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KEW MEDIA GROUP Reports Third Quarter 2019 Financial Results

November 15, 2019

TORONTO--(BUSINESS WIRE)--Nov 14, 2019--

KEW MEDIA GROUP INC. (“KEW MEDIA”, “KEW” or the “Company”) (TSX:KEW and KEW.WT) today released its financial results for the three and nine months ended September 30, 2019 (“Q3 2019”). KEW MEDIA’s interim condensed financial statements along with its Management’s Discussion and Analysis for Q3 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.

Q3 2019 Highlights

(in millions of Canadian dollars,
except per share data)

 

Three months ended

 

Six months ended

 

 

September 30,
2019

September 30,
2018

% Change

 

September 30,
2019

September 30,
2018

% Change

Revenue

 

 

 

 

 

 

 

 

Production

 

$27.5

 

$36.0

 

23.6

%

 

$107.1

 

$97.9

 

9.4

%

Distribution

 

$20.0

 

$16.8

 

19.0

%

 

$61.5

 

$44.5

 

38.2

%

Total

 

$47.5

 

$52.8

 

(10.0)

%

 

$168.6

 

$142.4

 

18.4

%

Gross Profit

 

 

 

 

 

 

 

 

Production

 

$7.6

 

$10.7

 

(29.0)

%

 

$28.2

 

$25.1

 

12.4

%

Distribution

 

$5.7

 

$7.6

 

(25.0)

%

 

$20.3

 

$19.3

 

5.2

%

Total

 

$13.2

 

$18.2

 

(27.5)

%

 

$48.5

 

$44.4

 

9.2

%

Gross Profit Margin - Production

 

27.6

%

29.7

%

 

 

26.3

%

25.6

%

 

Gross Profit Margin - Distribution

 

28.5

%

45.2

%

 

 

33.0

%

43.4

%

 

Gross Profit Margin Total

 

27.8

%

34.5

%

 

 

28.8

%

31.2

%

 

Adjusted EBITDA after NCI

 

$0.1

 

$6.4

 

N.M.

$7.7

 

$11.5

 

N.M.

Net loss for the period

 

$(6.4)

 

$(2.3

)

N.M.

$(14.1

)

$(7.4

)

N.M.

Adjusted net income (loss) after tax

 

$(2.5)

 

$5.1

 

N.M.

$2.6

 

$8.2

 

N.M.

Basic and diluted loss per share

 

 

$(0.45

)

 

$(0.18

)

N.M.

 

 

$(1.11

)

 

$(0.68

)

N.M.

Adjusted earnings (loss) per share

 

 

$(0.18)

 

 

$0.40

 

N.M.

 

 

$0.19

 

 

$0.68

 

N.M.

Steven Silver, Chief Executive Officer of KEW MEDIA, commented, “We experienced strong momentum coming out of the MIPCOM sales market in Cannes, France and through the first few weeks of Q4. While the loss of a key buyer due to a channel re-brand and delivery timing shifts have impacted our Q3 results and will negatively impact our full year production group performance, we don’t believe this is indicative of our ongoing growth trend. We expect to realize the revenue associated with the delivery timing shifts in 2020. Our diverse portfolio of companies is healthy and showing impressive trading in the market.”

Peter Sussman, Executive Chairman of KEW MEDIA, commented, “There’s never been a better time to be in our business. KEW remains firmly positioned to take advantage of unprecedented growth in content spend. We have a global, diverse platform which continues to attract traditional and new buyers. Following a very busy production season and robust sales trading at the MIPCOM market, KEW remains nimble and focused on feeding buyers’ evolving needs as we enhance our position as one of the world’s most significant independent content companies.”

Financial Highlights for the Three Months Ended September 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 our revenues and profits are achieved.

Q3 2019’s revenue of $47.5 million was comprised of $27.5 million from Production and $20.0 million from Distribution. Gross Profit of $13.2 million included $7.6 million from Production and $5.7 million from Distribution. Gross Profit Margin was 27.8%, with segmented Gross Profit Margin of 27.6% for Production and 28.5% for Distribution. Adjusted EBITDA was $0.1 million, the Net loss was $(6.4) million, the loss attributable to the equity holders of the parent was $(0.45) per share and Adjusted Net loss after tax was $(2.5) million, or $(0.18) per share.

