LIONS GATE ENTERTAINMENT CORP. (USA) SANTA MONICA, Calif. and VANCOUVER, B.C., Aug. 4, 2016 /PRNewswire/ -- Lionsgate (NYSE: LGF) today reported revenue of $553.6 million, adjusted EBITDA of $40.7 million, adjusted net income attributable to Lionsgate shareholders of $29.5 million or adjusted basic EPS of $0.20, and net income attributable to Lionsgate shareholders of $1.3 million or basic EPS of $0.01 for the first quarter of fiscal 2017 (quarter ended June 30, 2016).
"In addition to a very solid performance across all of our businesses, the most significant development in the quarter was our agreement to acquire Starz," said Lionsgate Chief Executive Officer Jon Feltheimer. "Upon closing, it will be the largest and most transformative transaction in our history. The combination will accelerate the growth and diversification of both companies, deepening our portfolio of content, expanding our access to distribution, streamlining our pathways to the consumer and unlocking enormous opportunities for future growth."
Strong Revenue Gains in Television and Film
Revenue of $553.6 million for the quarter grew 35% from the prior-year quarter driven by strong gains in Television Production revenue as well as revenue gains in all categories of the Motion Pictures segment.
Increased Television Production revenue was led by strong growth in domestic television series licensing and inclusion of $27.3 million in revenue from Pilgrim Media Group which more than offset declines from international television sales and home entertainment revenue from television programming. Domestic television series episodes and hours delivered in the quarter more than tripled those of the prior-year quarter.
Net income attributable to Lionsgate shareholders for the quarter of $1.3 million or basic EPS of $0.01 on 147.2 million weighted average number of common shares outstanding compared to net income attributable to Lionsgate shareholders of $40.7 million or basic EPS of $0.28 on 147.6 million weighted average number of common shares outstanding during the prior year quarter.
Adjusted EBITDA of $40.7 million for the quarter compared to adjusted EBITDA of $71.0 million in the prior year quarter. Adjusted net income attributable to Lionsgate shareholders of $29.5 million or adjusted basic EPS of $0.20 for the quarter compared to adjusted net income attributable to Lionsgate shareholders of $49.3 million or adjusted basic EPS of $0.33 in the prior year quarter.
Declines in adjusted EBITDA and EPS were attributable in part to higher marketing and distribution costs for a theatrical slate that included two wide releases in the quarter compared to no wide theatrical releases with associated marketing costs in the prior year quarter. Increased G&A in the quarter was due in part to one-time professional fees and other costs associated with Lionsgate's agreement to acquire Starz.
Overall Motion Picture segment revenue was $362.5 million in the quarter compared to $275.4 million in the prior year quarter. Theatrical revenue more than doubled in the quarter to $47.2 million due to a larger wide release slate than in the prior year quarter. Television revenues from the Motion Picture segment increased 10% to $53.3 million. Lionsgate's home entertainment revenue from motion picture and television production for the quarter was $150.3 million, a 16% increase from the prior year quarter, reflecting four wide theatrical releases compared to two wide theatrical releases in the prior year quarter.
International Motion Picture segment revenue increased 34% to $113.8 million in the quarter driven by the international box office performance of Now You See Me 2, which has already grossed more than $300 million at the global box office, and the continued performance of the fiscal 2016 releases Gods of Egypt, The Divergent Series: Allegiant, and The Hunger Games: Mockingjay--Part 2 as well as the Lionsgate UK release of Eddie the Eagle.
64 Episodes and 49 Hours of Domestic Television Series Delivered in the Quarter
The Television Production segment continued its strong performance. In the quarter, 64 episodes and 49 hours of domestic television series were delivered, led by Greenleaf, a breakout success in its debut season on OWN, Monica the Medium, Casual, Feed the Beast, Graves, Guilt and Nashville as well as the game and talk shows Family Feud, The Wendy Williams Show and Celebrity Name Game and the reality series The Ultimate Fighter and Street Outlaws from Pilgrim Media Group. International television revenue for the quarter declined compared to the prior year quarter that included revenue from Orange is the New Black's international licensing deal with Netflix.
Lionsgate's filmed entertainment backlog, or already contracted future revenue not yet recorded, exceeded a record $1.5 billion at June 30, 2016.
During the quarter, the Company declared a quarterly cash dividend of $0.09 per common share payable on August 5, 2016 to shareholders of record as of June 30, 2016.
