Lionsgate Revenue was $834.7 Million
Net Loss Attributable to Lionsgate
Shareholders was $59.4
Million or $0.25 Diluted Net
Loss Per Share
Adjusted Net Income Attributable to Lionsgate
Shareholders was $20.9 Million or
$0.09 Adjusted Diluted Earnings Per
Share
Lionsgate Operating Income was $18.8 Million
Lionsgate Adjusted OIBDA was $104.5
Million
North American Media Networks and Motion
Picture Segment Profits Increased Year-Over-Year by 54% and 24%,
Respectively
SANTA MONICA,
Calif., and VANCOUVER,
BC, Aug. 8,
2024 /PRNewswire/ -- Lions Gate Entertainment Corp. (NYSE:
LGF.A, LGF.B) ("Lionsgate") and Lionsgate Studios Corp. (Nasdaq:
LION) ("Lionsgate Studios") today reported first quarter results
for the quarter ended June 30,
2024. This press release includes consolidated financial
results for parent company Lionsgate as well as operating results
for Lionsgate Studios (also referred to as the "Studio Business"),
comprised of its Motion Picture and Television Production
segments.
Lionsgate reported first quarter revenue of
$834.7 million, operating income of
$18.8 million, and net loss
attributable to Lionsgate shareholders of $59.4 million or $0.25 diluted net loss per share on 235.6 million
diluted weighted average common shares outstanding. Adjusted
net income attributable to Lionsgate shareholders in the quarter
was $20.9 million or $0.09 adjusted diluted net earnings per share
on 240.4 million diluted weighted average common shares
outstanding. Adjusted OIBDA was $104.5
million in the quarter.
"We're pleased to report a solid quarter despite
unprecedented industry disruption and the aftereffects of the
strikes," said Lionsgate and Lionsgate Studios CEO Jon Feltheimer. "Our Motion Picture Group,
STARZ and our library performed well, though financial results in
our television segment reflected a heavily backloaded year.
Importantly, we generated great momentum during and after the
quarter by taking a number of steps toward full separation by
calendar year-end, subject to the timing of normal regulatory
approvals."
Trailing 12-month library revenue was
$882 million.
First Quarter Results
The Studio Business, comprised of the
Motion Picture and Television Production segments, reported revenue
of $588.4 million, a decrease of 5.9%
from the prior year quarter. Studio Adjusted OIBDA of
$58.3 million decreased by 5.5% from
the prior year quarter.
Motion Picture segment revenue
decreased by 15% to $347.3 million
and segment profit increased by 24% to $86.1
million. The year-over-year revenue decline was due to
the difficult comparison with the prior year's first quarter, which
included carryover theatrical revenue from John Wick: Chapter Four. Motion Picture
performance was driven by strong theatrical results from The
Strangers: Chapter One, robust home entertainment performances
from several theatrical titles, and lower P&A spend and content
amortization.
Television Production segment revenue
increased 10% to $241.1 million while
segment profit decreased 53% to $10.7
million. Revenue growth was driven by contributions
from eOne, while segment profit growth was impacted by lingering
impacts of the strike on the timing of deliveries in a heavily
backloaded year.
Media Networks North American revenue
grew 1% to $345.3 million and segment
profit grew 54% to $58.5 million.
Revenue growth was driven by the June
2023 price increase and OTT subscriber growth, partially
offset by linear declines. Segment profit growth was driven
primarily by lower content amortization. North American OTT
subscribers increased 5.5% to 13.2 million compared to the prior
year quarter, while on a sequential basis, North American OTT
subscribers decreased by 180K.
Overall North American subscribers decreased by 500K sequentially. Earlier this week, STARZ
notified its U.S. customers of a $1.00 rate increase to the service's monthly
cost.
Lionsgate and Lionsgate Studios senior management
will hold their analyst and investor conference call to discuss
fiscal 2025 first quarter results today, August 8th, at 6:00 PM ET/3:00 PM PT. The
consolidated financial results of Lionsgate and the operating
results of Lionsgate Studios' segments will be discussed on a
single call. Interested parties may listen to the live
webcast by visiting the events page on either the Lionsgate
Investor Relations website or the Lionsgate Studios
Investor Relations website. Alternatively, interested
parties can join the webcast directly via the
following link. A full replay will be available this
evening by clicking the same link.
About Lionsgate
Lionsgate (NYSE: LGF.A, LGF.B) encompasses
world-class motion picture and television studio operations and the
STARZ premium global subscription platform, bringing a unique and
varied portfolio of entertainment to consumers around the world.
The Company's film, television, subscription and location-based
entertainment businesses are backed by a more than 20,000-title
library and a valuable collection of iconic film and television
franchises. A digital age company driven by its entrepreneurial
culture and commitment to innovation, the Lionsgate brand is
synonymous with bold, original, relatable entertainment for
audiences worldwide.
About Lionsgate Studios
Lionsgate Studios (Nasdaq: LION) is one of the
world's leading standalone, pure play, publicly-traded content
companies. It brings together diversified motion picture and
television production and distribution businesses, a world-class
portfolio of valuable brands and franchises, a talent management
and production powerhouse and a more than 20,000-title film and
television library, all driven by Lionsgate Studios' bold and
entrepreneurial culture.
###
For further information, investors should contact:
Nilay Shah
310-255-3651
nshah@lionsgate.com
For media inquiries, please contact:
Peter D. Wilkes
310-255-3726
pwilkes@lionsgate.com
The matters discussed in this press release
include forward-looking statements, including those regarding the
performance of future fiscal years. Such statements are
subject to a number of risks and uncertainties. Actual results in
the future could differ materially and adversely from those
described in the forward-looking statements as a result of various
important factors, including, but not limited to: the benefits of
the business combination consummated on May
13, 2024; the outcome of any legal, regulatory or
governmental proceedings that may be instituted against the Company
or any investigation or inquiry in connection with the business
combination; unexpected costs related to the business combination;
changes in our business strategy including the potential separation
of the studio business and STARZ business; the substantial
investment of capital required to produce and market films and
television series; budget overruns; limitations imposed by our
credit facilities and notes; unpredictability of the commercial
success of our motion pictures and television programming; risks
related to acquisition and integration of acquired businesses; the
effects of dispositions of businesses or assets, including
individual films or libraries; the cost of defending our
intellectual property; technological changes and other trends
affecting the entertainment industry; potential adverse reactions
or changes to business or employee relationships; the impact of
global pandemics on our business; weakness in the global economy
and financial markets, including a recession and past and future
bank failures; wars, terrorism and multiple international conflicts
that could cause significant economic disruption and political and
social instability; labor disruptions and strikes; and the other
risk factors set forth in Lionsgate's and Lionsgate Studios' public
filings with the Securities and Exchange Commission. The
companies undertake no obligation to publicly release the result of
any revisions to these forward-looking statements that may be made
to reflect any future events or circumstances.
Additional Information Available on
Websites
The information in this press release should be
read in conjunction with the financial statements and footnotes
contained in Lionsgate's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2024, which
will be posted on Lionsgate's website
at http://investors.lionsgate.com/financial-reports/sec-filings, and
Lionsgate Studio's Quarterly Report on Form 10-Q, which will be
posted on Lionsgate Studios' website at
https://investors.lionsgatestudios.com/. Trending schedules
containing certain financial information will also be
available.
|
LIONS GATE
ENTERTAINMENT CORP.
CONSOLIDATED
BALANCE SHEETS
|
|
June 30,
2024
|
|
March 31,
2024
|
|
(Unaudited,
amounts in millions)
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
192.5
|
|
$
314.0
|
|
Accounts receivable,
net
|
654.5
|
|
753.0
|
|
Other current
assets
|
396.9
|
|
396.5
|
|
Total current
assets
|
1,243.9
|
|
1,463.5
|
|
Investment in films and
television programs and program rights, net
|
3,215.6
|
|
2,762.2
|
|
Property and equipment,
net
|
85.3
|
|
88.5
|
|
Investments
|
77.7
|
|
74.8
|
|
Intangible assets,
net
|
954.0
|
|
991.8
|
|
Goodwill
|
812.1
|
|
811.2
|
|
Other assets
|
833.6
|
|
900.7
|
|
Total
assets
|
$
7,222.2
|
|
$
7,092.7
|
|
LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
320.2
|
|
$
327.6
|
|
Content related
payables
|
186.7
|
|
190.0
|
|
Other accrued
liabilities
|
328.6
|
|
355.1
|
|
Participations and
residuals
|
608.9
|
|
678.4
|
|
Film related
obligations
|
1,666.0
|
|
1,393.1
|
|
Debt - short term
portion
|
649.6
|
|
860.3
|
|
Deferred
revenue
|
374.2
|
|
187.6
|
|
Total current
liabilities
|
4,134.2
|
|
3,992.1
|
|
Debt
|
1,544.9
|
|
1,619.7
|
|
Participations and
residuals
|
442.4
|
|
435.1
|
|
Film related
obligations
|
356.4
|
|
544.9
|
|
Other
liabilities
|
529.0
|
|
556.4
|
|
Deferred
revenue
|
116.8
|
|
118.4
|
|
Deferred tax
liabilities
|
24.5
|
|
13.3
|
|
Total
liabilities
|
7,148.2
|
|
7,279.9
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
123.0
|
|
123.3
|
|
|
|
|
|
EQUITY
(DEFICIT)
|
|
|
|
|
Class A voting common
shares, no par value, 500.0 shares authorized, 83.6 shares
issued
(March 31, 2024 -
83.6 shares issued)
|
673.8
|
|
673.6
|
|
Class B non-voting
common shares, no par value, 500.0 shares authorized, 152.3
shares
issued (March 31,
2024 - 151.7 shares issued)
|
2,490.4
|
|
2,474.4
|
|
Accumulated
deficit
|
(3,242.7)
|
|
(3,576.7)
|
|
Accumulated other
comprehensive income
|
93.1
|
|
116.0
|
|
Total Lions Gate
Entertainment Corp. shareholders' equity (deficit)
|
14.6
|
|
(312.7)
|
|
Noncontrolling
interests
|
(63.6)
|
|
2.2
|
|
Total equity
(deficit)
|
(49.0)
|
|
(310.5)
|
|
Total liabilities,
redeemable noncontrolling interest and equity (deficit)
|
$
7,222.2
|
|
$
7,092.7
|
|
LIONS GATE
ENTERTAINMENT CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions,
except per share
amounts)
|
|
Revenues
|
$
834.7
|
|
$
908.6
|
|
Expenses
|
|
|
|
|
Direct
operating
|
429.2
|
|
481.2
|
|
Distribution and
marketing
|
198.6
|
|
244.2
|
|
General and
administration
|
119.5
|
|
123.6
|
|
Depreciation and
amortization
|
46.1
|
|
44.4
|
|
Restructuring and
other
|
22.5
|
|
32.0
|
|
Total
expenses
|
815.9
|
|
925.4
|
|
Operating income
(loss)
|
18.8
|
|
(16.8)
|
|
Interest
expense
|
(68.8)
|
|
(62.0)
|
|
Interest and other
income
|
5.1
|
|
1.9
|
|
Other
expense
|
(3.1)
|
|
(5.7)
|
|
Gain (loss) on
extinguishment of debt
|
(5.9)
|
|
21.2
|
|
Equity interests income
(loss)
|
0.9
|
|
(0.3)
|
|
Loss before income
taxes
|
(53.0)
|
|
(61.7)
|
|
Income tax
provision
|
(10.1)
|
|
(9.8)
|
|
Net
loss
|
(63.1)
|
|
(71.5)
|
|
Less: Net loss
attributable to noncontrolling interests
|
3.7
|
|
0.8
|
|
Net loss
attributable to Lions Gate Entertainment Corp.
