PRESS RELEASE
Technicolor:
First Half
2021
Results
Strong recovery from the pandemic
slowdown
Improving delivery capacity
to boost second half and
2022 performance
Technicolor
on track to meet its 2021
and 2022 guidance
Paris (France),
July 29,
2021 –
Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) is today
announcing its results for the first half of 2021.
Richard Moat, Chief Executive Officer of
Technicolor, stated:
“Technicolor’s first half of 2021 results are
positive and in line with expectations. The Group is experiencing
growing demand across all of its businesses, and is benefiting from
improved profitability as a result of our disciplined operational
focus. Demand for creative VFX artistry and technology continues to
improve across media and entertainment, in combination with the
progressive return of live action production. In particular, we are
pleased by the fact that we have secured our target VFX sales
pipeline for 2021 and a material part of 2022, a milestone which
clearly demonstrates the tangible recovery of the Media and
Entertainment industry. The creation of Technicolor Creative
Studios was well timed in the light of the upcoming surge in
content. The division is led by a strong new leadership team
focused on redefining content experiences across film, episodic,
gaming, marketing, and advertising through a powerful combination
of storytelling and innovation. In Connected Home, despite very
strong demand in North America and in Eurasia, revenue has been
impacted by component shortages leading to sales being pushed into
the second half of the year. In DVD Services we saw a 4% increase
in total replicated disc activity, showing the attractiveness of
back catalog and the resiliency of packaged media. Based on
business activity for the first half and the continued successful
optimization of its businesses, the Group is confident of achieving
its outlook for 2021 and 2022.”
Despite the
continuing challenging environment,
Technicolor
delivered a
positive first
half 2021,
with results in line with expectations
and delivering
significant improvement in
profitability:
-
Revenues of
€1,359 million,
a
(5.2)%
decrease year-on-year at current exchange rate
but a
+1.2% increase at constant exchange
rate;
-
Adjusted EBITDA of €100
million, doubled
at constant
rate reflecting
operational and financial improvements across all
activities;
-
Adjusted EBITA of €15
million represents
an €83
million year-on-year
improvement at
constant rate;
-
Free cash flow (before financial results and tax) from
continuing operations of
€(208)
million,
representing a
€35 million
year-on-year improvement at current
rate, highlighting
the end of the payment terms normalization in Connected
Home.
All Technicolor
activities are benefiting from
sustained market
demand:
-
Technicolor Creative Studios
were awarded several new
projects, securing
around
95% of
their expected 2021 revenue pipeline for
Film & Episodic Visual Effects and Animation
& Games. Demand for
VFX technology continues to
improve in line
with a growing number of
theatrical and episodic projects being launched and awarded
to Technicolor Creative
Studios. Adjusted EBITDA and
Adjusted EBITA are also
benefiting from the positive impact of
operating efficiencies.
-
Connected Home revenues were
down (1.0)% year-on-year
at constant rate and (8.2)% at current
rate. Despite very strong
demand in North America and in Eurasia,
the division has been impacted by
component shortages leading to sales being pushed
to the second half, and
a challenging Latin
American market.
-
DVD Services revenue resilience was driven
predominantely
by a 4% increase in total replicated disc
activity, strong pricing improvement,
and ongoing growth in non-disc related supply chain
activity. The amount of
high margin new release
products, although growing,
remains lower than in the
first half of 2020.
The Group is on track to
achieve the c. €115
million cost savings
planned for calendar year 2021, with
€42 million cost savings realized
in the first half,
en route to delivering a
cumulative €325 million by the end of
2022.
Based on business
activity for the first half, the
Group is confident of achieving the outlook
presented in its FY 2020 results
press release issued on March 11, 2021.
First
Half year 2021
results and forward outlook – key
highlights
|
First Half |
|
In € million |
2021 |
2020 |
Atcurrentrate |
Atconstantrate |
|
|
Revenues from continuing operations |
1,359 |
1,433 |
(5.2)% |
+1.2% |
|
Adjusted EBITDA from continuing operations |
100 |
53 |
+90.6% |
+101.6% |
|
As a % of
revenues |
7.4% |
3.7% |
|
|
|
Adjusted EBITA from continuing operations |
15 |
(67) |
+123.0% |
+124.1% |
|
Free Cash Flow from continuing before Tax &
Financial |
(208) |
(243) |
+14.3% |
+7.4% |
|
First Half
2021 key
indicators for continuing
operations
-
Revenues of €1,359 million were up 1.2% at constant rate
reflecting:
-
a good performance in Technicolor Creative Studios driven by demand
for VFX technology and continued strong performance in Advertising
and Animation & Games;
-
a (1)% decrease in Connected Home sales as a result of key
component constraints, but continuing revenue resilience in DVD
Services with a 4% increase in total replicated disc activity.
-
Adjusted EBITDA of €100 million was up 101.6% at constant rate.
This reflects operational improvements across all activities,
particularly in Creative Studios and DVD Services. The Adjusted
EBITDA margin for the Group expanded from 3.7% to 7.4%, with all
three main Technicolor divisions reporting a significant margin
improvement compared to first half 2020.
-
Adjusted EBITA of €15 million represents an €83 million
year-on-year improvement at constant rate. This resulted from the
EBITDA increase and the positive impact of efficiency measures, in
particular lower D&A, following lower equipment spend for
Creative Studios and lower IP depreciation for DVD Services.
