PRESS RELEASE
Technicolor:
First
Quarter
2021
Results
Positive start to the
year in a challenging environment
Technicolor on track to deliver
2021 and 2022
guidance
First quarter
2021 marks net profitability improvement
vs. first quarter
2020
Paris (France),
May 11,
2021 –
Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) is today
announcing its results for the first quarter 2021.
Richard Moat, Chief Executive Officer of
Technicolor, stated:
“Technicolor’s first quarter 2021 results
demonstrate continued progress with the Group’s turnaround
strategy, and our business divisions are benefiting from strong and
growing demand. Live action production is ramping up, and more than
90% of our 2021 visual effects and animation pipeline is already
secured, in collaboration with Hollywood’s most prestigious
studios. The demand for state-of-the-art broadband gateways is four
times what it was 12 months ago, driving the continuing improvement
in performance of our Connected Home division. Our transformation
has delivered improved financial results, whilst making the Group
more resilient and innovative in the face of the pandemic. The
Group is maintaining its guidance towards strong figures for the
rest of the 2021 financial year, and is confirming its previously
issued 2022 guidance.”
Technicolor
delivered a
positive first quarter 2021
despite the continuing impact of the
pandemic, with results in line with
expectations:
-
Revenues totalled €711
million, a 3.7% decrease year-on-year at current exchange
rate but a 3.6% increase at
constant exchange rate;
-
Adjusted EBITDA of €43 million up
71.7% at
constant rate reflects operational and financial improvements
across all activities;
-
Adjusted EBITA of €(1)
million represents a
€33 million
year-on-year improvement
at constant
rate;
-
Free cash flow (before financial results and tax) from
continuing operations of €(196) million represents
a €118
million year-on-year improvement
at current rate.
Technicolor activities are benefiting
from a strong and growing demand driven by the urge to equip homes
with strong broadband access, the need
for original content from studios
and streamers, and
appetite for catalog DVDs.
The main challenges in
2021 are the capacity to
deliver given component
and recruitment
constraints.
-
Production Services were
awarded several new projects, securing
approximately 90% of
their expected 2021 revenue pipeline for
Film & Episodic Visual Effects and Animation & Games.
Moreover, operating efficiencies have continued to be harvested,
leading to a strong performance in
Adjusted EBITDA
and Adjusted
EBITA.
-
Connected Home revenues were up
18% at constant rate
year-on-year with
increased demand from the North American
cable division and stronger than
anticipated demand in
Eurasia. The current
key
components scarcity is,
however, slowing revenue growth, and reducing
profitability in the first
quarter.
The impact is expected to grow in the
second and third quarters before
plateauing in
the fourth quarter.
Nevertheless, as a result of
efficiency measures being
implemented, full year
targets are
confirmed.
-
DVD Services revenues were down
less than expected at
(8)%
at constant rate,
sustained by strong
catalog demand and growth in non-disc related
supply chain activity.
The Group is well on track to
achieve the c. €115
million cost savings
planned for calendar year 2021, with €20
million cost savings realized in the first quarter,
en route to delivering a
cumulative €325 million by the end of
2022.
Based on business
activity for the first 3 months, the Group is confident of
achieving the outlook presented in its FY 2020 press release issued
on March 11, 2021.
First quarter
2021 results
and forward outlook – key highlights:
|
First Quarter |
|
In € million |
2020 |
2021 |
Atcurrentrate |
Atconstantrate |
|
|
Revenues from continuing operations |
739 |
711 |
(3.7)% |
+3.6% |
|
Adjusted EBITDA from continuing operations |
27 |
43 |
+58.4% |
+71.7% |
|
As a % of
revenues |
3.6% |
6.0% |
|
|
|
Adjusted EBITA from continuing operations |
(34) |
(1) |
+96.4% |
+97.8% |
|
Free Cash Flow from continuing operations before
Tax & Financial |
(314) |
(196) |
+37.6% |
+32.1% |
|
First quarter
2021 key indicators
for continuing operations
-
Revenues of €711 million were up 3.6% at constant rate reflecting,
as expected, a decrease in Production Services of (15)%, primarily
driven by lower revenue in Film & Episodic Visual Effects, and
in DVD Services of (8)%, mainly due to lower volumes. However,
there was an extremely strong performance in Connected Home,
particularly in North America and Eurasia, where revenue growth
(+34% and +29% respectively) was driven by increased underlying
demand, mitigating a lower performance from Latin America.
-
In the first quarter 2021, the Group realized €20 million of cost
savings.
-
Adjusted EBITDA of €43 million was up 72% at constant rate. This
reflects operational and financial improvements across all
activities, particularly in Connected Home, and lower business
volumes in Film & Episodic Visual Effects compared to first
quarter 2020, a quarter not yet affected by Covid-19.
