Lions Gate's Earnings Beat Estimates - Analyst Blog


Strong top-line performance aided Lions Gate Entertainment Corp . ( LGF ) to post stellar first-quarter fiscal 2014 results. The company's quarterly earnings reached 10 cents a share, improving significantly from a loss of 27 cents registered in the year-ago quarter and substantially surpassing the Zacks Consensus Estimate of 3 cents. The quarterly earnings include stock-based compensation but exclude loss on extinguishment of debt.

Total revenue for this Zacks Rank #3 (Hold) stock surged 20.8% during the quarter to $569.7 million, driven by sturdy performance of the home entertainment, television production and international operations, partially offset by a fall in theatrical revenue. An increase of 21% in digital media revenue to $63.2 million also contributed to the growth in the top line. The reported revenue handily surpassed the Zacks Consensus Estimate of $513 million.

The year-ago quarter benefited from the domestic theatrical release of the first Hunger Games film. The Hunger Games: Catching Fire , the next installment is slated for a global release on Nov 22, 2013.

During the quarter, the company reported adjusted EBITDA of $60.8 million, rising significantly from $17.1 million in the year-ago quarter. Adjusted EBITDA margin expanded to 10.7% from 3.6% in the prior-year quarter.

Motion Pictures' revenue of $438.6 million rose 7.9% year over year, reflecting strong performance across Home Entertainment (up 22.3% to $162.2 million) and International operations (up 62.8% to $79.1 million), partially offset by Theatrical (down 35.4% to $88.9 million), Television (down 0.8% to $36.8 million) and Lionsgate U.K. (down 0.6% to $32.4 million).

Television Production revenue surged over twofold to $131.1 million due to revenue growth registered across International operations (up 107.4% to $22.4 million) and Domestic Television (up 147.8% to $101.1 million), partially offset by a decline in the Home Entertainment category (down 44.2% to $7.2 million).

Other Details

Lions Gate ended the quarter with cash and cash equivalents of $51 million with film obligations and production loans of $509 million and shareholders' equity of $379.8 million. The company generated negative free cash flow of $4.4 million during the quarter compared with positive free cash flow of $13.1 million in the year-ago period.

The company's filmed entertainment backlog was $1.1 billion at the end of the quarter, reflecting strong future revenues, which is encouraging.

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. The company has a strong track record of producing small and mid-budget specialty films. Lions Gate competes with other major studios, such as Twenty-First Century Fox, Inc. ( FOX ), The Walt Disney Company ( DIS ) and Time Warner Inc . ( TWX ).

DISNEY WALT (DIS): Free Stock Analysis Report

TWENTY-FIRST CF (FOX): Free Stock Analysis Report

LIONS GATE ETMT (LGF): Free Stock Analysis Report

TIME WARNER INC (TWX): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: DIS , FOX , LGF , TWX

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