-
Restructuring costs amounted to €(26) million at current rate,
including €(15) million in DVD Services driven by footprint
rationalization.
-
The change in working capital of €(210) million reflects mainly
payment terms normalization, and the seasonality trend at Connected
Home which has been amplified by sales delays from second quarter
to third quarter. With a cash-out impact of €(179) million in the
first half 2021, Connected Home has finalised its cycle of payment
terms reductions, benefiting from a normalized and de-risked
working capital contribution as well as positive seasonality in the
second half partly subject to the evolution of component
shortages.
-
Free cash flow1 (before financial results and tax) from continuing
operations of €(208) million represents a €35 million year-on-year
improvement at current rate, driven by working capital improvement
in Technicolor Creative Studios and DVD Services, and the ongoing
implementation of our cost transformation program.
-
Net debt at nominal value amounts to €1,174 million, and IFRS net
debt amounts to €1,096 million. The difference mainly relates to
the mark-to-market debt valuation on issuance, and will be reversed
through non-cash interest charges over the life of the debt.
Outlook
-
Demand for Technicolor’s products and services, in particular
Connected Home broadband boxes and Technicolor Creative Studios VFX
technology, is expected to continue to grow significantly
throughout the remainder of the year and into 2022.
-
Connected Home will be impacted by key component delivery and
pricing issues in the third quarter as expected. Nonetheless,
efficiency measures and progressive improvements in delivery should
help compensate for these factors throughout H2.
-
After achieving €171 million of cost savings in 2020, the Group
will continue to drive efficiency and productivity throughout 2021,
and is maintaining its target of a total of €325 million in run
rate cost savings by the end of 2022, with €115 million coming in
2021.
-
Technicolor confirms its operating guidance for Adjusted EBITDA,
Adjusted EBITA and FCF in 2021 and 2022. As already advised in the
first quarter results, 2021 guidance and updated 2022 guidance are
as follows:
-
In 2021:
-
Revenues from continuing operations broadly stable versus
2020;
-
Adjusted EBITDA of around €270 million;
-
Adjusted EBITA of around €60 million;
-
Continuing FCF before financial results and tax at around
breakeven;
-
Net debt to Adjusted EBITDA covenant ratio below 4x level at year
end.
-
In 2022:
-
Adjusted EBITDA of €385 million;
-
Adjusted EBITA of €180 million;
-
Continuing FCF before financial results and tax at around €230
million.
Continuing Operations – post IFRS 16 |
|
|
|
|
€ million, FYE Dec post IFRS-16 |
2020 |
2021e |
2022e |
|
|
|
Adjusted EBITDA from continuing operations |
167 |
270 |
385 |
|
Adjusted EBITA from continuing operations |
(56) |
60 |
180 |
|
Continuing FCF before financial results and
tax |
(124) |
c.0 |
230 |
|
-
The 2021 and 2022 objectives are calculated assuming constant
exchange rates.
-
In 2022, the cumulative impact of foreign exchange fluctuations and
change in Group perimeter as a result of the sale of Post
Production is €(40) million on Adjusted EBITDA and €(23) million on
Adjusted EBITA.
-
As of the end of the first half 2021, IFRS16 impacts Technicolor’s
KPIs as follows:
-
Adjusted EBITDA improved by €26 million and decreased by €11
million vs. the impact in first half 2020;
-
Adjusted EBITA improved by €7 million and increased by €2 million
vs. the impact in first half 2020;
-
FCF before financial results and tax improved by €34 million and
decreased by €(5) million vs. the impact in first half 2020;
-
Capital leases (principal repayment and interest) cash out totalled
c. €8 million and decreased by €7 million vs. the impact in first
half 2020.
Perimeter Change
-
As communicated previously, Technicolor announced on April 30, 2021
the closing of the disposal of its Post Production business (part
of Technicolor Creative Studios) for €30 million. The sale of Post
Production simplifies Technicolor Creative Studios’ portfolio of
activities, and allows management to increasingly focus on
Technicolor Creative Studios’ remaining core CGI activities.
Segment Review –
First Half
2021 Results
Highlights
|
First Half |
Change YoY |
Technicolor Creative Studios* |
2021 |
2020 |
Reported |
At constant rate |
In € million |
Revenues |
295 |
279 |
+5.8% |
+9.9% |
Adj. EBITDA |
40 |
2 |
ns |
ns |
As a % of revenues |
+13.7% |
+0.8% |
|
|
Adj. EBITA |
6 |
(51) |
ns |
ns |
As a % of revenues |
+1.9% |
(18.4)% |
|
|
(*) including Post Production
-
Technicolor Creative Studios
revenues amounted to €295 million in the first
half of 2021, up 9.9% at constant rate and 5.8% at current rate
year-on-year. The division is benefiting from the recovery in
demand for creative technology and productive services from Film
& Episodic VFX and Animation & Games, combined with an
outstanding performance from the Advertising service line.
-
Adjusted EBITDA amounted to €40 million, up €40
million year-on-year at constant rate, and Adjusted EBITA was €6
million, up €57 million year-on-year, as a result of higher margin
volume growth in conjunction with aggressive permanent cost
reduction measures.
-
Business Highlights
-
Film & Episodic Visual Effects: Double-digit year-on-year
growth during the first half, driven by clients’ return to
live-action shooting beginning in the latter half of 2020 and by
the expansion of MPC Episodic launched in the first quarter of
2020.
