WildBrain Ltd

TSX:WILD

Earnings Call Transcript 2019-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the DHX Media Fiscal 2019 First Quarter Webcast [Operator Instructions]Thank you. I would now like to turn the call over to Nancy Chan-Palmateer, Director, Investor Relations at DHX Media. You may begin your conference.

[Nancy Chan-Palmateer]

Thank you, operator. And thank you, everyone, for joining us today. Speaking on the call today are Michael Donovan, our Executive Chairman and CEO; and Doug Lamb, our Chief Financial Officer. Also with us and available during the question-and-answer session are Aaron Ames, our Chief Operating Officer; Josh Scherba, President; and David Regan, EVP, Strategy and Corporate Development. Turning to Slide 2, we have some standard cautionary statements. The matters discussed on this call include forward-looking statements under applicable securities laws with respect to DHX Media, including, but not limited to, statements regarding progress on the company's strategic priorities, the effectiveness of the company's management team, the sustainability of the company's organic growth, the expected growth of WildBrain, expected use of available cash, cost rationalization initiatives and expected results therefrom, the markets and industries in which the company operates, the business strategies, key priorities and objectives and operational activities of the company and results therefrom and the future financial and operating performance of the company. Such statements are based on information currently available and are subject to a number of risks and uncertainties. Actual information currently available, actual results or events in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including regulatory risk, the ability of the company to execute on transactions and realize on synergies and cost savings and the risk factors set out in the company's most recent MD&A and Annual Information Form. [Operator Instructions] Turning to Slide 3, I will now hand the call over to our Executive Chairman and CEO, Michael Donovan.

[Michael Patrick Donovan, Executive Chairman & CEO]

Thank you, Nancy, and thank you very much, everyone, for joining us today.We are encouraged by Q1 results and expect positive momentum to continue as we execute on our strategy of focusing on WildBrain and premium content. WildBrain had another excellent quarter with double-digit revenue growth affirming our focus on this high-growth platform. Our pipeline for content and brands is building well across the business, and we expect that to continue in the coming quarters. We are also making progress towards our fiscal objectives: growing revenue, cutting costs and reducing debt. Turning to Slide 4. Some important new statistics have emerged from YouTube, which illustrate that we have significantly underestimated the reach of WildBrain with kids. We now know that worldwide 1/3 of the approximately 830 million kids with access to YouTube watched at least 1 video on WildBrain -- the WildBrain network in Q1. This activity is generating over 2.5 million views per month on the network, that's 13 billion minutes of watch time per month, up 66% from Q1 2018. As a result, WildBrain has grown at 49%. AVOD is a major part of the rising trend of kids watching content online and WildBrain is the leading network in the space. Let me take a minute to give you a bit more insight into the platform we're building at WildBrain. WildBrain launched 6 years ago with access to DHX's large global content library. As many of you know, we own the world's largest independent library of kids' content. The reason this is important is because it allowed WildBrain to test at scale numerous genre formats and subjects across hundreds of demographics and territories. This testing has provided us with key insights to formulate our approach to optimizing the kids' experience in the AVOD space. Across our platform, we believe we're able to drive longer and better engagement and to attract the most relevant and most valuable viewers. We have applied our expertise and knowledge with tremendous success not only for our own IP but also for numerous third-party clients who've entrusted us with their content. Engaging with audiences through AVOD is becoming critical across the kids ecosystem, and to be clear, that includes toy companies, retailers, linear distributors and even SVOD distributors. This is why more and more companies are coming to WildBrain for solutions, and that's what we're seeing. Turning to Slide 5. One example of the great successes that we're having with original content in WildBrain is, this is an example, Tiddlytubbies. These are new characters we introduced in the third season of our Teletubbies series. We launched original Tiddlytubbies content on WildBrain last spring and the response has been tremendous. This new content has driven growth on the Tiddlytubbies channel by 139% to over 29 million views in Q1, increased watch time by 127% to 98 million minutes of videos watched. Those numbers speak to the opportunity we're just beginning to harness to generate engagement on WildBrain through original content and they illustrate how we can leverage our IP on the platform to grow brands and broaden those brands' reach. Turning to Slide 6. In the SVOD, that is the subscription video-on-demand space, major players are turning to DHX for family content. I'd like to draw your attention to some of the original series we recently licensed to Netflix. One is called -- the name of one is Chip and Potato, the new animated preschool series, which will be premiering on Netflix next year, about which we're particularly excited. Creeped Out is the name of a live action horror anthology. Season 1 launched on Netflix in October. And The Deep is a popular family adventure series now going into a third season on Netflix. These 3 series are good examples of the breadth of our production capacities and capabilities across multiple genres and demographics, and we have many more shows in our pipeline that we're excited about and look forward to announcing in the coming months. Turning to Slide 7. We're also delivering original shows to the world's top linear broadcasters and our focus is, as with other brands, developing global brands. For example, Mega Man: Fully Charged launched in Q1 on Cartoon Network in the United States. We're planning promotional push on the series in the spring to coincide with our toy launch. Mega Man: Fully Charged is already a hit on our own Family CHRGD channel, contributing to an upswing in ratings on that channel this fall. Another show we're excited about -- very excited about is Rev & Roll, a collaboration with Alpha Group. Alpha Group is China's leading toy and animation company, and we believe that Rev & Roll has very, very strong potential as a global toy brand. The show generated a lot of excitement at this year's MIPCOM, which is the television's main -- the television industry's main sales event in October in France, and we're already beginning to see orders. The Rev & Roll is launching next year on our Family Channel in Canada and in China on Alpha's Jiajia channel. Turning to Slide 8. In August, the leading industry trade publication, Licensing Letter is the name, ranked Peanuts as the world's sixth largest character brand based on retail sales. This year, Peanuts moved up 2 notches to outrank Paw Patrol, Frozen and Peppa Pig amongst others. There are great many things happening with Peanuts. We can't pull back the curtain on many of them just yet, but the team is busy working on a number of projects including the development of new Peanuts content. With that, I'll hand the call to Doug to speak to our financial results for the quarter.

