Bona Q2 2012 financial results: revenues up 23.9% YoY

24 August 2012 12 h 41 min Comments Off

Bona Film Group Limited (Nasdaq:BONA), a leading film distributor and vertically integrated film company in China, today announced its unaudited financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Financial Highlights
• Second quarter 2012 net revenues were US$20.7 million, an increase of 23.9% year-over-year from US$16.7 million in the second quarter of 2011.
• Second quarter 2012 gross profit was US$11.7 million, an increase of 48.7% year-over-year from US$7.9 million in the second quarter of 2011.
• Second quarter 2012 gross margin was 56.3%, compared to 46.9% in the second quarter of 2011.
• Second quarter 2012 net income attributable to Bona Film Group Limited was US$0.5 million, or US$0.01 per diluted ADS1, compared with a net loss attributable to Bona Film Group Limited of US$(0.9) million, or US$(0.02) per diluted ADS, in the second quarter of 2011.
• Second quarter 2012 non-GAAP net income2 was US$1.8 million, or US$0.03 per diluted ADS, an increase of 12.7% year-over-year, compared to non-GAAP net income of US$1.6 million, or US$0.03 per diluted ADS in the second quarter of 2011.
• Cash and cash equivalents, term deposits and restricted cash totaling US$29.1 million as of June 30, 2012.
• Cash outflow from operations totaled US$17.0 million, compared with US$6.4 million in the second quarter of 2011.
Business Updates and Recent Highlights
• Secured strategic investment from News Corporation following global media conglomerate’s purchase of 19.9% equity stake from founder, Chairman and CEO, Mr. Yu Dong.
• Signed agreement with IMAX to bring first IMAX® theater to Tianjin.
• Distributed three films in the second quarter, including one imported film.
• Opened 14th movie theater in Dongguan, Guangdong Province, on June 20, 2012, increasing the Company’s total number of screens to over 113 across the Company’s 14 theaters.
• Won a record 10 awards at the 31st Hong Kong Film Awards, including Bona’s third consecutive Best Picture award for critically acclaimed drama A Simple Life.

“We are pleased to report another quarter of double-digit year-over-year growth across all of our key operating metrics, with non-GAAP net income exceeding our projected range. During the second quarter, we furthered our strategy to diversify our revenue stream, growing revenues from our theater business by 100% year-over-year and 23.0% sequentially. By reducing the revenue concentration in our film distribution segment, we have made our business less susceptible to the timing of blockbuster releases,” said Bona Founder, Chairman and CEO Yu Dong. “Our focus is to continue to cultivate our leading position as a film distributor while aggressively growing our complementary business segments. This balanced approach, coupled with a strong second-half release schedule that includes our highly anticipated film, The Last Tycoon, has us firmly on track to meet our full-year objectives. Moreover, we are positioning the Company for even greater long-term success through expanded digital distribution of and the development of TV series based on films such as Flying Swords of Dragon Gate and Bodyguards and Assassins. Our television series, The King’s Battles completed shooting in the second quarter and is on track to premiere in December, and we are confident that we can replicate the success of our film productions on the small screen.
“In addition to our operational accomplishments, News Corporation’s strategic investment in our Company diversifies our ownership base and could help accelerate our longer-term global growth initiatives. We are uniquely positioned as one of China’s leading private film companies with broad reach across the country’s film industry value chain. The high quality international productions we bring to Chinese moviegoers and broad commercial appeal of our films to audiences throughout the world strengthen our brand equity as we continue to expand our vertically integrated business and work to achieve Bona’s objectives, bringing the Company to the next level of success.”

Second Quarter 2012 Financial Results

Net Revenues

2Q12           2Q11             Y-o-Y%
Net Revenues (US$mm)                                        20.7             16.7               23.9%

Net revenues for the second quarter of 2012 increased 23.9% year-over-year to US$20.7 million. The increase in net revenues was primarily due to growth in the Company’s theater and exhibition business.

Net Revenues by Segment Operations

. Net revenues from distribution totaled US$8.7 million, representing a year-over-year increase of 12.7%. During the second quarter of 2012, Bona distributed three new films: Snowfall in Taipei and Seefood, and one imported film, The Three Musketeers. The Company expects to recognize the majority of box office revenue from Seefood in the third quarter, as this film was released at the end of June 2012.
. Net revenues from film investment and production were US$5.8 million, mainly derived from Bona’s investments in Snowfall in Taipei, released in the second quarter of 2012, and also from Flying Swords of Dragon Gate and A Simple Life, which were released in the fourth quarter of 2011 and first quarter of 2012, respectively.
. Net revenues from the movie theater segment doubled to US$9.8 million, with the increase primarily attributable to expansion in the Company’s theater and exhibition business. The Company owned and operated 14 theaters as of June 30, 2012, compared with 6 as of June 30, 2011.

Gross Profit and Gross Margin

For the second quarter of 2012, gross profit increased 48.7% to US$11.7 million from US$7.9 million for the second quarter of 2011, with the increase primarily attributable to increased revenue contribution from Bona’s higher margin movie theater segment, resulting from the growth in the Company’s theater and exhibition business.

Segment margin for the distribution segment increased to 61.3% in the second quarter of 2012 from 42.2% in the second quarter of 2011, primarily as a result of the contribution from the imported film, The Three Musketeers, which carried a higher gross margin due to lower distribution costs. Segment margin from the Company’s investment & production business was 9.9% in the second quarter of 2012, compared with a segment margin of 12.2% in the second quarter of 2011. The fluctuation in segment margin of Bona’s Investment & Production business was mainly due to the unpredictable economic performance of each film.

Net Income and Net Income Attributable to Bona Film Group Limited per ADS
Excluding share-based compensation expense, non-GAAP net income for the second quarter of 2012 was US$1.8 million, an increase of US$0.2 million, or 12.7%, over non-GAAP net income of US$1.6 million in the second quarter of 2011.

Cash and Cash Flow
As of June 30, 2012, Bona had cash and cash equivalents, term deposits and restricted cash totaling US$29.1 million, compared with US$30.2 million as of December 31, 2011. Operating cash flow for the second quarter of 2012 was a net outflow of approximately US$17.0 million, compared with US$6.4 million in the second quarter of 2011. The increase in cash outflow was mainly attributable to investment and production related to certain films that are expected to be released in 2012.

Business Outlook
Based on current market and operating conditions, the Company expects non-GAAP net income for the third quarter of 2012 to be in the range of US$2.0 million to US$2.3 million. Based on these expectations for the second half of 2012, the Company maintains its full year 2012 non-GAAP net income guidance of approximately US$22.0 million. The net income estimates are attributed to the Company’s second half distribution schedule. Full year 2012 non-GAAP net income guidance assumes an effective tax rate of 20.0% for the year, as well as high upfront costs associated with the opening of 10 to 12 greenfield cinemas in 2012.

Mr. Yu added, “We achieved a great deal in the first half of 2012 and have set the stage for even greater success ahead. We have a solid pipeline of films that will take us into 2013 and will be enhancing our business in the fourth quarter with the launch of our television series, which we believe will provide another important growth engine for Bona. We have a strong foundation, a sound growth strategy and a team in place that is capable of executing. We are excited about what the future holds for Bona and the industry as a whole, and have tremendous confidence in our ability to meet our objectives of global expansion, business growth and the creation of shareholder value.”

Source: Bona Film Group (23/08/2012)

 

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