KEW generates organic growth by exploiting the significant benefits of the Company’s integrated platform, including combining production and distribution. This platform enables KEW to deliver a diverse range of high margin product to the market quickly and efficiently.

Segment Information

Production

During the third quarter, Revenues were $27.5 million, a decrease from the same period in 2018 of $8.5 million. Gross Profit was $7.6 million, a decrease of $3.1 million, and the Gross Margin percentage was 27.6% (2018: 29.7%). G&A increased by $0.7 million to $7.1 million. Adjusted EBITDA decreased by $4.1 million to $0.4 million.

The fall in profitability in our production segment in the third quarter is predominantly due to the performance of Essential, a wholly-owned subsidiary of KEW. As a result of Discovery re-branding the DIY channel as the Magnolia Network , Essential lost some key series including Texas Flip ’N Move. Essential and the rest of the KEW group anticipated replacing the loss in gross margin with new show orders from anticipated greenlights this year. However, the timing for the delivery of these shows has now shifted into 2020.

Titles produced in the third quarter include: Essential’s Ghost Loop for the Travel Channel in the U.S. and Off the Grid on the Beach for HGTV in the U.S., Jigsaw’s Death Row Stories S4 for CNN in the U.S. and Dirty Money S2 for Netflix, Architect’s Home to Win S4 and Fire Masters for Corus in Canada, and Our House Media’s Forbidden Love and Killer Affairs for Oxygen in the U.S. and Silent Witness for Discovery in the U.S.

Distribution

Our Distribution unit is performing strongly. During the third quarter, Revenues were $20.0 million, an increase of 19.0%, Gross Profit was $5.7 million, a decrease of $1.9 million, and the Gross Margin percentage was 28.5% (2018: 45.2%). G&A increased by $0.2 million to $4.3 million. Adjusted EBITDA decreased by $2.1 million to $1.5 million. While Revenues increased, Gross Profit margins decreased compared to Q3 last year, which had a product mix with comparatively higher margin titles. Additionally, some expected revenue and margin moved from Q3 to Q4. Titles distributed across the segment in Q3 include: Decades of Movies, 2019 Emmy ® Awards, In Plain Sight (Frantic Films), Cleared for Chaos (BGM), Underground Worlds, World’s Greatest Palaces, and World War Weird S3 .

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 low revenue items sometimes attracting 100% Gross Profit Margins and other high revenue items having Gross Profit Margins as low as 5%. Gross Profit for Q3 2019 was $13.2 million compared to $18.2 million last year, an overall decrease of $5.0 million. The decline was primarily due to the weakness in Essential.

G&A increased in the quarter to $13.9 million compared to $12.5 million last year.

Recent Highlights

There were a number of recent positive developments in our business including:

Balance Sheet, Debt and Net Debt

As of September 30, 2019, the Company had cash and cash equivalents of $21.7 million, and Net Debt 7 of $117.1 million.

Adjusted Net Debt 8 as of September 30, 2019 was $104.9 million. This figure takes into account foreign exchange movements since the beginning of the year and amounts expended by KEW’s treasury on interim production financing.

The Adjusted Net Debt of $104.9 million to Pro forma 2018 Adjusted EBITDA of $31.9 million is 3.3:1.

Just prior to the end of Q2 2019, the Company increased availability in its senior secured revolver facility by USD $10 million to accommodate seasonally high working capital funding requirements. The Company utilized those funds throughout the quarter and maintained cash balances in the business units, which explains the increase in debt.

The Company expects its debt to decrease and liquidity to increase over Q4 and into Q1 next year due to: (i) strong trading in Q4, (ii) the introduction of an interim distribution product acquisition fund, (iii) the introduction of centralized treasury operations, and (iv) a cost cutting and restructuring program across under-performing business units including Essential.

