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Lionsgate (LGF.A) Q2 Earnings Beat Estimates, Revenues Miss

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Lionsgate (LGF.A - Free Report) reported second-quarter fiscal 2021 adjusted earnings of 33 cents per share that beat the Zacks Consensus Estimate by 65%. The company had reported earnings of 22 cents in the year-ago quarter.

However, revenues decreased 24.3% year over year to $745 million and missed the consensus mark by 3.2%.

Segment Details

Motion Picture (34.6% of revenues) revenues decreased 36.5% year over year to $257.6 million, primarily attributed to theatre closings related to the coronavirus pandemic, much similar to what Lionsgate’s peer Comcast (CMCSA - Free Report) experienced in the July-September quarter.

Notably, Comcast division NBCUniversal’s third-quarter Theatrical revenues plunged 94.7% from the year-ago quarter.
 

 

However, Lionsgate’s top line benefited from the resumption of film and television production. Markedly, film and television library revenues grew to $166.7 million in the reported quarter.

Moreover, the Motion Picture segment generated a profit of $83 million compared with $51 million in the year-ago quarter.

Television Production (26.5% of revenues) revenues declined 28% year over year to $197.2 million, primarily due to production schedule timings and episodic deliveries. Segment profit was $9.9 million, down 21.4% year over.

The Media Networks segment (52.1% of revenues), formed after the acquisition of Starz, reported revenues of $388.3 million, up 3.8% year over year, driven by increased revenues from STARZPLAY International. Segment profit declined 11.2% to $92.9 million.

Starz Networks revenues declined 0.3% year over year to $360.8 million. STARZPLAY International revenues in the quarter surged to $14.2 million from $4.4 million in the year-ago quarter. Streaming services revenues soared 72.7% year over year to $13.3 million.

At the end of the quarter, Starz Networks’ domestic OTT subscribers grew to 9.2 million.  Global OTT subscribers (from STARZPLAY Arabia and PANTAYA) reached 13.7 million.

Operating Details

Lionsgate’s adjusted OIBDA grew 7.6% year over year to $156 million in the reported quarter.

Direct operating expenses, as a percentage of revenues, declined 150 basis points (bps) on a year-over-year basis to 49.2%.

Moreover, distribution and marketing expenses, as a percentage of revenues, fell 430 bps on a year-over-year basis to 22.4%.

However, general & administrative expenses, as a percentage of revenues, increased 520 bps year over year to 15.9%.

Operating income was $29.7 million in the reported quarter compared with $57.6 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Sep 30, 2020, Lionsgate had cash and cash equivalents of $463.7 million compared with $376.1 million as of Jun 30, 2020.

Moreover, as of Sep 30, 2020, total film obligations and production loans amounted to $405.2 million compared with $388.7 million as of Jun 30, 2020.

Net cash flow from operating activities was $122 million at the end of the fiscal second quarter compared with $81.4 million at the end of the previous quarter and $181.2 million in the year-ago quarter.

Adjusted free cash flow was $113 million compared with free cash flow of $77 million in the previous quarter and $61.1 million in the year-ago quarter.

Zacks Rank & Stocks to Consider

Currently, Lionsgate carries a Zacks Rank #3 (Hold).

TEGNA (TGNA - Free Report) and Callaway Golf Company (ELY - Free Report) are a couple of better-ranked stocks in the broader Zacks Consumer Discretionary sector. TEGNA sports a Zacks Rank #1 (Strong Buy), while Callaway Golf carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Both Callaway Golf and TEGNA are set to release quarterly results on Nov 9.

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