RealD Inc. (NYSE: RLD), a leading global licensor of 3D
technologies, today announced financial results for its first
quarter of fiscal 2014 ended June 30, 2013.
“We had a challenging first quarter, as moviegoers were more
selective than expected regarding the films they chose to
experience in 3D. Collaborating with our exhibitor and studio
partners we have recently initiated a variety of new industry
efforts to further promote the appeal of seeing films in RealD and
the premium RealD experience,” said Michael V. Lewis, Chairman and
Chief Executive Officer of RealD.
“Importantly, we continue to advance our international expansion
initiatives, highlighted by today’s announcement of our largest new
contract win in several years,” Lewis added, “as Cinemex, the
sixth-largest exhibitor in the world, has selected RealD as its
exclusive circuit-wide 3D technology provider and will equip RealD
3D technology in up to 700 auditoriums throughout the Cinemex
circuit in Mexico. Approximately 540 alternative 3D systems will be
replaced with RealD 3D within the next two years, ensuring that
Cinemex audiences will experience the brightest and most immersive
3D available.”
First Quarter Fiscal 2014 Financial
Highlights
- Total revenue was $59.2 million,
comprised of license revenue of $37.3 million and product and other
revenue of $21.9 million, for the first quarter of fiscal 2014. For
the first quarter of fiscal 2013, total revenue was $68.2 million,
comprised of license revenue of $41.2 million and product and other
revenue of $27.0 million.
- GAAP net loss attributable to common
stockholders was $1.5 million, or $0.03 per share, compared to GAAP
net income attributable to common stockholders of $3.0 million, or
$0.05 per diluted share, for the first quarter of fiscal 2013.
- Adjusted EBITDA was $16.0 million,
compared to $22.0 million in the first quarter of fiscal 2013.
- As previously announced, RealD has
modified its definition of Adjusted EBITDA for financial reporting
purposes to align with the Adjusted EBITDA definition under RealD’s
credit facility. As a result, the prior year calculation of
Adjusted EBITDA was revised to conform with RealD’s new definition
of Adjusted EBITDA.
- Adjusted EBITDA is defined within the
section of this press release entitled “Use of Non-GAAP Financial
Measures,” which includes a reconciliation to its most comparable
GAAP measure, net income (loss).
Cash Flows and Balance Sheet
Highlights
- For the quarter ended June 30, 2013,
cash flows from operating activities were a negative $8.7 million
and total capital expenditures were $10.1 million, resulting in
negative free cash flow of $18.8 million. Cash flows were impacted
by unfavorable movements in working capital items during the
quarter (when compared to RealD’s balance sheet as of March 31,
2013 for the prior quarter), due primarily to timing
considerations, including a $10.0 million increase in accounts
receivable, a $3.8 million increase in inventory, and a $5.0
million decrease in accounts payable and accrued expenses.
- Free cash flow is defined within the
section of this press release entitled “Use of Non-GAAP Financial
Measures,” which includes a reconciliation to its most comparable
GAAP measure, net cash provided by operating activities.
- As of June 30, 2013, $14.6 million
remained available under RealD’s $75 million stock repurchase
authorization. RealD did not repurchase shares during the
quarter.
- As of June 30, 2013, cash and cash
equivalents were $18.4 million and total debt was $52.5
million.
Key Metrics
- Estimated box office generated on
RealD-enabled screens(1) for the first quarter of fiscal 2014 was
$838 million ($431 million domestic, $407 million international).
In the first quarter of fiscal 2013, estimated box office generated
on RealD-enabled screens was $933 million ($444 million domestic,
$489 million international).
- Eight 3D films were released in the
first quarter of fiscal 2014, compared to 10 3D films in the first
quarter of fiscal 2013. These figures reflect the number of 3D
films released domestically during the periods.
- International markets generated 55% of
license revenue and 27% of product and other revenue in the first
quarter of fiscal 2014.
