Are Comics Sales Better? They Are For IDW!

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money pony 225x300 Are Comics Sales Better?  They Are For IDW!

“Money Pony” by Dan Allen
http://www.danallenart.com

There has been much talk about “corporate comics”, and the ongoing migration of notable talent deciding to explore creator-owned options.

Of course, almost all comics companies are corporations; it’s a nice legal framework which protects people from bad business decisions.

Some of these corporations are quite public, especially those which issue stock.  I remembered that Idea + Design Works was part of IDT Corporation.  Further searching showed they were spun off into a new corporation: CTM Holdings.

OVERVIEW
We are a former subsidiary of IDT Corporation. As a result of the Spin-Off, on September 14, 2009, we became an independent public company. IDT Corporation has provided certain functions pursuant to a Master Services Agreement, dated September 14, 2009. The agreement automatically renews in six month increments. The Company expects to utilize such services if and when the need arises. The Company has either brought such services in house or secured outside providers for services previously supplied by IDT Corporation. During the three and six months ended April 30, 2013 and 2012, the Company had no selling, general and administrative expenses pursuant to this agreement. At April 30, 2013 and 2012 no balances were owed to IDT Corporation.

CTM 300x191 Are Comics Sales Better?  They Are For IDW!What do they do?

Our principal businesses consist of:
CTM Media Group (“CTM”), our brochure and digital distribution company and other advertising-based product initiatives focused on small to medium sized businesses; and
Our majority interest in Idea and Design Works, LLC (“IDW”), which is a comic book and graphic novel publisher that creates and licenses intellectual property.

Have you seen those brochure racks in hotels?  That’s CTM’s business.

Here’s how IDW is involved with CTM:

IDW
IDW is a comic book and graphic novel publisher that creates and licenses intellectual property. IDW’s revenues represented 62.3% and 50.3% of our consolidated revenues in the three months ended April 30, 2013 and 2012, and 59.7% and 49.8% in the six months ended April 30, 2013 and 2012, respectively.
On November 5, 2009 we purchased an additional 23.335% interest in IDW for a purchase price of approximately $414,000. As a result of the transaction, the Company owns a 76.665% interest in IDW.

According to the annual reports, the remaining 24% is owned by the founders of IDW, which includes IDW CEO Ted Adams.  The initial four founders: Adams, Alex Garner, Kris Oprisko, and Robbie Robbins.

[Ed. note: Adams has informed us that he and Robbins are the only remaining minority owners; Garner and Oprisko sold their shares in the sale to CTM.]

Now, for the meat and potatoes!  CTM is an over-the-counter (OTC) stock.  They used to report to the SEC on a regular basis, but since going “pinl”, only issue reports via their website.  And right there, on the home page, was the latest quarterly report, for the quarter ending April 2013!

What’s interesting about CTM, is that they report on the two divisions in detail.  Big corporations like Disney tend to hide specifics under big headings like “publishing”, so here’s an easy way to discern how one comics publisher is doing.

So, how is IDW doing?

Pretty darn good.

IDW
(in thousands)  Change
Three months ended April 30,   2013 2012    $      %
Revenues 6,352 3,852 2,500 64.9%
Direct cost of revenues  3,269 2,231 1,038 46.5%
Selling, general and administrative  1,447 1,100 347 31.5%
Depreciation and amortization  5 5          - 0.00%
Income from operations 1,631 516 1,115 216.1%
(in thousands) Change
Six months ended April 30,  2013 2012     $      %
Revenues 11,534 7,570 3,964 52.4%
Direct cost of revenues  6,156 4,472 1,684 37.7%
Selling, general and administrative  2,681 2,077 604 29.1%
Depreciation and amortization  10 11 -1 -9.1%
Income from operations  2,687 1,010 1,677 166.0%

.
Add three zeroes to the dollar figures above.  For the quarter running February to April 2013, IDW took in $6.3 Million, and made a profit of $1.6 Million.  In three months.

For six months, (November 2012-April 2013, which includes the Holiday season), IDW took in $11.5 Million, and made a profit of $2.6 Million.  That’s half of CTM’s fiscal year to date.  They have already surpassed the income earned from FY2012.

Now, that’s not bad for a mid-size comics publisher.  “Millions” is always a nice word to add to any number.  If zero is a hero, then six of them is the Justice League!  But that’s only if one is talking a profit.  The United States government works in Billions and Trillions of dollars, but runs deficits.  So look at the right-hand column.  Percentage.  Three months: 216%  Six months: 166%.  One digit in a percentage is nice.  Two, nicer.  Three, and you’ve doubled (or more) your profit.

