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TECHNICOLOR: Third quarter 2012: Strong revenue growth, continued deleveraging Amplify 2015 on track


October 26, 2012 - Issy-les-moulineaux Cedex, France

Third quarter 2012:

Strong revenue growth, continued deleveraging

Amplify 2015 on track

Paris (France), 26 October 2012 - The Board of Directors ofTechnicolor(PARIS: TCH) met to review the Group's revenues for the third quarterof 2012.

Q3 2012 revenue highlights

Group revenues from continuing operations reached EUR928 million inthe thirdquarter of 2012, up 10.9% at current currency and up 6.0% at constantcurrencycompared to the third quarter of 2011. On a proforma basis (excludingBroadcastServices disposal, completed on 3 July 2012), revenues were up 15.4% atcurrentcurrency and 10.3% at constant currency.

* Technology: Solid growth in Licensing revenues, driven by goodperformances across the different licensing programs.

* Entertainment Services: Revenues year-over-year impacted by Photochemical Film activities. Stable DVD Services revenues, some softness inCreation Services.

* Digital Delivery: The Connected Home division posted revenues up 42% at constant currency, driven by volume growth across all regions andproduct categories.


+-------------------------------------+ +-------+-------+ +-------+-------+
|In EUR million | |Q3 2011|Q3 2012| |9M 2011|9M 2012|
+-------------------------------------+ +-------+-------+ +-------+-------+
|Total revenues from continuing | | 837| 928| | 2,396| 2,575|
|operations | | | | | | |
| | | | | | | |
|Change as reported (%) | | | +10.9%| | | +7.5%|
| | | | | | | |
|Change at constant currency (%) | | | +6.0%| | | +2.5%|
| | | | | | | |
|o/w Technology | | 107| 128| | 326| 364|
| | | | | | | |
| Change as reported (%) | | | +20.0%| | | +11.8%|
| | | | | | | |
| Change at constant currency (%) | | | +27.3%| | | +10.9%|
| | | | | | | |
| Entertainment Services[1] | | 454| 449| | 1,238| 1,206|
| | | | | | | |
| Change as reported (%) | | | (1.1)%| | | (2.6)%|
| | | | | | | |
| Change at constant currency (%) | | | (8.8)%| | | (9.1)%|
| | | | | | | |
| Digital Delivery[2] | | 275| 351| | 829| 1,004|
| | | | | | | |
| Change as reported (%) | | | +27.8%| | | +21.2%|
| | | | | | | |
| Change at constant currency (%) | | | +22.5%| | | +16.9%|
+-------------------------------------+ +-------+-------+ +-------+-------+


Q3 2012 Amplify 2015 highlights

* Significant progress on M-GO, the Group's new platform to help end-users discover, view and share all forms of media: signed agreements withmajor studios - NBC Universal, Paramount Pictures, Sony Pictures Home Entertainment, Twentieth Century Fox, Warner Brothers, DreamWorksAnimation and Relativity Media. The deals will enable rentals or purchase the dayof release of new home entertainment titles, catch up TV and back catalogfor movies and TV shows with UltraViolet compatibility, across an opendevice ecosystem. Open beta in the fourth quarter of 2012.

* The Group accelerated its Technology Licensing initiative in ImageFidelity & Enhancement with the launch of its Color Certification Program aimingat leveraging Technicolor's science for the benefit of prosumers andconsumers. Technicolor is partnering with Portrait Displays, a visual enhancement software provider, to offer a Color Certification Program to makers ofPC, laptop and tablet displays. It is also leveraging the traction created around its CineStyle color profile, to develop a full suite of PC andmobile applications that bring the "Hollywood" color-style to the prosumers.

* Technicolor established Magic Ruby, a venture around "second screen" innovations, to create new inroads into the multi-screen e-commerce and targeted advertising space. Fox is now offering this service through a downloadable iPad, iPhone and Android application to its clients forthe second season of Sons of Anarchy in the US.

* In collaboration with Warner Bros. and its other major studio customers, Technicolor announced the launch of its digital studio backbone tointegrate studios, Technicolor and third-party service providers on an openplatform with key functionality and tools to meet the demands of contentcreators and distributors. Technicolor's solution provides a unified set of featuresto manage, monitor and enable an integrated pipeline of individualservices from clients, Technicolor and other approved, trusted third-partyservice providers on a platform of common tools for the creation anddistribution of content.


