Reaffirms Full Year 2019 Outlook
KEW MEDIA GROUP INC. (“KEW MEDIA”, “KEW” or the “Company”)
(TSX:KEW and KEW.WT) today released its financial results for the
three and six months ended June 30, 2019 (“Q2 2019”). KEW MEDIA’s
interim condensed financial statements along with its Management’s
Discussion and Analysis for Q2 2019 are available on the Company’s
investor relations website at https://investors.kewmedia.com and
under the Company’s profile at www.sedar.com. All financial results
are reported in Canadian dollars unless otherwise stated.
Q2 2019 Highlights
- Revenue of $69.1 million (2018: 49.8 million)
- Gross Profit1 of $21.3 million (2018: $13.4 million)
- General and Administrative expenses2 (“G&A”) of $13.6
million (2018: $11.6 million)
- Adjusted EBITDA3 of $7.8 million (2018: $2.7 million)
- Net income of $0.2 million (2018: Net loss of $(5.0)
million)
- Adjusted Net Income4 after tax5 of $7.2 million (2018: $0.9
million)
- Free Cash Flow (FCF)6 before movements in working capital and
film and television rights of $4.6 million (2018: $1.0
million)
- FCF after movements in working capital and investments in film
and television rights of $0.9 million (2018: $(8.7) million)
- Reaffirmed full year 2019 outlook of mid to high single digit
percentage organic growth over the annualized Pro forma 2018
Adjusted EBITDA of $31.9 million7
(in millions of Canadian dollars, except
per share data)
Three months ended
Six months ended
June 30, 2019
June 30, 2018
% Change
June 30, 2019
June 30, 2018
% Change
Revenue
Production
$
46.0
$
37.4
23.0
%
$
79.6
$
61.9
28.6
%
Distribution
$
23.1
$
12.4
86.3
%
$
41.5
$
27.7
49.8
%
Total
$
69.1
$
49.8
38.8
%
$
121.1
$
89.6
35.2
%
Gross Profit
Production
$
11.7
$
8.0
46.3
%
$
20.7
$
14.4
43.8
%
Distribution
$
9.6
$
5.4
77.8
%
$
14.6
$
11.8
23.7
%
Total
$
21.3
$
13.4
59.0
%
$
35.3
$
26.2
34.7
%
Gross Profit Margin - Production
25.4
%
21.4
%
26.0
%
23.3
%
Gross Profit Margin - Distribution
41.6
%
43.5
%
35.2
%
42.6
%
Gross Profit Margin Total
30.8
%
26.9
%
29.1
%
29.2
%
Adjusted EBITDA after NCI
$
7.8
$
2.7
188.9
%
$
7.6
$
5.1
49.0
%
Net income (loss) for the period
$
0.2
$
(5.0
)
N.M.
$
(7.7
)
$
(5.2
)
N.M.
Adjusted net income after tax
$
7.2
$
0.9
700.0%
$
6.0
$
3.5
71.4
%
Basic and diluted loss per share
$
(0.03
)
$
(0.45
)
N.M.
$
(0.66
)
$
(0.51
)
N.M.
Adjusted earnings per share
$
0.53
$
0.07
657.1%
$
0.44
$
0.30
46.7
%
Steven Silver, Chief Executive Officer of KEW MEDIA, commented,
“KEW's strong momentum continued into the second quarter and met
our expectations, largely driven by high revenues from both our
production and distribution segments. We are beginning to see the
benefits of our significant investment in film and television
rights last year and expect this momentum to continue. Based on our
performance through the first half of the year and the current
visibility into the second half of the year, we reaffirm our 2019
outlook to deliver mid to high single digit percentage organic
growth over the annualized Pro forma Adjusted EBITDA of $31.9
million."
