Corus Entertainment : announces fiscal 2018 third quarter results

• Free cash flow⁽¹⁾ of $87.8 million for the quarter and $253.0 million for the year-to-date, up from $82.5 million and $212.5 million, respectively, last year
• Revised Capital Allocation Policy positions Corus for the future
• Consolidated revenues decreased 4% for the quarter and 2% for the year-to-date
• Consolidated segment profit⁽¹⁾ decreased 3% for the quarter and 2% for the year-to-date
• Consolidated segment profit margin⁽¹⁾ of 39% for the quarter and 36% for the year-to-date
• Net loss attributable to shareholders of $935.9 million ($4.49 loss per share basic) for the quarter and $818.2 million ($3.94 loss per share basic) for the year-to-date, which includes non-cash impairment charges related to broadcast licenses and goodwill of $1,013.7 million
• Adjusted basic earnings per share⁽²⁾ of $0.37 per share for the quarter and $0.96 per share for the year-to-date

TORONTO, June 27, 2018 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"We continue to advance our strategic priorities while contending with challenging television market conditions and exercising strong expense control, as reflected in this quarter's results. The net loss in Q3 was driven by non-cash impairment charges recorded in the period to adjust book value to current market value.  Excluding these charges, adjusted earnings per share increased year-over-year," said Doug Murphy, President and Chief Executive Officer. "Recently, Corus debuted a strong fall line-up for Global and our specialty channels, and announced the successful beta launch of CYNCH, the first automated buying platform for television advertising in Canada. Our revenue diversification strategy is also progressing well, with the greenlight of a robust slate of new shows to drive audiences for our networks and grow our international owned content business. Finally, we have positioned Corus for the future with our revised Capital Allocation Policy. Our focus on deleveraging will ensure that we create the balance sheet strength to continue to make these important investments in support of the ongoing transformation of our business model."

Financial Highlights                                           

Consolidated Results from Operations

Consolidated revenues for the three months ended May 31, 2018 were $441.4 million, down 4% from $461.6 million last year and consolidated segment profit was $170.4 million, a decrease of 3% from $175.8 million last year. Net loss attributable to shareholders for the quarter ended May 31, 2018 was $935.9 million ($4.49 loss per share basic and diluted), compared to net income attributable to shareholders of $66.7 million ($0.33 income per share basic and diluted) last year. Net loss attributable to shareholders for the third quarter of fiscal 2018 includes broadcast license and goodwill impairment charges of $1,013.7 million ($4.84 per share basic, net of income taxes), business acquisition, integration and restructuring costs of $5.3 million ($0.02 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $78.1 million ($0.37 per share basic) in the quarter. Net income attributable to shareholders for the prior year quarter includes business acquisition, integration and restructuring costs of $4.6 million ($0.02 per share, net of income taxes). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $70.1 million ($0.35 per share basic) for the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2018 were $1,268.3 million, down 2% from $1,297.8 million last year. Consolidated segment profit was $461.1 million, down 2% from $470.5 million last year. Net loss attributable to shareholders for the nine months ended May 31, 2018 was $818.2 million ($3.94 loss per share basic and diluted), compared to net income attributable to shareholders of $162.7 million ($0.81 income per share) last year. Net loss attributable to shareholders for the nine months ended May 31, 2018 includes broadcast license and goodwill impairment charges of $1,013.7 million ($4.87 per share basic, net of income taxes), business acquisition, integration and restructuring costs of $9.4 million ($0.03 per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $198.9 million ($0.96 per share basic) for the current fiscal year-to-date. Net income attributable to shareholders for the nine months ended May 31, 2017 includes business acquisition, integration and restructuring costs of $18.7 million ($0.07 per share, net of income taxes). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $176.5 million ($0.88 per share basic) for the prior fiscal year-to-date.

Operational Results - Highlights Television

• Segment revenues decreased 5% in Q3 2018 and 2% for the year-to-date
• Advertising revenues decreased 5% in Q3 2018 and 4% for the year-to-date
• Subscriber revenues decreased 1% in Q3 2018 and were flat for the year-to-date
• Merchandising, distribution and other revenues decreased 19% in Q3 2018 and were flat for the year-to-date
• Segment profit⁽¹⁾ decreased 6% in Q3 2018 and decreased 5% for the year-to-date
• Segment profit margin⁽¹⁾ of 40% in Q3 2018 and 38% for the year-to-date, compared to 41% and 39%, respectively, in the prior year comparable periods
• Non-cash goodwill impairment charge in Q3 2018 of $1,000.0 million

Radio

• Segment revenues decreased 2% in Q3 2018 and were flat for the year-to-date
• Segment profit⁽¹⁾ decreased 1% in Q3 2018 and increased 2% for the year-to-date
• Segment profit margin⁽¹⁾ of 30% in Q3 2018 and 28% for the year-to-date, compared to 30% and 27%, respectively, in the prior year comparable periods
• Non-cash broadcast license impairment charge in Q3 2018 of $13.7 million

Corporate

• Free cash flow⁽¹⁾ of $87.8 million in Q3 2018 and $253.0 million for the year-to-date, up from $82.5 million and $212.5 million, respectively, in the prior year
• Net debt to segment profit⁽¹⁾ leverage at 3.38 times
• Consolidated segment profit margin in Q3 2018 of 39% and 36% for the year-to-date, compared to 38% and 36%, respectively, in the prior comparable periods
• Revised Capital Allocation Policy positions Corus for the future

Corus Entertainment Inc. reports its financial results in Canadian dollars.

