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Lions Gate ekes out profit, beats Wall Street estimates

November 08, 2013|By Daniel Miller
  • Jennifer Lawrence stars in Lions Gate Entertainment's "The Hunger Games: Catching Fire," which will be released on Nov. 22.
Jennifer Lawrence stars in Lions Gate Entertainment's "The… (Murray Close / Lionsgate )

Lions Gate Entertainment Corp. reported a profit of $505,000 for the fiscal quarter ending Sept. 30 -- a significant decline from the same quarter a year earlier, when the studio made $75.5 million.

Revenue was $498.7 million, down 29% from $707 million for the same quarter a year ago, when the company was helped by the home entertainment release of its hit film "The Hunger Games."

Lions Gate posted earnings per share of 0 cents, a decline from a per-share gain of 56 cents a year earlier. 

However, the company beat the expectations of analysts, who had predicted a loss of 7 cents per share, according to investment research firm Zacks.

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Shares of Lions Gate were up 42 cents to $32.56 in midday trading on Friday.

The company recorded a small profit after being assessed a $36.2 million charge for paying back debt early. The company refinanced $435 million of debt in July, lowering the interest on the borrowed money from about 10% to about 5%.

“We completed a strong first six months of the year with a solid second quarter in which we generated robust free cash flow, continued to de-lever our balance sheet and lowered our interest expense,” said Lionsgate Chief Executive Officer Jon Feltheimer in a statement.  

Lions Gate's fiscal years end March 31, making the quarter ending Sept. 30 the company's second of its 2014 fiscal year.

On the set: movies and TV

The company's motion picture business segment, which includes much of the studio's home entertainment and international operations, posted revenue of $434.4 million -- a decline of 29% over the same quarter a year ago.  

Lions Gate partly attributed the drop-off to having only two wide theatrical releases during the quarter versus three films for the same quarter a year ago. The company released "Red 2" on July 19 and "You're Next" on Aug. 23.

The company's television production segment posted revenue of $64.3 million, a decline of 35% from the same quarter a year ago. Lions Gate said that the decline was due to the timing of domestic television series deliveries, which offset gains in international revenue driven by the the shows "Orange Is the New Black" and "Anger Management."

Lions Gate is releasing the second installment of the Jennifer Lawrence-starring "The Hunger Games" film series -- "The Hunger Games: Catching Fire" -- on Nov. 22. The first movie in the series grossed $691 million worldwide.

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Lions Gate released "Ender's Game" on Nov. 1. The film, like "Hunger Games," is based on a popular series of novels aimed at young adults. However, the "Ender's Game" author, Orson Scott Card, has come under scrunity for his opposition to same-sex marriage and Lions Gate has disavowed Card's views.

The film has grossed $33.7 million in the U.S. and Canada.

Speaking on a conference call with analysts on Friday morning, Feltheimer highlighted several forthcoming Lions Gate movies, including the Johnny Depp-starring action comedy "Mortdecai," which is currently in production; the science fiction picture "Divergent," which is based on the bestselling novel of the same name; and "Expendables 3," the next installment in the action series known for its ensemble of older actors.

"Expendables 3" adds Harrison Ford, Mel Gibson, Antonio Banderas, Wesley Snipes and Kelsey Grammer to the cast, giving Lions Gate "confidence that we’ve repositioned this franchise in a powerful way," Feltheimer said.


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Daniel Miller

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