Lionsgate senior management will hold its analyst and investor conference call to discuss its first quarter fiscal 2017 financial results at 5:00 PM ET/2:00 PM PT today, Thursday, August 4. Interested parties may participate live in the conference call by calling 1-800-230-1092 (612-288-0340 outside the U.S. and Canada). A full digital replay will be available from Friday, August 5, through Friday, August 12, by dialing 1-800-475-6701 (320-365-3844 outside the U.S. and Canada) and using access code 398706.
ABOUT LIONSGATE
Lionsgate is a premier next generation global content leader with a diversified presence in motion picture production and distribution, television programming and syndication, home entertainment, international distribution and sales, branded channel platforms, interactive ventures and games, and location-based entertainment. The Company has nearly 80 television shows on 40 different networks spanning its primetime production, distribution and syndication businesses. These include the ground-breaking hit series Orange is the New Black, the fan favorite drama series Nashville, the syndication success The Wendy Williams Show, the breakout series The Royals and the Golden Globe-nominated dramedy Casual.
The Company's feature film business spans eight labels and includes the blockbuster Hunger Games franchise, the Now You See Me, Divergent and John Wick series, Sicario, The Age of Adaline, Roadside Attractions' Love & Mercy and Mr. Holmes, Codeblack Films' Addicted and breakout concert film Kevin Hart: Let Me Explain and Pantelion Films' Instructions Not Included, the highest-grossing Spanish-language film ever released in the U.S.
Lionsgate's home entertainment business is an industry leader in box office-to-DVD and box office-to-VOD revenue conversion rates. Lionsgate handles a prestigious and prolific library of approximately 16,000 motion picture and television titles that is an important source of recurring revenue and serves as a foundation for the growth of the Company's core businesses. The Lionsgate and Summit brands remain synonymous with original, daring, quality entertainment in markets around the world. www.lionsgate.com
For further information, Investors should contact:
James Marsh
310-255-3651
jmarsh@lionsgate.com
For Media inquiries, please contact:
Peter Wilkes
310-255-3726
pwilkes@lionsgate.com
The matters discussed in this press release include forward-looking statements, including those regarding the performance of future fiscal years. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including the substantial investment of capital required to produce and market films and television series, increased costs for producing and marketing feature films and television series, budget overruns, limitations imposed by our credit facility and notes, unpredictability of the commercial success of our motion pictures and television programming, the cost of defending our intellectual property, difficulties in integrating acquired businesses, risks related to our acquisition strategy and integration of acquired businesses, including our proposed acquisition of Starz, the effects of disposition of businesses or assets, technological changes and other trends affecting the entertainment industry, and the risk factors as set forth in Lionsgate's Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (the "SEC") on August 4, 2016, which risk factors are incorporated herein by reference. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances.
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, March 31,
2016 2016
---- ----
(Amounts in thousands,
except share amounts)
ASSETS
Cash and cash equivalents $69,897 $57,742
Restricted cash 10,801 2,906
Accounts receivable, net of
reserves for returns and
allowances of $42,218
(March 31, 2016 -$51,809)
and provision for doubtful
accounts of $5,939 (March
31, 2016 -$6,014) 899,721 1,049,289
Investment in films and
television programs, net 1,429,279 1,478,296
Property and equipment, net 42,815 43,384
Investments 493,139 464,346
Goodwill 534,780 534,780
Other assets 67,965 69,075
Deferred tax assets 166,863 134,421
------- -------
Total assets $3,715,260 $3,834,239
========== ==========
LIABILITIES
Senior revolving credit
facility $220,970 $156,136
5.25% Senior Notes 221,240 220,796
Term Loan 388,701 388,207
Accounts payable and
accrued liabilities 288,806 377,698