Peter Sussman, Executive Chairman of KEW MEDIA, added, "We
continue to see growth in our sector in both financial and
non-financial metrics. In particular, the explosion of subscription
video on demand platforms across the world, together with ongoing
purchasing from traditional platforms, continues to fuel demand
across a range of content. As we wrap up our traditionally busy
production season and move into our sales-heavy fall and winter
seasons, we are pleased with our progress and are confident in our
future. There are no signs of the appetite for content slowing, and
we will continue to produce and sell to eager buyers around the
world.”
Financial Highlights for the Three
Months Ended June 30, 2019
KEW MEDIA’s results in any given quarter or year can be affected
by seasonality and/or specific product mix timing. Typically,
production occurs over the summer and starts delivering in the fall
and winter months, when the majority of revenues and profits are
achieved.
Q2 2019’s revenue of $69.1 million was comprised of $46.0
million from Production and $23.1 million from Distribution. Gross
Profit of $21.3 million included $11.7 million from Production and
$9.6 million from Distribution. Gross Profit Margin and was 30.8%,
with segmented Gross Profit Margin of 25.4% for Production and
41.6% for Distribution. Overall and Segmental margins met
management’s expectations for the quarter with Production Gross
Profit Margins higher in the period this year due to the
introduction of Essential and Distribution Gross Profit Margins
being marginally lower due to product mix and revenue recognition
timing. Adjusted EBITDA was $7.8 million, the Net income was $0.2
million, the loss attributable to the equity holders of the parent
was $(0.03) per share and Adjusted Net Income after tax was $7.2
million, or $0.53 per share.
Segment Information
Production
During the second quarter, Revenues were $46.0 million, an
increase from the same period in 2018 of 23%, Gross Profit was
$11.7 million, an increase of 18.7%, and the Gross Margin
percentage was 25.4% (2018: 21.4%). G&A increased by $1.3
million to $6.3 million. These increases were predominantly due to
the inclusion of Essential. Adjusted EBITDA increased by 65.4% to
$4.3 million with the positive change being driven by increased
production volume across the group. Titles produced include:
Essential's Texas Flip 'N Move seasons 12 and 13 for DIY Network in
the US and Body Hack season 3 for Network Ten in Australia, Collins
Avenue's Dance Moms season 8 for A&E in the US, Jigsaw
Productions' The Family for Netflix and Frantic Films' Baroness von
Sketch season 4 for CBC in Canada.
Distribution
During the second quarter, Revenues were $23.1 million, an
increase of 86.3%, Gross Profit was $9.6 million, an increase of
77.8%, and the Gross Margin percentage was 41.6% (2018: 43.5%).
G&A increased by $0.5 million to $4.8 million. Adjusted EBITDA
increased by 284.6% to $4.9 million. The segment’s revenues
benefited from the delivery in the quarter of some higher
revenue/low margin titles. Consequently, while Revenues increased,
Gross Profit margins decreased compared to Q2 last year, which had
a product mix with comparatively higher margin titles. Titles
distributed across the segment included: Line of Duty season 5,
Bletchley Circle: San Francisco, My Crazy Birth Story, Egypt's
Unexplained Files, Massive Engineering Mistakes, and Shocking
Emergency Calls.
Gross Profit and G&A
KEW MEDIA focuses on Gross Profit as a performance indicator
given that the Company has a diverse product range with some low
revenue items attracting 100% Gross Profit Margins and other high
revenue items having Gross Profit Margins as low as 5%. Gross
Profit for Q2 2019 was $21.3 million compared to $13.4 million last
year, an overall increase of 59%.
G&A increased in the quarter to $13.6 million compared to
$11.6 million last year. This was predominantly due to budgeted
increases in corporate overhead as well as the inclusion of
Essential in the production segment.
Developments in the
Quarter
There were a number of positive developments in the quarter.
These include:
- Leaving Neverland continues to captivate buyers and audiences.
Kew Media Distribution (KMD) has sold the 2-part documentary series
to every territory in the world save China. It was also recently
nominated for 5 Emmy Awards, as was the recipient of a Television
Critics Association award for best news and information
program.
