Pre-emptive measures taken to safeguard our business for the long-term
Notice of Q3 2020 earnings call
Halifax, NS – April 29, 2020 – WildBrain Ltd. (“WildBrain” or the “Company”) (TSX: WILD), a global leader in kids and family entertainment, announced today preliminary financial results for its Fiscal 2020 third quarter ended March 31, 2020 and provided a business update and actions taken in response to the coronavirus pandemic.
Eric Ellenbogen, WildBrain CEO, said: “As we navigate the global coronavirus crisis, we’re focused on the well-being of our team, serving our customers and delivering for our audiences, while taking actions to safeguard our business for the long-term. Early in the pandemic, we moved quickly and decisively to implement cost-containment measures as well as widespread work-from-home solutions, enabling our employees to remain connected and productive. These actions have allowed us to produce content at our studio at nearly 95% efficiency.”
Ellenbogen continued, “During this period of stay-at-home, our shows are experiencing unprecedented levels of viewership, providing hours of comfort, education and entertainment to our audiences. We are pleased to be an integral part of so many families’ solution to managing through this difficult time. Producing high-quality kids’ and family entertainment is the core of what we do at WildBrain, and we remain committed to and energized by this mission.”
Aaron Ames, WildBrain CFO, added: “Third-quarter financial results reflect steady execution of our priorities to build our business for the long-run, although due to COVID-19 effects, advertising revenue declined further in our AVOD business in the latter part of the quarter. The global advertising industry has taken a significant hit, and based on industry estimates, we anticipate these conditions will persist into our Fiscal 2021. However, we do not expect this to have a material effect on our Canadian TV channel business, which derives approximately 90% of revenue from subscribers. We have taken early mitigating actions to preserve cash, reduce overhead and lower our operating expenses. Such measures, combined with initiatives taken in recent quarters to pay down debt and improve our financial position, will help safeguard our business. We monitor the situation regularly to assess if additional actions are warranted, while continuing to invest across initiatives that drive the long-term value and growth of our business.”
Preliminary Financial Results for Q3 2020 and YTD 2020
WildBrain announces the following preliminary financial results for its Fiscal 2020 third quarter (Q3 2020) and nine-months (YTD 2020) ended March 31, 2020:
The Company also expects to report:
These results are preliminary, and are subject to change, following completion of management’s financial close process and approval by the Board of Directors.
We are taking appropriate measures and have implemented business-continuity plans to enable us to keep our people safe while managing our global operations. These have included temporarily closing all of our offices and facilities and implementing work-from-home measures for all our employees across our global organization. Fortunately, we are able to conduct much of our business remotely.
Premium Content Production Continues
Content Distribution Across All Media Platforms
Consumer Products Driven by Peanuts Franchise
We continue to regularly assess the COVID-19 situation and evaluate the potential impacts on our business. We continue to strongly believe in the long-term prospects and opportunities for our kids’ content and brands. Our strategy remains focused on growing our business by creating content that drives brand awareness and engages audiences on all the platforms where kids and families are watching, and by selling consumer products inspired by these shows and brands.
Business Protection Measures
We have initiated a further $2.0 million in quarterly operating expense savings to safeguard our financial position and preserve cash, including:
1. Loss before income taxes in Q3 2020 was primarily impacted by an unrealized foreign exchange revaluation loss of an estimated $26.0 million, largely due to the Company’s term loan denominated in US dollars, and also by the goodwill impairment.
2. Adjusted EBITDA is a non-GAAP financial measure and does not have a standardized meaning prescribed by GAAP. Adjusted EBITDA represents income of the Company before amortization, finance income (expense), taxes, development expenses, impairments, 3. equity-settled share-based compensation expense, and adjustments for other identified charges. Adjusted EBITDA reflects only the portion attributable to WildBrain (excluding non-controlling interests). For more details, see the “Non-GAAP Financial Measures” section of the Company’s Q2 2020 Management Discussion and Analysis. See Table 1 below for a Reconciliation of preliminary results to Adjusted EBITDA.