Financial update: continued focus on improving financial structure

· Following the capital increases, estimated gross debt at the endofSeptember 2012 amounted to EUR1,249 million, a decrease compared to endof June2012 mainly resulting from EUR200 million of debt repayments, ofwhich EUR162million of prepayments resulting from the capital increases andBroadcastServices disposal. The level of cash was slightly up compared to the end ofJune2012.

· Following the completion of the capital increases and theperformanceimprovement posted in the first half of 2012, Standard & Poor's andMoody'sreviewed Technicolor's rating. S&P upgraded its rating fromB-/stable to B/stable and Moody's changed its outlook from negativeto stable whilemaintaining its B3 rating. Nevertheless, both agencies clearly statedthat theGroup's financial structure needs to be further improved.

· The Group reiterates its focus on free cash flow generation anddebtdeleveraging.


2012 objectives

Technicolor reconfirms its 2012 objectives:

· Adjusted EBITDA in the range of EUR475-500 million;

· Continue to generate positive free cash flow[3]despite higherrestructuring expenses and investments in growth businesses;

· Operate within the financial covenants of credit agreements.


Frederic Rose, Chief Executive Officer of Technicolor, stated:

"Our focus on operational performance over the last 12 months is bearingfruitsas reflected in our strong revenue growth in the third quarter.We areparticularly pleased by the growth in Licensing revenues, the continuedstrengthof DVD Services and the confirmation of Connected Home's turnaround.Moreover,Technicolor continues to strengthen its financial structure andreduce itsindebtedness, which has led to improved ratings. We are on track toattain our2012 objectives and deliver on our Amplify 2015."

An analyst conference call hosted by Frederic Rose, CEO andStéphane Rougeot,CFO and SEVP Strategy will be held on Friday, 26 October 2012 at 4:00pmCET.

 Financial Calendar +------------------+------------------+| FY 2012 Results | 23 February 2013 |+------------------+------------------+| Q1 2013 Revenues | 25 April 2013 |+------------------+------------------+| 2012 AGM | 25 April 2013 |+------------------+------------------+


Warning: Forward Looking Statements

This press release contains certain statements thatconstitute "forward-looking statements", including but not limited tostatements that are predictions of orindicate future events, trends, plans or objectives, based oncertainassumptions or which do not directly relate to historical or current facts.Suchforward-looking statements are based on management's currentexpectations andbeliefs and are subject to a number of risks and uncertainties that couldcauseactual results to differ materially from the future resultsexpressed,forecasted or implied by such forward-looking statements. For a morecompletelist and description of such risks and uncertainties, refer toTechnicolor'sfilings with the French Autorité des marchés financiers.


About Technicolor

Technicolor, a worldwide technology leader in the media andentertainmentsector, is at the forefront of digital innovation. Our world classresearch andinnovation laboratories enable us to lead the market in deliveringadvancedvideo services to content creators and distributors. We also benefitfrom anextensive intellectual property portfolio focused on imaging andsoundtechnologies, based on a thriving licensing business. Our commitment:supportingthe delivery of exciting new experiences for consumers in theaters,homes andon-the-go. Euronext Paris: TCH Ÿ www.technicolor.com


Third quarter 2012 segment review

Technology +-----------------------------------+ +-------+-------+ +-------+-------+|In EUR million | |Q3 2011|Q3 2012| |9M 2011|9M 2012|+-----------------------------------+ +-------+-------+ +-------+-------+|Revenues | | 107| 128| | 326| 364|| | | | | | | ||Change as reported (%) | | | +20.0%| | | +11.8%|| | | | | | | ||Change at constant currency (%) | | | +27.3%| | | +10.9%|| | | | | | | ||o/w Licensing revenues | | 106| 128| | 322| 362|| | | | | | | || Change as reported (%) | | | +20.6%| | | +12.4%|| | | | | | | || Change at constant currency (%)| | | +28.1%| | | +11.5%|+-----------------------------------+ +-------+-------+ +-------+-------+


In the third quarter of 2012, Technology revenues reached EUR128million, up20.0% at current currency and up 27.3% at constant currency comparedto thethird quarter of 2011. This strong performance reflected the qualityof theGroup's Licensing division, which posted another quarter of revenuesoverEUR100 million.


Licensing

Licensing revenues were up 21% at current currency and up 28% atconstantcurrency in the third quarter of 2012, reflecting good performancesacross thedifferent licensing programs. Revenues generated by the MPEG LA poolamounted to57% of total Licensing revenues in the third quarter of 2012, versus 59%in thefirst half of 2012, and grew by 17% at current currency compared to thethirdquarter of 2011. Other Licensing programs delivered a strong performancein thethird quarter of 2012, with revenues up 26% at current currencyyear-on-year. The Group's Digital TV program posted a strong performance,as it benefited fromcontract renewals completed in the second quarter of 2012 thatgeneratedrevenues in the third quarter and from the outcome of audits, whileprogramlicensees achieved good volume performances in an overall stableaddressablemarket.


