Strategic Review update and final financial
results to be announced
September
25, 2018, with analyst call at 8 a.m.
ET that day
HALIFAX, Sept. 13, 2018
/PRNewswire/ - DHX Media (or the "Company") (TSX: DHX, NASDAQ:
DHXM), a global children's content and brands company, today issued
preliminary financial results for its Fiscal 2018 fourth quarter
and full year, ended June 30, 2018.
Final financial results for Fiscal 2018 will be reported before
market opens on September 25, 2018.
At that time, the Special Committee of the Company's Board of
Directors is also expected to provide an update on its strategic
review.
Preliminary Financial Results for Fourth Quarter and Fiscal
2018
DHX Media announces the following preliminary financial results
for Q4 2018 and Fiscal 2018:
|
|
|
|
|
|
Q4
2018
|
Q4 2017
|
Fiscal
2018
|
Fiscal
2017
|
Revenue
|
$99
million
|
$87.6
million
|
$436
million
|
$298.7
million
|
Adjusted EBITDA
attributable to DHX Media1
|
$15.5 million to
$17.5 million
|
$23.7
million
|
$97 million to $99
million
|
$87.3
million
|
Cash provided by
(used in) operating activities2
|
$8
million
|
$6.9
million
|
$13
million
|
$(6.5
million)
|
Net loss for the
period
|
($20 million) to
($18 million)
|
($18.3
million)
|
($8 million) to
($6 million)
|
($3.6
million)
|
|
|
|
June 30,
2018
|
June 30,
2017
|
Cash and cash
equivalents
|
$46
million
|
$62.1
million3
|
|
|
1.
|
Adjusted EBITDA is
not a recognized earnings measure under GAAP and may not be
comparable to similar measures presented by other companies, but
the Company reports this measure because it believes that it
facilities understanding of the results of its operations. See "Use
of Non-GAAP Financial Measures" section of the Company's Q3 2018
Management Discussion and Analysis. Adjusted EBITDA reflects only
the portion attributable to DHX Media (excluding non-controlling
interests). See Table 1 below for a Reconciliation of preliminary
results to Adjusted EBITDA.
|
2.
|
Fiscal 2018 Cash
provided by operating activities includes expenditures of
approximately $24.4 million in acquisition and refinancing costs
related to the Peanuts and Strawberry Shortcake
acquisition.
|
3.
|
June 30, 2017
excludes cash held in trust, which was used to repay the Company's
former Senior Unsecured Notes including all accrued interest and
the early redemption penalty on July 11, 2017.
|
These preliminary results reflect the ongoing transitioning of
the Company as it refocuses the business to enhance margins and
cash generation. Top-line growth was primarily driven by the
acquisition of Peanuts and Strawberry Shortcake, and by continued
strong growth in WildBrain. Excluding acquisitions, revenue for
Fiscal 2018 is expected to be down approximately 3% relative to
Fiscal 2017. The increase in adjusted EBITDA was the result of the
Peanuts and Strawberry Shortcake acquisition, partially offset by
declines in proprietary production, distribution (excluding
WildBrain) and the consumer products-represented businesses. The
net loss, relative to the prior periods, was partially due to lower
margins due to the new mix of our business with Peanuts, and a
$12 million combined write-down of
investment in film, television programs, acquired and library
content and intangible assets. Cash provided by operating
activities for Fiscal 2018 was $13
million, or $37.4 million
before acquisition & related refinancing costs of $24.4 million.
These results are preliminary, and are subject to change,
following completion of management's final close process.
"We have taken significant corrective actions to return to
strong and sustainable organic growth, which are not yet reflected
in our reported results," said Michael
Donovan, Executive Chair and CEO, DHX Media. "These actions
have included rebuilding the executive team and investing in
stronger systems. DHX Media intends to earn back the confidence of
shareholders in the value of the Company's assets and the
management team's ability to execute and surface value, as it
reports results throughout fiscal 2019 and beyond. Management looks
forward to discussing these and other developments in more detail
on our full earnings call on September 25th. Furthermore,
management firmly believes that the recent decline in the Company's
share price is not reflective of the current financial health of
the business, the value of the Company's assets or the future
earnings potential of DHX Media."
Based on these preliminary results, the Company expects the
Total Net Leverage Ratio, as defined in the Senior Secured Credit
Facilities, to be in the range of 6.0 to 6.1 as compared to a
permitted ratio of 7.25 at June 30,
2018. Subsequent to year end, the company used net proceeds
from the Sony transaction, totaling US$161.3
million, to repay a portion of the Senior Secured Credit
Facilities. As a result of this repayment, the Company estimates
that the Total Net Leverage Ratio at June
30, 2018 would have been reduced to less than 5.0 on a pro
forma basis.
