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RealD Inc. (NYSE:RLD), a leading global licensor of 3D technologies, today announced financial results for its second quarter of fiscal 2013 ended September 21, 2012.
“We continued to advance our key growth initiatives during the quarter, although we had a very challenging comparison versus last year’s second quarter that included exceptional contributions from
Harry Potter and
Transformers,” said Michael V. Lewis, Chairman and Chief Executive Officer of RealD. “We demonstrated our confidence in RealD’s future by repurchasing approximately 2.4 million common shares during the quarter, funded by cash flows from operations.”
Second Quarter Fiscal 2013 Financial Highlights
Total revenue was $55.0 million, comprised of license revenue of $35.0 million and product and other revenue of $20.0 million. For the second quarter of fiscal 2012, total revenue was $88.0 million, comprised of license revenue of $52.0 million and product and other revenue of $36.0 million.
GAAP net loss attributable to common stockholders was $4.2 million, or $0.08 per share, compared to GAAP net income attributable to common stockholders of $18.9 million, or $0.33 per diluted share, for the second quarter of fiscal 2012.
Cost of license revenue for the second fiscal quarter of 2013 included an impairment charge of $3.5 million (equivalent to approximately $0.06 per share) related to a non-cancelable purchase commitment for a specific configuration of 3D cinema systems.
Adjusted EBITDA was $13.8 million, compared to $44.4 million in the second quarter of fiscal 2012.
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).
Six-Month Fiscal 2013 Financial Highlights
Total revenue was $123.2 million, comprised of license revenue of $76.2 million and product and other revenue of $47.0 million. For the six months ended September 23, 2011, total revenue was $147.6 million, comprised of license revenue of $87.7 million and product and other revenue of $59.9 million.
GAAP net loss attributable to common stockholders was $1.2 million, or $0.02 per share, compared to GAAP net income of $28.5 million, or $0.50 per diluted share, for the six months ended September 23, 2011.
Adjusted EBITDA was $36.9 million, compared to $70.4 million for the six months ended September 23, 2011.
Cash Flows, Stock Repurchases and Balance Sheet Highlights
For the six months ended September 21, 2012, cash flows from operating activities were $50.6 million and total capital expenditures were $12.9 million, resulting in free cash flow of $37.7 million. The Company expects that its future cash flows will vary considerably from quarter to quarter, due to box office seasonality, among other factors.
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.
During the quarter, the Company repurchased approximately 2,426,000 common shares for $24.6 million, representing an average cost of $10.16 per share.
To-date, the company has repurchased approximately 2,560,000 common shares under its $50 million stock repurchase program. As of September 21, 2012, $23.8 million remained available under the repurchase authorization.
Cash and cash equivalents as of September 21, 2012 were $25.2 million. The decrease of $20.3 million from June 22, 2012 primarily reflects the Company’s stock repurchases and debt repayment.
Total debt as of September 21, 2012 was $12.5 million, a decrease of $12.5 million from June 22, 2012.
International markets generated 61% of license revenue, compared to 56% of license revenue in the second quarter of fiscal 2012.
International markets generated 44% of product and other revenue, compared to 41% of product and other revenue in the second quarter of fiscal 2012.
As of September 21, 2012, the Company had deployed approximately 21,500 RealD-enabled screens, an increase of 15% from approximately 18,700 screens as of September 23, 2011, and an increase of 800 screens, or 4%, from approximately 20,700 screens as of June 22, 2012.
As of September 21, 2012, the Company had approximately 12,300 domestic screens at approximately 2,700 domestic theater locations and approximately 9,200 international screens at approximately 2,600 international theater locations.
Updated Guidance for Fiscal Year 2013 Operating Expenses
The Company has updated its outlook for fiscal 2013 operating expenses. The Company currently expects total fiscal 2013 operating expenses to be in the range of $95 million to $100 million, a decrease from its prior expectation of $105 million to $110 million disclosed on RealD’s first quarter of fiscal 2013 results investor conference call held on July 30, 2012.
The Company’s moderated expectations for growth in fiscal 2013 operating expenses primarily reflect slower than-anticipated growth in headcount, a shift in the timing for certain initiatives, and operating efficiencies that contributed to lower-than-expected growth in operating expenses during the second quarter and six months ended September 21, 2012.
Proposed New Quarter End Dates for RealD
Historically, RealD’s fiscal year has included four 13-week periods for a total of 52 weeks. As a result, the timing of the end of RealD’s quarterly periods has often differed significantly compared to other publicly-traded companies.
In the future, RealD intends to slightly adjust its quarterly periods to coincide with traditional calendar quarterly reporting periods. For example, the Company’s third quarter of fiscal 2013 would end on December 31, 2012, and its fourth quarter of fiscal 2013 would end on March 31, 2013. In Fiscal 2014, RealD’s quarters would end on June 30, 2013; September 30, 2013; December 31, 2013; and March 31, 2014.
3D Theatrical Release Schedule for Fiscal 2013(As of October 29, 2012 – Domestic)
Fiscal Q1 2013
Domestic Release Date
Wrath of the Titans
The Pirates! Band of Misfits
Men in Black III
Madagascar 3: Europe’s Most Wanted
Abraham Lincoln: Vampire Hunter
Fiscal Q2 2013
Domestic Release Date
Katy Perry: Part of Me 3D
Ice Age: Continental Drift
Step Up Revolution
Nitro Circus: The Movie
Resident Evil: Retribution
Finding Nemo (re-release)
Fiscal Q3 2013
Domestic Release Date
Silent Hill: Revelation 3D
Rise of the Guardians
Life of Pi
The Hobbit: An Unexpected Journey
Monsters, Inc. (re-release)
Cirque du Soleil: Worlds Away
Fiscal Q4 2013
Domestic Release Date
The Texas Chainsaw Massacre 3D
Hansel and Gretel: Witch Hunters
Escape from Planet Earth
Jack the Giant Slayer
Oz: The Great and Powerful
G.I. Joe: Retaliation
Sources: Rentrak and imdb.com.
Conference Call Information
Members of RealD management will host a conference call to discuss the Company’s financial results for the second quarter of fiscal 2013, beginning at 4:30 pm ET (1:30 pm PT), today, October 29, 2012. To access the call via telephone, interested parties should dial (877) 407-0789 (U.S.) or (201) 689-8562. (International) ten minutes prior to the start time and use conference ID 401081.