-
VFX teams worked on over 18 theatrical films for the major studios,
including Cruella (Disney), The Lion King prequel (Disney), The
Little Mermaid (Disney), Mortal Kombat (Warner Bros./New Line), and
Transformers: Rise of the Beasts (Paramount).
-
And over 35 Episodic and/or Streaming projects, including
Foundation (Skydance/Apple TV+), The Nevers (HBO), Sex/Life
(Netflix), Vikings: Valhalla (MGM/Netflix), WandaVision
(Marvel/Disney+), and The Wheel of Time (Amazon/Sony).
-
During the first quarter, MPC Film received Oscar® and BAFTA
nominations for its work on Disney’s The One and Only Ivan; and Mr.
X received its first Oscar® nomination for Paramount’s Love and
Monsters.
-
In July, Mr. X received an Emmy nomination for Outstanding Special
Visual Effects in a Single Episode for its work on Vikings “The
Signal”; this is Mr. X’s seventh VFX Emmy nomination for the
Vikings franchise since 2013 (winner in 2020).
-
Advertising: Strongest first half performance in recent memory as
Advertising revenues grew significantly year-on-year and margins
continued to improve.
-
During the first half, Technicolor’s Advertising businesses
delivered nearly 1,900 commercials, including approximately 20
Super Bowl spots, while winning several prestigious industry awards
such as:
-
Three Cannes Lions for contributions to Burberry ‘Festive’ and
PlayStation 'Feel the Power of Pro';
-
Three VES Awards, including Outstanding Visual Effects in a
Commercial for Walmart ‘Famous Visitors’;
-
MPC Advertising recognized as Ad Age‘s VFX Company of the Year for
the second year running; and
-
Two Adweek Experiential Awards by The Mill for Best Use of Video in
an Experiential Activation for Respawn Entertainment’s ‘Apex
Legends at the Game Awards’ and Best Use of Virtual Event
Technology for HBO’s ‘HBO: Lovecraft Country Sanctum’.
-
Other notable projects included BMW ‘The Ultimate Self-Driving
Machine’, Dell ‘Youniverse’, Ford ‘Ford F-150 Lightning’, Samsung
‘Chromebook’, and Verizon ‘The Reset’.
-
Key hires/appointments include Josh Mandel, appointed CEO of The
Mill, and Anna Watkins, former managing director of Verizon Media,
hired as global vice-president of growth and brand
partnerships.
-
Animation & Games: Significant double-digit growth year-on-year
driven by strong work-for-hire volume in addition to the prior year
period being negatively impacted by a temporary studio closure
because of the pandemic.
-
Feature: Mikros was in production on three features, including Spin
Master’s PAW Patrol: The Movie which delivered in the second
quarter, and Paramount’s The Tiger’s Apprentice. Three additional
projects were verbally awarded during the period.
-
Episodic: Mikros continues to work on several series, including
ALVINNN!!! and the Chipmunks (M6), Chicken Squad (Wild
Canary/Disney), Gus (TF1), Kamp Koral: SpongeBob's Under Years
(Nickelodeon/Paramount+), Mira, Royal Detective (Wild
Canary/Disney), and Rugrats (Nickelodeon/Paramount+).
-
In June, TCS announced the consolidation of the Animation
businesses under the Mikros Animation brand with new senior
management led by Andrea Miloro who joined as President of Mikros
Animation earlier in the year.
-
Covid-19 situation update
-
Despite the risks of spreading Covid-19 variants, the Media &
Entertainment industry continues to increase production throughput
and invest in greater production capacity around the world under
relatively successful and strict Covid-19 protocols.
-
Abiding by frequently evolving local regulations and in
consultation with local business leadership, TCS continues to
adjust capacity limits, on-premise protocols, and remote work
policies and support on a local basis in order to ensure the safety
of our talent, clients and others.
###
|
First Half |
Change YoY |
Connected Home |
2021 |
2020 |
Reported |
At constant rate |
In € million |
Revenues |
770 |
839 |
(8.2)% |
(1.0)% |
Adj. EBITDA |
56 |
54 |
+4.5% |
+11.8% |
As a % of revenues |
+7.3% |
+6.4% |
|
|
Adj. EBITA |
29 |
20 |
+43.1% |
+51.9% |
As a % of revenues |
+3.8% |
+2.4% |
|
|
-
Connected Home revenues totaled €770 million in
the first half 2021, down (1.0)% year-on-year at constant rate and
(8.2)% at current rate. Despite demand remaining very strong,
particularly in North America and in Eurasia, the division has been
negatively impacted by key component shortages, and a difficult
Latin American market.
The overall worldwide market situation has
multiple consequences for the Connected Home business:
-
Continued difficulties in obtaining components, delaying production
to our final customers;
-
Challenges in finding transportation for our components and
finished goods, delaying deliveries to our customers;
-
Cost increases across multiple categories of components and
logistics, for which Connected Home is actively getting commercial
support from its customers.
Connected Home will continue to work with its
partners and customers to minimize supply disruptions.
The Connected Home division has strengthened its
leadership in key market segments:
-
In DOCSIS 3.1, over the second quarter Connected Home reached the
milestone of over 20 million RDK broadband gateways deployed, and
won deals with major operators across Europe and Latin America,
confirming its leadership across the RDK community;
-
On Android TV, Connected Home reached the figure of over 10 million
set-top boxes worldwide, winning customers in Europe and Latin
America. This quarter, the division continued to show its
innovation capabilities by launching with Sky Brazil the first
hands-free voice control set-top box integrating Google
Assistant;
-
On Fiber, Connected Home has won new customers in EMEA, and a first
deal outside of Brazil in Latin
America.