shareholders
|
$
(59.4)
|
|
$
(70.7)
|
|
|
|
|
|
Per share
information attributable to Lions Gate Entertainment
Corp.
shareholders:
|
|
|
|
|
Basic net loss per
common share
|
$
(0.25)
|
|
$
(0.31)
|
|
Diluted net loss per
common share
|
$
(0.25)
|
|
$
(0.31)
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
235.6
|
|
230.2
|
|
Diluted
|
235.6
|
|
230.2
|
|
LIONS GATE
ENTERTAINMENT CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in
millions)
|
|
Operating
Activities:
|
|
|
|
|
Net loss
|
$
(63.1)
|
|
$
(71.5)
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
46.1
|
|
44.4
|
|
Amortization of films
and television programs and program rights
|
287.7
|
|
359.9
|
|
Amortization of debt
financing costs and other non-cash interest
|
8.7
|
|
6.8
|
|
Non-cash share-based
compensation
|
18.1
|
|
16.5
|
|
Other
amortization
|
10.8
|
|
11.8
|
|
Content and other
impairments
|
19.9
|
|
28.0
|
|
Gain (loss) on
extinguishment of debt
|
5.9
|
|
(21.2)
|
|
Equity interests
(income) loss
|
(0.9)
|
|
0.3
|
|
Deferred income
taxes
|
11.2
|
|
0.2
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
155.8
|
|
76.7
|
|
Investment in films
and television programs and program rights, net
|
(694.3)
|
|
(445.4)
|
|
Other
assets
|
(10.8)
|
|
(1.5)
|
|
Accounts payable and
accrued liabilities
|
(56.5)
|
|
(20.3)
|
|
Participations and
residuals
|
(65.4)
|
|
(7.4)
|
|
Content related
payables
|
(12.8)
|
|
12.2
|
|
Deferred
revenue
|
180.7
|
|
39.7
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
(158.9)
|
|
29.2
|
|
Investing
Activities:
|
|
|
|
|
Investment in equity
method investees and other
|
(2.0)
|
|
—
|
|
Acquisition of assets
(film library and related assets)
|
(35.0)
|
|
—
|
|
Increase in loans
receivable
|
—
|
|
(0.9)
|
|
Capital
expenditures
|
(9.0)
|
|
(8.9)
|
|
Net Cash Flows Used
In Investing Activities
|
(46.0)
|
|
(9.8)
|
|
Financing
Activities:
|
|
|
|
|
Debt - borrowings, net
of debt issuance and redemption costs
|
771.8
|
|
490.0
|
|
Debt - repurchases and
repayments
|
(1,065.4)
|
|
(560.1)
|
|
Film related
obligations - borrowings
|
636.9
|
|
569.9
|
|
Film related
obligations - repayments
|
(557.8)
|
|
(423.7)
|
|
Sale of noncontrolling
interest in Lionsgate Studios Corp.
|
294.0
|
|
—
|
|
Purchase of
noncontrolling interest
|
—
|
|
(0.6)
|
|
Distributions to
noncontrolling interest
|
(0.6)
|
|
—
|
|
Exercise of stock
options
|
—
|
|
0.1
|
|
Tax withholding
required on equity awards
|
(3.0)
|
|
(15.1)
|
|
Net Cash Flows
Provided By Financing Activities
|
75.9
|
|
60.5
|
|
Net Change In Cash,
Cash Equivalents and Restricted Cash
|
(129.0)
|
|
79.9
|
|
Foreign Exchange
Effects on Cash, Cash Equivalents and Restricted
Cash
|
(0.5)
|
|
1.2
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning Of
Period
|
371.4
|
|
313.0
|
|
Cash, Cash
Equivalents and Restricted Cash - End Of Period
|
$
241.9
|
|
$
394.1
|
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION
The Company's reportable segments have been determined based on
the distinct nature of their operations, the Company's internal
management structure, and the financial information that is
evaluated regularly by the Company's chief operating decision
maker.
The Company has three reportable business segments: (1) Motion
Picture, (2) Television Production and (3) Media Networks. We refer
to our Motion Picture and Television Production segments
collectively as our Studio Business.
Studio Business:
Motion Picture. Motion Picture consists of the
development and production of feature films, acquisition of North
American and worldwide distribution rights, North American
theatrical, home entertainment and television distribution of
feature films produced and acquired, and worldwide licensing of
distribution rights to feature films produced and acquired.
Television Production. Television Production consists of
the development, production and worldwide distribution of
television productions including television series, television
movies and mini-series, and non-fiction programming. Television
Production includes the licensing of Starz original series
productions to Starz Networks and LIONSGATE+, and the ancillary
market distribution of Starz original productions and licensed
product. Additionally, the Television Production segment includes
the results of operations of 3 Arts Entertainment.
Media Networks Business:
Media Networks. Media Networks consists of the
following product lines (i) Starz Networks, which includes the
domestic distribution of STARZ branded premium subscription video
services through over-the-top ("OTT") platforms, on a
direct-to-consumer basis through the Starz App, and through U.S.
and Canada multichannel video
programming distributors ("MVPDs") including cable operators,
satellite television providers and telecommunication companies
(collectively, "Distributors"); and (ii) Other, which represents
revenues primarily from the OTT distribution of the Company's STARZ
branded premium subscription video services outside of the U.S. and
Canada.
In the ordinary course of business, the Company's reportable
segments enter into transactions with one another. The most common
types of intersegment transactions include licensing motion
pictures or television programming (including Starz original
productions) from the Motion Picture and Television Production
segments to the Media Networks segment. While intersegment
transactions are treated like third-party transactions to determine
segment performance, the revenues (and corresponding expenses,
assets, or liabilities recognized by the segment that is the
counterparty to the transaction) are eliminated in consolidation
and, therefore, do not affect consolidated results.
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION (Continued)
Segment information is presented in the tables below. The Motion
Picture and Television Production segments include the results of
operations of eOne from the acquisition date of December 27, 2023.
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Segment
revenues
|
|
|
|
|
Studio
Business:
|
|
|
|
|
Motion
Picture
|
$
347.3
|
|
$
406.5
|
|
Television
Production
|
241.1
|
|
218.5
|
|
Total Studio
Business
|
588.4
|
|
625.0
|
|
Media
Networks
|
350.1
|
|
381.1
|
|
Intersegment
eliminations
|
(103.8)
|
|
(97.5)
|
|
$
834.7
|
|
$
908.6
|
|
Segment
profit
|
|
|
|
|
Studio
Business:
|
|
|
|
|
Motion
Picture
|
$
86.1
|
|
$
69.2
|
|
Television
Production
|
10.7
|
|
22.9
|
|
Total Studio
Business(1)
|
96.8
|
|
92.1
|
|
Media
Networks
|
57.5
|
|
31.9
|
|
Intersegment
eliminations
|
(11.3)
|
|
(7.9)
|
|
Total segment
profit(1)
|
$
143.0
|
|
$
116.1
|
|
Corporate general and
administrative expenses
|
(33.3)
|
|
(30.4)
|
|
Unallocated rent cost
included in direct operating expense(2)
|
(5.2)
|
|
—
|
|
Adjusted
OIBDA(1)
|
$
104.5
|
|
$
85.7
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Total Segment Profit,
Studio Business Segment Profit and Adjusted OIBDA and
reconciliation to the most directly comparable GAAP financial
measure.
|
|
(2)
|
Amounts represent rent
cost for production facilities that were unutilized as a result of
the industry strikes, and therefore such amounts are not allocated
to the segments.
|
The Company's primary measure of segment performance is segment
profit. Segment profit is defined as segment revenues, less segment
direct operating and segment distribution and marketing expense,
less segment general and administration expenses. Total segment
profit represents the sum of segment profit for our individual
segments, net of eliminations for intersegment transactions.
Segment profit and total segment profit excludes, when applicable,
corporate general and administrative expense, restructuring and
other costs, share-based compensation, certain programming and
content charges as a result of changes in management and/or
programming and content strategy, certain charges related to the
COVID-19 global pandemic, and purchase accounting and related
adjustments. Segment profit is a GAAP financial measure.
We also present above our total segment profit for all of our
segments and the sum of our Motion Picture and Television
Production segment profit as our "Studio Business" segment profit.
Total segment profit and Studio Business segment profit, when
presented outside of the segment information and reconciliations
included in the notes to our consolidated financial statements, is
considered a non-GAAP financial measure, and should be considered
in addition to, not as a substitute for, or superior to, measures
of financial performance prepared in accordance with United States
GAAP. We use this non-GAAP measure, among other measures, to
evaluate the aggregate operating performance of our business.
