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TheStreet Open House

RealD Inc. Reports First Quarter Fiscal Year 2014 Financial Results

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.

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