-
Adjusted EBITDA amounted to €56 million in the
first half 2021, or 7.3% of revenue, up €6 million at constant rate
despite the sales shortfall, assisted by continuing reductions in
OPEX. Adjusted EBITA of €29 million increased by c.€11 million
compared to the prior year at constant rate. This positive
evolution in profitability is the result of the significant
transformation plan launched 3 years ago.
-
Business highlights
-
Americas
-
North America: revenues remained strong, driven by increased
demand from cable customers for upgrades to higher power
broadband.
-
Latin America: the difficult macroeconomic situation, FX and
components costs continue to create difficult trading
conditions.
-
Eurasia
- Europe, Middle
East & Africa: 10% growth year-on-year driven by strong demand
for DOCSIS 3.1, Android TV and Fiber products, but shortages were
creating a significant backlog. We scored new wins in the three
technologies in several markets including Poland, Israel and
Austria.
- Asia Pacific:
constraints were experienced in Broadband technologies for the
Australian market, in spite of strong demand. The Indian STB market
remains strong, maintaining growth year-on-year in traditional and
Android TV technologies. Manufacturing, for Indian customers, is
now taking place in India.
The division continues to focus on selective
investments in key customers, platform-based products and
partnerships that will lead to improved margins over the year.
-
Revenue Breakdown for Connected Home (at current
rate)
|
First Half |
In € million |
2021 |
2020 |
% Change(*) |
Total revenues |
770 |
839 |
(1.0)% |
By region |
Americas: |
517 |
575 |
(3.1)% |
|
- North America |
449 |
463 |
+3.5% |
|
- Latin America |
69 |
112 |
(30.0)% |
|
Eurasia: |
253 |
264 |
+3.7% |
- Europe, Middle East and
Africa |
155 |
154 |
+9.9% |
- Asia-Pacific |
98 |
110 |
(4.9)% |
By product |
Video |
278 |
318 |
(5.7)% |
|
Broadband |
492 |
521 |
+2.0% |
(*) Change at
constant rate
###
|
First Half |
Change YoY |
DVD
Services |
2021 |
2020 |
Reported |
At constant rate |
In € million |
Revenues |
283 |
302 |
(6.4)% |
(0.3)% |
Adj. EBITDA |
11 |
1 |
ns |
ns |
As a % of revenues |
+3.7% |
+0.5% |
|
|
Adj. EBITA |
(10) |
(29) |
+65.7% |
+62.2% |
As a % of revenues |
(3.5)% |
(9.7)% |
|
|
-
DVD Services revenues totaled €283 million in
the first half 2021, in line with 2020. Revenue resilience was
driven predominately by a 4% increase in total replicated disc
activity, driven by continued strong demand for back catalog
titles. We also saw the significant positive impact of new pricing,
and ongoing growth in non-disc related supply chain activity.
Covid-19, however, continued to have a negative impact in the first
half, with a significantly lower level of new release activity,
which in turn resulted in a reduced mix of higher priced Blu-ray
volume as compared to the first half of 2020, negatively impacting
the year-over-year revenue trend.
-
Adjusted EBITDA amounted to €11 million at current
rate, or 3.7% of revenue, slightly better than expectations given
stronger than anticipated disc volumes and the acceleration of cost
saving actions, partially offset by continued labor and material
cost pressures. Lower depreciation & amortization and renewal
of contracts helped to deliver an Adjusted EBITA at €(10) million
compared to €(29) million in the first half 2020.
-
Business Highlights
-
Standard Definition DVD volumes were up 12% in the first half of
2021 driven by the continued aggressive marketing of back catalog
product by the major studios and their retail partners,
particularly in the North American region.
-
Blu-rayTM volumes were down (13)% in the first half year-on-year,
due to the aforementioned lack of new release content, and less
mitigating benefit from catalog promotions.
-
CD volumes were down (11)% year-on-year on a combination of
expected structural declines and Covid-19 retail impacts.
-
Non-disc activity: non-studio supply-chain business revenue and
profitability have both exceeded assumptions, while Logistics and
Freight have performed well.
DVD Services continued to progress previously
announced structural division-wide initiatives to adapt
distribution and replication operations, and related customer
contract agreements, in response to continued volume
reductions. Two significant North American facility closures
were effected in the first half of 2021 as part the ongoing
transformation plan. Executive and management teams have been
implementing multiple cost reduction and business improvement and
efficiency programs, and these are ahead of plan at first half, and
expected to deliver the full-year savings and efficiencies
projected.
|
First Half |
In million units |
2021 |
2020 |
% Change |
Total Combined
Volumes |
338.9 |
326.3 |
+3.9% |
By Format |
SD-DVD |
245.8 |
220.1 |
+11.7% |
|
Blu-ray™ |
77.4 |
88.6 |
(12.5)% |
|
CD |
15.6 |
17.6 |
(11.3)% |
By Segment |
Studio/Video |
315.4 |
297.4 |
+6.1% |
|
Games |
4.8 |
6.3 |
(23.7)% |
|
Music & Software |
18.7 |
22.5 |
(17.0)% |
-
Covid-19 situation update
-
Theatrical new release activity remains partially suppressed, but
demonstrated an accelerating trend of improvement over the course
of the first half of 2021, with multiple major releases in the
second quarter generating significant box office results, with the
majority of theaters in the US reopening and drawing strong
consumer interest.
