New Frontier Media (NOOF) reported results on May 25, 2005 for the fiscal fourth quarter 2005.  Below are some highlights.

Results 1Q05 vs. 1Q04:

• EPS: $0.10 vs. $0.14 (-29%)
• Consensus EPS was $0.10
• Revenue: $10.8M vs. $11.1M (-3%)
• Consensus revenue was $11.9M
• Gross profit: $6.8M vs. $6.8M (0%)
• Gross margin: 63.2% vs. 61.4% (+180bps)
• Operating income: $3.2M vs. $3.3M (-4%)
• Operating margin: 29.3% vs. 29.9% (-60bps)
• Net Income: $2.4M vs. $3.3M (-28%)
• Net margin: 22.3% vs. 30% (-770bps)
• EBITDA: $3.1M vs. $3.7M (-15%)
• EBITDA margin: 29.2% vs. 33.5% (-430bps)
• Cash: $27.5.4M vs. $16.8M (+64%)
• Debt: $0.3M vs. $0.9M (-70%)

Pay TV Revenue Breakdown 1Q05 vs. 1Q04:

• Pay Per View: $5.9M vs. $5.6M (+5%)
• Video-On-Demand: $3.4M vs. $4.1M (-17%)
• C-Band: $0.8M vs. $0.7M (+14%)
• Total: $10.1M vs. $10.4M (-3%)

F2006 Guidance:

• EPS: $0.37 - $0.41; consensus was $0.52
• Revenues: $44.5M - $46.0M; consensus was $50.9M
• Net income: $8.4M - $9.3M
• Tax rate: 38%
• Link to a post on NOOF's fiscal Q3 results

Quick comments:

• NOOF opened the day down 17% before rebounding to close at $5.82, a 1.36% drop from a day earlier; investors were disappointed with the company's guidance
• PPV revenue increased as a result of a 7% increase in revenues from NOOF's largest customer
• Pay TV's network household
  distribution (excluding VOD) increased 18% to 61.8M versus 52.5M a year earlier
• Q4 VOD revenues decreased due to increased competition on the Time Warner (ticker: TWX) platform (previously, the company didn't have any competition)
• VOD is delivered to 18.3 million customers versus 11.5 million a year earlier (+59%) and 840,000 hotel rooms
• The C-Band has 232,000 active household unit, a 38% decline from a year earlier; the company has already expressed its intention to close this business by fiscal Q3 2006
• Internet revenues increased to $0.7M from $0.1 in fiscal 4Q04
• Corporate expenses increased 31% to $1.7M versus $1.3M as a result of Sarbanes-Oxley compliance
• On the agenda for NOOF's next board meeting:  uses of its cash, including paying a dividend or a stock buyback

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David Strahlberg

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