Corus Entertainment Announces Fiscal 2020 Second Quarter Results

• Consolidated revenues declined 2% for the quarter and 1% year-to-date
• Consolidated segment profit⁽¹⁾⁽²⁾ increased 2% for the quarter and decreased 2% year-to-date
• Consolidated segment profit margin⁽¹⁾ of 31% for the quarter and 36% year-to-date
• Net income attributable to shareholders of $18.5 million ($0.09 per share basic) for the quarter and $96.6 million ($0.46 per share basic) year-to-date
• Net debt to segment profit⁽¹⁾⁽³⁾ of 3.00 times at February 29, 2020 improved from 3.08 times at November 30, 2019
• Free cash flow⁽¹⁾⁽²⁾ of $65.1 million for the quarter and $118.1 million year-to-date

TORONTO, April 1, 2020 /PRNewswire/ - Corus Entertainment Inc. (TSX: CJR.B) announced its second quarter financial results today.

"Our determined focus on executing on our strategic priorities resulted in solid second quarter consolidated revenues and segment profit," said Doug Murphy, President and Chief Executive Officer. "At this unprecedented time across the world, we are focused on the health and well-being of our employees, who continue to diligently serve the needs of our audiences, clients and partners.  We deeply understand that one of our foremost responsibilities as an essential national and local broadcaster is to provide reliable and timely information, news and entertainment for the public, particularly in times like these.

"The entire Corus family has been working tirelessly on business continuity measures that not only enable us to continue delivering programming across our networks, but ensure we are positioned to return to normal operations, when the situation warrants it.  Strong operating and financial discipline are engrained in our culture, enabling our team to navigate adeptly through challenges.  We are benefitting from the work we have done to create sufficient liquidity and improve our financial flexibility, and our long-term strategy remains unchanged."

Financial Highlights

Consolidated Results from Operations

Consolidated revenues for the three months ended February 29, 2020 were $376.0 million, down 2% from $384.1 million last year, and consolidated segment profit was $115.9 million, an increase of 2% from $113.1 million last year. Net income attributable to shareholders for the quarter ended February 29, 2020 was $18.5 million ($0.09 per share basic), as compared to $6.3 million ($0.03 per share basic) last year. Net income attributable to shareholders for the second quarter of fiscal 2020 includes integration, restructuring and other costs of $10.0 million ($0.03 per share, net of income taxes). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $25.9 million ($0.12 per share basic) for the quarter. Net income attributable to shareholders for the prior year quarter includes integration, restructuring and other costs of $4.0 million ($0.01 per share, net of income taxes) and an impairment of an investment in associates of $8.7 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 $15.7 million ($0.07 per share basic) for the prior year quarter.

Consolidated revenues for the six months ended February 29, 2020 were $843.9 million, a decline of 1% from $851.6 million last year, and consolidated segment profit was $300.0 million, a decrease of 2% from $304.8 million last year. Net income attributable to shareholders for the six months ended February 29, 2020 was $96.6 million ($0.46 per share basic), as compared to a net income attributable to shareholders of $66.8 million ($0.31 per share basic) last year. Net income attributable to shareholders for the six months ended February 29, 2020 includes integration, restructuring and other costs of $12.6 million ($0.04 per share). Adjusting for the impact of this item results in an adjusted net income attributable to shareholders of $105.9 million ($0.50 per share basic) for the current fiscal year. Net income attributable to shareholders for the six months ended February 28, 2019 includes integration, restructuring and other costs of $17.2 million ($0.06 per share, net of income taxes) and an impairment of an investment in associates of $8.7 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 $85.8 million ($0.40 per share basic) for the prior fiscal year.

Operational Results - Highlights for Q2 2020 

Television

• Segment revenues decreased 2% in Q2 2020 and were flat year-to-date. On a proforma basis, when adjusted for the disposal of the Telelatino Network in March 2019, segment revenues were flat for the quarter and up 1% year-to-date
• Advertising revenues decreased 6% in Q2 2020 and 2% year-to-date. On a proforma basis, advertising revenues were down 5% in Q2 2020 and 1% year-to-date
• Subscriber revenues were down 2% in both Q2 2020 and year-to-date. On a proforma basis, subscriber revenues were up 1% in Q2 and flat year-to-date
• Merchandising, distribution and other revenues increased $8.3 million (50%) in Q2 2020 and $10.9 million (32%) year-to-date
• Segment profit⁽¹⁾ was up 2% in Q2 2020 and down 1% year-to-date
• Segment profit margin⁽¹⁾ of 33% in Q2 2020 and 38% year-to-date, compared to 32% and 38%, respectively, in the prior year

