DHX Media reports 3rd quarter results

NET INCOME UP 130%

www.dhxmedia.com
TSX: DHX

HALIFAX, May 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 March 31, 2012.

Highlights of Q3 2012 Results:
(All amounts in Canadian dollars)

• Revenues of $16.6 million, up 35% from $12.3 million for Q3 2011;
  
  
• Gross margin was $6.1 million, an increase in absolute dollars of 11% compared to $5.5 million for Q3 2011;
  
  
• EBITDA¹ of $2.1 million, an increase of 45% from $1.5 million for Q3 2011;
  
  
• Net income of $546,000, an increase of 130% from $237,000 for Q3 2011; and
  
  
• Earnings per share of $0.01 vs. $0.00 for Q3 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 another quarter with strong growth in both revenue and net income for which all three core business lines of production, distribution and licensing contributed positively. For Q3 2012, we added 38 half-hours of content to our library of more than 2,500 half-hours and again reduced our SG&A expenses, as compared to Q3 2011."

Consolidated Statements of Income and Comprehensive Income Data

		Three Months Ended		Three Months Ended
		March 31, 2012		March 31, 2011
		($000)		($000)
		(except per share data)		(except per share data)
		IFRS		IFRS
Revenues		16,619		12,283
Direct costs and amortization of film and television produced		(10,503)		(6,771)
Gross margin^2		6,116		5,512
Selling, general, and administrative		(4,070)		(4,132)
Impairment in value of certain investment in film and television programs		-		-
Share of loss of associates		(55)		(111)
Amortization, finance and other income (expenses), net		(1,188)		(970)
Provision for income taxes		(257)		(62)
Net income		546		237
Cumulative translation adjustment		(252)		200
Change in fair value of available-for-sale investments		(64)		(10)
Comprehensive income		230		427
Basic earnings per common share		0.01		0.00
Diluted earnings per common share		0.01		0.00
Weighted average common shares outstanding (expressed in thousands)
	Basic	53,095		61,618
	Diluted	53,512		62,149

Revenues
Proprietary production revenues: For Q3 2012, the Company added 38 half-hours to the library.  Proprietary production revenues for Q3 2012 of $2.25 million decreased by 11% compared to $2.52 million for Q3 2011. The breakdown for Q3 2012 is 28.0 half-hours - $2.25 million of proprietary film and television program production revenue versus the 32.5 half-hours for Q3 2011, where the programs have been delivered and the license periods have commenced for consolidated entities and 10.0 half-hours in intellectual property ("IP") rights for third party produced titles (15.0 half-hours in Q3 2011). Q3 2012 proprietary deliveries were in line with scheduled deliveries and Management's expectations.

Producer and service fee revenues: For Q3 2012, the Company earned $8.32 million for producer and service fee revenues, an increase of 99% versus the $4.19 million for Q3 2011.

Distribution revenues: Management was encouraged that for Q3 2012 (the second consecutive quarter), distribution revenues were up 15% to $1.89 million from $1.64 million for Q3 2011, as we continue to see positive trends in sales activities coming out of recent industry trade shows. The Company expects to be on track to achieve its updated Fiscal 2012 target for distribution revenue. For Q3 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 Seasons 1-3, Naturally Sadie Seasons 1-3, Latest Buzz Seasons 1-3, Pirates Seasons 1-2, How to be Indie Seasons 1-2, and Rastamouse Season 1.

Licensing and music royalty revenues: Management was very pleased that for Q3 2012, licensing, music, and royalty revenues increased 47% to $3.54 million. Traditional DHX music, licensing, and royalty revenues was up 11% to $0.89 million for Q3 2012. Gross Yo Gabba Gabba Live! tour revenues accrued were $1.00 million based on Management's best estimate to the end of the 2011 tour versus Q3 2011 (Yo Gabba Gabba Live! 2010 tour) of $0.14 million and $1.38 million for other Yo Gabba Gabba M&L, down slightly from Q3 2011 ($1.47 million). Management is also very pleased to report its first Rastamouse M&L revenues in the UK for the Christmas 2011 season of $0.27 million.

New Media Revenues: For Q3 2012, new media revenues decreased 61% to $0.55 million including $0.54 million for UMIGO (you make it go) due entirely to timing of deliverables on the project and $0.01 million for other new media projects.

Gross Margin
Gross margin for Q3 2012 was $6.12 million, an increase in absolute dollars of 11% compared to $5.51 million for Q3 2011.  The overall margin at 37% of revenue for Q3 2012 was at the midpoint of Management's Q3 2012 expectations.

SG&A Expenses
SG&A costs for Q3 2012 were down 1% at $4.07 million compared to $4.13 million for Q3 2011. Specifically, SG&A costs (excluding DHX Wildbrain) were $3.02 million and SG&A costs for DHX Wildbrain for Q3 2012 were $1.05 million.

EBITDA
For Q3 2012, EBITDA was $2.12 million, up $0.66 million or 45% over $1.46 million for Q3 2011. For Q3 2012, this increase was due to the increase in gross margin dollars of $0.61 million and a decrease in SG&A and other expenses of $0.06 million, offset by a $0.01 million decrease in stock-based compensation.

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).

www.dhxmedia.com

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.

 

David A. Regan - EVP, Corporate Development & IR       [phone]