- The popular Dance Moms started delivering episodes from its 8th
season to A&E in Q2.
- Jigsaw delivered The Family for Netflix, a five-part docuseries
on an enigmatic conservative Christian group known as the Family
which wields enormous influence in Washington, D.C., in pursuit of
its global ambitions. The show launched on the global streamer on
August 9.
- In the Production segment, production commenced on a raft of
titles including The Trickster for CBC, Hot Market for HGTV Canada,
Griff's Kiwi Adventures for Prime New Zealand, and Haunted
Hospitals season 2 for Travel Channel Canada. New series were also
commissioned including Volcano Walk Live for A&E in the US from
Essential and Frankie Boyle's Scotland for BBC Two from Two Rivers
Media.
Balance Sheet and Net
Debt
As of June 30, 2019 the Company had cash and cash equivalents of
$26.2 million, approximately $11.9 million in loan availability and
Net Debt8 of $99.7 million.
Adjusted Net Debt9 as of June 30, 2019 was $85.8 million. This
figure takes into account material foreign exchange movements since
the beginning of the year and amounts expended by KEW MEDIA’s
treasury on interim production financing.
The Adjusted Net Debt of $85.8 million to Pro forma 2018
Adjusted EBITDA of $31.9 million is 2.7:1. The Company continues to
anticipate that this ratio will reduce further into 2019 with an
overall target of 2.1 or below, reflecting the projected growth in
our Adjusted EBITDA for the year, together with the expected
benefits from positive cash flow generation.
Free Cash Flow (FCF)
FCF before movements in working capital and before movements in
film and television rights was $4.6 million compared to $1.0
million last year. FCF after movements in working capital but
before investments in film and television rights was $(2.2) million
compared to $(4.6) million last year. After movements in both
working capital and investments in film and television rights, FCF
was $0.9 million compared to $(8.7) million last year. As KEW's
significant FY18 investment in film and television begins to
provide returns, the cash flow generative nature of the overall
business is starting to emerge.
At the segment level, Production FCF before movements in working
capital and investments in film and television rights was $3.1
million. FCF after movements in working capital but before
movements in investments in film and television rights was $(2.1)
million. After movements in both working capital and investments in
film and television rights, FCF was $0.8 million).
Distribution FCF before movements in working capital and
movements in investments in film and television rights was $4.5
million. FCF after movements in working capital but before
movements in investments in film and television rights was $1.1
million. After movements in both working capital and investments in
film and television rights, FCF was $1.4 million.
Outlook10
For the full year 2019, KEW MEDIA continues to expect a range of
mid to high single digit percentage organic growth on full year
2018 Pro forma Adjusted EBITDA of $31.9 million. KEW MEDIA’s
results in any given quarter or year can be affected by seasonality
and/or specific product delivery timing. Typically, production
occurs over the summer and starts delivering in the fall and winter
months. As reflected in our 2018 performance, our 2019 results are
expected to be heavily weighted in the fourth quarter.
Conference Call
KEW MEDIA will host a conference call to discuss the second
quarter 2019 financial results on August 14, 2019 at 9:00 a.m. ET.
The conference call can be accessed live over the phone by dialing
877-407-0784 (USA and Canada) or 201-689-8560 (International). The
conference call replay will be available via webcast through KEW
MEDIA's Investor Relations website. The telephone replay will be
available from 12:00 p.m. Eastern Time on August 14, 2019, through
August 21, 2019, by dialing 844-512-2921 (USA and Canada) or
412-317-6671 (International). The replay passcode will be
13692653.
The call will also be webcast live from KEW MEDIA’s investor
relations website at https://investors.kewmedia.com. Following
completion of the call, a recorded replay of the webcast will be
available on the website.
About KEW MEDIA GROUP INC.
KEW MEDIA GROUP is a leading publicly-listed content company
that produces and distributes multi-genre content worldwide.
