Lionsgate Quarterly Earnings Drop, Exceed Expectations


UPDATED: The mini-studio had benefited from the home entertainment release of "The Hunger Games" in the year-ago period.

TORONTO – Lionsgate on Friday reported a smaller fiscal second-quarter profit of $500,000, compared with year-ago earnings of $75 million.

But the figure exceeded Wall Street estimates as most analysts had predicted a loss in the latest period.

As Lionsgate gets set to release The Hunger Games: Catching Fire on Nov. 22, it said it saw its bottom line for the latest quarter dented as it paid $36.2 million for the early extinguishment of debt.

The indie said its adjusted earnings came in at $25.4 million, excluding stock-based compensation, the early debt extinguishment and a Canadian tax benefit, compared to adjusted earnings of $83.4 million in the prior year quarter.

The mini-studio posted sharply lower revenue of $498.7 million, down 29 percent compared to $707 million in the same period of 2012 when it had the home entertainment release of The Hunger Games. The firm said the drop was also due in part to the timing of TV deliveries. The revenue figure came in below analysts' consensus estimate of $528.9 million.

Overall motion picture segment revenue was down 29 percent to $434.4 million as Lionsgate had only two wide releases in the quarter, Red 2 and You're Next, compared with three wide releases in the same quarter of 2012 and the Hunger Games home entertainment release.   

Lionsgate's home entertainment revenue from motion pictures and TV was $209.9 million, against a year-earlier  $277.8 million.    TV revenue in the motion picture segment was $34.6 million, compared to $35.5 million in the year-ago period, while international motion picture segment revenue, excluding Lionsgate U.K., came to $88.7 million, down from a year-earlier $108 million.

Lionsgate U.K. revenue was $27.1 million, down from the year-ago revenue of $48.4 million, and TV production revenue came to $64.3 million, down from $99.0 million.

"We completed a strong first six months of the year with a solid second quarter in which we generated robust free cash flow, continued to delever our balance sheet and lowered our interest expense," Lionsgate CEO Jon Feltheimer said ahead of a morning analyst call to discuss the latest results. 

He added: "We're on track for another very good year and, with the worldwide launch of the next installment of our Hunger Games franchise on November 22, the ongoing diversification of our television business and a strong and growing presence on digital platforms, we are positioned to deliver growth for many years to come."

Stifel, Nicolaus analyst Benjamin Mogil said in a first reaction: "Although revenue was a little lighter, on television deliveries, the company saw better margins at its film segment, and strong marketing cost controls aided results."