Lionsgate Swings to Second-Quarter Loss, Lower Revenues

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Jon Feltheimer

The studio, led by CEO Jon Feltheimer, missed analyst profit estimates as it reported a write-down on 'The Last Witch Hunter' and 'American Ultra' didn't perform at the box office.

Lionsgate on Monday swung to a second-quarter loss and lower overall revenues as the studio in part took a $7.2 million write down on The Last Witch Hunter, a film released after the quarter.

Lionsgate, led by CEO Jon Feltheimer, posted a loss of $42.1 million for the three months ending on Sept. 30, 2015, or a loss of 28 cents a share, compared to a profit of $20.8 million or 15 cents a share for the year-ago period. Lionsgate recorded around $7 million in theatrical marketing expenditures during the second quarter for The Last Witch Hunter, before the Vin Diesel-starrer bowed on Oct. 23 and has taken in just $23.5 million to date.

American Ultra also underperformed at the box office this summer, while the studio shifted the release of Sicario to October 2, into the fiscal third quarter. That will be positive for Lionsgate's current financial quarter, but means it had a full theatrical P&A spend in the second quarter, with no offsetting benefit in box office revenue.

Quarterly revenue for Lionsgate was $476.7 million, down from a year-ago $552.8 million. The studio missed an earnings forecast by analysts of 3 cents a share and second quarter revenue expectations of $491 million, as TV production and home entertainment revenues fell during the latest quarter.

Shares in Lionsgate fell sharply in after-hours trading on Monday on the New York Stock Exchange to $35.26, down $3.00 or 8 percent.

Overall motion picture segment revenue for the quarter was $354 million, compared to a year-earlier $398 million. Lionsgate had only two wide releases during the latest quarter, American Ultra and Shaun the Sheep.

Lionsgate's home entertainment revenue for motion picture and TV came to $153.5 million during the second quarter, down from a year-ago $164.4 million, due to fewer wide release theatrical titles and the product mix. TV revenue in the motion picture segment also fell to $60 million, against a year-earlier $69.4 million.

The international motion picture segment revenue came to $107.8 million, down from a year-earlier $113 million, and TV production revenue was $122.8 million, down sharply from $155 million in the same period last year, due to the timing of episodic deliveries.

Lionsgate expects deliveries of Orange Is the New Black, Nashville and The Royals to drive revenue growth in the second half of the year. And upcoming theatrical box office will be driven up by the release of The Hunger Games: Mockingjay – Part 2, starting Nov. 20, in the third quarter.

The fourth quarter will also see the release of Allegiant, part of the Divergent movie franchise, Gods of Egypt and Dirty Grandpa, starring Robert De Niro and Zac Efron. 

"Although the (second) quarter will be the lightest of the year due to timing and softer-than-anticipated performance of some of our recent film releases, our robust film and television pipelines position us for a very strong second half of the year," Lionsgate's Feltheimer said Monday in a statement.

Feltheimer and other top Lionsgate executives will hold an analyst call to discuss their latest financial results on Tuesday morning.