PRESS RELEASE
Third
Quarter 2020 results
Technicolor remains on track to meet its
full year and 2022 guidance
Paris (France), 5
November 2020 – Technicolor (Euronext Paris:
TCH; OTCQX: TCLRY) announces today its results for the third
quarter of 2020.
Richard Moat, Chief Executive Officer of
Technicolor, stated:
“The Group demonstrated its resilience in facing
the Covid-19 crisis during the third quarter. The Group’s
transformation plan has significantly improved underlying
profitability and year on year cash flow generation, even though
Technicolor has suffered in terms of sales during this difficult
period. We therefore remain confident in meeting our 2020 and 2022
outlook, and delivering profitable growth, cash generation and
value creation to our shareholders. Following the completion of our
financial restructuring, Technicolor now has the appropriate
financial structure, and will benefit from sufficient funding for
the foreseeable future to accomplish its transformation and
expansion projects.”
The Group’s activities have continued to
demonstrate resilience to the Covid-19 crisis in the third
quarter:
- Connected Home revenues were up 11% at constant rate
quarter-to-quarter, with continued strong consumer demand for
better broadband and wifi driving the positive performance,
particularly in North America (+41%
quarter-on-quarter);
- Production Services’ Film and Episodic Visual Effects
and Post Production activities were affected by the cessation of
live action shooting. However, resilience in Advertising activities
helped mitigate the impact of Covid-19;
- DVD Services were hit by the lack of new film releases
following cinema closures, but this was partly compensated by
strong back catalog demand.
As a result of these factors,
consolidated revenues for the Group were down 19.2% year to date at
current rates to €2,230 million. EBITDA of €106 million was down
48% at current rate. However, free cash flow improved by €76
million year-to-date at current rate compared to the prior year
primarily thanks to the performance of Connected Home.
Based on business activity for the last
9 months, and despite the challenging context, the Group is
confident of achieving the outlook presented in its press release
issued on July 30th, 2020, including:
- Cost savings in excess of €160 million during the year,
driven by a reduction in the permanent workforce of almost 30% vs.
December 2019;
- EBITDA 2020 target of €169 million and EBITDA 2022
target of €425 million;
- Continuing free cash flow (before financial results and
tax) in the range of €(115) to €(150) million in 2020, and at €259
million in 2022.
Technicolor’s ongoing cultural
transformation, aimed at relentlessly focusing on improving
operations, profitability and cash generation, continued in the
last quarter with the appointments of Christian Roberton as
President of Production Services and David Holliday as President of
DVD Services. Christian joined MPC in 2003, where he started as a
VFX Production Manager and within 5 years became Managing Director
of MPC Film; he has been a member of the Technicolor Executive
Committee since 2019. David was appointed in May 2020, bringing a
wealth of leadership experience to DVD Services, having spent
nearly 40 years overseas in the Middle-East, Europe, Asia, S.E.
Asia, Africa and South America – building, leading and
restructuring mobile, fixed and broadband telecoms companies in the
public and private sectors.
Key indicators from continuing
operations end of September 2020
|
Third Quarter |
YTD September |
|
|
In € million |
2019 |
2020 |
At current rate |
At
constant rate |
2019 |
2020 |
At current rate |
At
constant rate |
|
|
|
|
Revenues from continuing operations |
995 |
798 |
(19.9)% |
(15.6)% |
2 760 |
2 230 |
(19.2)% |
(18.0)% |
|
|
Adjusted EBITDA from
continuing operations |
100 |
53 |
(47.0)% |
(44.7)% |
203 |
106 |
(47.9)% |
(46.6)% |
|
|
As a % of revenues |
10.1% |
6.7% |
|
|
7.4% |
4.7% |
|
|
|
|
Adjusted EBITA from
continuing operations |
43 |
2 |
(95.0)% |
(96.6)% |
(2) |
(65) |
ns |
ns |
|
|
EBIT from continuing operations |
16 |
(17) |
ns |
ns |
(73) |
(212) |
ns |
ns |
|
|
Free Cash Flow from continuing before Tax &
Financial |
(132) |
(35) |
(73.4)% |
(67.6)% |
(343) |
(278) |
+19.0% |
+18.7% |
|
|
Free Cash Flow from
continuing operations |
(147) |
(48) |
+67.3% |
+61.5% |
(411) |
(335) |
+18.5% |
+18.1% |
|
|
9-month Group update
- Sales of €2,230 million were down 18.0% at constant rate,
including decreases in Production Services (41.2)% DVD Services
(21.3)% and Connected Home (4.8)%.
- Adjusted EBITDA of €106 million was down 46.6% at constant
rate, reflecting operational and financial improvements across all
activities, particularly in Connected Home, and a decline in Film
& Episodic Visual Effects mainly driven by cessation of live
action shooting and lower business volumes in DVD Services.
- Adjusted EBITA of €(65) million was lower by €(63) million at
current rate, mitigated by lower D&A and reserves.
- We made a €71 million impairment charge, mainly related to DVD
Services, due to Covid-19 revised assumptions.
