Lions Gate Entertainment Corp
) second-quarter fiscal 2014 earnings came in at 8 cents a share
that dropped sharply from 53 cents in the prior-year quarter that
benefited from blockbuster release of
The Hunger Games
and the timing of television deliveries. These were offset by
decline in theatrical marketing costs and lower interest
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
loss of 7 cents a share. Including one-time items, the company
delivered a breakeven bottom-line.
Total revenue of this Zacks Rank #3 (Hold) stock tumbled 29.5%
during the quarter to $498.7 million, and also fell short of the
Zacks Consensus Estimate of $534 million.
However, management remains optimistic about future
performance due to the worldwide launch of the next installments
of the Hunger Games franchise.
The Hunger Games: Catching Fire
The Hunger Games: Mockingjay I
The Hunger Games: Mockingjay II,
are slated to be released globally on Nov 22, 2013, Nov 21, 2014
and Nov 20, 2015, respectively. Lions Gate also remains on track
to capitalize on increasing digitalization and diversification of
During the quarter, the company reported adjusted EBITDA of
$56.5 million, declining significantly from $109.7 million in the
year-ago quarter. Adjusted EBITDA margin contracted 420 basis
points to 11.3%.
Motion Pictures' revenue of $434.4 million fell 28.6% year
over year, reflecting soft performances across Home Entertainment
(down 22% to $204.4 million), Theatrical (down 34.5% to $76.1
million), Television (down 2.5% to $34.6 million), Lionsgate U.K.
(down 44% to $27.1 million) and International operations (down
17.9% to $88.7 million).
Television Production revenue dropped 35.1% to $64.3 million
attributable to fall in revenue from domestic television (down
43.7%) and home entertainment (65.4%), partly offset by higher
international (up 81.1%) and other revenue (up 71.4%).
Lions Gate ended the quarter with cash and cash equivalents of
$67.2 million with film obligations and production loans of
$444.2 million and shareholders' equity of $426.1 million. The
company in the trailing four quarters has lowered its debt burden
by $277.8 million. During the quarter, contractual cash-based
interest expense dipped to $11.9 million from $18.9 million in
the year-ago quarter.
The company generated free cash flow of $84.9 million during
the quarter, up considerably from $18.9 million in the year-ago
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.
The Walt Disney Company
Time Warner Inc
DISNEY WALT (DIS): Free Stock Analysis Report
TWENTY-FST CF-A (FOXA): Free Stock Analysis
LIONS GATE ETMT (LGF): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
To read this article on Zacks.com click here.