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION (Continued)
The following table sets forth segment information by product
line for the Media Networks segment for the three months ended
June 30, 2024 and 2023:
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Media Networks
revenue:
|
|
|
|
|
Starz
Networks(1)
|
$
345.3
|
|
$
341.6
|
|
Other(2)
|
4.8
|
|
39.5
|
|
$
350.1
|
|
$
381.1
|
|
Media Networks
segment profit (loss):
|
|
|
|
|
Starz
Networks(1)
|
$
58.5
|
|
$
38.1
|
|
Other(2)
|
(1.0)
|
|
(6.2)
|
|
$
57.5
|
|
$
31.9
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Starz Networks
represents the results of operations of the U.S. and Canada, see
footnote (2) below.
|
|
(2)
|
During the quarter
ended June 30, 2024, the Company began reflecting the results of
operations of Canada within Starz Networks. Accordingly, the
following amounts were reclassified from "Other" (formerly
"LIONSGATE+") to Starz Networks in the three months ended June 30,
2023 to conform to the current period presentation: (i) revenue of
$4.2 million; (ii) direct operating expense of $2.7 million; and
(iii) distribution and marketing expense of $1.1 million, which
resulted in gross contribution and segment profit of $0.4 million
reclassified. The amounts reflected in "Other" consist of the
results of operations outside of the U.S. and Canada.
|
LIONS GATE ENTERTAINMENT CORP.
SEGMENT INFORMATION (Continued)
Subscriber Data. The number of period-end service
subscribers is a key metric which management uses to evaluate a
non-ad supported subscription video service. We believe this
key metric provides useful information to investors as a growing or
decreasing subscriber base is a key indicator of the health of the
overall business. Service subscribers may impact revenue
differently depending on specific distribution agreements we have
with our distributors which may include fixed fees, rates per basic
video household or a rate per STARZ subscriber. The following table
sets forth, for the periods presented, subscriptions to our Media
Networks and STARZPLAY Arabia services, excluding subscribers in
territories exited or to be exited:
|
|
As
of
|
|
As
of
|
|
|
6/30/23
|
|
9/30/23
|
|
12/31/23
|
|
3/31/24
|
|
6/30/24
|
|
|
(Amounts in
millions)
|
|
Starz North
America(1)
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers
|
|
12.51
|
|
12.73
|
|
13.43
|
|
13.38
|
|
13.20
|
|
Linear
Subscribers
|
|
9.48
|
|
9.21
|
|
8.85
|
|
8.42
|
|
8.10
|
|
Total
|
|
21.99
|
|
21.94
|
|
22.28
|
|
21.80
|
|
21.30
|
|
Other (excluding
territories exited or to be exited)(2)
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers(3)
|
|
3.03
|
|
3.06
|
|
2.45
|
|
2.52
|
|
2.62
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Starz
(excluding territories exited or to be exited)
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers(3)
|
|
15.54
|
|
15.79
|
|
15.88
|
|
15.90
|
|
15.82
|
|
Linear
Subscribers
|
|
9.48
|
|
9.21
|
|
8.85
|
|
8.42
|
|
8.10
|
|
Total Starz
(excluding territories exited or to be exited)
|
|
25.02
|
|
25.00
|
|
24.73
|
|
24.32
|
|
23.92
|
|
STARZPLAY
Arabia(4)
|
|
2.80
|
|
3.04
|
|
3.19
|
|
3.22
|
|
3.25
|
|
Total (including
STARZPLAY Arabia and excluding territories exited or to be
exited)(3)
|
|
27.82
|
|
28.04
|
|
27.92
|
|
27.54
|
|
27.17
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers by
Platform (excluding territories exited or to be
exited):
|
|
|
|
|
|
|
|
|
|
|
|
OTT
Subscribers(3)(5)
|
|
18.34
|
|
18.83
|
|
19.07
|
|
19.12
|
|
19.07
|
|
Linear
Subscribers
|
|
9.48
|
|
9.21
|
|
8.85
|
|
8.42
|
|
8.10
|
|
Total Global
Subscribers (excluding territories exited or to be
exited)(3)
|
|
27.82
|
|
28.04
|
|
27.92
|
|
27.54
|
|
27.17
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Starz North America
represents subscribers in the U.S. and Canada.
|
|
(2)
|
Other consists of OTT
subscribers in India.
|
|
(3)
|
Excludes subscribers in
territories exited or to be exited in Australia, Latin America and
the U.K. as follows:
|
|
|
|
As
of
|
|
As
of
|
|
|
6/30/23
|
|
9/30/23
|
|
12/31/23
|
|
3/31/2024
|
|
6/30/24
|
|
|
(Amounts in
millions)
|
|
OTT
Subscribers
|
|
1.59
|
|
1.58
|
|
1.10
|
|
0.57
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
(4)
|
Represents subscribers
of STARZPLAY Arabia, a non-consolidated equity method
investee.
|
|
(5)
|
OTT subscribers
includes subscribers of STARZPLAY Arabia, as presented
above.
|
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF OPERATING INCOME
(LOSS)
TO ADJUSTED OIBDA AND TOTAL SEGMENT
PROFIT
The following table reconciles the GAAP measure, operating
income (loss) to the non-GAAP measures, Adjusted OIBDA and Total
Segment Profit:
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Operating income
(loss)
|
$
18.8
|
|
$
(16.8)
|
|
Adjusted depreciation
and amortization(1)
|
8.5
|
|
10.0
|
|
Restructuring and
other(2)
|
22.5
|
|
32.0
|
|
COVID-19 related
charges (benefit)(3)
|
(3.1)
|
|
0.2
|
|
Adjusted share-based
compensation expense(4)
|
18.1
|
|
15.9
|
|
Purchase accounting
and related adjustments(5)
|
39.7
|
|
44.4
|
|
Adjusted
OIBDA
|
$
104.5
|
|
$
85.7
|
|
Corporate general and
administrative expenses
|
33.3
|
|
30.4
|
|
Unallocated rent cost
included in direct operating expense(6)
|
5.2
|
|
—
|
|
Total Segment
Profit
|
$
143.0
|
|
$
116.1
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our consolidated statements of operations less the
depreciation and amortization related to the non-cash fair value
adjustments to property and equipment and intangible assets
acquired in acquisitions which are included in the purchase
accounting and related adjustments line item above, as shown in the
table below:
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Depreciation and
amortization
|
$
46.1
|
|
$
44.4
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(37.6)
|
|
(34.4)
|
|
Adjusted depreciation
and amortization
|
$
8.5
|
|
$
10.0
|
|
|
|
(2)
|
Restructuring and other
includes restructuring and severance costs, certain transaction and
other costs, and certain unusual items, when applicable, as shown
in the table below:
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Restructuring and
other:
|
|
|
|
|
Content and other
impairments(a)
|
$
19.9
|
|
$
28.0
|
|
Severance(b)
|
|
|
|
|
Cash
|
3.1
|
|
4.3
|
|
Accelerated vesting on
equity awards
|
—
|
|
0.5
|
|
Total severance
costs
|
3.1
|
|
4.8
|
|
Transaction and other
costs(c)
|
(0.5)
|
|
(0.8)
|
|
$
22.5
|
|
$
32.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Media Networks
Restructuring: During fiscal 2024, the Company continued
executing its restructuring plan, which included exiting all
international territories except for Canada and India, and included
an evaluation of the programming on Starz's domestic and
international platforms.
|
|
|
|
|
|
As a result of these
restructuring initiatives, the Company recorded content impairment
charges related to the Media Networks segment in the three months
ended June 30, 2024 and 2023 of $1.9 million and $28.0 million,
respectively. The Company has incurred impairment charges from the
inception of the plan through June 30, 2024 amounting to $745.7
million.
Under the current restructuring plan and ongoing strategic content
review, the net future cash outlay is estimated to range from
approximately $50 million to $55 million, which includes
contractual commitments on content in territories being exited or
to be exited, and payments on the remaining amounts payable for
content removed or that may be removed from its services. The
amounts above will depend on the results of its strategic content
review and amounts recoverable from alternative distribution
strategies, if any, on content in domestic and foreign markets.
As the Company continues to evaluate the Media Networks business
and its current restructuring plan in relation to the current micro
and macroeconomic environment and the announced plan to separate
the Company's Starz business (i.e., Media Networks segment) and
Studio Business (i.e., Motion Picture and Television Production
segments), including further strategic review of content
performance and its strategy on a territory-by-territory basis, the
Company may decide to expand its restructuring plan and exit
additional territories or remove certain content off its platform
in the future. Accordingly, the Company may incur additional
content impairment and other restructuring charges beyond the
estimates above.
Other Impairments: Amounts in the three months ended June
30, 2024 also include impairments of certain operating lease
right-of-use and leasehold improvement assets related to the
Television Production segment amounting to $18.0 million
associated with facility leases that will no longer be utilized by
the Company, primarily related to the integration of
eOne.
|
|
|
|
|
|
(b)
|
Severance costs were
primarily related to restructuring activities and other cost-saving
initiatives.
|
|
|
|
|
|
|
(c)
|
Transaction and other
costs in the three months ended June 30, 2024 and 2023 reflect
transaction, integration and legal costs associated with certain
strategic transactions, and restructuring activities and also
include costs and benefits associated with legal and other matters.
In the three months ended June 30, 2024 and 2023, transaction and
other costs also includes a benefit of $7.1 million and $3.8
million, respectively, associated with an arrangement to migrate
subscribers in some of the exited territories to a third-party in
connection with the Starz international restructuring.
|
|
|
|
|
(3)
|
Amounts include
incremental costs incurred, if any, due to circumstances associated
with the COVID-19 global pandemic, net of insurance recoveries. In
the three months ended June 30, 2024, insurance recoveries exceeded
the incremental costs expensed in the period, resulting in a net
benefit included in direct operating expense.
|
|
|
|
(4)
|
The following table
reconciles total share-based compensation expense to adjusted
share-based compensation expense:
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Total share-based
compensation expense
|
$
18.1
|
|
$
16.4
|
|
Less: Amount included
in restructuring and other(a)
|
—
|
|
(0.5)
|
|
Adjusted share-based
compensation
|
$
18.1
|
|
$
15.9
|
|
|
|
|
(a)
|
Represents share-based
compensation expense included in restructuring and other expenses
reflecting the impact of the acceleration of certain vesting
schedules for equity awards pursuant to certain severance
arrangements.
|
|
|
|
(5)
|
Purchase accounting and
related adjustments primarily represent the amortization of
non-cash fair value adjustments to certain assets acquired in
acquisitions. The following sets forth the amounts included in each
line item in the financial statements:
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Purchase accounting and
related adjustments:
|
|
|
|
|
General and
administrative expense(a)
|
$
2.1
|
|
$
10.0
|
|
Depreciation and
amortization
|
37.6
|
|
34.4
|
|
$
39.7
|
|
$
44.4
|
|
|
|
|
(a)
|
These adjustments
include the expense associated with the noncontrolling equity
interests in the distributable earnings related to 3 Arts
Entertainment, and the amortization of the recoupable portion of
the purchase price (through May 2023) related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense, as presented in
the table below. The noncontrolling equity interest in the
distributable earnings of 3 Arts Entertainment are reflected as an
expense rather than noncontrolling interest in the unaudited
condensed consolidated statement of operations due to the
relationship to continued employment.