-
Adjusted EBITA of €(1) million represents a €33 million
year-on-year improvement at current rate, as a result of the EBITDA
increase and the positive impact of efficiency measures, in
particular lower D&A, following lower render spend for
Production Services and lower IP depreciation for DVD
Services.
-
Restructuring costs amounted to €(14) million at current rate,
including €(11) million in DVD Services for the costs of
optimization of sites.
-
The change in working capital of €(191) million reflects mainly the
end of the payment terms normalization and also the seasonality
trend at Connected Home. With a cash-out impact of €(120) million
in the first quarter 2021, Connected Home has finished its cycle of
payment terms reductions, and will, starting in the second quarter
2021, benefit from a normalized and de-risked working capital
contribution. It should also be noted that Production Services has
started to benefit again from down payments, the mark of the return
of studios to large orders.
-
Free cash flow1 (before financial results and tax) from continuing
operations of €(196) million represents a €118 million year-on-year
improvement at current rate, driven by a significant improvement in
Connected Home operational performance, working capital improvement
in Production Services and DVD Services, and the ongoing
implementation of our cost transformation program.
-
Net debt at nominal value amounts to €1,156 million, and IFRS net
debt amounts to €1,074 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, in particular Connected Home broadband
boxes and Production Services’ 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, particularly in the second and third quarters.
Labor constraints will also affect Production Services and DVD
Services. Nonetheless, efficiency measures and improvements in
delivery should combine to boost performance throughout the
year.
-
After achieving €171 million of cost savings in 2020, the Group
will continue to improve efficiency and productivity throughout the
period, and continues to target a total of €325 million in run-rate
cost savings by end 2022, with €115 million coming in 2021.
-
Technicolor will continue to significantly improve its Adjusted
EBITDA, Adjusted EBITA and FCF in 2021 and 2022 and, following the
recent change in perimeter (sale of Post Production) and the change
in forex assumptions, 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 cumulated impact of foreign exchange fluctuations and
change in Group perimeter as a result of the sale of Post
Production are €(40) million on Adjusted EBITDA and €(23) million
on Adjusted EBITA.
-
As of end of the first quarter 2021, IFRS16 impacts Technicolor’s
KPIs as follows:
-
Adjusted EBITDA improved by €14 million and decreased by €4 million
vs. the impact in first quarter 2020;
-
Adjusted EBITA improved by €4 million and increased by €1 million
vs. the impact in first quarter 2020;
-
FCF before financial results and tax improved by €18 million and
decreased by €(1) million vs. the impact in first quarter
2020;
-
Capital leases (principal repayment and interest) cash out totalled
c. €4 million and decreased by €3 million vs. the impact in first
quarter 2020.
Perimeter Change
- Technicolor announced on April 30,
2021 the closing of the disposal of its Post Production business
(part of Production Services) for €30 million. The sale of Post
Production simplifies Production Services’ portfolio of activities,
and allows management to increasingly focus on Production Services’
remaining core CGI activities.
Combined general meeting to be held on May 12,
2021
- Technicolor SA’ shareholders
general meeting will be held behind closed door on May 12, 2021 at
3 pm CET.
- The Meeting will be broadcasted
live and the webcast will also be available afterwards on the
Company's website.
- On May 10, 2021, the Company was
informed by Mr. Luigi Rizzo that, due to his acceptance of a new
position, he is no longer able to accept the functions of member of
the Board of Directors of the Company and consequently withdraws
his application to the position of Director as it appears on
the agenda of the General Meeting.
As the draft resolution n° 8 ("Appointment of
Mr. Luigi Rizzo as Director") has become devoid of purpose, votes
on this draft resolution, cast prior to the General Meeting in
accordance with the provisions of Ordinance n° 2020-321 of March
25, 2020 as amended, will not be taken into account.
Segment Review – First
Quarter 2021
Results Highlights
|
First Quarter |
Change YoY |
Production Services |
2020 |
2021 |
Reported |
At constant rate |
In € million |
Revenues |
176 |
140 |
(20.8)% |
(16.6)% |
Adj. EBITDA |
11 |
14 |
+23.0% |
+29.5% |
As a % of revenues |
+6.2% |
+9.7% |
|
|
Adj. EBITA |
(15) |
(2) |
+85.8% |
+85.1% |
As a % of revenues |
(8.4)% |
(1.5)% |
|
|
-
Production Services revenues
amounted to €140 million in the first quarter of 2021, down (16.6)%
at constant rate and (20.8)% at current rate year-on-year, due to
slower than anticipated ramp-up of projects following
pandemic-related impacts on production around the world. The
revenue decline was partially mitigated by significant revenue
growth at MPC Episodic, where sales more than doubled in absolute
value.