Companies included in the KEW family are the production companies:
Architect Films, Awesome Media & Entertainment, Bristow Global
Media, Collins Avenue Productions, Essential Media Group, 4East
Media, Frantic Films, Jigsaw Productions, Media Headquarters, Our
House Media, Sienna Films, Spirit Digital Media, and Two Rivers
Media; and the distribution companies: KEW Media Distribution and
TCB Media Rights.
With primary offices in London, Los Angeles, New York, Sydney
and Toronto, the KEW MEDIA GROUP companies develop, produce and
distribute more than 2,000 new hours of content every year, as well
as manage a library of more than 14,000 hours of content, for
almost every available viewing platform worldwide. KEW aspires to
offer great content from all over the world to viewers of all ages
and tastes. KEW promotes transparency, equality, respect, and
inclusiveness and plans to grow with the benefit of people from a
wide range of perspectives and backgrounds.
Forward-Looking Statements
This news release may include forward-looking statements. All
such statements constitute forward looking information within the
meaning of securities law and are made pursuant to the “safe
harbour” provisions of applicable securities laws. Forward-looking
statements may include, but are not limited to, statements about
anticipated future events or results including comments with
respect to the Company’s objectives and priorities for 2019 and
beyond, and strategies or further actions with respect to the
Company, its business operations, financial performance and
condition. Forward-looking statements are statements that are
predictive in nature, depend upon or refer to future events or
conditions and are identified by words such as “will”, “expects”,
“anticipates”, “intends”, “plans”, “believes”, “estimates” or
similar expressions concerning matters that are not historical
facts. Such statements are based on current expectations of the
Company’s management and inherently involve numerous risks and
uncertainties, known and unknown, including economic factors.
In particular, the statements set out in the Outlook section of
this press release regarding our expected Adjusted EBITDA for the
year ending December 31, 2019, our expected financial performance
for the remainder of 2019 and our expectations regarding the
performance of our production and distribution segments for the
remainder of 2019, constitute forward-looking statements. These
statements are based on management’s current strategies,
assumptions concerning growth and assessment of the outlook for the
business. In particular, such statements assume that: (i) our
production companies will continue to develop, produce and deliver
successful productions in a manner consistent with past experience
and on expected delivery schedules as outlined under “Outlook” in
the press release; (ii) the product mix of the Company’s revenues
will continue to be skewed towards higher margin titles; (iii) we
will continue to acquire and distribute content in a manner
consistent with past experience; (iv) our operating and overhead
costs will be within budget; and (v) that the companies we have
acquired will meet or exceed our performance expectations. We
consider the foregoing assumptions to be reasonable in the
circumstances given the time period for such outlook. However,
readers are cautioned that KEW’s actual results may vary from these
forward-looking statements and that variation could be material.
The forward-looking information contained in this news release is
presented for the purpose of assisting readers in understanding the
Company’s business and strategic priorities and objectives as at
the periods indicated and may not be appropriate for other
purposes. A number of risks, uncertainties and other factors may
cause actual results to differ materially from the forward-looking
statements contained in this news release, including, among other
factors, those referenced in the section entitled “Risk Factors” in
the Company’s annual information form for the year ended December
31, 2018, a copy of which is available on the SEDAR website at
www.sedar.com under the Company’s profile. In particular, KEW’s
results of operations fluctuate significantly quarter to quarter
depending on the number and timing of content delivered or made
available to various media. As in past years, KEW anticipates that
its 2019 financial results will be heavily weighted in the fourth
quarter and as a result, KEW may not have visibility on its ability
to meet the 2019 guidance until the end of the fourth quarter of
2019.
Forward-looking statements contained in this news release are
not guarantees of future performance and, while forward-looking
statements are based on certain assumptions that the Company
considers reasonable, actual events and results could differ
materially from those expressed or implied by forward-looking
statements. Readers are cautioned to consider these and other
factors carefully when making decisions with respect to the Company
and not place undue reliance on forward-looking statements.