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Amortization of
recoupable portion of the purchase price
|
$
—
|
|
$
1.3
|
|
Noncontrolling equity
interest in distributable earnings
|
2.1
|
|
8.7
|
|
$
2.1
|
|
$
10.0
|
|
(6)
|
Amounts represent rent
cost for production facilities that were unutilized as a result of
the industry strikes, and therefore such amounts are not allocated
to the segments.
|
|
LIONS GATE
ENTERTAINMENT CORP.
RECONCILIATION OF
NET LOSS ATTRIBUTABLE TO LIONS GATE ENTERTAINMENT CORP.
SHAREHOLDERS TO ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO LIONS
GATE ENTERTAINMENT CORP. SHAREHOLDERS, AND BASIC AND DILUTED EPS TO
ADJUSTED BASIC AND DILUTED EPS
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions,
except per share
amounts)
|
|
Reported Net Loss
Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
(59.4)
|
|
$
(70.7)
|
|
Adjusted share-based
compensation expense
|
18.1
|
|
15.9
|
|
Restructuring and
other
|
22.5
|
|
32.0
|
|
COVID-19 related
charges (benefit)
|
(3.1)
|
|
0.2
|
|
Purchase accounting
and related adjustments
|
39.7
|
|
44.4
|
|
(Gain) loss on
extinguishment of debt
|
5.9
|
|
(21.2)
|
|
Tax impact of above
items(1)
|
(0.1)
|
|
0.1
|
|
Noncontrolling
interest impact of above items(2)
|
(2.7)
|
|
(10.5)
|
|
Adjusted Net Income
(Loss) Attributable to Lions Gate Entertainment Corp.
Shareholders
|
$
20.9
|
|
$
(9.8)
|
|
|
|
|
|
|
|
|
|
Reported Basic
EPS
|
$
(0.25)
|
|
$
(0.31)
|
|
Impact of adjustments
on basic earnings per share
|
0.34
|
|
0.27
|
|
Adjusted Basic
EPS
|
$
0.09
|
|
$
(0.04)
|
|
|
|
|
|
|
|
|
|
Reported Diluted
EPS
|
$
(0.25)
|
|
$
(0.31)
|
|
Impact of adjustments
on diluted earnings per share
|
0.34
|
|
0.27
|
|
Adjusted Diluted
EPS
|
$
0.09
|
|
$
(0.04)
|
|
|
|
|
|
Adjusted weighted
average number of common shares outstanding:
|
|
|
|
|
Basic
|
235.6
|
|
230.2
|
|
Diluted
|
240.4
|
|
230.2
|
|
|
|
(1)
|
Represents the tax
impact of the adjustments to net income attributable to Lions Gate
Entertainment Corp. shareholders, calculated using the applicable
effective tax rate of the adjustment.
|
|
|
|
(2)
|
Represents the
noncontrolling interest impact of the adjustments related to
subsidiaries that are not wholly owned.
|
|
|
|
LIONS GATE
ENTERTAINMENT CORP.
RECONCILIATION OF
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES
TO ADJUSTED FREE
CASH FLOW
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
$
(158.9)
|
|
$
29.2
|
|
Capital
expenditures
|
(9.0)
|
|
(8.9)
|
|
Net borrowings under
and (repayment) of production and related
loans(1):
|
|
|
|
|
Production loans and
programming notes
|
68.7
|
|
0.5
|
|
Production tax credit
facility
|
(0.2)
|
|
3.1
|
|
Payments on impaired
content in territories exited or to be
exited(2)
|
10.5
|
|
10.9
|
|
Adjusted Free Cash
Flow
|
$
(88.9)
|
|
$
34.8
|
________________
|
(1)
|
See "Reconciliation for
Non-GAAP Adjustments for Net Borrowings Under and (Repayment) of
Production and Related Loans" for reconciliation to the most
directly comparable GAAP financial measure.
|
|
|
|
(2)
|
Represents cash
payments made on impaired content in territories exited or to be
exited under the LIONSGATE+ international
restructuring.
|
|
|
LIONS GATE ENTERTAINMENT CORP.
RECONCILIATION OF NON-GAAP ADJUSTMENTS FOR NET
BORROWINGS UNDER AND REPAYMENT OF PRODUCTION AND RELATED
LOANS
The following tables reconcile the non-GAAP adjustments for net
borrowings under and (repayment) of production and related loans to
the changes in the related balance sheet amounts and the
consolidated statement of cash flows:
|
Three Months Ended
June 30, 2024
|
|
Non-GAAP
Adjustments to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and Statement of Cash Flows Amounts
|
|
Production Loans and
Programming Notes
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited,
amounts in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,938.0
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
524.9
|
|
$
12.5
|
|
$
99.5
|
|
636.9
|
|
Repayments
|
(459.9)
|
|
(12.7)
|
|
(85.2)
|
|
(557.8)
|
|
Adjustment related to
net payments on loans outstanding prior to acquisition of
eOne
|
3.7
|
|
—
|
|
—
|
|
|
|
$
68.7
|
|
$
(0.2)
|
|
$
14.3
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
2,022.4
|
|
Three Months Ended
June 30, 2023
|
|
Non-GAAP
Adjustments to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and Statement of Cash Flows Amounts
|
|
Production Loans and
Programming Notes
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited,
amounts in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
2,023.6
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
397.6
|
|
$
15.8
|
|
$ 156.5
|
|
569.9
|
|
Repayments
|
(397.1)
|
|
(12.7)
|
|
(13.9)
|
|
(423.7)
|
|
$
0.5
|
|
$
3.1
|
|
$ 142.6
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
2,172.8
|
LIONS GATE ENTERTAINMENT CORP.
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents the following
important financial measures utilized by Lions Gate Entertainment
Corp. (the "Company," "we," "us" or "our") that are not all
financial measures defined by generally accepted accounting
principles ("GAAP"). The Company uses non-GAAP financial measures,
among other measures, to evaluate the operating performance of our
business. These non-GAAP financial measures are in addition to, not
a substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP.
Adjusted OIBDA: Adjusted OIBDA is
defined as operating income (loss) before adjusted depreciation and
amortization ("OIBDA"), adjusted for adjusted share-based
compensation ("adjusted SBC"), purchase accounting and related
adjustments, restructuring and other costs, certain charges
(benefits) related to the COVID-19 global pandemic, certain
programming and content charges as a result of management changes
and/or changes in strategy, and unusual gains or losses (such as
goodwill and intangible asset impairment), when applicable.
- Adjusted depreciation and amortization represents depreciation
and amortization as presented on our consolidated statement of
operations, less the depreciation and amortization related to the
amortization of purchase accounting and related adjustments
associated with recent acquisitions. Accordingly, the full impact
of the purchase accounting is included in the adjustment for
"purchase accounting and related adjustments", described
below.
- Adjusted share-based compensation represents share-based
compensation excluding the impact of the acceleration of certain
vesting schedules for equity awards pursuant to certain severance
arrangements, which are included in restructuring and other
expenses, when applicable.
- Restructuring and other includes restructuring and severance
costs, certain transaction and other costs, and certain unusual
items, when applicable.
- COVID-19 related charges or benefits include incremental costs
associated with the pausing and restarting of productions including
paying/hiring certain cast and crew, maintaining idle facilities
and equipment costs, and when applicable, certain motion picture
and television impairments and development charges associated with
changes in performance expectations or the feasibility of
completing the project resulting from circumstances associated with
the COVID-19 global pandemic, net of insurance recoveries, which
are included in direct operating expense, when applicable. In
addition, the costs include early or contractual marketing spends
for film releases and events that have been canceled or delayed and
will provide no economic benefit, which are included in
distribution and marketing expense, when applicable.
- Programming and content charges include certain charges as a
result of changes in management and/or changes in programming and
content strategy, which are included in direct operating expenses,
when applicable.
- Purchase accounting and related adjustments primarily represent
the amortization of non-cash fair value adjustments to certain
assets acquired in recent acquisitions. These adjustments include
the accretion of the noncontrolling interest discount related to
Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge
for the amortization of the recoupable portion of the purchase
price and the expense associated with the noncontrolling equity
interests in the distributable earnings related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense.
Adjusted OIBDA is
calculated similar to how the Company defines segment profit and
manages and evaluates its segment operations. Segment profit also
excludes corporate general and administrative expense.
Total Segment Profit and Studio Business
Segment Profit and Studio Business Adjusted OIBDA: We
present the sum of our Motion Picture and Television Production
segment profit as our "Studio Business" segment profit, and we
define our Studio Business Adjusted OIBDA as Studio Business
segment profit less corporate general and administrative expenses.
Total segment profit and Studio Business segment profit and Studio
Business Adjusted OIBDA, when presented outside of the segment
information and reconciliations included in our consolidated
financial statements, is considered a non-GAAP financial measure,
and should be considered in addition to, not as a substitute for,
or superior to, measures of financial performance prepared in
accordance with United States GAAP. We use this non-GAAP measure,
among other measures, to evaluate the aggregate operating
performance of our business.
The Company believes the presentation of total segment profit
and Studio Business segment profit is relevant and useful for
investors because it allows investors to view total segment
performance in a manner similar to the primary method used by the
Company's management and enables them to understand the fundamental
performance of the Company's businesses before non-operating items.
Total segment profit and Studio Business segment profit is
considered an important measure of the Company's performance
because it reflects the aggregate profit contribution from the
Company's segments, both in total and for the Studio Business and
represents a measure, consistent with our segment profit, that
eliminates amounts that, in management's opinion, do not
necessarily reflect the fundamental performance of the Company's
businesses, are infrequent in occurrence, and in some cases are
non-cash expenses. Not all companies calculate segment profit or
total segment profit in the same manner, and segment profit and
total segment profit as defined by the Company may not be
comparable to similarly titled measures presented by other
companies due to differences in the methods of calculation and
excluded items.
Adjusted Free Cash Flow: Free cash flow is
typically defined as net cash flows provided by (used in) operating
activities, less capital expenditures. The Company defines Adjusted
Free Cash Flow as net cash flows provided by (used in) operating
activities, less capital expenditures, plus or minus the net
increase or decrease in production and related loans (which
includes our production tax credit facility), plus or minus certain
unusual or non-recurring items, such as insurance recoveries on
prior shareholder litigation, proceeds from the termination of
interest rate swaps, and payments on impaired content in
territories exited or to be exited.
