Lions Gate Entertainment Q2 Profit Tops View, But Revenues Miss

(RTTNews) - Lions Gate Entertainment Corp. (LGF) reported Friday a profit for the second quarter that plunged from last year, reflecting higher loss from early extinguishment of debt and double-digit revenue drop due to the absence of last year's blockbuster performance of 'The Hunger Games' worldwide.

Adjusted earnings per share significantly topped analysts' expectations, but quarterly revenues missed their estimates. The company also noted that it is on track for another very good year and is positioned to deliver growth for many years to come.

'The Hunger Games,' released on March 23, 2012 is Lions Gate's biggest hit ever. The year-ago quarter's results were boosted by the blockbuster performance of 'The Hunger Games' worldwide.

The company noted that the next three films in the blockbuster Hunger Games franchise, The Hunger Games: Catching Fire, The HungerGames: Mockingjay I and The Hunger Games: Mockingjay II will be released worldwide on November 22, 2013, November 21, 2014 and November 20, 2015, respectively.

"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 deliver our balance sheet and lowered our interest expense," CEO Jon Feltheimer said in a statement.

The Santa Monica, California-based company reported net income of $0.51 million or breakeven per share for the second quarter, sharply lower than $75.53 million or $0.53 per share in the prior-year quarter.

Results for the latest quarter include $36.2 million charge on early extinguishment of debt, stock-based compensation, and the discrete tax benefit from the reversal of a Canadian tax valuation allowance.

Excluding items, adjusted net income for the quarter was $25.38 million or $0.18 per share, compared to $83.43 million or $0.58 per share in the year-ago quarter.

On average, eight analysts polled by Thomson Reuters expected the company to report a loss of $0.08 per share for the quarter. Analysts' estimate typically excludes one-time items.

Revenues for the quarter declined 29 percent to $498.73 million from $706.97 million in the same quarter last year, and missed eleven Wall Street analysts' consensus estimate of $528.85 million.

The revenue drop was attributable primarily to last year's revenue been driven by strong home entertainment revenue from the global blockbuster The Hunger Games.

Motion picture revenue for the quarter was $434.4 million, a decline of 29 percent from last year, and home entertainment revenue from both motion pictures and television decreased to $209.9 million from $277.8 million in the year-ago quarter.

Television revenue included in motion picture revenue edged down to $34.6 million from $35.5 million a year ago.

International motion picture revenue of $88.7 million (excluding Lionsgate U.K.) decreased from $108.0 million in the prior year quarter, and Lionsgate U.K. revenue nearly halved from last year to $27.1 million from $48.4 million last year.

Television production revenues also declined to $64.3 million from $99.0 million a year ago.

Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, stood at $1.1 billion at the end of the second quarter.

"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," Feltheimer added.

LGF closed Thursday's regular trading session at $32.14, down $1.68 on a volume of 4.87 million shares. In the past 52-week period, the stock has been trading in a range of $14.58 to $37.81.