Today, Wildbrain announced the preliminary financial results for its Fiscal 2020 third quarter ended March 31, 2020, and provided a business update and actions taken in response to the coronavirus pandemic. “Early in the pandemic, we moved quickly and decisively to implement cost-containment measures as well as widespread work-from-home solutions, enabling our employees to remain connected and productive,” said Wildbrain CEO, Eric Ellenbogen. “These actions have allowed us to produce content at our studio at nearly 95% efficiency."
The company reported a revenue of USD 96 million to USD 100 million in Q3 2020, with a USD 205 to USD 215 million loss before income taxes, USD 110 million with a USD 19 million loss in Q3 2019, USD 331 million to USD 335 million with a USD 210 million to USD 220 million loss in YTD 2020, and a USD 331 million with a USD 30.7 million loss in YTD 2019. The adjusted EBITDA attributable to Wilbrain is USD 17 to USD 19 million in Q# 2020, USD 20.1 million in Q3 2019, USD 62 million to USD 64 million in YTD 2020, and USD 59.4 million in YTD 2019. The company also expects to report no near-term debt maturities. The company's long-term debt, nearing USD 507.0 million, matures at the end of 2023 or later. Wildbrain received USD 62.2 million in cash on hand and USD 32.6 million in committed undrawn revolving facility as of 31 March 2020. It will implement a non-cash goodwill impairment charge of USD185.0 million in Q3 2020. Wildbrain’s Canadian television channel business continues to deliver consistent cash flow with subscriber fees contributing approximately 90% of segment revenue. Family Channel has been receiving increasing viewership since April, with ratings up more than 17% across kids and family demos. The revenue flow from the company’s distribution business fluctuates quarter to quarter based on when deals are closed and the timing of content deliveries. It is currently seeing a drastic increase in demand for its “expansive” library. Production is ongoing on new WildBrain proprietary content, as well as content for partners such as LEGO, DreamWorks, Netflix, Mattel, and Apple TV+. "Third-quarter financial results reflect steady execution of our priorities to build our business for the long-run, although due to COVID-19 effects, advertising revenue declined further in our AVOD business in the latter part of the quarter," WildBrain CFO, Aaron Ames said. "The global advertising industry has taken a significant hit, and based on industry estimates, we anticipate these conditions will persist into our Fiscal 2021."
Wildbrain is seeing a strong audience growth, with views up by 34% and watch times up by 69% in the last 30 days versus the same period last year, averaging more than 3.5 billion views each month on its premium network. With a drawback in media advertising, along with YouTube data-collection policies implemented in January, WildBrain Spark has seen its revenue decline approximately 60% in April to date, compared with the same period a year ago. The company plans to capitalize on the growing trends of viewership and advertising moving online create a service offering of quality programming, analytics and custom content to support advertisers and their brands. "During this period of stay-at-home, our shows are experiencing unprecedented levels of viewership, providing hours of comfort, education and entertainment to our audiences," Ellenbogen said. "Producing high-quality kids' and family entertainment is the core of what we do at WildBrain, and we remain committed to and energized by this mission."
Due to the impact, the coronavirus outbreak has had on stock market valuations and global business conditions in general, and the changes made on Youtube’s advertising revenue to targeted advertising, the company doesn’t expect to record a non-cash charge. It insists that the impairment will not affect its cash flow, operations, or ability to meet obligations. These results are subject to change, following the completion of management's financial close process and approval from the Board of Directors. WIldbrain gathered USD2.0 million in quarterly operating expense savings to safeguard its financial position and preserve cash. The company also implemented a temporary 20% reduction in salaries for senior management across the global organization, who will receive new Restricted Share Units in lieu. It also temporarily reduced salaries at Wildbrain Spark and furloughed some of its employees as part of the UK government's funding support during the coronavirus crisis. The Board of Directors has agreed to receive Deferred Share Units in place of all cash fees. A suspension of new non-critical employee hiring, consulting agreements, travel, and non-critical spending will also be implemented. Wildbrain plans to evaluate and apply for government programs for which it may qualify. The Company will report its Q3 Fiscal 2020 results after the market close on Wednesday, 13 May, 2020, and hold a conference call at 9:30 a.m. ET, Thursday, 14 May 2020 to discuss the results. “We continue to strongly believe in the long-term prospects and opportunities for our kids' content and brands," Ellenbogen said. "Our strategy remains focused on growing our business by creating content that drives brand awareness and engages audiences on all the platforms where kids and families are watching, and by selling consumer products inspired by these shows and brands.”
Our strategy remains focused on growing our business by creating content that drives brand awareness and engages audiences on all the platforms where kids and families are watching, and by selling consumer products inspired by these shows and brands.” Eric Ellenbogen Wildbrain CEO