Circumstances affecting the Company may change rapidly. Except as
may be expressly required by applicable law, KEW does not undertake
any obligation to update publicly or revise any such
forward-looking statements, and as a result of new information,
future events or otherwise.
Non-IFRS Measures
This news release contains references to certain measures that
do not have a standardized meaning under International Financial
Reporting Standards (“IFRS”) as prescribed by the International
Accounting Standards Board and are therefore unlikely to be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement IFRS measures by providing a further understanding of
operations from management’s perspective. Accordingly, non-IFRS
measures should not be considered in isolation nor as a substitute
for analysis of financial information reported under IFRS. This
news release makes reference to Gross Profit, Gross Profit Margin,
Adjusted Net Income, Adjusted EBITDA, Free Cash Flow, Net debt, and
Adjusted Net Debt, each of which is a non-IFRS financial measure.
The Company believes these non-IFRS financial measures are
frequently used by securities analysts, investors and other
interested parties as measures of financial performance and it is
therefore helpful to provide supplemental measures of operating
performance and thus highlight trends that may not otherwise be
apparent when relying solely on IFRS financial measures.
The Company’s definitions of non-IFRS financial measures are as
follows:
- Gross Profit is revenue less cost of sales.
- Gross Profit Margin is gross profit as a percentage of
revenue.
- Adjusted Net Income is Income (Loss) before income tax recovery
then includes add-back adjustments for items such as transaction
costs, reorganization and exceptional costs, share-based
compensation, deferred compensation, other intangibles
amortization, gain on change in fair value of financial
liabilities, and (gain) loss on sale of subsidiary.
- Adjusted EBITDA is also provided to better analyze trends in
performance and present a truer economic representation on a
comparative basis. Adjusted EBITDA is Adjusted Net Income including
additional add-back adjustments for Interest Expense, net of
Interest Income, Depreciation and any non-cash amortization (to the
extent not added back to Adjusted Net Income).
- Free Cash Flow is Adjusted EBITDA adjusted for additions to
Property and Equipment, Interest and cash taxes.
- Adjusted Free Cash Flow is Free Cash Flow adjusted for
additions to film and television rights, net of amortization.
- Adjusted Net Income after tax is adjusted net income less
income tax recovery.
- Adjusted Net Debt is Net Debt less intra-group interim
production financing and adjusted for the impact of foreign
exchange
- Adjusted Earnings Per Share is Adjusted Net Income divided by
weighted average number of common shares in the capital of the
Company
Please see the Company’s management’s discussion and analysis
for the three and six months ended June 30, 2019 for a detailed
description of these measures and a reconciliation of these
measures to the nearest IFRS measure.
Selected Comparative Information
Below is selected information from the consolidated statements
of loss for the three and six months ended June 30, 2019 and the
three and six months ended June 30, 2018.