The adjustment for the production and related loans, exclusive
of our production tax credit facility, is made because the GAAP
based cash flows from operations reflects a non-cash reduction of
cash flows for the cost of films and television programs prior to
the time the Company pays for the film or television program
through the payment of the associated production or related loan
which occurs at or near completion of the production, or in some
cases, over the period revenues and cash receipts are being
generated, as more fully described below.
The cost of producing films and television programs, which is
reflected as a reduction of the GAAP based cash flows provided by
(used in) operating activities, is often financed through
production loans. The adjustment for production and related loans
is made in order to better align the timing of the cash flows
associated with producing films and television programs with the
timing of the repayment of the production loans, which is
consistent with how management views its production cash spend and
manages the Company's cash flows and working capital needs.
Borrowings on production loans offset the spend on investment in
films reflected in the GAAP based cash flows provided by (used in)
operating activities and thus increase the Adjusted Free Cash Flows
as compared to the GAAP based cash flows provided by (used in)
operating activities and subsequent payments on production loans
reflect the payment for the production of the film or TV program
and reduce Adjusted Free Cash Flows as compared to the GAAP based
cash flows provided by (used in) operating activities.
The adjustment for the production tax credit facility is made to
better reflect the timing of the cash requirements of the
production, since a portion of the amounts expended initially are
later refunded through the receipt of the tax credit, as more fully
described below. The production tax credit facility reduces the
timing difference between the payments for production cost and the
receipt of the tax credit and thus reflects the cash cost of the
film or television program at or near the time the film or
television program is produced and completed.
Part of the cost of a film or television program is effectively
funded through obtaining government incentives, however, the
incentives are not received until a future period which could be a
few years after the completion of the film. The tax credit facility
reflects borrowings collateralized by the tax credits to be
received in the future and thus by including these borrowings in
Adjusted Free Cash Flow it has the effect of better aligning the
receipt of the tax credits with the timing of the production and
completion of the film and television programs, which is consistent
with how management views its production cash spend and manages the
Company's cash flows and working capital needs. Borrowings under
the tax credit facility reduce the cash spend reflected in the GAAP
based cash flows provided by (used in) operating activities and
thus increase adjusted free cash flows and payments on the tax
credit facility offset the tax credit receivable collection
reflected in the GAAP based cash flows provided by (used in)
operating activities and reduce adjusted free cash flows as
compared to the GAAP based cash flows provided by (used in)
operating activities.
The Company believes that it is more meaningful to reflect the
impact of the payment for these films and television programs when
the payments are made under the production loans and the receipt of
the tax credit when the film is being produced in its Adjusted Free
Cash Flow.
The adjustment for the payments on impaired content represents
cash payments made on impaired content in territories exited or to
be exited under the LIONSGATE+ international restructuring. The
adjustment is made because these cash payments relate to content in
territories the Company has exited or is exiting, and therefore the
cash payments are not reflective of the ongoing operations of the
Company.
Adjusted Net Income (Loss) Attributable to
Lions Gate Entertainment Corp.
Shareholders: Adjusted net income (loss)
attributable to Lions Gate Entertainment Corp. shareholders is
defined as net income (loss) attributable to Lions Gate
Entertainment Corp. shareholders, adjusted for share-based
compensation, purchase accounting and related adjustments,
restructuring and other items, insurance recoveries on prior
shareholder litigation and net gains or losses on investments and
other, gain or loss on extinguishment of debt, certain programming
and content charges, COVID-19 related charges (benefit), and
unusual gains or losses (such as goodwill and intangible asset
impairment), when applicable, as described in the Adjusted OIBDA
definition, net of the tax effect of the adjustments at the
applicable effective tax rate for each adjustment and net of the
impact of the adjustments on noncontrolling interest.
Adjusted Basic and Diluted EPS: Adjusted
basic earnings (loss) per share is defined as adjusted net income
(loss) attributable to Lions Gate Entertainment Corp. shareholders
divided by the weighted average shares outstanding. Diluted EPS is
similar to basic EPS but is adjusted for the effects of securities
that are diluted based on the level of adjusted net income (loss),
similar to GAAP.
Overall: These measures are non-GAAP
financial measures as defined in Regulation G promulgated by the
SEC and are in addition to, not a substitute for, or superior to,
measures of financial performance prepared in accordance with
United States GAAP.
We use these non-GAAP measures, among other measures, to
evaluate the operating performance of our business. We believe
these measures provide useful information to investors regarding
our results of operations and cash flows before non-operating
items. Adjusted OIBDA is considered an important measure of the
Company's performance because this measure eliminates amounts that,
in management's opinion, do not necessarily reflect the fundamental
performance of the Company's businesses, are infrequent in
occurrence, and in some cases are non-cash expenses. Adjusted Free
Cash Flow is considered an important measure of the Company's
liquidity because it provides information about the ability of the
Company to reduce net corporate debt, make strategic investments,
dividends and share repurchases. Adjusted Net Income (Loss)
Attributable to Lions Gate Entertainment Corp. Shareholders and
Adjusted EPS are considered important measures of the Company's
business operations as, similar to Adjusted OIBDA, these measures
eliminate amounts that, in management's opinion, do not necessarily
reflect the fundamental performance of the Company's
businesses.
These non-GAAP measures are commonly used in the
entertainment industry and by financial analysts and others who
follow the industry to measure operating performance. However, not
all companies calculate these measures in the same manner and the
measures as presented may not be comparable to similarly titled
measures presented by other companies due to differences in the
methods of calculation and excluded items.
A general limitation of these non-GAAP financial measures is
that they are not prepared in accordance with U.S. generally
accepted accounting principles. These measures should be reviewed
in conjunction with the relevant GAAP financial measures and are
not presented as alternative measures of operating income, cash
flow, net income (loss), or earnings (loss) per share as determined
in accordance with GAAP. Reconciliations of the adjusted metrics
utilized to their corresponding GAAP metrics are provided
below.
|
LIONSGATE STUDIOS
CORP.
FINANCIAL
INFORMATION
LIONSGATE STUDIOS
CORP.
CONSOLIDATED
BALANCE SHEETS
|
|
June 30,
2024
|
|
March 31,
2024
|
|
(Unaudited,
amounts in millions)
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
167.2
|
|
$
277.0
|
|
Accounts receivable,
net
|
578.0
|
|
688.6
|
|
Due from Starz
Business
|
64.4
|
|
33.4
|
|
Other current
assets
|
373.0
|
|
373.1
|
|
Total current
assets
|
1,182.6
|
|
1,372.1
|
|
Investment in films and
television programs, net
|
2,345.6
|
|
1,929.0
|
|
Property and equipment,
net
|
34.3
|
|
37.3
|
|
Investments
|
77.7
|
|
74.8
|
|
Intangible assets,
net
|
24.4
|
|
25.7
|
|
Goodwill
|
812.1
|
|
811.2
|
|
Other assets
|
789.1
|
|
852.9
|
|
Total
assets
|
$
5,265.8
|
|
$
5,103.0
|
|
LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
231.1
|
|
$
246.7
|
|
Content related
payables
|
52.8
|
|
41.4
|
|
Other accrued
liabilities
|
273.1
|
|
282.4
|
|
Participations and
residuals
|
578.2
|
|
647.8
|
|
Film related
obligations
|
1,612.1
|
|
1,393.1
|
|
Debt - short term
portion
|
716.3
|
|
860.3
|
|
Deferred
revenue
|
388.7
|
|
170.6
|
|
Total current
liabilities
|
3,852.3
|
|
3,642.3
|
|
Debt
|
847.4
|
|
923.0
|
|
Participations and
residuals
|
442.4
|
|
435.1
|
|
Film related
obligations
|
356.5
|
|
544.9
|
|
Other
liabilities
|
440.1
|
|
452.5
|
|
Deferred
revenue
|
116.8
|
|
118.4
|
|
Deferred tax
liabilities
|
13.3
|
|
13.7
|
|
Total
liabilities
|
6,068.8
|
|
6,129.9
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
123.0
|
|
123.3
|
|
|
|
|
|
EQUITY
(DEFICIT)
|
|
|
|
|
Common shares, no par
value, unlimited authorized, 288.7 shares issued (March 31, 2024-
253.4 shares issued)
|
289.3
|
|
—
|
|
Accumulated
deficit
|
(1,339.2)
|
|
(1,249.1)
|
|
Accumulated other
comprehensive income
|
89.1
|
|
96.7
|
|
Total Lionsgate
Studios Corp shareholders' equity (deficit)
|
(960.8)
|
|
(1,152.4)
|
|
Noncontrolling
interests
|
34.8
|
|
2.2
|
|
Total equity
(deficit)
|
(926.0)
|
|
(1,150.2)
|
|
Total liabilities,
redeemable noncontrolling interests and equity (deficit)
|
$
5,265.8
|
|
$
5,103.0
|
|
LIONSGATE STUDIOS
CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions, except per share amounts)
|
|
Revenues:
|
|
|
|
|
Revenue
|
$
484.6
|
|
$
527.5
|
|
Revenue - Starz
Business
|
103.8
|
|
97.5
|
|
Total
revenues
|
588.4
|
|
625.0
|
|
Expenses:
|
|
|
|
|
Direct
operating
|
355.8
|
|
362.1
|
|
Distribution and
marketing
|
92.6
|
|
129.2
|
|
General and
administration
|
92.1
|
|
88.4
|
|
Depreciation and
amortization
|
4.6
|
|
4.2
|
|
Restructuring and
other
|
27.7
|
|
4.1
|
|
Total
expenses
|
572.8
|
|
588.0
|
|
Operating
income
|
15.6
|
|
37.0
|
|
Interest
expense
|
(58.6)
|
|
(49.9)
|
|
Interest and other
income
|
5.1
|
|
2.2
|
|
Other
expense
|
(1.4)
|
|
(3.8)
|
|
Loss on extinguishment
of debt
|
(1.0)
|
|
—
|
|
Equity interests income
(loss)
|
0.9
|
|
(0.3)
|
|
Loss before income
taxes
|
(39.4)
|
|
(14.8)
|
|
Income tax
provision
|
(5.0)
|
|
(6.6)
|
|
Net
loss
|
(44.4)
|
|
(21.4)
|
|
Less: Net loss
attributable to noncontrolling interests
|
0.9
|
|
0.9
|
|
Net loss
attributable to Lionsgate Studios Corp. shareholders
|
$
(43.5)
|
|
$
(20.5)
|
|
|
|
|
|
Per share
information attributable to Lionsgate Studios Corp.
