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TECHNICOLOR - First quarter 2013 revenues: Robust revenue growth of 2.2% at constant scope and currency


April 26, 2013 - PARIS


PRESSRELEASE

First quarter 2013 revenues:

Robust revenue growth of 2.2% at constant scope and currency

Paris (France), 26 April 2013 - The Board of Directors ofTechnicolor(Euronext Paris: TCH) met yesterday to review the Group's revenues(unaudited)for the first quarter of 2013.

Q1 2013 revenue highlights

In the first quarter of 2013, Group revenues from continuing operationsamountedto EUR775 million, up 2.1% at constant scope[1] and current currency andup 2.2%at constant scope and currency compared to the first quarter of2012revenues[2].

* Technology: Another quarter of solid Licensing revenues, driven by good performance of the different licensing programs.

* Entertainment Services: Slightly higher revenues year-on-year excluding legacy activities, with sustained growth in DVD Services revenues androbust level of activities in Digital Creative Services.

* Connected Home: Strong performance in line with the momentum recordedin H2 2012.


+------------------------------+ +-----------+-----------+----------------+
|In EUR million | | Q1 2012| Q1 2013| Change, at|
| | | | | constant scope|
| | |(unaudited)|(unaudited)|and currency (%)|
+------------------------------+ +-----------+-----------+----------------+
|Group revenues from continuing| | 800| 775| +2.2%|
|operations | | | | |
| | | | | |
|Change as reported (%) | | | (3.2)%| |
| | | | | |
|Change at constant currency | | | (3.1)%| |
|(%) | | | | |
| | | | | |
|o/w Technology | | 121| 125| (1.5)%|
| | | | | |
| Change as reported (%) | | | +3.3%| |
| | | | | |
| Change at constant | | | (1.5)%| |
| currency (%) | | | | |
| | | | | |
| Entertainment Services | | 395| 376| (5.4)%|
| | | | | |
| Change as reported (%) | | | (4.9)%| |
| | | | | |
| Change at constant | | | (5.4)%| |
| currency (%) | | | | |
| | | | | |
| Connected Home | | 242| 274| +16.3%|
| | | | | |
| Change as reported (%) | | | +13%| |
| | | | | |
| Change at constant | | | +16.3%| |
| currency (%) | | | | |
| | | | | |
| Digital Delivery | | 42| 0| -|
| (activities disposed) | | | | |
+------------------------------+ +-----------+-----------+----------------+

Financial Structure update

· Gross debt at the end of March 2013 amounted to EUR1,222million at nominalvalue and EUR1,107 million on an IFRS basis, a decrease ofrespectively EUR14million and EUR8 million compared to the end of December 2012, mainlyresultingfrom EUR36 million of debt repayments partly offset by the impactof theappreciation of the US dollar. The level of cash was lower compared toend ofDecember 2012 mostly due to debt repayments and the payment of the EUR38.6millionEU antitrust fine in March 2013.

· Technicolor has put in place a new EUR50 million receivablesbacked committedcredit facility with Natixis replacing the previous facility whichexpired inApril 2013. This new facility, at improved terms versus the previousone,matures in April 2016.

2013 objectives confirmed

· Growth of adj. EBITDA of between 5% to 10% compared to FY 2012adj. EBITDAat constant scope[3] (EUR498 million):

o Licensing adj. EBITDA broadly stable vs. FY 2012 assuming anotheryear ofstrong contracts;

o Continued improvement of Connected Home adj. EBITDA and return topositivefree cash flow generation in this segment;

o Improved profitability in Entertainment Services, reflecting costactionsimplemented in H2 2012;

o Continued increase in operating expenses for M-GO and newgrowthinitiatives.

· Strong growth in Free Cash Flow, above 30%, before one-offpayments forlegacy litigation (particularly the EU antitrust fine for EUR38.6 million).

· Net debt to adj. EBITDA ratio (as per the Group'scovenants) below1.25x at end-December 2013.

