Well, color me surprised, but my eyebrows rose along with shares of DreamWorks Animation Skg Inc (NASDAQ:DWA) last night following the release of the company’s solid second-quarter earnings report.
Of course, I wasn’t surprised by the success of The Croods, which helped propel the animator’s earnings last quarter. After all, the quirky caveman flick has brought in more than $186 million domestically and $397 million at the international box office, good for a total of nearly $583 million to date. Dreamworks Animation Skg Inc (NASDAQ:DWA), for its part, took home $71.8 million in revenue from the movie during the most recent three-month period.
And Dreamworks Animation Skg Inc (NASDAQ:DWA)’ other movie properties helped to run up the score: Rise of the Guardians brought in $16.7 million from home entertainment during the quarter, and Madagascar 3: Europe’s Most Wanted contributed $48.9 million in sales, mostly from worldwide pay television.
In total, Dreamworks Animation Skg Inc (NASDAQ:DWA) reported a 31% year-over-year increase in quarterly revenue to $213.4 million and an even more impressive 73% rise in earnings per diluted share to $0.26.
For those of you keeping track, that crushed analysts’ expectations of earnings of $0.19 per share on $187.4 million in revenue.
Could it be? Turbo gains ground
But, really, the elephant in the room was a snail named Turbo, whose namesake movie turned in a horrifically bad box office debut earlier this month, bringing in just $21.3 million in the U.S. during its opening weekend.
For reference, that was even worse than Rise of the Guardians‘ dismal domestic opening take of $23.8 million last year. And considering that one ended up ultimately resulting in $87 million in writedowns for Dreamworks Animation Skg Inc (NASDAQ:DWA) in the following quarter, it was no surprise several analysts chimed in after Turbo hit the big screen to forecast potentially huge writedowns this time around as well.
But speaking on the company’s earnings conference call Wednesday evening, CEO Jeffrey Katzenberg stunned those listening when he said Turbo is actually expected to be profitable when all is said and done.
Of course, those profits will likely be muted given the film’s slow domestic start and relatively large $135 million production budget, but that’s a heck of a lot better than taking a big loss.
To be sure, Katzenberg also took the opportunity to point out that Turbo is generally well liked, with its A- cinema score (A+ among audiences under 18), and claimed:
The film’s soft opening is a clear result of an overly saturated marketplace and a difficult release date. This has turned out to be an unprecedented summer, with more family and animated titles than ever, competing for share at the box office. […] We believe that our specific release date, as well as the difficulty of breaking through the clutter with an original title caused us to fall short of our expectations.
And he’s right: Turbo has faced more than its fair share of competition this summer. Remember, on July 3 — just two weeks prior to Turbo‘s release — came Despicable Me 2 from Comcast Corporation (NASDAQ:CMCSA)‘s Universal Studios and The Walt Disney Company (NYSE:DIS) Pixar’s Monster’s University hit the big screen on June 21.
So what saved Turbo? According to Katzenberg, look no further than international audiences, with whom Turbo didn’t face the same release date challenges as it did with domestic viewers. As of right now, Turbo‘s worldwide gross comes in at just above $102 million, with international sales contributing around $42 million.
The thing is, Monsters University took the No. 1 spot in its weekend debut by bringing in more than $82 million domestically and has brought in more than $578 million worldwide so far.
And Despicable Me 2, complete with its enviable $76 million production budget, managed yet again to snag the No. 1 rank in its own first weekend with a huge $83.5 million take. Since then, DM2 has gone on to rock the worldwide box office with a total gross of nearly $667 million to date.
Meanwhile, as I noted last week, Turbo was the No. 3 movie in its own opening weekend, coming in about $3.5 million below the then-two-week-old Despicable Me 2, as the top spot went to a low-budget horror film from Time Warner Inc (NYSE:TWX)‘s Warner Brothers Studios in The Conjuring, which managed to bring in around $41.8 million in its first three days.
What’s more, while around 41.1% of Turbo‘s overall sales have come from outside the U.S., remember international viewers have so far comprised around 53.2% and 55.6% of sales for Despicable Me 2 and Monsters University, respectively. As a result, it’s hard to believe Turbo is really doing all that well compared to its fellow animated competitors right now.