shareholders:
|
|
|
|
|
Basic net loss per
common share
|
$
(0.16)
|
|
$
(0.08)
|
|
Diluted net loss per
common share
|
$
(0.16)
|
|
$
(0.08)
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
272.4
|
|
253.4
|
|
Diluted
|
272.4
|
|
253.4
|
|
LIONSGATE STUDIOS
CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Operating
Activities:
|
|
|
|
|
Net loss
|
$
(44.4)
|
|
$
(21.4)
|
|
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
4.6
|
|
4.2
|
|
Amortization of films
and television programs
|
230.5
|
|
254.1
|
|
Other
impairments
|
18.0
|
|
—
|
|
Amortization of debt
financing costs and other non-cash interest
|
7.9
|
|
6.0
|
|
Non-cash share-based
compensation
|
12.6
|
|
12.2
|
|
Other
amortization
|
9.9
|
|
9.2
|
|
Loss on extinguishment
of debt
|
1.0
|
|
—
|
|
Equity interests
(income) loss
|
(0.9)
|
|
0.3
|
|
Deferred income
taxes
|
(0.4)
|
|
0.2
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts receivable,
net
|
167.7
|
|
82.5
|
|
Investment in films
and television programs, net
|
(599.4)
|
|
(374.1)
|
|
Other
assets
|
(11.1)
|
|
(1.2)
|
|
Accounts payable and
accrued liabilities
|
(37.0)
|
|
(14.5)
|
|
Participations and
residuals
|
(64.4)
|
|
(6.6)
|
|
Content related
payables
|
6.7
|
|
(5.2)
|
|
Deferred
revenue
|
212.1
|
|
38.2
|
|
Due from Starz
Business
|
(31.0)
|
|
53.8
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
(117.6)
|
|
37.7
|
|
Investing
Activities:
|
|
|
|
|
Investment in equity
method investees and other
|
(2.0)
|
|
—
|
|
Acquisition of assets
(film library and related assets)
|
(35.0)
|
|
—
|
|
Increase in loans
receivable
|
—
|
|
(0.9)
|
|
Purchases of accounts
receivables held for collateral
|
—
|
|
(49.8)
|
|
Receipts of accounts
receivables held for collateral
|
—
|
|
46.3
|
|
Capital
expenditures
|
(4.1)
|
|
(1.4)
|
|
Net Cash Flows Used
In Investing Activities
|
(41.1)
|
|
(5.8)
|
|
Financing
Activities:
|
|
|
|
|
Debt - borrowings, net
of debt issuance and redemption costs
|
879.5
|
|
490.0
|
|
Debt - repurchases and
repayments
|
(1,066.7)
|
|
(498.7)
|
|
Film related
obligations - borrowings
|
583.2
|
|
507.7
|
|
Film related
obligations - repayments
|
(557.9)
|
|
(340.9)
|
|
Purchase of
noncontrolling interest
|
—
|
|
(0.6)
|
|
Distributions to
noncontrolling interest
|
(0.6)
|
|
—
|
|
Parent net
investment
|
(90.4)
|
|
(140.2)
|
|
Proceeds from Business
Combination
|
294.0
|
|
—
|
|
Net Cash Flows
Provided By Financing Activities
|
41.1
|
|
17.3
|
|
Net Change In Cash,
Cash Equivalents and Restricted Cash
|
(117.6)
|
|
49.2
|
|
Foreign Exchange
Effects on Cash, Cash Equivalents and Restricted
Cash
|
(0.2)
|
|
(0.8)
|
|
Cash, Cash
Equivalents and Restricted Cash - Beginning Of
Period
|
334.4
|
|
251.4
|
|
Cash, Cash
Equivalents and Restricted Cash - End Of Period
|
$
216.6
|
|
$
299.8
|
LIONSGATE STUDIOS CORP.
SEGMENT INFORMATION
Lionsgate Studios' reportable segments have been determined
based on the distinct nature of their operations, the Company's
internal management structure, and the financial information that
is evaluated regularly by the Company's chief operating decision
maker.
Lionsgate Studios has two reportable business segments: (1)
Motion Picture, (2) Television Production.
Motion Picture. Motion Picture consists of the
development and production of feature films, acquisition of North
American and worldwide distribution rights, North American
theatrical, home entertainment and television distribution of
feature films produced and acquired, and worldwide licensing of
distribution rights to feature films produced and acquired.
Television Production. Television Production consists of
the development, production and worldwide distribution of
television productions including television series, television
movies and mini-series, and non-fiction programming. Television
Production includes the licensing of Starz original series
productions to the Starz Business, and the ancillary market
distribution of Starz original productions and licensed product.
Additionally, the Television Production segment includes the
results of operations of 3 Arts Entertainment.
Segment information is presented in the tables below. The Motion
Picture and Television Production segments include the results of
operations of eOne from the acquisition date of December 27, 2023.
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Segment
revenues
|
|
|
|
|
Motion
Picture
|
$
347.3
|
|
$
406.5
|
|
Television
Production
|
241.1
|
|
218.5
|
|
Total
revenue
|
$
588.4
|
|
$
625.0
|
|
Segment
profit
|
|
|
|
|
Motion
Picture
|
$
86.1
|
|
$
69.2
|
|
Television
Production
|
10.7
|
|
22.9
|
|
Total segment
profit(1)
|
96.8
|
|
92.1
|
|
Corporate general and
administrative expenses(2)
|
(33.3)
|
|
(30.4)
|
|
Unallocated rent cost
included in direct operating expense(3)
|
(5.2)
|
|
—
|
|
Adjusted
OIBDA(1)
|
$
58.3
|
|
$
61.7
|
|
|
|
(1)
|
See "Use of Non-GAAP
Financial Measures" for the definition of Total Segment Profit, and
Adjusted OIBDA and further below for the reconciliation to the most
directly comparable GAAP financial measure.
|
|
(2)
|
Corporate general and
administrative expenses represent the corporate general and
administrative expenses allocated to the Studio Business and
included in the historical combined or consolidated financial
statements, plus amounts that were allocated to Starz prior to the
separation such that the total corporate general and administrative
expenses reflect the same amounts as historically presented in the
Lionsgate consolidated corporate general and administrative
expenses less any allocations to Starz post the separation pursuant
to the shared services and overhead sharing agreement. The table
below breaks out the components of the corporate general and
administrative expenses:
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Corporate general and
administrative expense historically allocated to the Studio
Business and included in the historical unaudited combined or
consolidated financial statements of Lionsgate Studios
Corp.
|
$
31.0
|
|
$
24.5
|
|
Adjustment to add the
corporate general and administrative expense historically allocated
to the Starz Business
|
2.3
|
|
5.9
|
|
Corporate general and
administrative expenses
|
$
33.3
|
|
$
30.4
|
The following table reconciles corporate general and administrative
expense allocated to the Studio Business to the Studio Business's
total consolidated general and administration expense:
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
General and
administrative expenses
|
|
|
|
|
Corporate general and
administrative expense historically allocated to the Studio
Business
|
$
31.0
|
|
$
24.5
|
|
Segment general and
administrative expenses
|
46.4
|
|
42.1
|
|
Share-based
compensation expense included in general and administrative
expense
|
12.6
|
|
11.7
|
|
Purchase accounting
and related adjustments
|
2.1
|
|
10.1
|
|
$
92.1
|
|
$
88.4
|
|
(3)
|
Amounts represent rent
cost for production facilities that were unutilized as a result of
the industry strikes, and therefore such amounts are not allocated
to the segments.
|
Lionsgate Studios' primary measure of segment performance is
segment profit. Segment profit is defined as gross contribution
(revenues, less direct operating and distribution and marketing
expense) less segment general and administration expenses. Segment
profit excludes, when applicable, corporate and allocated general
and administrative expense, restructuring and other costs,
share-based compensation, certain charges related to the COVID-19
global pandemic, and purchase accounting and related adjustments.
The Company believes the presentation of segment profit is relevant
and useful for investors because it allows investors to view
segment performance in a manner similar to the primary method used
by Lionsgate Studios' management and enables them to understand the
fundamental performance of the Company's businesses. Segment profit
is a GAAP financial measure.
We also present above our total segment profit for all of our
segments. Total segment profit, when presented outside of the
segment information and reconciliations included in the notes to
our combined financial statements, is considered a non-GAAP
financial measure, and should be considered in addition to, not as
a substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP. We use this
non-GAAP measure, among other measures, to evaluate the aggregate
operating performance of our business.
LIONSGATE STUDIOS CORP.
RECONCILIATION OF OPERATING INCOME
TO ADJUSTED OIBDA AND TOTAL SEGMENT
PROFIT
The following table reconciles the GAAP measure, operating
income to the non-GAAP measures, Total Segment Profit and Adjusted
OIBDA:
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Operating
income
|
$
15.6
|
|
$
37.0
|
|
Adjusted depreciation
and amortization(1)
|
3.6
|
|
2.8
|
|
Restructuring and
other(2)
|
27.7
|
|
4.1
|
|
COVID-19 related
charges (benefit)(3)
|
(2.0)
|
|
0.1
|
|
Content
charges(4)
|
—
|
|
0.4
|
|
Unallocated rent cost
included in direct operating expense(5)
|
5.2
|
|
—
|
|
Adjusted share-based
compensation expense(6)
|
12.6
|
|
11.7
|
|
Purchase accounting
and related adjustments(7)
|
3.1
|
|
11.5
|
|
Corporate general and
administrative expense historically allocated to the Studio
Business
|
31.0
|
|
24.5
|
|
Total Segment
Profit
|
$
96.8
|
|
$
92.1
|
|
Corporate general and
administrative expenses(8)
|
(33.3)
|
|
(30.4)
|
|
Unallocated rent cost
included in direct operating expense(5)
|
(5.2)
|
|
—
|
|
Adjusted
OIBDA(1)
|
$
58.3
|
|
$
61.7
|
|
|
|
(1)
|
Adjusted depreciation
and amortization represents depreciation and amortization as
presented on our combined statements of operations less the
depreciation and amortization related to the non-cash fair value
adjustments to property and equipment and intangible assets
acquired in acquisitions which are included in the purchase
accounting and related adjustments line item above, as shown in the
table below:
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Depreciation and
amortization
|
$
4.6
|
|
$
4.2
|
|
Less: Amount included
in purchase accounting and related adjustments
|
(1.0)
|
|
(1.4)
|
|
Adjusted depreciation
and amortization
|
$
3.6
|
|
$
2.8
|
|
|
|
(2)
|
Restructuring and other
includes restructuring and severance costs, certain transaction and
other costs, and certain unusual items, when applicable, as shown
in the table below:
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Restructuring and
other:
|
|
|
|
|
Other
impairments(a)
|
$
18.0
|
|
$
—
|
|
Severance(b)
|
|
|
|
|
Cash
|
3.0
|
|
2.0
|
|
Accelerated vesting on
equity awards
|
—
|
|
0.5
|
|
Total severance
costs
|
3.0
|
|
2.5
|
|
Transaction and other
costs(c)
|
6.7
|
|
1.6
|
|
27.7
|
|
4.1
|
|
|
|
|
(a)
|
Amounts in the three
months ended June 30, 2024 relate to impairments of certain
operating lease right-of-use and leasehold improvement assets
related to the Television Production segment associated with
facility leases that will no longer be utilized by the Company
primarily related to the integration of eOne.
