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Lions Gate (LGF.A) Q1 Earnings & Sales Surpass Estimates

Zacks

Lions Gate Entertainment Corp. LGF.A reported first-quarter fiscal 2018 quarterly numbers, wherein the company posted adjusted earnings per share (including stock-based compensation) of 39 cents, beating the Zacks Consensus Estimate of 14 cents. Meanwhile, excluding stock-based compensation adjusted earnings came in at 49 cents, up from the prior-year quarter earnings of 12 cents.

On the revenue front, Lions Gate witnessed a sharp increase of 81.6% year over year to $1,005.3 million and also surpassed the Zacks Consensus estimate of $1,000 million. This can primarily be attributed to a surge in Motion pictures revenues and Starz acquisition. However, on a pro forma basis revenues increased 5%.

The company’s adjusted EBITDA came in at $181.5 million, in comparison with $10.6 million reported in the prior-year quarter. On a pro forma basis, adjusted EBITDA increased 32.3% year over year. The company’s filmed entertainment backlog was nearly $1.4 billion at the end of the fiscal first quarter.

Not much movement was witnessed in after-hours trading session yesterday. However, the stock has increased 10.9% in the past three months, outperforming the industry’s gain of 1.2%.


Segmental Performance (On Pro forma basis)

Media Networks’ segment formed after the acquisition of Starz reported revenues of $390.5 million, up 9.2% year over year on account of Starz new series American Gods and The White Princess and also due to the fourth season of the hit series Power, which returned at the end of reported quarter.

However, segment profit came in at $109.5 million, down 7.9% year-over-year, primarily due to higher marketing costs. Segment profit margins decreased to 28% in the quarter from 33.2%.

Motion Pictures reported revenue of $472.4 million, up 15.8% due to robust home entertainment performances of John Wick: Chapter Two, La La Land, Saban's Power Rangers and The Shack. The segment profit increased to $86.9 million, compared with $29.8 million reported in the year-ago quarter. Operating profit margin rose to 18.4% from 7.3%.

Television Production revenues dropped 18.6% to $156.6 million. Moreover, segment profit rose 22.3% to $12.6 million. Segment profit margin rose to 8% from 5.4% reported in the year-ago quarter.

Financial Details

Lions Gate ended the first quarter with cash and cash equivalents of $156.5 million, film obligations and production loans of $168.8 million and shareholders’ equity of $2,775.8 million. The company reported negative free cash flow of $110.4 million, in comparison with $19.2 million used in the prior-year quarter.

Lions Gate, which shares space with major studios like Twenty-First Century Fox, Inc. FOXA, 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.

Zacks Rank & Stocks to Consider

Lions Gate currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering include World Wrestling Entertainment, Inc. WWE and Gray Television, Inc. GTN. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

World Wrestling Entertainment has an impressive long-term earnings growth rate of 20%.

NTN Buzztime shares have increased nearly 11% in the past three months.

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