1
PRESS RELEASE
Full Year 2020 results
Technicolor exceeds its 2020 guidance and remains on track to meet its 2022
guidance
Paris (France), 11 March 2021 –
Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) is today
announcing its results for the full year 2020.
Richard Moat, Chief Executive Officer of Technicolor, stated:
“Technicolor has re-engineered its operations, balance sheet and global footprint and has exceeded its
guidance for 2020. Connected Home beat the targets originally set before the crisis began, but
Production Services and DVD Services were hit by the halting of activity in the film industry, and
associated cinema closures. However, overall the Group showed good resiliency in the face of the
pandemic. During 2020, significant structural changes were implemented across all divisions, which saw
a more than €165 million reduction in our cost base, combined with further investment to improve our
efficiency. In particular, Production Services strengthened its capacity to serve its clients through state
of the art technologies and artistic expertise. Despite persistent uncertainty relating to the pandemic, we
are looking to the future with confidence, and will continue to execute our transformation program to
deliver improved operational and financial performance. In consequence, the Group issuing guidance
towards strong figures for 2021, and is maintaining previously issued 2022 guidance.”
Full year 2020 results and forward outlook – key highlights:
Second Half
Full Year
In € million
2019
2020
At
current
rate
At
constant
rate
2019
2020
At
current
rate
At
constant
rate
Revenues from continuing
operations
2,036
1,573
(22.7)%
(17.9)%
3,800
3,006
(20.9)%
(18.5)%
Adjusted EBITDA from
continuing operations
222
115
(48.3)%
(44.9)%
324
167
(48.5)%
(46.0)%
As a % of revenues
10.9%
7.3%
8.5%
5.6%
Adjusted EBITA from continuing
operations
87
11
(86.9)%
(85.8)%
42
(56)
ns
ns
Free Cash Flow from continuing
operations before Tax &
Financial
202
118
(41.5)%
(44.6)%
(8)
(124)
ns
ns
In 2020 Technicolor successfully achieved a major balance sheet financial restructuring, and the
implementation of a significant business transformation:
o Liquidity as at December 31, 2020 of €432 million, consisting of €330 million cash on
balance sheet and €102 million of fully undrawn committed credit lines;
o Nominal net debt as at December 31, 2020 reduced by €340 million following the
completion of the financial restructuring, with a net debt to adjusted EBITDA (including
op. leases) ratio of 5.37;
o Significant momentum established in improving operations, profitability and cash
generation, ultimately creating value for all stakeholders;
2
o Management team renewed, and their incentives realigned to value creation for the
company in the short and medium term.
As a result, and despite the successive waves of the pandemic crisis which were not anticipated
at the time of the financial restructuring, Full Year 2020 results are ahead of previously
communicated guidance:
o EBITDA of €167 million (including IFRS 16), is better than expected and has more than
doubled from €53 million in the first half to €115 million in the second half;
o Permanent cost savings of €171 million;
o 2020 EBITA of €(56) million, better than the €(64) million expected;
o Continuing free cash flow (before financial results and tax) of €(124) million in line with
guidance, showing a strong improvement in the second half with an inflow of €118 million
despite absorbing around €(90) million of supplier payment term reductions.
The Group’s businesses demonstrated operating resilience to the Covid-19 crisis. Nonetheless,
revenue generation in some of our activities has been significantly impaired as a result of
sanitary restrictions around the world:
o Production Services activities were significantly impacted by the pandemic, with
revenues down 41% at constant rate year-on-year due to the halting of live action
shooting at the end of the first quarter. The decline in Film and Episodic Visual Effects and
Post Production was, however, partially mitigated by increased demand in Animation, and
resilience in Advertising which achieved the same EBITDA as in 2019 despite lower revenues.
o Connected Home delivered a strong year with a standout performance in North America,
exceeding the original targets set before the pandemic and maintaining its market
leadership. Adjusted EBITDA grew 46.7% at constant rate, as a result, EBITDA margin
expanded from 4.0% to 6.2%, highlighting the positive impact of the cost restructuring
measures. 2020 EBITA of €41 million was almost twice 2019 EBITA of €23 million.
o DVD Services performed well in a difficult environment. 2020 EBITA reached break-even
compared to a loss of €(6) million in 2019, illustrating the positive impact of successful
contract renewals and aggressive transformation actions. This was achieved despite a
decrease in revenue of (19)% at constant rate year-on-year, impacted by the lack of new film
releases following theaters closures, but partly compensated by resilient back catalog demand.
While uncertainty linked to the pandemic remains, the Group is focused on continuing the
execution of its transformation program, which has gained significant momentum in 2020. 2021
and 2022 will be years of substantial financial improvement. Taking into account the impact of
foreign exchange fluctuations and the change in Group perimeter as a result of the sale of Post
Production
1
, the Group is today adapting its 2022 guidance, and providing 2021 guidance of:
o Revenues from continuing operations stable vs. 2020;
o Adjusted EBITDA
2
of around €270 million (incl. IFRS 16), a very significant improvement
from €167 million achieved in 2020;
o Adjusted EBITA of around €60 million;
o Continuing free cash flow (before financial results and tax) at around breakeven;
o Net debt to EBITDA covenant ratio should reduce to below 4X level at 2021 year end.
