DreamWorks Animation Stock Up as Earnings Beat Expectations
UPDATED: "The Croods" helps the company post better revenue and profits than Wall Street had anticipated, and "Turbo" should eventually turn a profit.
DreamWorks Animation on Wednesday reported rising second-quarter financial results, with revenue at $213.4 million and earnings per-share at 26 cents. A year ago, the company earned 15 cents a share on revenue of $162.8 million.
Analysts had expected revenue of just under $188 million and net earnings of about 19 cents per share.
DreamWorks stock, while still trading at a lower price than where it debuted in 2004, has been enjoying a rally lately, up about 48 percent so far this year. On Wednesday, shares rose 2 percent to $24.76 then surged another 6 percent after the closing bell once earnings had been disclosed.
The Croods, which has earned $583.9 million at the worldwide box office, contributed $7.18 million in revenue during the quarter, while Rise of the Guardians turned in a respectable $16.7 million, primarily from home entertainment.
Madagascar 3: Europe's Most Wanted contributed $48.9 million, mostly via worldwide pay television; Puss In Boots brought $1.4 million, mostly through home entertainment; and DWA's library content contributed $41.3 million.
Classic Media brought in $9 million and "other items," which includes results from Oriental DreamWorks and recent digital acquisition AwesomenessTV, was good for $24.3 million. Jeffrey Katzenberg, the company's chief executive, said AwesomenessTV, which operates YouTube channels, is working on a children's offering.
Katzenberg also acknowledged a soft opening for Turbo, which he blamed on an "over-saturated" market for family films, but he's confident the movie will eventually be profitable. He said the large number of movies aimed at kids -- like Monsters University from Disney and Despicable Me 2 from Universal -- led to an "unprecedented" amount of competition for Turbo.
Katzenberg said the company is enjoying "a great deal of momentum within our television, consumer products and location-based businesses today, as DreamWorks Animation continues to diversify and evolve into a branded family entertainment company."
The company expects that $100 million in revenue this year will come from television, with half that courtesy of Classic Media.
Katzenberg also said Wednesday that, while next year's releases How to Train Your Dragon 2 and Mr. Peabody & Sherman will sport "typical" DWA budgets, after that the company will be making movies with negative costs of $120 million or less. Turbo was a negative cost of $127 million and Rise of the Guardians was $157 million.
Speaking with The Hollywood Reporter after the release of earnings, Katzenberg said that holding negative costs to no more than $120 million represents "a meaningful and significant change in the cost structure for our film production." That effort, he said, "will bring the cost of our movies down 20 percent without changing the quality of them."
He also said efforts to reduce costs associated with marketing DWA's films are ongoing, though he wouldn't offer specifics.
"We are in the world of reining in costs anywhere we can, anytime we can," he said.