Lions Gate Entertainment Corp.
) tumbled 6.7% during aftermarket trading hours yesterday,
following its dismal fourth-quarter fiscal 2014 performance. The
quarterly adjusted earnings, including stock-based compensation
expense, of 34 cents per share missed the Zacks Consensus Estimate
of 39 cents, and slumped 34.6% year over year.
On a GAAP basis, the company delivered earnings of 33 cents per
share compared with $1.10 in the year-ago period.
The top line of this Zacks Rank #3 (Hold) stock also had a dismal
run with total revenue declining 8.1% to $721.9 million during the
quarter. The number also fell short of the Zacks Consensus Estimate
of $838.0 million.
During the quarter, the company's adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) of roughly
$92.0 million fell 20.5% from $115.6 million in the year-ago
Buoyed by successful blockbuster releases, robust results from
filmed entertainment library and a fall in interest costs, Lions
Gate's adjusted earnings for fiscal 2014 (including stock-based
compensation expense) soared 55.3% to $1.18 per share. Earnings
also fared much better than the Zacks Consensus Estimate of $1.08.
On a GAAP basis, the company reported fiscal 2014 earnings of $1.04
a share compared with $1.61 last year.
For the full year, revenue slipped 2.9% to $2,630.3 million,
falling short of the Zacks Consensus Estimate of $2,731.0 million.
Revenues remained soft as the number of domestic theatrical
releases fell to 13 from 19 releases last year. However, this was
partly compensated by profits made in Lions Gate's international
operations and television production.
During the year, Lions Gate recorded adjusted EBITDA of $370.8
million, up from $329.7 million last year.
Full Year Synopsis
The company's fiscal results were mainly driven by record margins,
profits from its blockbuster releases of
The Hunger Games: Catching Fire
Now You See Me
, gains from its collaborations with
), Viacom and Metro−Goldwyn−Mayer Studios Inc. (MGM) and enhanced
performance at the cable network, TVGN.
Going forward, management remains optimistic about its performance
on the back of a strong business portfolio, sustained improvement
in its capital structure and an impressive content pipeline.
During the year,
' revenue of $2,182.9 million declined 6.3% year over year,
reflecting weak performances across Theatrical (down 2% to $524.7
million), Television (down 18.9% to $225.3 million), Lionsgate U.K.
(down 0.9% to $146.3 million), Home Entertainment (down 7.8% to
$829.6 million) and other revenue (down 39.1% to $59.9 million),
partly offset by strong International operations (up 7.4% to $397.1
The decline in the Home Entertainment segment revenue was caused by
a decrease in worldwide releases in 2014, compared with last year.
However, this was partly offset by greater revenues from Managed
brands and Other titles of the company.
Television revenue at Motion Pictures fell due to lower number of
releases this year than 2013, which comprised the pay TV window for
Hunger Games' first film as well as solid revenues from 3 Twilight
The Hunger Games: Catching Fire
, other releases like
Now You See Me
also augmented Motion Pictures' International segment revenue.
Further, the segment benefited from the lingering performance of
The Twilight Saga: Breaking Dawn - Part II.
revenue jumped 18% to $447.4 million mainly attributable to a rise
in revenue from domestic television (up 28.7% to $326.1 million),
strong international revenue (up 39.5% to $82.3 million) and other
revenue (up 80.8% to $4.7 million), partly offset by a plunge in
the home entertainment category (down 46.5% to $34.3 million).
Television Production sales were boosted by shows like
Orange is the New Black
Lions Gate ended the fiscal with cash and cash equivalents of $25.7
million with film obligations and production loans of $499.8
million and shareholders' equity of $584.5 million.
During fiscal 2014, the company lowered the principal outstanding
amount under its revolving credit facility of $800 million to $97.6
million. However, as of May 29, 2014, this balance was reduced to
During the year, contractual cash-based interest expense dipped to
$49.0 million from $75.3 million last year.
The company's Film Entertainment backlog increased to $1.2 billion,
from $1.1 billion last year.
Also, during the fourth quarter, Lions Gate declared a quarterly
dividend of 5 cents a share, payable on May 30, 2014 to
stockholders of record as of Mar 31.
Since the company's board raised its share repurchase authorization
to $300 million on Dec 17, 2013 from the earlier $150 million,
3,436,017 common shares have been bought back for a total price of
$90.5 million as of May 14, 2014.
Lions Gate is a film studio engaged in the production and
distribution of motion pictures for theater and straight-to-video
release as well as television programming for cable and broadcast
networks. Competing with major studios like
Twenty-First Century Fox, Inc.
Time Warner Inc.
), the company is poised for growth, given the content-friendly
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