- Restructuring costs accounted for €(51) million at current
rate, including €(20) million in Production Services on cost
streamlining actions, €(17) million in DVD Services, mainly
resulting from optimization of distribution sites, €(8) million in
Connected Home, pursuant to the three-year transformation plan, and
€(5) million for Corporate and Other.
- Free cash flow1 of €(335) million was higher by €76 million at
current rate, with a significant improvement in the third quarter
compared to 2019 driven mainly by improved Connected Home
operational performance, and the ongoing implementation of our cost
transformation program.
- Net debt at nominal value amounts to €1,044 million and IFRS
net debt amounts to €955 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.
- The Group is now targeting a total of €325 million in run-rate
cost savings by 2022, an increase of €25 million compared to our
previous announcement. At the end of September 2020 the Group had
already realized €109 million of these cost savings, and as
previously stated anticipates achieving more than €160m savings
during 2020 as a whole.
Outlook
- Adjusted continuing EBITDA of €169 million and Adjusted
continuing EBITA of €(64) million in 2020.
- Adjusted continuing EBITDA of €425 million and Adjusted
continuing EBITA of €202 million in 2022.
- It should be noted that more than €15 million of Covid-19
related costs will be included in the Group’s EBITDA in 2020.
- Continuing free cash flow (before financial results and tax) is
anticipated to be in a range of €(115) to €(150) million in 2020
and will improve to €259 million in 2022. Following the entry into
the SFA procedure, a faster than expected reduction of payment
terms was requested by suppliers, which will lead to some payments
advanced from 2021 to 2020. This will impact 2020 and 2021, but
mitigating factors will help 2021 remain in line with the strategic
plan. The positive side of these changes is that the Group’s
ambition to very significantly reduce payment terms by 2022 will be
achieved as early as the beginning of 2021. As these are timing
adjustments, the Group’s liquidity needs remain unchanged
overall.
Continuing Operations – post
IFRS 16 |
|
|
|
|
|
€m, FYE Dec post
IFRS-16 |
2019a |
2020e |
2022e |
|
|
|
|
Adjusted EBITDA from
continuing operations |
324 |
169 |
425 |
|
|
Adjusted EBITA from continuing operations |
42 |
(64) |
202 |
|
|
Continuing FCF before financial results and
tax |
(8) |
(115)-(150) |
259 |
|
|
Management update
·To continue pushing the boundaries of
what entertainment can be, and the Group’s transformation,
Technicolor has announced the appointment of Christian Roberton as
President of the Production Services Business Division.
Board composition
·The Board of Directors has appointed
Gauthier Reymondier as Board Observer. Gauthier Reymondier is
currently Managing Director, European Portfolio Manager, at Bain
Capital Credit based in London, and previously held several similar
observer positions on boards of companies in which Bain Capital
Credit had invested. Prior to this role, he was a member of the
private equity practice at Bain & Company. As of 30 September,
Bain Capital Credit held 8.197% of the share capital and voting
rights.
Successful Completion, announced on 22
September 2020, of the final steps of the financial restructuring
of the Company
- Implementation of the reinstated Debt
Facilities: Technicolor finalized and executed the
contractual documentation implementing the reinstatement of 46.5%
of the previous RCF and term loan facilities (the “Debt
Facilities”) into new term loans in an amount equivalent to €574
million in principal, maturing on 31 December 2024.
- Repayment and equitization of the non-reinstated Debt
Facilities: the significant reduction of the Group's
indebtedness, in an amount of c. €660 million, was finalized as
part of the definitive completion of the capital increase with
shareholders' preferential subscription rights and the capital
increase with cancellation of the shareholders' preferential
subscription rights in favor of the creditors of the Debt
Facilities. The non-reinstated Debt Facilities were therefore
repaid in cash for an amount of €59,716,580.58 and equitized for an
amount of €600,283,419.22.
- Closing of Chapter 15: Technicolor announced
that, on 11 September 2020, the U.S. Bankruptcy Court presiding
over Technicolor’s Chapter 15 proceedings ordered the closing of
such proceedings. This marks the final step of the Company’s
proceedings in the United States of America.
Rating Agencies
- At the end of September, S&P upgraded their rating to
“CCC+” (corporate rating) and to “B” (new debt) with stable outlook
and Moody’s upgraded their rating to “Caa2” (corporate rating), and
to “Caa1” (new debt), with stable outlook.
- These rating actions reflect the successful completion of the
Group’s financial restructuring, through which it has obtained €420
million (net of fees) of new financing, and has deleveraged via the
equitization of €660 million of debt. As previously stated,
Technicolor now has a significantly strengthened balance sheet,
with a liquidity buffer sufficient to meet its business plan needs
and potential additional requirements.
