Adjusted OIBDA Reaches 12-Year High
Adjusted OIBDA for the quarter was $165 million, a 12-year high and up 17% year-over-year, demonstrating improved operating profitability.
Lionsgate Studios
· LION
May 22nd, 2026
Summary
- Earnings Call Date:
- 2026-05-22
- Change Since:
- +2.61%
- Next Earnings Date:
- 2026-08-06
Earnings Call Sentiment
PositiveThe call conveyed strong operating performance and clear momentum: record-level adjusted OIBDA, significant motion picture profit growth, durable library revenue exceeding $1 billion, strong free cash flow, and a deep content pipeline with multiple branded franchises and sequel opportunities. Management highlighted improved liquidity, a sizable backlog, AI adoption, and confident FY27 growth expectations. Headwinds include a quarter-over-quarter revenue decline driven by timing and mix, TV delivery timing pressures, elevated leverage (6.1x) despite improvement, and some uncertainty due to release timing and potential strategic actions (e.g., 3 Arts put). On balance, the positives — strong profitability, cash generation, pipeline visibility and marquee theatrical successes — outweigh the near-term challenges, pointing to a constructive outlook.
Company Guidance
Management guided to “significant” adjusted OIBDA growth in fiscal 2027 and “substantial” free cash flow improvement (building on Q4 adjusted OIBDA of $165M, up 17% YoY, and Q4 free cash flow of $190M), with continued deleveraging from year‑end net debt of ~ $1.6B (improved ~ $150M QoQ) and leverage of 6.1x toward roughly 4.0–4.5x; they expect to double scripted episodic deliveries in FY27 versus FY26, to realize much of a $1.3B backlog (≈90% within 24 months), and to benefit from durable library performance (trailing‑12‑month library revenue >$1B, +5% YoY), while maintaining ~ $800M revolver capacity and $341M unrestricted cash and strong theatrical carryover (including Michael, on track for >$1B WW, and The Housemaid).
Strong Operating Income and EPS
Operating income was $118 million, up over 50% year-over-year; reported diluted EPS was $0.23 and diluted adjusted EPS was $0.37.
Robust Free Cash Flow
Free cash flow for the quarter was a strong positive $190 million, supporting balance sheet improvement and deleveraging efforts.
Library Revenue Consistency and Growth
Trailing 12-month library revenue remained above $1 billion for the third consecutive quarter, growing 5% year-over-year, underscoring durable recurring revenue.
Studio Segment Profit Expansion
Studio segment profit increased 24% year-over-year to $218 million, bolstered by Motion Picture results and library performance.
Motion Picture Revenue and Profit Surge
Motion Picture revenue rose 23% year-over-year to $652 million, and Motion Picture segment profit grew 39% to $187 million, driven by theatrical hits and strong PVOD/home entertainment carryover.
Breakout Theatrical Successes
The Housemaid delivered high box-office-to-ancillary conversion and became the industry's highest grossing PVOD title among films with up to $150M domestic box office; Michael opened strongly and is on track to exceed $1 billion worldwide (Japan release pending).
Television Renewal Momentum and Delivery Visibility
Secured renewals for 12 of 13 scripted series and expect to nearly double episodic scripted deliveries from fiscal '26 to fiscal '27, supporting TV growth in FY27.
Balance Sheet Progress and Liquidity
Net debt was approximately $1.6 billion (improved ~ $150 million vs prior quarter); year-end leverage improved to 6.1x; company had ~$800 million revolver capacity and $341 million unrestricted cash.
Pipeline, Backlog and Strategic Content Investments
Backlog (contractual future revenues and cash flows) is $1.3 billion (majority within 24 months); company greenlit/advanced multiple high-profile projects (Hunger Games installment, Rambo, Resurrection parts 1 & 2, Blair Witch reimagining, Magic) and reported ongoing work on Michael sequel.
AI Adoption and Productivity Initiatives
Company leaned into AI, deploying tools across ~80% of workforce (Copilot, ChatGPT Enterprise, Runway integrations) to boost creative efficiency, analytics and productivity.
Operator
Good afternoon, and welcome to the Lionsgate Studios Fourth Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nilay Shah, Head of Investor Relations. Please go ahead.
Nilay Shah
Good afternoon. Thank you for joining us for the Lionsgate Studios Corporation's Fiscal 2026 Fourth Quarter Conference Call. We'll begin with opening remarks from our CEO, Jon Feltheimer; followed by remarks from our CFO, Jimmy Barge. After their remarks, we'll open the call for questions. Also joining us on the call today are Vice Chairman, Michael Burns; COO, Brian Goldsmith; Chairman of the TV Group, Kevin Beggs; Chairman of the Motion Picture Group, Adam Fogelson; Chief Revenue Officer, Jim Packer; and Senior Adviser to the Office of the CEO at Lionsgate and Co-CEO of 3 Arts, Brian Weinstein. The matters discussed on the call also 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 could differ materially and adversely from those described in the forward-looking statements as a result of various factors.
This includes the risk factors set forth in our public filings for Lionsgate Studios Corp. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances. I'll now turn the call over to Jon.
Jon Feltheimer
Thank you, Nilay, and good afternoon, everyone. We just reported...
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