- Revenue was $140.5 million in Q2
2023, compared to $153.2 million in
Q2 2022. YTD 2023 revenue of $267.1
million was consistent with YTD 2022 revenue of $265.8 million.
- Net loss was $13.0 million in Q2
2023, compared to net income of $4.6
million in Q2 2022. YTD 2023 net loss was $20.5 million, compared to YTD 2022 net loss of
$16.8 million.
- Adjusted EBITDA1 in Q2 2023 was $26.0 million, compared with $27.3 million in Q2 2022. YTD 2023 Adjusted
EBITDA was $45.9 million, compared to
YTD 2022 Adjusted EBITDA of $47.2
million.
- Cash provided by operating activities in Q2 2023 was
$63.1 million, compared to
$11.3 million provided by operating
activities in Q2 2022. Cash provided by operating activities YTD
2023 was $39.8 million, compared to
$0.1 million used YTD 2022.
- Free Cash Flow1 for Q2 2023 was positive
$26.4 million, compared with negative
Free Cash Flow of $0.8 million in Q2
2022. YTD 2023 Free Cash Flow was positive $17.5 million, compared to negative $20.7 million YTD 2022.
TORONTO, Feb. 7, 2023
/CNW/ - WildBrain Ltd. ("WildBrain" or the "Company") (TSX: WILD),
a global leader in kids' and family entertainment, today reported
its second-quarter ("Q2 2023") results for the period ended
December 31, 2022.
Eric Ellenbogen, WildBrain CEO,
said: "We continue to execute on our 360-degree strategy to engage
and entertain audiences across the globe with our leading kids' and
family brands, multi-platform content and consumer products. Our
newest series, Sonic Prime, co-produced with SEGA, is off to
a terrific start, having premiered on Netflix in December as the
top show in kids' content worldwide, spending three weeks in the
global top 10 on the platform across all demographics. Audiences
are loving Sonic Prime, and we look forward to delighting
fans further with many upcoming consumer products launches tied to
the brand this year.
"In post-quarter activity, the enduring power of the Peanuts
brand was highlighted in a new partnership that sees Snoopy team up
with MetLife Pet Insurance. MetLife and Peanuts previously had a
30-year partnership, and we're delighted now to reignite our
relationship with this valued partner. Additionally post-quarter,
our global licensing agency, WildBrain CPLG, was appointed master
licensee worldwide for PLAYMOBIL, a brand synonymous with
high-quality toys, to expand this globally popular kids' toy brand
into new consumer products categories. We're off to a solid start
in calendar 2023, with many more exciting partnerships, content
launches and brand activations in the pipeline."
Aaron Ames, WildBrain CFO, added:
"We remain on track to deliver continued growth in line with our
guidance in fiscal 2023. The Content Production and Distribution
revenue in the quarter was impacted by timing as certain production
revenue shifted from Q2 and we now expect to recognize that revenue
in the second half of our fiscal year. We've made investments
across content, creative and consumer products, which are beginning
to show results and will provide the foundation for future growth,
as we continue to drive our own brands and also work with quality
partners seeking access to our unique strengths across the entire
IP lifecycle. Gross Margin was up over 200 basis points as we
realized the synergies from the consolidation of Peanuts
representation rights under our global licensing agency, WildBrain
CPLG. Free Cash Flow and operating cash flow were particularly
strong in the quarter with increased collections, and we expect to
end the fiscal year with positive Free Cash Flow. We implemented
the cost initiatives discussed last quarter, and we will continue
to moderate our expenses while supporting growth initiatives."
Q2 2023 Performance – Executing on
Priorities
PRIORITIES
|
HIGHLIGHTS
|
Activate IP and Grow
Key
Brands
|
- Sonic Prime premiered on Netflix in December with a highly
positive
reception from audiences worldwide. The series spent three weeks in
the
Global Top 10 TV on the platform across all demographics, reaching
the Top
10 in 66 countries. WildBrain CPLG has a robust pipeline of Sonic
Prime
consumer products to expand on the brand's popularity.
