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Lions Gate (LGF.A) Q1 Earnings Beat, Revenues Decline Y/Y

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Lions Gate Entertainment (LGF.A - Free Report) delivered first-quarter fiscal 2019 adjusted earnings of 18 cents per share that beat the Zacks Consensus Estimate by 3 cents but plunged 64% from the year-ago quarter.

Revenues declined 7.2% year over year to $932.7 million.

Adjusted OIBDA declined 35.6% from the year-ago quarter to $116.9 million. OIBDA margin also contracted 550 basis points (bps) to 12.5%.

Operating income plunged 57.4% from the year-ago quarter to $38.2 million. Operating margin also contracted 480 bps on a year-over-year basis to 4.1%.

Lions Gate Entertainment Corp. Price, Consensus and EPS Surprise

Lions Gate Entertainment Corp. Price, Consensus and EPS Surprise | Lions Gate Entertainment Corp. Quote

Segment Details

Motion Pictures (39.2% of revenues) reported revenues of $365.3 million, down 22.7% year over year. The segment logged profit of $51.6 million, down 40.6% from the year-ago quarter. Results were negatively impacted by difficult year-over-year comparisons. The year-ago quarter had benefited from revenues generated from La La Land and John Wick Chapter 2.

Television Production (30% of revenues) revenues increased 7% year over year to $279.4 million on the back of increased international revenues and domestic license fees. However, segment profit plunged 63.9% to $15.6 million.

The Media Networks segment (38.1% of total revenues), formed after the acquisition of Starz, reported revenues of $354.9 million, up 3% year over year driven by strong over-the-top (OTT) subscriber growth. Moreover, segment profit was $88.5 million, down 0.4% due to increased costs associated with domestic marketing spend and Starz’s international expansion.

Starz revenues increased 2.3% year over year to $351.2 million. The company ended the quarter with 23.8 billion subscribers, up 300K sequentially.

During the quarter, Starz announced its plans to launch STARZPLAY channels in France, Italy and Spain compared with previous launches in United Kingdom and Germany.

Streaming services (1%) surged 164.3% year over year to $3.7 million.

Balance Sheet & Cash Flow

As of Jun 30, 2018, cash and cash equivalents were $315.6 million, while total film obligations and production loans were $491.9 million.

Net cash flow from operations was $113.3 million in the reported quarter and free cash flow was $113.6 million.

Zacks Rank & Stocks to Consider

Currently, Lions Gate carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader consumer discretionary sector include Weight Watchers International (WTW - Free Report) , Penn National (PENN - Free Report) and Glu Mobile (GLUU - Free Report) . While Weight Watchers International sports a Zacks Rank #1 (Strong Buy), Penn Nation and Glu Mobile carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for Weight Watchers International, Penn National and Glu Mobile is 17.5%, 10% and 15%, respectively.

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