Subsequent to the end of Q3, our long-term loan facility was amended (“the Amendment”) such that the leverage ratio covenant was deleted in its entirety. Additionally, the loan facility was restructured to increase the term loan component of the facility by USD $22.5 million and the amortization on the term loan was increased from USD $0.5 million each quarter to USD $1.5 million, to reflect the expected decrease in our senior debt. Additionally, interest rates were increased by 0.5% to December 31, 2019 and 0.25% to June 30, 2020, whereupon they will return to previous rates of effectively U.S. LIBOR +3.5%. The Amendment means that the Company no longer has covenants related to its profitability other than the fixed charges ratio, which is comfortably in compliance.

Under accounting standards, the above means that the loan is disclosed temporarily as short-term and reverts to long-term at the date of the Amendment and, therefore, is long-term at the date of this release.

The Company has the ability to extend the accordion to its loan facility by a further USD $15 million, but does not currently intend to do so given the expectation of debt reduction.

Free Cash Flow (FCF)

FCF before movements in working capital and before movements in film and television rights was $(3.1) million compared to $4.3 million last year. FCF after movements in working capital but before investments in film and television rights was $2.7 million compared to $(2.4) million last year. After movements in both working capital and investments in film and television rights, FCF was $(11.1) million compared to $(16.0) million last year.

At the segment level, Production FCF before movements in working capital and investments in film and television rights was $0.03 million. FCF after movements in working capital but before movements in investments in film and television rights was $8.4 million. After movements in both working capital and investments in film and television rights, FCF was $(3.8) million.

Distribution FCF before movements in working capital and movements in investments in film and television rights was $1.0 million. FCF after movements in working capital but before movements in investments in film and television rights was $(1.6) million. After movements in both working capital and investments in film and television rights, FCF was $(3.2) million.

Outlook9

The fundamental drivers of KEW’s business have not changed. While there has been under-performance at Essential and some timing issues in Production, Distribution continues to outperform. The underlying platform continues to grow with Production and Distribution becoming more integrated. Nonetheless, Essential was expected to be our largest production company profit contributor and its weakness will negatively affect our Adjusted EBITDA in FY19. As a result, the Company is revising its Adjusted EBITDA guidance for FY19 to be between $18 and $24 million on a pre-IFRS 16 basis (or between $22 and $28 million on a post-IFRS 16 basis) to reflect the under-performance of Essential and the shift in the timing of delivery of certain shows into 2020.

Conference Call

KEW MEDIA will host a conference call to discuss the third quarter 2019 financial results on November 15, 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 November 15, 2019, through November 22, 2019, by dialing 844-512-2921 (USA and Canada) or 412-317-6671 (International). The replay passcode will be 13694838.

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, our expectation that we will realize the revenue associated with the delivery timing shifts in 2020, that our debt will decrease and liquidity will increase over Q4 and into Q1 next year (and as a result we won’t need to extend the accordion feature in our loan facility), and the statements set out in the Outlook section of this press release regarding our expectations for Adjusted EBITDA for FY19 and financial performance for FY20 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 (including that the deliveries we expect to be shifted to 2020 are actually delivered in 2020); (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) ongoing organic growth of the underlying business will meet our expectations.Our expectation that our debt will decrease and liquidity will increase over Q4 and into Q1 next year assumes (i) strong trading in Q4, (ii) the introduction of an interim distribution product acquisition fund, (iii) the introduction of centralized treasury operations, and (iv) a reduction in costs as a result of a cost cutting and restructuring program across under-performing business units including Essential. 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 revised 2019 Adjusted EBITDA 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:

Please see the Company’s management’s discussion and analysis for the three and nine months ended September 30, 2019 for a detailed description of these measures and a reconciliation of these measures to the nearest IFRS measure.

 

1 Gross Profit is revenue less cost of sales.

2 The increase in general and administrative costs in the quarter is attributable to increased corporate overheads necessary to support the business. For the nine month period ended September 30, 2019, the increase over the same period in prior year, also includes the impact of the Essential Media Acquisition.