-
While studios continue to experiment with various premium video-on
demand and day and date strategies, in almost all cases studios are
still electing to have a DVD/BD release in the normal windowing
sequence.
-
Most major retailers continue to remain open and are operating
normally. With limited new release content, some retailers are
continuing to allocate shelf space to catalog/library content
promotions, which helped to support DVD replication volumes in the
first half of 2021.
-
Some production facilities continue to experience temporary
staffing shortages, but the overall impact on operations remains
limited.
-
The ongoing Covid-19 impact will be dependent on the extent and
duration of ongoing restrictions (driven by the rate of new
Covid-19 case growth). The specific timing and extent of the
reopening of movie theaters will impact the level of new disc
release activity. DVD Services has accelerated certain aspects of
its future restructuring plans in an effort to adapt to these
impacts.
###
|
First Half |
Change YoY |
Corporate &Other |
2021 |
2020 |
Reported |
At constant rate |
In € million |
Revenues |
11 |
13 |
(12.5)% |
(12.5)% |
Adj. EBITDA |
(7) |
(5) |
(43.5)% |
(48.4)% |
As a % of revenues |
(67.0)% |
(40.9)% |
|
|
Adj. EBITA |
(9) |
(7) |
(34.0)% |
(38.4)% |
As a % of revenues |
(85.9)% |
(56.1)% |
|
|
-
Corporate & Other includes the Trademark
Licensing business.
Corporate & Other recorded revenues of €11
million in the first half 2021, decreasing compared to last year as
a result of the decrease of the retained patent revenue. Adjusted
EBITDA amounted to €(7) million and Adjusted EBITA was €(9)
million.
##
As part of the financial restructuring
transaction completed in 2020, debt maturities were extended and
new financings executed, reinforcing the Group’s liquidity.
In million currency |
Currency |
Nominal Amount |
IFRS Amount |
Type of rate |
Nominal rate (1) |
Repayment Type |
Final maturity |
Moodys / S&P rating |
|
New Money Notes |
EUR |
350 |
361 |
Floating |
12.00%(2) |
Bullet |
Jun. 30, 2024 |
Caa1/B |
|
New Money Term Loans |
USD |
104 |
107 |
Floating |
12.23%(3) |
Bullet |
Jun. 30, 2024 |
Caa1/B |
|
Reinstated Term Loans |
EUR |
453 |
380 |
Floating |
6.00%(4) |
Bullet |
Dec. 31, 2024 |
Ca/CCC |
|
Reinstated
Term Loans |
USD |
119 |
100 |
Floating |
5.95%(5) |
Bullet |
Dec. 31, 2024 |
Ca/CCC |
|
Subtotal |
EUR |
1,026 |
948 |
|
8.67% |
|
|
|
|
Lease Liabilities(6) |
Various |
160 |
160 |
Fixed |
8.68% |
|
|
|
|
Accrued PIK Interest |
EUR+USD |
35 |
35 |
NA |
0% |
|
|
|
|
Accrued Interest |
Various |
16 |
16 |
NA |
0% |
|
|
|
|
Wells Fargo Line |
USD |
35 |
35 |
Floating |
5.25% |
Revolving |
Dec.31,2023 |
|
|
Other Debt |
Various |
1 |
1 |
NA |
0% |
|
|
|
|
Total Gross Debt |
|
1,273 |
1,195 |
|
8.23% |
|
|
|
|
Cash & Cash equivalents |
Various |
99 |
99 |
|
|
|
|
|
|
Total Net Debt |
|
1,174 |
1,096 |
|
|
|
|
|
|
(1)
Rates as of June 30, 2021. |
|
|
|
|
|
(2) Cash interest of 6-month EURIBOR with a floor of 0% +6.00% and
PIK interest of 6.00%. |
|
(3) Cash interest of 6-month USD LIBOR with a floor of 0% +6.00%
and PIK interest of 6.00%. |
|
|
(4) Cash interest of 6-month EURIBOR with a floor of 0% + 3.00% and
PIK interest of 3.00%. |
|
(5) Cash interest of 6-month USD LIBOR with a floor of 0% + 2.75%
and PIK interest of 3.00% |
|
|
(6) Of which €11 million are capital leases and €149 million is
operating lease debt under IFRS 16 |
|
|
Summary of consolidated results
for the first half
|
First Half |
In € million |
2021 |
2020 |
Change* |
Revenues from continuing
operations |
1,359 |
1,433 |
(5.2)% |
Change at constant currency (%) |
- |
- |
+1.2% |
o/w |
Technicolor Creative Studios |
295 |
279 |
+5.8% |
|
DVD Services |
283 |
302 |
(6.4)% |
|
Connected Home |
770 |
839 |
(8.2)% |
|
Corporate & Other |
11 |
13 |
(12.5)% |
Adjusted EBITDA from continuing operations |
100 |
53 |
+90.6% |
Change at constant currency (%) |
- |
- |
+101.6% |
As a % of revenues |
+7.4% |
+3.7% |
370bps |
o/w |
Technicolor Creative Studios |
40 |
2 |
n.a. |
|
DVD Services |
11 |
1 |
n.a. |
|
Connected Home |
56 |
54 |
+4.5% |
|
Corporate & Other |
(7) |
(5) |
(43.5)% |
Adjusted EBITA from continuing operations |
15 |
(67) |
+123.0% |
Change at constant currency (%) |
- |
- |
+124.1% |
As a % of revenues |
+1.1% |
(4.7)% |
583bps |
Adjusted EBIT from continuing operations |
(3) |
(89) |
+96.5% |
Change at constant currency (%) |
- |
- |
+95.7% |
As a % of revenues |
(0.2)% |
(6.2)% |
597bps |
EBIT from continuing
operations |
(4) |
(194) |
+97.7% |
Change at constant currency (%) |
- |
- |
+96.2% |
As a % of revenues |
(0.3)% |
(13.6)% |
n.a. |
Financial result |
(62) |
(67) |
- |
Income tax |
(11) |
(3) |
- |
Share of profit/(loss) from associates |
0 |
0 |
- |
Profit/(loss) from continuing operations |
(78) |
(264) |
- |
Profit/(loss) from discontinued operations |
(1) |
(1) |
- |
Net income |
(79) |
(265) |
- |
(*) Change at current rate
-
Restructuring costs accounted for €(26) million at current rate,
including €(15) million in DVD Services, largely resulting from
optimization of sites.
