Corus Entertainment Inc (CJREF) Q4 2024 Earnings Call Highlights: Navigating Revenue Declines …

• Consolidated Revenue: Just under $1.3 billion for fiscal 2024, a decrease of 16% from the prior year.

• Cost Reductions: 21% reduction in direct cost of sales, 7% reduction in employee costs, and 15% reduction in other general and administrative costs for the year.

• Consolidated Segment Profit: $283 million for the year.

• Free Cash Flow: $114 million for fiscal 2024, a 7% increase over the prior year.

• Net Debt to Segment Profit: 3.84 times as of August 31, 2024, up from 3.6 times at the end of 2023.

• TV Segment Revenue: $1.177 billion for the year, down 16% from last year.

• TV Advertising Revenue Decline: 15% for the year.

• Subscriber Revenue Decline: 6% for the year.

• Radio Segment Revenue: $94 million for the year, a decrease of 9% from the prior year.

• Radio Segment Profit Margin: 10% for the year, down from 13% last year.

• Cash and Cash Equivalents: $82 million at the end of the fourth quarter.

• Available Credit: $30 million available under the revolving credit facility.

Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Corus Entertainment Inc (CJREF) achieved a 21% reduction in direct cost of sales, a 7% reduction in employee costs, and a 15% reduction in other general and administrative costs for fiscal 2024.

• The company delivered a free cash flow of $114 million in fiscal 2024, marking a 7% increase over the prior year.

• Corus Entertainment Inc (CJREF) announced the launch of two new lifestyle brands, Flavour Network and Home Network, with positive reception and strong advertiser interest.

• Global’s prime time ratings increased by 16% over the previous fall in the key demographic of adults 25-54, indicating strong audience engagement.

• The company reduced bank debt by $39 million in fiscal 2024, demonstrating effective debt management.

Negative Points

• Consolidated revenue for fiscal 2024 decreased by 16% to $1.271 billion, reflecting challenges in the advertising market.

• Television advertising revenue declined by 16% in the fourth quarter and 15% for the year, impacting overall financial performance.

• Subscriber revenue was lower by 7% in Q4 and 6% for the year, indicating challenges in maintaining subscription levels.

• The company faces ongoing disruptions in advertising markets and an oversupply of digital advertising inventory, exerting pressure on revenue.

• Net debt to segment profit increased to 3.84 times at the end of fiscal 2024, up from 3.6 times at the end of 2023, indicating increased leverage.

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Q & A Highlights

Q: Can you provide an update on the headcount reduction target? A: John Gossling, CFO, stated that they have essentially met their headcount reduction target, achieving the expected dollar savings.

Q: How are the new Home and Flavour networks being received by advertisers? A: Troy Reeb, EVP of Networks and Content, mentioned that the launch event was oversubscribed, with positive feedback and several advertisers committing to being launch partners.

Q: Are there any signs of advertising revenue improvement following the fall schedule launch? A: Troy Reeb noted that while there is potential for increased buoyancy in the back half of the quarter due to more inventory and ratings, the overall market remains pressured by an oversupply of digital inventory.

Q: Are there plans for additional asset sales to manage the balance sheet? A: John Gossling confirmed that they are exploring sales of less material assets to generate cash proceeds, which would be used to repay term loans.

Q: What is the outlook for subscription revenue, especially with the transition of channels? A: John Gossling indicated that the normalized trend for subscription revenue has been a decline of about 3-4%, with digital growth partially offsetting traditional declines.

Q: How is Corus addressing the regulatory environment and potential relief? A: Troy Reeb highlighted ongoing efforts to shift mandated spending to more profitable programming and the pursuit of eligibility for local news funding, which remains pending.

Q: What are the expectations for TV program amortization and cash spend in fiscal 2025? A: John Gossling explained that while the exact figures are uncertain, they expect higher amortization and cash spend due to increased programming deliveries, especially in the first half of the year.

Q: How is Corus planning to manage its debt covenants post-March 2025? A: John Gossling stated that while the current balance sheet structure is not sustainable, they are exploring all options to address the situation, though specifics were not disclosed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.