Quarterly revenue and earnings up 17 percent on strength of ‘How to Train Your Dragon 2.’
DreamWorks Animation reported Wednesday that it earned 14 cents per share in the third quarter on $181 million in revenue, in part due to a strong overseas reception for How to Train Your Dragon 2.
Last year, in the same quarter, DreamWorks Animation reported earnings of 12 cents a share on $154.5 million in revenue.
While the results are better than expected by industry analysts, who had predicted nine cents per share on $177 million in revenue, the company continues to receive close scrutiny. Turbo, Rise of the Guardians and Mr. Peabody & Sherman each underperformed significantly enough to warrant write-downs, with a federal investigation launched in the case of Turbo.
In a conference call on Wednesday, DreamWorks Animation CEO Jeffrey Katzenberg reportedly declined to address the status of that investigation, along with rumors that SoftBank or another entity might be interested in purchasing the company.
The next release from DreamWorks Animation is franchise property The Penguins of Madagascar on DATE, followed next year by Home and B.O.O.: Bureau of Otherworldly Operations. The studio also has in the works Boss Baby, Trolls, Captain Underpants and Bollywood Superstar Monkey, although Katzenberg stated that those release dates are not yet firm.
"We are going to remain flexible in the release of these movies," Katzenberg said. "You can look at our release schedule as the intent of the moment. I just have to say, every time something happens in the marketplace, we're going to respond to that in the most offensive way we can to protect the performance of those films."
The stock market reacted favorably to the company's earnings release Wednesday, with DWA stock rising 5 percent after the closing bell after having fallen 2 percent, to $23.29, during the regular session.
"The third quarter of 2014 was strong for DreamWorks Animation, with both quarterly revenue and earnings per share up 17 percent in a year-over-year comparison," Katzenberg said Wednesday. "Driving the company's third-quarter results is the blockbuster performance of How to Train Your Dragon 2, which has reached over $615 million at the worldwide box office to become the highest-grossing animated film of the year."
You can read the full press release, below:
GLENDALE, CA -- DreamWorks Animation SKG, Inc. (NASDAQ: DWA) today announced financial results for its third quarter ended September 30, 2014. For the quarter, the Company reported total revenue of $180.9 million and net income attributable to the Company of $11.9 million, or $0.14 per diluted share. This compares to revenue of $154.5 million and net income attributable to the Company of $10.1 million, or $0.12 per diluted share in the third quarter of 2013.
"The third quarter of 2014 was strong for DreamWorks Animation, with both quarterly revenue and earnings per share up 17% in a year-over-year comparison," commented Jeffrey Katzenberg, Chief Executive Officer of DreamWorks Animation. "Driving the Company's third quarter results is the blockbuster performance of How to Train Your Dragon 2, which has reached over $615 million at the worldwide box office to become the highest-grossing animated film of the year."
The feature film segment contributed revenue of $142.4 million and segment gross profit of $64.3 million to the third quarter.
How to Train Your Dragon 2 contributed feature film revenue of $74.2 million to the third quarter, primarily from its continued performance at the worldwide box office.
Turbo, The Croods and Rise of the Guardians contributed feature film revenue of $12.7 million, $1.8 million and $3.5 million, respectively, to the third quarter and reached an estimated 5.3 million, 7.8 million and 5.8 million home entertainment units sold worldwide, respectively, through the end of the third quarter, net of actual and estimated future returns.
Library titles contributed feature film revenue of $50.2 million to the third quarter.
The Television segment contributed revenue of $14.3 million and segment gross profit of $2.3 million to the third quarter, primarily from Classic Media content, the Turbo F.A.S.T. series and DreamWorks Dragons: Riders of Berk on Cartoon Network.
The Consumer Products segment contributed revenue of $12.1 million and segment gross profit of $4.2 million to the third quarter.
The segment consisting of all other items contributed revenue of $12.1 million and segment gross profit of $1.2 million to the third quarter, primarily from AwesomenessTV. The Company reduced the estimated fair value of the contingent consideration related to its prior acquisition of AwesomenessTV resulting in a $4.9 million pretax gain in the third quarter.
Due to the Company's continued focus on diversification and growth in the variety of business lines in which it now operates, it is now presenting all selling and marketing expenses as a single line item on its statements of operations. Certain selling and marketing expenses previously captured in costs of revenue and selling, general and administrative expenses will now be recorded in the selling and marketing expense line item.
Costs of revenue for the third quarter equaled $103.7 million. Selling and marketing expenses totaled $8.8 million for the third quarter. General and administrative expenses totaled $55.0 million.
The Company's income tax expense for the third quarter was approximately $2.6 million. The Company's combined effective tax rate, its actual tax rate coupled with the effect of a tax sharing agreement with a former stockholder, was approximately 30% for the third quarter.
The Company's fourth quarter 2014 results are expected to be driven primarily by its feature film segment, including results from the theatrical release of Penguins of Madagascar and the home entertainment release of How to Train Your Dragon 2.
Source: DreamWorks Animation