Participations and
residuals 650,698 607,358
Film obligations and
production loans 560,877 715,018
Convertible senior
subordinated notes 100,555 99,984
Deferred revenue 321,566 328,244
------- -------
Total liabilities 2,753,413 2,893,441
--------- ---------
Commitments and contingencies
Redeemable noncontrolling
interest 91,776 90,525
SHAREHOLDERS' EQUITY
Common shares, no par
value, 500,000,000 shares
authorized, 147,638,816
shares issued (March 31,
2016 -146,785,940 shares) 903,207 885,800
Retained earnings - 7,584
Accumulated other
comprehensive loss (33,136) (43,111)
------- -------
Total shareholders' equity 870,071 850,273
------- -------
Total liabilities and
shareholders' equity $3,715,260 $3,834,239
========== ==========
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
June 30,
--------
2016 2015
---- ----
(Amounts in thousands, except per
share amounts)
Revenues $553,575 $408,941
Expenses:
Direct operating 366,276 230,310
Distribution and marketing 125,039 71,924
General and administration 78,667 60,712
Depreciation and amortization 5,616 1,830
Total expenses 575,598 364,776
Operating income (loss) (22,023) 44,165
------- ------
Other expenses (income):
Interest expense
Cash interest 12,892 10,371
Amortization of debt discount and
deferred financing costs 2,342 2,254
----- -----
Total interest expense 15,234 12,625
Interest and other income (949) (600)
Total other expenses, net 14,285 12,025
------ ------
Income (loss) before equity interests
and income taxes (36,308) 32,140
Equity interests income 10,846 11,388
------ ------
Income (loss) before income taxes (25,462) 43,528
Income tax provision (benefit) (26,302) 2,844
------- -----
Net income 840 40,684
Less: Net loss attributable to
noncontrolling interest 414 -
Net income attributable to Lions Gate
Entertainment Corp. shareholders $1,254 $40,684
====== =======
Per share information attributable to Lions Gate
Entertainment Corp. shareholders:
Basic net income per common share $0.01 $0.28
===== =====
Diluted net income per common share $0.01 $0.26
===== =====
Weighted average number of common shares outstanding:
Basic 147,215 147,619
Diluted 149,611 157,498
Dividends declared per common share $0.09 $0.07
LIONS GATE ENTERTAINMENT CORP.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
June 30,
--------
2016 2015
---- ----
(Amounts in thousands)
Operating Activities:
Net income $840 $40,684
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation
and
amortization 5,616 1,830
Amortization
of films
and
television
programs 292,394 160,419
Amortization
of debt
discount
and
deferred
financing
costs 2,342 2,254
Non-cash
share-
based
compensation 21,731 16,591
Other non-
cash
items 1,250 -
Equity
interests
income (10,846) (11,388)
Deferred
income
taxes (30,720) 791
Changes in operating assets
and liabilities:
Restricted
cash (7,895) -
Accounts
receivable,
net 145,962 134,173
Investment
in films
and
television
programs (250,011) (315,861)
Other
assets 702 (2,514)
Accounts
payable
and
accrued
liabilities (70,861) (95,336)
Participations
and
residuals 43,590 29,916
Film
obligations 5,518 (9,218)
Deferred
revenue (6,523) 16,776
Net Cash
Flows
Provided
By (Used
In)
Operating
Activities 143,089 (30,883)
------- -------
Investing Activities:
Investment
in equity
method
investees (4,172) (800)
Purchases
of
property
and
equipment (2,906) (3,248)
Net Cash
Flows
Used In
Investing
Activities (7,078) (4,048)
------ ------
Financing Activities:
Senior
revolving
credit
facility
-
borrowings 185,000 -
Senior
revolving
credit
facility
-
repayments (121,000) -
Term Loan
-
borrowings,
net of
deferred
financing
costs of
$616 in
2015 - 24,384
Convertible
senior
subordinated
notes -
repurchases - (5)
Production
loans -
borrowings 63,263 203,087
Production
loans -
repayments (222,730) (74,276)
Dividends
paid (13,210) (10,187)
Distributions
from
noncontrolling
interest (2,159) -
Excess tax
benefits
on
equity-
based
compensation
awards - 45
Exercise
of stock
options 423 3,118
Tax
withholding
required
on equity
awards (13,752) (16,082)
Net Cash
Flows
Provided
By (Used
In)
Financing
Activities (124,165) 130,084
-------- -------
Net Change
In Cash
And Cash
Equivalents 11,846 95,153
Foreign
Exchange
Effects
on Cash 309 (1,300)
Cash and
Cash
Equivalents
-
Beginning
Of Period 57,742 102,697
Cash and
Cash
Equivalents
-End Of
Period $69,897 $196,550
======= ========
LIONS GATE ENTERTAINMENT CORP.
