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Television production business drives Lionsgate Q2 revenue to $552.9 mn

MUMBAI: US media and entertainment company Lionsgate has reported revenue of $552.9 million, adjusted EBITDA of $59.0 million, adjusted net income of $33.0 million or $0.24 adjusted basic net income per share and net income of $20.8 million or $0.15 basic net income per share for the second quarter of fiscal 2015 (quarter ended September 30, 2014).

Revenue of $552.9 million for the quarter increased by per cent from $498.7 million in the prior year quarter, driven by strong gains in television production as well as increases in motion picture revenue from pay and free television windows which more than offset declines in theatrical and home entertainment revenue in the quarter. Lionsgate UK also recorded a 38 per cent revenue increase in the quarter.

Adjusted EBITDA of $59 million for the quarter increased by four per cent from adjusted EBITDA of $56.5 million in the prior year quarter. Adjusted EBITDA excluded $17.3 million in stock-based compensation, a $1.4 million restructuring charge associated with costs of the company’s relocation of its international sales operations to London, England and a $0.6 million loss related to conversion of subordinated debentures in the quarter.

Adjusted net income of $33.0 million or $0.24 adjusted basic net income per share for the quarter increased by 30 per cent from adjusted net income of $25.4 million or $0.19 adjusted basic net income per share in the prior year quarter. Adjusted net income for the quarter benefitted from decreased interest expense and a lower effective tax rate compared to the prior year quarter.

Net income was $20.8 million from $0.5 million in the prior year quarter. The prior year quarter included a $36.2 million loss on extinguishment of debt.

Lionsgate CEO Jon Feltheimer said, “We’re pleased that our entire portfolio of businesses contributed to our solid results in the quarter, driven by a particularly strong performance from our television operations. It was a quarter in which we extended our franchises into new lines of business, continued to assemble a strong pipeline of new properties with great commercial potential and developed online platforms that will enhance our ability to deliver our content directly to the consumer.”

During the quarter, the company increased its quarterly dividend from $0.05 to $0.07 per common share payable on 7 November 2014 to shareholders of record as of 30 September 2014.

Lionsgate’s film backlog, or already contracted future revenue not yet recorded, was $1.3 billion at 30 September 30 2014 compared to $1.2 billion on 31 March 2014.

Overall, film segment revenue for the quarter was $398.0 million compared to $434.4 million in the prior year quarter. Within the Motion Picture segment, theatrical revenue declined to $44.9 million with only two wide theatrical releases in the quarter, ‘The Expendables 3’ and ‘Step Up All In’, compared to a prior year quarter that included two wide releases, continuing revenue from the May 2013 release of ‘Now You See Me’ and the record-setting Spanish-language release ‘Instructions Not Included’ from Pantelion Films.

Lionsgate’s home entertainment revenue for the quarter was $164.4 million compared to $209.9 million in the prior year quarter due to strong performances from Managed Brands and ‘Now You See Me’ in the prior year quarter, partially offset by the outstanding home entertainment performance of ‘Divergent’ in the current quarter. Home entertainment revenue from television production increased in the quarter due to gains in digital media revenue.

Bolstered by the pay television window opening for ‘The Hunger Games: Catching Fire’ and the free television window opening for ‘The Twilight Saga: Breaking Dawn – Part 1’, television revenue included in the Motion Picture segment more than doubled to $69.4 million in the quarter compared to $34.6 million in the prior year quarter. The next installment of the global blockbuster ‘Hunger Games’ franchise, ‘The Hunger Games: Mockingjay Part 1’, will open on nearly 10,000 screens in North America on 21 November 2014.

International film segment revenue (excluding Lionsgate UK) for the quarter was $75.6 million compared to $88.7 million in the prior year quarter, with three wide release titles in worldwide release compared to five in the prior year quarter.

As noted earlier, Lionsgate UK revenue of $37.3 million in the quarter increased by 38 per cent compared to the prior year quarter.

Revenue for the television production segment rose to $154.9 million in the quarter, an increase of more than 140 per cent compared to $64.3 million in the prior year quarter, with strong gains in both domestic and international television as well as home entertainment revenue from television production.

Fifty-five episodes and 38.5 hours of domestic television series were delivered in the quarter, including episodes of ‘Manhattan’, ‘Anger Management’, ‘Orange is the New Black’, ‘Houdini’, ‘Nashville’ and ‘Mad Men’, compared to 20 episodes and 11.0 hours in the prior year quarter. Strong international sales of ‘Orange is the New Black’, ‘Nashville’ and ‘Anger Management’ were also reported in the quarter.