Research & Innovation

In the third quarter of 2012, the Research & Innovation ("R&I") teamshanded offkey technologies to improve market differentiation. For example, R&Ideliveredan enhanced version of Secure Dubbing to Creation Services activities.Thissoftware allows higher performance dubbing of a movie by detecting thefaces ofthe actors in a secure way, and thereby allowing the dubber toperform theneeded tasks safely. To do so, this Final Cut Pro® plug-in isdesigned to trackseveral objects simultaneously, which will remain at the sameposition andretain their size whatever their original displacement in the originalsequence.This stabilization step ensures an optimal configuration to furtherperfect thesynchronization of lips movement and voice. The remaining part of theimage isthen blurred or darkened to ensure the confidentiality of the content.

A second innovation of R&I has been installed to Los Angeles CreationServicesfacility, namely the Automatic Restoration Tool. R&I invented a newmetadatadriven three-step restoration workflow to improve and accelerate thedigitalrepair of scanned film material. New algorithms enable metadatageneratingautomatic detection of film defects, an optional review and qualitycontrolsession with reporting and automatic removal/repair. Whereasstandardrestoration methods are time consuming, this new automatic restorationworkflowwith its professional quality algorithms minimizes human intervention,increasesthroughout, supports objective reporting and enables alternative businesscases.This tool will be available soon in the Group's Creation Servicesfacility inFrance.

Entertainment Services +-------------------------------------+ +-------+-------+ +-------+-------+|In EUR million | |Q3 2011|Q3 2012| |9M 2011|9M 2012|+-------------------------------------+ +-------+-------+ +-------+-------+|Revenues | | 454| 449| | 1,238| 1,206|| | | | | | | ||Change as reported (%) | | | (1.1)%| | | (2.6)%|| | | | | | | ||Change at constant currency (%) | | | (8.8)%| | | (9.1)%|| | | | | | | ||Revenues excl. Photochemical Film | | 398| 415| | 1,056| 1,089||activities | | | | | | || | | | | | | ||Change as reported (%) | | | +4.3%| | | +3.1%|| | | | | | | ||Change at constant currency (%) | | | (3.7)%| | | (3.7)%|+-------------------------------------+ +-------+-------+ +-------+-------+


In the third quarter of 2012, Entertainment Services revenuestotaledEUR449 million, down 1.1% at current currency and down 8.8% at constantcurrencyversus the third quarter of 2011. Excluding Photochemical Film activities,whichreported another drop in revenues in the quarter, EntertainmentServicesrevenues were up 4.3% at current currency and down 3.7% at constantcurrencycompared to the third quarter of 2011, resulting from stable DVDServicesrevenues and a weak performance in Creation Services and TheatricalServices, ina context of a lower number of releases and productions by theGroup'scustomers.


Creation Services

In the third quarter of 2012, Creation Services activities recorded ayear-on-year decline in revenues at constant currency, reflecting theabsence of major title released by the Group's studio customerscompared to third quarter of 2011, as well as tougher marketconditions in some areas, in particular inEurope. The Group implemented in the third quarter of 2012 major costreductionmeasures to mitigate the impact of lower sales on its profitability andfurthermaximize the cost structure.

* Digital Production level of activity was lower overall in the thirdquarter of 2012, as a result of a weak performance in Visual Effects ("VFX")for feature films, due to the delay in two sizeable projects with the bulkof the workload being pushed back, leading to a particularly low level ofVFX activity for feature films in the London facilities. This was partlyoffset by increased VFX for Commercials in Los Angeles and New York. VFX teams started work on Maleficent (Disney) and The Seventh Son (Warner), while continuing work on The Lone Ranger (Disney) and Man of Steel (Warner).They completed work on Life of Pi (Fox) and Skyfall (Sony). Animation had a sustained level of activity in the quarter, with Technicolor notably deepening its partnership with Rockstar Games, following the successfulwork on several major titles, including Red Dead Redemption, L.A. Noire andMax Payne 3.

* Postproduction activity increased in digital services, but did not compensate the tail of remaining legacy services in a context marked bya slowdown in the number of productions. Activity levels were mixedacross the Group in the third quarter of 2012, with improved performance of US Postproduction and Sound activities and a positive contribution fromFrance, while other European operations were weak. The Group provided a largerange of services for movies such as The Dark Knight Rises (Warner), Lawless (Weinstein) and The Expendables 2 (Lionsgate).

