DreamWorks Animation SKG, Inc. (DWA)
Q1 2009 Earnings Call
April 28, 2009 4:30 pm ET
Rich Sullivan - Investor Relations
Jeffrey Katzenberg - Chief Executive Officer, Director
Lewis W. Coleman - President, Chief Financial Officer, Director
Ann Daly - Chief Operating Officer
Jessica Reif-Cohen – Bank of America/Merrill Lynch
Drew Crum - Stifel Nicolaus
James Marsh – Piper Jaffray
Doug Creutz - Cowen & Company
Benjamin Swinburne – Morgan Stanley
Ingrid Chung - Goldman Sachs
Richard Greenfield - Pali Capital
David Miller - Caris & Company
Michael Morris - UBS
Barton Crockett - Lazard Capital Markets
Tuna Amobi - Standard & Poor’s
Tony Wible - Janney Montgomery
Vasily Karasyov - J.P. Morgan
Previous Statements by DWA
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Thank you. Good afternoon, everyone and welcome to DreamWorks Animation’s first quarter 2009 earnings conference call. With me today is our Chief Executive Officer, Jeffrey Katzenberg and our President and Chief Financial Officer, Lew Coleman and our Chief Operating Officer, Ann Daly. This call will begin with a brief discussion of the quarterly financials disclosed in today’s press release followed by an opportunity for you to ask questions.
I would like to remind everyone that the press release is available on our website, www.dreamworksanimation.com.
Before we begin, we need to remind you that certain statements made on this call may constitute forward-looking statements. Forward-looking statements can vary materially from actual results and are subject to a number of risks and uncertainties, including those contained in the company’s annual and quarterly reports, as well as other filings with the SEC. I would encourage all of you to review the risk factors listed in these documents. The company undertakes no obligation to update any of its forward-looking statements.
With that, I would like to now hand the call over to DreamWorks Animation President and Chief Executive Officer, Jeffrey Katzenberg. Jeffrey?
Thanks Rich and good afternoon everyone. I will begin with a few comments about our recent performance before Lew discusses our quarterly results and Ann sheds some insight into our home video business. Then we will get to your questions.
With our strongest first quarter ever, 2009 is off to a great start. Madagascar Escape to Africa is a blockbuster by every measure and our results for the quarter were primarily driven by its performance in international box office and domestic home video. It’s international box office has reached approximately $415 million bringing worldwide box office totals to nearly $595 million. Even in the face of the recession our titles continue to perform very well in home video. Madagascar II was released on DVD and Blue Ray domestically on February 6th and was one of the top two titles for the quarter in revenue and sales and rentals combined.
Both Madagascar II and Kung Fu Panda are among the best performing titles in the past 12 months. On the feature film side, our most recent release, Monsters v. Aliens, opened on March 27 in both 3D and traditional CG and having passed $175 million is on track to reach around $200 million in domestic box office. In fact, it will be the single highest grossing movie domestically of 140 new films that have been released since the end of July last year.
Together with Madagascar II, the third highest grossing movie domestically in that same time frame, it is clear that DreamWorks Animation is performing at the top of the charts. MVA marks our third consecutive blockbuster theatrical release in under a year’s time. We made progress towards our goal of averaging approximately $200 million in the domestic market for our releases and attaining a level of theatrical consistency that we strive for as a company.
As evidenced by the strength of our first quarter results, our financial performance is beginning reflect consistency. Internationally, Monsters v. Aliens has grossed approximately $145 million to date achieving mixed results in various territories, some positive and others disappointing. It has had a very strong showing in several key territories such as the United Kingdom, Australia and Spain. On the flip side, in Germany, France and Italy it hasn’t delivered the level of performance we have come to expect from our films.
While we acknowledge its overall international box office results remain below our expectations to date, Monsters v. Aliens does remain among the highest grossing films in 2009 overseas.
Moving beyond our core business, we are making a great deal of progress on our new initiatives. Just last month our first TV series, The Penguins of Madagascar, became the most watched series premiere in Nickelodeon’s history and its ratings continue to be excellent since then. Among kids 2-11 and kids 6-11, it is the second highest rated program on TV since its premiere behind only Spongebob Squarepants. Looking to build on this success, Nickelodeon has already ordered a pilot for a second series based on Kung Fu Panda.
Moving on to Broadway, we are thrilled that just yesterday Shrek the Musical received 12 Drama Desk nominations added to the 10 nominations it received last week for Outer Critic Circle awards including best musical, tying with Billy Elliot for the most nominations of any show this season. Additionally, the show’s original cast recording debuted on billboards original cast chart at number one and remains the best selling recording for any new show this season.
On the heels of several very high grossing weekends at the Broadway box office we announced last week plans to bring the first national performing show of Shrek the Musical to Chicago next summer.
In Broadway, TV specials and TV series we have identified meaningful opportunities for our content to generate incremental revenue outside of our theatrical releases.