-
EBIT from continuing operations amounted to a loss of
€(4) million in the first half 2021 compared to €(194) million
in the first half 2020, due to better operational performance, DVD
Services impairment and higher restructuring accruals.
-
The financial result totaled €(62) million in the first half 2021
compared to €(67) million in the first half 2020, reflecting:
-
Net interest costs of €(61) million, up from last year’s €(40)
million, primarily due to the higher interest rates on the new debt
structure;
-
Other financial income improved to €(2) million in the first
half 2021 compared to €(28) million in the prior year, which was
mainly due to the financial fees incurred on the bridge loan and
the financial restructuring.
-
Income tax amounted to €(11) million, compared to €(3) million in
the first half 2020.
-
Group net income therefore amounted to a loss of €(79) million in
the first half 2021, compared to the €(265) million loss in the
first half 2020.
Reconciliation of adjusted
indicators
In addition to published results, and with the
aim of providing a more comparable view of the evolution of its
operating performance in 2021 compared to 2020, Technicolor is
presenting a set of adjusted indicators which exclude the following
items as per the statement of operations of the Group’s
consolidated financial statements:
-
Net restructuring costs;
-
Net impairment charges;
-
Other income and expenses (other non-current items).
These adjustments, the reconciliation of which
is detailed in the following table, amounted to an impact on EBIT
from continuing operations of €(1) million in 2021 compared to
€(105) million in 2020 (including IFRS 16).
|
First Half |
In € million |
2021 |
2020 |
Change (*) |
EBIT from continuing operations |
(4) |
(194) |
190 |
Restructuring charges, net |
(26) |
(41) |
16 |
Net impairment losses on non-current operating assets |
- |
(72) |
72 |
Other income/(expense) |
24 |
8 |
16 |
Adjusted EBIT from continuing operations |
(3) |
(89) |
86 |
As a % of revenues |
(0.2)% |
(6.2)% |
597bps |
Depreciation and amortization (“D&A”) (**) |
103 |
139 |
(36) |
IT capacity use for rendering in Technicolor Creative Studios |
- |
2 |
(2) |
Adjusted EBITDA from continuing operations |
100 |
53 |
48 |
As a % of revenues |
7.4% |
3.7% |
370bps |
(*) Variation at current rates
(**) including reserves (Risk, litigation and
warranty reserves)
Free Cash Flow Reconciliation and
Summarized Financial
Structure
Technicolor defines “Free Cash Flow” as net cash
from operating activities (continuing and discontinued) plus
proceeds from sales of property, plant and equipment (“PPE”) and
intangible assets, minus purchases of PPE and purchases of
intangible assets including capitalization of development
costs.
|
First half period
(IFRS) |
|
In € million |
June
30, |
June
30, |
|
2021 |
2020 |
|
|
|
|
Adjusted EBITDA from continuing operations |
100 |
53 |
|
Changes in
working capital and other assets and liabilities |
(210) |
(197) |
|
IT capacity
use for rendering in Creative Studios |
- |
(2) |
|
Pension cash
usage of the period |
(13) |
(12) |
|
Restructuring
provisions – cash usage of the period |
(46) |
(23) |
|
Interest
paid |
(32) |
(35) |
|
Interest
received |
- |
- |
|
Income tax
paid |
(9) |
(1) |
|
Other
items |
- |
(13) |
|
Net operating cash generated from continuing
activities |
(209) |
(230) |
|
Purchases of
property, plant and equipment (PPE) |
(20) |
(17) |
|
Proceeds from
sale of PPE and intangible assets |
2 |
- |
|
Purchases of
intangible assets including capitalization |
(24) |
(39) |
|
of development
costs |
|
Net operating
cash used in discontinued activities |
(14) |
(8) |
|
Free cash-flow |
(265) |
(294) |
|
Nominal gross
debt (including Lease debt) |
1,273 |
1,670 |
|
Cash position |
99 |
63 |
|
Net financial debt at nominal value (non
IFRS) |
1,174 |
1,607 |
|
IFRS adjustment |
(78) |
(6) |
|
Net financial debt (IFRS) |
1,096 |
1,601 |
|
-
The change in working capital & other assets and liabilities
was negative by €(210) million in the first half 2021, mostly
driven by unfavorable changes in supplier payment terms and the
normal seasonality trend at Connected Home.