* Media Services revenues fell very slightly at constant currency in thethird quarter of 2012, reflecting a marked decline in Compression & Authoring revenues almost completely offset by another quarter of double-digitgrowth in Digital Services for Studios, Over-the-Top and Video-on-Demandplayers.


Theatrical Services

Theatrical Services revenues were down in the third quarter of 2012,reflectingcontinuous decline in photochemical film footage, down 48%year-over-year. Photochemical film activities now represent only 3.6%of the Group's total revenues and around 8% of Entertainment Servicesrevenues. Digital Cinema Distribution revenues were hurt by the absenceof major releases by the Group's studio customers in the third quarterof 2012, whereas the third quarter of2011 benefited from the release of Harry Potter and the Deathly Hallows:Part 2(Warner). The Digital Cinema Distribution market is expected to reboundin thefourth quarter of 2012, due to the planned strongslate of titles releasedby theGroup's Studio customers.


DVD Services

In the third quarter of 2012, DVD Services revenues were flat atconstantcurrency compared to the third quarter of 2011, reflecting a 2%decline incombined Standard DVD and Blu-ray™ volumes, fully offset by apositive mixincrease. This limited volume decrease was consistent with overallvolumeperformance experienced in the second quarter of 2012 (also down 2%)indicatingongoing general stability in packaged media.

Standard DVD volumes continued to show resiliency, while Blu-ray™volumegrowth accelerated, up 26% in the third quarter of 2012 versus the prioryear, amarked increase over the 17% year-on-year growth recorded in the secondquarterof 2012. The title release slate from the Group's Studio customers in theperiodprimarily included The Avengers (Disney), Dark Shadows (Warner),Madagascar 3:Europe's Most Wanted (DreamWorks) and Snow White and the Huntsman(Universal).Year-to-date through the third quarter of 2012, Blu-ray™ volumes were up15%compared to the same period of 2011 (versus only 6% growth through thefirsthalf of 2012). Games volumes rebounded in the third quarter of 2012, up13%year-on-year, following a particularly soft second quarter of 2012.Gamesquarterly variances were largely attributable to the timing of keytitlereleases, while overall Games demand was stable, with year-to-datevolumes up1% through the third quarter of 2012.


DVD Volumes +--------------------------------+ +-------+-------+ +-------+-------+|In million units | |Q3 2011|Q3 2012| |9M 2011|9M 2012|+--------------------------------+ +-------+-------+ +-------+-------+|Total DVD volumes | | 418| 409| | 1,012| 967|| | | | | | | ||Change (%) | | | (2)%| | | (4)%|| | | | | | | ||o/w SD-DVD (Standard Definition | | | | | | ||DVD) | | 349| 326| | 847| 795|| | | | | | | || Change (%) | | | (6)%| | | (6)%|| | | | | | | || BD (Blu-ray™) | | 44| 55| | 95| 110|| | | | | | | || Change (%) | | | +26%| | | +15%|| | | | | | | || Games | | 19| 22| | 47| 47|| | | | | | | || Change (%) | | | +13%| | | +1%|| | | | | | | || Software and Kiosk | | 6| 5| | 23| 15|| | | | | | | || Change (%) | | | (11)%| | | (33)%|+--------------------------------+ +-------+-------+ +-------+-------+


IZ-ON (formerly PRN)

IZ-ON (formerly PRN) recorded a decrease in revenues compared to thethirdquarter of 2011, resulting from a weak US advertising market. Theactivitycompleted its rebranding campaign in the third quarter and entered intoa newmulti-year agreement under which it will be the exclusive advertisingsalesrepresentative for 7-Eleven® TV.


Digital Delivery +-----------------------------------+ +-------+-------+ +-------+-------+|In EUR million | |Q3 2011|Q3 2012| |9M 2011|9M 2012|+-----------------------------------+ +-------+-------+ +-------+-------+|Revenues | | 275| 351| | 829| 1,004|| | | | | | | ||Change, as reported (%) | | | +27.8%| | | +21.2%|| | | | | | | ||Change at constant currency (%) | | | +22.5%| | | +16.9%|| | | | | | | ||o/w Connected Home | | 233| 345| | 706| 918|| | | | | | | || Change, as reported (%) | | | +48.0%| | | +29.9%|| | | | | | | || Change at constant currency (%)| | | +41.7%| | | +25.1%|+-----------------------------------+ +-------+-------+ +-------+-------+


In the third quarter of 2012, Digital Delivery revenues reached EUR351million, up27.8% at current currency and up 22.5% at constant currency comparedto thethird quarter of 2011. Excluding Broadcast Services activity,deconsolidated inthe third quarter of 2012 due to the completion of the disposal onJuly3, 2012, Digital Delivery revenues were up 45.0% at current currencyand up39.0% at constant currency compared with the third quarter of 2011.Thisperformance reflected the confirmation of the recovery of ConnectedHomedivision.


