Eros STX Global Corporation (NYSE: ESGC) (“ErosSTX” or the
“Company”), a global entertainment company, today reported
preliminary headline financial results for the nine months ended
December 31, 2020, as well as updates on the STX film distribution
strategy and the Company’s global debt refinancing.
Preliminary Headline Financial Results for Nine Months Ended
December 31, 2020
The following summarizes preliminary financials from April 1,
2020 to December 31, 2020. These results comply with US GAAP
accounting standards, are harmonized to legacy STX accounting
principles, and are in accordance with SEC reporting guidelines for
an interim reporting period merger. Notably, with STX deemed the
Accounting Acquirer in the business combination, the ErosSTX
consolidated financials include legacy Eros's results starting July
31, 2020 when the merger closed and legacy STX for the entire
nine-month period. The financials for the comparable year-ago
period for the nine months ended December 31, 2019 reflect only
legacy STX results, also consistent with the SEC reporting
convention for the Accounting Acquirer. These preliminary results
have not yet been reviewed by the Company's recently confirmed
global audit firm, Ernst & Young (EY). Final EY reviewed fiscal
2021 interim results for the six months ended September 30, 2020
will be available by March 31, 2021.
- Operating Profit was $7 million and Adjusted Operating Profit,
excluding merger related costs, was $22 million compared to an
operating loss of $(99) million in the first nine months of fiscal
2020.
- Revenues were $219 million compared to $315 million in the
prior year period. This decline was driven by a significant
reduction in global film releases resulting from the negative
effects of COVID, partially offset by revenue growth from the STX
film library.
- Operating Expenses were $212 million and Adjusted Operating
Expenses, excluding merger related costs, were $197 million
compared to $414 million in the prior year period. This decline was
driven by significantly lower film release marketing and
distribution costs due to COVID.
- Net Cash provided by Operating Activities was $25 million and
Adjusted Net Cash provided by Operating Activities, excluding
merger related cash costs, was $40 million.
- Net debt as of December 31, 2020 was $284 million, with total
cash on hand of $62 million.
Recent STX Film Performance & Fiscal 2022 Film
Strategy
Since the start of the pandemic, the Company has modified its
film distribution strategy to capitalize on the increased demand
for premium film content in the home, utilizing a mix of Premium
Video on Demand (PVOD) and agreements with five different US
streaming platforms on the five most recent STX film releases. The
five film releases are: My Spy, Songbird, Greenland, Horizon Line
and The Mauritanian.
This strategy has resulted in profitability on all five of these
films, including Greenland, where the Company used a combination of
international theatrical, US PVOD, digital and physical home
entertainment and a US streaming deal with HBO to achieve an
estimated $25 million in ultimate cash profit and a 90% return on
invested capital. This bespoke film distribution strategy reduces
future performance risk, maximizes the return on invested capital
and further strategically aligns the Company with the largest
global media enterprises.
Global Debt Refinancing
The Company has engaged J.P. Morgan to lead a refinancing of its
global debt. The Company’s expectation is to refinance all current
debt, extend maturities and strengthen the balance sheet. The
Company expects to provide a debt refinancing update shortly.
Fiscal 2021 ending net debt is currently trending below the $325
million guided during on the Company's November 4, 2020 investor
call.
Eros STX Global Corporation:
Eros STX Global Corporation, (“ErosSTX”) (NYSE: ESGC) is a
global entertainment company that acquires, co-produces and
distributes films, digital content & music across multiple
formats such as theatrical, television and OTT digital media
streaming to consumers around the world. Eros International Plc
changed its name to Eros STX Global Corporation pursuant to the
July 2020 merger with STX Entertainment, merging two international
media and entertainment groups. The combination of one of the
largest Indian OTT players and premier studio with one of
Hollywood’s fastest-growing independent media companies has created
an entertainment powerhouse with a presence in over 150 countries.
ErosSTX delivers star-driven premium feature film and episodic
content across a multitude of platforms at the intersection of the
world's most dynamic and fastest-growing global markets, including
US, India, Middle East, Asia and China. The Company also owns the
rapidly growing OTT platform Eros Now which has rights to over
12,000 films across Hindi and regional languages and had 211.5
million registered users and 36.2 million paying subscribers as of
September 30, 2020. For further information, please visit
ErosSTX.com.
