TECHNICOLOR : Q1 2015 Revenues
(Thomson Reuters ONE) -
Technicolor: Q1 2015 Revenue Performance
* Q1 2015 revenues up 8.3% at current currency, down 3.2% at constant currency
* Full year 2015 objectives confirmed
* Strong start on Drive 2020 initiatives
Paris (France), 23 April 2015 - Technicolor (Euronext Paris: TCH; OTCQX: TCLRY)
announces today its revenues for the first quarter of 2015.
Frederic Rose, Chief Executive Officer of Technicolor, stated:
"Our strong first-quarter performance means we are well on our way to deliver on
our 2015 objectives of EBITDA and FCF. With the launch of the UHD Alliance and
our broad program of initiatives in High Dynamic Range technologies and
services, the HEVC Advance patent pool and the announced acquisitions of OuiDo
Productions and Mikros Image, Technicolor's implementation of its Drive 2020
strategic plan is on track and we are laying foundation for success in our key
areas of profitable growth. Even at this early stage, 2015 is shaping up to be a
very good year for Technicolor."
Key points
* Technology revenues above ?120 million, significant business development in
Technology Licensing and establishment of HEVC Advance patent pool;
* Acquisition of OuiDo Productions and Mikros Image, joint-venture in Digital
Cinema and exit from poorly performing Digital Distribution activities;
* DVD volumes down, partially due to an unfavourable comparison base;
* Connected Home on track for full year growth and continued margin
improvement;
* Improved credit profile with Moody's rating upgraded to B1 (vs. B2), driven
by strong financial performance.
2015 objectives confirmed
* Adjusted EBITDA between ?560 million and ?590 million;
* Free Cash Flow of at least ?230 million;
* Leverage ratio (Net Debt/Adj. EBITDA) of around 0.75x at end December 2015
Segment review - Q1 2015 revenue highlights
Group revenues by segment
First | Change YoY
Quarter |
| | |
In ? million 2014| 2015|Reported|At constant rate
----------------------------------------------+-------+--------+----------------
Technology 113| 123| +9.0%| (2.2)%
| | |
Entertainment Services 328| 358| +9.2%| (4.1)%
| | |
Connected Home 291| 317| +8.9%| (0.8)%
----------------------------------------------+-------+--------+----------------
Group revenues (excl. legacy activities 732| 798| +9.1%| (2.5)%
and Other) | | |
----------------------------------------------+-------+--------+----------------
Legacy activities 5| 1| (87.8)%| (89.9)%
| | |
Other 7| 7| (0.4)%| (19.0)%
----------------------------------------------+-------+--------+----------------
Group revenues 744| 805| +8.3%| (3.2)%
| | |
Technology revenues amounted to ?123 million in the first quarter of 2015, up
9% at current currency compared to the first quarter of 2014. Licensing revenues
totaled ?118 million in the period, increasing by 7% year-over-year. Revenues
generated by the MPEG LA pool were significantly higher, due to favorable ?/US$
exchange rate movements that fully offset continued softness in the global PC
industry. Revenues from direct licensing programs remained solid but were lower
compared to the first quarter of 2014, which benefited in particular from the LG
smartphone licensing agreement signed in February 2014 (including a lump sum
payment for the past).
In the first quarter, Technicolor joined GE, Dolby, Philips and Mitsubishi
Electric as initial licensors of the HEVC Advance patent pool. The pool is
expected to launch in the third quarter of 2015, with at least 500 essential
HEVC patents, which should grow rapidly and already provide broad and high-
quality intellectual property coverage.
Technicolor made progress in Technology Licensing business, with the
announcement of the Group's first technology licensing deal in the mobile
industry, partnering with Chinese mobile device manufacturer TCL on the launch
of its latest premium smartphone, IDOL 3, which embeds Technicolor's Color
Enhance technology. The Group also continued to make significant progress around
its HDR offering and has now initiated discussion with leading SoC makers,
encoding partners and postproduction tool companies to implement its core
solution.
Technicolor's service platform, M-GO, continued to increase its market and
audience reach in the first quarter of 2015 benefitting from a strong release
slate.
Entertainment Services revenues amounted to ?358 million in the first quarter of
2015, up 9.2% at current currency compared to the first quarter of 2014. This
performance was driven by a positive forex impact and the strong growth of
Production Services revenues that partly offset lower DVD volumes.
* Production Services revenues rose significantly in the first quarter of
2015, supported by double-digit year-on-year growth across Visual Effects
("VFX") and Animation activities and a strong performance in Postproduction
Services in Canada. Postproduction activities in the US were slightly down
as the good performance of TV series did not fully offset lower Theatrical
revenues, resulting from the delay to the end of the quarter of several
titles from a key studio customer.
