The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from Marketwire

CORRECTION: DHX Media Announces Q3 Results

Saturday, May 15, 2010

CORRECTION: DHX Media Announces Q3 Results04:49 EDT Saturday, May 15, 2010HALIFAX, CANADA--(Marketwire - May 15, 2010) - A correction is being issued with respect to the release sent out on May 14th at 7:09 PM EDT by Marketwire. The corrected version follows.DHX Media Ltd. ("DHX Media" or the "Company") (TSX:DHX), a leading independent international producer and distributor of mainly children's entertainment content, announced its unaudited financial results for the three and nine months ended March 31, 2010.Highlights of Q3 2010 Results:(All amounts in Canadian dollars) -- Revenue of $9.0 million and $31.4 million for the three and nine months ended March 31, 2010 ("Q3 2010" and "Nine Months 2010" respectively), decreases of 25% and 38%, respectively (Q3 2009: $12.1 million, Nine Months 2009: $50.4 million); -- Gross margin as a percentage of revenue was 35% and 37% for Q3 2010 and Nine Months 2010, respectively, down from 41% for Q3 2009 and up from 33% for Nine Months 2009. -- SG&A costs excluding stock based compensation were reduced by $0.6 million and $1.2 million for Q3 2010 and Nine Months 2010 versus Q3 2009 and Nine Months 2009, representing decreases of 18% and 12%, respectively. -- EBITDA(1) of $0.4 million and $2.6 million for Q3 2010 and Nine Months 2010, decreases of 75% and 60%, respectively (Q3 2009: $1.6 million, Nine Months 2009: $6.5 million); -- Net loss of $0.5 million and $0.7 million for Q3 2009 and Nine Months 2009 (Q3 2009: $0.4 million income, Nine Months 2009: $0.6 million income); -- Deliveries of television content of 62.0 and 214.5 half-hours for Q3 2010 and Nine Months 2010, respectively. (Q3 2009: 41.0 half-hours, Nine Months 2009: 240.5) (1)EBITDA represents net earnings (loss) of the Company before amortization expense, interest and other income (expense), non-controlling interest, equity income (loss), development expenses, stock-based compensation expense and one-time charges.Michael Donovan, Chairman and CEO, DHX Media commented, "During our third quarter, DHX continued to feel the effects of last year's difficult advertising market as experienced by our broadcast customers. While the third quarter financial results are disappointing, commissions for new and current series continue to pick up significantly and we look forward to better results in fiscal 2011." Selected recent announcements since DHX Media's last quarterly results:May 13: DHX announces second-season commission of That's So Weird! May 7: DHX announces that PBS KIDS' Sprout has acquired broadcast license for dirtgirlworld in US.April 15: DHX announces the successful close of the previously announced equity offering. 14,605,000 common shares, including fully-exercised over-allotment were sold for $1.30 each, raising gross proceeds of approximately $19MM.April 1: DHX announces license deals with Boomerang Latin America and Nickelodeon Australia for That's So Weird!March 18: DHX announces Animal Mechanicals broadcast deal in the US with a major broadcaster.March 4: DHX announces launch of Living Stories storybook apps for iPhone and iPod Touch.Consolidated Statements of Income and Comprehensive Income Data -------------------------------------------------------------------------- Three Months Three Months Nine Months Nine Months Ended Ended Ended Ended March 31, March 31, March 31, March 31, 2010 2009 2010 2009 -------------------------------------------------------------------------- ($000) ($000) ($000) ($000) (except per (except per (except per (except per share data) share data) share data) share data) -------------------------------------------------------------------------- Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Data:(1) Revenues 9,015 12,061 31,390 50,446 Direct production costs and amortization of film and television produced 5,876 7,060 19,761 33,719 -------------------------------------------------------------------------- Gross margin 3,139 5,001 11,629 16,727 -------------------------------------------------------------------------- Selling, general, and administrative 2,923 3,546 9,655 10,809 Impairment in value of certain investment in film and television programs 151 - 385 - Income (loss) before the following and discontinued operations (119) 1,323 919 5,552 Income (loss) from strategic investments 1 (6) (23) (18) Costs associated with abandoned transactions - - - (1,145) Amortization, interest and other expenses, net (548) (666) (1,646) (1,924) Provision for income taxes (131) 190 (15) 780 Net income (loss) and comprehensive income (loss) before discontinued operations (535) 461 (735) 1,685 Discontinued operations, net of income tax - (17) - (1,039) Net income (loss) and comprehensive income (loss) (535) 444 (735) 646 Basic earnings (loss) before discontinued operations per common share (0.01) 0.01 (0.02) 0.04 Diluted earnings (loss) before discontinued operations per common share (0.01) 0.01 (0.02) 0.04 Basic earnings (loss) per common share (0.01) 0.01 (0.02) 0.02 Diluted earnings (loss) per common share (0.01) 0.01 (0.02) 0.02 Weighted average common shares outstanding Basic 46,347 42,846 45,046 42,820 Diluted 47,161 42,846 45,649 42,826 As at March 31, As at June 30, 2010 2009 ($000) ($000) -------------------------------------------------------------------------- Consolidated Balance Sheet Data: Cash, restricted cash and short- term investments 11,504 11,086 Investment in film and television programs 29,602 35,827 Total assets 123,182 148,803 Total liabilites 60,979 88,253 Shareholders' equity 62,203 60,550 Revenues Revenues for Q3 2010 were $9.02 million, down 25% from $12.06 million for Q3 2009. The decrease in Q3 2010 was mainly due to a lower per half-hour license fee revenue as a result of variations in the product delivery mix and the effects of the continuing global recession and credit crunch on some of our broadcast customers. Proprietary production revenues for Q3 2010 of $5.36 million were down 20% compared to $6.71 million for Q3 2009. As noted above, Q3 2010 had lower half-hour license fee revenue as compared to Q3 2009. For Q3 2010 the Company accounted for 62.0 half-hours - $5.36 million of proprietary film and television program production revenue, a 51% increase versus the 41.0 half-hours for Q3 2009, where the programs have been delivered and the license periods have commenced for consolidated entities. For Q3 2010 the Company earned $1.30 million for producer and service fee revenues, an increase of 81% over the $0.72 million for Q3 2009. For Q3 2010 the Company earned $1.30 million for My Little Pony Season I. For Q3 2010 distribution revenues were down 58% to $1.68 million from $3.96 million for Q3 2009, generally due to timing of license periods for existing contracts on hand and generally in line with Management's expectations. For Q3 2010 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: The Latest Buzz Seasons I, II, and III, Animal Mechanicals Seasons I and II, Franny's Feet Seasons I, II, and III, Super Why! Season I, Kid vs. Kat Season I, Poppets Town Season I, The Guard Seasons I and II, and Martha Speaks Season I. For Q3 2010 music and royalty revenues increased 92% to $0.50 million (Q3 2009-$0.26 million). Music and royalty revenues are up as the Company's volume of production was up considerably in its most recent fiscal year ended 2009. Due to a lag in these streams, they tend to follow on 12-18 months after production revenue.Gross Margin Gross margin for Q3 2010 was $3.14 million, a decrease in absolute dollars of 37% compared to $5.00 million for Q3 2009. For Q3 2010 $0.58 million of the decrease in absolute dollars (or 6% of revenue) was due to a $0.10 million foreign exchange loss ($0.08 million of which was unrealized) versus Q3 2009-$0.48 million foreign exchange gain ($0.43 million of which was unrealized) as both amounts are included in direct production costs and amortization of film and television produced. Management was pleased with the overall margin at 35% of revenue for Q3 2010 which was in line with Management's expectations.Operating Expenses Operating expenses for Q3 2010 were $3.26 million compared to $3.68 million for Q3 2009, a decrease of 11%. SG&A costs for Q3 2010 excluding stock based compensation were down 18% at $2.76 million compared to $3.38 million for Q3 2009. Management was pleased with this decrease in SG&A as this was ahead of Managements' targeted reductions of 5%.The full unaudited Q3 2010 interim financial statements and MD&A are available on SEDAR at www.sedar.com and will be available on the Company's website www.dhxmedia.com. About DHX Media Ltd.DHX Media Ltd. is a leading international producer and distributor of television programming and interactive content with an emphasis on children, family and youth markets. DHX Media Ltd. shares trade on AIM and are listed on the TSX, the Toronto Stock Exchange. DHX Media's production companies, Decode Entertainment, Halifax Film, Studio B Productions and imX Communications, are the producers or co-producers of eight original television series currently commissioned for production and maintain a growing library of over 2,350 half-hours of mostly children and youth-oriented television productions. www.dhxmedia.comDisclaimerThis press release contains forward looking statements with respect to the Company. 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, customer contract interpretation, 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 short form prospectus dated April 9, 2010 and in the Company's Amended Annual Information Form incorporated by reference therein. 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.FOR FURTHER INFORMATION PLEASE CONTACT: DHX Media Ltd. David A. Regan EVP, Corporate Development & IR +1 902-423-0260