- As of June 30, 2013, RealD had deployed
approximately 23,500 RealD-enabled screens, an increase of 14% from
approximately 20,700 screens as of June 22, 2012, and an increase
of 800 screens (300 domestic, 500 international), or 4%, from
approximately 22,700 screens as of March 31, 2013.
- As of June 30, 2013, RealD had
approximately 13,100 domestic screens at approximately 2,900
domestic theater locations and approximately 10,400 international
screens at approximately 2,700 international theater
locations.
(1)
Estimated domestic box office on
RealD-enabled screens represents the estimated 3D box office
generated on RealD-enabled domestic screens. Estimated
international box office on RealD-enabled international screens is
the estimated 3D box office generated on RealD-enabled
international screens. RealD’s estimates of box office on
RealD-enabled screens rely on box office tracking data.
International box office reflects RealD’s estimates of
international box office generated on RealD-enabled screens in 20
foreign countries where box office tracking is available. RealD
estimates these countries represent approximately 85% of RealD’s
international license revenues.
3D Theatrical Release Schedule for
Fiscal 2014 (As of August 7, 2013 – Domestic)
Fiscal Q1
2014
Film
Domestic Release
Date
(ended 6/30/13) Jurassic Park (re-release) 4/5/2013 Iron Man 3
5/3/2013 The Great Gatsby 5/10/2013 Star Trek Into Darkness
5/16/2013 Epic 5/24/2013 Man of Steel 6/14/2013 World War Z
6/21/2013 Monsters University 6/21/2013
Fiscal Q2
2014
Film
Domestic Release
Date
(ending 9/30/13) Despicable Me 2 7/3/2013 Pacific Rim 7/12/2013
Turbo 7/17/2013 R.I.P.D. 7/19/2013 The Wolverine 7/26/2013 The
Smurfs 2 7/31/2013 Percy Jackson: Sea of Monsters 8/7/2013 Planes
8/9/2013 One Direction: This Is Us 8/30/2013 Battle of the Year:
The Dream Team 9/20/2013 Cloudy With a Chance of Meatballs 2
9/27/2013
Fiscal Q3
2014
Film
Domestic Release
Date
(ending 12/31/13) Gravity 10/4/2013 Metallica: Through the Never
10/4/2013 Free Birds 11/1/2013 Thor: The Dark World 11/8/2013
Frozen 11/27/2013 Postman Pat: The Movie - You Know You're the One
11/27/2013 The Hobbit: The Desolation of Smaug 12/13/2013 Walking
With Dinosaurs 12/20/2013 47 Ronin 12/25/2013
Fiscal Q4
2014
Film
Domestic Release
Date
(ending 3/31/14) The Nut Job 1/17/2014 Seventh Son 1/17/2014 I,
Frankenstein 1/24/2014 The Lego Movie 2/7/2014 Pompeii 2/21/2014
Mr. Peabody and Sherman 3/7/2014 300: Rise of an Empire 3/7/2014
Sources: Rentrak and imdb.com.
Conference Call Information
Members of RealD’s management will host a conference call to
discuss RealD’s financial results for the first quarter of fiscal
2014, beginning at 4:30 pm ET (1:30 pm PT), today, August 7, 2013.
To access the call via telephone, interested parties should dial
(855) 769-4820 (U.S.) or (407) 374-0083 (International) ten minutes
prior to the start time and use conference ID 20099342.
The conference call will also be broadcast live over the
Internet, hosted at the Investor Relations section of RealD’s
website at www.reald.com. An archived replay of the call will be
available via webcast at www.reald.com or by dialing (855)
859-2056, or (404) 537-3406 for international callers. The
conference ID for the telephone replay is 20099342.