1
In 2022, the cumulated impacts 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.
2
“Adjusted EBITDA” corresponds to the profit (loss) from continuing operations before tax and net financial income (expense),
net of other income (expense), depreciation and amortization (including impact of provision for risks, litigation and warranties).
3
Full Year 2020 key indicators from continuing operations
• Revenues of €3,006 million were down (18.5)% at constant rate, including a decrease in Production
Services of (41)%, primarily driven by lower revenue in Film & Episodic Visual Effects, and lower
volumes in DVD Services (19)%. Connected Home showed resiliency with a reduction of only (8)%
thanks to the buoyant activity in North America (+16%), mitigating a lower performance from Eurasia.
• In 2020, the Group realized €171 million of cost savings, in line with its target.
• Adjusted EBITDA of €167 million was down 46% at constant rate. This reflects operational and
financial improvements across all activities, particularly in Connected Home, a decline in Film &
Episodic Visual Effects mainly driven by cessation of live action shooting, and lower business
volumes in DVD Services. EBITDA during the second half more than doubled versus the first half
reflecting a strong profitability increase in DVD Services and Production Services (primarily due to
cost restructuring actions).
• Adjusted EBITA of €(56) million was lower by €(98) million at current rate, as a result of the EBITDA
decrease mitigated by lower depreciation & amortisation and reserves.
• Non-current assets impairment charge of €75 million mainly related to DVD services goodwill
impairment due to revised Covid-related assumptions.
• Restructuring costs accounted for €(100) million at current rate, including €(33) million in DVD
Services, mainly resulting from optimization of distribution sites, €(27) million in Production Services
on cost streamlining actions, €(31) million in Connected Home pursuant to the three-year
transformation plan, and €(9) million for Corporate and Other.
• Free cash flow
3
(before financial results and tax) from continuing operations of €(124) million was
lower by €(116) million, despite a significant improvement in Connected Home operational
performance, and the ongoing implementation of our cost transformation program. Following entry
into the Accelerated Financial Safeguard procedure, a faster than expected reduction of payment
terms was requested by suppliers, which led to €(35) million of payments being advanced from 2021
to 2020.
• Net debt at nominal value amounts to €897 million, and IFRS net debt amounts to €812 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
• Film & Episodic VFX activities are seeing a significant improvement in the forward pipeline, and
demand for Connected Home broadband products remain high, despite the extended lockdowns
affecting the Group’s trading environment.
• DVD Services and Advertising revenues are expected to take longer to recover.
• Component supply constraints are also expected to affect Connected Home activities. To address
this, Technicolor has already engaged in commercial discussions in order to pass surcharges through
to customers.
3
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).
4
• In Production Services, the work secured for 2021 is in line with the strong level of activity in 2019.
Production Services has been awarded several new major projects, already securing 75%+ of its
expected 2021 sales pipeline for Film & Episodic Visual Effects and Animation & Games. Confirmed
projects for 2021 include Disney’s live-action adaptations of The Little Mermaid and Pinocchio, and
its recently announced The Lion King prequel.
• The Group will continue to improve efficiency and productivity throughout the period, and is now
targeting a total of €325 million in run-rate cost savings by 2022, an increase of €25 million compared
to the previous announcement, despite a challenging context.
• The Group’s ambition to normalize working capital dynamics by 2022 will be achieved as early as the
end of the first quarter of 2021, without significant impact on the Group’s liquidity needs.
• Technicolor will continue to significantly improve its EBITDA, 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 areas follows:
o In 2021:
▪ Revenues from continuing operations stable vs. 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 EBITDA covenant ratio below 4X level at year end.
o 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
2020e
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 impacts 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.
Perimeter Change
• Technicolor announced on January 14, 2021 the disposal of its Post Production business (part of
Production Services) for €30 million. Closing is expected during the first half of 2021. The sale of
5
Post Production simplifies Production Services’ portfolio of activities, and allows management to
increasingly focus on Production Services’ remaining core CGI activities.
Management update in 2020
• As communicated during Technicolor’s third quarter results, Christian Roberton was promoted to
become President of the Production Services business division.
• As also previously communicated, David Holliday was appointed President of the DVD Services
division.
Board composition
• As previously announced, the Board of Directors has appointed as Board Observers:
o Bain Capital Credit, represented by Gauthier Reymondier, Managing Director,
European Portfolio Manager at Bain Capital Credit based in London; and
o Angelo, Gordon & Co represented by Julien Farre, Managing Director at Angelo Gordon
in London.
6
Segment Review – Full Year 2020 Results Highlights
• Production Services revenues amounted to €513 million in 2020, down (41.4)% at constant rate
and (42.5)% at current rate year-on-year, driven mainly by pandemic-related impacts on production
in Hollywood and around the world. The revenue decline was partially mitigated by double-digit
revenue growth at Mikros Animation and the launch of MPC Episodic in early 2020.
• Adjusted EBITDA amounted to €18 million, down €(144) million year-on-year at constant rate.
Costs were aggressively reduced to offset the €(370) million at constant rate revenue decline in a
high margin segment. This negative evolution also impacted Adjusted EBITA compared to the prior
year, partially mitigated by lower cloud render costs. Advertising EBITA, despite a sharp drop in its
revenues linked to the pandemic, reached the same level as in 2019, showing the positive impact
of its transformation activities on its margin.