Frederic Rose, Chief Executive Officer of Technicolor, stated:

"This quarter was marked by robust revenue growth resulting from ourcontinuedfocus on execution. This good performance was driven by sustainedLicensingrevenues, a great performance in Connected Home and revenue growth in ourcoreEntertainment Services. We have increased market shares across ourdifferentbusinesses and maintained our focus on innovation to support their growthand tofurther strengthen our intellectual property. We are on track to deliveron our2013 commitments."

An analyst conference call hosted by Frederic Rose, CEO andStéphane Rougeot,CFO and SEVP Strategy will be held on Friday, 26 April 2013 at 4:00pm CET.

Financial Calendar

+------------------+-----------------+| AGM 2013 | May 23 2013 |+------------------+-----------------+| H1 2013 Results | July 26 2013 |+------------------+-----------------+| Q3 2013 Revenues | 25 October 2013 |+------------------+-----------------+

***

Warning: Forward Looking Statements

This press release contains certain statements that constitute "forward-lookingstatements", including but not limited to statements that are predictionsof 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

Review by segment for the first quarter of 2013

Technology

+---------------------------------------+ +---------+---------+| In EUR million | | Q1 2012 | Q1 2013 |+---------------------------------------+ +---------+---------+| Revenues | | 121 | 125 || | | | || Change as reported (%) | | | +3.3% || | | | || Change at constant currency (%) | | | (1.5)% || | | | || o/w Licensing revenues | | 121 | 125 || | | | || Change as reported (%) | | | +3.6% || | | | || Change at constant currency (%) | | | (1.3)% |+---------------------------------------+ +---------+---------+


In the first quarter of 2013, Technology revenues amounted to EUR125million, up3.3% at current currency and down 1.5% at constant currency comparedto thefirst quarter of 2012. This performance reflected the quality of theGroup'sLicensing division, whose quarterly revenues once again exceeded EUR100million.

Licensing

In the first quarter of 2013, Licensing revenues amounted to EUR125million, up3.6% at current currency compared to the first quarter of 2012. Atconstantcurrency, Licensing revenues were down 1.3% year-on-year, as softerrevenuesgenerated by the MPEG LA pool were mostly offset by a sustainedperformance ofthe other patent licensing programs. The Group's Digital TV programpostedanother quarter of strong growth, driven by new contracts and contractrenewalsin the second half of 2012.

Research and Innovation

R&I continued its focus in the first quarter on delivering highqualityintellectual property, increasing significantly its level ofdisclosures. R&Imade also several advances with metadata, in particular around newtechniquesfor on-set metadata. R&I also continued to sharpen exploration oflaboratoryresearch relating emotional feedback (via bio-sensors) to viewer interestlevelof films and commercials and deployed algorithms with audiences viewingfourfull length films in regular theaters. Such viewer participation inTechnicolorresearch is complemented by targeted collaborative activity with somestudiosand directors aimed at rendering the technology valuable both tocontentcreators and to viewers. Bringing such research elements togetherunderpins theobjective of making viewing of content comfortable in the expandingecosystem offormat diversity and also in rendering the choice of content uniquelypersonaland intuitive.

Regarding M-GO, the Group has been improving overall technicalcapabilities onthe basis of beta testing feedback. Technicolor initiated first marketingtestsand has been working closely with its consumer electronic partners tocompleteintegration in their devices. Preloaded devices are expected to belaunchedprogressively during the second quarter. M-GO is also continuingdiscussionswith additional device manufacturers.

Entertainment Services

+---------------------------------------+ +---------+---------+| In EUR million | | Q1 2012 | Q1 2013 |+---------------------------------------+ +---------+---------+| Revenues | | 395 | 376 || | | | || Change as reported (%) | | | (4.9)% || | | | || Change at constant currency (%) | | | (5.4)% || | | | || Revenues excluding legacy activities* | | 345 | 352 || | | | || Change as reported (%) | | | +2.2% || | | | || Change at constant currency (%) | | | +1.8% |+---------------------------------------+ +---------+---------+

* Legacy activities include mainly photochemical film andcompression &authoring activities.