The unaudited consolidated financial statements and accompanying notes for the three and nine months ended May 31, 2018 and Management's Discussion and Analysis are available on the Company's website at www.corusent.com in the Investor Relations section.

A conference call with Corus senior management is scheduled for June 27, 2018 at 8:00 a.m. ET. While this call is directed at analysts and investors, members of the media are welcome to listen in. The dial-in number for the conference call for local and international callers is 1.647.427.7450 and for North America is 1.888.231.8191. More information can be found on the Corus Entertainment website at www.corusent.com in the Investor Relations section.

Use of Non-IFRS Financial Measures

This press release includes the non-IFRS financial measures of adjusted net income, adjusted basic earnings per share and free cash flow that are not in accordance with, nor an alternate to, generally accepted accounting principles ("IFRS") and may be different from non-IFRS measures used by other companies. In addition, these non-IFRS measures are not based on any comprehensive set of accounting rules or principles.

Non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. They are limited in value because they exclude charges that have a material effect on the Company's reported results and, therefore, should not be relied upon as the sole financial measures to evaluate the Company's financial results. The non-IFRS financial measures are meant to supplement, and to be viewed in conjunction with, IFRS financial results. A reconciliation of the Company's non-IFRS measures is included in the Company's most recent Report to Shareholders which is available on Corus' website at www.corusent.com as well as on SEDAR.

Caution Concerning Forward-Looking Information

This press release contains forward-looking information and should be read subject to the following cautionary language:

To the extent any statements made in this report contain information that is not historical, these statements are forward-looking statements and may be forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking information"). These forward-looking statements relate to, among other things, our objectives, goals, strategies, intentions, plans, estimates and outlook, including advertising, distribution, merchandise and subscription revenues, operating costs and tariffs, taxes and fees, and can generally be identified by the use of the words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances may be considered forward-looking information. Although Corus believes that the expectations reflected in such forward-looking information are reasonable, such information involves assumptions and risks and uncertainties and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied with respect to the forward-looking information, including without limitation, factors and assumptions regarding the general market conditions and general outlook for the industry, interest rates, stability of the advertising, distribution, merchandise and subscription markets, operating and capital costs and tariffs, taxes and fees, our ability to source desirable content and our capital and operating results being consistent with our expectations. Actual results may differ materially from those expressed or implied in such information. Important factors that could cause actual results to differ materially from these expectations include, among other things: our ability to attract and retain advertising revenues; audience acceptance of our television programs and cable networks; our ability to recoup production costs, the availability of tax credits and the existence of co-production treaties; our ability to compete in any of the industries in which we do business; the opportunities (or lack thereof) that may be presented to and pursued by us; conditions in the entertainment, information and communications industries and technological developments therein; changes in laws or regulations or the interpretation or application of those laws and regulations; our ability to integrate and realize anticipated benefits from our acquisitions and to effectively manage our growth; our ability to successfully defend ourselves against litigation matters arising out of the ordinary course of business; and changes in accounting standards. Additional information about these factors and about the material assumptions underlying any forward-looking information may be found under the heading "Risks and Uncertainties" in the Management's Discussion and Analysis for the year ended August 31, 2017 and the third quarter ended May 31, 2018 and under the heading "Risk Factors" in our Annual Information Form. Corus cautions that the foregoing list of important assumptions and factors that may affect future results is not exhaustive. When relying on our forward-looking information to make decisions with respect to Corus, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Unless otherwise specified, all forward-looking information in this document speaks as of the date of this document. Unless otherwise required by applicable securities laws, Corus disclaims any intention or obligation to publicly update or revise any forward-looking information whether as a result of new information, events or circumstances that arise after the date thereof or otherwise.

About Corus Entertainment Inc.
Corus Entertainment Inc. (TSX: CJR.B) is a leading media and content company that creates and delivers high quality brands and content across platforms for audiences around the world. The company's portfolio of multimedia offerings encompasses 44 specialty television services, 39 radio stations, 15 conventional television stations, a global content business, digital assets, live events, children's book publishing, animation software, technology and media services. Corus' roster of premium brands include Global Television, W Network, OWN: Oprah Winfrey Network Canada, HGTV Canada, Food Network Canada, HISTORY®, Showcase, National Geographic, Q107, CKNW, Fresh Radio, Disney Channel Canada, YTV and Nickelodeon Canada. Visit Corus at www.corusent.com.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

CONSOLIDATED STATEMENTS OF CASH FLOWS

BUSINESS SEGMENT INFORMATION

REVENUES BY TYPE

NON-IFRS FINANCIAL MEASURES                                       

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SOURCE Corus Entertainment Inc.