-
Adjusted EBITDA amounted to €14 million, up €3
million year-on-year at constant rate, and Adjusted EBITA was €(2)
million, up €13 million year-on-year as a result of lower cloud
rendering costs. Advertising Adjusted EBITDA and Adjusted EBITA,
despite a sharp drop in its revenues linked to the pandemic,
increased compared to 2020, showing the positive impact of its
transformation activities on margin.
Production Services has been awarded numerous
new projects, securing approximately 90% of its expected 2021 sales
pipeline for Film & Episodic Visual Effects and Animation &
Games.
-
Key appointments in the first
quarter
-
Josh Mandel appointed CEO of The Mill.
-
Andrea Miloro hired as President of Mikros Animation. Her
appointment reinforces Technicolor’s commitment to expand the
company’s global feature and episodic animation services under the
Mikros Animation brand.
-
Other business updates
-
The sale of Post Production closed at the end of April.
-
Successful transformation
Christian Roberton, as President of the
Production Services Business Division, has continued to implement
management changes to drive the transformation of Production
Services into an efficient creative production platform. He is
maintaining a relentless focus on improving profitability and
streamlining operations, and the following actions have been
launched in the first quarter:
-
Continued harmonization of technology infrastructure and R&D
efforts to eliminate inefficiencies from previously siloed
operations;
-
Substantial progress made on the “One India” strategic alignment
that will continue throughout 2021;
-
Further development of data-driven sales strategies and resource
optimization tools.
-
Business Highlights
-
Film & Episodic Visual Effects: revenues were significantly
lower year-on-year, mainly due to slower ramp-up of projects
following the continued impact of the pandemic on live-action film
shoots.
-
VFX teams worked on over 12 theatrical films from the major
studios, including Cruella (Disney), The Lion King prequel
(Disney), The Little Mermaid (Disney), Mortal Kombat (Warner
Bros./New Line), and Nightmare Alley (Searchlight Pictures).
-
And over 25 Episodic and/or Streaming projects, including Chip ‘n
Dale: Rescue Rangers (Disney+), The Nevers (HBO), Pennyworth
(Warner Bros. Television/Epix), Pinocchio (Disney+), WandaVision
(Marvel/Disney+), and The Wheel of Time (Amazon).
-
During the quarter, MPC Film received Oscar® and BAFTA nominations
for their work on Disney’s The One and Only Ivan; and Mr. X
received its first Oscar® nomination for Paramount’s Love and
Monsters.
-
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 quarter, Technicolor’s Advertising businesses delivered
over 1,000 commercials including approximately 20 Super Bowl spots,
while winning three VES Awards and six British Arrows.
-
Notable projects included Audi ‘Future Is an Attitude’, Dell
‘Youniverse’, Electronic Arts Apex Legends ‘Stories from the
Outlands – Fight Night’, Mercedes S-Class Alicia Keys ‘Pieces’, and
Samsung ‘Awesome Is for Everyone 2’.
-
Animation & Games: revenues were stable versus prior year.
-
During the quarter, Mikros Animation was in production on multiple
films, including Spin Master’s PAW Patrol: The Movie and
Paramount’s The Tiger’s Apprentice, and was verbally awarded two
additional feature projects.
-
On the episodic side, Technicolor continues to work on several
series, including ALVINNN!!! and the Chipmunks (M6), Chicken Squad
(Wild Canary/Disney), Fast & Furious: Spy Racers (DreamWorks
Animation/Netflix), Kamp Koral: SpongeBob's Under Years
(Nickelodeon/Paramount+), and Mira, Royal Detective (Wild
Canary/Disney).
-
Post Production: lower revenues compared to the prior year, driven
primarily by the pandemic’s impact on productions.
-
Covid-19 situation update
-
There continue to be production stoppages/delays as the latest
waves of the pandemic temporarily restrict production activity or
limit international travel for talent and crew. Nevertheless,
as vaccinations continue to roll out globally, the industry remains
optimistic about a steady return to normalcy during the back half
of 2021.
-
Recent Covid-19 surges in India, Toronto and Montreal have required
Production Services to shift back to work-from-home for almost all
staff during the second quarter to maintain operating capacity. The
Group continues to take steps to provide assistance to staff in
India affected by the pandemic.
###
|
First Quarter |
Change YoY |
Connected Home |
2020 |
2021 |
Reported |
At constant rate |
In € million |
Revenues |
393 |
428 |
+8.7% |
+18.3% |
Adj. EBITDA |
16 |
28 |
+72.7% |
+90.5% |
As a % of revenues |
+4.1% |
+6.4% |
|
|
Adj. EBITA |
(1) |
10 |
ns |
ns |
As a % of revenues |
(0.2)% |
+2.4% |
|
|
-
Connected Home revenues totaled €428 million in
the first quarter 2021, up 18.3% year-on-year at constant rate and
+8.7% at current rate. The division continued to experience supply
challenges due to Covid. Demand was strong in North America and in
Eurasia, but Latin America showed some slowdown. The division is
maintaining its market leadership in the Broadband segment and in
the Android-based video segment.
