NET INCOME UP 115%
HALIFAX, Feb. 14, 2012 /CNW/ - DHX Media Ltd. ("DHX Media" or the "Company") (TSX: DHX), a leading independent international producer, distributor and licensor of mainly children's entertainment content, is pleased to announce its financial results for the quarter ended December 31, 2011.
Highlights of Q2 2012 Results:
(All amounts in Canadian dollars)
- Revenues of $24.7 million, up 27% from $19.4 million for Q2 2011;
- Gross margin was $7.7 million, an increase in absolute dollars of 8% compared to $7.1 million for Q2 2011;
- EBITDA1 of $3.6 million, an increase of 25% from $2.9 million for Q2 2011;
- Net income of $1.8 million, an increase of 115% from $0.85 million for Q2 2011; and
- Earnings per share of $0.03 vs. $0.01 for Q2 2011.
1 EBITDA represents income of the Company before amortization, interest and other income (expense), taxes, non-controlling interest, equity income (loss), development expenses, stock-based compensation expense, and other one-time adjustments. (See Annual MD&A definition of EBITDA for full details).
Michael Donovan, Chairman and CEO, DHX Media commented, "We are pleased to report 115% growth in net income for which all business lines contributed positively. We added 32 half-hours of proprietary content to our library of 2,500 half-hours of mostly children's content over the quarter and reduced our operating expenses 11% as compared to Q2 2011."
| Consolidated Statements of Income and Comprehensive Income Data | ||||
| Three Months Ended | Three Months Ended | |||
| December 31, 2011 | December 31, 2010 | |||
| ($000) | ($000) | |||
| (except per share data) | (except per share data) | |||
| Consolidated Statements of Income and Comprehensive Income Data:1 | IFRS | IFRS | ||
| Revenues | 24,675 | 19,381 | ||
| Direct costs and amortization of film and television produced | (16,990) | (12,278) | ||
| Gross margin2 | 7,685 | 7,103 | ||
| Selling, general, and administrative | (4,125) | (4,262) | ||
| Impairment in value of certain investment in film and television programs | - | (350) | ||
| Share of loss of associates | (7) | (83) | ||
| Amortization, finance and other income (expenses), net | (1,001) | (1,102) | ||
| Provision for income taxes | (717) | (452) | ||
| Net income | 1,835 | 854 | ||
| Cumulative translation adjustment | (352) | (475) | ||
| Change in fair value of available-for-sale investments | 55 | (8) | ||
| Comprehensive income | 1,538 | 371 | ||
| Basic earnings per common share | 0.03 | 0.01 | ||
| Diluted earnings per common share | 0.03 | 0.01 | ||
| Weighted average common shares outstanding (expressed in thousands) | ||||
| Basic | 60,648 | 61,618 | ||
| Diluted | 60,724 | 62,149 | ||
Revenues
Proprietary production revenues: For Q2 2012, the Company added 32 half-hours to the library. Proprietary production revenues for Q2 2012 of $4.92 million decreased by 22% compared to $6.31 million for Q2 2011. The breakdown for Q2 2012 is 31.0 half-hours - $4.92 million of proprietary film and television program production revenue, where the programs have been delivered and the license periods have commenced for consolidated entities and 1.0 half-hours in intellectual property ("IP") rights for third party produced titles.
As part of the maturation of DHX, specifically the experience gained by our in-house international television distribution team along with the licensing expertise the Company picked up from the Wildbrain acquisition, the Company is strategically targeting third party produced titles for IP rights. As noted above, the Company added 1.0 half-hour to the library which related to its UK breakout property Rastamouse.
Producer and service fee revenues: For Q2 2012, the Company earned $9.85 million for producer and service fee revenues, an increase of 103% versus the $4.85 million for Q2 2011.