2021 so far seems to be witnessing a restart of activity in the VFX market. The work already secured
for 2021 is in line with our more successful years, pre-pandemic, as the expanding demand for
streaming content matches or exceeds the continuing robust tentpole market. Production Services
has been awarded numerous new projects, securing more than 75% of its expected 2021 sales
pipeline for Film & Episodic Visual Effects, and is in negotiations for several more. Confirmed
projects for 2021 include Disney’s live-action adaptations of ‘The Little Mermaid’ and ‘Pinocchio’,
and their recently announced ‘The Lion King’ prequel. Focus has been placed on achieving
framework agreements with the major Hollywood studios and significant streaming players, bringing
more predictability of revenues in the coming years, and establishing a presence in locations such
as Berlin so that we can service the need for development of local content.
• Management and strategic changes
o Technicolor recently announced the appointment of Christian Roberton as President of the
Production Services Business Division. His focus on technology, quality and creativity,
combined with cost efficiency, rigorous management and client orientation, will drive Production
Services to operate as a customer-focused, technology-driven and highly profitable global
studio.
o Christian has immediately implemented management changes, with the aim of bringing forward
creativity, business acumen, and efficiency skills within his executive committee. Josh Mandel
has become CEO of The Mill, and Andrea Miloro recently joined the Group to lead the Mikros
Animation brand. Our portfolio is being refocused on value-added VFX services, and Post
Production activities are no longer aligned with our strategic repositioning. As a consequence,
Second Half
Change HtH
Full Year
Change YoY
Production
Services
2019
2020
Reported
At
constant
rate
2019
2020
Reported
At constant
rate
In € million
Revenues
465
234
(49.6)%
(47.0)%
893
513
(42.5)%
(41.4)%
Adj. EBITDA
84
16
(80.9)%
(79.5)%
164
18
(88.8)%
(88.0)%
As a % of
revenues
+18.1%
+6.9%
+18.3%
+3.6%
Adj. EBITA
9
(27)
ns
ns
28
(78)
ns
ns
As a % of
revenues
+2.0%
(11.5)%
+3.1%
(15.3)%
7
Technicolor announced on January 14, that Streamland Media had agreed to purchase the
Technicolor Post business for €30 million. The sale, which is subject to customary closing
conditions, is expected to close during the first half of 2021.
o This move strengthens Technicolor’s ability to focus on and expand its flagship creative studios
(The Mill, MPC, Mr. X and Mikros Animation) specializing in CGI (including VFX and Animation),
which is in increasing demand across film, TV, advertising, gaming and live events.
• Successful transformation
To drive the transformation of Production Services into an efficient creative production platform through
a relentless focus on improving profitability and streamlining operations, the following actions have been
launched:
o Harmonization of technology infrastructure to eliminate inefficiencies from previously siloed
operations (e.g. optimizing storage and render farms across our data centers and brands);
o Centralization of R&D efforts to ensure more efficient use of resources (e.g. real time production
technology that will impact and benefit all Production Services businesses);
o Integration of our substantial talent pool in India under a “One India” model to service all brands,
optimize utilization, and generate efficiencies of scale. This transformation program will continue
throughout 2021.
• Business Highlights
o 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 approximately 25 theatrical films from the major studios,
including 2020 releases like The Call of the Wild (Fox), The New Mutants (Fox),
and Monster Hunter (Constantin Film/Sony); and highly anticipated 2021
releases like Cruella (Disney), Ghostbusters: Afterlife (Sony), Godzilla vs. Kong
(Legendary/Warner Bros.), Snake Eyes (Paramount), Top Gun: Maverick
(Paramount), and West Side Story (Amblin/Fox).
▪ And over 40 Episodic and/or Non-Theatrical (i.e. Streaming/OTT) projects,
including The Alienist: Angel of Darkness (Paramount/TNT), Da 5 Bloods
(Netflix), The Old Guard (Netflix), Raised by Wolves (Scott Free
Productions/HBO Max), and WandaVision (Marvel/Disney+).
▪ During the year, MPC Film won the Oscar
®
and BAFTA awards for visual effects
for its work on Sam Mendes’ 1917 (Universal); and Mr. X won an Emmy Award
for Outstanding Special Visual Effects in a Supporting Role for its work
on Vikings (MGM/History).
o Advertising: revenues were lower compared to the prior year due to the impact of Covid-19 on
client spend and live action production shoots, particularly during the second quarter.
▪ Technicolor’s Advertising businesses continued to receive numerous industry
accolades in 2020 - MPC won VFX Company of the Year at the Ad Age
Creativity Awards and two VES (Visual Effects Society) Awards for Hennessy
‘The Seven Worlds’, while The Mill was awarded Creative Production Agency
of the Year by More About Advertising.
▪ Other notable projects during the year include the Dua Lipa ‘Hallucinate’ music
video, Jeep ‘Groundhog Day’, Walmart ‘Famous Visitors’, Burberry ‘Festive’,
Chanel ‘N°5. Être Ce Qui Va Arriver’, PlayStation ‘The Last of Us Part II’, Lexus
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International ‘Electrified’, EA Sports ‘FIFA 21’ reveal trailer, Epic Games ‘Unreal
For All Creators’, and HBO ‘Lovecraft Country: Sanctum’ - a three-part social
VR experience for the highly acclaimed series.