Segment Review – Third Quarter 2020
Results Highlights
|
Third Quarter |
Change QtQ |
YTD September |
Change YoY |
Production
Services |
2019 |
2020 |
Reported |
At constant rate |
2019 |
2020 |
Reported |
At constant rate |
In €
million |
Revenues |
240 |
111 |
(53.7)% |
(51.6)% |
668 |
390 |
(41.6)% |
(41.2)% |
Adj. EBITDA |
49 |
(2) |
ns |
ns |
129 |
0 |
ns |
ns |
As a % of revenues |
+20.5% |
(1.5)% |
|
|
+19.2% |
+0.1% |
|
|
Adj. EBITA |
15 |
(24) |
ns |
ns |
33 |
(75) |
ns |
ns |
As a % of revenues |
+6.3% |
(21.1)% |
|
|
+5.0% |
(19.2)% |
|
|
- Production Services revenues
amounted to €111 million in the third quarter of 2020, down 51.6%
at constant rate and down 53.7% at current rate year-on-year,
driven by the previously anticipated (pre-Covid-19) delays in
awards coming from one key client, and by the subsequent
pandemic-related impacts on production around the world.
- Adjusted EBITDA amounted to €(2) million in
the third quarter, down €50 million year-on-year at constant rate.
The Adjusted EBITDA reduction was mainly due to Film & Episodic
VFX.This negative evolution has impacted Adjusted EBITA compared to
the prior year, mitigated by lower render costs. As already
mentioned, the Advertising service line has continued to implement
cost actions to improve profitability.
- Business Highlights
- Film & Episodic Visual Effects: revenues were significantly
lower year-on-year, mainly due to the impact of the pandemic on
live action film shoots and shifting release dates.
- VFX teams worked on 7 theatrical films from the major studios,
including projects like Cruella (Disney), The Little Mermaid
(Disney), Mortal Kombat (Warner Bros.), Snake Eyes: G.I. Joe
Origins (Paramount), and Top Gun: Maverick (Paramount).
- And over 20 Episodic and/or Non-Theatrical (i.e.,
Streaming/OTT) projects, including American Gods season 3
(Fremantle/Starz), Jupiter’s Legacy (Netflix), Raised by Wolves
(HBO Max), WandaVision (Marvel/Disney+), and The Wheel of Time
(Amazon).
- During the quarter, Mr. X won the Emmy Award for Outstanding
Special Visual Effects in a Supporting Role for its work on
History’s Vikings, a series the team has worked on for all six
seasons.
- Advertising: revenues were lower compared to the prior year due
to the impact of Covid-19 on client spend and live action
production shoots during the second and third quarters.
Quarter-on-quarter, however, Advertising revenues improved
significantly as client spend began to recover, particularly in the
U.S.
- Technicolor’s Advertising businesses continued to receive
numerous industry accolades, including MPC’s Nikola Stefanovic
winning Best Colorist for his work on the 90th anniversary campaign
for Durex ‘Step Forward’ at the Golden Lion Advertising Awards in
Shanghai.
- Highlight projects delivered during the third quarter include
EA Sports ‘FIFA 21’ reveal trailer, Epic Games ‘Unreal For All
Creators’, Hennessy ‘Maurice Ashley & The Black Bear School’,
Stella ‘You’re Never Too Far From The Life Artois’, and HBO
‘Lovecraft Country: Sanctum’— a groundbreaking three-part social VR
experience for the highly acclaimed series.
- Animation & Games: revenues were relatively flat versus
prior year.
- In the third quarter, Mikros Animation was in production on 3
features, including Spin Master’s PAW Patrol: The Movie and
Paramount’s The Tiger’s Apprentice.
- In episodic animation, Technicolor continues to work on
multiple projects for clients including Disney, DreamWorks
Animation, France Télévisions, M6, Nickelodeon, TF1, and Wild
Canary.
- Technicolor Games during the quarter completed its work on EA
Sports UFC 4.
- Post Production: lower revenues compared to the prior year,
driven primarily by the pandemic’s impact on productions.
- During the third quarter, Post Production worked on projects
like Bridgerton (produced by Shonda Rhimes for Netflix), The Good
Lord Bird (Showtime), Perry Mason (HBO), and Borat Subsequent
Moviefilm (Amazon).
- Technicolor also won two Emmy Awards for Outstanding Sound
Mixing for a Limited Series or Movie and for Outstanding Sound
Editing for a Limited Series, Movie or Special - both for its work
on HBO’s Watchmen.
- Covid-19 situation update
- During the third quarter, film and episodic productions began
to restart, initially in the Asia Pacific and certain European
territories, followed by Canadian and limited U.S. productions
during the latter half of the quarter. The major U.S. studios
reached an agreement in late September with all the key Hollywood
unions, and the industry expects production activity to accelerate.
- Production Services is now in negotiations on major VFX
tentpole projects that were delayed during the first half from one
key client.
- A number of countries like Canada, France and the U.K. have
launched or will launch production insurance/indemnity schemes that
will provide pandemic-related coverage, which is also anticipated
to stimulate production activity for producers who cannot afford to
self-insure like the major U.S. studios.
- Overall, Production Services is observing an increasing level
of bidding activity for projects, particularly for streaming/OTT
distribution.
- Management and strategic changes
- To continue pushing the boundaries of what entertainment can be
and the Group’s transformation, Technicolor has announced the
appointment of Christian Roberton as President of the Production
Services Business Division. He has successfully built organically
one of the largest and most effective VFX agencies in the world.