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, amortization of right-of-use asset, interest expense on lease obligations, 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 Net Debt is debt less any cash and cash equivalent balances.

8 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.

9 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.

Selected Comparative Information
Below is selected information from the consolidated statements of loss for the three and nine months ended September 30, 2019 and the three and nine months ended September 30, 2018.

 

Three months
ended
September 30,
2019

Three months
ended
September 30,
2018

Nine months
ended
September 30,
2019

Nine months
ended
September 30,
2018

Revenue

 

 

 

 

Production and distribution revenue

47,516

 

52,817

 

168,604

 

142,368

 

Cost of sales

34,284

 

34,575

 

120,080

 

97,921

 

Gross profit (1)

13,232

 

18,242

 

48,524

 

44,447

 

Expenses

 

 

 

 

General and administrative expenses

13,900

 

12,499

 

41,564

 

34,628

 

Amortization of other intangible assets

2,157

 

3,506

 

6,472

 

7,843

 

Amortization of right-of-use asset

1,336

 

 

4,062

 

 

Transaction costs

 

443

 

 

3,203

 

Deferred compensation (recovery) expense

(1,152

)

3,057

 

825

 

4,760

 

Share-based compensation

947

 

655

 

2,325

 

1,253

 

Interest expense, net of interest income

2,901

 

1,779

 

7,656

 

4,292

 

Depreciation

455

 

240

 

1,333

 

639

 

Gain (loss) on change in fair value of financial liabilities

(733

)

49

 

(904

)

(3,101

)

Gain on disposition of a business

 

(964

)

 

(964

)

Foreign exchange gain on financial liabilities

(64

)

(43

)

(135

)

(192

)

Total expenses

19,747

 

21,221

 

63,198

 

52,361

 

Loss before income tax recovery

(6,515

)

(2,979

)

(14,674

)

(7,914

)

Income tax recovery

127

 

705

 

558

 

472

 

Net loss for the period

(6,388

)

(2,274

)

(14,116

)

(7,442

)

 

 

 

 

 

Net (loss) income attributable to:

 

 

 

 

Equity holders of the parent

(6,248

)

(2,258

)

(15,288

)

(8,287

)

Non-controlling interest

(140

)

(16

)

1,172

 

845

 

Net loss for the period

(6,388

)

(2,274

)

(14,116

)

(7,442

)

 

 

 

 

 

Loss per share attributable to equity holders of the parent:

 

 

 

 

Basic and diluted loss per share

(0.45

)

(0.18

)

(1.11

)

(0.68

)

 

 

 

 

 

Weighted average number of Common Shares outstanding
– basic and diluted

13,835,904

 

12,866,878

 

13,798,686

 

12,174,319

 

 

 

 

 

 

 

Three months
ended
September 30,
2019

Three months
ended
September 30,
2018

Nine months
ended
September 30,
2019

Nine months
ended
September 30,
2018

 

 

 

 

 

Calculation of Adjusted net income (loss) (1) and Adjusted EBITDA: (1)

 

 

 

 

Loss before income tax recovery

(6,515

)

(2,979

)

(8,159

)

(4,935

)

Amortization of other intangible assets

2,157

 

3,506

 

4,315

 

4,337

 

Amortization of right-of-use asset (3)

1,336

 

 

 

2,760

 

Transaction costs

 

443

 

1,977

 

1,703

 

Deferred compensation (recovery) expense

(1,152

)

3,057

 

1,378

 

598

 

Share-based compensation

947

 

655

 

(171

)

(3,150

)

(Gain) loss on change in fair value of financial liabilities

(733

)

49

 

(71

)

(149

)

Gain on disposition of a business

 

(964

)

 

315

 

Foreign exchange on financial liabilities

(64

)

(43

)

1,935

 

1,878

 

Interest expense on lease obligations (3)

443

 

 

1,204

 

3,357

 

Corporate reorganization costs (2)

 

 

878

 

399

 

Exceptional costs (2)

924

 

686

 

2,726

 

 

Adjusted net income for the period

(2,657

)

4,410

 

3,974

 

2,513

 

Depreciation

455

 

240

 

781

 

 

Interest expense, net of interest income, on long-term borrowings

2,458

 

1,779

 

9,563

 

6,269

 

Adjusted EBITDA before NCI

256

 

6,429

 

(1,948

)

(1,143

)

Non-controlling interest

(146

)

(12

)

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 nine month period ended September 30, 2018. The amounts reflected in the three and nine months ended September 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 nine months ended September 30, 2019 were $1,254 and $3,651 respectively and having factored in the impact of NCI were 1,036 and 2,995 respectively.

