Lionsgate earnings up sharply in Q4

Minimajor's earnings at $46.1 million, 34 cents a share

Roaring past Wall Street forecasts, Lionsgate posted Q4 earnings of $46.1 million, or 34¢ a share — lessening the red ink for the mini-major’s fiscal year.

Fourth-quarter profits for Lions-gate, which reported results after the market closed Tuesday, came in well above analysts’ expectations of 18¢ a share and were up sharply from a loss of $22.3 million, or 19¢ a share, in the same period a year ago.

But it was the only quarter in the fiscal year in which Lionsgate turned a profit: The studio lost $6 million in the third quarter, $29.7 million in the second quarter and $64.1 million in the first quarter. For the fiscal year, Lionsgate reported a loss of $53.6 million, compared with a loss of $19.5 million in the prior year, with revenues increasing 6% to $1.58 billion while cash flow was up 10% to $68.3 million.

Lionsgate said the 2011 loss was due primarily to increased interest expenses, a $14.5 million non-cash loss on extinguishment of debt on its $100 million debt-for-equity swap last July and increased equity interest loss due mainly to Lionsgate’s interest in pay cabler Epix.

The mini-major said the quarterly earnings gain stemmed from lower theatrical P&A expenses, record digital revenue, a strong performance for cable VOD revenue and strong international sales in addition to a “significant” increase in equity interest income as pay cabler Epix contributed a profit.

Quarterly revenue decreased by 6% to $376.9 million. Cash flow surged to $58.8 million from $12.5 million in the prior year’s fourth quarter while adjusted cash flow was $65.7 million vs. $30.5 million and free cash flow of $168 million compared to free cash flow of negative $17 million in the prior year’s fourth quarter, a swing of $185 million.

Lionsgate execs will discuss earnings in detail with analysts in a conference call Wednesday.

“Strong performances from our television business and our filmed entertainment library contributed to financial results that exceeded our preliminary estimates,” said Lionsgate co-chairman and CEO Jon Feltheimer. “We were particularly pleased by near record international sales, reflecting the demand for content in the world marketplace, and rapid growth of high margin digital and on demand revenue.”

Feltheimer also said results going forward should reflect “growing momentum” from franchises like “The Hunger Games,” “The Expendables” and “What to Expect When You’re Expecting.” Such titles, he added, will have the capacity to generate more consistent year-to-year film performance.

The company’s filmed entertainment library achieved its sixth consecutive record year, generating revenue of $329 million, up by $6 million. Library revenue was $374 million including syndicated TV product vs. $371 million the prior year.

Overall motion picture revenue for fiscal 2011 gained 10% to $1.23 billion, and theatrical revenue jumped 48% to $205.9 million. “The Expendables,” “Kick Ass,” “The Last Exorcism,” “Why Did I Get Married Too” and “Saw 3D” were cited as contributors.

Home entertainment revenue from both films and TV rose 5% to $690 million, with Lionsgate citing “The Expendables,” “Kick Ass,” “Killers,” “The Next Three Days,” “The Switch” and “Saw 3D” as well as carryovers from “Precious,” “Daybreakers” and “From Paris With Love.” “Weeds” and “Mad Men” also made significant contributions.

International motion picture revenue soared 72% to $126.5 million (excluding Lionsgate U.K.). Lionsgate U.K. revenue increased 7% to $79.2 million.

Television production revenue edged up 1% to $353.2 million, and domestic series licensing increased 48% to $136.5 million on increased revenue from deliveries of “Meet the Browns,” “Are We There Yet?” and “The Wendy Williams Show.”

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