Although demand will remain strong throughout
2021, the Covid pandemic has created distortions in the industry
with disruption to global logistics. Shortages in semiconductors,
which started in the second half of 2020 and are affecting many
industries, will continue to impact the remainder of 2021:
-
Difficulties with component supply, due to high overall demand, is
increasing the price of some component costs;
-
Component shortages could delay sales during the coming
months.
In consequence, Connected Home will continue to
work with its partners and customers to minimize supply
disruptions. Technicolor has engaged in commercial discussions in
order to pass surcharges through to customers.
Adoption of DOCSIS 3.1 and Fiber gateways is
expected to continue through 2021. Technicolor Connected Home is
already working with multiple major Tier 1 operators in North
America, Europe and Latin America to meet current deployment
demands. We anticipate the next wave of the expanding market for
DOCSIS 3.1 and Fiber as operators make the transition to next
generation Wi-Fi technologies and higher speeds like 10G. In the
video STB segment, as stated in March this year, Technicolor
Connected Home announced its latest milestone achievement in the
deployment of over 10 million Android TV set-top boxes (STBs) since
the beginning of the initiative in 2016.
-
Adjusted EBITDA amounted to €28 million in the
first quarter 2021, or 6.4% of revenue, up €14 million at constant
rate driven by the increased demand from the North American cable
division, and OPEX improvement initiatives implemented in 2020.
Adjusted EBITA of €10 million increased by €12 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
to support pandemic related remote work and education
activities.
-
Latin America: the difficult macroeconomic situation in the region
continued to drive demand down, particularly in Brazil and
Mexico.
-
Eurasia
- Europe, Middle
East & Africa: significant increase of revenues due to strong
demand in Europe both for Broadband and Video products, and
expansion of new gateway and set top box technologies to a larger
customer base.
- Asia Pacific:
exceeded prior year revenues due to a rebound in India in
preparation for the transfer of manufacturing that will be
effective in second quarter 2021. Demand remains strong in the
Australian and Korean markets.
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 Quarter |
In € million |
2020 |
2021 |
% Change(*) |
Total revenues |
393 |
428 |
+18.3% |
By region |
Americas: |
276 |
288 |
+13.7% |
|
|
212 |
264 |
+34.0% |
|
|
64 |
24 |
(53.4)% |
|
Eurasia: |
117 |
139 |
+29.3% |
- Europe, Middle East and Africa
|
74 |
84 |
+24.5% |
|
43 |
55 |
+37.7% |
By product |
Video |
154 |
141 |
(0.9)% |
|
Broadband |
239 |
287 |
+30.8% |
(*) Change at constant rate
###
|
First Quarter |
Change YoY |
DVD
Services |
2020 |
2021 |
Reported |
At constant rate |
In € million |
Revenues |
160 |
139 |
(13.4)% |
(7.7)% |
Adj. EBITDA |
1 |
4 |
ns |
ns |
As a % of revenues |
+0.6% |
+3.1% |
|
|
Adj. EBITA |
(16) |
(6) |
+63.9% |
+60.5% |
As a % of revenues |
(10.0)% |
(4.2)% |
|
|
-
DVD Services revenues totalled €139 million
in the first quarter 2021, down (7.7)% at constant rate and (13.4)%
at current rate compared to 2020, driven predominately by a (10.7)
% reduction in total replicated disc activity. This was partially
mitigated by pricing improvements following the studio contracts
renegotiations, and by growth in non-disc related supply chain
activity. Covid-19 continued to have a negative impact in the first
quarter, predominantly related to a significantly reduced level of
new release activity as compared to the first quarter of 2020
(which was largely unimpacted by Covid).
-
Adjusted EBITDA amounted to €4 million, or 3.1% of
revenue, better than expectations given stronger than anticipated
disc volumes, improved replication pricing, and the acceleration of
cost saving actions, partially offset by labor cost pressures and
various impacts from severe weather events experienced in the US in
the first quarter. Lower depreciation & amortization and the
positive impact of past contracts renewals helped to deliver an
Adjusted EBITA of €(6) million compared to €(16) million in the
first quarter 2020.
-
Business Highlights
-
Standard Definition DVD volumes were up 1.4% in the first quarter
2021 driven by the ongoing aggressive push of back catalog product
by the major studios and their retailer partners.
-
Blu-rayTM volumes were down (30.7)% in the first quarter
year-on-year, due to the aforementioned lack of new release
content, and without as much mitigating benefit from catalog
promotions.
