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Lionsgate Posts Loss on Soft Movie Performance, Shares Slide

Citing a soft performance by its movie slate, Lionsgate has reported a net loss of $42.1 million, or 28 cents a share, for its 2016 second quarter, which ended on Sept. 30.

The performance was well under Wall Street estimates of 3 cents a share. The stock slid 8% in afterhours trading, falling $3.03 to $35.25.

The studio said its results in the quarter were affected by the timing of episodic TV deliveries and the shift of the wide release of the film “Sicario” into October, which resulted in marketing costs being recorded in the September quarter without offsetting revenue benefit. “Sicario” has generated solid grosses so far with $44 million at the U.S. box office.

Lionsgate also said its Jesse Eisenberg-Kristen Stewart comedy “American Ultra” underperformed during the quarter with a $14.4 million domestic gross. It also recorded a write-down of $7.2 million on Vin Diesel’s “The Last Witch Hunter,” which was released on Oct. 23 and took in $23 million domestically on a $70 million budget.

Lionsgate’s average exposure per movie is limited to about $13 million due to its array of output deals covering most major international markets.

Revenue declined 14% to $476.8 million from $552.9 million in the prior year quarter. Wall Street was expecting the revenues to come in at about $485 million.

Motion Picture segment revenues fell 11% to $354 million with only two wide releases in the quarter —  “American Ultra” and “Shaun the Sheep.”

“Although this quarter will be the lightest of the year due to timing and softer-than-anticipated performance of some of our recent film releases, our robust film and television pipelines position us for a very strong second half of the year,” said CEO Jon Feltheimer.

The studio will open “The Hunger Games: Mockingjay — Part 2” on Nov. 20. It’s the fourth and final movie in a franchise that’s already delivered $2.3 billion at the worldwide box office.

Lionsgate’s third of four “Divergent” movies opens in March. It has been attempting to set up additional franchises such as “Gods of Egypt” with Gerard Butler,  “The Odyssey” with Hugh Jackman starring and a Power Rangers movie.

Adjusted EBITDA was negative $8.1 million for the quarter compared to $59 million in the prior year quarter.  The company reported a combined cash balance and availability on its revolving credit facility of over $970 million as of Sept. 30 with a filmed entertainment backlog of approximately $1.2 billion.

Home entertainment revenue from motion picture and television production for the quarter declined 7% to $153.5 million due to fewer wide release theatrical titles. “Insurgent” performed well on packaged media, VOD and electronic sell-through during the quarter.

Television production segment revenue slid 17% to $122.8 million due to timing of episodic deliveries. Lionsgate said deliveries of “Orange is the New Black,” “Nashville” and “The Royals” are expected to drive revenue growth in the second half of the fiscal year.

In the year-ago quarter, Lionsgate reported earnings of $20.8 million, or 15 cents a share.

 

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