Citing higher sales of more profitable e-books, ongoing operational efficiencies and higher revenue, EBITDA rose 83% at HarperCollins for the third quarter of fiscal 2014 which ended March 31. EBITDA hit $53 million, up from $29 million in last year's third quarter. Revenue increased 14%, to $354 million. Both sales and profits were driven by the Divergent series which sold more than 8 million units in the quarter. Total e-book revenue increased 46% and accounted for 26% of HC sales, up from 21% a year ago.
HC CEO Brian Murrary that in addition to a stellar performance by the U.S. children's division, the American general trade group had a good quarter as did HC Canada. Revenue in other international markets was about flat. "Even outside of Divergent we had a solid quarter," Murray said. But Divergent has been the big sales driver and Murray thinks there still could be more to come. HC research shows that only about half the audience who have seen the film have read the book. "Hopefully this summer we will see some more sales from kids we go to see the movie," he said, adding that a new Divergent -related book, Four: A Divergent Collection, a companion volume that includes four pre-Divergent stories plus three additional scenes from Divergent,will be out in July.
The huge jump in profits was led by the higher revenue plus continued efficiencies in HC's backoffice operations. HC has cut the number of warehouses it operates from five to one plus a returns center. The warehouse consolidation was only completed at the beginning of the year and the first full benefits of the move were beginning to be felt in the quarter. Murray estimated the warehouse consolidation will save HC about $10 million annually.
For the first nine months of the fiscal year, which ends June 30, HC EBITDA was up 37%, to $164 million, on a 3% sales increase to $1.07 billion.