Technicolor continued to grow at record level in VFX for feature films and
commercials, driven by strong organic growth and incremental revenues associated
with the acquisition of Mr. X in July 2014. The Mr. X acquisition integrated
well with Postproduction activities in Canada, which increased at a solid rate
in the quarter. VFX for commercials grew across facilities and benefited from
the opening in the fourth quarter of 2014 of two new VFX studios in Shanghai
(China) and Paris (France) that gained traction rapidly.
Technicolor continued during the quarter to develop its offering of creative
services and tools for the premium content industry and to grow in the Animation
market, with the acquisition in February 2015 of OuiDo Productions, a French-
based production house specialized in animated TV series. The OuiDo acquisition
expanded Technicolor's global offering and bolstered contribution of Animation
revenues. The Group also pursued its focus on growing its position in the
Animation and Advertising markets, with the acquisition of Mikros Image
announced in early April 2015, which would strengthen its position and offering
in the Animation market and drive the Group to lead France's Advertising market.
During the first quarter of 2015, VFX teams completed work on Fast and
Furious 7 (Universal), while pursuing work on Theatrical projects such as Jungle
Book (Disney), Monster Trucks (Paramount), The Fantastic Four (Fox), Goosebumps
(Sony), Pan (Warner), Terminator Genisys (Paramount), as well as Frankenstein
(Fox). Postproduction teams also recorded a sustained level of activity during
the period, completing work on Theatrical projects such as Avengers: Age of
Ultron (Marvel/Disney) and Insurgent (Lionsgate). Technicolor continued to lead
the premium TV series market, with Postproduction teams completing work on
successful TV franchises including Banshee (HBO), The Originals Season 2 and The
Vampire Diaries Season 6 (Warner), while they also confirmed their leading
market position with Over-the-Top ("OTT") service platforms, completing work on
original content for Amazon (Bosch) and Netflix (Daredevil, Narcos, Sense 8,
Grace & Frankie).
In accordance with its Drive 2020 strategic plan, Technicolor implemented in
the first quarter of 2015 some structural enhancements, specifically in Digital
Distribution and Digital Cinema activities. In Digital Distribution, the Group
decided to focus solely on its digital servicing platform and to phase out
immediately all non-platform services. In Digital Cinema, Technicolor and Deluxe
announced a binding agreement to establish a worldwide joint-venture combining
both companies' businesses, which is expected to close in the second quarter of
2015. Financial implications of the above will be provided with Technicolor's
first half 2015 results.
* DVD Services revenues decreased in the first quarter of 2015, reflecting an
11% decline in combined Standard Definition DVD and Blu-ray(TM) disc volumes
compared to a very strong first quarter of 2014, which benefited from the
significant success of Disney's Frozen. This decline in volumes also
resulted from continued weakness in the fourth quarter of 2014 of major new
releases across Technicolor's key studio customers (which reported a 13%
year-on-year decrease in their Q4 2014 box office revenues). Volume trends
were generally better in Europe than in North America in the period.
During the first quarter of 2015, Standard Definition DVD volumes decreased
at a lower rate of decline compared to the second half of 2014, driven by growth
in independent (non-studio) customers, as well as significant growth from one
key studio customer across both new releases and catalog. Blu-ray(TM) disc
volumes declined in the first quarter of 2015 compared to a very strong first
quarter of 2014 as it was also impacted by Frozen and the introduction of the
Xbox One platform that occurred in late 2013. Xbox One volume was stable during
the period, due to the seasonal second half timing of key new releases, while
demand for the prior generation Xbox platform continued to decline as expected.
The first calendar quarter is typically a seasonally slow period for major
Games releases, and specific to the first quarter of 2015, the overall release
slate for the Group's major studio customers was not particularly strong. The
improvement in 2015 box office performance to date and a high quality upcoming
release slate for both Theatrical and Games titles are expected to help support
improved year-on-year comparative volume trends in the second half of 2015.
Major titles produced in the first quarter of 2015 included Big Hero 6
(Disney), The Hobbit: The Battle of the Five Armies (Warner), Unbroken
(Universal) and Interstellar (Paramount/Warner).
Volume Data for DVD Services
First Quarter
| |
In million units 2014 | 2015 | Change
----------------------------------------------+-------+---------
Total Combined Volumes 304.4 | 269.6 | (11.4)%
----------------------------------------------+-------+---------
By Format Standard Definition DVD 239.2 | 211.0 | (11.8)%
| |
Blu-ray(TM) 65.2 | 58.6 | (10.1)%
----------------------------------------------+-------+---------
By Segment Studio / Video 280.5 | 252.5 | (10.0)%
| |
Games 12.3 | 9.6 | (22.3)%
| |
Software & Kiosk 11.5 | 7.5 | (34.6)%
| |
* Legacy activities revenues were ?1 million in the first quarter of 2015
compared to ?5 million in the first quarter of 2014, a year-on-year decrease
of 88%, as the Group is completing this year the exit of these activities.