Distribution revenues: Management was encouraged that for Q2 2012, distribution revenues were up 12% to $1.79 million from $1.60 million for Q2 2011, as we continue to see positive trends coming out of recent sales at trade shows. The Company expects to be on track to achieve its previously stated Fiscal 2012 target for distribution revenue (see "Outlook" section of the Q2 2012 MD&A for further details). For Q2 2012, the Company recognized revenue on several contracts throughout its existing library and delivered episodes of newer titles. Some of the more significant sales were on the following titles: Poko Seasons 1-3, Animal Mechanicals Seasons 1-4, Save Ums! Seasons 1-2, Super Why! Season 1, Kid vs. Kat Seasons 1-2, Bo on the Go! Seasons 1-3, Radio Free Roscoe Seasons 1-2, Martha Speaks Seasons 1-2, Franny's Feet Season 1-3, and How to be Indie Seasons 1-2.
M&L and music royalty revenues: Management was very pleased that for Q2 2012, M&L, music, and royalty revenues increased 12% to $7.01 million. Traditional DHX music, M&L, and royalty revenues were up 105% to $0.76 million for Q2 2012. Gross Yo Gabba Gabba revenues were accrued $5.15 million based on the Company's estimate to the end of the 2011 tour for Yo Gabba Gabba Live! versus Q2 2011 ($5.63 million) and $1.09 million, up considerably over Q2 2011 ($0.25 million), for other Yo Gabba Gabba M&L.
New Media Revenues: For Q2 2012, new media revenues increased 304% to $1.05 million including $0.89 million for UMIGO (you make it go) and $0.16 million, up 100%, for other new media projects.
Gross Margin
Gross margin for Q2 2012 was $7.69 million, an increase in absolute dollars of 8% compared to $7.10 million for Q2 2011. The overall margin at 31% of revenue for Q2 2012 was at the low end, but in line with Management's Q2 2012 expectations based on the Q2 2012 scheduled revenue mix. Specifically, it is as a result of the higher weighting of producer fees and service revenues and lower margin proprietary production scheduled and delivered in the quarter as compared to other higher margin revenue streams. The Company expects this to smooth out somewhat over the remainder of Fiscal 2012, and for the gross margin percentage to increase to its adjusted 2012 target range.
Operating Expenses
Operating expenses for Q2 2012 were $5.13 million compared to $5.80 million for Q2 2011, a decrease of 11%. SG&A costs for Q2 2012 were down 3% at $4.12 million compared to $4.27 million for Q2 2011. Specifically, SG&A costs (excluding DHX Wildbrain) were $2.81 million and SG&A costs for DHX Wildbrain for Q2 2012 were $1.31 million. Management was pleased with SG&A costs for Q2 2012 (excluding DHX Wildbrain) at $2.81 million as these were down 6%, slightly ahead of Management's expectations.
EBITDA
For Q2 2012, EBITDA was $3.64 million, up $0.72 million or 25% over $2.92 million for Q2 2011. For Q2 2012, this increase was due to the increase in gross margin dollars of $0.58 million and a decrease in SG&A of $0.14 million.
DHX Media's complete financial statements are available at www.dhxmedia.com or on www.sedar.com.
About DHX Media Ltd.
DHX Media, together with its subsidiary, W!LDBRAIN Entertainment, is a leading international family entertainment rights creation and management company with three-award-winning production facilities, worldwide distribution and a global consumer products business. DHX Media has produced over 40 original television series and maintains a library of over 2,500 half-hours of animation and live-action programming. DHX Media has offices in Toronto, Halifax, Vancouver, Los Angeles and London. DHX Media is listed on the TSX (Toronto Stock Exchange).
Disclaimer
This press release contains forward looking statements with respect to the Company, including statements about the value of the substantial issuer bid to the Company's remaining shareholders and its effects on the Company's earnings per share. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, such statements involve risks and uncertainties and are based on information currently available to the Company. Actual results may differ materially from those expressed or implied by such forward looking statements. Factors that could cause actual results or events to differ materially from current expectations, among other things, include risks related to market factors, including changing popularity of the titles in the Company's production library, application of accounting policies and principles, and production related risks, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time including matters discussed under "Risk Factors" in the Company's Annual Information Form for the year ended June 30, 2011. These forward-looking statements are made as of the date hereof, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
Enquiries:
David A. Regan - EVP, Corporate Development & IR +1 902-423-0260
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