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DG FastChannel Inc. Reports Operating Results (10-Q)

November 09, 2010 | About:
10qk

10qk

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DG FastChannel Inc. (DGIT) filed Quarterly Report for the period ended 2010-09-30.

Dg Fastchannel Inc. has a market cap of $770 million; its shares were traded at around $27.07 with a P/E ratio of 15.8 and P/S ratio of 4. Dg Fastchannel Inc. had an annual average earning growth of 0.8% over the past 10 years.DGIT is in the portfolios of Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

· Our diluted earnings increased to $0.34 per share, or 55%, compared to $0.22 per share in last years third quarter.

Revenues. For the three months ended September 30, 2010, revenues increased $8.7 million, or 18%, as compared to the same period in the prior year. The Video and Audio Content Distribution segment increased $9.8 million, partially offset by a $1.1 million decrease in the Other segment. The increase in the Video and Audio Content Distribution segment was primarily due to (i) a $9.1 million increase in HD revenue ($24.7 million in 2010 vs. $15.6 million in

2009), (ii) a $0.8 million increase in standard definition (SD) revenue and (iii) a $1.0 million increase in Unicast revenue, all of which were driven by an increase in deliveries, partially offset by a $1.1 million decrease in Pathfire revenue as a result of transitioning customers from a wholesale (limited service) model to a retail (full service) model. The increases in HD and SD revenue include political advertising revenue which increased $1.8 million ($2.4 million in 2010 vs. $0.6 million in 2009). Political advertising revenue increased as a result of the 2010 national, state and local elections. The Other segment revenues decreased $1.1 million due to a $1.2 million decline in Springbox revenue partially offset by a $0.1 million increase in SourceEcreative revenue. The decline in Springboxs revenue was primarily attributable to a decline in project-based revenues, and a customer loss which has not yet been replaced. In the next few quarters, we expect revenues for Springbox will be consistent with revenues reported in the third quarter.

Cost of Revenues. For the three months ended September 30, 2010, cost of revenues increased $1.2 million, or 7%, as compared to the same period in the prior year. As a percentage of revenues, cost of revenues decreased to 31.8% in the current period as compared to 35.0% in the same period in the prior year. A large portion of our cost structure is fixed. Therefore, as revenues increase our gross profit margin tends to increase. Costs of revenues increased due to higher (i) labor costs ($1.0 million), video telecommunications charges associated with increased bandwidth capacity ($0.7 million) and (iii) facilities charges ($0.6 million), partially offset by non-cash consideration received in a lawsuit settlement with a vendor ($0.8 million).

General and Administrative. For the three months ended September 30, 2010, general and administrative expense increased $1.2 million, or 18%, as compared to the same period in the prior year. The increase was primarily attributable to higher legal fees ($0.8 million) and increased incentive compensation ($0.5 million), partially offset by a reduction in rent expense ($0.4 million). Legal expense increased due to (i) costs related to potential business acquisitions (see note 11 to the consolidated financial statements), (ii) settling a dispute with a vendor and (iii) defense costs associated with alleged securities violations (see note 10 to the consolidated financial statements).

Interest Expense. For the three months ended September 30, 2010, interest expense decreased $1.5 million, or 64%, as compared to the same period in the prior year. The decrease was due to retiring all of our outstanding debt in April 2010. Substantially all of the current period expense ($0.7 million) relates to writing off deferred loan fees in connection with terminating the Senior Credit Facility in August 2010.

Read the The complete Report

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