During the first quarter, IZ-ON has been transferred from the Entertainment
Services segment to the Other segment, as a result of the Group's decision
to divest from this activity.
Connected Home revenues reached ?317 million in the first quarter of 2015, up
8.9% at current currency compared to the first quarter of 2014. At constant
currency, Connected Home revenues remained broadly stable year-over-year, as
further improved overall product mix fully offset lower unit volumes. The
Group's performance was particularly strong in North America, driven by
sustained demand from Cable customers in the period, notably for high-end
Broadband devices. In Latin America, volumes recorded solid growth in the
quarter, supported by a good level of activity in large markets such as Mexico
and Brazil, as well as in Chile. In Europe, Middle-East and Africa and Asia-
Pacific, the overall product mix was particularly strong and offset partially
the drop in volumes that is mostly related to timing and regulatory issues in
India.
In the first quarter of 2015, Technicolor continued to secure a number of new
awards and customer wins across all regions, notably for higher-end devices,
which is expected to lead to stronger level of activity in the second half of
the year. Gross margin progressed well in the period, driven by ongoing solid
operating execution, supply-chain efficiency and improved product mix, while
adjusted EBITDA margin was also up materially year-on-year, notwithstanding
stronger R&D expenses in order to support some new product introductions
scheduled for the second half of the year.
Technicolor now expects a year-on-year revenue decrease at constant currency in
the second quarter of 2015, as a result of a tough comparison base in North
America (Q2 2014 revenues were up 89% in the region) and the shift in
digitization in India to the second half. Technicolor expects to resume strong
growth in the second half of the year and remains confident in its ability to
achieve continued material improvement in the profitability of Connected Home in
2015.
Q1 2015 Regional Highlights
* In North America, revenues increased significantly in the first quarter of
2015, benefiting from double-digit year-on-year growth in unit volumes,
primarily as a result of sustained demand from large Cable customers for
high-end broadband gateways, while deliveries of Satellite set top boxes
remained solid, although lower year-over-year, after the strong level of
activity experienced in the second half of 2014. Overall product mix also
improved materially compared to the first quarter of 2014, driven by
increased contribution of higher-end Cable devices in the sales mix.
* In Latin America, revenues increased in the first quarter of 2015, supported
by double-digit year-on-year growth in unit shipments, which expanded year-
on-year for the third consecutive quarter, despite continuing difficult
macroeconomic conditions in certain parts of the region. This performance
resulted from a solid level of customer demand in large markets such as
Mexico and Brazil, as well as in Chile, in particular for Satellite set top
boxes and Telecom broadband gateways.
* In Europe, Middle East and Africa, revenues declined slightly in the first
quarter of 2015, as strongly improved overall product mix almost fully
offset a significant reduction in unit volumes compared to the first quarter
of 2014, which benefited from stronger level of demand, particularly for
modems & routers, as part of product deployments at some large customers.
Technicolor continued to record further new awards and customer wins in the
period, including high-end devices.
· In Asia-Pacific, revenues decreased significantly in the first quarter
of 2015, as a strong improvement in overall product mix only partially offset a
sharp year-on-year decrease in unit volumes, which mainly reflected lower
customer demand associated with the shift of the next phase of the digitization
in India to the second half of the year. Technicolor further expanded its market
positions in China, with significant deliveries of GPON gateways.
Volume Data for Connected Home
First Quarter
| |
In million units 2014 | 2015 | Change
---------------------------------------------------+------+---------
Total Combined Volumes* 7.1 | 6.6 | (5.9)%
---------------------------------------------------+------+---------
By Region North America 1.3 | 1.5 | +15.6%
| |
Latin America 2.8 | 3.1 | +10.5%
| |
Europe, Middle-East and Africa 2.0 | 1.5 | (22.2)%
| |
Asia-Pacific 0.9 | 0.5 | (51.3)%
| |
* Including tablets and other connected devices.
An analyst conference call hosted by Frederic Rose, CEO, and Esther Gaide, CFO,
will be held on Thursday, 23 April 2015 at 4:00pm CEST.
Financial Calendar
+------------------+------------------+
| Dividend Payment | From 22 May 2015 |
+------------------+------------------+
| H1 2015 Results | 23 July 2015 |
+------------------+------------------+
| Q3 2015 Revenues | 21 October 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: (at)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).
Contacts
Press: +33 1 41 86 53 93
technicolorpressoffice(at)technicolor.com
Investor relations: +33 1 41 86 55 95
investor.relations(at)technicolor.com
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Datum: 23.04.2015 - 07:06 Uhr
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