Driven by strong operating performance, success of its
blockbuster release of The Hunger Games: Catching Fire, robust
results from its filmed entertainment library and a fall in
Lions Gate Entertainment Corp.
) reported record third-quarter fiscal 2014 results. The
company's adjusted earnings of 70 cents per share surged 55.6%
year over year.
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The quarterly earnings, which include stock-based compensation
but exclude loss on extinguishment of debt and valuation
allowance, fared far better than the Zacks Consensus Estimate of
51 cents a share. Including one-time items, the company delivered
earnings per share of 64 cents.
Total revenue of this Zacks Rank #3 (Hold) stock advanced 13.0%
during the quarter to $839.9 million, surpassing the Zacks
Consensus Estimate of $832.0 million. Improvement in revenues was
mainly attributable to the domestic and global success of
The Hunger Games: Catching Fire
, apart from delivering other theatrical hits like
Ender's Game, A Madea Christmas, Escape Plan, Red 2 and Now
You See Me
Going forward, management remains optimistic about its future
performance due to the worldwide launch of the next installments
of the Hunger Games franchise. The Hunger Games: Mockingjay I and
The Hunger Games: Mockingjay II, are slated to be released
globally on Nov 21, 2014 and Nov 20, 2015, respectively.
During the quarter, Lions Gate reported adjusted EBITDA of $154.1
million, rising significantly from $87.2 million in the year-ago
' revenue of $757.6 million shot up by 12% year over year,
reflecting strong performances across Theatrical (up 44% to a
quarterly record of $277.6 million), Television (up 7.1% to
$105.8 million), Lionsgate U.K. (up 52.7% to $55.9 million) and
International operations (up 30.8% to $88.7 million), partly
offset by softness in the Home Entertainment segment (down 12.9%
to $193.4 million) and other revenue (down 76.9%).
The decline in Home Entertainment segment revenue was driven by a
decrease in the worldwide releases in the quarter compared to
last year. While there were only 3 releases this year, the
segment had coped 6 releases last year. However, this was partly
offset by greater revenues from Other Product Category and
Television revenue was augmented by the release of
Snitch and Temptation: Confessions of a Marriage Counselor,
The Twilight Saga: Breaking Dawn - Part 2, Warm Bodies
. International segment benefitted from
The Hunger Games: Catching Fire, Red 2, Now You See Me
. Lionsgate U.K.'s revenues were also driven by
The Hunger Games: Catching Fire
Olympus Has Fallen
revenue jumped 17% to $82.3 million mainly attributable to a rise
in revenue from domestic television (up 29%), higher
international (up 17.8%) and other revenue (up 92.3%), partly
offset by a dip in home entertainment category (down 34.2%).
Television Production sales were boosted by shows like
Nashville, Orange is the New Black
Revenues at Lions Gate's Film Entertainment Library segment
increased 10% to $148.6 million, marking it as one of the best
quarterly performances for the company.
Financial and Other Details
Lions Gate ended the quarter with cash and cash equivalents of
$75.4 million with film obligations and production loans of
$573.9 million and shareholders' equity of $518.5 million. The
company in the trailing four quarters has lowered its debt burden
by $373.0 million, post which the principal outstanding amount
under its revolving credit facility worth $800 million stands at
During the quarter, contractual cash-based interest expense
dipped to $11.5 million from $18.2 million in the year-ago
The company generated free cash flow of $117.4 million,
representing a decline from $125.7 million in the year-ago
The company's filmed entertainment backlog rose to $1.2 billion
at the end of the quarter, reflecting strong future revenues,
which is encouraging.
For the first time during third quarter, Lions Gate announced a
dividend payment of 5 cents per share to stockholders of record
as of Dec 31, 2013, payable on Feb 7, 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.
The Walt Disney Company
Time Warner Inc.
), the company performed well in this quarter, benefiting from a
healthy balance sheet and the content-friendly environment.