Radio

• Segment revenues decreased $2.5 million (8%) in Q2 2020 and $5.8 million (8%) year-to-date
• Segment profit⁽¹⁾ decreased $0.4 million (8%) in Q2 2020 and $1.4 million (8%) year-to-date
• Segment profit margin⁽¹⁾ of 16% in Q2 2020 and 25% year-to-date was comparable with the prior year

Corporate

• Free cash flow⁽¹⁾ of $65.1 million in Q2 2020 and $118.1 million year-to-date, compared to $83.9 million and $126.3 million, respectively, in the prior year
• Net debt to segment profit⁽¹⁾ was 3.00 times at February 29, 2020, up from 2.82 times at August 31, 2019, due to the implementation of IFRS 16 - Leases that added $153.6 million to the net debt calculation as at February 29, 2020, offset by bank loan repayments of $38.3 million in Q2 2020 and $87.0 million for the year-to-date, as well as segment profit growth
• As at February 29, 2020 2.48 million shares have been repurchased under the Normal Course Issuer Bid since its implementation on November 13, 2019
• Consolidated segment profit margin⁽¹⁾ of 31% in Q2 2020 and 36% year-to-date, compared to 29% and 36%, respectively, in the prior year

COVID – 19 Update

The Company is closely monitoring the evolution of the novel coronavirus-19 ("COVID-19") situation. The priority has been keeping the Company's employees safe and healthy.  Active steps have been taken to implement physical distancing and other measures as recommended by public health agencies, decreasing the number of people in the Company's offices and broadcast centres. Where possible, the Company's employees are working from home.  Appropriate business continuity measures are being taken to ensure uninterrupted service of the Company's television, digital and radio operations, which are considered essential services across Canada. The Company has gone through extraordinary lengths to continue to serve its customers and audiences, ensuring that Canadians can connect with high-quality news and entertainment at a time when it is needed the most.

It is too soon to gauge the impacts of the current COVID-19 outbreak, given the many unknowns related to it. These include the duration and severity of the outbreak.  COVID-19 is altering business and consumer activity in affected areas and beyond which may materially impact the Company.  The Company's financial priorities remain unchanged.  Importantly the Company remains committed to increasing its financial flexibility over the longer term.  In this environment, however, the Company believes it is prudent to conserve cash out of an abundance of caution.  As such, the Company expects to refrain from buying back shares under its share buyback program in the immediate term.  Consistent with this approach, the Board of Directors has elected to defer its decision on the declaration of the June dividend at this time.  The outside date for a decision on the declaration of the June dividend is June 9, 2020, by which point the Company expects to have more clarity on the nature and length of the impact of the COVID-19 pandemic.  For greater clarity, the Company is not reducing, eliminating or temporarily suspending the dividend at this time.

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

The unaudited interim condensed consolidated financial statements and accompanying notes for the three and six months ended February 29, 2020 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 April 1, 2020 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 attributable to shareholders, adjusted basic earnings per share, free cash flow and net debt to segment profit 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 at www.sedar.com.

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 forwardlooking 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 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; failure to meet covenants under our senior credit facility; epidemics, pandemics or other public health crises, including the current outbreak of novel coronavirus ("COVID-19") 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, 2019 and the second quarter ended February 29, 2020 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 develops and delivers high quality brands and content across platforms for audiences around the world. Engaging audiences since 1999, the company's portfolio of multimedia offerings encompass 34 specialty television services, 39 radio stations, 15 conventional television stations, a suite of digital assets, animation software, technology and media services. Corus is an established creator of globally distributed content through Nelvana animation studio, Corus Studios, and children's book publishing house Kids Can Press. The company also owns innovative full-service social digital agency so.da, and lifestyle entertainment company Kin Canada. Corus' roster of premium brands includes Global Television, W Network, HGTV Canada, Food Network Canada, HISTORY®, Showcase, Adult Swim, National Geographic, Disney Channel Canada, YTV, Global News, Globalnews.ca, Q107, Country 105, and CFOX. Visit Corus at www.corusent.com.

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