- Post-quarter,
Peanuts Worldwide signed a U.S. partnership for Snoopy with
MetLife Pet Insurance, the leading pet health insurance provider in
the
workplace, to build a greater awareness of the importance of pet
insurance.
The partnership reignites the relationship between Peanuts and
MetLife, who
previously enjoyed a more than 30-year partnership through
2016.
- Continuing our
commitment to igniting beloved kids' IP, we partnered with
Ukrainian producer Glowberry to bring the popular Brave Bunnies
preschool
brand into our 360-degree franchise portfolio. As the majority
owner in the
Brave Bunnies IP, WildBrain will lead distribution of Brave Bunnies
content
and will co-produce season two of the series with Glowberry and
Spanish
animation studio, Anima. WildBrain CPLG will manage licensing
and
merchandising.
- Post-quarter,
WildBrain CPLG appointed as master licensee worldwide for
PLAYMOBIL, a global brand known for its high quality and
imaginative toys,
to expand the highly popular kids' brand into new consumer
products
categories, including merchandise, publishing, location-based
experiences and
promotions.
|
Deliver Sustainable
Growth
|
- Reaffirming our
expectations for Fiscal 2023 for revenue of approximately
$525 million to $575 million and adjusted EBITDA of approximately
$95
million to $105 million.
- We expect to see
acceleration in growth in the second half of Fiscal 2023 as we
close deals later in the year that we expected earlier in the
year.
|
Q2 2023 Financial Highlights
Financial
Highlights
(in millions of
Cdn$)
|
Three Months
ended
December
31,
|
2022
|
2021
|
Revenue
|
$140.5
|
$153.2
|
Gross
Margin1
|
$61.3
|
$63.6
|
Gross Margin
(%)1
|
44 %
|
42 %
|
Adjusted EBITDA
attributable to WildBrain1
|
$26.0
|
$27.3
|
Net Income (Loss)
attributable to WildBrain
|
$(13.0)
|
$4.6
|
Basic Earnings (Loss)
per Share
|
$(0.07)
|
$0.03
|
Cash Provided by (Used
In) Operating Activities
|
$63.1
|
$11.3
|
Free Cash
Flow1
|
$26.4
|
$(0.8)
|
In Q2 2023, revenue declined 8% to $140.5
million, compared to $153.2
million in Q2 2022. YTD 2022 revenue of $267.1 million was consistent with YTD 2022
revenue of $265.8.
Content Production and Distribution revenue declined 8% to
$56.1 million in Q2 2023, compared to
$61.3 million in Q2 2022. Content
Production and Distribution revenue in the quarter was impacted by
timing, particularly in the live action slate, and by certain
productions that shifted to 2H23. YTD 2022 revenue increased 10% or
$10.0 million to $108.8 million, compared to YTD 2022 revenue of
$98.8 million.
Consumer Products revenue declined 8% to $57.4 in Q2 2023, compared to $62.5 million in Q2 2022. YTD 2023 revenue was
$109.5 million compared to YTD 2022
revenue of $110.9 million. The
decrease in revenue was driven by foreign exchange headwinds in
Yen, Euro and GBP currencies which impacts the licensing royalties
from the Peanuts franchise, and lower royalty performance by top
global apparel and domestic partners as retailers focused on
reducing overstock inventory that had built up during Covid, both
in the current quarter and YTD.
Q2 2023 WildBrain Spark revenue decreased 11% to
$16.0 million, compared to
$18.0 million in Q2 2022, a
sequential improvement from Q1 2023, supported by strong direct ad
sales. Segment revenue remains impacted by softer advertising
revenue due to macroeconomic headwinds. YTD 2023 revenue was
$27.7 million compared to YTD 2022
revenue of $33.4 million. Kids
continued to be highly engaged on WildBrain Spark, particularly in
our owned brands, attracting over 46 billion views across seven
billion minutes of videos watched on our network in Q2 2023.