Cautionary Note on Forward-Looking Statements
This press release includes forward-looking information and
statements, including but not limited to: statements concerning
anticipated future financial and operating performance; our
expectations regarding demand and acceptance for our technologies;
RealD’s ability to continue to derive substantial revenue from the
licensing of RealD’s 3D technologies for use in the motion picture
industry; 3D motion picture releases and conversions scheduled for
fiscal 2014 ending March 31, 2014 and beyond, their commercial
success and consumer preferences, that, in recent periods, have
trended in favor of 2D over 3D in some motion pictures in domestic
and international markets; our ability to increase our revenues and
the number of RealD-enabled screens in domestic and international
markets and our market share; our ability to supply our solutions
to our customers on a timely basis; RealD's relationships with its
exhibitor and studio partners and the business model for 3D eyewear
in North America; the progress, timing and amount of expenses
associated with RealD’s research and development activities, which
may increase in future periods; market and industry trends,
including growth in 3D content; our plans, strategies and expected
opportunities; the deployment of and demand for our products and
products incorporating our technologies; RealD’s projected
operating results; and competitive pressures in domestic and
international cinema markets impacting license and product
revenues.
These statements are based on our management’s current
expectations and beliefs, as well as a number of assumptions
concerning future events. Such forward-looking statements are
subject to known and unknown risks, uncertainties, assumptions and
other important factors, many of which are outside our management’s
control that could cause actual results to differ materially from
the results discussed in the forward-looking statements. RealD’s
Annual Report on Form 10-K for the twelve months ended March 31,
2013 and other documents filed with the SEC include a more detailed
discussion of the risks and uncertainties that may cause actual
results to differ materially from the results discussed in the
forward-looking statements.
RealD undertakes no obligation to update publicly the
information contained in this press release, or any forward-looking
statements, to reflect new information, events or circumstances
after the date they were made, or to reflect the occurrence of
unanticipated events.
Use of Non-GAAP Financial Measures
To supplement RealD’s financial statements presented on a GAAP
basis, RealD provides Adjusted EBITDA and free cash flow as
supplemental measures of its performance. RealD defines Adjusted
EBITDA as net income (loss), plus net interest expense, income
taxes, other income, and depreciation and amortization, as further
adjusted to eliminate the impact of share based compensation
expense and certain other items not considered by RealD management
to be indicative of RealD’s core operating performance. RealD
defines free cash flow as net cash provided by operating activities
less total capital expenditures in a given period (e.g. purchases
of cinema systems and property and equipment on a combined
basis).
RealD presents Adjusted EBITDA in reporting its financial
results to provide investors with additional tools to evaluate
RealD’s operating results in a manner that focuses on what RealD’s
management believes to be its ongoing business operations. RealD
presents free cash flow to provide investors a metric for our
capacity to generate cash from our operating and investing
activities to sustain our operating activities. RealD’s management
does not itself, nor does it suggest that investors should,
consider any such Non-GAAP financial measures in isolation from, or
as a substitute for, financial information prepared in accordance
with GAAP. Adjusted EBITDA and free cash flow are used by
management for planning purposes, including: the preparation of
internal budgets, forecasts and strategic plans; in analyzing the
effectiveness of business strategies; to evaluate potential
acquisitions; in making compensation decisions; and in
communications with its Board of Directors concerning financial
performance. Because not all companies use identical calculations,
RealD’s presentation of Adjusted EBITDA and free cash flow may not
be comparable to similarly titled measures of other companies.
Adjusted EBITDA is not intended to be a measure of free cash flow
for management’s discretionary use, as it does not consider certain
cash requirements such as tax and debt service payments. Adjusted
EBITDA also differs from the amounts calculated under the similarly
titled definition in our credit agreement, which is further
adjusted to reflect certain other cash and non-cash charges and is
used to determine compliance with financial covenants and RealD’s
ability to engage in certain activities, such as incurring
additional debt and making certain restricted payments.
About RealD Inc.