Connected Home

In the third quarter of 2012, Connected Home revenues increased by42% atconstant currency compared with the third quarter of 2011, in linewith thepositive trend experienced in the second quarter of 2012 (up 35%), withvolumegrowth across all regions and product categories. The divisionprimarilybenefited from strong demand from Latin America customers, continuedexpansionin the Asia-Pacific region, particularly in India, as well as improvedoverallproduct mix in North America, driven by Cable customers.The Group expects year-on-year growth in Connected Home revenues to remainstrong in the fourth quarterof 2012. The turnaround plan of Connected Home launched in December 2011is ontrack and Connected Home is well positioned to achieve Adjusted EBITDAbreakevenin 2012 and generate positive Adjusted EBITDA in the second half of 2012.

* In North America, volumes of Connected Home products grew slightly in the third quarter of 2012, as strength in shipments to Cable operators morethan offset softer Satellite customer deliveries. Overall product mix also improved year-over-year, driven by new product introductions andincreased sales of higher-end devices in Cable, partly offset by lower HD PVRvolumes in Satellite compared to last year.

* In Latin America, customer demand remained buoyant across the region inthe third quarter of 2012, as reflected by more than a doubling in volumesof Connected Home products compared to the third quarter of 2011. This performance principally reflected stronger shipments of set top boxesto Satellite customers, as well as higher deliveries of broadband gatewaysto Telecom operators. Overall product mix was softer year-on-year, due primarily to a lower proportion of HD products compared to last year.

* In Europe, Middle-East and Africa, Connected Home product volumes were upin the third quarter of 2012, reflecting stronger shipments of Telecom broadband gateways and Cable modems, partly offset by weaker deliveriesof set top boxes, due principally to the phase-out of some Satellite and Telecom devices, as well as some delays in product shipments to one customer. Overall product mix was lower year-over-year, principally asa result of a weaker contribution of HD products compared to last year.

· In Asia-Pacific, growth in shipments of Connected Homeproducts wasvery strong in the third quarter of 2012, driven primarily by sustainedcustomerdemand for set top boxes across the region, notably in India andMalaysia.Overall product mix also improved compared to last year.


Connected Home Product Volumes +-----------------------------------+ +-------+-------+ +-------+-------+|In million units | |Q3 2011|Q3 2012| |9M 2011|9M 2012|+-----------------------------------+ +-------+-------+ +-------+-------+|Total Connected Home Product | | 5.1| 7.8| | 17.2| 22.3||Volumes* | | | | | | || | | | | | | ||Change (%) | | | +52%| | | +29%|| | | | | | | ||o/w North America | | 1.6| 1.7| | 5.8| 5.7|| | | | | | | || Change (%) | | | +4%| | | (3)%|| | | | | | | || Latin America | | 1.8| 3.8| | 5.6| 9.8|| | | | | | | || Change (%) | | | +115%| | | +74%|| | | | | | | || Europe, Middle-East and Africa | | 1.1| 1.2| | 4.0| 4.2|| | | | | | | || Change (%) | | | +8%| | | +5%|| | | | | | | || Asia-Pacific | | 0.6| 1.1| | 1.8| 2.6|| | | | | | | || Change (%) | | | +77%| | | +49%|+-----------------------------------+ +-------+-------+ +-------+-------+ * Including tablets and other connected devices


[1] Media Services activity, formerly reported in Digital Deliverysegment, isincluded in Creation Services business in Entertainment Services segment.

[2] Broadcast Services activity contributed EUR33 million of revenues inthe thirdquarter of 2011. As the disposal of this activity was completed on 3 July2012,it did not contribute to Digital Delivery revenues in the third quarter of2012.

[3] Free Cash Flow from both continuing operations and discontinuedoperations.

Technicolor Q3 2012 Revenues:http://hugin.info/143597/R/1652654/533562.pdf


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(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: TECHNICOLOR via Thomson Reuters ONE[HUG#1652654]

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