Technicolor announces its results for the first half of 2017 today.
Paris (France), 26 July 2017 – Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) announces today its results for the first half of 2017.
Frederic Rose, Chief Executive Officer of Technicolor, stated:
“Following a slow start to the year, we saw a marked improvement in the latter half of the period across all our operating businesses which we expect to carry through for the rest of the year.”
First Half 2017 key highlights
· First half 2017 revenues were at €2,146 million and the Adjusted EBITDA at €107 million. This was largely attributed to:
o The Connected Home Adjusted EBITDA decreased year-on-year as a result of lower revenues versus a very strong first half 2016 performance, which was exacerbated by the €30 million negative impact of memory price increases;
o The Technology segment revenues declined compared to a very strong first half 2016 performance and due to the expiry of Digital TV agreements in anticipation of the ramp up of the joint licensing program with Sony.
· Entertainment Services saw a stable Adjusted EBITDA as Production Services revenue and profit growth was constrained by capacity ramp up and DVD Services improvement in margin was offset by a mix which was heavily weighted toward Standard Definition discs;
· Free cash flow excluding cash impacts of the CRT[4] case settlements amounted to €(67) million due to the lower Adjusted EBITDA. Group free cash flow amounted to €(148) million;
· Technicolor reinforced its cost optimization program while working on ongoing mitigation actions related to the memory cost impact.
Full Year 2017 objectives confirmed
As a result of the memory price increases affecting Connected Home profitability, Technicolor expects to deliver an Adjusted EBITDA in the range of €420 million to €480 million as announced on June 29, 2017.
The Group confirms its free cash flow objective (in excess of €150 million before cash impacts of the CRT cartel case settlements). These cash settlements amounted to €81 million and were paid in the first half of 2017.
These objectives are calculated based on constant exchange rates.
Summary of consolidated results for the first half of 2017 (unaudited)
Summary P&L
|
First Half |
Change YoY |
||||
|
In € million |
2016 |
2017 |
Reported |
At constant rate |
|
|
Group revenues from continuing operations |
2,420 |
2,146 |
(11.3)% |
(12.6)% |
|
|
Group revenues excluding exited activities[2] |
2,418 |
2,146 |
(11.3)% |
(12.5)% |
|
|
Adjusted EBITDA from continuing operations |
265 |
107 |
(59.8)% |
(60.9)% |
|
|
As a % of revenues |
11.0% |
5.0% |
(6.0)pts |
|
|
|
Adjusted EBIT before PPA[3] amortization |
179 |
22 |
(87.7)% |
ns |
|
|
As a % of revenues |
7.4% |
- |
- |
|
|
|
Adjusted EBIT from continuing operations |
152 |
(4) |
ns |
ns |
|
|
As a % of revenues |
6.3% |
- |
- |
|
|
|
EBIT from continuing operations |
93 |
(37) |
ns |
ns |
|
|
As a % of revenues |
3.8% |
- |
- |
|
|
|
EBIT excluding PPA5amortization |
120 |
(11) |
ns |
ns |
|
|
As a % of revenues |
5.0% |
- |
|
|
|
|
Financial result |
(73) |
(62) |
+11 |
|
|
|
Income tax |
(30) |
(11) |
+19 |
|
|
|
Share of profit/(loss) from associates |
0 |
0 |
0 |
|
|
|
Profit/(loss) from continuing operations |
(10) |
(110) |
(100) |
|
|
|
Profit/(loss) from discontinued operations |
(44) |
4 |
+48 |
|
|
|
Net income |
(54) |
(106) |
(52) |
|
|
Group revenues from continuing operations totaled €2,146 million in the first half of 2017, down by 12.6% at constant currency compared to the first half of 2016, resulting mainly from lower revenues in the Connected Home segment and in DVD Services.
Adjusted EBITDA from continuing operations amounted to €107 million in the first half of 2017, down 60.9% at constant currency compared to the first half of 2016. The Adjusted EBITDA margin amounted to 5.0%, down by 6 points year-on-year due mainly to the margin squeeze in the Connected Home segment due to the memory cost impact and the much lower contribution of the high-margin Technology business.
Depreciation and Amortization amounted to €119 million out of which €26 million of amortization was related to purchase price allocation, mostly related to the 2015 acquisitions.
EBIT from continuing operations totaled €(37) million in the first half of 2017. This was mostly due to the lower Adjusted EBITDA as restructuring costs and other non-current items recorded a significant decrease compared to last year. Restructuring provisions were mainly taken in the Connected Home segment and in DVD Services. Non-current items were much lower notwithstanding some additional integration fees in the Connected Home segment. Excluding the purchase price allocation amortization, EBIT from continuing operations was a loss of €11 million in the first half of 2017.
