Lionsgate Logs $53.6M Loss for Fiscal 2011, Reports 4Q Gain

Annual revenue increases 6% thanks to increases in the home entertainment and theatrical market; company reported net gain of $46.1 million for fourth quarter

Lionsgate lost $53.6 million in its fiscal year 2011 due to debt and interest payments, the Vancouver based studio announced on Tuesday.

This represented a 64 percent drop from the $19.5 million Lionsgate lost the previous fiscal year.

On the plus side of the ledger, Lionsgate reported revenue of $1.58 billion, an increase of  6 percent over the previous year.

Perhaps most surprising in an era of cratering DVD sales, Lionsgate's home entertainment sector actually recorded a 5 percent increase in annual revenues.

The studio reported a net gain of $46.1 million for its fourth fiscal quarter, a turnaround compared to the comparable period the prior year, when the company posted a $22.3 million loss. The company also reported revenues of $376.9 million for the period. 

Earnings for the most recent quarter beat Wall Street's expectations. Analysts polled by FactSet anticipated earnings of 20 cents per share. Revenues were lower than the $391.2 million analysts had predicted.  

The company attributed the strong performance in its fourth fiscal quarter to lower prints and advertising costs, record digital revenue, strong cable VOD and strong international sales. 

Lionsgate's motion picture division posted $1.23 billion in revenue for its fiscal year 2011, a 10 percent gain from the previous fiscal year. Theatrical revenue contributed $205.9 million, a 48 percent increase, thanks to hit movies including "The Expendables" and "Kick Ass." 

Home entertainment brought in $690 million revenue during the fiscal year. That increase was due in part to strong growth in digital and on demand revenue, which increased 69 percent to $106.5 million during the fiscal year. 

 

 Full release below: 

 

 

LIONSGATE REPORTS REVENUE OF $1.58 BILLION AND EBITDA OF $68.3 MILLION FOR FISCAL YEAR 2011; ADJUSTED EBITDA FOR THE FISCAL YEAR IS $106.5 MILLION; NET LOSS IS $53.6 MILLION OR $(0.41) PER BASIC SHARE

COMPANY SWINGS TO POSITIVE FREE CASH FLOW

COMPANY REPORTS REVENUE OF $376.9 MILLION, EBITDA OF $58.8 MILLION, NET INCOME OF $46.1 MILLION OR $0.34 PER BASIC SHARE AND FREE CASH FLOW OF $167.6 MILLION IN THE FOURTH QUARTER OF FISCAL 2011 

SANTA MONICA, CA, and VANCOUVER, BC, May 31, 2010 – Lionsgate (NYSE: LGF) today reported revenue of $1.58 billion, EBITDA of $68.3 million and adjusted EBITDA of $106.5 million for fiscal year 2011 (fiscal year ended March 31, 2011). 

Revenue increased 6% compared to the prior year driven primarily by increases in theatrical, home entertainment and international film revenue.  The home entertainment revenue included strong growth in digital and on demand revenue, which increased 69% from the prior year to $140 million.  

The Company reported EBITDA of $68.3 million and adjusted EBITDA of $106.5 million for the fiscal year compared to EBITDA of $62.3 million and adjusted EBITDA of $128.4 million in the prior year.  EBITDA gains primarily reflected significantly reduced theatrical marketing costs and higher margin revenue from digital media platforms.  Adjusted EBITDA decreased because of the inclusion of an adjustment for non-risk prints and advertising (P&A).

Net loss of $53.6 million in fiscal 2011 compared to net loss of $19.5 million in the prior year was primarily due to increased interest expenses, a $14.5 million non-cash loss on extinguishment of debt related to the July 20, 2010 deleveraging transaction and increased equity interest loss, mainly associated with Lionsgate’s interest in EPIX.   

Basic net loss per common share for the fiscal year was $0.41 on 131.2 million weighted average common shares outstanding, compared to basic net loss per common share of $0.17 on 117.5 million weighted average common shares outstanding in the prior year.

“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 Chief Executive Officer 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.  Our numbers going forward should reflect growing momentum in our film business from franchises like THE HUNGER GAMES, THE EXPENDABLES and WHAT TO EXPECT WHEN YOU’RE EXPECTING that we expect will have the capacity to generate more consistent year to year motion picture performance.”

The Company noted that its filmed entertainment library achieved its sixth consecutive record year, generating revenue of $329 million in fiscal 2011 compared to $323 million in the prior year.  Library revenue was $374 million including syndicated TV product compared to $371 million the prior year.

