DG Reports Third Quarter 2012 Results

Posted by Joe Zaller
Nov 14 2012

Advertising and content delivery specialist DG reported that its consolidated revenue for the three months ended September 30, 2012 increased 11% to $93.8 million, compared to $84.6 million in the same period of 2011. DG’s third quarter loss from continuing operations, which includes a goodwill impairment charge related to the online segment of $208.2 million, was $219.7 million, or $7.96 per diluted share, compared to a loss of $2.7 million, or $0.10 per diluted share, in the year earlier period. Third quarter Adjusted EBITDA was $27.6 million, compared to $30.7 million in the third quarter of 2011.

“In the short term, we saw improvement of the online business this quarter, continued increased shift towards HD in TV and greater opportunities to help our clients make the move to video across all screens,” noted Neil Nguyen, President and CEO of Digital Generation. “It is clear from conversations with large advertisers that video convergence is a disruptive force that is now gaining acceptance and momentum with DG uniquely positioned to benefit. But it is also clear that we need to stay focused and execute with even more urgency to overcome current trends.”

Third quarter financial highlights include:

  • DG generated consolidated revenue in the quarter of $93.8 million, an increase of 11% over the same period a year ago.
  • The television segment generated revenue of $60.1 million, a decrease of 1% from the year earlier period. HD advertising revenue increased 15% to $36.5 million from the year earlier period.
  • The online segment generated revenue of $33.7 million, an increase of 40% from the year earlier period, due to DG’s acquisitions of MediaMind and EyeWonder during the 3rd quarter of 2011.
  • As of September 30, 2012, DG reported $68.6 million of cash and short-term investments and reported $455.0 million outstanding under its long-term credit facility.

 

Acquisitions / Dispositions / Discontinued Operations

The Company has completed several acquisitions that have impacted the comparability of the operating results presented. The results of operations for each of the following entities have been included in the Company’s results since the acquisition date.

  • MIJO Corporation (“MIJO”) on April 1, 2011 (included in television segment)
  • MediaMind Technologies, Inc. (“MediaMind”) on July 26, 2011 (included in online segment)
  • EyeWonder LLC, a Delaware LLC, and the equity interests of Chors GmbH, a German LLC (collectively, “EyeWonder”) on September 1, 2011 (included in online segment)
  • Peer 39, Inc. (“Peer 39”) on April 30, 2012 (included in online segment)
  • NCMG, Inc. (“North Country”) on July 31, 2012 (included in television segment)

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The company sold the net assets of its Springbox unit effective June 1, 2012 for estimated proceeds of $0.9 million, resulting in an after tax loss of $0.6 million. Results from Springbox have been included in discontinued operations for both 2012 and 2011.

 

Strategic Review Process:

The company said the following about its previously announced strategic review:

“In July 2012, we announced that our Board of Directors was undergoing a strategic review of the feasibility and relative merits of various financial strategies for the Company, which may include partnerships, strategic business model alternatives, a sale or other transaction. In connection therewith, we engaged Goldman Sachs to assist us in exploring strategic alternatives. The Board established a Special Committee composed of independent directors who are exercising the full power of the Board regarding, and are controlling, the Company’s strategic alternatives process. The strategic review process underway by the Special Committee is continuing and we do not intend to disclose developments in this process until such time as the Board of Directors approves or has a transaction or transactions to recommend to stockholders, or otherwise deems further disclosure appropriate.”

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Related Content:

Press Release: DG Reports Third Quarter 2012 Results

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