DreamWorks Animation profit of $11.9 million in quarter tops estimates
DreamWorks Animation SKG Inc. reported a stronger-than-expected profit in the third quarter, fueled by the box-office success of “How to Train Your Dragon 2.”
The Glendale animation studio earned $11.9 million, or 14 cents a share, on revenue of $180.9 million in the quarter. That was an improvement over the same quarter a year earlier, when it posted net income of $10.1 million, or 12 cents, on revenue of $154.5 million.
The results easily exceeded the earnings of 5 cents a share estimated by analysts polled by Thomson Reuters.
“The third quarter of 2014 was strong for DreamWorks Animation, with both quarterly revenue and earnings per share up 17% in a year-over-year comparison,” Chief Executive Jeffrey Katzenberg said in a statement.
The improved financials come at a welcome time for a studio that has struggled with a rocky patch at the box office.
DreamWorks has recorded three write-downs on its films in two years, and on Wednesday said it took an additional $2.1-million impairment charge because of lower-than-expected TV revenue from its 2013 snail comedy “Turbo.” Previously, DreamWorks announced that the Securities and Exchange Commission was investigating a $13.5-million write-down it took for “Turbo.”
The studio’s latest movie, the sequel to the 2010 movie “How to Train Your Dragon,” gave it a much-needed lift this summer. Released in June, the film did strong business in China and other overseas markets.
“Driving the company’s third-quarter results is the blockbuster performance of ‘How to Train Your Dragon 2,’ which has reached over $615 million at the worldwide box office to become the highest-grossing animated film of the year,” Katzenberg said.
During a conference call with analysts Wednesday, Katzenberg sought to downplay speculation about whether his studio would be sold.
Katzenberg has been actively shopping the studio and was in talks last month to sell the company for $3.4 billion to Japanese telecommunications giant SoftBank Corp. But people close to the discussions say those talks have quieted.
Although he declined to comment on “rumor and speculation” about a possible sale, Katzenberg suggested that DreamWorks was nonetheless attractive to suitors.
“We’re investing in a number of new businesses in territories across the globe,” he said. “The value in DreamWorks as a global, family-branded company is becoming clearer and clearer to us every day.”
Katzenberg and his executive team touted the company’s move to diversify operations.
To lessen its reliance on movies, DreamWorks has launched a publishing division, expanded its consumer products business and beefed up television programming. That includes a partnership with the streaming service Netflix, which has ordered a new live-action series from AwesomenessTV based on the classic cartoon character Richie Rich from DreamWorks’ Classic Media library.
DreamWorks’ television division generated revenue of $14.3 million and segment gross profit of $2.3 million in the third quarter, primarily from Classic Media content, the “Turbo F.A.S.T.” series and DreamWorks “Dragons: Riders of Berk” on Cartoon Network. Television is on track to generate more than $200 million in revenue next year, executives said.
The consumer products sales contributed revenue of $12.1 million and segment gross profit of $4.2 million in the quarter.
Investors welcomed the results. DreamWorks shares, which closed down 46 cents, or 1.9%, at $23.29, before earnings were released, jumped 5% in after-hours trading.
“Clearly the headline numbers were pretty decent,” said Tuna Amobi, equity analyst at S&P Capital IQ, which has a buy rating on the stock. “They’re changing the narrative from being a feature film play to a company that is diversified into complementary businesses.”
DreamWorks’ next movie, “Penguins of Madagascar,” the latest in the successful “Madagascar” franchise, will be released in November.
Follow me on Twitter: @rverrier
From the Oscars to the Emmys.
Get the Envelope newsletter for exclusive awards season coverage, behind-the-scenes stories from the Envelope podcast and columnist Glenn Whipp’s must-read analysis.
You may occasionally receive promotional content from the Los Angeles Times.