Marvel's Blockbuster: Fool by Numbers
By Tim Beyers
November 6, 2007
Yesterday, Motley Fool Stock Advisor pick Marvel Entertainment (NYSE: MVL) released earnings for the third quarter ended Sept. 30, 2007.
- Third-quarter licensing revenue ballooned to $66 million from $28.3 million the year before, thanks mostly to the success of Spider-Man 3, which Sony (NYSE: SNE) released in May.
- Similar licensing deals are in the works. Lions Gate (NYSE: LGF) plans a sequel to 2004's The Punisher for next year, and News Corp.'s (NYSE: NWS) 20th Century Fox has slated X-Men Origins: Wolverine for May of 2009.
- Licensing also improved margins by reducing inventory and production costs for toys. Marvel shed its toy business in 2006 in favor of a deal with Hasbro (NYSE: HAS).
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(Figures are in thousands, except per-share data.)
Income Statement Highlights
|
Q3 2007
|
Q3 2006
|
Change
|
|
Sales
|
$123,642
|
$92,161
|
34.2%
|
|
Net Profit
|
$36,268
|
$13,200
|
174.8%
|
|
EPS
|
$0.45
|
$0.16
|
181.3%
|
|
Diluted Shares
|
80,521
|
84,854
|
(5.1%)
|
Get back to basics with a look at the income statement.
Margin Checkup
|
Q3 2007
|
Q3 2006
|
Change*
|
|
Gross Margin
|
85.82%
|
67.79%
|
18.03
|
|
Operating Margin
|
53.14%
|
29.98%
|
23.16
|
|
Net Margin
|
29.33%
|
14.32%
|
15.01
|
* Expressed in percentage points.
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets
|
Q3 2007
|
Q3 2006
|
Change
|
|
Cash + ST Invest.*
|
$45,611
|
$42,307
|
7.8%
|
|
Accounts Rec.
|
$37,708
|
$71,235
|
(47.1%)
|
|
Inventory
|
$10,076
|
$11,874
|
(15.1%)
|
|
Liabilities
|
Q3 2007
|
Q3 2006
|
Change
|
|
Accounts Payable
|
$1,934
|
$9,114
|
(78.8%)
|
|
Non-Film Debt
|
$0
|
$79,700
|
(100.0%)
|
*Includes restricted cash.
The balance sheet reflects the company's health.
Cash Flow Highlights
|
YTD 2007
|
YTD 2006
|
Change
|
|
Cash From Ops.
|
$16,298
|
$116,513
|
(86.0%)
|
|
Capital Expenditures
|
$2,372
|
$14,466
|
(83.6%)
|
|
Free Cash Flow
|
$13,926
|
$102,047
|
(86.4%)
|
Free cash flow is a Fool's best friend.
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