- Revenue increased 17% to $142.3
million in Q2 2021 vs $122.1
million in Q2 2020. H1 2021 revenue grew to $237.7 million vs $234.4
million in H1 2020.
- Net income of $11.3 million in Q2
2021 increased from a net loss of $2.3
million in Q2 2020. H1 2021 net income of $8.0 million increased from a net loss of
$18.3 million in H1 2020.
- Positive Free Cash Flow increased to $23.5 million in Q2 2021 vs $13.3 million in Q2 2020. H1 2021 positive Free
Cash Flow was consistent at $20.9
million vs H1 2020.
- Adjusted EBITDA in Q2 2021 grew 14% to $29.1 million vs $25.6
million in Q2 2020. H1 2021 adjusted EBITDA increased 3% to
$46.7 million vs $45.2 million in H1 2020. Q2 2021 and H1 2021
included other income from a litigation settlement of $4.4 million.
- WildBrain Spark's revenue was $15.5
million in Q2 2021, marking another quarter of sequential
improvement, up 74% from $8.9 million
in Q1 2021. This compared to $24.2
million in Q2 2020. H1 2021 revenue was $24.4 million vs $46.3
million in H1 2020.
- WildBrain Spark increased its audience engagement to 59.7
billion minutes of videos watched on its network in Q2 2021, up 15%
from Q2 2020. H1 2021 watch time grew 14% to 123.9 billion minutes
vs H1 2020.
HALIFAX, NS, Feb. 9, 2021 /PRNewswire/ - WildBrain Ltd.
("WildBrain" or the "Company") (TSX: WILD), a global leader in kids
and family entertainment, today reported its Fiscal 2021 second
quarter ("Q2 2021") and six-month ("H1 2021") results for the
periods ended December 31, 2020.
Eric Ellenbogen, WildBrain CEO,
said: "We recently announced yet another major deal that
capitalizes on our capabilities to manage, monetize and grow brands
across content and licensing. In partnership with SEGA, we're
producing a new original series for Netflix's global audience based
on the highly popular Sonic the Hedgehog gaming franchise.
WildBrain and SEGA will jointly participate in production,
distribution and licensing revenues generated from the new animated
series, titled Sonic Prime. Our new content is
expected to extend the fan base for the Sonic franchise and builds
on the success that our agency, WildBrain CPLG, is already having
with consumer products licensing for SEGA across continental
Europe. These multi-year, exclusive agreements with two of
the world's leading entertainment companies add another premium
project to our creative pipeline and gives us excellent visibility
into even more contracted, high-quality earning streams for years
to come."
Ellenbogen continued, "We're also realizing positive momentum
across every part of our business, evidenced by our Q2 financial
results, led by strength in our content and distribution
segment. We're further encouraged by quarter-over-quarter
sequential improvement at WildBrain Spark as advertising revenues
continued to rebound from the pressures of COVID-19 and YouTube
policy changes. WildBrain Spark is also successfully building
new revenue streams including direct ad sales, paid media and
digital production fees, with these nascent revenues growing by
365% in the current quarter. Overall, we're delivering
meaningful progress on our plans to provide 360-degree support to
grow our own and partners' brands by leveraging the strength
WildBrain has in development, production, distribution, licensing
and audience delivery."
Aaron Ames, WildBrain CFO, added:
"During Q2, we continued our disciplined approach to content
investments and the management of costs and working capital, as
reflected in our positive Free Cash Flow. We are also making
significant investments to support our growth in premium
production, licensing, and further building our development
pipeline. In Q2, we further accelerated build-out of our
proprietary data analysis and ad-sales teams at WildBrain Spark to
support growth in our own and partners' brands. Our leverage
ratio remained steady from Q1, and we remain on track to be in the
mid-4x level, or below, by the end of our Fiscal 2022."
Q2 2021 Performance - Executing on Priorities
PRIORITIES
|
HIGHLIGHTS
|
Monetizing our
Large Audience on WildBrain Spark
|
- WildBrain Spark
increased its audience engagement with 59.7 billion minutes of
videos watched on our ad-supported video-on-demand ("AVOD") network
in Q2 2021, up 15% from Q2 2020.
- WildBrain Spark
revenue was $15.5 million in Q2 2021 vs $8.9 million in Q1
2021, reflecting sequential growth, up 74% from the previous
quarter as we saw continued recovery in advertising rates. We
also continued to grow other AVOD revenue streams from direct ad
sales, paid media and digital production.
|
Grow Key
Brands
|
- Continued delivery
of The Snoopy Show to Apple TV+. Ongoing production on more
original Peanuts content for Apple TV+ including multiple family
specials and season 2 of Snoopy in Space.
- Continued delivery
of the brand-new series Go, Dog. Go!, a top-ten show now
streaming on Netflix.