In the first quarter of 2013, Entertainment Services revenuesamounted toEUR376 million, down 4.9% at current currency and down 5.4% at constantcurrencycompared with the first quarter of 2012. Excluding legacy activities,whoserevenues at constant currency declined by half in the quarter,EntertainmentServices revenues were up 2.2% at current currency and up 1.8% atconstantcurrency compared to the first quarter of 2012, due to a good performancein DVDServices, driven by sustained volume growth, particularly for Blu-ray™discs,which offset lower Creative Services revenues.

DVD Services

In the first quarter of 2013, combined Standard DVD and Blu-ray™volumesincreased by 9%, driven by stable SD-DVD volume in combination with strongBlu-ray™ growth of almost 100% over the first quarter of 2012. Volumegrowth wassupported in part by a strong slate of new release titles in the quarter,whichmainly included The Hobbit: An Unexpected Journey (Warner), Wreck-It-Ralph(Disney), Les Miserables (Universal), Rise of theGuardians(Paramount/DreamWorks) and Django Unchained (Weinstein). Growth in Blu-ray™volumes in the first quarter was further bolstered by selective shareincreasesacross the existing customer base. In addition, the ongoing popularitywithconsumers of multi-disc DVD/Blu-ray™ "combo-packs" and other specialeditionsets has continued to help drive strong disc replication demand for bothSD-DVDand Blu-ray™. Games volumes declined by 4.2 million units compared to averystrong first quarter of 2012, which included a larger release slate oftitlesfrom several key publishers. This reduction was partially offset by anincreasein Software related volumes.

DVD and Blu-ray™ Volumes

+----------------------------------------+ +---------+---------+| In million units | | Q1 2012 | Q1 2013 |+----------------------------------------+ +---------+---------+| Total Volumes | | 297 | 322 || | | | || Change (%) | | | +9% || | | | || o/w SD-DVD (Standard Definition DVD) | | 248 | 249 || | | | || Change (%) | | | +0% || | | | || BD (Blu-ray™) | | 27 | 54 || | | | || Change (%) | | | +98% || | | | || Games | | 16 | 12 || | | | || Change (%) | | | (26)% || | | | || Software and Kiosk | | 6 | 7 || | | | || Change (%) | | | +34% |+----------------------------------------+ +---------+---------+

Creative Services

In the first quarter of 2013, Creative Services recorded a year-on-yeardeclinein revenues, due to a 54% revenue drop at constant currency in legacyactivitiesand a weak level of activity in January and February in DigitalProduction. Inthe quarter, the Group continued to focus its Digital Postproduction andDigitalDistribution Services on their core strengths, in particular video andsoundactivities in Postproduction and work on digital contentlibraries inDistribution. The Group expects the overall Digital Creative Servicesactivitiesto rebound in the next quarter.

Digital Creative Services

* Digital Production activities recorded a year-on-year decline inrevenues in the first quarter of 2013, reflecting a lower level of activity inJanuary and February in Visual Effects ("VFX") for feature films due to thedelay in some sizeable projects. However, Commercial VFX activities performed strongly in the first quarter of 2013, especially in the United States.In particular, the introduction of new services in New York strengthenedthe Group's market share in this key advertising market. Based on thecurrent solid backlog, Digital Production activities are expected to rebound inthe next quarter. In the first quarter of 2013, VFX teams continued to workon Maleficent (Disney), Lone Ranger (Disney) and 7(th) Son (Warner). Technicolor was also honored with the Academy Award ® for visualeffects on Life of Pi (Fox), further demonstrating its excellence in servicing its studio customers.