Revenue, Cost of Sales, Gross Profit and Segmental Analysis

 

Three months
ended September 30,
2019

 

Three months
ended September 30,
2018

Nine months
ended September 30,
2019

Nine months
ended September
30, 2018

Revenue

 

 

 

 

Production and distribution revenue

47,516

52,817

168,604

142,368

Cost of sales

34,284

34,575

120,080

97,921

Gross profit (1)

13,232

18,242

48,524

44,447

The Company’s business activities are conducted through two segments: Production and Distribution

 

Three months ended September 30, 2019

Nine months ended September 30, 2019

 

Production

 

Distribution

Corporate

 

Consolidated

 

Production

 

Distribution

Corporate

 

Consolidated

 

Revenues

27,537

 

19,979

 

47,516

 

107,104

 

61,500

 

168,604

 

Cost of sales

19,978

 

14,306

 

34,284

 

78,867

 

41,213

 

120,080

 

Gross profit (1)

7,559

 

5,673

 

13,232

 

28,237

 

20,287

 

48,524

 

General and administrative expenses

7,085

 

4,287

2,528

 

13,900

 

20,578

 

13,596

7,390

 

41,564

 

Segment profit (loss)

474

 

1,386

(2,528

)

(668

)

7,659

 

6,691

(7,390

)

6,960

 

Exceptionals and corporate reorganization costs

67

 

147

710

 

924

 

157

 

306

2,396

 

2,859

 

NCI

(146

)

 

(146

)

(2,094

)

 

(2,094

)

Adjusted EBITDA (1)

395

 

1,533

(1,818

)

110

 

5,722

 

6,997

(4,994

)

7,725

 

 

Three months ended September 30, 2018

Nine months ended September 30, 2018

Production

 

Distribution

Corporate

 

Consolidated

 

Production

 

Distribution

Corporate

 

Consolidated

Revenues

36,001

 

16,816

 

52,817

 

97,880

 

44,488

 

142,368

 

Cost of sales

25,332

 

9,243

 

34,575

 

72,771

 

25,150

 

97,921

 

Gross profit (1)

10,669

 

7,573

 

18,242

 

25,109

 

19,338

 

44,447

 

General and administrative expenses

6,390

 

4,048

2,061

 

12,499

 

16,528

 

11,786

6,314

 

34,628

 

Segment profit (loss)

4,279

 

3,525

(2,061

)

5,743

 

8,581

 

7,552

(6,314

)

9,819

 

Exceptionals and corporate reorganization costs

226

 

83

377

 

686

 

541

 

241

2,097

 

2,879

 

NCI

(12

)

 

(12

)

(1,155

)

 

(1,155

)

Adjusted EBITDA (1)

4,493

 

3,608

(1,684

)

6,417

 

7,967

 

7,793

(4,217

)

11,543

 

(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 September
30, 2019

Three months
ended September
30, 2018

Nine months
ended September
30, 2019

Nine months
ended September
30, 2018

 

 

 

 

 

Adjusted EBITDA after NCI

110

 

6,417

 

7,725

 

11,543

 

Additions to property and equipment

(294

)

(378

)

(1,534

)

(901

)

Interest expense

(2,901

)

(1,779

)

(7,656

)

(4,292

)

Cash taxes

 

 

 

 

FCF before movements in working capital and before movements in film and television rights

(3,085

)

4,260

 

(1,465

)

6,350

 

Net change in non cash working capital balance related to operations

5,818

 

(6,704

)

8,124

 

(15,455

)