-
CD volumes were down (34.5)% year-on-year on a combination of
expected structural declines and Covid-19 retail impacts.
DVD Services continued to progress on 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 quarter of 2021 as part of the ongoing
transformation plan.
|
First Quarter |
In million units |
2020 |
2021 |
% Change |
Total Combined Volumes |
174.1 |
155.5 |
(10.7)% |
By Format |
SD-DVD |
109.8 |
111.3 |
+1.4% |
|
Blu-ray™ |
53.1 |
36.8 |
(30.7)% |
|
CD |
11.3 |
7.4 |
(34.5)% |
By Segment |
Studio/Video |
157.3 |
144.3 |
(8.3)% |
|
Games |
3.0 |
2.1 |
(29.6)% |
|
Music & Software |
13.8 |
9.1 |
(34.2)% |
-
Covid-19 situation update
-
Theatrical new release activity remains suppressed, but showed an
increasing trend over the course of Q1 2021 as theaters begin to
reopen, and major new titles like Godzilla vs. Kong were well
received by audiences in the U.S. and internationally.
-
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 Q1
2021.
-
Some U.S. production facilities continue to experience
temporary staffing challenges / shortages, driven in-part by the
ongoing availability of unemployment subsidies.
-
The ongoing Covid-19 impact will be dependent on the extent and
duration of continuing restrictions (driven by the rate of
vaccinations and prevalence of Covid within each country / region).
DVD Services has already accelerated certain aspects of its future
restructuring plans in an effort to adapt to these impacts.
###
|
First Quarter |
Change YoY |
Corporate &Other |
2020 |
2021 |
Reported |
At constant rate |
In € million |
Revenues |
9 |
5 |
(40.3)% |
(40.3)% |
Adj. EBITDA |
(1) |
(3) |
ns |
ns |
As a % of revenues |
(11.0)% |
(48.7)% |
|
|
Adj. EBITA |
(2) |
(4) |
(72.0)% |
(81.3)% |
As a % of revenues |
(22.8)% |
(65.6)% |
|
|
-
Corporate & Other includes the Trademark
Licensing business.
Corporate & Other recorded revenues of €5
million in the first quarter 2021, decreasing compared to last
year. Adjusted EBITDA amounted to €(3) million and Adjusted EBITA
was €(4) 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 |
362 |
Floating |
12.00%(2) |
Bullet |
Jun. 30, 2024 |
Caa1/B |
|
New Money Term Loans |
USD |
105 |
109 |
Floating |
12.23%(3) |
Bullet |
Jun. 30, 2024 |
Caa1/B |
|
Reinstated Term Loans |
EUR |
453 |
376 |
Floating |
6.00%(4) |
Bullet |
Dec. 31, 2024 |
Ca/CCC |
|
Reinstated
Term Loans |
USD |
121 |
100 |
Floating |
5.95%(5) |
Bullet |
Dec. 31, 2024 |
Ca/CCC |
|
Subtotal |
EUR |
1,029 |
947 |
|
8.67% |
|
|
|
|
Lease Liabilities(6) |
Various |
166 |
166 |
Fixed |
9.15% |
|
|
|
|
Accrued PIK Interest |
EUR+USD |
24 |
24 |
NA |
0% |
|
|
|
|
Accrued Interest |
Various |
4 |
4 |
NA |
0% |
|
|
|
|
Wells Fargo Line |
USD |
34 |
34 |
Floating |
5.25%(7) |
Revolving |
Dec.31,2023 |
|
|
Other Debt |
Various |
1 |
1 |
NA |
0% |
|
|
|
|
Total Gross Debt |
|
1,258 |
1,176 |
|
7.41% |
|
|
|
|
Cash & Cash equivalents |
Various |
102 |
102 |
|
|
|
|
|
|
Total Net Debt |
|
1,156 |
1,074 |
|
|
|
|
|
|
(1)
Rates as of March 31, 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 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 LIBOR with a floor of 0% + 2.75% and
PIK interest of 3.00% |
|
|
(6) Of which €12 million are capital leases and €154 million is
operating lease debt under IFRS 16 |
|
(7) Wells Fargo base rate +2% |
Summary of consolidated results
for the first
quarter
|
First Quarter |
In € million |
2020 |
2021 |
Change* |
Revenues from continuing
operations |
739 |
711 |
(3.7)% |
Change at constant currency (%) |
|
|
+3.6% |
o/w |
Production Services |
176 |
140 |
(20.8)% |
|
DVD Services |
160 |
139 |
(13.4)% |
|
Connected Home |
393 |
428 |
+8.7% |
|
Corporate & Other |
9 |
5 |
(40.3)% |
Adjusted EBITDA from continuing operations |
27 |
43 |
+58.4% |
Change at constant currency (%) |
|
|
+71.7% |
As a % of revenues |
+3.6% |
+6.0% |
235bps |
o/w |
Production Services |
11 |
14 |
+23.0% |
|
DVD Services |
1 |
4 |
ns |
|
Connected Home |
16 |
28 |
+72.7% |
|
Corporate & Other |
(1) |
(3) |
ns |
Adjusted EBITA from continuing operations |
(34) |
(1) |
+96.4% |
Change at constant currency (%) |