So IDW is quite profitable for their shareholders…

Note 2—Dividends
The Company paid of a cash dividend in the amount of $6.00 per share (approximately $2,478,000) on December 21, 2012. The dividend was paid to stockholders of record as of December 17, 2012 of the Registrant’s Class A common stock, Class B common stock and Class C common stock. In connection with the declaration of the payment of the special dividend, the Company had suspended its regular quarterly dividends for 2013, however on June 12, 2013, the Board of Directors, in light of the Company’s cash position, determined to declare the payment of a special cash dividend in the amount of $1.20 per share (approximately $500,000 in the aggregate) which, subject to confirmation by the Company’s management that there is sufficient surplus as of the proposed payment date, will be paid on or about July 2, 2013 to stockholders of record as of June 24, 2013 of the Company’s Class A common stock, Class B common stock and Class C common stock. The declaration of future dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board that dividends are in the best interest of our stockholders at that time, subject to confirmation by the Company’s management that there is sufficient surplus as of the proposed future payment dates and other circumstances existing at the relevant times.
The Company paid cash dividends in the amount of $1.20 per share (approximately $500,000 each date, in the aggregate) on January 17, 2012, March 14, 2012, June 28, 2012 and October 12, 2012 to stockholders of record as of January 6, 2012, March 5, 2012, June 20, 2012 and September 24, 2012, respectively, of our Class A, Class B and Class C common stock.   [1.05 Million shares total.]

And what about actual units sold?

Revenues. The increases in IDW’s revenues in the three and six months ended April 30, 2013 compared to the three and six months ended April 30, 2012 were across the board, primarily due to increases in direct market sales (independent comic book stores) in the amounts of $1,099,000 and $1,832,000, and digital publishing revenues in the amounts of $295,000 and $539,000, respectively. Increases in non-direct market sales, in the amounts of $800,000 and $1,060,000, and increases in IDW’s direct and specialty sales in the amounts of $186,000 and $281,000, respectively, also contributed to the revenue increase. The increases reflect new titles, growth in artist editions sales, growth in repeating sales, a more diverse mix of products, improved product sell-through in the distribution network and general strength in the industry.

Those are the increases for each segment.  I can’t wrap my head around the math necessary to do the retro-calculations of what each segment may have actually sold, I can calculate one thing: the change in the past three months (Feb-Apr 2013) and the change in three months before (six months – three months):

six months feb-apr nov-jan
direct market 1832000 1099000 733000
digital publishing revenues   539000   295000 244000
non-direct market sales 1060000   800000 260000
direct and specialty sales   281000   186000   95000

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These are the dollar amounts of the change, not actual revenue.  But here’s some good news.  The holiday quarter all had increases, but the quarter following, when most retailers expect lower sales for the quarter, actually surpassed the previous quarter!  That’s quite impressive, given that February-April is usually a slow period for both general retailing and comics shops.  (Or, at least it used to be, with publishers launching titles for bored kids on summer vacation and rich kids on vacation in San Diego.)

Let’s see if I can dig up previous reports…  AHA!  10-K is the annual report, 10-Q is quarterly.  (CTM no longer reports to the SEC, so other documents can be found on their website.)

Revenue:

2008: $9.8 Million
2009: $12.6 Million
2010: $11.464 Million (loss)
2011: $13.871 Million

2012 (changed fiscal year end from July to October): $17.290 Million
2011: $13.889 Million

Income:

2008  $.05 Million
2009 -$0.1 Million (from move from IDT)
2010 -$0.3 Million (returns)
2011  $1.251 Million  422.4% change from 2010)

2012 $2.187 Million
2011 $1.351 Million

So doing quite well!  They had a few rough quarters, noticeably due to their children’s books and some overprinting which ended up as remainders.  But the last negative quarter was in 2010.  Since then, they have expanded their deluxe editions and successfully marketed their licensed properties.

Further proof that 2013 is heading towards a record year, with growth driven by reader, not investor, interest.  Hmm… perhaps the Wall Street Journal should report on Comics stocks as an investment, not comic books!

Comments

  1. horatio weisfeld says:

    Berry interesting — thanks for this.

  2. jaroslav hasek says:

    thanks for digging up these financials. very interesting. looks like its been very good lately for IDW. not only are sales up but their margins are increasing. the owners and investors should be very pleased with the direction they are going in.

  3. Paul Houston says:

    Yeah, I love this stuff. I think we all knew IDW was doing good, but to see this, wow! So on assumption being the third/fourth best comic seller in America, Image and Dark Horse must be doing similar numbers?

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