DreamWorks Animation reports third quarter 2013 financial results; revenue from feature film segment drives strong earnings.
DreamWorks Animation announced financial results for its third quarter ended September 30, 2013. For the quarter, the Company reported total revenue of $154.5 million, net income of $10.1 million, and earnings per share of $0.12 on a fully diluted basis.
"Strength in our feature film segment is the single largest driver of our positive third quarter earnings," said Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "It also continues to propel new areas of growth for DreamWorks Animation as we have now transitioned into a global, diversified family entertainment company."
"We are introducing four new reporting segments – feature films, television series and specials, consumer products and all other – to align with the ways in which we operate DreamWorks Animation's business today," added Lew Coleman, Chief Financial Officer of DreamWorks Animation. "Our financial reports will now include revenue and gross profit contributions from these segments, which we believe will also serve to provide more detail behind our growth and diversification efforts going forward."
The feature film segment contributed revenue of $120.7 million and gross profit of $55.4 million to the third quarter.
Turbo, which was released theatrically on July 17, 2013, has reached $82.7 million at the domestic box office and $163.5 million at the international box office for a worldwide gross of $246.2 million to date. Turbo contributed feature film revenue of $6.4 million to the third quarter.
The Croods, which was released theatrically on March 22, 2013, has reached $187 million at the domestic box office and $400 million at the international box office for a worldwide gross of $587 million, making it the sixth highest-grossing film of the year on a global basis. The Croods contributed feature film revenue of $4.0 million to the quarter.
Rise of the Guardians contributed feature film revenue of $42.4 million to the third quarter, primarily from worldwide pay television. The film reached an estimated 4.3 million home entertainment units sold worldwide through the end of the third quarter, net of actual and estimated future returns.
Madagascar 3: Europe's Most Wanted and Puss In Boots contributed feature film revenues of $10.9 million and $4.8 million to the third quarter, respectively. Madagascar 3 reached an estimated 8.1 million home entertainment units and Puss In Boots reached an estimated 7.5 million home entertainment units sold worldwide through the end of the third quarter, net of actual and estimated future returns.
Library titles contributed feature film revenue of $52.2 million to the third quarter.
The television series and specials segment contributed revenue of $18.2 million and gross profit of $4.2 million to the third quarter, primarily from Classic Media content and DreamWorks Dragons: Riders of Berk on Cartoon Network.
The consumer products segment contributed revenue of $12.0 million and gross profit of $3.0 million to the third quarter, primarily from Turbo and Classic Media.
The segment consisting of all other items contributed revenue of $3.6 million to the third quarter, primarily from AwesomenessTV.
Costs of revenue for the quarter equaled $91.7 million. Selling, general and administrative expenses totaled $47.7 million, including $4.5 million of stock-based compensation expense.
The Company's income tax expense for the third quarter was $6.9 million. The Company's combined effective tax rate, its actual tax rate coupled with the effect of its tax sharing agreement with a former stockholder, was 41.7% for the third quarter. The Company currently expects that its full-year 2013 combined effective tax rate will be approximately 27%.
During the third quarter, the Company issued $300 million in senior unsecured notes due 2020 at an interest rate of 6.875%.
The home entertainment releases of both The Croods on October 1, 2013 and Turbo on November 12, 2013 occur in the fourth quarter. The Company's fourth quarter results are expected to be driven primarily by its feature film segment as well as the distribution of holiday themed content within its television series & specials segment.
Items related to the earnings press release for the third quarter of 2013 will be discussed in more detail on the Company's earnings conference call later today.
Source: DreamWorks Animation