Halifax, Canada – September 19, 2011 – 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 audited financial results for the year ended June 30, 2011.
Highlights of Fiscal 2011 Results:
(All amounts in Canadian dollars)
- Revenues of $54.7 million, up 35% from $40.5 million in fiscal 2010;
- Gross Margin increased to $22.3 million (41%), up 36% from $16.4 million in fiscal 2010 (41%);
- EBITDA1 of $7.4 million, an increase of 77% from $4.2 million for fiscal 2010; and,
- Net income of $1.7 million, $0.03 per share, up from a net loss of $0.8 million, ($0.02) per share, for fiscal 2010.
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 announce our improved 2011 results as the Company continues to recover from fiscal 2009’s difficulties in the general economy. In particular, the acquisition in September 2010 of Wildbrain Entertainment has helped to propel the business into meaningful merchandising and licensing success. With these complementary capabilities, we look forward to evolving into an expanded rights management company.”
Consolidated Statements of Income and Comprehensive Income Data
| Fiscal | Fiscal | |
| 2011 | 2010 | |
| ($000) | ($000) | |
| (except per share data) | (except per share data) | |
| Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Data:1 | ||
| Revenues……………………………………………………………… | 54,676 | 40,471 |
| Direct costs and amortization of film and television produced…. | 32,409 | 24,062 |
| Gross margin……………………………..…………………………… | 22,267 | 16,409 |
| Selling, general, and administrative………………………………… | 15,449 | 12,984 |
| Impairment in value of certain investment in film and television programs………………………………………………………………. |
450 | 557 |
| Income before the following………………………………………… | 4,882 | 1,522 |
| Income (loss) from strategic investments…………………………. | (28) | (47) |
| Equity loss……………………………………………………………. | (553) | (40) |
| Gain on restructuring of investment……………………………….. | – | 348 |
| Foreign exchange gain (loss)……………………………………… | 54 | (587) |
| Amortization, interest and other expenses, net……….………… | (2,185) | (2,500) |
| Recovery of (provision for) income taxes……………………….. | (457) | 491 |
| Net income (loss) and comprehensive income (loss) before discontinued operations……………………………………………. |
1,713 | (813) |
| Net income (loss) and comprehensive income (loss)…………… | 1,713 | (813) |
| Basic earnings (loss) per common share………………………… | 0.03 | (0.02) |
| Diluted earnings (loss) per common share………………………. | 0.03 | (0.02) |
| Weighted average common shares outstanding (expressed in thousands) | ||
| Basic………………………………………………………………… | 61,622 | 48,580 |
| Diluted………………………………………………………………… | 61,944 | 48,580 |
| N/A – Not applicable |
Revenues
Revenues for Fiscal 2011 were $54.68 million, up 35% from $40.47 million for Fiscal 2010. The increase in Fiscal 2011 was generally due to increases in producer and service fee and M&L revenues offset by decreases in proprietary production and distribution revenues.
Proprietary production revenues for Fiscal 2011 of $15.37 million were down 16% compared to $18.27 million for Fiscal 2010. The overall decrease was made up of no change in DHX Halifax at $5.93 million (Fiscal 2010-$5.93 million), a 62% decrease to $4.29 million for Fiscal 2011 (Fiscal 2010-$11.23 million) for DHX Toronto, and a 364% increase to $5.15 million for DHX Vancouver (Fiscal 2010-$1.11 million).
For Fiscal 2011, the Company accounted for 138.0 half-hours or $15.37 million of proprietary film and television program production revenue versus the 248.5 half-hours for Fiscal 2010, where the programs have been delivered and the license periods have commenced for consolidated entities. Included in these totals for Fiscal 2011 are 56.0 half-hours – $4.36 million (Fiscal 2010-113.0 half-hours – $4.96 million) for other proprietary titles where the Company has Canadian rights and other rights.
For Fiscal 2011, Management was very pleased with the growth in producer and service fee revenues, as the Company earned $15.48 million, an increase of 107% over the $7.48 million for Fiscal 2010. DHX Vancouver earned $7.14 million and DHX Wildbrain earned $8.34 million for Fiscal 2011 (Fiscal 2010 was entirely DHX Vancouver). For Fiscal 2011, the breakdown for major projects over $0.10 million for DHX Vancouver was $5.83 million for My Little Pony Seasons 1-2 and $1.31 million for Pound Puppies Seasons 1-2. For DHX Wildbrain the breakdown was $2.23 million for Monster HighSeasons 1-5, $0.24 million for Oki’s Oasis Pilot, $3.09 million for The Ricky Gervais Show Seasons 1-3, $0.15 million forJapan Day commercial, $0.12 million for Sideway (Game) Project, $0.28 million for Hard Times of R.J. Berger Season 2, $1.08 million for How to Train Your Dragon Season 1, and $0.44 million for Go Time Pilot.