Gross Margin1 for Q2 2023 was 44% vs 42% in Q2 2022,
reflecting the synergies from our strategy of consolidating
representation rights under our global licensing agency, WildBrain
CPLG. YTD 2023 consolidated gross margin was $116.5 million, an increase of $1.4 million, compared to YTD 2022 gross margin
of $115.2 million.
Cash provided by operating activities in Q2 2023 was
$63.1 million, compared to
$11.3 million provided by operating
activities in Q2 2022. YTD 2023 cash provided by operating
activities was $39.8 million,
compared to $0.1 million used YTD
2022. Free Cash Flow1 was positive $26.4 million in Q2 2023, compared with negative
Free Cash Flow1 of $0.8
million in Q2 2022. YTD 2023 Free Cash Flow was positive
$17.5 million, compared to negative
$20.7 million in the prior year
period. Free Cash Flow1 for Q2 2023 and YTD 2023
reflected the increase in collections for trade receivables
associated with larger deals and timing of working capital
settlements.
Adjusted EBITDA1 was $26.0
million in Q2 2023, compared with $27.3 million in Q2 2022. YTD 2023 Adjusted
EBITDA was $45.9 million, compared to
$47.2 million in the prior year
period. This decrease in the quarter was primarily due to lower
gross margin1 dollars, and higher SG&A to support
growth initiatives. The decrease in the YTD period was driven by
higher SG&A which was offset by higher gross
margin1 dollars. Starting in the second quarter, we
implemented the cost saving initiatives and we will continue to
moderate our expenses while supporting growth initiatives.
Q2 2023 net loss was $13.0
million compared to net income of $4.6 million in Q2 2022. The decrease was
primarily driven by higher change in fair value of embedded
derivatives, higher SG&A, lower gross
margin1 dollars, offset by higher foreign exchange
gain. YTD 2023 net loss was $20.5
million, compared to net loss of $16.8 million, a decrease in net income of
$3.7 million. The decrease in the YTD
period was driven primarily by higher SG&A, higher net income
attributable to non-controlling interests, offset by higher gross
margin1 dollars.
1.
|
Free Cash Flow,
Gross Margin, Adjusted EBITDA and Adjusted EBITDA attributable to
WildBrain are non-GAAP financial measures - see below for further
details.
|
Q2 2023 Conference Call
The Company will hold a conference call on February 8, 2023 at 10:00
a.m. ET to discuss the results.
To listen, call +1 (800) 406-5356 toll-free or +1 (647) 794-4605
internationally and reference conference ID 2609147. Please allow
10 minutes to be connected to the conference call. Replay will be
available after the call on +1 (888) 390-0541 toll free or +1 (416)
764-8677, under passcode 2609147, until February 15, 2023.
The audio and transcript will also be archived on our website
approximately two days after the event.
For more information, please contact:
Investor Relations: Kathleen Persaud - VP, Investor
Relations, WildBrain
kathleen.persaud@wildbrain.com
+1 212-405-6089
Media: Shaun Smith - Sr.
Director, Global Communications & Public Relations,
WildBrain
shaun.smith@wildbrain.com
+1 416-977-7230
About WildBrain
At WildBrain we inspire imaginations to run wild, engaging kids
and families everywhere with great content and beloved brands. With
approximately 13,000 half-hours of filmed entertainment in our
library—one of the world's most extensive—we are home to such
treasured franchises as Peanuts, Teletubbies, Strawberry Shortcake,
Yo Gabba Gabba!, Caillou, Inspector
Gadget and Degrassi. Our integrated, in-house capabilities spanning
production, distribution and licensing set us apart as a unique
independent player in the industry, managing IP across its entire
lifecycle, from concept to content to consumer products.