▪ At this year’s Super Bowl LV, The Mill and MPC worked on over 20
commercials, including those for Bud Light, Doritos, Michelob, Paramount,
Robinhood, Squarespace, Tide, and Uber Eats.
o Animation & Games: revenues were slightly higher versus prior year.
▪ Mikros delivered Paramount’s The SpongeBob Movie: Sponge on the Run in
2020, and is currently in production on three 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 year completed its work on several AAA titles
like FIFA 21 (EA), NHL 21 (EA), Assassin’s Creed Valhalla (Ubisoft), Destiny 2
(Bungie), NBA 2K21 (2K), Call of Duty: Black Ops Cold War (Activision), and
Immortals Fenyx Rising (Ubisoft).
o Post Production: lower revenues compared to the prior year, driven primarily by the pandemic’s
impact on productions.
▪ Selected highlight feature film projects during 2020 include Minions: The Rise
of Gru (Illumination/Universal), The SpongeBob Movie: Sponge on the Run
(Paramount), West Side Story (Amblin/Fox), Borat Subsequent Moviefilm
(Amazon), and The Witches (HBO Max).
▪ Selected highlight episodic projects include Bridgerton (Netflix), His Dark
Materials (HBO/BBC), Gentleman Jack (HBO/BBC), Perry Mason (HBO),
American Gods (Starz), This Is Us (Fox/NBC), and The Good Lord Bird
(Showtime).
• Covid-19 situation update
o Following the major U.S. studios reaching an agreement in September with all the key
Hollywood unions, production activity began to accelerate during the fourth quarter of 2020.
Furthermore, a number of countries like Canada, France and the U.K. have launched and/or
extended pandemic-related support programs including wage subsidies and production
insurance/indemnity schemes that provide pandemic-related coverage.
o 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 is optimistic about
a steady return to normalcy during the back half of 2021.
o Overall, Production Services continues to observe an increasing level of bidding activity for
projects, particularly for streaming/OTT distribution in addition to large tentpole films targeting
to ramp-up production once Covid-19 vaccine distribution has reached a critical mass later in
the current year.
###
9
Second Half
Change HtH
Full Year
Change YoY
Connected
Home
2019
2020
Reported
At constant
rate
2019
2020
Reported
At constant
rate
In € million
Revenues
1,029
924
(10.2)%
(3.3)%
1,983
1,764
(11.0)%
(7.6)%
Adj. EBITDA
54
56
+3.7%
+13.8%
79
110
+39.5%
+46.7%
As a % of revenues
+5.2%
+6.0%
+4.0%
+6.2%
Adj. EBITA
40
21
(48.7)%
(41.2)%
23
41
+75.8%
+91.8%
As a % of revenues
+3.9%
+2.2%
+1.2%
+2.3%
• Connected Home revenues totaled €1,764 million in 2020, down (7.6)% year-on-year at constant
rate and (11.0)% at current rate. The division experienced demand slowdown and supply constraints
in Eurasia and Latin America, which were partially offset by increased demand from the North
American cable division. The division is maintaining its market leadership in the Broadband segment
and in the video Android based segment.
The division successfully completed the bulk of the transformation plan launched in 2018. Selective
investments in key customers, and a platform-based products approach focused on broadband and
Android TV segments, combined with strategic partnerships with key suppliers and aggressive
investment in process re-engineering, have generated a significant increase in the productivity and
competitiveness of Connected Home in the market place. Connected Home has improved its
margins and its market share over the last years, despite facing many market, industry and global
challenges.
We anticipate that, overall, demand will remain strong throughout 2021. However, the Covid global
pandemic has created distortions in our industry. World logistics were severely disrupted in recent
months, and they will remain difficult for some time to come. The semiconductor crisis which started
in the second half of 2020 will continue to impact 2021 supply. Connected Home will continue to
work with its partners and customers to minimize supply disruptions. Connected Home has been
awarded the next generation DOCSIS gateway for the leading cable operator in the US which will
reinforce our leading position with the top 6 cable operators in the US, and our global leadership in
the broadband segment in the coming years.
• Adjusted EBITDA amounted to €110 million in 2020, or 6.2% of revenue, up €37 million at constant
rate primarily linked to cost reduction initiatives implemented in 2020. Adjusted EBITA of €41 million
increased by €21 million compared to the prior year at constant rate. This positive evolution in
profitability is the result of the significant transformation plan launched 2 years ago.
• Business highlights
o 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. We expect this trend to continue into 2021 as customers plan for continued
CPE upgrades, as well as seeking to ensure supply continuity and manage anticipated supply
concerns due to Covid-related demand surges from other industries competing for
semiconductor supply.
o Latin America: The difficult macroeconomic situation in the region continued to drive demand
down, particularly in Brazil, due to Covid as well as buying power impacts resulting from currency
devaluation stemming from the drop in oil prices.
o Europe, Middle East & Africa: Sales were flat in the second half year-on-year, with strong growth
in the broadband segment (+20%) compensating for the decline in the market for video set top
10
boxes. Android TV remained stable year over year, with additional service providers adopting
this technology in the region and associated new wins. Logistics between Asia and Europe and
the first stages of the Brexit implementation have generated backlogs additional to the one
generated by the semiconductor market situation.
o Asia Pacific: Sales were highly impacted by lockdowns in the main countries served, with slow
recovery, mainly India and Australia, combined with semiconductor supply constraints. Video
demand remained weak over the period, while broadband started to recover with strong
projections for 2021. Android TV demonstrated strong growth (+25%) with a solid trend in the
Indian market.