His division has won multiple accolades over the years, including
several Oscars, while growing sales from c. €50 million up to under
€900 million. His focus on technology and creativity, combined with
cost efficiency, rigorous management and client focus will drive
Production Services to operate as a client-focused,
technology-driven and profitable global studio. Building up on the
success of Advertising, Animation & Games, and Post Production,
his mission is to drive their respective growth and margin
enhancementby cross fertilizing all current Production Services
creative knowledge and by adapting our client servicing to the
post-Covid era, marked by an increased need for technological
solutions and “digital production expertise”.
- This announcement is also part of Technicolor’s ongoing
cultural transformation aimed at relentlessly focusing on improving
profitability and streamlining operations in this Covid-19
unfavorable context.
- The business organization will be as follows:
- Film & Episodic VFX will continue to be led by Christian
Roberton, on an acting basis;
- Advertising will be led by David Patton;
- Animation & Games will be led by Greg Mandel, also on an
acting basis;
- Post Production will be led by Sherri Potter; and
- Nathan Wappet, as Production Services COO, will lead Technology
and Operations.
- The main objectives assigned to this team are:
- Defining an ambitious strategy for Production Services to
become the worldwide leader in each of its activities;
- Developing our portfolio of brands;
- Enhancing our cutting edge technologies; and
- Streamlining operations to drive profitability and cash
generation.
###
|
Third Quarter |
Change QtQ |
YTD September |
Change YoY |
DVD Services |
2019 |
2020 |
Reported |
At constant rate |
2019 |
2020 |
Reported |
At constant rate |
In €
million |
Revenues |
258 |
193 |
(25.4)% |
(22.7)% |
633 |
495 |
(21.8)% |
(21.3)% |
Adj. EBITDA |
31 |
27 |
(11.2)% |
(10.1)% |
42 |
29 |
(31.8)% |
(31.2)% |
As a % of revenues |
+11.9% |
+14.1% |
|
|
+6.7% |
+5.8% |
|
|
Adj. EBITA |
11 |
15 |
+40.2% |
+36.6% |
(20) |
(14) |
+27.6% |
+27.6% |
As a % of revenues |
+4.2% |
+7.8% |
|
|
(3.1)% |
(2.9)% |
|
|
- DVD Services revenues totaled €193
million in the third quarter 2020, down 22.7% at constant rate and
25.4% at current rate compared to the third quarter 2019, due
predominately to lower volumes across all formats as a result of
the negative impact of COVID-19 which has exacerbated the
structural decline trend. Total combined replication volumes
reached 260 million discs in the third quarter, down 23%
year-on-year. David Holliday, the newly appointed President of the
DVD Services Business Division, has been tasked with the in-depth
transformation of the business. In a very short period of time he
has already achieved the acceleration of the DVD Services
transformation with further sites closures, review of internal
processes and cost management, and a very disciplined approach to
contract negotiations.
- Adjusted EBITDA amounted to €27 million at
current rate in the third quarter, or 14.1% of revenue, better than
expectations given stronger than anticipated disc volumes and
acceleration of certain cost saving actions. The margin also
includes the benefit of other ongoing cost savings and positive
impact from contracts renegotiated in 2019. Lower D&A and
renewal contracts have helped to deliver an Adj. EBITA of €15
million.
- Business Highlights
- Standard Definition DVD volumes were down 13% in the third
quarter reflecting the lack of new release content, but overall
results were better than expected given the continued aggressive
studio and major retailer catalog promotional activity.
- Blu-rayTM volumes were down 41% in the third quarter; heavily
impacted by the lack of new release content, and without the
mitigating benefit of catalog promotions (which in general are
focused on value priced DVD content).
- CD volumes were down 42% year-on-year on a combination of
expected structural declines and Covid-19 retail impacts.
DVD Services continued to progress its
previously announced structural division-wide initiatives to adapt
distribution and replication operations, and related customer
contract agreements in response to continued volume
reductions. Multiple successful contract renegotiations were
announced in 2019, and similar efforts with other customers are
ongoing. Following protracted negotiations, the Paramount
replication / manufacturing contract will expire in mid-2021 and
will not be renewed, while the associated distribution contract
remains with Technicolor. The impact of this will be mitigated by
the accelerated actions of DVD Services in respect to its business
transformation plans.
|
Third Quarter |
September YTD |
In million units |
2019 |
2020 |
% Change |
2019 |
2020 |
% Change |
Total Combined Volumes |
338.6 |
260.2 |
(23.2)% |
784.5 |
586.4 |
(25.2)% |
By
Format |
SD-DVD |
218.8 |
189.3 |
(13.5)% |
518.0 |
409.4 |
(21.0)% |
|
Blu-ray™ |
103.6 |
61.5 |
(40.6)% |
221.2 |
150.0 |
(32.2)% |
|
CD |
16.2 |
9.4 |
(42.1)% |
45.3 |
27.0 |
(40.4)% |
By Segment |
Studio/Video |
307.3 |
240.1 |
(21.9)% |
709.8 |
537.5 |
(24.3)% |
|
Games |
12.1 |
7.7 |
(36.1)% |
21.2 |
14.0 |
(34.0)% |
|
Music
& Software |
19.2 |
12.4 |
(35.4)% |
53.4 |
34.9 |
(34.7)% |
- Covid-19 situation update
- Theatrical new release activity continues to remain very
limited with many key title release dates getting pushed out into
2021, which in most cases results in the home entertainment release
being delayed as well, directly impacting DVD Services revenue /
volume activity.
