Lionsgate Studios’ Earnings Call Highlights Growth and Challenges

Lionsgate Studios Corp. ((LION)) has held its Q4 earnings call. Read on for the main highlights of the call.

Lionsgate Studios Corp. recently held its earnings call, revealing a robust financial quarter marked by significant revenue growth and record-breaking performance in its library segment. While the company faces challenges in its television segment and concerns about debt levels, the overall sentiment is positive, with strategic initiatives and future projects set to drive continued success.

Separation of Lionsgate and Starz

Lionsgate announced the completion of its separation from Starz, marking a significant milestone as it began trading on the New York Stock Exchange under the ticker symbol LION. This move also involved the consolidation of two classes of stock into one, streamlining its equity structure.

Record Library Revenue

The company’s library segment achieved a record performance, generating $956 million in trailing twelve-month revenue. This success was driven by strong organic replenishment and the launch of new proprietary FAST and AVOD channels, underscoring the library’s critical role in Lionsgate’s growth strategy.

Strong Motion Picture Group Performance

Lionsgate’s Motion Picture Group reported a remarkable 28% increase in revenue year over year, reaching $526 million. The segment’s profit also hit a ten-year high of $135 million, up 65% from the previous year, highlighting the group’s strong market position and successful film releases.

Television Group Success

The Television Group secured renewals for popular series such as “Ghosts,” “The Rookie,” “The Sherri Shepherd Show,” and “Yellowjackets.” Additionally, it launched new hit shows like “The Studio” on Apple TV Plus, demonstrating its ability to produce compelling content that resonates with audiences.

Financial Performance

Overall, Lionsgate Studios reported a 22% increase in revenue year over year, totaling $1.1 billion. The company’s adjusted OIBDA reached a ten-year high, increasing by 49% to $138 million, while operating income significantly rose to $94 million, reflecting strong operational efficiency and profitability.

Decrease in TV Segment Profit

Despite the overall success, the television segment faced a 23% decline in quarterly profit year over year, attributed to tough comparisons with the previous year’s strong fourth quarter. This highlights the challenges within the TV segment that the company aims to address moving forward.

Finance and Debt Concerns

Lionsgate’s net debt stood at $1.5 billion by the end of the quarter, with a leverage ratio of 4.9 times. Although net debt was slightly reduced from $1.65 billion at separation, managing debt levels remains a priority for the company.

Michael Jackson Biopic Delay

The anticipated release of the Michael Jackson biopic has been delayed beyond fiscal 2026, which is expected to impact the financial results for that year. This delay underscores the challenges in film production timelines and their financial implications.

Forward-Looking Guidance

Lionsgate provided comprehensive guidance during the earnings call, emphasizing a 22% year-over-year revenue increase to $1.1 billion and an adjusted OIBDA of $138 million, up 49%. Operating income rose to $94 million, with a fully diluted adjusted earnings per share of $0.21. The company also highlighted strategic developments, such as the successful separation from Starz and the unveiling of a strong film slate, aimed at sustaining momentum into fiscal 2026 and positioning for robust growth in fiscal 2027.

In conclusion, Lionsgate Studios Corp.’s earnings call reflected a strong quarter with positive sentiment, driven by record library performance and robust motion picture revenue. While challenges in the television segment and debt concerns persist, the company’s strategic initiatives and future projects are poised to support continued growth and success.