|
|
|
|
|
(b)
|
Severance costs were
primarily related to restructuring activities and other cost-saving
initiatives.
|
|
|
|
|
(c)
|
Transaction and other
costs in the three months ended June 30, 2024 and 2023 reflect
transaction, integration and legal costs associated with certain
strategic transactions, and restructuring activities and also
include costs and benefits associated with legal and other
matters.
|
|
|
|
(3)
|
Amounts represent the
incremental costs, if any, included in direct operating expense
resulting from circumstances associated with the COVID-19 global
pandemic, net of insurance recoveries. For the three months ended
June 30, 2024, insurance recoveries exceeded the incremental costs
expensed, resulting in a net benefit included in direct operating
expense. These charges (benefits) are excluded from segment
operating results.
|
|
|
|
(4)
|
Amounts represent
certain unusual content charges. These charges are excluded from
segment results and included in amortization of investment in film
and television programs in direct operating expense on the
unaudited condensed consolidated statement of
operations.
|
|
|
|
(5)
|
Amounts represent rent
cost for production facilities that were unutilized as a result of
the industry strikes, and therefore such amounts are not allocated
to the segments.
|
|
|
|
(6)
|
The following table
reconciles total share-based compensation expense to adjusted
share-based compensation expense:
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Total share-based
compensation expense
|
$
12.6
|
|
$
12.2
|
|
Less: Amount included
in restructuring and other(a)
|
—
|
|
(0.5)
|
|
Adjusted share-based
compensation
|
$
12.6
|
|
$
11.7
|
|
|
|
|
(a)
|
Represents share-based
compensation expense included in restructuring and other expenses
reflecting the impact of the acceleration of certain vesting
schedules for equity awards pursuant to certain severance
arrangements.
|
|
|
|
(7)
|
The following sets
forth the amounts included in each line item in the financial
statements:
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Purchase accounting and
related adjustments:
|
|
|
|
|
General and
administrative expense(a)
|
$
2.1
|
|
$
10.1
|
|
Depreciation and
amortization
|
1.0
|
|
1.4
|
|
$
3.1
|
|
$
11.5
|
|
(a)
|
These adjustments
include the expense associated with the noncontrolling equity
interests in the distributable earnings related to 3 Arts
Entertainment, and the amortization of the recoupable portion of
the purchase price (through May 2023) related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense, as presented in
the table below. The noncontrolling equity interests in the
distributable earnings of 3 Arts Entertainment are reflected as an
expense rather than noncontrolling interest in the unaudited
condensed consolidated statements of operations due to the
relationship to continued employment.
|
|
|
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Amortization of
recoupable portion of the purchase price
|
$
—
|
|
$
1.3
|
|
Noncontrolling equity
interest in distributable earnings
|
2.1
|
|
8.8
|
|
$
2.1
|
|
$
10.1
|
|
(8)
|
Corporate general and
administrative expenses represent the corporate general and
administrative expenses allocated to the Studio Business and
included in the historical combined or consolidated financial
statements, plus amounts that were allocated to Starz prior to
the separation such that the total corporate general and
administrative expenses reflect the same amounts as historically
presented in the Lionsgate consolidated corporate general and
administrative expenses less any allocations to Starz post the
separation pursuant to the shared services and overhead sharing
agreement, see footnote (2) in Segment Information above for
further detail.
|
|
LIONSGATE STUDIOS
CORP.
RECONCILIATION OF
NET LOSS ATTRIBUTABLE TO LIONSGATE STUDIOS CORP. SHAREHOLDERS TO
ADJUSTED NET LOSS ATTRIBUTABLE TO LIONSGATE STUDIOS CORP.
SHAREHOLDERS, AND BASIC AND DILUTED EPS TO ADJUSTED BASIC AND
DILUTED EPS
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions,
except per share
amounts)
|
|
Reported Net Loss
Attributable to Lionsgate Studios Corp. Shareholders
|
$
(43.5)
|
|
$
(20.5)
|
|
Adjusted share-based
compensation expense
|
12.6
|
|
11.7
|
|
Restructuring and
other
|
27.7
|
|
4.1
|
|
COVID-19 related
charges (benefit)
|
(2.0)
|
|
0.1
|
|
Content
charges
|
—
|
|
0.4
|
|
Purchase accounting
and related adjustments
|
3.1
|
|
11.5
|
|
(Gain) loss on
extinguishment of debt
|
1.0
|
|
—
|
|
Tax impact of above
items(1)
|
—
|
|
(0.1)
|
|
Noncontrolling
interest impact of above items(2)
|
(2.7)
|
|
(10.5)
|
|
Adjusted Net Loss
Attributable to Lionsgate Studios Corp. Shareholders
|
$
(3.8)
|
|
$
(3.3)
|
|
|
|
|
|
|
|
|
|
Reported Basic
EPS
|
$
(0.16)
|
|
$
(0.08)
|
|
Impact of adjustments
on basic earnings per share
|
0.15
|
|
0.07
|
|
Adjusted Basic
EPS
|
$
(0.01)
|
|
$
(0.01)
|
|
|
|
|
|
|
|
|
|
Reported Diluted
EPS
|
$
(0.16)
|
|
$
(0.08)
|
|
Impact of adjustments
on diluted earnings per share
|
0.15
|
|
0.07
|
|
Adjusted Diluted
EPS
|
$
(0.01)
|
|
$
(0.01)
|
|
|
|
|
|
Adjusted weighted
average number of common shares outstanding:
|
|
|
|
|
Basic
|
272.4
|
|
253.4
|
|
Diluted
|
272.4
|
|
253.4
|
|
|
|
(1)
|
Represents the tax
impact of the adjustments to net income attributable
to Lionsgate Studios Corp. shareholders, calculated using the
applicable effective tax rate of the adjustment.
|
|
|
|
(2)
|
Represents the
noncontrolling interest impact of the adjustments related to
subsidiaries that are not wholly owned.
|
|
LIONSGATE STUDIOS
CORP.
RECONCILIATION OF
NET CASH FLOWS PROVIDED BY (USED IN) OPERATING
ACTIVITIES
TO ADJUSTED FREE
CASH FLOW
|
|
Three Months
Ended
|
|
June
30,
|
|
2024
|
|
2023
|
|
(Unaudited,
amounts in millions)
|
|
Net Cash Flows
Provided By (Used In) Operating Activities
|
$
(117.6)
|
|
$
37.7
|
|
Capital
expenditures
|
(4.1)
|
|
(1.4)
|
|
Net borrowings under
and (repayment) of production and related
loans(1):
|
|
|
|
|
Production
loans
|
14.9
|
|
21.1
|
|
Production tax credit
facility
|
(0.2)
|
|
3.1
|
|
Adjusted Free Cash
Flow
|
$
(107.0)
|
|
$
60.5
|
|
|
|
(1)
|
See "Reconciliation for
Non-GAAP Adjustments for Net Borrowings Under and (Repayment) of
Production and Related Loans" for reconciliation to the most
directly comparable GAAP financial measure.
|
|
|
LIONSGATE STUDIOS CORP.
RECONCILIATION OF NON-GAAP ADJUSTMENTS FOR NET
BORROWINGS UNDER AND REPAYMENT OF PRODUCTION AND RELATED
LOANS
The following tables reconcile the non-GAAP adjustments for net
borrowings under and (repayment) of production and related loans to
the changes in the related balance sheet amounts and the
consolidated statement of cash flows:
|
Three Months Ended
June 30, 2024
|
|
Non-GAAP
Adjustments to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and Statement of Cash Flows Amounts
|
|
Production
Loans
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited,
amounts in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,938.0
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
471.1
|
|
$
12.5
|
|
$
99.6
|
|
583.2
|
|
Repayments
|
(459.9)
|
|
(12.7)
|
|
(85.3)
|
|
(557.9)
|
|
Adjustment related to
net payments on loans outstanding prior to acquisition of
eOne
|
3.7
|
|
—
|
|
—
|
|
|
|
$
14.9
|
|
$
(0.2)
|
|
$
14.3
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
1,968.6
|
|
Three Months Ended
June 30, 2023
|
|
Non-GAAP
Adjustments to Adjusted Free Cash Flow
|
|
|
|
Total per GAAP
Balance Sheet and Statement of Cash Flows Amounts
|
|
Production
Loans
|
|
Production Tax Credit
Facility
|
|
Other Film Related
Obligations
|
|
|
(Unaudited,
amounts in millions)
|
|
Film related
obligations at beginning of period (current and
non-current)
|
|
|
|
|
|
|
$
1,940.1
|
|
|
|
|
|
|
|
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
Borrowings
|
$
335.4
|
|
$
15.8
|
|
$ 156.5
|
|
507.7
|
|
Repayments
|
(314.3)
|
|
(12.7)
|
|
(13.9)
|
|
(340.9)
|
|
$
21.1
|
|
$
3.1
|
|
$ 142.6
|
|
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
Included in cash flows
provided by (used in) operating activities
|
|
|
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
Film related
obligations at end of period (current and non-current)
|
|
|
|
|
|
|
$
2,110.6
|
LIONSGATE STUDIOS CORP.
USE OF NON-GAAP FINANCIAL MEASURES
This earnings release presents the following
important financial measures utilized by Lionsgate Studios Corp.