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.
Limited supply coupled with high demand for semiconductors is creating potential cost increases and
production constraints which could delay sales during the first half 2021. To address this, Technicolor
has engaged in commercial discussions in order to pass surcharges through to customers.
• Revenue Breakdown for Connected Home (at current rate)
Second Half
Full Year
In € million
2019
2020
% Change(*)
2019
2020
% Change (*)
Total revenues
1,029
924
(3.3)%
1,983
1,764
(7.6)%
By region
North America
467
515
+16.9%
865
980
+15.9%
Europe, Middle East and Africa
193
182
(0.3)%
453
336
(24.3)%
Latin America
145
95
(19.0)%
307
206
(22.7)%
Asia-Pacific
224
132
(38.0)%
357
242
(30.5)%
By product
Video
455
375
(10.9)%
830
693
(12.5)%
Broadband
575
549
+2.5%
1,152
1,071
(4.1)%
(*) Change at constant rate
• Covid-19 situation update
Connected Home has remained fully operational throughout the Covid crisis due to the early adoption
of a remote work model that successfully moved half of all employees off site to ensure key engineering
facilities remained safe and open.
The Covid-19 impact is now limited for its Asian-based manufacturing, but is still affecting capacity in
Latin America for manufacturing and back-end operations.
###
Second Half
Change HtH
Full Year
Change YoY
DVD Services
2019
2020
Reported
At
constant
rate
2019
2020
Reported
At constant
rate
In € million
Revenues
508
404
(20.5)%
(17.3)%
882
706
(20.0)%
(18.6)%
Adj. EBITDA
69
52
(24.8)%
(23.1)%
81
54
(33.6)%
(32.3)%
As a % of
revenues
+13.6%
+12.9%
+9.1%
+7.6%
Adj. EBITA
24
29
+20.9%
+19.0%
(6)
(0)
+95.0%
+94.1%
As a % of
revenues
+4.7%
+7.2%
(0.7)%
(0.0)%
• DVD Services revenues totaled €706 million in 2020, down (18.6)% at constant rate and (20.0)%
at current rate compared to 2019, due predominately to lower replication & packaging disc volumes
11
across all formats, and lower distribution activity as a result of the negative impact of Covid-19,
which exacerbated the structural decline trend. Total combined replication volumes reached 817.1
million discs in 2020, down (22.9)% year-on-year. However, this reduction was much lower than
originally anticipated as demand for back catalog grew to compensate somewhat for loss of revenue
from new film releases.
David Holliday, the newly appointed President of the DVD Services Business Division, has been
tasked with further in-depth transformation of the business, driving efficiencies across the worldwide
footprint, streamlining internal processes and centralizing cost management, while accelerating
revenue and profitability from non-disc activities.
• Adjusted EBITDA amounted to €54 million at current rate, or 7.6% of revenue, better than
expectations given stronger than anticipated disc volumes and the acceleration of cost saving
actions. The margin also includes the benefit of the positive impact from contracts renegotiated in
2019 and 2020. Lower depreciation & amortisation and renewal of contracts helped to deliver an
Adjusted EBITA at break even compared to a loss in 2019.
• Business Highlights
o Standard Definition DVD volumes were down (20)% in 2020 reflecting the lack of new release
content due to theater closures, but overall results were better than expected given the
continued aggressive studios and major retailers catalog promotional activity.
o Blu-ray
TM
volumes were down (27)% in 2020, heavily impacted by the lack of new release
content, and without as much mitigating benefit from catalog promotions.
o CD volumes were down (33)% year-on-year on a combination of expected structural declines
and Covid-19 retail impacts.
All formats showed an easing in the rate of decline in the fourth quarter with strong retail demand
activity during the holiday season, particularly in the games segment.
The Disney/Fox contract successfully closed, as did the Lionsgate contract. Paramount (PHE)
replication will expire in mid-2021 and will not be renewed; the effect of this will be mitigated by an
acceleration of DVD Services’ business transformation plans. Technicolor will continue to service
PHE for distribution services.
Second Half
Full Year
In million units
2019
2020
% Change
2019
2020
% Change
Total Combined Volumes
613.3
490.5
(20.0)%
1,059.1
817.1
(22.9)%
By Format
SD-DVD
402.6
340.1
(15.5)%
701.9
560.2
(20.2)%
Blu-ray™
181.3
129.2
(28.7)%
298.8
218.0
(27.1)%
CD
29.3
21.2
(27.6)%
58.4
38.9
(33.5)%
By Segment
Studio/Video
557.0
442.9
(20.5)%
959.4
740.6
(22.8)%
Games
20.5
21.2
+3.1%
29.7
27.5
(7.5)%
Music & Software
35.7
26.5
(25.9)%
70.0
49.0
(30.0)%
12
• Covid-19 situation update
o Theatrical new release activity was very limited in 2020 from March onwards due to the Covid-
19 outbreak, with many key title release dates pushed out into 2021, which in most cases
resulted in the home entertainment release being delayed as well, directly impacting DVD
Services revenue/volume activity.
o Most major retailers remained open during the pandemic, but the level of sales activity was
below normal, with some signs of improvement in the fourth quarter. Without new release
content, some retailers are continuing to allocate shelf space to catalog/library content
promotions, which should continue to support DVD replication volumes in 2021.
o Some production facilities experienced temporary staffing shortages, but the overall impact to
operations was low.
o The ongoing Covid-19 impact will be dependent on the extent and duration of ongoing
restrictions (driven by the 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.
