Corus Entertainment Announces Fiscal 2019 Third Quarter Results

• Consolidated revenues increased 4% for the quarter and 3% year-to-date, driven by a 10% increase in Television advertising revenues for the quarter and 8% for the year-to-date
• Consolidated segment profit⁽¹⁾ was consistent with the quarter and up 3% year-to-date
• Consolidated segment profit margin⁽¹⁾ of 37% for the quarter and 36% year-to-date
• Net income attributable to shareholders of $66.4⁽²⁾ million ($0.31 per share basic) for the quarter and $133.1⁽²⁾ million ($0.63 per share basic) for the year-to-date
• Free cash flow⁽¹⁾ of $90.1 million for the quarter and $216.4 million for the year-to-date

TORONTO, June 26, 2019 /CNW/ - Corus Entertainment Inc. (TSX: CJR.B) announced its third quarter financial results today.

"Corus delivered a third consecutive quarter of consolidated revenue growth, driven primarily by a double-digit increase in Television advertising, partially offset by lower subscriber revenues and softness in our radio segment," said Doug Murphy, President and Chief Executive Officer. "Significant innovations such as the debut of STACKTV on Amazon Prime Video Channels and expansion of Corus' social and digital content offerings, combined with our robust new slate of owned content and a strong programming line-up demonstrate our commitment to optimize our core business and build for the future. Importantly, these strong Q3 results have enabled us to achieve our leverage target one quarter ahead of our goal, once again improving our financial flexibility."

Financial Highlights         

Consolidated Results from Operations

Consolidated revenues for the three months ended May 31, 2019 were $458.4 million, up 4% from $441.4 million    last year and consolidated segment profit was $170.5 million, consistent with $170.4 million last year. Net income attributable to shareholders for the quarter ended May 31, 2019 was $66.4 million ($0.31 per share basic), compared to a net loss attributable to shareholders of $935.9 million ($4.49 loss per share basic) last year. Net income attributable to shareholders for the third quarter of fiscal 2019 includes business acquisition, integration and restructuring costs of $2.3 million ($0.01 per share, net of income taxes), a gain on debt modification of $3.9 million ($0.01 per share, net of income taxes) and a loss on disposal of the Telelatino Network of $0.3 million ($nil per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $66.1 million ($0.31 per share basic) for the quarter. Net loss attributable to shareholders for the prior year quarter includes broadcast license and goodwill impairment charges of $1,013.7 million ($4.84 per share basic, net of income taxes), and 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) for the prior year quarter.

Consolidated revenues for the nine months ended May 31, 2019 were $1,310.0 million, up 3% from $1,268.3 million last year. Consolidated segment profit was $475.3 million, up 3% from $461.1 million last year. Net income attributable to shareholders for the nine months ended May 31, 2019 was $133.1 million ($0.63 per share basic), compared to a net loss attributable to shareholders of $818.2 million ($3.94 loss per share basic) last year. Net income attributable to shareholders for the nine months ended May 31, 2019 includes business acquisition, integration and restructuring costs of $19.5 million ($0.07 per share, net of income taxes), an impairment on an investment in associates of $8.7 million ($0.03 per share, net of income taxes), a gain on debt modification of $3.9 million ($0.01 per share, net of income taxes) and a loss on disposal of the Telelatino Network of $0.3 million ($nil per share, net of income taxes). Adjusting for the impact of these items results in an adjusted net income attributable to shareholders of $153.1 million ($0.72 per share basic, net of income taxes) for the current fiscal 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), and 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 prior year-to-date period.

Consolidated net income attributable to shareholders as well as basic and diluted earnings per share for the three and nine months ended May 31, 2019 was impacted by a change in accounting estimate related to the useful life of the Company's television brands. Commencing September 1, 2018, the useful life of television brands was changed from indefinite life to lives ranging from three to 20 years. For the three and nine months ended May 31, 2019, this has resulted in an additional $16.7 million and $86.5 million, respectively, in amortization expense in the depreciation and amortization line within the Consolidated Statement of Income and Comprehensive Income, and reduced net income attributable to shareholders, net of income taxes, by $12.3 million ($0.06 per share basic) and $63.6 million ($0.30 per share basic), respectively. Further discussion of this can be found in the Impact of New Accounting Policies and Changes in Estimates section of the Third Quarter 2019 Report to Shareholders

Operational Results - Highlights for Q3 2019 Television

• Segment revenues increased 5% in Q3 2019 and 4% year-to-date
• Advertising revenues increased 10% in Q3 2019 and 8% year-to-date
• Subscriber revenues were down 4% in Q3 2019 and 2% year-to-date
• Merchandising, distribution and other revenues were down $1.2 million in Q3 2019 and $3.2 million year-to-date
• Segment profit⁽¹⁾ increased 4% in Q3 2019 and 7% year-to-date
• Segment profit margin⁽¹⁾ of 40% in Q3 2019 and 39% year-to-date, compared to 40% and 38%, respectively, in the prior year

Radio

• Segment revenues decreased 4% in both Q3 2019 and the year-to-date
• Segment profit⁽¹⁾ decreased $1.7 million in Q3 2019 and $4.1 million year-to-date
• Segment profit margin⁽¹⁾ of 26% in Q3 2019 and 25% year-to-date, compared to 30% and 28%, respectively, in the prior year

Corporate

• Divestiture of 50.5% interest in the Telelatino Network for $12.5 million, net of divested cash and prepaid revenue related to ongoing service arrangements (gross proceeds of $19.0 million) in Q3 2019
• Free cash flow⁽¹⁾ of $90.1 million in Q3 2019 and $216.4 million year-to-date, compared to $87.8 million and $253.0 million, respectively, in the prior year
• Net debt to segment profit⁽¹⁾ leverage of 2.92 times at May 31, 2019, down from 3.28 times at August 31, 2018, in part due to debt repayments of $190.0 million for the year-to-date
• Consolidated segment profit margin(1) of 37% in Q3 2019 and 36% year-to-date, compared to 39% and 36%, respectively, in the prior year

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

The unaudited interim condensed consolidated financial statements and accompanying notes for the three and nine months ended May 31, 2019 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 26, 2019 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 net income attributable to shareholders, 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 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 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 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, 2018 and the third quarter ended May 31, 2019 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. The company's portfolio of multimedia offerings encompass 37 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, National Geographic, Disney Channel Canada, YTV and Nickelodeon Canada, Global News, Globalnews.ca, Q107, Country 105, and CFOX. Visit Corus at www.corusent.com.

SOURCE Corus Entertainment Inc.