- Most major retailers have re-opened, but the level of sales
activity remains below normal. Without new release content,
some retailers are increasing allocation of shelf space for DVD
catalog / library content, which has helped support higher than
expected DVD replication volumes.
- Some production facilities continued to experience temporary
staffing shortages, but the overall impact was low.
- The level of impact throughout 2020 and beyond will be
dependent on the extent and duration of ongoing restrictions
(driven by rate of new Covid 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.
###
|
Third Quarter |
Change QtQ |
YTD September |
Change YoY |
Connected Home |
2019 |
2020 |
Reported |
At constant rate |
2019 |
2020 |
Reported |
At constant rate |
In €
million |
Revenues |
468 |
488 |
+4.2% |
+10.6% |
1422 |
1 327 |
(6.6)% |
(4.8)% |
Adj. EBITDA |
3 |
31 |
ns |
ns |
28 |
85 |
ns |
ns |
As a % of revenues |
+0.6% |
+6.3% |
|
|
+1.9% |
+6.4% |
|
|
Adj. EBITA |
0 |
15 |
ns |
ns |
(17) |
35 |
ns |
ns |
As a % of revenues |
(0.0)% |
+3.0% |
|
|
(1.2)% |
+2.7% |
|
|
- Connected Home revenues totaled €488 million
in the third quarter 2020, up 10.6% quarter-to-quarter at constant
rate and 4.2% at current rate. The division experienced demand
slowdown and supply constraints in Eurasia, which were partially
offset by increased demand from the North American cable division,
but is maintaining its market leadership in the broadband segment
and in the video Android based segment. Connected Home’s overall
results are remarkable as the division managed to achieve its
original 2020 budget targets, set prior to the arrival of the
Covid-19 crisis. Strategic choices to focus on gateway broadband
access and to transform operations to increase efficiency have
proven so far successful in the Covid-19 era. Year-to-date 2020
results are validating the solidity and future of the Connected
Home business model.
- Adjusted EBITDA amounted to €31 million in the
third quarter 2020, or 6.3% of revenue. Adjusted EBITA of €15
million, increased by €15 million compared to prior year at current
rate. This positive evolution in profitability is the result of the
transformation plan launched 2 years ago, increasing the division’s
performance and drastically improving productivity.
- Business highlights
- North America: Revenues remained strong, driven by
increased demand from cable customers for upgrades to higher-power
broadband.
- Latin America: The difficult macroeconomic situation in the
region continued driving demand down, particularly in
Brazil.
- Europe, Middle East & Africa: Sales were flat YoY both for
video and broadband. Reduction in legacy video was offset by
continued growth in the Android TV segment.
- Asia-Pacific: The video satellite business experienced
weakness, especially in India, due to lower demand, supply
constraints from some large customers and a high comparison point
last year. The broadband business suffered some slowdown driven by
a sluggish demand in Australia where commercial deployments were
impacted by Covid-19.
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
|
Third Quarter |
September YTD |
In € million |
2019 |
2020 |
% Change* |
2019 |
2020 |
% Change* |
Total revenues |
468 |
488 |
+10.6% |
1,422 |
1,327 |
(4.8)% |
By
region |
North America |
209 |
282 |
+41.2% |
607 |
745 |
+23.7% |
|
Europe, Middle East and Africa |
98 |
92 |
(1.5)% |
358 |
246 |
(30.9)% |
|
Latin America |
64 |
45 |
(15.0)% |
226 |
157 |
(22.9)% |
Asia-Pacific |
98 |
69 |
(25.9)% |
231 |
179 |
(21.3)% |
By
product |
Video |
192 |
187 |
+3.2% |
568 |
505 |
(8.7)% |
|
Broadband |
276 |
302 |
+15.6% |
853 |
823 |
(2.2)% |
(*) Change at constant rate
- Covid-19 situation update
- Connected Home is operational due to the early adoption of a
remote work model that successfully moved half of all employees off
site to ensure key engineering facilities remain safe and
open.
- The Covid-19 impact is now limited for its Asian-based
manufacturing and supply chain, but is still impacting capacity in
Latin America for manufacturing and back-end operations.
###
|
Third Quarter |
Change QtQ |
YTD September |
Change YoY |
Corporate &
Other |
2019 |
2020 |
Reported |
At constant rate |
2019 |
2020 |
Reported |
At constant rate |
In €
million |
Revenues |
28 |
5 |
(81.1)% |
(81.1)% |
37 |
18 |
(51.9)% |
(51.9)% |
Adj. EBITDA |
18 |
(3) |
ns |
ns |
5 |
(8) |
ns |
ns |
As a % of revenues |
+63.5% |
(58.4)% |
|
|
+12.8% |
(46.1)% |
|
|
Adj. EBITA |
18 |
(4) |
ns |
ns |
2 |
(11) |
ns |
ns |
As a % of revenues |
+62.5% |
(77.3)% |
|
|
+4.6% |
(62.4)% |
|
|
·Corporate & Other
includes the Trademark Licensing business.
