DreamWorks Animation Earnings Exceed Estimates on TV Growthby
TV business feasted on home-video releases, Netflix shows
Shares jump almost 10 percent in post-market trading in NY
DreamWorks Animation SKG Inc. posted fourth-quarter profit that beat analysts’ estimates, reflecting growth from its TV and home video businesses as the maker of “Kung Fu Panda” movies restructures its struggling movie operation. Shares rose.
Earnings excluding some items were 55 cents a share, the Glendale, California-based company said Tuesday in a statement. Analysts predicted 15 cents, the average of estimates compiled by Bloomberg. Revenue was $319.3 million, beating projections of $275.4 million.
The positive earnings report is a shot in the arm for DreamWorks Animation, led by Chief Executive Officer Jeffrey Katzenberg, which last year cut 500 jobs, shelved films and sold its campus in California following several disappointing features. A shift in strategy may be starting to pay off: The company has grown its TV business, focusing on home-video releases and making shows for Netflix Inc., including “Dragons: Race to the Edge” and “Dinotrux.” Its only 2015 theatrical release, “Home,” contributed $55.3 million to feature film segment revenue in the fourth quarter -- primarily from TV and home video.
Katzenberg, on a call with analysts Tuesday, said the company was driving film production costs below $130 million, with a goal to be in the range of $120 million starting with its next release, “Trolls.”
“After a couple years of uneven performance, these are very solid results from DreamWorks,” said Paul Sweeney, a Bloomberg Intelligence analyst. “It appears that management’s focused theatrical strategy and growing television and merchandise businesses are beginning to gain traction.”
Shares of DreamWorks jumped 9.6 percent to $23.08 in late trading after closing down 2 percent to $21.06 in New York. The stock has dropped 18 percent so far this year.
- Fourth-quarter revenue from DreamWorks’ TV segment was $104.9 million, compared with $50.7 million a year earlier, because of a higher number of episodes delivered under licensing deals, among other things.
- Sales from the film unit increased to $146.4 million, up from $131.3 million a year earlier.
- Library titles contributed $71.2 million to feature film revenue in the quarter.
- On the year, DWA’s revenue increased 33.8 percent to $915.9 million.
- Cash and equivalents was $110.8 million at the end of 2015 compared with $34.2 million.
- DreamWorks’ net income of $42.1 million in the fourth quarter, up from a $263.2 million loss a year earlier.