For Fiscal 2011, distribution revenues were down 28% to $8.02 million from $11.20 million for Fiscal 2010, generally due to timing of license periods for existing contracts on hand and the lagging effect on distribution revenues of fewer proprietary deliveries. For Fiscal 2011, 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: DirtgirlworldSeason 1, The Latest Buzz Seasons 1-3, Animal Mechanicals Seasons 1-3, Martha Speaks Seasons 1-2, Grandpa in my PocketSeasons 1-3, Super Why! Season 1, Kid vs. Kat Seasons 1-2, How to be Indie Seasons 1-2, and Waybuloo Seasons 1-2.
Intellectual property (“IP“) rights on third party produced titles: As part of the maturation of DHX, specifically the experience our in house international television distribution team has gained over the years along with the licensing expertise the Company has gained from the Wildbrain acquisition, the Company is strategically targeting third party produced titles for IP rights. The Company is aggressively pursuing and adding half-hours to the library deploying this strategy. Due to our strong balance sheet and position in the industry, we are able to add significant exploitation and distribution rights through this avenue without taking great risks on capital. This strategy remains consistent with our previously stated goal of increasing, by 5-10% annually, the Company’s library totals for new titles upon which the Company owns IP rights.
For Fiscal 2011, music and royalty revenues, including M&L, increased 444% to $12.73 million (Fiscal 2010-$2.34 million). Overall, music and royalty revenues, including M&L, were up 444% mainly due to the addition of DHX Wildbrain which has significant licensing revenue, specifically for Yo Gabba Gabba. Traditional DHX music and royalty revenues, including M&L, was $1.60 million for Fiscal 2011 (Fiscal 2010-$2.34 million). Gross Yo Gabba Gabba Live! revenues were $8.06 million and $3.07 million for other M&L on Yo Gabba Gabba.
For Fiscal 2011, new media revenues increased 462% to $2.64 million (Fiscal 2010-$0.47 million) including $2.45 million for the start of UMIGO (you make it go). The Company has teamed with WTTW, Chicago’s premier public television station, to develop UMIGO, a transmedia property, in collaboration with the Michael Cohen Group, LLC. UMIGO will launch as a web-based property and is intended to later transition into a television series and line of consumer products. UMIGO will test the boundaries of even the most creative imaginations while providing a solid foundation in mathematics. The multi-platform strategy will make UMIGO accessible to children and families of all social-economic levels.
Gross Margin
Gross margin for Fiscal 2011 was $22.26 million, an increase in absolute dollars of 36% compared to $16.41 million for Fiscal 2010. The overall margin at 41% of revenue for Fiscal 2011 was at the high end of Management’s expectations.
Operating Expenses
Operating expenses for Fiscal 2011 were $17.39 million compared to $14.89 million for Fiscal 2010, an increase of 17%.
SG&A
SG&A costs for Fiscal 2011 were up 19% at $15.45 million compared to $12.99 million for Fiscal 2010. Specifically, SG&A costs (excluding DHX Wildbrain) for DHX Toronto, DHX Vancouver, and DHX Halifax were $11.81 million (Fiscal 2010 $12.99 million) and SG&A costs for the 289 days from date of acquisition to June 30, 2011 were $3.64 million (Fiscal 2010 nil) for DHX Wildbrain. Management was pleased with Fiscal 2011 SG&A costs (excluding DHX Wildbrain) at $11.81 million, which were down 9%, ahead of Management’s expectation of 5%, as compared to Fiscal 2010.
EBITDA
For Fiscal 2011, EBITDA was $7.35 million, up significantly by $3.19 million or 77% over the $4.16 million for Fiscal 2010. For Fiscal 2011, this was generally due to the increase in gross margin dollars of $5.86 million, offset by a net increase in SG&A and non-cash stock based compensation of $2.67 million.
DHX Media’s complete financial statements are available at www.dhxmedia.com or on www.sedar.com.
Enquiries:
DHX Media Ltd.
David A. Regan – EVP, Corporate Development & IR +1 902-423-0260
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 are the producers or co-producers of 8 original television series and theatrical releases currently commissioned for production and maintain a growing library of over 2,500 half-hours of mostly children and youth-oriented television productions.
Disclaimer
This 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.