Lions Gate's Earnings Beat Estimates


Strong top-line performance aided Lions Gate Entertainment Corp. (LGF) to post stellar fourth-quarter fiscal 2013 results. The company’s quarterly earnings reached 61 cents a share, improving significantly from a loss of 6 cents registered in the comparable year-ago quarter and substantially surpassing the Zacks Consensus Estimate of 45 cents. Including one-time items, earnings came in at $1.10 per share.

Total revenue for this Zacks Rank #3 (Hold) stock surged 21.8% during the quarter to $785.7 million, driven by sturdy performance of the home entertainment, international and Lionsgate U.K. operations, led by the worldwide blockbuster HUNGER GAMES and TWILIGHT franchises. The reported revenue handily surpassed the Zacks Consensus Estimate of $729 million.

During the quarter, the company reported adjusted EBITDA of $115.6 million, rising significantly from $30 million in the year-ago quarter. Adjusted EBITDA margin expanded to 14.7% from 4.7% in the prior-year quarter.

Coming to the annual results, Lions Gate posted earnings of $1.32 per share in fiscal 2013 compared with a loss of 10 cents delivered in the prior year, and came ahead of the Zacks Consensus Estimate of 94 cents.

On the revenue front, Lions Gate reported total revenue of $2,708.1 million, up 70.6% from the prior year, and outdid the Zacks Consensus Revenue Estimate of $2,635 million.

Motion Pictures’ revenue of $2,329.1 million surged 95.7% year over year, reflecting strong performance across Theatrical business (significantly up to $535.5 million from $208.9 million), Home Entertainment (up 54.6% to $900 million), Television (up to $277.9 million from $119.9 million), International Film (significantly up to $369.7 million from $112.9 million), Lions Gate U.K. (up 45.5% to $147.7 million) and Mandate Pictures (up 36.1% to $75.4 million).

Television Production revenue decreased 4.6% year over year to $379 million due to revenue decline of 36.8% to $64.1 million in the home entertainment category, partially offset by a 58.6% increase in international revenue and a marginal jump in domestic television.

Other Details

Lions Gate ended the quarter with cash and cash equivalents of $62.4 million with film obligations and production loans of $569 million and shareholders’ equity of $356.5 million. The company generated free cash flow of $123.3 million during the quarter compared with $42.2 million in the year-ago period.

The company’s filmed entertainment backlog increased to $1.1 billion, 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 News Corp’s. (NWSA) Fox Entertainment Group, The Walt Disney Company (DIS) and Time Warner Inc. (TWX).

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