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents EBITDA, Adjusted EBITDA, free cash flow, adjusted net income attributable to Lions Gate Entertainment Corp. (the "Company," "we," "us" or "our") shareholders, and adjusted earnings per share, all of which are important financial measures for the Company but are not financial measures defined by generally accepted accounting principles ("GAAP").
These measures are non-GAAP financial measures as defined in Regulation G promulgated by the Securities and Exchange Commission (the "SEC") and are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with United States ("U.S.") GAAP.
We believe these non-GAAP measures to be meaningful indicators of our performance that provide useful information to investors regarding our financial condition and results of operations and cash flows before non-operating items. These non-GAAP measures are commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. However, not all companies calculate these measures in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies.
These measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as alternative measures of operating income, cash flow, net income, or earnings (loss) per share as determined in accordance with GAAP. Definitions and reconciliations of the adjusted metrics utilized to their corresponding GAAP metrics are provided below.
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before interest, income tax provision or benefit, and depreciation and amortization.
Adjusted EBITDA represents EBITDA as defined above adjusted for stock-based compensation, purchase accounting and related adjustments, restructuring and other items, non-cash imputed interest charge, start-up losses of new business initiatives, and backstopped prints and advertising expense.
Free Cash Flow
Free cash flow is defined as net cash flows provided by (used in) operating activities, less purchases of property and equipment, plus or minus the net increase or decrease in production loans, and plus or minus excess tax benefits on equity-based compensation awards if applicable. The adjustment for the production loans is made because the GAAP based cash flows from operations reflects a non-cash reduction of cash flows for the cost of films and television programs associated with production loans prior to the time the Company actually pays for the film or television program. The Company believes that it is more meaningful to reflect the impact of the payment for these films and television programs in its free cash flow when the payments are actually made.
Adjusted Net Income Attributable to Lions Gate Entertainment Corp. Shareholders, and Adjusted Earnings Per Share
Adjusted net income attributable to Lions Gate Entertainment Corp. shareholders is defined as net income attributable to Lions Gate Entertainment Corp. shareholders, adjusted for stock-based compensation, purchase accounting and related adjustments, restructuring and other items, non-cash imputed interest charge net of related interest income, start-up losses of new business initiatives, and backstopped prints and advertising expense, net of taxes at the applicable statutory rate and net of the amounts attributable to noncontrolling interest.
Adjusted earnings per share is defined as adjusted net income attributable to Lions Gate Entertainment Corp. shareholders per weighted average shares outstanding.
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME TO EBITDA AND ADJUSTED EBITDA
Three Months Ended
June 30,
--------
2016 2015
---- ----
(Amounts in thousands)
Net income $840 $40,684
Depreciation
and
amortization 5,616 1,830
Interest,
net 14,285 12,025
Income tax
provision
(benefit) (26,302) 2,844
------- -----
EBITDA $(5,561) $57,383
======= =======
Stock-
based
compensation 22,180 16,879
Restructuring
and other
items(1) 7,431 -
Non-cash
imputed
interest
charge(2) 621 -
Purchase
accounting
and
related
adjustments(3) 5,554 -
Start-up
losses of
new
business
initiatives(4) 10,376 714
Backstopped
prints
and
advertising
expense(5) 144 (3,934)
Adjusted
EBITDA $40,745 $71,042
======= =======
(1) Restructuring and other items
includes restructuring and
severance costs, certain
transaction related costs, and
certain unusual items, when
applicable, included in general
and administrative expense.
Amounts in the three months ended
June 30, 2016 primarily represent
professional fees associated with
the proposed merger with Starz.
(2) Non-cash imputed interest charge
represents a charge associated
with the interest cost of long-
term accounts receivable for
Television Production licensed
product that become due beyond
one-year.
(3) Purchase accounting and related
adjustments represent the
incremental amortization expense
associated with the non-cash
fair value adjustments on
television assets of $4.3 million
included in direct operating
expense resulting from the
application of purchase
accounting and the charge of $1.3
million included in general and
administrative expense related to
the accretion of the
noncontrolling interest discount.
(4) Start-up losses of new business
initiatives represent losses
associated with the Company's
direct to consumer initiatives
including its subscription video-
on-demand platforms and Atom
Tickets, the first-of-its-kind
theatrical mobile ticketing
platform and app. For the three
months ended June 30, 2016, $6.8
million represents the negative
gross contribution (i.e., revenue
less direct operating and
distribution and marketing
expenses) of the consolidated
business, $2.7 million is
included in the Company's
consolidated general and
administrative expense and $0.8
million is included in equity
interests income. For the three
months ended June 30, 2015, $0.7
million is included in equity
interests income.
