Lions Gate Entertainment Corp. (LGF) recently reported mixed first-quarter 2012 results. The company posted quarterly earnings of 9 cents a share, a significant recovery from a loss of 54 cents a share in the prior-year quarter. The analysts covered by Zacks had anticipated Lions Gate to deliver a loss of 6 cents a share.
Sturdy television performance, remarkable jump in equity interest income and abridged theatrical marketing costs helped the company to improve its bottom-line results.
Total revenue for the quarter decreased 20% year over year to $261.3 million, falling behind the Zacks Consensus Revenue Estimate of $307 million.
Segment wise, Motion Pictures’ revenue of $192.6 million decreased 29.4% from the prior year. Within Motion Pictures, revenues declined across Theatrical (down 62% to $27.1 million), Home Entertainment (down 33.8% to $86.8 million), International Film (down 60.1% to $11.6 million), Lions Gate UK (down 23.3% to $12.5 million) and Mandate Pictures (down 26.3% to $9.8 million), partly offset by fourfold increase in Television (up to $43.3 million).
Television Production revenue jumped 27.5% year over year to $68.7 million, reflecting an increase of 24.1% in domestic series licensing revenue from the television distribution and syndication business and a 61.5% year-over-year revenue jump in International television segment.
Home Entertainment revenue for the television production came in at $6.1 million during the quarter, reflecting an increase of 5.2% from the prior year.
Adjusted EBITDA in the first quarter of 2012 was $28.7 million compared with a negative adjusted EBITDA of $13.7 million in the prior-year period. During the reported quarter, the company generated a negative free cash flow of $75.8 million compared with a negative free cash flow of $113.2 million reported in the prior-year quarter.
Lions Gate ended the quarter with cash and cash equivalents of $111 million with film obligations and production loans of $298.1 million and shareholders’ equity of $141.4 million.
Lions Gate is a film studio engaged in the production and distribution of motion pictures for theater and straight-to-video release and also television programming for cable and broadcast networks. The company has a strong track record of producing small and mid-budget specialty films.
To grab its share of box office receipts, Lions Gate competes with other major studios, such as Fox Entertainment Group, Paramount Motion Pictures Group and Time Warner Inc. (TWX).
Currently, we have a long-term ‘Neutral’ recommendation on the stock. Moreover, Lions Gate holds a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating.
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