|
|
+97.8% |
As a % of revenues |
(4.6)% |
(0.2)% |
441bps |
Adjusted EBIT from continuing operations |
(45) |
(10) |
+76.6% |
Change at constant currency (%) |
|
|
+75.9% |
As a % of revenues |
(6.1)% |
(1.5)% |
458bps |
EBIT from continuing
operations |
(61) |
(26) |
+57.7% |
Change at constant currency (%) |
|
|
+55.3% |
As a % of revenues |
(8.3)% |
(3.6)% |
465bps |
Financial result |
(25) |
(32) |
- |
Income tax |
0 |
(1) |
- |
Share of profit/(loss) from associates |
0 |
0 |
- |
Profit/(loss) from continuing operations |
(86) |
(59) |
- |
Profit/(loss) from discontinued operations |
(1) |
(2) |
- |
Net income |
(87) |
(61) |
- |
(*) Change at current rate
-
Restructuring costs accounted for €(14) million at current rate,
including mainly €(11) million in DVD Services, largely resulting
from optimization of sites.
-
EBIT from continuing operations amounted to a loss of
€(26) million in the first quarter 2021.
-
The financial result totaled €(32) million in the first quarter
2021 compared to €(25) million in the first quarter 2020,
reflecting:
-
Net interest costs of €(31) million, up from last year’s €(17)
million, primarily due to the higher interest rates on the new debt
structure;
-
Other financial income improved to €(1) million in the first
quarter 2021 compared to €(9) million in the prior year, which was
mainly due to the financial fees on the bridge loan put in place in
March 2020.
-
Income tax amounted to €(1) million, compared to €0 million in the
first quarter 2020.
-
Group net income therefore amounted to a loss of €(61) million in
the first quarter 2021, compared to the €(87) million loss in the
first quarter 2020.
Reconciliation of adjusted indicators
(unaudited)
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 €(16) million in 2021 compared to
€(16) million in 2020 (including IFRS 16).
|
First Quarter |
In € million |
2020 |
2021 |
Change (*) |
EBIT from continuing operations |
(61) |
(26) |
35 |
Restructuring charges, net |
(14) |
(14) |
(0) |
Net impairment losses on non-current operating assets |
(0) |
(1) |
(1) |
Other income/(expense) |
(3) |
(0) |
2 |
Adjusted EBIT from continuing operations |
(45) |
(10) |
34 |
As a % of revenues |
(6.1)% |
(1.5)% |
458bps |
Depreciation and amortization (“D&A”) (**) |
70 |
53 |
(17) |
IT capacity use for rendering in Production S. |
2 |
0 |
(2) |
Adjusted EBITDA from continuing operations |
27 |
43 |
16 |
As a % of revenues |
3.6% |
6.0% |
235bps |
(*) Variation at current rates
(**) including reserves (Risk, litigation and
warranty reserves)
Free Cash Flow Reconciliation and
Summarized Financial
Structure (unaudited)
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.
|
3-month period (IFRS) |
|
In € million |
March 31, |
March 31, |
|
2021 |
2020 |
|
|
|
|
Adjusted EBITDA from continuing operations |
43 |
27 |
|
Changes in
working capital and other assets and liabilities |
(191) |
(288) |
|
IT capacity
use for rendering in Production Services |
- |
(2) |
|
Pension cash
usage of the period |
(7) |
(7) |
|
Restructuring
provisions – cash usage of the period |
(21) |
(10) |
|
Interest
paid |
(27) |
(16) |
|
Interest
received |
- |
- |
|
Income tax
paid |
(5) |
(4) |
|
Other
items |
3 |
(9) |
|
Net operating cash generated from continuing
activities |
(205) |
(309) |
|
Purchases of
property, plant and equipment (PPE) |
(11) |
(10) |
|
Proceeds from
sale of PPE and intangible assets |
- |
- |
|
Purchases of
intangible assets including capitalization |
(12) |
(18) |
|
of development
costs |
|
Net operating
cash used in discontinued activities |
(13) |
(7) |
|
Free cash-flow |
(240) |
(345) |
|
Nominal gross
debt (including Lease debt) |
1,258 |
1,676 |
|
Cash position |
102 |
58 |
|
Net financial debt at nominal value (non
IFRS) |
1,156 |
1,618 |
|
IFRS adjustment |
(82) |
(6) |
|
Net financial debt (IFRS) |
1,074 |
1,612 |
|
-
The change in working capital & other assets and liabilities
was negative by €(191) million in the first quarter 2021, mostly
driven by unfavorable changes in supplier payment terms and
seasonality trend at Connected Home.