(the "Company," "we," "us" or "our") that are not all financial
measures defined by generally accepted accounting principles
("GAAP"). The Company uses non-GAAP financial measures, among other
measures, to evaluate the operating performance of our business.
These non-GAAP financial measures are in addition to, not a
substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP.
Adjusted OIBDA: Adjusted OIBDA is
defined as operating income (loss) before adjusted depreciation and
amortization ("OIBDA"), adjusted for adjusted share-based
compensation ("adjusted SBC"), purchase accounting and related
adjustments, restructuring and other costs, certain charges
(benefits) related to the COVID-19 global pandemic, certain content
charges as a result of management changes and/or changes in
strategy, and unusual gains or losses (such as goodwill and
intangible asset impairment), when applicable.
- Adjusted depreciation and amortization represents depreciation
and amortization as presented on our combined statement of
operations, less the depreciation and amortization related to the
amortization of purchase accounting and related adjustments
associated with recent acquisitions. Accordingly, the full impact
of the purchase accounting is included in the adjustment for
"purchase accounting and related adjustments", described
below.
- Adjusted share-based compensation represents share-based
compensation excluding the impact of the acceleration of certain
vesting schedules for equity awards pursuant to certain severance
arrangements, which are included in restructuring and other
expenses, when applicable.
- Restructuring and other includes restructuring and severance
costs, certain transaction and other costs, and certain unusual
items, when applicable.
- COVID-19 related charges or benefits include incremental costs
associated with the pausing and restarting of productions including
paying/hiring certain cast and crew, maintaining idle facilities
and equipment costs, and when applicable, certain motion picture
and television impairments and development charges associated with
changes in performance expectations or the feasibility of
completing the project resulting from circumstances associated with
the COVID-19 global pandemic, net of insurance recoveries, which
are included in direct operating expense, when applicable. In
addition, the costs include early or contractual marketing spends
for film releases and events that have been canceled or delayed and
will provide no economic benefit, which are included in
distribution and marketing expense, when applicable.
- Content charges include certain charges as a result of changes
in management and/or changes in content strategy, which are
included in direct operating expenses, when applicable.
- Purchase accounting and related adjustments primarily represent
the amortization of non-cash fair value adjustments to certain
assets acquired in recent acquisitions. These adjustments include
the accretion of the noncontrolling interest discount related to
Pilgrim Media Group and 3 Arts Entertainment, the non-cash charge
for the amortization of the recoupable portion of the purchase
price and the expense associated with the noncontrolling equity
interests in the distributable earnings related to 3 Arts
Entertainment, all of which are accounted for as compensation and
are included in general and administrative expense.
Adjusted OIBDA is
calculated similar to how the Company defines segment profit and
manages and evaluates its segment operations. Adjusted OIBDA
is also adjusted to reflect the corporate general and
administrative expenses allocated to the Studio Business and
included in the historical combined or consolidated financial
statements, plus amounts that were allocated to Starz
prior to the separation such that the total corporate general
and administrative expenses reflect the same amounts as
historically presented in the Lionsgate consolidated
corporate general and administrative expenses less any allocations
to Starz post the separation pursuant to the shared
services and overhead sharing agreement. Segment profit includes
general and administrative expenses directly related to the segment
and excludes corporate general and administrative
expense.
Total Segment Profit: We present the
sum of our Motion Picture and Television Production segment profit
as our total segment profit. Total segment profit, when presented
outside of the segment information and reconciliations included in
our combined financial statements, is considered a non-GAAP
financial measure, and should be considered in addition to, not as
a substitute for, or superior to, measures of financial performance
prepared in accordance with United States GAAP. We use this
non-GAAP measure, among other measures, to evaluate the aggregate
operating performance of our business.
The Company believes the presentation of total segment profit is
relevant and useful for investors because it allows investors to
view total segment performance in a manner similar to the primary
method used by the Company's management and enables them to
understand the fundamental performance of the Company's businesses
before non-operating items. Total segment profit is considered an
important measure of the Company's performance because it reflects
the aggregate profit contribution from the Company's segments, and
represents a measure, consistent with our segment profit, that
eliminates amounts that, in management's opinion, do not
necessarily reflect the fundamental performance of the Company's
businesses, are infrequent in occurrence, and in some cases are
non-cash expenses. Not all companies calculate segment profit or
total segment profit in the same manner, and segment profit and
total segment profit as defined by the Company may not be
comparable to similarly titled measures presented by other
companies due to differences in the methods of calculation and
excluded items.
Adjusted Free Cash Flow: Free cash flow is
typically defined as net cash flows provided by (used in) operating
activities, less capital expenditures. The Company defines Adjusted
Free Cash Flow as net cash flows provided by (used in) operating
activities, less capital expenditures, plus or minus the net
increase or decrease in production and related loans (which
includes our production tax credit facility), plus or minus certain
unusual or non-recurring items, such as insurance recoveries on
prior shareholder litigation, proceeds from the termination of
interest rate swaps.
The adjustment for the production and related loans, exclusive
of our production tax credit facility, is made because the GAAP
based cash flows from operations reflects a non-cash reduction of
cash flows for the cost of films and television programs prior to
the time the Company pays for the film or television program
through the payment of the associated production or related loan
which occurs at or near completion of the production, or in some
cases, over the period revenues and cash receipts are being
generated, as more fully described below.
The cost of producing films and television programs, which is
reflected as a reduction of the GAAP based cash flows provided by
(used in) operating activities, is often financed through
production loans. The adjustment for production and related loans
is made in order to better align the timing of the cash flows
associated with producing films and television programs with the
timing of the repayment of the production loans, which is
consistent with how management views its production cash spend and
manages the Company's cash flows and working capital needs.
Borrowings on production loans offset the spend on investment in
films reflected in the GAAP based cash flows provided by (used in)
operating activities and thus increase the Adjusted Free Cash Flows
as compared to the GAAP based cash flows provided by (used in)
operating activities and subsequent payments on production loans
reflect the payment for the production of the film or TV program
and reduce Adjusted Free Cash Flows as compared to the GAAP based
cash flows provided by (used in) operating activities.
The adjustment for the production tax credit facility is made to
better reflect the timing of the cash requirements of the
production, since a portion of the amounts expended initially are
later refunded through the receipt of the tax credit, as more fully
described below. The production tax credit facility reduces the
timing difference between the payments for production cost and the
receipt of the tax credit and thus reflects the cash cost of the
film or television program at or near the time the film or
television program is produced and completed.
Part of the cost of a film or television program is effectively
funded through obtaining government incentives, however, the
incentives are not received until a future period which could be a
few years after the completion of the film. The tax credit facility
reflects borrowings collateralized by the tax credits to be
received in the future and thus by including these borrowings in
Adjusted Free Cash Flow it has the effect of better aligning the
receipt of the tax credits with the timing of the production and
completion of the film and television programs, which is consistent
with how management views its production cash spend and manages the
Company's cash flows and working capital needs. Borrowings under
the tax credit facility reduce the cash spend reflected in the GAAP
based cash flows provided by (used in) operating activities and
thus increase adjusted free cash flows and payments on the tax
credit facility offset the tax credit receivable collection
reflected in the GAAP based cash flows provided by (used in)
operating activities and reduce adjusted free cash flows as
compared to the GAAP based cash flows provided by (used in)
operating activities.
The Company believes that it is more meaningful to reflect the
impact of the payment for these films and television programs when
the payments are made under the production loans and the receipt of
the tax credit when the film is being produced in its Adjusted Free
Cash Flow.
Adjusted Net Income (Loss) Attributable to
Lionsgate Studios Corp. Shareholders: Adjusted net
income (loss) attributable to Lionsgate Studios Corp. shareholders
is defined as net income (loss) attributable to Lionsgate Studios
Corp. shareholders, adjusted for share-based compensation, purchase
accounting and related adjustments, restructuring and other items,
insurance recoveries on prior shareholder litigation and net gains
or losses on investments and other, gain or loss on extinguishment
of debt, certain content charges, COVID-19 related charges
(benefit), and unusual gains or losses, when applicable, as
described in the Adjusted OIBDA definition, net of the tax effect
of the adjustments at the applicable effective tax rate for each
adjustment and net of the impact of the adjustments on
noncontrolling interest.
Adjusted Basic and Diluted EPS: Adjusted
basic earnings (loss) per share is defined as adjusted net income
(loss) attributable to Lionsgate Studios Corp. shareholders divided
by the weighted average shares outstanding. Diluted EPS is similar
to basic EPS but is adjusted for the effects of securities that are
diluted based on the level of adjusted net income (loss), similar
to GAAP.
Overall: These measures are non-GAAP
financial measures as defined in Regulation G promulgated by the
SEC and are in addition to, not a substitute for, or superior to,
measures of financial performance prepared in accordance with
United States GAAP.
We use these non-GAAP measures, among other measures, to
evaluate the operating performance of our business. We believe
these measures provide useful information to investors regarding
our results of operations and cash flows before non-operating
items. Adjusted OIBDA is considered an important measure of the
Company's performance because this measure eliminates amounts that,
in management's opinion, do not necessarily reflect the fundamental
performance of the Company's businesses, are infrequent in
occurrence, and in some cases are non-cash expenses. Adjusted Free
Cash Flow is considered an important measure of the Company's
liquidity because it provides information about the ability of the
Company to reduce net corporate debt, make strategic investments,
dividends and share repurchases. Adjusted Net Income (Loss)
Attributable to Lionsgate Studios Corp. Shareholders and Adjusted
EPS are considered important measures of the Company's business
operations as, similar to Adjusted OIBDA, these measures eliminate
amounts that, in management's opinion, do not necessarily reflect
the fundamental performance of the Company's businesses.
These non-GAAP measures are commonly used in the
entertainment industry and by financial analysts and others who
follow the industry to measure operating performance. However, not
all companies calculate these measures in the same manner and the
measures as presented may not be comparable to similarly titled
measures presented by other companies due to differences in the
methods of calculation and excluded items.
A general limitation of these non-GAAP financial measures is
that they are not prepared in accordance with U.S. generally
accepted accounting principles. These measures should be reviewed
in conjunction with the relevant GAAP financial measures and are
not presented as alternative measures of operating income, cash
flow, net income (loss), or earnings (loss) per share as determined
in accordance with GAAP. Reconciliations of the adjusted metrics
utilized to their corresponding GAAP metrics are provided
above.
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SOURCE Lionsgate; Lionsgate Studios