Technicolor Creative Studios Releases Q1 Earnings report
Technicolor Creative Studios, a creative technology company, has announced its earnings report for first quarter 2022. The Board of Directors of Technicolor SA met on May 5, 2022, and approved the Group’s first quarter 2022 accounts and guidance. The report sited the quarter ended strong, with strong performance across all divisions leading with improved financial performance compared to the first quarter 2021.
Here are some highlights:
Technicolor Creative Studios revenue growth was 66.1% at current exchange rate and 56.5% at constant rate compared to Q1 2021. This improvement resulted from the significant demand for original content and rising advertising spend, which together drove double-digit revenue growth for each business line compared with the first quarter 2021, which still suffered from pandemic-related impacts on production. More specifically in the first quarter 2022:
- At MPC, revenues were up significantly driven by the continued ramp-up in production of major theatrical projects (Sonic the Hedgehog 2, Aquaman and the Lost Kingdom), as well as increasing contributions from all the major streaming platforms (The Boys, House of the Dragon)
- At The Mill, advertising revenues grew across all key markets, particularly in the U.S.
- At Mikros Animation (Mickey Mouse Funhouse, Star Trek: Prodigy), revenues were up mainly as a result of higher volumes in feature animation projects (PAW Patrol: The Mighty Movie, The Tiger’s Apprentice)
- At Technicolor Games, revenues were higher thanks to greater production capacity.
Technicolor Creative Studios expects demand to continue to rise for its VFX artistry and technology with growth expected throughout 2022. The division has been awarded multiple new projects, resulting in approximately 80% of the revenue pipeline for MPC and Mikros Animation being already committed for 2022.
Feature animation projects in production has grown from two in 2019 to six features in 2022. Delivery of all pipeline projects remains the main challenge for 2022, due to talent shortage in the market. Investment in artist recruitment, retention, and training (including TCS Academy programs) continues.
Connected Home sales volumes continued to be impacted by the worldwide semiconductor crisis combined with supply chain disruptions, limiting the division’s ability to fully satisfy the demand from its customers. Specifically, the underlying demand for the first quarter 2022 was higher than actual sales.
Worldwide demand for Connected Home broadband equipment is expected to remain strong in 2022, as customers seek to improve their connectivity. However, ongoing component shortages and pricing challenges will continue to impact ability to serve end customer demand throughout 2022.
DVD Services revenues were up 8.2% or 2.2% at constant exchange rate compared with first quarter 2021. Despite lower disc volumes year-on-year (-16.5%), revenue increased driven by the performance of new growth businesses (notably transportation management and vinyl).
In DVD Services, higher year-on-year new release volumes are expected as theatrical attendance continues to normalize, but this will be slightly offset by lower catalog volumes. This should be further mitigated by continuing cost efficiencies. As part of the Group’s plan to accelerate the diversification of the business, the division is continuing to work on significantly expanding non-disc activities.
The 65% partial spin-off of Technicolor Creative Studios is on track to be completed in the third quarter of 2022:
- An Extraordinary General Meeting for the approval of the Mandatory Convertible Notes (MCN) will be held on May 6.
- The Capital Market Days for TCS and Technicolor Ex-TCS will take place in London on June 14th
- The Company’s Annual and Extraordinary Shareholders Meeting to approve the 2021 accounts and the spin-off will take place on June 30
The Group has appointed the leadership teams for the two new entities.
- Richard Moat, current CEO of Technicolor, will be appointed chairman of Technicolor Ex-TCS
- Luis Martinez-Amago, current president of Connected Home, will be appointed CEO of Technicolor Ex-TCS
- Lars Ihlen, current CFO of Connected Home, will be appointed CFO of Technicolor Ex-TCS
- DVD Services Business Division will continue to be headed by David Holliday
- Connected Home Business Division will remain under the authority of Martinez-Amago with François Allain being appointed as deputy president in charge of the operational management of Connected Home, in addition to his current COO role.
Technicolor Creative Studios (TCS):
- Anne Bouverot, current chairperson of Technicolor, will be appointed Chairperson of TCS
- Christian Roberton, current president of TCS, will be appointed CEO of TCS
- Laurent Carozzi, current CFO of Technicolor, will be appointed CFO of TCS and will oversee Finance, M&A and Strategy
- The four Business Divisions will continue to be headed by the current brand leaders – Thomas Williams for MPC, Andrea Miloro for Mikros Animation, Joshua Mandel for The Mill and Jeaneane Falkler for Technicolor Games, and Production Operations will remain under Nathan Wappet.
Complete Q1 2022 report details can be seen here.
Dan Sarto is Publisher and Editor-in-Chief of Animation World Network.