###
Second Half
Change HtH
Full Year
Change YoY
Corporate &
Other
2019
2020
Reported
At
constant
rate
2019
2020
Reported
At constant
rate
In € million
Revenues
34
11
(68.1)%
(68.1)%
43
23
(45.6)%
(45.6)%
Adj. EBITDA
15
(9)
(162.4)%
(163.3)%
1
(14)
ns
ns
As a % of
revenues
+43.2%
(84.7)%
+3.5%
(61.1)%
Adj. EBITA
14
(11)
(180.5)%
(181.9)%
(2)
(18)
ns
ns
As a % of
revenues
+40.7%
(102.9)%
(5.0)%
(77.7)%
• Corporate & Other includes the Trademark Licensing business.
Corporate & Other recorded revenues of €23 million in 2020, decreasing compared to last year. In 2019,
the Group benefited from €20 million of retained patent licensing revenues versus only €5 million in
2020. Adjusted EBITDA amounted to €(14) million and Adjusted EBITA was €(18) million.
###
• Debt and leverage details
As part of the financial restructuring transaction completed in 2020, debt maturities have been extended
and new financings executed, reinforcing the Group’s liquidity.
13
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
363
Floati
ng
12.00%
(2)
Bullet
Jun. 30,
2024
Caa1/B
New Money Term
loans
USD
98
101
Floati
ng
12.34%
(3)
Bullet
Jun. 30,
2024
Caa1/B
Reinstated Term
Loans
EUR
453
372
Floati
ng
6.00%
(4)
Bullet
Dec. 31,
2024
Ca/CCC
Reinstated Term
Loans
USD
115
95
Floati
ng
6.03%
(5)
Bullet
Dec. 31,
2024
Ca/CCC
Subtotal
EUR
1,016
931
8.68%
Lease liabilities
(6)
Various
178
178
Fixed
7.94%
Accrued PIK Interest
EUR+USD
16
16
NA
0%
Accrued Interest
Various
16
16
NA
0%
Other Debt
Various
1
1
NA
0%
Total Gross Debt
1,227
1,142
8.34%
Cash & Cash
equivalents
Various
330
330
Total Net Debt
897
812
Covenant leverage
ratio
(7)
5.37
(1) Rates as of December 31, 2020.
(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 €14 million are capital leases and €164 million is operating lease debt under IFRS 16
(7) Net debt using nominal value of financial debts divided by adjusted EBITDA, not tested as at December 31, 2020
14
Summary of consolidated results for 2020
Second Half
Full Year
In € million
2019
2020
Change
2019
2020
Change
Revenues from continuing operations
2,036
1,573
(22.7)%
3,800
3,006
(20.9)%
Change at constant currency (%)
(17.9)%
(18.5)%
o/w
Production Services
465
234
(49.6)%
893
513
(42.5)%
DVD Services
508
404
(20.5)%
882
706
(20.0)%
Connected Home
1,029
924
(10.2)%
1,983
1,764
(11.0)%
Corporate & Other
34
11
(68.1)%
43
23
(45.6)%
Adjusted EBITDA from continuing
operations
222
115
(48.3)%
324
167
(48.5)%
Change at constant currency (%)
(44.9)%
(46.0)%
As a % of revenues
+10.9%
+7.3%
(361)bps
+8.5%
+5.6%
(298)bps
o/w
Production Services
84
16
(80.9)%
164
18
(88.8)%
DVD Services
69
52
(24.8)%
81
54
(33.6)%
Connected Home
54
56
+3.7%
79
110
+39.5%
Corporate & Other
15
(9)
ns
1
(14)
ns
Adjusted EBITA from continuing
operations
87
11
(86.9)%
42
(56)
ns
Change at constant currency (%)
(85.8)%
ns
As a % of revenues
+4.3%
+0.7%
(356)bps
+1.1%
(1.9)%
(297)bps
Adjusted EBIT from continuing
operations
60
(7)
ns
(12)
(96)
ns
Change at constant currency (%)
ns
ns
As a % of revenues
+3.0%
(0.5)%
(345)bps
(0.3)%
(3.2)%
(289)bps
EBIT from continuing operations
(31)
(70)
ns
(121)
(264)
ns
Change at constant currency (%)
ns
ns
As a % of revenues
(1.5)%
(4.4)%
(292)bps
(3.2)%
(8.8)%
(561)bps
Financial result
(36)
144
-
(84)
77
-
Income tax
3
(2)
-
(3)
(5)
-
Share of profit/(loss) from associates
0
0
-
(1)
0
-
Profit/(loss) from continuing operations
(64)
72
-
(208)
(193)
-
Profit/(loss) from discontinued
operations
(26)
(14)
-
(22)
(15)
-
Net income
(90)
58
-
(230)
(207)
-
(*) Change at current rate
• Restructuring costs accounted for €(100) million at current rate, including €(27) million in Production
Services on cost streamlining actions, €(33) million in DVD Services, mainly resulting from
optimization of replication and distribution sites, €(31) million in Connected Home, pursuant to the
three-year transformation plan, and €(9) million for Corporate and Other.