RealD is a leading global licensor of 3D and other visual
technologies. RealD's extensive intellectual property portfolio is
used in applications that enable a premium viewing experience in
the theater, the home and elsewhere. RealD licenses its RealD
Cinema Systems to motion picture exhibitors that show 3D motion
pictures and alternative 3D content. RealD also provides its RealD
Display, active and passive eyewear, and RealD Format technologies
to consumer electronics manufacturers, content producers and
distributors to enable the delivery and viewing of 3D and other
premium content on a variety of visual displays and devices.
RealD was founded in 2003 and has offices in Beverly Hills,
California; Boulder, Colorado; London, United Kingdom; Moscow,
Russia; Shanghai, China; Hong Kong; Tokyo, Japan; and Rio de
Janeiro, Brazil. For more information, please visit our website at
www.reald.com.
© 2013 RealD Inc. All Rights Reserved.
RealD Inc. Consolidated Statements
of Operations (In thousands, except per share amounts)
(Unaudited) Three months ended June 30,
June 22, 2013 2012
Revenue: License $ 37,306 $ 41,189 Product and other 21,913
26,989 Total revenue 59,219 68,178 Cost of
revenue: License 10,818 10,013 Product and other 20,220
26,820 Total cost of revenue 31,038 36,833
Gross profit 28,181 31,345 Operating expenses: Research and
development 5,544 4,898 Selling and marketing 7,338 6,895 General
and administrative 14,422 11,262 Total
operating expenses 27,304 23,055
Operating income 877 8,290 Interest expense, net (489 ) (313 )
Other loss, net (209 ) (353 ) Income before income
taxes 179 7,624 Income tax expense 1,715 4,677
Net income (loss) (1,536 ) 2,947
Net loss attributable to noncontrolling
interest
2 32
Net income (loss) attributable to RealD
Inc. common stockholders
$ (1,534 ) $ 2,979 Earnings (loss) per common share:
Basic $ (0.03 ) $ 0.05 Diluted $ (0.03 ) $ 0.05 Shares used
in computing earnings (loss) per common share: Basic 49,588 54,676
Diluted 49,588 56,643
RealD Inc. Consolidated Balance Sheets (In
thousands) June 30, March 31, 2013
2013 (unaudited) Assets Current assets: Cash
and cash equivalents $ 18,399 $ 31,020 Accounts receivable, net
55,444 45,472 Inventories 19,269 15,430 Deferred costs – eyewear
441 538 Prepaid expenses and other current assets 5,991
3,973 Total current assets 99,544 96,433
Property and equipment, net 25,123 25,002 Cinema systems, net
125,171 125,379 Digital projectors, net-held for sale 644 728
Goodwill 10,657 10,657 Other intangibles, net 7,107 7,417 Deferred
income taxes 3,001 3,001 Other assets 4,859
5,031 Total assets $ 276,106 $ 273,648
Liabilities and equity Current liabilities: Accounts payable
$ 18,113 $ 22,737 Accrued expenses and other liabilities 24,634
25,013 Deferred revenue 7,964 9,916 Income taxes payable 1,139 603
Deferred income taxes 2,859 2,860 Current portion of long-term debt
1,042 1,042 Total current liabilities
55,751 62,171 Credit facility agreement 51,458 46,458 Deferred
revenue, net of current portion 9,329 10,392 Other long-term
liabilities, customer deposits and virtual print fee liability
6,182 5,438 Total liabilities
122,720 124,459
Commitments and
contingencies Equity (deficit) Common stock
338,290 332,694 Accumulated deficit (184,380 ) (182,846 )
Accumulated other comprehensive income 252 115
Total RealD Inc. stockholders’ equity 154,162 149,963
Noncontrolling interest (776 ) (774 ) Total equity
153,386 149,189 Total
liabilities and equity $ 276,106 $ 273,648
RealD Inc. Consolidated Statements
of Cash Flows (In thousands) (Unaudited)
Three months ended June 30,
June 22, 2013 2012 Cash flows from
operating activities Net income (loss) $ (1,536 ) $ 2,947