[Douglas Edward John Lamb, Chief Financial Officer]

Thanks, Michael. Our financial results for Q1 are summarized on Slide 9. Q1 2019 revenue was $104 million, up 5.5% compared to Q1 2018. The increase was driven by continued strong performance in WildBrain, higher consumer products, royalties derived from our own IP and higher production service revenue. This was partially offset by declines in other business segments. The implementation of the IFRS 15 accounting standard reduced overall revenue by $2.4 million in Q1 2019. This revenue is expected to be recognized during the remainder of fiscal 2019. Adjusted EBITDA was $17.3 million compared to $22.8 million in Q1 2018. Adjusted EBITDA was reduced by $3.8 million related to the sale of a 39% minority stake in Peanuts to Sony and reduced by $1 million due to IFRS 15. Factoring in these reductions, adjusted EBITDA would have been $22.1 million on a comparable basis to last year. Q1 2019 recorded a net loss of $2.4 million versus net income of $8.1 million in the prior year. The decline was in part due to a larger noncontrolling interest in Peanuts due to the Sony transaction and a noncash write-down in deferred financing charges related to the debt repayment. Turning to Slide 10. During the quarter, we made progress against our priority of enhancing our financial position. We reduced net debt by 31% to $503 million from the end of fiscal 2018 as the net proceeds from this Sony transaction were used to pay down a portion of our term loan. As a result, our net leverage ratio has declined to 5.35x from 6.07x at year-end. We also remained focused on cost containment, which is reflected in cash SG&A cost for Q1 2019 staying largely flat compared to the same quarter last year despite growth in WildBrain SG&A. We anticipate that the recently announced sale of our Halifax animation studio, which is expected to close on or around December 31 this year, will contribute to improving margins beyond fiscal 2019 as well. Although we did generate negative cash flow from operating activities in the quarter, this was largely due to seasonal and timing factors, and we expect to generate positive cash flow in the remainder of the year. Turning to Slide 11, I'll now hand the call back to Michael. Michael?

[Michael Patrick Donovan, Executive Chairman & CEO]

Thank you, Doug. Thank you. Yes. Management is committed to reducing costs and paying down debt. And we are taking the necessary steps to streamline operations and to focus the business on the largest opportunities in the kids and family space. We're confident that the targeted investments we are making across the organization are positioning the company for sustainable long-term growth. And with that, we'll open up to questions.

[Operator]

[Operator Instructions] Your first question comes from Adam Shine of National Bank Financial.