Table 1: Reconciliation of preliminary results to Adjusted
EBITDA
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|
|
|
|
All figures in C$
millions
|
Q4
|
Q4
|
Fiscal
|
Fiscal
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Net loss for
the period
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(19)
|
(18.3)
|
(7)
|
(3.6)
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Provision for
(recovery of) income taxes
|
(5)
|
(3.7)
|
2
|
1.9
|
|
|
|
|
|
Finance income
and finance expense
|
21
|
26.4
|
46
|
40.5
|
|
|
|
|
|
Amortization of
property and equipment and intangible assets
|
6
|
5.1
|
24
|
17.6
|
|
|
|
|
|
Amortization of
acquired and library content
|
4
|
2.4
|
16
|
10.5
|
|
|
|
|
|
Share-based
compensation expense
|
-
|
1.5
|
3
|
5.9
|
Acquisition
costs
|
-
|
9.7
|
-
|
9.7
|
|
|
|
|
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Write-down of
investment in film, television programs, acquired and library
content and intangible assets
|
10
|
0.0
|
12
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1.5
|
|
|
|
|
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Development,
integration and other expense
|
2
|
0.7
|
11
|
3.4
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Adjusted
EBITDA
|
19.0
|
23.7
|
107
|
87.3
|
Portion of
EBITDA attributable to non-controlling interests
|
(2.5)
|
-
|
(9)
|
-
|
Adjusted
EBITDA attributable to DHX
|
16.5
|
23.7
|
98
|
87.3
|
|
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Analyst and Investor Webcast and Conference Call
The Company will report its Fiscal 2018 fourth quarter and full
year results before market opens on September 25, 2018. DHX Media senior management
will host a live webcast and conference call for investors and
analysts at 8:00 a.m. ET on
September 25, 2018 to discuss the
Company's results. Media are welcome to listen in.
Interested parties may access the live webcast with audio and
presentation at the following link:
https://event.on24.com/wcc/r/1836701/14B00219A3CE6B6B7E4F9BCB1E74F78A
. The webcast will be archived at this link for 30 days.
To listen by phone only, please call +1(888) 231-8191 or +1(647)
427-7450 internationally, and reference conference ID 8980389.
Please allow 10 minutes to be connected to the conference call.
Instant replay will be available after the call on +1(855) 859-2056
toll free, under passcode 8980389, until 11:59 p.m. ET, October 2,
2018.
The presentation for the call will also be posted to the
Investor Relations section of the Company's website,
at: http://www.dhxmedia.com/investors/.
The audio and transcript will also be permanently archived on
the Company's website beginning approximately two days following
the event.
About DHX Media
DHX Media Ltd. (TSX: DHX, NASDAQ:
DHXM) is a global children's content and brands company, recognized
for such high-profile properties as Peanuts, Teletubbies,
Strawberry Shortcake, Caillou, Inspector Gadget, and the
acclaimed Degrassi franchise. One of the world's foremost
producers of children's shows, DHX Media owns the world's largest
independent library of children's content, at 13,000 half-hours. It
licenses its content to broadcasters and streaming services
worldwide and generates royalties through its global consumer
products program. Through its subsidiary, WildBrain, DHX Media
operates one of the largest networks of children's channels on
YouTube. Headquartered in Canada,
DHX Media has offices worldwide. Visit us at www.dhxmedia.com.
Disclaimer
This press release contains "forward-looking statements" under
applicable securities laws with respect to DHX Media including,
without limitation, statements regarding the activities of the
Special Committee and the results and timing of its strategic
review process, the transitioning of the Company to refocus on
margins and cash generation, expectations for financial results and
performance of the Company, expected impacts of corrective actions
taken by the Company, the health of the Company's business, value
of assets and future earnings potential as they relate to the share
price of the Company, the business strategies and operational
activities of DHX Media and its subsidiaries, estimates of the
leverage of the Company, the future growth and financial and
operating performance of DHX Media and its subsidiaries, and the
timing for release of the Company's Fiscal 2018 results. Although
the Company believes that the expectations reflected in such
forward-looking statements are reasonable, such statements involve
risks and uncertainties and are based on information currently
available to the Company. Actual results or events may differ
materially from those expressed or implied by such forward-looking
statements. Factors that could cause actual results or events to
differ materially from current expectations, among other things,
include the ability of the Special Committee to complete its
review, the outcomes from the strategic review process, the ability
of the Company to complete its Fiscal 2018 audit process and the
outcomes of such audit, the Company's ability to complete its
transition and execute on its strategy coming out of such
transition, and the risk factors discussed in materials filed
with applicable securities regulatory authorities from time to time
including matters discussed under "Risk Factors" in the Company's
most recent Annual Information Form and annual Management
Discussion and Analysis, which also form part of the Company's
annual report on Form 40-F filed with the U.S. Securities and
Exchange Commission. These forward-looking statements are made as
of the date hereof, and the Company assumes no obligation to update
or revise them to reflect new events or circumstances, except as
required by law.
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SOURCE DHX Media Ltd.