DHX Media reported its fourth quarter (Q4 2019) and year-end results (Fiscal 2019) for the period ended 30 June, 2019. The company also announced that it will change its name to WildBrain and has begun rolling out a new corporate brand identity. Additionally, the company commenced a management and business re-organisation to advance its strategic priorities, and has appointed Eric Ellenbogen as the new chief financial officer.
Ellenbogen said, “In Fiscal 2019, we advanced our priorities of creating premium content, growing our AVOD business, improving our cash flow and strengthening our balance sheet. In Q4 2019, revenue rose 12 per cent to $108.8 million and adjusted EBITDA was up 26 per cent to $20.2 million.
“Rebranding as WildBrain embraces our commitment to creativity, imagination and innovation, and our 360 degree approach to brand management. For many years, our WildBrain group has been at the leading edge of the digital media business. As that landscape continues to rapidly evolve, now is time to unify all the parts of our company under both the name and entrepreneurial culture that WildBrain represents.”
Financial highlights for Q4 and Fiscal 2019 (all currency figures are CAD)
- Q4 2019 revenue rose 12 per cent to $108.8 million vs $97.4 million in Q4 2018; full year revenue grew to $439.8 million vs $434.4 million in Fiscal 2018.
- WildBrain revenue rose 25 per cent to $17.9 million vs Q4 2018 and was up 20 per cent year-over-year to $69.0 million.
- Distribution revenue (excluding WildBrain) grew 46 per cent to $16.6 million vs Q4 2018 and was down 10 per cent year-over-year to $59.8 million.
- Consumer products-owned revenue grew 22 per cent to $38.6 million vs Q4 2018, and rose 11 per cent year-over-year to $160.3 million, driven by Peanuts.
- Adjusted EBITDA grew to $20.2 million in Q4 2019 vs $16.0 million in Q4 2018; adjusted EBITDA for Fiscal 2019 was $79.6 million vs $97.5 million in the prior year. Fiscal 2019 adjusted EBITDA was reduced by $17.5 million due to the sale of a minority stake in Peanuts to Sony1.
- Cash flow from operations increased to $44.5 million for Fiscal 2019 vs $13.4 million in Fiscal 2018.
- Net loss for Q4 2019 was $62.8 million, or ($0.47) per share, vs a net loss of $21.6 million, or ($0.16) per share in Q4 2018. Net loss for Fiscal 2019 was $101.5 million, or ($0.75) vs a net loss of $14.1 million, or ($0.10) per share, a year ago. Net loss for the full year was mainly impacted by a $104.9 million write-down in 2H 2019 and a higher portion of net income to non-controlling interests of $23.3 million.
- $223.8 million was paid down on the term loan and $16.4 million on the revolving credit facility during Fiscal 2019.
Company-wide re-branding as WildBrain
- The company’s comprehensive rebrand to WildBrain includes a new logo and website. A new tagline for the company – ‘Imagination runs wild’ – speaks to becoming the best home for talent and a place where creativity comes first. The YouTube business, formerly known as WildBrain, has been renamed WildBrain Spark.
- The company will be exhibiting at the upcoming major trade conferences, Brand Licensing Europe and MIPCOM, under the new Company brand WildBrain.
- Shareholders of the company will be asked to approve a special resolution to change the corporate name to WildBrain at the upcoming 2019 Annual Meeting of Shareholders, which is expected to be scheduled for December 2019. Following approval, the Company also expects to change its ticker on the Toronto Stock Exchange (TSX) and NASDAQ to WILD. Until that time, the company will continue to report under the DHX Media name and to trade on both stock exchanges under its present symbols, DHX on the TSX and DHXM on the NASDAQ.
As part of its strategic re-positioning, subsequent to year-end the company’s new CEO initiated a reorganisation of its management team to simplify the organisational structure and reduce costs. These initiatives began in Q1 2020 and are expected to be completed by the end of Fiscal 2020. As a result, the Company expects to incur one-time cash reorganization charges in the range of $10.0 – $12.0 million that are expected to generate annual savings of approximately $10.0 million. A portion of these savings will be redeployed to invest in growth areas of the business including our AVOD business and brands.
Ellenbogen continued, “Aaron has a lengthy history with the company and has made significant contributions as COO. I’m confident that with his deep knowledge of our operations and a background in business improvement, integration and synergies, Aaron will be a strong leader of our finance function. We thank Doug for his considerable contributions to the company.”
As part of this reorganization, COO Aaron Ames, has been appointed CFO effective immediately, succeeding Doug Lamb, who has decided to step down. To ensure a smooth transition, Lamb will remain with the company in an advisory role until 31 October, 2019. The COO position will not be replaced.