[Adam Shine]

Maybe we'll just touch on cash flow. I mean, Doug, you alluded to timing as a negative driver in Q1 and some recovery ahead, but maybe we can start with the new definition or any definition that you're now looking at vis-à-vis free cash flow in F '19, we had a few changes in prior years. Curious with you in place, what the new perspective is? And then as it relates to a follow-up, how do we see per Michael's comment further delevering likely to materialize? Is it going to be through some positive cash flow generation? Or we're going to see further asset sales over the near term?

[Douglas Edward John Lamb, Chief Financial Officer]

Thanks, Adam. So what we're -- we're focused on cash flow from operating activities as it's disclosed on the cash statement right now. So when I allude to negative cash flow in the quarter, it was largely related to working capital fluctuations that we typically see seasonally in Q1 and then there are some timing things related, too, like we had more favorable tax credit collection last year versus this year where we're starting up earlier phase of production on a number of shows and so we're accruing tax credit. So it's those kind of things. But overall, we expect to generate positive cash flow during fiscal 2019. I think in terms of how we expect to address the debt like -- I think, largely, what we're always interested in opportunities and obviously we'll explore anything that's going to significantly enhance shareholder value. Right now our 100% focus is on improving operations and pursuing the opportunities in front of us and we think that's going to lead to EBITDA growth on a sustainable basis.

[Adam Shine]

Okay, I was just waiting for any follow-up from Michael. So maybe specific to Michael, so it's fair to say that we don't need for the duration of F '19 to necessarily ask you each quarter about the pursuit of monetization necessarily of WildBrain and/or the idea of a divestiture of the TV assets. That's arguably off the table for the very, very near term?

[Michael Patrick Donovan, Executive Chairman & CEO]

Yes. So I mean, our approach is, we're always trying to build shareholder value. I am personally a large shareholder, as you know, and so we're looking at opportunities all the time to do that. Having said that, our approach is operational. Our shoulders are to the plow incrementally and redirecting the direction of the company to realize how to optimize all the opportunities out there for our library. And that's the question that's in front of us: how can we monetize our library as this new area is developing with these new entrants in these ways? I mean, for example, one thing that we're looking at is repackaging our library and combining it with our channel expertise and packaging it as channels into the United States. That's a high-priority initiative, for example. So that's -- our approach is block and tackle. At the same time, we are always looking at opportunities and having ongoing discussions. The question being there, is that the optimal way to build library -- to build shareholder value? Our priority, though, is operations. Our priority is block and tackle.

[Operator]

Your next question comes from Aravinda Galappatthige of Canaccord Genuity.

[Aravinda Suranimala Galappatthige, Managing Director]

I wanted to just touch on Peanuts. Looking at the noncontrolling component of your EBITDA as well as the consumer-owned line, it looks like Peanuts had a very good quarter on a year-over-year basis. Either Michael or Doug, I was wondering if you could just talk to sort of the components that drove that. Was there more sort of geographic movement in terms of -- I know that it's been a big focus to kind of expand beyond sort of the concentration in Japan. Was it -- was that a big part of it or was it a matter of sort of expanded product lines? I just want to get a little bit more insight in sort of what appears to be strong growth in the Peanuts line item?

[Michael Patrick Donovan, Executive Chairman & CEO]

Why don't you speak first?

[Josh Scherba, President]

So maybe -- this is Josh Scherba here, maybe I can touch on that. So I think the team with Peanuts just continued to expand the business globally. There's numerous ongoing initiatives. It's such a large worldwide brand that touches on so many territories that there's various activities going on. And we did see a number of overages in certain categories, which helped lead to the strong quarter. But there -- I wouldn't point to any 1 particular item that led to this. It was overall a positive quarter for the brand.

[Aravinda Suranimala Galappatthige, Managing Director]

Okay. And just to follow up, Doug, maybe just to make sure that the math makes sense. The noncontrolling number that you have, we can arrive at a reasonable estimate of Peanuts by simply grossing it up, right, given that we know the minority percentages for Q1 last year and Q1 this year? Or are there lots of other adjustments that probably kind of make that a little bit more complicated?

[Douglas Edward John Lamb, Chief Financial Officer]

Yes -- I mean, it's a little bit. There are some smaller minority interests in there related to, for example, a couple of minor WildBrain acquisitions, that sort of thing. But I think we did disclose the impact of Sony transaction in the quarter, it was $3.8 million. Now just bear in mind that transaction closed July 23. So I mean, I think that gets you where you -- what you're looking for.