-
Pension liabilities are down by €37 million, mainly due to a
positive effect from the discount rates of €29 million and payments
of €13 million.
-
Cash outflow for restructuring totaled €46 million in the first
half 2021, up by €23 million year-on-year at current rate, mainly
resulting from accelerated implementation of cost savings.
-
Capital expenditures amounted to €42 million, down by €14 million
year-on-year at current rate, maintaining a strict control of
investment expense.
-
The cash position at the end of June 2021 was €99 million, compared
to €63 million at the end of June 2020.
An analyst audio webcast hosted by Richard Moat,
CEO and Laurent Carozzi, CFO will be held today, July 29, 2021 at
6:30pm CEST.
Financial
calendar
Q3 2021 results |
4 November 2021 |
###
Warning: Forward Looking
Statements
This press release contains certain statements
that constitute "forward-looking statements", including but not
limited to statements that are predictions of or indicate future
events, trends, plans or objectives, based on certain assumptions
or which do not directly relate to historical or current facts.
Such forward-looking statements are based on management's current
expectations and beliefs and are subject to a number of risks and
uncertainties that could cause actual results to differ materially
from the future results expressed, forecasted or implied by such
forward-looking statements. For a more complete list and
description of such risks and uncertainties, refer to Technicolor’s
filings with the French Autorité des marchés financiers
###About
Technicolor:
www.technicolor.com
Technicolor shares are admitted to
trading on the regulated market of Euronext Paris (TCH) and are
tradable in the form of American Depositary
Receipts (ADR) in the United States on the OTCQX market
(TCLRY).
Investor
Relations Media
Christophe le Mignan: +33 1 88 24 32
83 Stephanie
VarlottaChristophe.lemignan@technicolor.com Stephanie.varlotta@technicolor.com
Nathalie Feld :
+33 1 53 70 94
23 nfeld@image7.fr
INTERIM CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
|
|
|
|
First Half ended June
30, |
(€ in million) |
2021 |
|
2020 |
|
|
|
|
CONTINUING OPERATIONS |
|
|
|
Revenues |
1,359 |
|
1,433 |
Cost of
sales |
(1,191) |
|
(1,323) |
Gross margin |
168 |
|
110 |
|
|
|
|
Selling and
administrative expenses |
(128) |
|
(149) |
Research and
development expenses |
(43) |
|
(49) |
Restructuring
costs |
(26) |
|
(41) |
Net impairment
gains (losses) on non-current operating assets |
- |
|
(72) |
Other income
(expense) |
24 |
|
8 |
Earnings before Interest & Tax (EBIT) from continuing
operations |
(4) |
|
(194) |
|
|
|
|
Interest
income |
- |
|
- |
Interest
expense |
(61) |
|
(40) |
Other
financial income (expense) |
(2) |
|
(28) |
Net financial income (expense) |
(62) |
|
(67) |
|
|
|
|
Share of gain
(loss) from associates |
0 |
|
- |
Income
tax |
(11) |
|
(3) |
Profit (loss) from continuing operations |
(78) |
|
(264) |
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
Net gain
(loss) from discontinued operations |
(1) |
|
(1) |
|
|
|
|
Net income (loss) |
(79) |
|
(265) |
|
|
|
|
Attribuable
to: |
|
|
|
- Equity
holders |
(79) |
|
(265) |
-
Non-controlling interest |
0 |
|
0 |
INTERIM CONDENSED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
|
(€ in million) |
June 30,
2021 |
|
December 31, 2020 |
|
|
|
|
|
ASSETS |
|
|
|
|
Goodwill |
741 |
|
716 |
|
Intangible
assets |
522 |
|
535 |
|
Property,
plant and equipment |
136 |
|
140 |
|
Right-of-use
assets |
135 |
|
148 |
|
Other operating non-current assets |
26 |
|
27 |
TOTAL OPERATING NON-CURRENT ASSETS |
1,560 |
|
1,566 |
|
|
|
|
|
|
Non-consolidated investments |
17 |
|
14 |
|
Other non-current financial assets |
35 |
|
47 |
TOTAL FINANCIAL NON-CURRENT ASSETS |
52 |
|
61 |
|
|
|
|
|
|
Investments in
associates and joint-ventures |
1 |
|
1 |
|
Deferred tax assets |
53 |
|
45 |
TOTAL NON-CURRENT ASSETS |
1,666 |
|
1,674 |
|
|
|
|
|
|
Inventories |
168 |
|
195 |
|
Trade accounts
and notes receivable |
360 |
|
425 |
|
Contract
assets |
79 |
|
63 |
|
Other operating current assets |
224 |
|
224 |
TOTAL OPERATING CURRENT ASSETS |
832 |
|
907 |
|
|
|
|
|
|
Income tax
receivable |
6 |
|
14 |
|
Other
financial current assets |
24 |
|
17 |
|
Cash and cash
equivalents |
99 |
|
330 |
|
Assets classified as held for sale |
2 |
|