3. Net debt includes long-term debt, lease liabilities and bank indebtedness less cash, and excludes interim production financing. Net leverage ratio as discussed in this press release is a reference to the Total Net Leverage Ratio as defined in the Company’s senior secured credit agreement available on SEDAR at sedar.com. The adoption of IFRS 16 in Q1 2020 added $34.2 million in new lease liabilities, which will not have any impact on the calculation of the Total Net Leverage Ratio as per the terms of the senior secured credit agreement.
4. The non-cash goodwill impairment charge of $185.0 million excludes goodwill held in the Company’s Peanuts and Television cash generating units (CGUs).
Table 1: Reconciliation of preliminary results to Adjusted EBITDA
5. Amounts for Q3 2020 and YTD 2020 in the table are preliminary and represent the mid-point of our disclosed range.
Q3 2020 Conference Call
The Company will report its Q3 Fiscal 2020 results after market close on Wednesday, May 13, 2020 and hold a conference call at 9:30 a.m. ET, Thursday, May 14, 2020 to discuss the results.
To listen, call +1 (888) 231-8191 toll-free or +1 (647) 427-7450 internationally and reference conference ID 9975808. Please allow 10 minutes to be connected to the conference call. Replay will be available after the call on +1 (855) 859-2056 toll free, under passcode 9975808, until 11:59 p.m. ET, May 22, 2020.
The audio and transcript will also be archived on the Company’s website approximately two days after the event.
For more information, please contact:
Investor Relations: Nancy Chan-Palmateer – Director, Investor Relations, WildBrain
Media: Shaun Smith – Director, Corporate & Trade Communications, WildBrain
At WildBrain we make great content for kids and families. With approximately 13,000 half-hours of filmed entertainment in our library – one of the world’s most extensive – we are home to such brands as Peanuts, Teletubbies, Strawberry Shortcake, Caillou, Inspector Gadget, Johnny Test and Degrassi. Our shows are seen in more than 150 countries on over 500 telecasters and streaming platforms. Our AVOD business – WildBrain Spark – offers one of the largest networks of kids’ channels on YouTube, with over 168 million subscribers. We also license consumer products and location-based entertainment in every major territory for our own properties as well for our clients and content partners. Our television group owns and operates four family entertainment channels that are among the most viewed in Canada. WildBrain is headquartered in Canada with offices worldwide and trades on the Toronto Stock Exchange (TSX: WILD). Visit us at www.wildbrain.com.
This press release contains “forward-looking statements” under applicable securities laws with respect to the Company including, without limitation, statements regarding impacts of the COVID-19 situation on the Company, its business and future financial and operating results, actions being taken by the Company in response to the COVID-19 situation and expected impacts from such actions, the Company’s preliminary financial results for its Fiscal 2020 third quarter, the Company’s cash position and availability under its revolving facility, the Company’s net leverage ratio, a goodwill impairment charge to be reflected in the Company’s results for its Fiscal 2020 third quarter, production deliveries and pipeline, business protection measures being implemented by the Company and expected operating expense savings from such measures, market trends, the business strategies and operational activities of the Company and its long-term prospects, and the timing for release of the Company’s Q3 2020 financial 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 epidemics, pandemics or other public health crises, including the current outbreak of COVID-19, the magnitude and length of economic disruption as a result of the worldwide COVID-19 outbreak, the reliance of the Company on the Internet and other technologies to continue to conduct its business, failure to meet covenants under the senior credit facility of the Company, the ability of the Company to execute on its business strategies, the ability of the Company to realize expected operating cost savings, consumer preferences, market factors, conditions in the entertainment and brands industries, the ability of the Company to execute on production and licensing arrangements, the ability of the Company to complete its financial close process in a timely manner, employee and employee retention risks, and 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. 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.