Corus Entertainment Inc. (TSX: CJR.B) Declares Fiscal 2K19 2nd Quarter Results

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Corus Entertainment Inc. (TSX: CJR.B) declared its 2nd quarter financial results recently.

“Corus delivered another strong quarter, with double-digit Television advertising revenue growth surpassing our prospect,” said Doug Murphy, President, and CEO. “The benefits of our ongoing progress in higher advertising and data programs, our client-centric move toward and robust advertising demand are reflected in these optimistic results, partially offset by softness in our Radio segment and timing-related variability in our happy business.

Notably, the strength of our free cash flow in the quarter is accelerating our progress towards our leverage targets and supporting the progression of our planned previous cities as we continue to build for the future.”

Merged Results from Operations

Merged revenues for the 3 months finished February 28, 2K19 were $384.1M, up 4 percent from $369.5M last year and merged segment profit was $113.1M, relatively consistent with $112.8M last year. Net income attributable to stockholders for the quarter finished February 28, 2K19 was $6.3M ($0.03 per share basic), difference to $40.0M ($0.19 per share basic) last year.

Net income attributable to stockholders for the 2nd quarter of fiscal 2K19 includes business acquisition, integration and restructuring costs of $4.0M ($0.01 per share, net of income taxes) and an impairment of an investment in associates of $8.7M ($0.03 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to stockholders of $15.7M ($0.07 per share basic) for the quarter.

Net income attributable to stockholders for the previous year quarter includes business acquisition, integration and restructuring costs of $2.5M ($0.01 per share, net of income taxes). Adjusting for the impact of this item results in an adjusted net income attributable to stockholders of $41.9M ($0.20 per share basic) for the previous year quarter.

Merged revenues for the 6 months finished February 28, 2K19 were $851.6M, up 3 percent from $826.9M last year.  Merged segment profit was $304.8M, up 5 percent from $290.6M last year.  Net income attributable to stockholders for the 6 months finished February 28, 2K19 was $66.8M ($0.31 per share basic), difference to net income attributable to stockholders of $117.7M ($0.57 per share basic) last year.

Net income attributable to stockholders for the 6 months finished February 28, 2K19 includes business acquisition, integration and restructuring costs of $17.2M ($0.06 per share, net of income taxes) and an impairment of an investment in associates of $8.7M ($0.03 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to stockholders of $85.8M ($0.40 per share basic) for the current fiscal year.

Net income attributable to stockholders for the 6 months finished February 28, 2K18 includes business acquisition, integration and restructuring costs of $4.1M ($0.01 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to stockholders of $120.8M ($0.58 per share basic) for the previous fiscal year.

Merged net income attributable to stockholders in addition to basic and diluted earnings per share for the 3 and 6 months finished February 28, 2K19 was influenced by a change in accounting estimate related to the useful life of the Company’s television brands. Commencing September 1, 2K18, the useful life of television brands was changed from indefinite life to lives ranging from 3 to 20 years.

For the 3 and 6 months finished February 28, 2K19, this has resulted in an additional $34.9M and $69.8M, respectively, in amortization expense in the depreciation and amortization line within the Merged Statement of Income and Comprehensive Income, and reduced net income attributable to stockholders, net of income taxes, by $25.7M ($0.12 per share basic) and $51.3M ($0.24 per share basic), respectively. Further negotiation of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the 2nd Quarter 2K19 Report to Stockholders.

Operational Results – Highlights for Q1 2K19

Television

  1. Segment revenues raised 5 percent in Q2 2K19 and 4 percent for the year-to-date
  2. Advertising revenues raised 11 percent in Q2 2K19 and 7 percent for the year-to-date
  3. Subscriber revenues were down 1 percent in Q2 2K19 and flat for the year-to-date
  4. Merchandising, distribution and other revenues were down $2.5M (13 percent) in Q2 2K19 and $2.0M (6 percent) for the year-to-date
  5. Segment profit(1) raised 10 percent in both Q2 2K19 and the year-to-date
  6. Segment profit margin(1) of 32 percent in Q2 2K19 and 38 percent for the year-to-date, difference to 31 percent and 36 percent, respectively, in the previous year

Corporate

  1. Free cash flow(1) of $83.9M in Q2 2K19 and $126.3M for the year-to-date, difference to $82.1M and $165.3M, respectively, in the previous year
  2. Net debt to segment profit(1) leverage of 3.05 times at February 28, 2K19, down from 3.28 times at August 31, 2K18, in part because of debt repayments of $117.6M for the year-to-date
  3. Merged segment profit margin(1) of 29 percent in Q2 2K19 and 36 percent for the year-to-date, difference to 31 percent and 35 percent, respectively, in the previous year

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