At our state-of-the-art animation studio in Vancouver, we produce award-winning,
fan-favourite series, such as The Snoopy Show; Snoopy in
Space; Sonic Prime; Chip and Potato;
Strawberry Shortcake: Berry in the Big City; Carmen Sandiego; Go, Dog. Go! and
many more. Enjoyed in more than 150 countries and on over 500
streaming platforms and telecasters, our content is everywhere kids
and families view entertainment. WildBrain Spark, our AVOD network,
has garnered over 1 trillion minutes of watch time on YouTube,
offering one of the largest selections of kids' content on that
platform. Our leading consumer-products and location-based
entertainment agency, WildBrain CPLG, represents our owned and
partner properties in every major territory worldwide. Our
television group owns and operates some of Canada's most-viewed family entertainment
channels.
WildBrain is headquartered in Canada with offices worldwide and trades on
the Toronto Stock Exchange (TSX: WILD). Visit us at
wildbrain.com.
Forward-Looking Statements
This press release contains
"forward looking statements" under applicable securities laws with
respect to WildBrain including, without limitation, statements
regarding WildBrain's execution against its 360º strategy, content
and other commercial agreements and opportunities of WildBrain,
consumer products growth, monetization of WildBrain's assets,
investments, including those reflected in SG&A, and expected
benefits therefrom, WildBrain's production and deal pipeline and
projects in development, the business strategies and operational
activities of WildBrain, WildBrain's market positioning, the
markets and industries in which WildBrain operates, expense
management and the growth and future financial and operating
performance of WildBrain, including revenue, Adjusted EBITDA, and
Free Cash Flow for Fiscal 2023. Although WildBrain 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 WildBrain. Actual
results or events may differ materially from those expressed or
implied by such forward looking statements. These forward-looking
statements are made as of the date hereof, and WildBrain assumes no
obligation to update or revise them to reflect new events or
circumstances, except as required by law.
Forward-looking statements are based on factors and assumptions
that management believes are reasonable at the time they are made,
but a number of assumptions may prove to be incorrect, including,
but not limited to, assumptions about (i) WildBrain's future
operating results, (ii) the expected pace of expansion of
WildBrain's operations, (iii) future general economic and market
conditions, including debt and equity capital markets and the
availability of financing on acceptable terms, (iv) the impact of
increasing competition on WildBrain, (v) changes in laws and
regulations related to the industries and markets in which
WildBrain operates, (vi) consumers and consumer preferences, (vii)
the ability of WildBrain to execute on investment, acquisition and
other growth strategies and opportunities and realize the expected
benefits therefrom, (viii) the ability of WildBrain to identify and
execute production, distribution, licensing and other
revenue-generating arrangements, (ix) the availability of
investment, acquisition, and other growth opportunities at
acceptable valuations and the ability of WildBrain to execute on
and integrate such opportunities, * the timing for commencement and
completion of productions, (xi) the ability of WildBrain and its
partners to execute on its brand plans and consumer products
programs, (xii) changes in the markets and industries in which
WildBrain operates and the ability of WildBrain to adapt to such
changes, (xiii) changes to YouTube and in advertising markets,
(xiv) the ability of WildBrain to commercialize consumer products
related to its brands, (xv) changes in foreign exchange and
interest rates, and (xvi) the current geopolitical landscape
(including vis a vis the recent invasion of the Ukraine by Russia and associated political and economic
repercussions).
