February 27, 2019

Full Year 2018 Results

Technicolor announces today its results for the full year 2018.

Paris (France), 27 February 2019Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) announces today its results for the full year 2018.

 

Full Year 2018 Key Indicators from continuing operations

In € million

Reported

At constant rate

2017

As published in Feb. 2018

2017

(* and **)

 

2018

As published

 (* and **)

 

2018

As published (* and **)

2018

Guidance perimeter

(** and ***)

Revenues from continuing operations

4,231

4,253

3,988

4,132

4,138

Adjusted EBITDA from continuing operations

291

341

266

284

267

Free Cash Flow from continuing operations

63

109

(43)

(34)

(51)

 

(*) Technicolor announced on 11 February 2019, its decision to dispose of its Research & Innovation (“R&I”) activity.  As a result, the Group reports the financial information of its R&I activity in Discontinued operations. It was previously presented in the Corporate and Other segment. Pursuant to IFRS 5, 2017 accounts have been restated to reclassify R&I activity as discontinued operations.

(**) Following the close of the Patent Licensing disposal, Technicolor kept a portion of its Patent Licensing revenues which was not part of the disposal (previously booked in discontinued). As a result, this contribution was retained in 2018 in its continuing results and will be reported in the future in continuing operations.

 (***) Including contribution of Patent Licensing and “R&I” businesses.

 

Before taking into account the positive impact of the announced disposal of the Research & Innovation (“R&I”) activity, 2018 Adjusted EBITDA amounted to €267 million at constant rate within the revised guidance communicated by Technicolor in December 2018 (see reconciliation of 2017 and guidance perimeter on page 9).

Full Year 2018 Key Highlights

  • Revenues from continuing activities were €3,988 million, down 3% year-on-year at constant rate, with an Adjusted EBITDA of €266 million compared to €341 million in 2017. Sales in the second half of the year grew by 3% at constant rate, driven in particular by a solid 5% during the last quarter.
  • Production Services recorded a solid performance, up 6% year-on-year at constant rate, including 7% growth during the second half at constant rate. This growth was driven in particular by the Film & TV Visuals Effects activity resulting from significant capacity expansion throughout the year.
  • In DVD Services, revenues declined by 5% at constant rate year-on-year, down 2% in the second half.  The stronger than expected volume decline in 2018, affecting particularly the distribution activity, has led to a depreciation of the division goodwill. As a result, a non-cash impairment charge of €(77) million is booked in the 2018 accounts.
  • Connected Home revenues totaled €2,218 million in 2018, down 5% year-on-year at constant rate (mainly due to the year on year decline in the North American video market) but up 5% at constant rate in the second half.
  • Restructuring amounted to €(62) million at current rate, including €(34) million for Connected Home (pursuant to the three-year transformation plan), and €(26) million, mainly resulting from sites closures in the US for Post Production and DVD Services.
  • Full Year free cash flow from continuing operations (excluding “R&I”) was €(43) million, down by €143 million year-on-year at constant rate, with a second half free cash flow of €94 million.
  • Further simplification of the Group’s structure has been achieved, beyond the Patent Licensing activity disposal, with the announced disposal of its Research & Innovation activity to Interdigital.
  • Solid financial structure, with a nominal gross debt of €1,029 million, down €74 million compared to 31 December 2017. The Group also had a strong level of liquidity at the end of December, including cash on hand of €291 million and committed undrawn credit lines of €394 million.
  • Nominal net debt at the end of 2018 amounted to €738 million, €(46) million lower than 2017. This decrease reflects mainly the positive impact of the €117 million net proceeds from the sale of Patent Licensing, offset by €(43) million from continuing operations free cash flow , €(17) million of R&I accounted for in discontinued free cash flow, and others of €(11) million.

Strategy update

  • In 2018 Technicolor increased its investments in organic growth in Production Services and in the transformation program in Connected Home. These initiatives are expected to continue over the next few years in well-defined areas.
  • Specifically:
    • The Group will continue to build upon its strong position as worldwide leader in Production Services by increasing capacity (in particular in India, France, Australia and Canada), while continuing to improve profitability;
    • In Connected Home, the benefits from the implementation of the ongoing transformation plan and the expected improvement in components availability and pricing, will enable the Group to invest in market share gains in broadband access and Android based video solutions which will lead to improving margins over the next several years.
    • In DVD Services the Group expects to start renewing contracts with its major customers on improved trading terms over the next several years to reflect structural reductions in volumes.

Guidance

  • The Group will no longer provide specific numerical guidance for the current or future financial years. It will continue to pursue leverage reduction through improved profitability and cash generation.

Governance

  • The Board of directors of Technicolor appointed today Mindy Mount as Vice Chairman of the Board. This is further to Bruce Hack’s announcement to the Board that he will not apply for the renewal of his term as Director at the next shareholders’ meeting.

Dividend

  • The Board of Directors of Technicolor will not propose a dividend to the 2019 Annual General Meeting of Shareholders.

 

An analyst audio webcast hosted by Frederic Rose, CEO, and Laurent Carozzi, CFO, will be held Wednesday, 27 February 2019 at 6:30pm CET.

Link to the Audio Webcast
http://www.technicolor.com/webcastFY2018

(The presentation slides will be made available on our website prior to the webcast)
The replay will be available at the latest by 9:30pm (CET) on February 27, 2019

 

Financial calendar

Q1 2019 business update

24 April 2019

H1 2019 results

24 July 2019

 

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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. Our commitment: supporting the delivery of exciting new experiences for consumers in theaters, homes and on-the-go.

www.technicolor.com – Follow us: @Technicolorlinkedin.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

Christophe Le Mignan : +33 1 88 24 32 83
christophe.lemignan@technicolor.com

 

 

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