Technicolor SA announced financial and production results for its third quarter 2014.
According to the statement, Technicolor’s revenues were €839 million (US $1.065 billion) in the quarter, down 3.1% compared to Q3 2013.
On the optical disc replication front, Technicolor reported that “DVD services revenues were affected in the third quarter of 2014 by significantly lower combined Standard Definition DVD and Blu-ray volumes, which fell by 21.3% compared to the third quarter of 2013. These lower volumes resulted from a limited slate of major new titles and a large year-on-year reduction in catalog and promotional activities by one customer. This compares to a very strong third quarter of 2013 during which total disc volumes grew around 3%. Technicolor’s main customers recorded a 29% year-on-year drop in 2014 summer box office revenues, and the Group DVD volumes were impacted by a particularly weak demand from some of these customers. The decline in Blu-ray volumes was limited to 6.3%, thanks to ongoing growth in Games products for the Xbox One platform.”
Additionally, “selected major titles produced in the third quarter of 2014 included Captain America: The Winter Soldier (Disney/Marvel), Godzilla (Warner), Neighbors (Universal) and Transformers: Age of Extinction (Paramount).”
Disc Replication Services (by format)
| Millions of units | Q3 2013 | Q3 2014 | Change (%) |
| DVD | 350.0 | 264.8 | -24.3% |
| Blu-ray Disc (BD) | 69.3 | 64.9 | -6.3% |
| Total | 419.2 | 329.7 | -21.3% |
Disc Replication Services (by segment)
| Millions of units | Q3 2013 | Q3 2014 | Change (%) |
| Studio/Video | 383.6 | 299.1 | -22.0% |
| Games | 27.6 | 20.1 | -27.1% |
| Software & Kiosk | 8.0 | 10.6 | 31.6% |
| Total | 419.2 | 329.7 | -21.3% |
Currency conversion as of October 22, 2014.
For more information visit: www.technicolor.com
Unedited press release follows:
Q3 2014 Revenue Performance
Technicolor today announces its revenues for the third quarter of 2014.
Full year 2014 objectives confirmed
Q3 revenues [1] down 3.1% due to low DVD volumes in the quarter
Paris (France), 22 October 2014 – Technicolor (Euronext Paris: TCH; OTCQX: TCLRY) announces today its revenues for the third quarter of 2014.
Frederic Rose, Chief Executive Officer of Technicolor, stated:
“While we saw a lower than expected activity in DVD Services in the third quarter, our performance continued to be fuelled by profitable growth in Connected Home and Production Services. We have also progressed in the quarter on our various short and mid-term key licensing initiatives. As a result we are able to confirm our 2014 guidance and I am particularly satisfied with our strong free cash flow generation for the first nine months of the year.”
Key points
• Q3 14 revenues1 at €839 million, down 3.1% at current currency and down 4.9% at constant currency. The revenue decrease was almost entirely due to lower DVD volumes in Q3 14.
• Year-to-date revenues at €2.3 billion, down 2.9% at current currency and broadly stable at constant currency.
• Continued focus on execution and operating efficiencies, in particular in DVD Services to help mitigate the impact of lower volumes on profitability.
• Solid free cash flow generation in Q3 14, marked improvement compared to Q3 13. For the first nine months of 2014, free cash flow generation significantly above the same period last year.
2014 guidance confirmed
• Technicolor confirms its objective to reach an Adjusted EBITDA between €550 million and €575 million;
• Expects to generate a free cash flow of more than €200 million, despite the impact of higher cash restructuring charges compared with 2013;
• Expects a positive net income;
• Confirms its objective to reach a Net Debt to Adjusted EBITDA ratio well below 1.2x at end December 2014.
Innovation
• R&I continued to dedicate its work in enabling immersive media experiences through contribution to MPEG, BDA and ATSC standardization bodies, focusing on color gamut, high dynamic range and metadata based services.
• The Group unveiled partnerships that accelerate the development and adoption of some of its technologies:
– With Sinclair Broadcast, deploying an ATSC 3.0 4K/UltraHD testbed platform with the objective to offer broadcasters the ability to deliver the highest quality content inclusive of 4K UltraHD live broadcast in a simultaneous transmission to consumers both at home and on-the-go.
– The successful migration of Samsung’s Media Hub customers to M-GO completed during the quarter.
• Connected Home introduced this quarter a large number of new and innovative products and solutions with a particular focus on immersive technologies, over-the-top services and advanced products for Ultra Broadband.
Segment review – Year-to-date performance
|
Nine months |
Change YoY |
|||
| In € million |
2013 |
2014 |
Reported |
At constant |
| Technology |
349 |
331 |
(5.0)% |
(7.1%) |
| Entertainment Services (excl. legacy activities) |
1,063 |
979 |
(8.0)% |
(5.9)% |
| Connected Home |
990 |
1,024 |
+3.4% |
+7.3% |
| Group revenues (excl. legacy activities) |
2,404 |
2,334 |
(2.9)% |
(0.7)% |
| Legacy activities |
67 |
14 |
(79.1)% |
(78.5)% |
| Group revenues |
2,471 |
2,349 |
(4.9)% |
(2.8)% |
Technology revenues amounted to €331 million in the first nine months of 2014, down 5.0% as reported compared to the first nine months of 2013, mainly driven by decreased Licensing revenues, as a result of lower MPEG LA revenues in the first half and the absence of significant new agreement signed in the third quarter.
Entertainment Services revenues (excl. legacy activities) totaled €979 million in the first nine months of 2014, down 8.0% as reported compared to the first nine months of 2013, reflecting weaker DVD Services revenues, partially offset by double-digit growth in Production Services revenues.
Connected Home revenues amounted to €1,024 million in the first nine months of 2014, reporting above-market growth of 3.4% as reported compared to the first nine months of 2013. This performance was driven by sustained level of activity across most regions, with healthy product volumes of 25.4m units during the period (+4.7%), including a growing proportion of high-end devices, as well as ongoing market share gains across all geographies, in particular in North America and Europe, Middle-East & Africa.
An analyst conference call hosted by Frederic Rose, CEO, and Stéphane Rougeot, CFO, will be held on Wednesday, 22 October 2014 at 4:00pm CEST.
Financial Calendar
FY 2014 Results 19 February 2015
Q1 2015 Revenues 23 April 2015
Warning: Forward Looking Statements
This press release contains certain statements that constitute “forward-looking statements”, including but not limited to statements that are predictions of or indicate future events, trends, plans or objectives, based on certain assumptions or which do not directly relate to historical or current facts. Such forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the future results expressed, forecasted or implied by such forward-looking statements. For a more complete list and description of such risks and uncertainties, refer to Technicolor’s filings with the French Autorité des marchés financiers.
About Technicolor
Technicolor, a worldwide technology leader in the media and entertainment sector, is at the forefront of digital innovation. Our world class research and innovation laboratories enable us to lead the market in delivering advanced video services to content creators and distributors. We also benefit from an extensive intellectual property portfolio focused on imaging and sound technologies, based on a thriving licensing business. Our commitment: supporting the delivery of exciting new experiences for consumers in theaters, homes and on-the-go.www.technicolor.com Follow us: @Technicolor – linkedin.com/company/technicolor
Technicolor shares are on the NYSE Euronext Paris exchange (TCH) and traded in the USA on the OTCQX marketplace (OTCQX: TCLRY).