* Digital Postproduction revenues reported growth in the first quarter of 2013 compared to the first quarter of 2012. The Group posted solidrevenue growth in North America driven by a strong level of activity inparticular in Video with market share gains both in Theatrical and Broadcast.However, this good performance was partly offset by the continued weakness ofthe European markets and the resulting revenue decrease in the region, in particular in Italy. During the first quarter of 2013, Digital Postproduction teams continued to work on movies such as G.I. Joe: Retaliation and World War Z (Paramount), Gravity (Warner) and Oblivion (Universal) in Theatrical, as well as on successful TV series such asMad Men Season 5 (AMC), Scandal Season 2 (ABC) and The Following Season 1(Fox) in Broadcast.

* Digital Distribution Services posted revenue growth in the firstquarter of 2013 compared to last year. The continued sustained level of work ondigital content libraries for Major Studios and Distributors, Video-on-Demandand Over-the-Top aggregators compensated the significant revenue decline in Localization Services (subtitling), in particular in North America as a consequence of the subcontracting agreement of the Compression &Authoring activity in the third quarter of 2012.

* Digital Cinema activities recorded volume growth year-on-year butrevenues were affected by the price reductions granted to some key customers in 2012. At the end of March 2013, digital screen penetration was 84% inNorth America and 74% in Europe.

Legacy activities

As expected, legacy activities continued to decline sharply in the firstquarterof 2013, and represented at the end of March 2013 only 3% of Grouprevenuescompared to 6.3% in the first quarter of 2012. The subcontractingagreementsimplemented in 2011 and 2012 allowed to mitigate the impact of this sharpdropon the Group's profitability.

Connected Home

Following the sale of the Broadcast Services and the SmartVision(television-over-IP) businesses in 2012, and the disposal of Cirpack softswitchoperations(voice-over-IP) in 2013, the Group renamed the existing "DigitalDelivery"segment to "Connected Home". The business review is focused on ConnectedHome.

+---------------------------------+ +---------+---------+| In EUR million | | Q1 2012 | Q1 2013 |+---------------------------------+ +---------+---------+| Proforma revenues | | 242 | 274 || | | | || Change as reported (%) | | | +13.0% || | | | || Change at constant currency (%) | | | +16.3% |+---------------------------------+ +---------+---------+

In the first quarter of 2013, Connected Home revenues totaled EUR274million, up13% at current currency and up 16.3% at constant currency compared to thefirstquarter of 2012, marking the fourth straight quarter of double-digityear-on-year growth. This performance principally reflected continued strongdemand inemerging markets, particularly Brazil and Mexico in Latin America, as wellas inIndia, combined with some volume growth in Europe. In North America,lowershipments were partially offset by further improvement in overall productmix.

Technicolor continues to expect double-digit year-on-year growth inConnectedHome revenues for 2013, in line with the first quarter trend,driven bysustained demand and market share gains in the fast-growing emergingmarkets, aswell as the ramp-up of higher-end devices launched in 2012 and theintroductionof new products in the course of 2013, notably starting in the thirdquarter of2013 for Cable customers in North America. The turnaround plan of theConnectedHome segment, launched in December 2011, is on track and the Groupexpects topost annualized cost savings of approximately EUR45 million in 2013compared to2011 cost base. As a result, Technicolor confirms it anticipatesfurtherimprovement in adjusted EBITDA for Connected Home and a return to apositivefree cash flow generation in this segment in 2013.

* In North America, Connected Home product volumes declined significantlyin the first quarter of 2013, reflecting a drop in set top box shipments related to the phase-out of some Satellite products, reduced deliveriesof digital-to-analog Cable adaptors and the timing of new productintroductions (expected to occur in the third quarter of 2013), offset in part bystrong growth in volumes of Cable gateways. Overall product mix improvedstrongly year-on-year, benefiting from increased contribution of higher-enddevices in Cable, partly offset by lower shipments of High Definition PVRs in Satellite compared to last year.