USE OF NON-GAAP FINANCIAL MEASURES
In addition to the results prepared in accordance with generally
accepted accounting principles (“GAAP”), the Company has presented
other financial measures that are not defined by GAAP. The Company
uses non-GAAP financial measures, among other measures, to evaluate
the operating performance of our business. These non-GAAP financial
measures are in addition to, not a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
These measures should not be considered in isolation and may not be
comparable to similarly titled measures employed by other
companies.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS:
Information provided in this communication includes
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, or the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended, and
such statements are subject to the safe harbors created thereby.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as “approximately,”
“anticipate,” “believe,” “estimate,” “continue,” “could,” “expect,”
“future,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “will” and similar expressions. Those
statements include, among other things, the discussions of the
Company’s business strategy and expectations concerning its and the
Company’s market position, future operations, margins,
profitability, liquidity and capital resources, tax assessment
orders and future capital expenditures. All such forward-looking
statements are subject to risks and uncertainties that may cause
actual results to differ materially from those that we are
expecting, including, without limitation: our ability to
successfully and cost-effectively source film content; the
Company’s ability to achieve the desired growth rate of Eros Now,
its digital over-the-top (“OTT”) entertainment service; our ability
to maintain or raise sufficient capital; delays, cost overruns,
cancellation or abandonment of the completion or release of the
Company’s films; our ability to predict the popularity of its
films, or changing consumer tastes; our ability to maintain
existing rights, and to acquire new rights, to film content; our
ability to successfully defend any future class action lawsuits we
are a party to in the U.S.; anonymous letters to regulators or
business associates or anonymous allegations on social media
regarding the Company’s business practices, accounting practices
and/or officers and directors; our ability to recoup the full
amount of box office revenues to which it is entitled due to
underreporting of box office receipts by theater operators; our
dependence on our relationships with theater operators and other
industry participants to exploit the Company’s film content; our
ability to mitigate risks relating to distribution and collection
in international markets; our ability to compete with other forms
of entertainment; our ability to combat piracy and to protect our
intellectual property; our ability to maintain an effective system
of internal control over financial reporting; contingent
liabilities that may materialize, our exposure to liabilities on
account of unfavorable judgments/decisions in relation to legal
proceedings involving the Company or its subsidiaries and certain
of its directors and officers; our ability to successfully respond
to technological changes; our ability to satisfy debt obligations,
fund working capital and pay dividends; the monetary and fiscal
policies of countries around the world, inflation, deflation,
unanticipated turbulence in interest rates, foreign exchange rates,
equity prices or other rates or prices; our ability to address the
risks associated with acquisition opportunities; risks that the
ongoing novel coronavirus pandemic and its spread, and related
public health measures, may have material adverse effects on our
business, financial position, results of operations and/or cash
flows; challenges, disruptions and costs of the Merger and related
transactions, integrating the Eros and STX businesses and achieving
anticipated synergies, and the risk that such synergies will take
longer to realize than expected or may not be realized in whole or
in part; the amount of any costs, fees, expenses, impairments and
charges related to the Merger and related transactions; uncertainty
as to the effects of the consummation of the Merger and related
transactions on the market price of our A Ordinary Shares and/or
the Company’s financial performance; and uncertainty as to the
long-term value of the Company’s ordinary shares.
The forward-looking statements contained in this communication
are based on historical performance and management’s current plans,
estimates and expectations in light of information currently
available and are subject to uncertainty and changes in
circumstances. There can be no assurance that future developments
affecting the Company will be those that it has anticipated. Actual
results may differ materially from these expectations due to
changes in global, regional or local political, economic, business,
competitive, market, regulatory and other factors, many of which
are beyond the Company’s control. Should one or more of these risks
or uncertainties materialize or should any of the Company’s
assumptions prove to be incorrect, the Company’s actual results may
vary in material respects from what the Company may have expressed
or implied by these forward-looking statements. The Company
cautions that you should not place undue reliance on any of its
forward-looking statements. Any forward-looking statement made by
the Company in this communication speaks only as of the date on
which the Company makes it. Factors or events that could cause the
Company’s actual results to differ may emerge from time to time,
and it is not possible for the Company to predict all of them. The
Company undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
applicable securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20210225005670/en/
Investor Contact: Drew Borst EVP, Investor Relations
& Business Development ErosSTX Global Corporation
drew@erosstx.com
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