76 |
TOTAL CURRENT ASSETS |
963 |
|
1,344 |
|
|
|
|
|
TOTAL ASSETS |
2,629 |
|
3,018 |
INTERIM CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
|
(€ in million) |
June 30,
2021 |
|
December 31, 2020 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Common stock
(235,819,875 shares at June 30, 2021 with nominal value of 0.01
euro per share) |
2 |
|
2 |
|
Subordinated
Perpetual Notes |
500 |
|
500 |
|
Additional
paid-in capital & reserves |
84 |
|
126 |
|
Cumulative translation adjustment |
(440) |
|
(456) |
Shareholders equity attributable to owners of the
parent |
146 |
|
173 |
|
Non-controlling interests |
0 |
|
0 |
TOTAL EQUITY |
147 |
|
173 |
|
|
|
|
|
|
Retirement
benefits obligations |
287 |
|
325 |
|
Provisions |
25 |
|
33 |
|
Contract
liabilities |
2 |
|
2 |
|
Other operating non-current liabilities |
22 |
|
21 |
TOTAL OPERATING NON-CURRENT LIABILITIES |
336 |
|
381 |
|
|
|
|
|
|
Borrowings |
983 |
|
948 |
|
Lease
liabilities |
97 |
|
122 |
|
Other
non-current liabilities |
1 |
|
- |
|
Deferred tax liabilities |
18 |
|
15 |
TOTAL NON-CURRENT LIABILITIES |
1,435 |
|
1,466 |
|
|
|
|
|
|
Retirement
benefits obligations |
31 |
|
30 |
|
Provisions |
67 |
|
90 |
|
Trade accounts
and notes payable |
455 |
|
710 |
|
Accrued
employee expenses |
116 |
|
142 |
|
Contract
liabilities |
53 |
|
41 |
|
Other current
operating liabilities |
191 |
|
215 |
TOTAL OPERATING CURRENT LIABILITIES |
913 |
|
1,228 |
|
|
|
|
|
|
Borrowings |
52 |
|
16 |
|
Lease
liabilities |
63 |
|
56 |
|
Income tax
payable |
18 |
|
21 |
|
Other current
financial liabilities |
1 |
|
2 |
|
Liabilities classified as held for sale |
- |
|
56 |
TOTAL CURRENT LIABILITIES |
1,047 |
|
1,379 |
|
|
|
|
|
TOTAL LIABILITIES |
2,482 |
|
2,845 |
|
|
|
|
|
TOTAL EQUITY & LIABILITIES |
2,629 |
|
3,018 |
INTERIM CONDENSED CONSOLIDATED
STATEMENT OF CASH FLOWS
|
Half year ended
June
30, |
(€ in million) |
2021 |
|
2020 |
Net income (loss) |
(79) |
|
(265) |
Income (loss)
from discontinuing activities |
(1) |
|
(1) |
Profit (loss) from continuing activities |
(78) |
|
(264) |
Summary
adjustments to reconcile profit from continuing activities to cash
generated from continuing operations |
|
|
|
Depreciation
and amortization |
108 |
|
144 |
Impairment of
assets |
- |
|
75 |
Net changes in
provisions |
(33) |
|
4 |
Gain (loss) on
asset disposals |
(29) |
|
(4) |
Interest
(income) and expense |
61 |
|
40 |
Other items
(including tax) |
13 |
|
7 |
Changes in
working capital and other assets and liabilities |
(210) |
|
(197) |
Cash
generated from continuing activities |
(168) |
|
(195) |
Interest paid
on lease debt |
(7) |
|
(10) |
Interest
paid |
(24) |
|
(25) |
Interest
received |
- |
|
- |
Income tax
paid |
(9) |
|
(1) |
NET OPERATING CASH GENERATED FROM CONTINUING ACTIVITIES
(I) |
(209) |
|
(230) |
Acquisition of
subsidiaries, associates and investments, net of cash acquired |
- |
|
(2) |
Proceeds from
sale of investments, net of cash |
27 |
|
(1) |
Purchases of
property, plant and equipment (PPE) |
(20) |
|
(17) |
Proceeds from
sale of PPE and intangible assets |
2 |
|
- |
Purchases of
intangible assets including capitalization of development
costs |
(24) |
|
(39) |
Cash
collateral and security deposits granted to third parties |
(3) |
|
(26) |
Cash
collateral and security deposits reimbursed by third parties |
8 |
|
- |
NET INVESTING CASH USED IN CONTINUING ACTIVITIES
(II) |
(10) |
|
(84) |
Increase of
Capital |
- |
|
- |
Proceeds from
borrowings |
35 |
|
394 |
Repayments of
lease debt |
(36) |
|
(42) |
Repayments of
borrowings |
- |
|
(2) |
Fees paid
linked to the debt and capital operations |
(1) |
|
(21) |
Other |
(2) |
|
4 |
NET FINANCING CASH USED IN CONTINUING ACTIVITIES
(III) |
(4) |
|
333 |
|
|
|
|
NET CASH FROM DISCONTINUED ACTIVITIES (IV) |
(16) |
|
(8) |
|
|
|
|
CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE
PERIOD |
330 |
|
65 |
Net increase (decrease) in cash and cash equivalents
(I+II+III+IV) |
(239) |
|
10 |
Exchange gains / (losses) on cash and cash equivalents |
8 |
|
(11) |
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD |
99 |
|
63 |
1 Free cash flow defined as: Adj. EBITDA – (net capex +
restructuring cash expenses + change in pension reserves + change
in working capital and other assets & liabilities + cash impact
of other non-current result).
- H1 2021_Press_Release_VUS