[Aravinda Suranimala Galappatthige, Managing Director]

Okay, great. And just a quick follow-up relating to that. With respect to the Peanuts content going into WildBrain, I know that there's -- a lot of the content is sort of still licensed to a number of parties, including Warner. Are you at a stage where you're close to being able to take some of that content and maybe some of those brands and place it into WildBrain and maybe further supercharge the growth you're seeing there?

[Josh Scherba, President]

So there certainly is some short-form content that we're generating for WildBrain related to the Peanuts brand, which we expect to continue on. But as we've alluded to, there are larger content plans in development and those are progressing nicely and we expect to have news on those soon.

[Operator]

Your next question comes from Rob Goff of Echelon Wealth Partners.

[Robert Goff, MD & Head of Research]

My question would be about some of your strategic priorities as laid out where you specify that you were looking to explore targeted partnerships to best monetize on our assets globally and then to form major agreements for Peanuts to grow the brand. Could you give us any additional color or perspective on those objectives? Do they include geographic territories? Or how best should we look at this?

[Michael Patrick Donovan, Executive Chairman & CEO]

Josh, could you could answer that, please?

[Josh Scherba, President]

Well, we have a number of important strategic partnerships where we're partnered with Alpha, a major toy company out of China, on Rev & Roll. We've got a strong partnership with Dentsu on Mega Man. I think the key for us in these partnerships is we bring expertise around content, distribution, monetization. And if we can partner with companies that bring something else to us, whether it be toy or whether it be built-in brand awareness, we're going to continue to explore those and these opportunities can come from anywhere in the world. We're always looking for the best and brightest related to content.

[Michael Patrick Donovan, Executive Chairman & CEO]

And then what we see, for example, with WildBrain is that its killer app is e-commerce. We have large, large audience and advertising currently drives its monetization model. But we believe that its true application because it's in so many homes, 1/3 of all children who have -- globally who have access to YouTube, as we said, can see it. We feel that the opportunity is transactional and for that -- and quickly. So that's, for example, what we're seeing in we can partner with brands that want to get quickly to markets, whereas in the past, it would take 2 or 3 years to build a TV series. What we're finding, and these are the discussions we're having, is that we can fast-forward a production program on WildBrain in months, weeks even and have the new shows on to tie up to toy launches. Those are the sorts of discussions we're having, and those are the sorts of relationships we're building.

[Operator]

Your next question comes from Drew McReynolds of RBC.

[Drew McReynolds, Analyst]

Maybe for you, Doug, my first question. You've given directional guidance certainly on, I think, expectations for EBITDA growth and positive operating cash flow for 2019 and indicated there'd be progress on the balance sheet. I'm just wondering, do we get to a time through fiscal '19 or maybe looking at fiscal 2020 when you're willing to put some more tangible targets -- financial targets around those kinds of metrics?

[Douglas Edward John Lamb, Chief Financial Officer]

I mean, mostly for now, we're not actually going to provide guidance as I think you're aware, Drew. We remain focused on bringing our leverage ratio down. That's a high priority for our free cash. As you know, we canceled the dividend and we have done a number of cost reduction initiatives in addition to investing in the high-growth areas. That continues to be our focus, I think, improving operations 100%, as Michael sort of already said.

[Drew McReynolds, Analyst]

Okay, and just a follow-up. Maybe Michael, can you talk to how the profitability of WildBrain is evolving given, obviously, the big top line growth there? And just a very quick third one. In terms of the sale of the Halifax studio, is there any kind of net proceeds here, just kind of what kind of economics we should model in here, if there is any?

[Michael Patrick Donovan, Executive Chairman & CEO]

Yes. So we -- the Halifax studio is -- will add to the EBITDA going forward, and we expect to see that to start materialize in 2020. And that's part of an initiative, which we've talked about in the previous calls, of concentrating on premium content. And so we've -- we have basically 3 studios and back in Vancouver we had 2. And what we're doing is concentrating it down to 1 central studio in Vancouver, where we think we can get the most appropriate level of scale. That's what's going on there. And in fact, maybe on that, I'll ask Aaron, if you have any further comments. Aaron Ames, our COO.