Forward-looking statements are inherently subject to risks and
uncertainties that may be general or specific and which give rise
to the possibility that expectations, forecasts, predictions,
projections or conclusions will not prove to be accurate, that
assumptions may not be correct and that objectives, strategic goals
and priorities will not be achieved. Known and unknown risk
factors, many of which are beyond the control of the Company, could
cause actual results to differ materially from the forward-looking
statements in this press release. Factors that could cause actual
results or events to differ materially from current expectations
include, among other things, general economic and market conditions
and the impact of such conditions on the industries in which
WildBrain operates, competition and the potential impact of
industry mergers and acquisitions, other market factors,
WildBrain's ability to identify and execute anticipated production,
distribution, licensing and other contracts, contractual
counterparty risk, the ability of WildBrain to realize the expected
value of its assets, supply chain and other related disruptions,
and other factors discussed in materials filed with applicable
securities regulatory authorities from time to time including
matters discussed under "Risk Factors" in WildBrain's most recent
Annual Information Form and Management Discussion and Analysis
filed with the securities regulatory authorities in Canada and available under the Company's
profile on SEDAR (www.sedar.com).
Non-IFRS Measures
In addition to the results reported
in accordance with IFRS as issued by the International Accounting
Standards Board, the Company uses various non-GAAP financial
measures, which are not recognized under IFRS, as supplemental
indicators of our operating performance and financial position.
These non-GAAP financial measures are provided to enhance the
user's understanding of our historical and current financial
performance and our prospects for the future. Management believes
that these measures provide useful information in that they exclude
amounts that are not indicative of our core operating results and
ongoing operations and provide a consistent basis for comparison
between periods. The following discussion explains the Company's
use of certain non-GAAP financial measures, which are Adjusted
EBITDA, Adjusted EBITDA attributable to the Shareholders of the
Company, and Gross Margin.
Investors are cautioned that these non-GAAP financial measures
should not be construed as an alternative measure to net income or
loss, or other measures as determined in accordance with GAAP, or
as an indicator of the Company's financial performance or a measure
of liquidity and cash flows.
"Adjusted EBITDA" means earnings (loss) before net finance
costs, income taxes, amortization of property & equipment and
right-of-use and intangible assets, amortization of acquired and
library content, equity-settled share-based compensation expense,
changes in fair value of embedded derivatives, gain/loss on foreign
exchange, reorganization, development and other expenses,
impairment of certain investments in film and television
programs/acquired and library content/P&E/intangible
assets/goodwill, and also includes adjustments for other identified
charges, as specified in the accompanying tables. Adjusted EBITDA
is not an earnings measure recognized by GAAP and does not have a
standardized meaning prescribed by GAAP; accordingly, Adjusted
EBITDA may not be comparable to similar measures presented by other
issuers. Management believes that certain lenders, investors and
analysts use Adjusted EBITDA to measure a company's ability to
service debt and meet other payment obligations, and as a common
valuation measurement in the media and entertainment industry.
Further, certain of our debt covenants use Adjusted EBITDA in the
calculation. The most comparable GAAP measure is earnings before
income taxes.
"Adjusted EBITDA attributable to the Shareholders of the
Company" means Adjusted EBITDA excluding the portion of Adjusted
EBITDA attributable to non-controlling interests.
"Gross Margin" means revenue less direct production costs
and expense of film and television produced. Gross Margin is not an
earnings measure recognized by GAAP and does not have a
standardized meaning prescribed by GAAP; accordingly, Gross Margin
may not be comparable to similar measures presented by other
issuers. Management believes Gross Margin is a useful measure of
profitability before considering operating and other expenses and
can be used to assess the Company's ability to generate positive
net earnings and cash flows. The most comparable GAAP measure is
gross profit.
"Free Cash Flow" means operating cash flow less distributions to
non-controlling interests, changes in interim production financing,
cash interest paid on our long-term debt, bank indebtedness, and
lease liabilities, and principal repayments on our lease
liabilities. Free Cash Flow does not have a standardized meaning
prescribed by GAAP; accordingly, Free Cash Flow may not be
comparable to similar measures presented by other issuers.
Management believes Free Cash Flow is a useful measure of the
Company's ability to repay debt, finance strategic business
acquisitions and investments, pay dividends, and repurchase shares.
The most comparable GAAP measure is cash from operating
activities.
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SOURCE WildBrain Ltd.