RealD Plunges After First-Quarter Profit, Sales Miss View

RealD Inc. (RLD), the supplier of 3-D projection systems to theaters, fell the most since its market debut two years ago after reporting a quarterly profit that missed analysts’ estimates because of costs to supply theaters with new eyeglasses.

RealD tumbled 23 percent to $9.70 at the close in New York, the biggest drop since its July 2010 initial public offering. Yesterday, the Beverly Hills, California-based company reported first-quarter profit fell 69 percent. The stock, up 59 percent this year through July 30, was the second-worst performer in the Russell 2000 Index. (RTY)

The profit decline resulted from a lower mix of recycled 3- D eyewear in shipments to theaters, the company said. Product costs jumped by 50 percent to $26.8 million. The ratio of new to recycled eyewear varies from quarter to quarter based on inventories, Chief Financial Officer Drew Skarupa said.

“It will fluctuate quite a bit,” Skarupa said on a conference call yesterday. “We continue to urge the Street to look at this from a break-even perspective.”

Profit in the period ended June 22 fell to $3 million, or 5 cents a share, RealD said yesterday in a statement. That missed the 15-cent average of eight analysts’ estimates compiled by Bloomberg. Sales rose 14 percent to $68.2 million, below the $70.8 million predicted by analysts.

RealD provides 3-D glasses to theaters that use its three- dimensional technology, collecting a fee from the film studios whether each pair is new or recycled, said Rick Heineman, a company spokesman. New eyewear costs more than glasses that are reused after cleaning.

Recycled glasses represented 21 percent of domestic shipments to theaters in the first quarter, down from 61 percent a year earlier and 34 percent in the March-ended quarter, Skarupa said on the call.

“Just to be clear, we’re not seeing any reduction in consumer recycling at theaters,” Skarupa said.

The number of screens using RealD increased about 18 percent to 20,700 from 17,500 a year ago and by 500 from three months ago, according to the company.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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