MGM Quarter Revenues Soar 164 Percent

10:54 AM PST 08/14/2013 by Alex Ben Block
"Skyfall"

The money flowing from theatrical and home video releases of "Skyfall," "The Hobbit" and the TV show "Vikings" help propel the privately held studio to another spectacular quarter.

Riding the continued cash flow from the success of Daniel Craig’s Skyfall and The Hobbit: An Unexpected Journey, as well as the TV shows Vikings and Teen Wolf, the parent company of MGM Studios reported revenue in the second quarter was up 164 percent to $339 million, compared to the same period in 2012.

Revenue for the first six months was a spectacular $820.6 million, up from $307.8 million in the same period of 2012, MGM CEO Gary Barber announced Wednesday.

Operating income for the second quarter was $56 million, up from $8.9 million in the prior year (excluding a one-time gain last year). For the first six months, operating income was $147.9 million, up from only $53.7 million in the same period of 2012.

The net income adjusted EBITDA (net income before interest expense and other expense’s including income tax provisions and depreciation), which is a key measure for Wall Street of how much cash a company actually has, jumped in the second quarter to $79.4 million from $35.7 million in 2012. For the first six months, EBITDA was $207.5 million, up from $110 million in the same period of 2012.

MGM Holdings has now reduced its bank and other debt from $371 million at the end of 2012 to only $97 million currently, while the company is now sitting on $140.7 million in cash.

This sent the thinly traded stock shooting up nearly 4 percent today in private market trading to $58.50 per share.

Steven Azarbad, who is with New York-based Maglan Capital, which owns some MGM Holdings shares, believes the stock is ultimately worth as much as $95 a share. However, he notes there was no discussion on a conference call with investors Wednesday about the possibility of MGM eventually going public.

“MGM continues to post strong results driven by home video and co-produced films,” says Azarbad. “The earning power of the film slate and library are driving a tremendous amount of free cash flow for the company with a net debt reduction of $137 million in just the second quarter. The fruits of Skyfall and The Hobbit will continue for quarters to come as they move through the various television windows.”

Barber, on a conference call with investors, touted the studios upcoming releases this year: Carrie (through Sony’s Screen Gems Oct. 18) and The Hobbit: The Desolation of Smaug, which New Line will release Dec. 13.

MGM called its 2014 slate of movies “robust.” They include RoboCop, 22 Jump Street, Hercules, Poltergeist and the third film in the Hobbit trilogy.

On the TV side, in addition to the success of Vikings and Teen Wolf, MGM said that it has a limited series order for Fargo (for FX) and has cleared over 92 percent of U.S. TV homes for its syndicated show Paternity Court, which premieres Sept. 23.

 

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