* In Latin America, Connected Home product volumes recorded anotherquarter of double digit growth, driven by sustained customer demand and marketshare gains across the region. This performance reflected increased shipmentsof Satellite set top boxes, particularly in Brazil, as well as stronger deliveries of Telecom products such as broadband gateways, especiallyin Mexico. Overall product mix improved year-on-year, due to higherproportion of High Definition products compared to last year.

* In Europe, Middle-East and Africa, Connected Home product volumes wereup in the first quarter of 2013, due to sustained growth in shipments ofCable modems, partly offset by softness in deliveries of other productcategories. Overall product mix was lower year-on-year, as a result of a lessfavorable product mix in Telecom, offset in part by improvements in Satellite and Cable compared to last year.

* In Asia-Pacific, Connected Home product volumes experienced very strong growth in the first quarter of 2013, driven principally by buoyantcustomer demand for set top boxes, particularly in India. Overall product mixwas lower year-on-year, due to weaker proportion of High Definitionproducts compared to last year.

Connected Home Product Volumes

+--------------------------------------+ +---------+---------+| In million units | | Q1 2012 | Q1 2013 |+--------------------------------------+ +---------+---------+| Total Volumes* | | 6.3 | 7.1 || | | | || Change (%) | | | +12% || | | | || o/w North America | | 2.0 | 0.6 || | | | || Change (%) | | | (69)% || | | | || Latin America | | 2.5 | 3.7 || | | | || Change (%) | | | +46% || | | | || Europe, Middle-East and Africa | | 1.3 | 1.3 || | | | || Change (%) | | | +4% || | | | || Asia-Pacific | | 0.5 | 1.4 || | | | || Change (%) | | | +182% |+--------------------------------------+ +---------+---------+

* Including tablets and other connected devices

APPENDIX

Following the sale of the Broadcast Services and the SmartVision(television-over-IP or IPTV) businesses in 2012, and the disposal of Cirpacksoftswitchoperations (voice-over-IP or VoIP) in 2013, Technicolor renamed theexisting"Digital Delivery" segment "Connected Home".

The following table provides proforma information on quarterlyrevenues persegment for 2012 and the first quarter of 2013 (excluding BroadcastServices,IPTV and VoIP activities).

+----------------------+ +-----+-----+-----+-----+-----+-----+-----+-----+|In EUR million | |Q1 12|Q2 12|H1 12|Q3 12|Q4 12|H2 12|FY 12|Q1 13|+----------------------+ +-----+-----+-----+-----+-----+-----+-----+-----+|Technology | | 121| 115| 236| 128| 150| 279| 515| 125|| | | | | | | | | | ||Entertainment Services| | 395| 362| 757| 449| 524| 973|1,730| 376|| | | | | | | | | | ||Connected Home | | 242| 330| 572| 345| 326| 671|1,244| 274|| | | | | | | | | | ||Other | | 0| 0| 0| 0| 1| 1| 1| 0|| | | | | | | | | | ||Group revenues* | | 759| 807|1,566| 922|1,001|1,923|3,489| 775|+----------------------+ +-----+-----+-----+-----+-----+-----+-----+-----+

* From continuing operations

--------------------------------------------------------------------------------

[1] Excluding the Broadcast Services and the SmartVision (television-over-IP)businesses, sold in 2012, and the Cirpack softswitch operations (voice-over-IP),sold in 2013. Those activities contributed EUR42 million of revenues inthe firstquarter of 2012 (no contribution in the first quarter of 2013).

[2] On a reported basis, including disposals, revenues were down 3.2% atcurrentcurrency and down 3.1% at constant currency.

[3] Adjusted EBITDA at constant scope excluding the Broadcast Servicesand theSmartVision (television-over-IP) businesses, sold in 2012, and theCirpacksoftswitch operations (voice-over-IP), sold in 2013.

Technicolor - Q1 2013 Revenues:http://hugin.info/143597/R/1696686/558899.pdf

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Source: TECHNICOLOR via Thomson Reuters ONE

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