FCF after movements in working capital and before movements in film and television rights

2,733

 

(2,444

)

6,659

 

(9,105

)

Net additions to film and television rights

(13,812

)

(13,585

)

(18,798

)

(17,818

)

FCF

(11,079

)

(16,029

)

(12,139

)

(26,923

)

SegmentalFCF

 

Three months ended September 30, 2019

 

Nine months ended September 30, 2019

 

Production

Distribution

Corporate

Consolidated

 

Production

Distribution

Corporate

Consolidated

Adjusted EBITDA after NCI

395

 

1,533

 

(1,818

)

110

 

 

5,722

 

6,997

 

(4,994

)

7,725

 

Additions to property and equipment

(39

)

(255

)

 

(294

)

 

(1,193

)

(319

)

(22

)

(1,534

)

Interest expense

(329

)

(290

)

(2,282

)

(2,901

)

 

(808

)

(677

)

(6,171

)

(7,656

)

Cash taxes

 

 

 

 

 

 

 

 

 

FCF before movements in working capital and before movements in film and television rights

27

 

988

 

(4,100

)

(3,085

)

 

3,721

 

6,001

 

(11,187

)

(1,465

)

Net change in non cash working capital balance related to operations

8,410

 

(2,587

)

(5

)

5,818

 

 

7,989

 

(2,664

)

2,799

 

8,124

 

FCF after movements in working capital and before movements in film and television rights

8,437

 

(1,599

)

(4,105

)

2,733

 

 

11,710

 

3,337

 

(8,388

)

6,659

 

Net additions to film and television rights

(12,237

)

(1,575

)

 

(13,812

)

 

(15,825

)

(2,973

)

 

(18,798

)

FCF

(3,800

)

(3,174

)

(4,105

)

(11,079

)

 

(4,115

)

364

 

(8,388

)

(12,139

)

Earnings per share (EPS) and Adjusted EPS

 

Three months
ended
September 30,
2019

Three months
ended
September 30,
2018

Nine months
ended
September 30,
2019

Nine months
ended
September 30,
2018

 

 

 

 

 

Adjusted EBITDA after NCI

110

 

6,417

 

7,725

 

11,543

 

Depreciation

(455

)

(240

)

(1,333

)

(639

)

Interest expense on long term borrowings

(2,458

)

(1,779

)

(6,432

)

(4,292

)

Income tax recovery

127

 

705

 

558

 

472

 

Non-controlling interest from EBITDA

146

 

12

 

2,094

 

1,155

 

Adjusted net (loss) income after tax

(2,530

)

5,115

 

2,612

 

8,239

 

Adjusted EPS- basic and diluted

(0.18

)

0.40

 

0.19

 

0.68

 

Exceptional costs

(924

)

(686

)

(2,859

)

(2,564

)

Corporate restructuring costs

(315

)

Transaction costs

(443

)

(3,203

)

Share-based compensation

(947

)

(655

)

(2,325

)

(1,253

)

Deferred compensation recovery (expense)

1,152

 

(3,057

)

(825

)

(4,760

)

Amortization of right-of-use asset

(1,336

)

(4,062

)

Amortization of other intangible assets

(2,157

)

(3,506

)

(6,472

)

(7,843

)

Interest expense on lease obligations

(443

)

(1,224

)

Gain (loss) on change in fair value of financial liabilities

733

 

(49

)

904

 

3,101

 

Gain on disposition of a business

964

 

964

 

Foreign exchange gain on financial liabilities

64

 

43

 

135

 

192

 

Net loss for the period

(6,388

)

(2,274

)

(14,116

)

(7,442

)

EPS - basic and diluted

(0.45

)

(0.18

)

(1.11

)

(0.68

)

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191114005953/en/

CONTACT: Investor Relations:

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Chief Executive Officer

647-957-2194

investors@kewmedia.com

KEYWORD: NORTH AMERICA CANADA

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SOURCE: KEW MEDIA GROUP INC.

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PUB: 11/14/2019 09:53 PM/DISC: 11/14/2019 09:53 PM

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