The Company was profitable in the fourth quarter of the fiscal year (quarter ended March 31, 2011) as net income of $46.1 million or basic net income of $0.34 per common share on 136.8 million weighted average common shares outstanding compared to a net loss of $22.3 million or basic net loss of $0.19 per common share on 117.9 million weighted average common shares outstanding in the prior year’s fourth quarter.

EBITDA in the fourth quarter was $58.8 million compared to EBITDA of $12.5 million in the prior year’s fourth quarter.  Adjusted EBITDA of $65.7 million compared to adjusted EBITDA of $30.5 million in the prior year’s fourth quarter, and free cash flow of $168 million in the fourth quarter compared to free cash flow of negative $17 million in the prior year’s fourth quarter, a swing of $185 million.  Revenue decreased by 6% to $376.9 million.

The strong income performance in the fourth quarter was attributable to lower theatrical P&A expenses, record digital revenue, a strong cable VOD quarterly revenue performance and strong international sales in addition to a significant increase in equity interest income as EPIX contributed a profit in the quarter.

Overall motion picture revenue for 2011 was $1.23 billion, an increase of 10% from the prior year.  Within the motion picture segment, theatrical revenue was $205.9 million, an increase of 48% from the prior year, attributable to a record North American box office performance that included such films as THE EXPENDABLES, KICK ASS, THE LAST EXORCISM, TYLER PERRY’S WHY DID I GET MARRIED TOO? and SAW 3D.

Lionsgate’s home entertainment revenue from both motion pictures and television was $690.0 million in the fiscal year, a 5% increase from the prior year, driven by strong growth in digital and on demand revenue and strong performances from a diversified slate of theatrical titles including THE EXPENDABLES, KICK ASS, KILLERS, THE NEXT THREE DAYS, SAW 3D and THE SWITCH as well as carryover titles from the prior year’s theatrical slate such as PRECIOUS, DAYBREAKERS and FROM PARIS WITH LOVE.  The television series WEEDS and MAD MEN also made significant contributions.  

Television revenue included in motion picture revenue was $139.8 million in the fiscal year, an increase of 3% from the prior year.

International motion picture revenue of $126.5 million (excluding Lionsgate U.K.) for the fiscal year increased 72% from the prior year as the slate of SAW 3D, KICK ASS, KILLERS, THE NEXT THREE DAYS and ALPHA & OMEGA compared favorably to the prior year’s slate and the Company achieved near record international sales in a strong marketplace.

Lionsgate U.K. revenue also increased in the fiscal year, growing 7% to $79.2 million, reflecting the strength of Lionsgate titles such as SAW 3D, which had a record U.K. performance for any installment of the SAW franchise, and THE EXPENDABLES as well as third-party titles such as HARRY BROWN and the Academy Award®-winning THE HURT LOCKER. 

Mandate Pictures’ revenue of $38.7 million in the fiscal year declined 61% from the prior year due to a smaller slate. 

Television production revenue was $353.2 million in the fiscal year, an increase of 1% from the prior year.  Domestic series licensing from the Company’s television distribution and syndication business increased 48% to $136.5 million in the fiscal year due to increased revenue from deliveries of the television series  “Meet The Browns,” “Are We There Yet?” and “The Wendy Williams Show.”

Domestic series licensing from Lionsgate Television decreased 5% in the fiscal year due to timing of deliveries, which included 13 episodes of “Mad Men Season 4” (AMC), 13 episodes of “Weeds Season  6” (Showtime), 13 episodes of “Blue Mountain State Season 2” (Spike), 12 episodes of “Nurse Jackie season 3” (Showtime), 13 episodes of “Running Wilde” (Fox) and eight episodes of “Scream Queens Season 2” (VH1).  Total deliveries of 75 episodes and 48.5 hours (including pilots) were comparable to the prior year.    The prior year also included $19.0 million of revenue from the Company’s former collaboration with Ish Entertainment.    

Lionsgate’s filmed entertainment backlog reached a record $532.0 million at March 31, 2011.  Filmed entertainment backlog represents the amount of future revenue not yet recorded from contracts for the licensing of films and television product for television exhibition and in international markets. 

Lionsgate G&A expenses in the fiscal year were $116.1 million, excluding stock-based compensation and corporate defense costs related to shareholder activist activities.  G&A as a percentage of revenue, excluding stock-based compensation and corporate defense and related costs, declined to 7.3% in the fiscal year compared to 7.5% in the prior year.