Three months ended June 30,
2019
Three months ended June 30,
2018
Six months ended June 30,
2019
Six months ended June 30,
2018
Revenue
Production and distribution revenue
69,087
49,769
121,088
89,551
Cost of sales
47,801
36,364
85,796
63,346
Gross profit(1)
21,286
13,405
35,292
26,205
Expenses
General and administrative expenses
13,608
11,585
27,664
22,129
Amortization of other intangible
assets
2,158
2,169
4,315
4,337
Amortization of right-of-use asset
1,404
—
2,726
—
Transaction costs
—
1,828
—
2,760
Deferred compensation
1,075
1,703
1,977
1,703
Share-based compensation
455
553
1,378
598
Interest expense, net of interest
income
2,254
1,355
4,755
2,513
Depreciation
503
209
878
399
Gain on change in fair value of financial
liabilities
(205
)
(1,253
)
(171
)
(3,150
)
Foreign exchange gain on financial
liabilities
(32
)
(600
)
(71
)
(149
)
Total expenses
21,220
17,549
43,451
31,140
Income (loss) before income tax
recovery
66
(4,144
)
(8,159
)
(4,935
)
Income tax recovery (expense)
90
(845
)
431
(233
)
Net income (loss) for the
period
156
(4,989
)
(7,728
)
(5,168
)
Net income (loss) attributable
to:
Equity holders of the parent
(478
)
(5,339
)
(9,040
)
(6,029
)
Non-controlling interest
634
350
1,312
861
Net income (loss) for the
period
156
(4,989
)
(7,728
)
(5,168
)
Loss per share attributable to equity
holders of the parent:
Basic and diluted loss per share
(0.03
)
(0.45
)
(0.66
)
(0.51
)
Weighted average number of Common Shares
outstanding – basic and diluted
13,761,152
11,825.913
13,761,152
11,821.228
Three months ended June 30,
2019
Three months ended June 30,
2018
Six months ended June 30,
2019
Six months ended June 30,
2018
Calculation of Adjusted net income
(loss) (1) and Adjusted EBITDA: (1)
Income (loss) before income tax
recovery
66
(4,144
)
(8,159
)
(4,935
)
Amortization of other intangible
assets
2,158
2,169
4,315
4,337
Transaction costs
—
1,828
—
2,760
Deferred compensation
1,075
1,703
1,977
1,703
Share-based compensation
455
553
1,378
598
Gain on change in fair value of financial
liabilities
(205
)
(1,253
)
(171
)
(3,150
)
Foreign exchange on financial
liabilities
(32
)
(600
)
(71
)
(149
)
Corporate reorganization costs (2)
—
—
—
315
Exceptional costs (2)
1,271
1,241
1,935
1,878
Adjusted net income for the
period
4,788
1,497
1,204
3,357
Depreciation
503
209
878
399
Amortization of right-of-use asset (3)
1,404
—
2,726
—
Interest expense, net of interest income,
on long-term borrowings
1,799
1,355
3,974
2,513
Interest expense on lease obligations
(3)
455
—
781
—
Adjusted EBITDA before NCI
8,949
3,061
9,563
6,269
Non-controlling interest
(1,188
)
(410
)
(1,948
)
(1,143
)
Adjusted EBITDA after NCI
7,761
2,651
7,615
5,126
(1)
Refer to the “Use of Non-IFRS Financial
Measures” section of the MD&A.
(2)
Included in general and administrative
expenses.
(3)
On January 1, 2019, Kew adopted IFRS 16,
Leases. No adjustment was made to the six-month period ended June
30, 2018. The amounts reflected in the three and six months ended
June 30, 2019 reflect the relevant changes under the standard. As
noted in the interim condensed consolidated financial statements,
payments made under lease obligations for the three and six month
period ended June 30, 2019 were $1,212 and $2,397 respectively and
having factored in the impact of NCI were $1,000 and $1,961
respectively
Revenue, Cost of Sales, Gross Profit
and Segmental Analysis
Three months ended June 30,
2019
Three months ended June 30,
2018
Six months ended June 30,
2019
Six months ended June 30,
2018
Revenue
Production and distribution revenue
69,087
49,769
121,088
89,551
Cost of sales
47,801
36,364
85,796
63,346
Gross profit(1)
21,286