- Acquired additional
rights, that we did not own previously, in the Caillou series from
PBS for US$6.4 million. This investment consolidated our rights
ownership, allowing us to extend this well-known brand to a broader
US audience and increase exploitation across various business
areas.
- Subsequent to
quarter-end, signed multi-year exclusive partnerships with SEGA and
Netflix to produce a new animated Netflix Original series based on
Sonic the Hedgehog in which we will participate across
multiple revenue streams.
|
Improve Cash Flow
and Balance Sheet
|
- Generated $23.5
million in positive Free Cash Flow in Q2 2021 vs $13.3 million in
Q2 2020.
- Paid down the
remaining $5.0 million on our revolving credit facility in Q2
2021.
- Total Net Leverage
Ratio2 remained steady at 5.78x from Q1 2021. This
compared to 5.40x at June 30, 2020. We remain on track to be in the
mid-4x level, or below, by the end of our Fiscal 2022.
|
Q2 2021 Financial Highlights
Financial
Highlights
(in millions of
Cdn$)
|
Three Months
ended
December 31,
|
Six Months
ended
December 31,
|
2020
|
2019
|
2020
|
2019
|
Revenue
|
$142.3
|
$122.1
|
$237.7
|
$234.4
|
Gross
Margin
|
$61.8
|
$54.5
|
$105.0
|
$103.9
|
Gross Margin
(%)
|
43%
|
45%
|
43%
|
44%
|
Adjusted EBITDA
attributable to WildBrain
|
$29.1
|
$25.6
|
$46.7
|
$45.2
|
Net Income (Loss)
attributable to WildBrain
|
$11.3
|
$(2.3)
|
$8.0
|
$(18.3)
|
Basic Earnings (Loss)
per Share
|
$0.07
|
$(0.02)
|
$0.05
|
$(0.13)
|
Free Cash
Flow
|
$23.5
|
$13.3
|
$20.9
|
$20.9
|
In Q2 2021, revenue grew 17% to $142.3
million compared with $122.1
million in the prior-year quarter, driven primarily by the
large deal for the Peanuts library. H1 2021 revenue increased
to $237.7 million vs
$234.4 million in H1 2020.
Content Production and Distribution revenue increased 101% to
$68.5 million in Q2 2021 vs
$34.1 million in Q2 2020.
Higher revenue was driven by a growing roster of premium projects
in production, including an expanding slate of new Peanuts content
as well as the licensing of the Peanuts library of classic specials
to Apple TV+. H1 2021 revenue rose 52% to $104.9 million vs $69.2
million in H1 2020.
WildBrain Spark saw continued recovery in advertising revenue
from the impact of COVID-19 and YouTube's policy changes on "Made
for Kids" content. Q2 2021 revenue improved
sequentially by 74% from $8.9 million
in Q1 2021, reflecting the build-out of our proprietary
data-analysis tools, which is driving growth in revenue streams,
including direct advertising sales on our own network, paid media
and digital production fees and some seasonality. These nascent
revenues grew by 365% in Q2 2021 vs Q2 2020. Owing to the
previously identified COVID-19 and "Made for Kids" factors, Q2 2021
revenue was down 36% to $15.5 million
in Q2 2021 vs $24.2 million in
Q2 2020. H1 2021 revenue on WildBrain Spark was $24.4 million vs $46.3
million in H1 2020.
We are confident that monetization of our highly engaged
audience on WildBrain Spark will continue to grow
meaningfully. Watch time was 59.7 billion minutes of videos
in Q2 2021, up 15% from 52.0 billion minutes in Q2 2020. Kids
on our platform spent six minutes and 16 seconds on average per
view, up 20% from Q2 2020. Viewership remained strong at 9.5
billion views in Q2 2021.
Consumer Products revenue was $46.4
million in Q2 2021 compared with $51.5 million in Q2 2020. For H1 2021, revenue
was $85.3 million vs $94.4 million in the same prior-year
period. The declines in both the current quarter and
year-to-date reflected the expiry of the MetLife contract for
Peanuts in December 2019. Excluding MetLife, revenue declined
3% in Q2 2021 and 2% in H1 2021 vs the prior-year periods,
reflecting the strength of our Consumer Products business despite
the impact of COVID-19 on the global retail sector.
Gross Margin was relatively steady at 43% in Q2 2021 vs 45% in
Q2 2020, reflecting a strong slate of premium projects in our
studio and the Peanuts library deal in the current quarter.
Gross Margin for H1 2021 was 43% vs 44% in the same prior-year
period.
Positive Free Cash Flow for Q2 2021 increased to $23.5 million compared to positive Free Cash Flow
of $13.3 million in Q2 2020.