• EBIT from continuing operations amounted to a loss of €(264) million in 2020.
15
• The financial result totaled €77 million in 2020 compared to €(84) million in 2019, reflecting:
o Net interest costs of €(78) million, slightly up from last year’s €(69) million, primarily due to the
interest rates on the bridge loan in place from March to July;
o Other financial income amounting to €155 million in 2020 compared to €(15) million in 2019,
mostly explained by a non-cash gain on the equity and debt initial valuations, in the application
of IFRS Standards following the financial restructuring process.
• Income tax amounted to €(5) million, compared to €(3) million in 2019.
• Group net income therefore amounted to a loss of €(207) million at current rate in 2020, compared
to the €(230) million loss in 2019.
16
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 2020 compared to 2019, 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 €(168) million in 2020 compared to €(109) million in 2019
(including IFRS 16).
Full Year
In € million
2019
2020
Change(*)
EBIT from continuing operations
(121)
(264)
(144)
Restructuring charges, net
(31)
(100)
(69)
Net impairment losses on non-current operating
assets
(63)
(75)
(12)
Other income/(expense)
(15)
8
23
Adjusted EBIT from continuing operations
(12)
(96)
(84)
As a % of revenues
(0.3)%
(3.2)%
(289)bps
Depreciation and amortization (“D&A”) **
305
261
(44)
IT capacity use for rendering in Production S.
31
2
(29)
Adjusted EBITDA from continuing operations
324
167
(157)
As a % of revenues
8.5%
5.6%
(298)bps
(*) Variation at current rates
(**) including reserves (Risk, litigation and warranty reserves)
17
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.
Full Year (IFRS)
In € million
Dec 31,
Dec 31,
2020
2019
Adjusted EBITDA from continuing operations
167
324
Changes in working capital and other assets and liabilities
(101)
(65)
IT capacity use for rendering in Production Services
(2)
(31)
Pension cash usage of the period
(30)
(26)
Restructuring provisions – cash usage of the period
(46)
(35)
Interest paid
(51)
(65)
Interest received
3
1
Income tax paid
(12)
(12)
Other items
(9)
(21)
Net operating cash generated from continuing activities
(81)
70
Purchases of property, plant and equipment (PPE)
(33)
(70)
Proceeds from sale of PPE and intangible assets
-
1
Purchases of intangible assets including capitalization
(75)
(99)
of development costs
Net operating cash used in discontinued activities
(18)
(11)
Free cash-flow
(207)
(111)
Nominal gross debt (including Lease debt)
1,227
1,302
Cash position
330
65
Net financial debt at nominal value (non IFRS)
897
1,237
IFRS adjustment
(85)
(4)
Net financial debt (IFRS)
812
1,233
• The change in working capital & other assets and liabilities was negative by €(101) million in 2020,
mostly driven by unfavorable changes in supplier payment terms at Connected Home and DVD
Services, and reduced milestone payments at Film & Episodic Visual Effects due to Covid-19.
• Cash outflow for restructuring totaled €46 million in 2020, up by €11 million year-on-year at current
rate, mainly resulting from accelerated implementation of cost savings.
• Capital expenditures amounted to €108 million, down by €61 million year-on-year at current rate,
reflecting a strict control of investment expense.
Cash position at end of 2020 was €330 million, compared to €65 million at the end of December 2019.
18
An analyst audio webcast hosted by Richard Moat, CEO and Laurent Carozzi, CFO will be held today,
11 March 2021 at 7:30pm CET.
Financial calendar
Q1 2021
May 11 2021
Annual General Meeting
May 12 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
.###
Audited financial information
The auditors have performed their procedures on the consolidated financial statements. The audit report
will be issued after verification of the management report and the presentation of the format required by
the ESEF regulation on the financial statements intended to be included in the annual financial report.
