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Lionsgate's (LGF.A) Q1 Earnings, Revenues Beat Estimates

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Lionsgate (LGF.A - Free Report) reported first-quarter fiscal 2021 adjusted earnings of 39 cents per share that beat the Zacks Consensus Estimate by 95%. The company had reported loss of 2 cents in the year-ago quarter.

However, revenues decreased 15.6% year over year to $813.7 million but beat the consensus mark by 11.2%.

Segment Details

Motion Picture (34.5% of revenues) revenues decreased 29.4% year over year to $280.7 million, primarily attributed to theatre closings related to the coronavirus pandemic, much similar to what Lionsgate peers Disney (DIS - Free Report) , Comcast (CMCSA - Free Report) and ViacomCBS (VIAC - Free Report) experienced in April-June quarter.

Notably, Disney’s Studio Entertainment revenues decreased 54.7% year over year and no significant titles were released in its fiscal third quarter. Comcast division NBCUniversal’s second-quarter Theatrical revenues plunged 96.8% from the year-ago quarter. Further, ViacomCBS’ Filmed Entertainment revenues declined 26% year over year to $647 million.

However, Lionsgate’s top line benefited from increased home-entertainment and library revenues. Markedly, library revenues of this Zacks Rank #4 (Sell) company grew to a record $219 million driven by strong demand for content and revenues from the recent syndication of Mad Men.

Moreover, the Motion Picture segment raked in a profit of $101.1 million compared with $7.6 million in the year-ago quarter.

Television Production (24.1% of revenues) revenues declined 30.1% year over year to $195.7 million, primarily due to coronavirus-led production delays. Segment profit was $34.9 million, up 39.6% year over year driven by the recent syndication of Mad Men.

The Media Networks segment (45.1% of revenues), formed after the acquisition of Starz, reported revenues of $367.3 million, down 1.4% year over year. Segment profit increased 18.5% to $71.8 million, driven by lower losses at STARZPLAY International.

Starz Networks revenues declined 4.7% year over year to $345.8 million. STARZPLAY International revenues in the quarter surged to $10 million from $3.1 million in the year-ago quarter. Streaming-services revenues soared 79.7% year over year to $11.5 million.

At the end of the quarter, Starz Networks’ domestic OTT subscribers grew to 7.4 million.  Global OTT subscribers (from Starz, STARZPLAY Arabia and PANTAYA) reached 11.4 million.

Total Global subscribers (linear and OTT) was 25 million at the end of the fiscal first quarter.

Operating Details

Lionsgate’s adjusted OIBDA surged 158.1% year over year to $173.7 million in the reported quarter.

Direct operating expenses, as a percentage of revenues, declined 700 basis points (bps) on a year-over-year basis to 52%.

Moreover, distribution and marketing expenses, as a percentage of revenues, fell 860 bps on a year-over-year basis to 17.4%.

However, general & administrative expenses, as a percentage of revenues, increased 270 bps year over year to 13.4%.

Operating income was $89.4 million in the reported quarter against operating loss of $3.2 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jun 30, 2020, Lionsgate had cash and cash equivalents of $376.1 million compared with $318.2 million as of Mar 31, 2020.

Moreover, as of Jun 30, 2020, total film obligations and production loans amounted to $388.7 million compared with $353.7 million as of Mar 31, 2020.

Net cash flow from operating activities was $81.4 million at the end of the fiscal first quarter compared with $180.3 million at the end of the previous quarter and $37.3 million in the year-ago quarter.

Adjusted free cash flow was $77 million compared with free cash flow of $175 million in the previous quarter and $24 million in the year-ago quarter.

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