Corporate & Other recorded revenues of €5
million in the third quarter 2020, decreasing compared to last year
due to a high comparison point last year with some retained patent
licensing revenues. Adjusted EBITDA amounted to €(3) million and
Adjusted EBITA at €(4) million.
Summary of consolidated results for the
third quarter of 2020
|
Third Quarter |
YTD September |
In € million |
2019 |
2020 |
Change* |
2019 |
2020 |
Change* |
Revenues
from continuing operations |
995 |
798 |
(19.9)% |
2 760 |
2 230 |
(19.2)% |
Change at constant currency (%) |
|
|
(15.6)% |
|
|
(18.0)% |
o/w |
Production Services |
240 |
111 |
(53.7)% |
668 |
390 |
(41.6)% |
|
DVD
Services |
258 |
193 |
(25.4)% |
633 |
495 |
(21.8)% |
|
Connected Home |
468 |
488 |
+4.2% |
1 422 |
1 327 |
(6.6)% |
|
Corporate & Other |
28 |
5 |
(81.1)% |
37 |
18 |
(51.9)% |
Adjusted EBITDA from continuing operations |
100 |
53 |
(47.0)% |
203 |
106 |
(47.9)% |
Change at
constant currency (%) |
|
|
(44.7)% |
|
|
(46.6)% |
As a % of revenues |
+10.1% |
+6.7% |
(340)bps |
+7.4% |
+4.7% |
(260)bps |
o/w |
Production Services |
49 |
(2) |
ns |
129 |
0 |
ns |
|
DVD
Services |
31 |
27 |
(11.2)% |
42 |
29 |
(31.8)% |
|
Connected Home |
3 |
31 |
ns |
28 |
85 |
ns |
|
Corporate & Other |
18 |
(3) |
ns |
5 |
(8) |
ns |
Adjusted EBITA from continuing operations |
43 |
2 |
(95.0)% |
(2) |
(65) |
ns |
Change at
constant currency (%) |
|
|
(96.6)% |
|
|
ns |
As a % of revenues |
+4.3% |
+0.3% |
(410)bps |
(0.1)% |
(2.9)% |
(290)bps |
Adjusted
EBIT from continuing operations |
29 |
(7) |
ns |
(43) |
(96) |
ns |
Change at
constant currency (%) |
|
|
ns |
|
|
ns |
As a % of revenues |
+2.9% |
(0.9)% |
(390)bps |
(1.6)% |
(4.3)% |
(270)bps |
EBIT from continuing
operations |
16 |
(17) |
ns |
(73) |
(212) |
ns |
Change at
constant currency (%) |
|
|
ns |
|
|
ns |
As a % of revenues |
+1.7% |
(2.2)% |
(380)bps |
(2.7)% |
(9.5)% |
(680)bps |
Financial
result |
(10) |
172 |
- |
(57) |
105 |
- |
Income tax |
(2) |
(1) |
- |
(9) |
(5) |
- |
Share of profit/(loss) from associates |
0 |
0 |
- |
(1) |
0 |
- |
Profit/(loss) from continuing operations |
4 |
154 |
- |
(140) |
(111) |
- |
Profit/(loss)
from discontinued operations |
(5) |
(9) |
- |
(1) |
(10) |
- |
Net income |
(1) |
144 |
- |
(141) |
(121) |
- |
(*) Change at current
rate
- Restructuring costs accounted for €(51) million at current
rate, including €(20) million in Production Services on cost
streamlining actions, €(17) million in DVD Services, mainly
resulting from optimization of distribution sites, €(8) million in
Connected Home, pursuant to the three-year transformation plan, and
€(5) million for Corporate and Other.
- The EBIT from continuing operations amounts to a loss of
€(212) million in 2020.
- The financial result totaled €105 million in 2020 compared to
€(57) million in 2019, reflecting:
- Net interest costs of €(54) million, slightly up from last year
(at €(48) million) primarily due to the interest rates on the
bridge loan in place from March to July;
- Other financial income amounted to €159 million in 2020
compared to €(9) million in 2019 mostly explained by a non-cash
gain on the equity and debt initial valuations, in application of
IFRS Standards, following the financial restructuring
process.
- Income tax amounted to €(5) million, compared to €(9) million
in 2020 year-to-date.
- Group net income therefore amounted to a loss of €(121) million
at current rate in 2020 compared to the €(141) million loss in
2019.
An analyst audio webcast hosted by Richard Moat,
CEO and Laurent Carozzi, CFO will be held today, 5 November 2020 at
7:30pm CET.