The Group’s financial result totaled €(62) million in the first half of 2017 compared to €(73) million in the first half of 2016, reflecting:
· Net interest costs amounted to €(24) million in the first half of 2017 compared to €(44) million in the first half of 2016, reflecting lower interest expense both related to lower debt (317m€ of net repayments done in 2016) and lower average interest rates due to the 2017 refinancing;
· Other financial charges amounted to €(38) million in the first half of 2017 compared to €(29) million in the first half of 2016. These charges included the IFRS adjustment write off for €27 million, that was generated by the repayment of the old Term Loan maturing in 2020.
Income tax amounted to €11 million, lower by €19 million compared to last year, mostly due to lower results.
Net income was a loss of €106 million in the first half of 2017 compared to a loss of 54 million in the first
half of 2017.
Summary statement of financial position and cash position
|
First Half |
Change |
||
|
In € million |
2016 |
2017 |
|
|
Free cash flow excluding CRT settlements |
122 |
(67) |
(189) |
|
Group free cash flow |
98 |
(148) |
(246) |
|
Nominal gross debt |
1,330 |
1,099 |
(231) |
|
Cash position |
434 |
183 |
(251) |
|
Net financial debt at nominal value (non IFRS) |
896 |
916 |
+20 |
|
IFRS adjustment |
(67) |
(7) |
+60 |
|
Net financial debt (IFRS) |
829 |
909 |
+80 |
· Capital expenditures amounted to €69 million, down by €5 million year-on-year;
· Cash outflow for restructuring totaled €29 million in the first half of 2017, down by €4 million year-on-year, mainly resulting from lower restructuring costs in the Technology segment;
· The change in working capital & other assets and liabilities was negative €29 million in the first half of 2017 mostly driven by the seasonality of DVD services;
Group free cash flow amounted to €(148) million in the first half of 2017, including:
· Financial charges were €37 million, down by €10 million year-on-year due to lower interest expense both related to lower debt (€317million of net repayments done in 2016) and lower average interest rates due to refinancing;
· Tax cash inflow was €3 million, improved by €43 million year-on-year, due to lower results and the monetization of research tax credit for around €10 million;
· Other cash charges reached €20 million, mainly reflecting pensions for €12 million and Connected Home integration cash outflow for €2 million;
· Cash impact of the CRT settlements amounted to €81 million.
Nominal gross debt totaled €1,099 million at end June 2017, up €16 million versus end December 2016, after partial refinancing of the Group’s debt in March 2017.
The Group’s cash position amounted to €183 million at end June 2017, down by €188 million compared to end December 2016, mainly reflecting the negative free cash flow and the dividend payment for €25 million.
Net debt at nominal value amounted to €916 million at end June 2017, compared to €712 million at end December 2016 mainly due to the lower cash position.
An analyst audio Webcast hosted by Frederic Rose, CEO, and Esther Gaide, CFO, will be held Thursday, 27 July 2017 at 9:00 am CEST.
Link to the Audio Webcast
http://www.technicolor.com/webcastH12017 (The presentation slides will be made available on our website prior to the Webcast)
The replay will be available at the latest by 12pm (CEST) on July 27th until October 25th, 2017
Financial calendar
|
Q3 2017 business update |
26 October 2017 |
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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.
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About Technicolor
Technicolor, a worldwide technology leader in the media and entertainment sector, is at the forefront of digital innovation. Our world class research and innovation laboratories enable us to lead the market in delivering advanced video services to content creators and distributors. We also benefit from an extensive intellectual property portfolio focused on imaging and sound technologies. Our commitment: supporting the delivery of exciting new experiences for consumers in theaters, homes and on-the-go.
www.technicolor.com – Follow us: @Technicolor – linkedin.com/company/technicolor
Technicolor shares are on the NYSE Euronext Paris exchange (TCH) and traded in the USA on the OTCQX marketplace (OTCQX: TCLRY).
Investor Relations
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[1] Six months ended June 30, 2016 amounts have been restated due to the finalization of the 2015 acquisitions purchase price allocation (PPA) in the second semester of 2016. Selling and administrative expenses have been increased by €2 million to adjust the amortization of customer relationships recognized within these PPA.
[2] Digital Cinema and Distribution Services in the Entertainment Services segment, IZ-ON, M-GO and Virdata activities in the Other segment.
[3] Purchase Price Allocation.
[4] CRT: Cathode Ray Tubes