Lions Gate Entertainment Corp.
) - a film and television production company - climbed 1.8% during
aftermarket trading hours yesterday, as the company's first-quarter
fiscal 2015 adjusted earnings of 27 cents a share rose over
two-fold from 10 cents a share reported last year and also
surpassed the Zacks Consensus Estimate of 13 cents.
The improvement in adjusted earnings, which includes stock-based
compensation, was backed by a fall in interest expense coupled with
lower tax rate. On a GAAP basis, the company delivered earnings of
30 cents per share, significantly up from 10 cents recorded in the
While the bottom line was impressive, the top line of this Zacks
Rank #4 (Sell) stock plunged 21.1% year over year to $449.4
million. The number also fell short of the Zacks Consensus Estimate
of $475.0 million.
Revenues remained soft as this quarter was highlighted by only two
big/major theatrical releases, compared to three releases last
year. The prior-year quarter included the blockbuster release of
Now You See Me
, which garnered significant revenues for the company, absent this
During the quarter, the company's adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) of roughly
$77.3 million advanced 27.1% from last year owing to relatively
lower theatrical marketing expenses.
During the quarter, Motion Pictures' revenue of $331.9 million
slumped 24.3% year over year, reflecting weak performances across
Theatrical (down almost 52% to $42.7 million), Home Entertainment
(down 17.9% to $133.2 million), International ( down 23.3% to $60.7
million), Lionsgate U.K. (down 7.4% to $30.0 million), and other
revenue (down 83.4% to $6.5 million), partly offset by strong
Television revenues (up 59.8% to $58.8 million).
As mentioned above, this quarter witnessed only two releases
compared to three last year, leading to lower theatrical revenues.
Also, the decrease can be attributed to higher revenues from
Managed brands and Other titles of the company in first-quarter
fiscal 2014, compared to this year. However, the decrease was
partly offset by sustained revenues from Divergent, which released
in Mar 2014.
The decline in the Home Entertainment and International revenues
was also caused by a decrease in worldwide releases in fiscal 2015,
compared with last year.
The surge in television revenue at Motion Pictures was driven by
the foray of films like
in the television world. Other revenue at the segment fell sharply
because of the absence of revenues from the sale of a part of Lions
Gate's music catalogues, which took place in first-quarter fiscal
Television Production revenue slipped 10.4% to $117.5 million
impacted by a plunge in revenues from domestic television (down 28%
to $72.8), more than offsetting strong international revenues (up
53.6% to $34.4 million), home entertainment category (up 6.9% to
$7.7 million) and other revenue (up significantly to $2.6 million).
Anger Management, Mad Men
Orange is the New Black
bolstered international revenues at the television production
segment, poor timing of
episodes led to shrinking domestic revenues.
Lions Gate ended the quarter with cash and cash equivalents of
$50.4 million with film obligations and production loans of $636.3
million and shareholders' equity of $535.8 million. Moreover,
during the quarter, Lions Gate generated a free cash flow of $159.8
The company's Film Entertainment backlog increased to $1.3 billion
by the quarter end, from $1.2 billion last year.
Also, during the first quarter, Lions Gate announced another
quarterly dividend of 5 cents a share, payable on Aug 8, 2014 to
stockholders of record as of Jun 30.
Since the company's board raised its share repurchase authorization
to $300 million on Dec 17, 2013, 4.7 million common shares have
been bought back for a total price of $126.4 million as of Jul 25,
Hence we see that the company's results were marked by robust
adjusted EBITDA, healthy free cash flows and spectacular earnings,
benefiting from its solid brand portfolio, its attempt to
strengthen its international footprint and gains from its business
oriented collaborations with giants like CBS Corporation (
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. (
) and Time Warner Inc. (
), the company is poised for growth, given the content-friendly
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