13,405
35,292
26,205
The Company’s business activities are conducted through two
segments: Production and Distribution
Three months ended June 30,
2019
Six months ended June 30,
2019
Production
Distribution
Corporate
Consolidated
Production
Distribution
Corporate
Consolidated
Revenues
46,025
23,062
—
69,087
79,567
41,521
—
121,088
Cost of sales
34,375
13,426
—
47,801
58,889
26,907
—
85,796
Gross profit(1)
11,650
9,636
—
21,286
20,678
14,614
—
35,292
General and administrative expenses
6,250
4,808
2,550
13,608
13,493
9,309
4,862
27,664
Segment profit (loss)
5,400
4,828
(2,550
)
7,678
7,185
5,305
(4,862
)
7,628
Exceptionals
90
91
1,090
1,271
90
159
1,686
1,935
NCI
(1,188
)
—
—
(1,188
)
(1,948
)
—
—
(1,948
)
Adjusted EBITDA(1)
4,302
4,919
(1,460
)
7,761
5,327
5,464
(3,176
)
7,615
Three months ended June 30,
2018
Six months ended June 30,
2018
Production
Distribution
Corporate
Consolidated
Production
Distribution
Corporate
Consolidated
Revenues
37,400
12,369
—
49,769
61,879
27,672
—
89,551
Cost of sales
29,444
6,920
—
36,364
47,439
15,907
—
63,346
Gross profit(1)
7,956
5,449
—
13,405
14,440
11,765
—
26,205
General and administrative expenses
4,916
4,338
2,331
11,585
10,138
7,738
4,253
22,129
Segment profit (loss)
3,040
1,111
(2,331
)
1,820
4,302
4,027
(4,253
)
4,076
Exceptionals
—
158
1,083
1,241
315
158
1,720
2,193
NCI
(410
)
—
—
(410
)
(1,143
)
—
—
(1,143
)
Adjusted EBITDA(1)
2,630
1,269
(1,248
)
2,651
3,474
4,185
(2,533
)
5,126
(1) Refer to the “Use of Non-IFRS
Financial Measures” section of the MD&A
Adjusted EBITDA and Free Cash Flow
(FCF)
Three months ended June 30,
2019
Three months ended June 30,
2018
Six months ended June 30,
2019
Six months ended June 30,
2018
Adjusted EBITDA after NCI
7,761
2,651
7,615
5,126
Additions to property and equipment
(868
)
(307
)
(1,240
)
(523
)
Interest expense
(2,254
)
(1,355
)
(4,755
)
(2,513
)
Cash taxes
—
—
—
—
FCF before movements in working capital
and before movements in film and television rights
4,639
989
1,620
2,090
Net change in non cash working capital
balance related to operations
(6,876
)
(5,585
)
2,306
(8,751
)
FCF after movements in working capital
and before movements in film and television rights
(2,237
)
(4,596
)
3,926
(6,661
)
Net deductions (additions) to film and
television rights
3,148
(4,112
)
(4,986
)
(4,233
)
FCF
911
(8,708
)
(1,060
)
(10,894
)
Segmental FCF
Three months ended June 30,
2019
Six months ended June 30,
2019
Production
Distribution
Corporate
Consolidated
Production
Distribution
Corporate
Consolidated
Adjusted EBITDA after NCI
4,302
4,919
(1,460
)
7,761
5,327
5,464
(3,176
)
7,615
Additions to property and equipment
(849
)
(18
)
(1
)
(868
)
(1,154
)
(64
)
(22
)
(1,240
)
Interest expense
(356
)
(358
)
(1,540
)
(2,254
)
(479
)
(387
)
(3,889
)
(4,755
)
Cash taxes
—
—
—
—
—
—
—
—
FCF before movements in working capital
and before movements in film and television rights
3,097
4,543
(3,001
)
4,639
3,694
5,013
(7,087
)
1,620
Net change in non cash working capital
balance related to operations
(5,180
)
(3,479
)
1,783
(6,876
)
(421
)
(77
)
2,804
2,306
FCF after movements in working capital
and before movements in film and television rights
(2,083
)
1,064
(1,218
)
(2,237
)
3,273
4,936
(4,283
)
3,926
Net deductions (additions) to film and
television rights
2,844
304
—
3,148
(3,588
)
(1,398
)
—
(4,986
)
FCF
761
1,368
(1,218
)
911
(315
)
3,538
(4,283
)
(1,060
)
Earnings per share (EPS) and
Adjusted EPS
Three months ended June 30,
2019
Three months ended June 30,
2018
Six months ended June 30,
2019
Six months ended June 30,
2018
Adjusted EBITDA after NCI
7,761
2,651
7,615
5,126
Interest expense on long term
borrowings