The increase was partly driven by improvements in collection of
production financing, other income earned in Q2 2021 and lower
distributions to non-controlling interests in the current
quarter. In H1 2021, we generated positive Free Cash Flow of
$20.9 million, consistent with
$20.9 million in H1 2020.
Adjusted EBITDA increased 14% to $29.1
million in Q2 2021 compared with $25.6 million in Q2 2020, principally driven by
the Peanuts library licensing deal, continued strength in our
Content Production and Distribution business and other income of
$4.4 million from a litigation
settlement. Funds from this settlement were used to
materially accelerate investments across growth areas, principally
in our proprietary data-analysis tools, direct ad sales and our
licensing capabilities. In H1 2021, adjusted EBITDA increased
3% to $46.7 million vs
$45.2 million in H1 2020.
Q2 2021 net income increased to $11.3
million vs a net loss of $2.3
million in the same prior-year quarter. H1 2021 saw
net income of $8.0 million vs a
net loss of $18.3 million in the same
six-month period in Fiscal 2020. These increases were
primarily attributable to higher gross margin, a higher non-cash
foreign exchange gain and other income together with lower expenses
related to reorganization, development and finance costs in Q2 2021
vs Q2 2020.
1.
|
Free Cash Flow,
Gross Margin, Adjusted EBITDA and Adjusted EBITDA attributable to
WildBrain are non-GAAP financial measures. Free Cash Flow is
defined as 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. Gross Margin means revenue less direct production
costs and expense of film and television programs produced (per the
financial statements). Adjusted EBITDA represents income of the
Company before amortization, finance income (expense), taxes,
reorganization and development expenses, impairments,
equity-settled share-based compensation expense, and adjustments
for other identified charges. Adjusted EBITDA attributable to
WildBrain means Adjusted EBITDA excluding the portion of Adjusted
EBITDA attributable to non-controlling interests. Further details
on the definitions of and reconciliation to Free Cash Flow, Gross
Margin, Adjusted EBITDA and Adjusted EBITDA attributable to
WildBrain can be found in the "Non-GAAP Financial Measures" section
of the Company's Q2 2021 MD&A.
|
|
|
2.
|
Net debt includes
long-term debt 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 www.sedar.com.
|
Q2 2021 Conference Call
The Company will hold a conference call on February 10, 2021 at 10:00
a.m. ET to discuss the results.
To listen, call +1 (888) 231-8191 toll-free or +1 (647) 427-7450
internationally and reference conference ID 6197294. 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 or
+1 (416) 849-0833, under passcode 6197294, until February 17, 2021.
The audio and transcript will also be archived on our website
approximately two days after the event.
For more information, please contact:
Investor Relations: Nancy Chan-Palmateer - Director,
Investor Relations, WildBrain
nancy.chanpalmateer@wildbrain.com
+1 416-977-7358
Media: Shaun Smith - Director,
Corporate & Trade Communications, 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 across all media. 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. At our 75,000-square-foot state-of-the-art animation
studio in Vancouver, BC, we
produce such fan-favourite series as The Snoopy Show, Snoopy in
Space, Chip & Potato, Carmen
Sandiego, Go, Dog. Go! and more. Our shows are enjoyed
worldwide in more than 150 countries on over 500 streaming
platforms and telecasters, and our AVOD business – WildBrain Spark
– offers one of the largest networks of kids' channels on YouTube,
garnering billions of views per month from over 150 million
subscribers. We also license consumer products and location-based
entertainment in every major territory for our own properties as
well as 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). Please visit us at
www.wildbrain.com.
Forward-Looking Statements
This press release contains "forward-looking statements" under
applicable securities laws with respect to the Company including,
without limitation, statements regarding the production,
distribution and licensing of a new animated series based on
Sonic the Hedgehog, productions in development, advertising
rates and revenue of WildBrain Spark, investments and acquisitions
by the Company and expected benefits from such investments and
acquisitions, future growth and financial and operating performance
of WildBrain Spark, impacts of YouTube's changes to targeted
advertising, the markets and industries in which the Company and
its subsidiaries operate, impacts of COVID-19 on the Company, its
business, and the markets and industries in which it operates, the
future financial and operating results of the Company (including
leverage), changes and expected developments in the markets and
industries in which the Company operates, and the business
strategies and operational activities of the Company and its growth
and long-term prospects. 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 the availability of
investment and acquisition opportunities and at acceptable
valuations, the ability of the Company to execute and integrate
such acquisitions and investments, epidemics, pandemics or other
public health crises, including the current COVID-19 pandemic, the
magnitude and length of economic disruption as a result of the
worldwide COVID-19 pandemic, 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 AVOD, entertainment and brands
industries, the ability of the Company to execute on production and
licensing arrangements, 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.
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SOURCE WildBrain Ltd.