[Aaron Sholom Ames, Chief Operating Officer]

Yes, I would say, as far as the Halifax studio proceeds, the real focus of why we sold the studio is to focus our resources around our premium content strategy. So that's the priority for us. The proceeds really weren't -- the proceeds weren't that material, but we really wanted to focus on our premium content strategy and that's key for us. And having said that, the sale allows us to streamline our studio operations, reduced cost going forward, as Michael said, after 2019.

[Josh Scherba, President]

And then maybe I'll jump in on the second question there related to WildBrain. While WildBrain is certainly profitable and generating EBITDA, we're focused on growing revenue. For WildBrain, it's the growth engine, and that's really what we want to focus on is growing revenue and views.

[Operator]

Your next question comes from Bentley Cross of TD Securities.

[Bentley Cross, Associate]

First, I wanted to ask a bit of a personal question for you, Michael. Yesterday, it was disclosed or at least that was the first time I noticed, your options disclosure in that, I believe, they strike at $10 and you have until 2025 to get there. Can you just maybe talk about how you and the board came to those metrics?

[Michael Patrick Donovan, Executive Chairman & CEO]

Yes, I mean, I believe, you, for one, have called me an optimist. I believe that the shares will, in the next several years, go several notches north of $10. So since I have been saying that to the board, the board held my feet to the fire on that and so therefore offered me options that triggered them. But they only trigger above $10, and I'm completely comfortable with that. I think that, that is how it should be. We're -- I don't want to be in this for $1 and $2. It's $40 and $50 that I'm in this. And that's why -- that's what we're doing, we're building this platform, which is world-leading, is #1. We have the largest library, and we have the #1 AVOD channel or collection of channels in the space that I believe will be the #1 space for the delivery of television for the next 20, 30 years. And I've been in television for a very long time. Also, we are producing some very, very good shows right now and also we're working very closely together, every part of the company is -- has been realigned and teed up so that every part is working to every part. And that's part of our value proposition. Not only are we a supplier of this network -- this incredible network, but we also have these studios and we also have this library and we also are producing and distributing. We're the #1 distributor of children's television outside the studios. And bringing that altogether into cohesive whole is will deliver the, what I believe, will be the large share price outcome that I think is coming. And so rigging my options to the higher price seems fair. And I'm happy that, that is so. So that's -- I mean, that's probably more than you wanted but that's -- and it is, it's a personal thing for me. So...

[Bentley Cross, Associate]

No, Michael, that's just what I wanted. And then stepping back a little bit, I mean, now is obviously a bigger picture question. In terms of nuances for coming quarters, you mentioned a live action show being delivered to Netflix in October. Should we expect maybe a bigger revenue quarter with maybe a lower margin just in the coming quarter? Just trying to model things out a little bit more appropriately.

[Josh Scherba, President]

It's -- so there's always seasonality for sure. I would say that -- the live action series that's referenced there, that's when it was officially launched on Netflix. But they had rights and the opportunity to do that prior to that date, so I wouldn't look into that for the quarter specifically.

[Operator]

Your next question comes from Tim Casey of BMO.

[Tim Casey, Equity Research Analyst]

Michael, can we go back to something you mentioned earlier in this call about pursuing, I think you called it channel opportunities in the U.S. for some of your content? Can you flush that out a bit? I mean, it would seem to me that's -- I mean, the legacy side just obviously has issues everywhere and beyond the virtual bundle site and whatnot than in streaming options, that's a very crowded space. Are you looking to partner with Sony on that? I mean, how do you address the issue of scale to pursue that type of opportunity?

[Michael Patrick Donovan, Executive Chairman & CEO]

Okay. So first of all, our channels are doing well, unusually well, at the moment. Our advertising is up. The -- our ratings -- and that's because our ratings are up, in some cases 30% and 40% as opposed -- compared to this time last year because we have 4 channels and different ones are up to different degrees, but all are up. And that's for a number of reasons, but we think the main one being that we have -- we're increasingly putting our own shows in the channels because a lot of them were -- they were -- a lot of our most popular shows were encumbered by other arrangements, and as those encumbrances are coming off, we're able to put more and more of our own shows into our channels. And we think -- and together with other good programming decisions, we are seeing unexpected growth there reflected in advertising. And also advertising, I think, is doing better in television than is generally understood because advertisers are coming back to television because it's a unique proposition, that's the kind of headline. But our attitude is, to answer your question specifically, has been how can we -- we've got this library, how can we monetize it in every way. Let's think inside the box, but let's also think outside the box. And there's a lot of rock 'n' roll taking place in the U.S. and abroad in the cable industry and there's a lot of competitive threats and so we see one thing that we can do is take our channel infrastructure and expertise here in Canada, years of managing channels and a really capable staff, combining that with our library and creating packaged channels and taking them into the United States and Latin America and elsewhere and creating channel offerings to help the MSOs there meet the competitive threat of the SVODs. Because then we think that, that is an important area of growth for us going forward. And we're -- I'm really, really excited with what our team is doing on that front.

