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Lions Gate’s (LGF.A) Q3 Earnings & Revenues Improve Y/Y

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Lions Gate Entertainment Corp. LGF.A delivered third-quarter fiscal 2018 quarterly numbers, wherein both earnings and revenues surged year over year. In the past six months, the shares of the company gained 11.5%, underperforming the industry’s growth of 26.9%.

Q3 Highlights

Lions Gate’s adjusted earnings came in at 48 cents per share, compared with the year-ago earnings of 20 cents. Moreover, on a GAAP basis the company reported earnings of 87 cents, against a loss of 18 cents. On the revenue front, Lions Gate witnessed a surge of 51.9% year over year to approximately $1,142.7 million. This can primarily be attributed to a surge in Media Networks revenues. Moreover, on a pro-forma basis, revenues rose 7.9%.

The company’s adjusted operating income before depreciation and amortization (OIBDA) came in at $177.6 million, in comparison with $85.8 million reported in the prior-year quarter. On a pro-forma basis, adjusted OIBDA increased almost remained flat year over year. The company’s filmed entertainment backlog was nearly $1.2 billion at the end of the fiscal third quarter.

Lions Gate Entertainment Corporation Price, Consensus and EPS Surprise

Lions Gate Entertainment Corporation Price, Consensus and EPS Surprise | Lions Gate Entertainment Corporation Quote


Segmental Performance (On Pro-forma basis)

Media Networks’ segment formed after the acquisition of Starz reported revenues of $382.9 million, up about 6% year over year on account of surge in revenues from over-the-top (OTT) and international digital media licensing arrangements. Moreover, segment profit came in at $128.3 million, up 6%. Segment profit margins expanded to 33.5% in the quarter from 33.6%.

Motion Pictures reported revenues of $539.1 million, which surged nearly 14% owing to robust theatrical revenues driven by blockbuster hits like Wonder and sturdy international performances of La La Land as well as American Assassin. Moreover, Home entertainment revenues gained from Starz third party distribution business, partly offset by lower feature films. The segment logged profit of $54.3 million, down 2.9% year over year.

Television Production revenues dropped 1.6% to $227.3 million, mainly due to decline in syndicated licensing revenues. Moreover, segment profit plunged 17.5% to $22.7 million, while the segment profit margin contracted 190 basis points to 10%.

Financial Details

Lions Gate ended the quarter with cash and cash equivalents of $216.7 million, film obligations and production loans of $331.2 million and shareholders’ equity of $3,060.1 million. The company generated $221.3 million as cash flow from operating activities in the first nine months of the fiscal.

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 along with television programming for cable and broadcast networks.

Zacks Rank & Stocks to Consider

Lions Gate carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks are Time Warner Inc. TWX and The New York Times Company NYT, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Time Warner has an impressive long-term earnings growth rate of 10.2%.

The New York Times delivered better-than-expected earnings in the trailing four quarters.

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