(5) Backstopped prints and advertising
expense ("P&A") represents the
amount of theatrical marketing
expense for third party titles
that the Company funded and
expensed for which a third party
provides a first dollar loss
guarantee (subject to a cap) that
such expense will be recouped
from the performance of the film
(which results in minimal risk of
loss to the Company). The amount
represents the P&A expense
incurred and expensed net of the
impact of expensing the P&A cost
over the revenue streams similar
to a participation expense (i.e.,
the P&A under these arrangements
are being expensed similar to a
participation cost for purposes
of the adjusted measure).
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF FREE CASH FLOW TO
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Three Months Ended
June 30,
--------
2016 2015
---- ----
(Amounts in thousands)
Net Cash
Flows
Provided
By (Used
In)
Operating
Activities $143,089 $(30,883)
Purchases
of
property
and
equipment (2,906) (3,248)
Net
borrowings
under
and
(repayment)
of
production
loans (159,467) 128,811
Excess
tax
benefits
on
equity-
based
compensation
awards - 45
--- ---
Free Cash
Flow, as
defined $(19,284) $94,725
======== =======
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP. SHAREHOLDERS, AND BASIC AND DILUTED EPS TO ADJUSTED NET INCOME ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP. SHAREHOLDERS, AND ADJUSTED BASIC AND DILUTED EPS
Three Months Ended June 30, 2016
--------------------------------
(Amounts in thousands, except per share amounts)
Income (loss) Net income (1) Net income Basic EPS* Diluted EPS*
before income attributable to
taxes Lions Gate
Entertainment
Corp.
shareholders (2)
---
As reported $(25,462) $840 $1,254 $0.01 $0.01
Stock-based compensation 22,180 14,084 14,084 0.10 0.10
Restructuring and other items(3) 7,431 4,730 4,730 0.03 0.03
Non-cash imputed interest charge(4) (141) (90) (90) - -
Purchase accounting and related adjustments(5) 6,368 4,915 2,527 0.02 0.02
Start-up losses of new business initiatives(6) 10,934 6,943 6,943 0.05 0.04
Backstopped prints and advertising expense 144 91 91 - -
As adjusted for items above $21,454 $31,513 $29,539 $0.20 $0.19
======= ======= ======= ===== =====
Three Months Ended June 30, 2015
--------------------------------
(Amounts in thousands, except per share amounts)
Income before Net income (1) Net income Basic EPS* Diluted EPS*
income taxes attributable to
Lions Gate
Entertainment
Corp.
shareholders (2)
---------------
As reported $43,528 $40,684 $40,684 $0.28 $0.26
Stock-based compensation 16,879 10,689 10,689 0.07 0.07
Start-up losses of new business initiatives(6) 714 460 460 - -
Backstopped prints and advertising expense (3,934) (2,491) (2,491) (0.02) (0.02)
------ ------ ------ ----- -----
As adjusted for items above $57,187 $49,342 $49,342 $0.33 $0.32
======= ======= ======= ===== =====
______________________________________
* Basic and Diluted EPS amounts may not add precisely due to rounding
(1) Represents amounts net of the tax
impact calculated using the
statutory tax rate applicable to
each adjustment.
(2) Represents the net income amount
adjusted for the portion
attributable to noncontrolling
interest, if any.
(3) Restructuring and other items
include amounts presented in
Adjusted EBITDA.
(4) Represents the non-cash imputed
interest charge presented in
Adjusted EBITDA net of the
related interest income. The
amount is a deduction from net
income because the interest
income exceeded the charge in the
quarter.
(5) Purchase accounting and related
adjustments include amounts
presented in Adjusted EBITDA,
plus $0.8 million of incremental
depreciation and amortization
expense associated with the non-
cash fair value adjustments to
property and equipment and
intangible assets resulting from
the application of purchase
accounting related to the
acquisition of Pilgrim Studios.
(6) Start-up losses of new business
initiatives include amounts
presented in Adjusted EBITDA,
plus $0.6 million for the
depreciation expense associated
with these entities for the three
months ended June 30, 2016.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/lionsgate-reports-results-for-first-quarter-fiscal-2017-300309471.html
SOURCE Lionsgate