-
Cash outflow for restructuring totaled €21 million in the first
quarter 2021, up by €11 million year-on-year at current rate,
mainly resulting from accelerated implementation of cost
savings.
-
Capital expenditures amounted to €23 million, down by €6 million
year-on-year at current rate, maintaining a strict control of
investment expense.
-
Cash position end of March 2021 was €102 million, compared to €58
million at the end of March 2020.
An analyst audio webcast hosted by Richard Moat,
CEO and Laurent Carozzi, CFO will be held today, May 11, 2021 at
7:30pm CET.
Financial
calendar
Annual General Meeting |
May 12, 2021 |
First Half results |
July 29, 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
CONSOLIDATED STATEMENT OF
OPERATIONS (UNAUDITED)
|
|
|
|
3 months ended
March 31, |
(€ in million) |
2021 |
|
2020 |
|
|
|
|
CONTINUING OPERATIONS |
|
|
|
Revenues |
711 |
|
739 |
Cost of
sales |
(637) |
|
(678) |
Gross margin |
74 |
|
61 |
|
|
|
|
Selling and
administrative expenses |
(62) |
|
(80) |
Research and
development expenses |
(23) |
|
(26) |
Restructuring
costs |
(14) |
|
(14) |
Net impairment
gains (losses) on non-current operating assets |
(1) |
|
(1) |
Other income
(expense) |
- |
|
(1) |
Earnings before Interest & Tax (EBIT) from continuing
operations |
(26) |
|
(61) |
|
|
|
|
Interest
income |
- |
|
- |
Interest
expense |
(31) |
|
(17) |
Other
financial income (expense) |
(1) |
|
(8) |
Net financial income (expense) |
(32) |
|
(25) |
|
|
|
|
Share of gain
(loss) from associates |
0 |
|
- |
Income
tax |
(1) |
|
- |
Profit (loss) from continuing operations |
(59) |
|
(86) |
|
|
|
|
DISCONTINUED OPERATIONS |
|
|
|
Net gain
(loss) from discontinued operations |
(2) |
|
(1) |
|
|
|
|
Net income (loss) |
(61) |
|
(87) |
|
|
|
|
Attribuable
to: |
|
|
|
- Equity
holders |
(61) |
|
(87) |
-
Non-controlling interest |
0 |
|
0 |
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION (UNAUDITED)
|
(€ in million) |
March 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
ASSETS |
|
|
|
|
Goodwill |
750 |
|
716 |
|
Intangible
assets |
543 |
|
535 |
|
Property,
plant and equipment |
143 |
|
140 |
|
Right-of-use
assets |
136 |
|
148 |
|
Other operating non-current assets |
31 |
|
27 |
TOTAL OPERATING NON-CURRENT ASSETS |
1,603 |
|
1,566 |
|
|
|
|
|
|
Non-consolidated investments |
14 |
|
14 |
|
Other non-current financial assets |
44 |
|
47 |
TOTAL FINANCIAL NON-CURRENT ASSETS |
58 |
|
61 |
|
|
|
|
|
|
Investments in
associates and joint-ventures |
1 |
|
1 |
|
Deferred tax assets |
49 |
|
45 |
TOTAL NON-CURRENT ASSETS |
1,711 |
|
1,674 |
|
|
|
|
|
|
Inventories |
200 |
|
195 |
|
Trade accounts
and notes receivable |
480 |
|
425 |
|
Contract
assets |
74 |
|
63 |
|
Other operating current assets |
216 |
|
224 |
TOTAL OPERATING CURRENT ASSETS |
970 |
|
907 |
|
|
|
|
|
|
Income tax
receivable |
12 |
|
14 |
|
Other
financial current assets |
20 |
|
17 |
|
Cash and cash
equivalents |
102 |
|
330 |
|
Assets classified as held for sale |
80 |
|
76 |
TOTAL CURRENT ASSETS |
1,184 |
|
1,344 |
|
|
|
|
|
TOTAL ASSETS |
2,895 |
|
3,018 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
|
(€ in million) |
March 31, 2021 |
|
December 31, 2020 |
|
|
|
|
|
EQUITY AND LIABILITIES |
|
|
|
|
Common stock
(235,800,463 shares at March 31, 2021 with nominal value of 0.01
euro per share) |
2 |
|
2 |
|
Subordinated
Perpetual Notes |
500 |
|
500 |
|
Additional
paid-in capital & reserves |
80 |
|
126 |
|
Cumulative translation adjustment |
(412) |
|
(456) |
