DHX Media Ltd. (or the “Company”) (TSX: DHX;NASDAQ: DHXM) reported its third-quarter (“Q3 2k19”) and nine-month (“YTD 2k19”) results for Fiscal 2k19, ended March 31, 2k19.
- Cash flow from operations increased to $15.8 million for YTD 2k19 vs $5.1 00million YTD 2k18.
- Distribution revenue (excluding WildBrain) grew sequentially by 51. 00percent to $20.7 00million in Q3 2k19, over Q2 2k19; and was $26.600 million in Q3 2k18.
- WildBrain views grew by 15. 00percent to more than 8.7 billion in Q3 2k19 vs a year ago. WildBrain revenue grew 4percent to $14.900 million vs $14.400 million in Q3 2k18.
- Consumer Products-owned revenue grew 10. 00percent to $37.500 million in Q3 2k19 vs $34.1 million a year ago, driven by Peanuts.
- Revenue was $110. 000 million for Q3 2k19 vs $116.500 million in Q3 2k18.
- Adjusted EBITDA was $20.100 million in Q3 2k19 vs $26.7 00million in Q3 2k18. Q3 2k19 adjusted EBITDA was impacted by $5.000 million due to the sale in Q1 2k19 of a minority stake in Peanuts to Sony1.
- Net income before income taxes and the write-down was $15.1 million in Q3 2k19 vs a net loss of $4.9 million a year ago.
- Net loss for Q3 2k19 was $18.400 million, or ($0.1400) per share, vs a net loss of $8. 000 million, or ($0.06) 00 per share in Q3 2k18. Net loss was impacted by a $34.200 million write-down in Q3 2k19 related to investment in the film, licensed television programs, acquired content, and intangible assets.
Q3 2k19 Performance – Executing on Strategic Priorities
Q3 2k19 revenue was $110.0 00million compared with $116.500 million in the prior-year quarter. YTD 2k19 revenue was $331. 000 million vs $337. 000 million in the first nine months of 2k18.
In Q3 2k19, distribution revenue (excluding WildBrain) was $20.700 million vs. $26.600 million in Q3 2k18, reflecting a sequential improvement of 51. 00percent from the last quarter as we realized on a stronger pipeline in Q3.
WildBrain continued to grow its audience, with views rising 15percent to over 8.7 billion in Q3 2k19. Revenue grew 4.vpercent to $14.900 million in Q3 2k19. The moderation in revenue growth highlights that monetization continues to lag behind the expansion in views as the market on YouTube continues to evolve. Initiatives to realize further value from WildBrain’s large user base was reflected in a 90. 00percent growth in revenue derived from paid media and production services in Q3 2k19, compared with a year ago.
Gross Margin was 43. 00percent for Q3 2k19, largely in line with the margin of 44. 00percent in the same prior-year period, and slightly better than the first half of Fiscal 2k19.
Adjusted EBITDA was $20.100 million in Q3 2k19 and $59.4 million YTD 2k19, compared with $26.7 million in Q3 2k18 and $81.500 million YTD 2k18. The decline was partly due to an increase in the non-controlling interest in Peanuts, primarily related to the Sony transaction, which reduced Adjusted EBITDA by $5.000 million in Q3 2k19 and $13.500 million YTD 2k191.
Q3 2k19 saw a net loss of $18.400 million vs a net loss of $8.000 million in the same quarter last year. The first nine months of Fiscal 2k19 recorded a net loss of $38.700 million compared with a net income of $7.600 million YTD 2k18. The higher net losses in the current periods were primarily due to a $34.200 million combined write-down in Q3 2k19 related to investment in the film, licensed television programs, acquired content, and intangible assets.
The Company’s debt leverage ratio was 6.09x at Q3 2k193. Subsequent to quarter-end, we announced an agreement to sell a building in Toronto owned by the Company, for $12.000 million. The sale is expected to close in June 2k19, subject to customary closing conditions, with net proceeds to be used to further pay down debt.