Link to the audio webcast:
http://www.technicolor.com/webcastnovember2020
The presentation slides will be made available on our website
prior to the webcast.The replay will be available
at the latest by 10:30pm (CET) on November 5th, 2020
Financial calendar
FY 2020 Results |
11 March 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 on the Euronext
Paris exchange (TCH) and traded in the USA on the OTCQX marketplace
(OTCQX: TCLRY).
Investor Relations
Christophe le Mignan: +33 1 88 24 32 83
Christophe.lemignan@technicolor.com
UNAUDITED CONSOLIDATED STATEMENT OF
OPERATIONS
|
|
|
|
9 months ended September 30, |
(€ in million) |
2020 |
|
2019 |
|
|
|
|
CONTINUING OPERATIONS |
|
|
|
Revenues |
2,230 |
|
2,760 |
Cost of
sales |
(2,040) |
|
(2,469) |
Gross margin |
190 |
|
291 |
|
|
|
|
Selling and
administrative expenses |
(214) |
|
(245) |
Research and
development expenses |
(72) |
|
(89) |
Restructuring
costs |
(51) |
|
(20) |
Net impairment gains (losses) on
non-current operating assets |
(71) |
|
(1) |
Other income
(expense) |
6 |
|
(9) |
Earnings before Interest & Tax (EBIT) from continuing
operations |
(212) |
|
(73) |
|
|
|
|
Interest
income |
0 |
|
1 |
Interest
expense |
(54) |
|
(49) |
Other
financial income (expense) |
159 |
|
(9) |
Net financial income (expense) |
105 |
|
(57) |
|
|
|
|
Share of gain
(loss) from associates |
0 |
|
(1) |
Income
tax |
(5) |
|
(9) |
Profit (loss) from continuing operations |
(111) |
|
(140) |
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
Net gain
(loss) from discontinued operations |
(10) |
|
(1) |
|
|
|
|
Net income (loss) |
(121) |
|
(141) |
|
|
|
|
Attribuable to
: |
|
|
|
- Equity
holders |
(121) |
|
(141) |
-
Non-controlling interest |
0 |
|
0 |
UNAUDITED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
|
(€ in million) |
September 30, 2020 |
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Goodwill |
748 |
|
777 |
|
851 |
|
Intangible
assets |
576 |
|
607 |
|
632 |
|
Property,
plant and equipment |
155 |
|
168 |
|
191 |
|
Right-of-use
assets |
216 |
|
248 |
|
285 |
|
Other operating non-current assets |
26 |
|
30 |
|
32 |
TOTAL OPERATING NON-CURRENT ASSETS |
1,721 |
|
1,830 |
|
1,991 |
|
|
|
|
|
|
|
|
Non-consolidated investments |
16 |
|
16 |
|
17 |
|
Other non-current financial assets |
42 |
|
43 |
|
22 |
TOTAL FINANCIAL NON-CURRENT ASSETS |
58 |
|
58 |
|
39 |
|
|
|
|
|
|
|
|
Investments in
associates and joint-ventures |
1 |
|
1 |
|
1 |
|
Deferred tax assets |
55 |
|
45 |
|
52 |
TOTAL NON-CURRENT ASSETS |
1,835 |
|
1,935 |
|
2,082 |
|
|
|
|
|
|
|
|
Inventories |
207 |
|
197 |
|
243 |
|
Trade accounts
and notes receivable |
570 |
|
486 |
|
507 |
|
Contract
assets |
78 |
|
78 |
|
79 |
|
Other operating current assets |
233 |
|
230 |
|
184 |
TOTAL OPERATING CURRENT ASSETS |
1,088 |
|
991 |
|
1,013 |
|
|
|
|
|
|
|
|
Income tax
receivable |
34 |
|
34 |
|
36 |
|
Other
financial current assets |
17 |
|
16 |
|
13 |
|
Cash and cash
equivalents |
241 |
|
63 |
|
65 |
|
Assets classified as held for sale |
1 |
|
1 |
|
- |
TOTAL CURRENT ASSETS |
1,380 |
|
1,105 |
|
1,127 |
|
|
|
|
|
|
|
TOTAL ASSETS |
3,216 |
|
3,040 |
|
3,210 |
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
|
(€ in million) |
September 30, 2020 |
|
June 30, 2020 |
|
December 31, 2019 |
|
|
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
|
Common stock
(2 183 121 shares at September 30, 2020 with nominal value of 0.01
euro per share) |
2 |
|
0 |
|
414 |
|
Subordinated
Perpetual Notes |
500 |
|
500 |
|
500 |
|
Additional
paid-in capital & reserves |
213 |
|
(409) |
|
(540) |
|
Cumulative translation adjustment |
(414) |
|
(366) |
|
(339) |
Shareholders equity attributable to owners of the
parent |
301 |
|
(275) |
|
36 |
|
Non-controlling interests |
0 |
|
0 |
|
0 |
TOTAL EQUITY |
301 |
|
(275) |
|
36 |
|
|
|
|
|
|
|
|
Retirement
benefits obligations |
336 |
|
345 |
|
342 |