(1,799
)
(1,355
)
(3,974
)
(2,513
)
Tax recovery (expense)
90
(845
)
431
(233
)
Non-controlling interest from EBITDA
1,188
410
1,948
1,143
Adjusted net income after tax
4,878
652
1,635
3,124
Adjusted EPS- basic and diluted
0.35
0.06
0.12
0.26
Exceptional costs
(1,271
)
(1,241
)
(1,935
)
(1,878
)
Corporate restructuring costs
—
—
—
(315
)
Transaction costs
—
(1,828
)
—
(2,760
)
Stock-based compensation
(455
)
(553
)
(1,378
)
(598
)
Deferred compensation costs
(1,075
)
(1,703
)
(1,977
)
(1,703
)
Amortization of other intangible
assets
(2,158
)
(2,169
)
(4,315
)
(4,337
)
Gain on change in fair value of financial
liabilities
205
1,253
171
3,150
Gain on FX translation of financial
liabilities
32
600
71
149
Net income (loss)
156
(4,989
)
(7,728
)
(5,168
)
Basic EPS- basic and diluted
(0.03
)
(0.45
)
(0.66
)
(0.51
)
1
Gross Profit is revenue less cost of
sales.
2
The increase of $2 million in G&A was
primarily due to the Essential acquisition last year and
centralized infrastructure costs, as contemplated in our full year
2019 outlook.
3
Adjusted EBITDA is EBITDA
excluding certain items to better analyze trends in performance and
after non-controlling interests. These adjustments result in a
truer economic representation on a comparative basis. Adjusted
EBITDA includes the add-backs made to calculate the Adjusted Net
Income and additional add-backs for interest expense, net of
interest income, depreciation and any non-cash amortization (to the
extent not added to Adjusted Net Income). See “Non-IFRS Measures”
and “Forward-Looking Statements” below in this press release.
4
Adjusted Net Income is income (loss)
before income tax recovery then includes add-back adjustments for
items such as transaction costs, reorganization and exceptional
costs, share-based compensation, deferred compensation, other
intangibles amortization, gain on change in fair value of financial
liabilities, and gain (loss) on foreign exchange on financial
liabilities. See “Non-IFRS Measures” and “Forward-Looking
Statements” below in this press release
5
Adjusted Net Income after tax is Adjusted
Net Income less income tax recovery.
6
Free Cash Flow is Adjusted EBITDA adjusted
for additions to Property and Equipment, Interest and cash
taxes.
7
2018 Pro forma Adjusted EBITDA is $31.9
million, being the 2018 Adjusted EBITDA of $26.9 million plus an
additional approximate $5 million from the period January 1, 2018
to the date of acquisition to reflect a full year’s results of
Essential.
8
Net Debt is debt less any cash and cash
equivalent balances.
9
Adjusted Net Debt is Net Debt less interim
production loans provided by KEW MEDIA treasury less effect of
foreign exchange movements. See “Non-IFRS Measures” and
“Forward-Looking Statements” below in this press release.
10
The statements set out in this Outlook
section are based on management’s assumptions, current strategies
and assessment of the outlook for the business. Given the seasonal
and other fluctuations in KEW MEDIA’s business, the Company may not
be in a position to provide periodic updates on its progress in
meeting its expectations. These statements constitute forward
looking information for purposes of applicable Canadian securities
legislation and readers are cautioned that KEW MEDIA’s actual
result may vary from these forward looking statements and that
variation could be material. See “Forward Looking Statements” for a
description of the assumptions and risks associated with these
forward looking statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190813005786/en/
Investor Relations: Steven Silver Chief Executive Officer
647-957-2194 investors@kewmedia.com