###
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 Varlotta
Christophe.lemignan@technicolor.com Stephanie.varlotta@technicolor.com
Nathalie Feld : +33 1 53 70 94 23
19
CONSOLIDATED STATEMENT OF OPERATIONS
12 months ended December 31,
(€ in million)
2020
2019
CONTINUING OPERATIONS
Revenues
3,006
3,800
Cost of sales
(2,725)
(3,375)
Gross margin
281
425
Selling and administrative expenses
(284)
(323)
Research and development expenses
(94)
(114)
Restructuring costs
(100)
(31)
Net impairment gains (losses) on non-current operating assets
(75)
(63)
Other income (expense)
8
(15)
Earnings before Interest & Tax (EBIT) from continuing
operations
(264)
(121)
Interest income
4
1
Interest expense
(82)
(70)
Net gain on financial restructuring
158
-
Other financial income (expense)
(3)
(15)
Net financial income (expense)
77
(84)
Share of gain (loss) from associates
0
(1)
Income tax
(5)
(3)
Profit (loss) from continuing operations
(193)
(208)
DISCONTINUED OPERATIONS
Net gain (loss) from discontinued operations
(15)
(22)
Net income (loss)
(207)
(230)
Attribuable to:
- Equity holders
(207)
(230)
- Non-controlling interest
0
0
20
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(€ in million)
December
31, 2020
December 31,
2019
ASSETS
Goodwill
716
851
Intangible assets
535
632
Property, plant and equipment
140
191
Right-of-use assets
148
285
Other operating non-current assets
27
32
TOTAL OPERATING NON-CURRENT ASSETS
1,566
1,991
Non-consolidated investments
14
17
Other non-current financial assets
47
22
TOTAL FINANCIAL NON-CURRENT ASSETS
61
39
Investments in associates and joint-ventures
1
1
Deferred tax assets
45
52
TOTAL NON-CURRENT ASSETS
1,674
2,082
Inventories
195
243
Trade accounts and notes receivable
425
507
Contract assets
63
79
Other operating current assets
224
184
TOTAL OPERATING CURRENT ASSETS
907
1,013
Income tax receivable
14
36
Other financial current assets
17
13
Cash and cash equivalents
330
65
Assets classified as held for sale
76
-
TOTAL CURRENT ASSETS
1,344
1,127
TOTAL ASSETS
3,018
3,210
21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(€ in million)
December
31, 2020
December
31, 2019
EQUITY AND LIABILITIES
Common stock (235,795,486 shares at December 31, 2020 with nominal value
of 0.01 euro per share)
2
414
Subordinated Perpetual Notes
500
500
Additional paid-in capital & reserves
126
(540)
Cumulative translation adjustment
(456)
(339)
Shareholders equity attributable to owners of the parent
173
36
Non-controlling interests
0
0
TOTAL EQUITY
173
36
Retirement benefits obligations
325
342
Provisions
33
30
Contract liabilities
2
3
Other operating non-current liabilities
21
25
TOTAL OPERATING NON-CURRENT LIABILITIES
381
400
Borrowings
948
979
Lease liabilities
122
224
Other non-current liabilities
-
1
Deferred tax liabilities
15
27
TOTAL NON-CURRENT LIABILITIES
1,466
1,631
Retirement benefits obligations
30
33
Provisions
90
70
Trade accounts and notes payable
710
825
Accrued employee expenses
142
134
Contract liabilities
41
40
Other current operating liabilities
215
302
TOTAL OPERATING CURRENT LIABILITIES
1,228
1,404
Borrowings
16
8
Lease liabilities
56
87
Income tax payable
21
41
Other current financial liabilities
2
2
Liabilities classified as held for sale
56
-
TOTAL CURRENT LIABILITIES
1,379
1,542
TOTAL LIABILITIES
2,845
3,173
TOTAL EQUITY & LIABILITIES
3,018
3,210
22
CONSOLIDATED STATEMENT OF CASH FLOWS
12 months ended
December 31,
(€ in million)
2020
2019
Net income (loss)
(207)
(230)
Income (loss) from discontinuing activities
(15)
(22)
Profit (loss) from continuing activities
(193)
(208)
Summary adjustments to reconcile profit from continuing activities to cash generated
from continuing operations
Depreciation and amortization
263
322
Impairment of assets
88
63
Net changes in provisions
16
(48)
Gain (loss) on asset disposals
(14)
17
Interest (income) and expense
78
69
Net gain on financial restructuring
(158)
-
Other items (including tax)
(2)
-
Changes in working capital and other assets and liabilities
(101)
(69)
Cash generated from continuing activities
(22)
146
Interest paid on lease debt
(19)
(21)
Interest paid
(32)
(44)
Interest received
3
1
Income tax paid
(12)
(12)
NET OPERATING CASH GENERATED FROM CONTINUING ACTIVITIES (I)
(81)
70
Acquisition of subsidiaries, associates and investments, net of cash acquired
(3)
(3)
Proceeds from sale of investments, net of cash
7
1
Purchases of property, plant and equipment (PPE)
(33)
(70)
Proceeds from sale of PPE and intangible assets
-
-
Purchases of intangible assets including capitalization of development costs
(75)
(99)
Cash collateral and security deposits granted to third parties
(35)
(6)
Cash collateral and security deposits reimbursed by third parties
1
5
NET INVESTING CASH USED IN CONTINUING ACTIVITIES (II)
(138)
(171)
Disposal of treasury shares
-
1
Increase of Capital
60
-
Proceeds from borrowings
760
1
Repayments of lease debt
(85)
(91)
Repayments of borrowings
(158)
(5)
Fees paid linked to the debt and capital operations
(60)
(1)
Other
5
4
NET FINANCING CASH USED IN CONTINUING ACTIVITIES (III)
522
(91)
NET CASH FROM DISCONTINUED ACTIVITIES (IV)
(23)
(33)
CASH AND CASH EQUIVALENTS AT THE BEGINING OF THE PERIOD
65
291
Net increase (decrease) in cash and cash equivalents (I+II+III+IV)
280
(226)
Exchange gains / (losses) on cash and cash equivalents
(16)
-
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
330
65