Shareholders equity attributable to owners of the
parent |
171 |
|
173 |
|
Non-controlling interests |
0 |
|
0 |
TOTAL EQUITY |
171 |
|
173 |
|
|
|
|
|
|
Retirement
benefits obligations |
311 |
|
325 |
|
Provisions |
32 |
|
33 |
|
Contract
liabilities |
2 |
|
2 |
|
Other operating non-current liabilities |
23 |
|
21 |
TOTAL OPERATING NON-CURRENT LIABILITIES |
367 |
|
381 |
|
|
|
|
|
|
Borrowings |
971 |
|
948 |
|
Lease
liabilities |
111 |
|
122 |
|
Other
non-current liabilities |
1 |
|
- |
|
Deferred tax liabilities |
18 |
|
15 |
TOTAL NON-CURRENT LIABILITIES |
1,467 |
|
1,466 |
|
|
|
|
|
|
Retirement
benefits obligations |
31 |
|
30 |
|
Provisions |
82 |
|
90 |
|
Trade accounts
and notes payable |
572 |
|
710 |
|
Accrued
employee expenses |
127 |
|
142 |
|
Contract
liabilities |
56 |
|
41 |
|
Other current
operating liabilities |
221 |
|
215 |
TOTAL OPERATING CURRENT LIABILITIES |
1,088 |
|
1,228 |
|
|
|
|
|
|
Borrowings |
39 |
|
16 |
|
Lease
liabilities |
55 |
|
56 |
|
Income tax
payable |
16 |
|
21 |
|
Other current
financial liabilities |
1 |
|
2 |
|
Liabilities classified as held for sale |
57 |
|
56 |
TOTAL CURRENT LIABILITIES |
1,257 |
|
1,379 |
|
|
|
|
|
TOTAL LIABILITIES |
2,724 |
|
2,845 |
|
|
|
|
|
TOTAL EQUITY & LIABILITIES |
2,895 |
|
3,018 |
CONSOLIDATED STATEMENT OF CASH
FLOWS (UNAUDITED)
|
3 months ended March 31, |
(€ in million) |
2021 |
|
2020 |
Net income (loss) |
(61) |
|
(87) |
Income (loss)
from discontinuing activities |
(2) |
|
(1) |
Profit (loss) from continuing activities |
(59) |
|
(86) |
Summary
adjustments to reconcile profit from continuing activities to cash
generated from continuing operations |
|
|
|
Depreciation
and amortization |
53 |
|
71 |
Impairment of
assets |
1 |
|
- |
Net changes in
provisions |
(13) |
|
(4) |
Gain (loss) on
asset disposals |
- |
|
(1) |
Interest
(income) and expense |
31 |
|
17 |
Other items
(including tax) |
6 |
|
4 |
Changes in
working capital and other assets and liabilities |
(191) |
|
(290) |
Cash
generated from continuing activities |
(172) |
|
(289) |
Interest paid
on lease debt |
(4) |
|
(6) |
Interest
paid |
(23) |
|
(10) |
Interest
received |
- |
|
- |
Income tax
paid |
(5) |
|
(4) |
NET OPERATING CASH GENERATED FROM CONTINUING ACTIVITIES
(I) |
(205) |
|
(309) |
Acquisition of
subsidiaries, associates and investments, net of cash acquired |
- |
|
(2) |
Proceeds from
sale of investments, net of cash |
- |
|
- |
Purchases of
property, plant and equipment (PPE) |
(11) |
|
(10) |
Proceeds from
sale of PPE and intangible assets |
- |
|
- |
Purchases of
intangible assets including capitalization of development
costs |
(12) |
|
(18) |
Cash
collateral and security deposits granted to third parties |
(2) |
|
(14) |
Cash
collateral and security deposits reimbursed by third parties |
1 |
|
2 |
NET INVESTING CASH USED IN CONTINUING ACTIVITIES
(II) |
(24) |
|
(42) |
Increase of
Capital |
- |
|
- |
Proceeds from
borrowings |
32 |
|
375 |
Repayments of
lease debt |
(18) |
|
(22) |
Repayments of
borrowings |
- |
|
(1) |
Fees paid
linked to the debt and capital operations |
(1) |
|
(1) |
Other |
(3) |
|
6 |
NET FINANCING CASH USED IN CONTINUING ACTIVITIES
(III) |
11 |
|
357 |
|
|
|
|
NET CASH FROM DISCONTINUED ACTIVITIES (IV) |
(14) |
|
(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) |
(231) |
|
(2) |
Exchange gains / (losses) on cash and cash equivalents |
3 |
|
(5) |
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD |
102 |
|
58 |
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).
- Q1 2021_Press_Release_VUS