[Tim Casey, Equity Research Analyst]

Yes. But Michael, I mean, I have to push back on you on this. I mean, the advertising you derive from these channels, does it move the dial? And the main source of revenue for your legacy channels is subscription. And I think...

[Michael Patrick Donovan, Executive Chairman & CEO]

Yes, 91% subscription, 9% advertising.

[Tim Casey, Equity Research Analyst]

Yes, like, I don't -- I mean, do you really think you can replicate that model in a non-CRTC-regulated environment? I just don't -- help me understand how you can make a go of that?

[Michael Patrick Donovan, Executive Chairman & CEO]

The central idea is to package our library into channels and sell them abroad as channels, leveraging our channel expertise. That's the principle. I can't talk too much about it, but I will -- I'm hoping to be able to in upcoming quarters. But that's the idea, does that not make sense?

[Tim Casey, Equity Research Analyst]

Well, I just think scale is an issue. And I mean, a strategy based on driving a legacy model, I just think has challenges that are obvious out there.

[Michael Patrick Donovan, Executive Chairman & CEO]

But that -- for example, packaging our channels in SVODs and other models, not only legacy but also evolving new models. I mean, so in other words, we're looking at every single way to monetize the library. And that's how you have to think about it: how can we package our library to optimize its monetization. That's the way to look at it, and that's how we're looking at it.

[Operator]

[Operator Instructions] Your next question comes from Rob Goff of Echelon Wealth Partners.

[Robert Goff, MD & Head of Research]

Could you talk to the outlook for the non-WildBrain distribution and how you see that market evolving and momentum returning to the pipeline?

[Josh Scherba, President]

Sure. So we know distribution is lumpy and it's certainly a dynamic and evolving market, but overall, market trends are going in the right direction. There's been recent announcements of new entrants looking for kids content and we remain optimistic about that, which can -- that can ultimately create more value for our library. I think it's important, too, to look at a couple of other areas that our library continues to derive value. I know you were mentioning separate from WildBrain, but I think it's important to note that WildBrain is deriving value from the library and not just from straight monetizing of existing content, but also derivative content that we're able to create based on our existing IP. I think we referenced Tiddlytubbies in our script, and I think that's an important example of areas that we can continue to create additional value from our library.

[Operator]

Your next question comes from Adam Shine of National Bank Financial.

[Adam Shine]

Maybe just building a little bit on Tim's question of bringing into Canada, Michael or Josh, revenues in the quarter on the TV side, advertising was about $0.9 million versus $1 million. It was an initiative that you guys embarked on maybe 2-plus years ago in terms of freeing up the opportunity to go after advertising and you said from the outset that it was a bit slow going, maybe a bit slower than anticipated. But I think we're 2 years-plus into this initiative, do you see a greater push? Or is this really coming up against perhaps a variety of issues that are surprising you precluding greater increases?

[Michael Patrick Donovan, Executive Chairman & CEO]

No. The...

[Aaron Sholom Ames, Chief Operating Officer]

What I would say is on the advertising side, I mean, I think, we think it's a stable business for Canada and that's kind of what we anticipate going forward. Obviously, there are some ups and downs quarterly depending on the Christmas season and things like that, but we think of it as a pretty stable business for us going forward.

[Douglas Edward John Lamb, Chief Financial Officer]

Again, I would just add, Adam, that we are seeing -- there have been costs taken out of them. We are seeing consistent, stable cash flow at this point, which is really the primary focus for that business.

[Operator]

There are no further questions at this time. I would now like to turn the call back over to DHX for closing remarks.

[Nancy Chan-Palmateer]

Thank you, everyone, for listening to us today. We look forward to updating investors at or before our annual meeting in December. See you next quarter. Thanks.

[Operator]

This concludes today's webcast. You may now disconnect.