Adjustments to reconcile net income (loss)
to net cash (used) provided by operating activities:
Depreciation and amortization 9,554 7,850 Deferred income tax (1 )
(55 ) Non-cash interest expense 20 104 Non-cash stock compensation
4,645 4,282 Gain on sale of digital projectors (18 ) – Impairment
of long-lived assets and related purchase commitments 953 1,574
Changes in operating assets and liabilities: Accounts receivable
(9,972 ) (1,996 ) Inventories (3,839 ) 18,565 Prepaid expenses and
other current assets (2,018 ) 173 Deferred costs - eyewear 97 (348
) Other assets 172 (1,064 ) Accounts payable (4,637 ) (5,114 )
Accrued expenses and other liabilities (399 ) (3,964 ) Other
long-term liabilities, customer deposits and virtual print fee
liability 744 180 Income taxes receivable/payable 535 3,133
Deferred revenue (3,015 ) 1,565 Net cash
(used) provided by operating activities (8,715 ) 27,832
Cash flows from investing activities Purchases of property
and equipment (1,636 ) (2,745 ) Purchases of cinema systems and
related components (8,428 ) (5,044 ) Proceeds from sale of digital
projectors 70 2,474 Net cash used in
investing activities (9,994 ) (5,315 )
Cash flows from
financing activities Proceeds from credit facility 5,000 25,000
Repayments on credit facility – (25,000 ) Payments of debt issuance
costs – (1,167 ) Proceeds from exercise of stock options 951 565
Proceeds from employee stock purchase plan – 302 Purchases of
treasury stock – (1,586 ) Net cash (used)
provided by financing activities 5,951 (1,886
) Effect of currency exchange rate changes on cash and cash
equivalent 137 – Net (decrease) increase in cash and cash
equivalents (12,621 ) 20,631 Cash and cash equivalents, beginning
of period 31,020 24,894 Cash and cash
equivalents, end of period $ 18,399 $ 45,525
RealD Inc. Schedule of Non-GAAP
Reconciliations (In thousands) (Unaudited)
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Three months ended June 30,
June 22, (in thousands) 2013
2012 Net income (loss) $ (1,536 ) $ 2,947 Add
(deduct): Interest expense, net 489 313 Income tax expense 1,715
4,677 Depreciation and amortization 9,554 7,850 Other loss, net (1)
209 353 Share-based compensation expense (2) 4,645 4,282 Impairment
of assets and intangibles (3) 951 1,574
Adjusted EBITDA (4) $ 16,027 $ 21,996
(1)
Includes gains and losses from foreign
currency exchange and foreign currency forward contracts.
(2)
Represents share-based compensation
expense of nonstatutory and incentive stock options and restricted
stock units and employee stock purchase plan to employees, officers
and directors.
(3)
Represents impairment of long-lived
assets, such as fixed assets, theatrical equipment and related
purchase commitments and identifiable intangibles.
(4)
As previously announced, RealD has
modified its definition of Adjusted EBITDA for financial reporting
purposes to align with the Adjusted EBITDA definition under RealD’s
credit facility. As a result, the prior year calculation of
Adjusted EBITDA was revised to conform with RealD’s new definition
of Adjusted EBITDA.
RealD Inc. Schedule of
Non-GAAP Reconciliations (In thousands)
(Unaudited)
Reconciliation of Net Cash Provided by
Operating Activities to Free Cash Flow
Three months ended June 30,
June 22, 2013 2012 (in
thousands) Net cash provided by operating activities $ (8,715 )
$ 27,832 Purchases of property and equipment (1,636 ) (2,745 )
Purchases of cinema systems and related components (8,428 )
(5,044 ) Free cash flow $ (18,779 ) $ 20,043
Reald (NYSE:RLD)
Historical Stock Chart
From Sep 2024 to Oct 2024
Reald (NYSE:RLD)
Historical Stock Chart
From Oct 2023 to Oct 2024