|
Provisions |
37 |
|
37 |
|
30 |
|
Contract
liabilities |
3 |
|
3 |
|
3 |
|
Other operating non-current liabilities |
23 |
|
26 |
|
25 |
TOTAL OPERATING NON-CURRENT LIABILITIES |
400 |
|
410 |
|
400 |
|
|
|
|
|
|
|
|
Borrowings |
943 |
|
1 |
|
979 |
|
Lease
liabilities |
172 |
|
201 |
|
224 |
|
Other
non-current liabilities |
1 |
|
1 |
|
1 |
|
Deferred tax liabilities |
36 |
|
22 |
|
27 |
TOTAL NON-CURRENT LIABILITIES |
1,552 |
|
635 |
|
1,631 |
|
|
|
|
|
|
|
|
Retirement
benefits obligations |
32 |
|
33 |
|
33 |
|
Provisions |
54 |
|
59 |
|
70 |
|
Trade accounts
and notes payable |
742 |
|
678 |
|
825 |
|
Accrued
employee expenses |
141 |
|
139 |
|
134 |
|
Contract
liabilities |
29 |
|
29 |
|
40 |
|
Other current
operating liabilities |
243 |
|
236 |
|
302 |
TOTAL OPERATING CURRENT LIABILITIES |
1,241 |
|
1,174 |
|
1,404 |
|
|
|
|
|
|
|
|
Borrowings |
6 |
|
1,382 |
|
8 |
|
Lease
liabilities |
75 |
|
80 |
|
87 |
|
Income tax
payable |
40 |
|
44 |
|
41 |
|
Other current financial liabilities |
2 |
|
0 |
|
2 |
TOTAL CURRENT LIABILITIES |
1,362 |
|
2,679 |
|
1,542 |
|
|
|
|
|
|
|
TOTAL LIABILITIES |
2,915 |
|
3,314 |
|
3,173 |
|
|
|
|
|
|
|
TOTAL EQUITY & LIABILITIES |
3,216 |
|
3,040 |
|
3,210 |
UNAUDITED CONSOLIDATED STATEMENT OF CASH
FLOWS
|
Nine months ended September 30, |
(€ in million) |
2020 |
|
2019 |
Net income (loss) |
(121) |
|
(141) |
Income (loss)
from discontinuing activities |
(10) |
|
(1) |
Profit (loss) from continuing activities |
(111) |
|
(140) |
Summary
adjustments to reconcile profit from continuing activities to cash
generated from continuing operations |
|
|
|
Depreciation
and amortization |
210 |
|
240 |
Impairment of
assets |
74 |
|
(1) |
Net changes in
provisions |
(9) |
|
(30) |
Gain (loss) on
asset disposals |
13 |
|
11 |
Interest
(income) and expense |
54 |
|
49 |
Other non-cash
items (including tax) |
(194) |
|
4 |
Changes in
working capital and other assets and liabilities |
(241) |
|
(356) |
Cash
generated from continuing activities |
(203) |
|
(224) |
Interest paid
on lease debt |
(15) |
|
(15) |
Interest
paid |
(30) |
|
(33) |
Interest
received |
0 |
|
0 |
Income tax
paid |
(4) |
|
(12) |
Net
operating cash generated from continuing activities |
(252) |
|
(285) |
Net operating
cash used in discontinued activities |
(12) |
|
(7) |
NET OPERATING CASH GENERATED FROM CONTINUING ACTIVITIES
(I) |
(252) |
|
(285) |
Acquisition of
subsidiaries, associates and investments, net of cash acquired |
(7) |
|
(2) |
Proceeds from
sale of investments, net of cash |
9 |
|
(0) |
Purchases of
property, plant and equipment (PPE) |
(25) |
|
(57) |
Proceeds from
sale of PPE and intangible assets |
0 |
|
1 |
Purchases of
intangible assets including capitalization of development
costs |
(58) |
|
(71) |
Cash collateral and security deposits
granted to third parties |
(26) |
|
(13) |
Cash collateral and security deposits
reimbursed by third parties |
0 |
|
5 |
NET INVESTING CASH USED IN CONTINUING ACTIVITIES
(II) |
(107) |
|
(138) |
Increase of
Capital |
60 |
|
- |
Proceeds from
borrowings |
757 |
|
292 |
Repayments of
lease debt |
(64) |
|
(69) |
Repayments of
borrowings |
(158) |
|
(4) |
Fees paid
linked to the debt and capital operations |
(41) |
|
(1) |
Other |
5 |
|
5 |
NET FINANCING CASH USED IN CONTINUING ACTIVITIES
(III) |
557 |
|
223 |
|
|
|
|
NET CASH FROM DISCONTINUED ACTIVITIES (IV) |
(12) |
|
(28) |
|
|
|
|
CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE
PERIOD |
65 |
|
291 |
Net increase (decrease) in cash and cash equivalents
(I+II+III+IV) |
186 |
|
(228) |
Exchange gains
/ (losses) on cash and cash equivalents |
(10) |
|
(6) |
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD |
241 |
|
57 |
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 + net financial interests +
exchange result + other financial results and income tax)
- 11_05_2020_Q3 2020_Press Release_VUS