Lionsgate Studios Corp. Q4 FY2026 earnings call

### Corporate Update - Completed the separation of Lionsgate and Starz into two standalone public companies and collapsed the prior dual-share structure into a single class of common stock, a move management says the market has responded positively to, as it creates a focused, content-driven structure to unlock shareholder value. - Ended fiscal 2026 with a net debt position of ~$1.6 billion, a $150 million improvement quarter-over-quarter driven by strong free cash flow. Leverage improved to 6.1x, down over 1 full turn from the prior quarter. The company held $341 million in unrestricted cash and had ~$800 million in unused revolver capacity at quarter end.

Content Pipeline and Franchise Development - Over the next 2-3 years, over half of the film, television, and live entertainment slates will consist of owned/controlled branded, repeatable intellectual property. - Key recent and upcoming content milestones include: kickoff of marketing for the new *Hunger Games* installment, wrapped production on the new *Rebo* interpretation starring Noah Centineo, wrapped production on Mel Gibson's *Resurrection of the Christ Parts 1 and 2*, greenlighted a reimagined *Blair Witch* in partnership with Blumhouse and Atomic Monster, signed Sam Raimi to direct a *Magic* remake, and confirmed *The Housemaid's Secret* will start production in 2026 for a December 17, 2027 release. - The recently released *Michael* has already become a global box office hit, and is on track to become Lionsgate's first film to gross over $1 billion worldwide, with the Japan release still pending.

Television Business Update - Renewed 12 out of 13 active scripted series, positioning the 2027 episodic scripted delivery volume to nearly double compared to fiscal 2026. Management maintains a strategy of leaning into creative strength, controlling costs, retaining flexibility to produce series at all price points for all buyer types, and balancing retained rights and cost-plus models. - Long-running procedural *The Rookie* was renewed for a ninth season after its season 8 finale set a new streaming viewership record and grew younger audience share; a spinoff *The Rookie North* was picked up by ABC. - *The Studio* on Apple TV+ completed one of the most dominant award runs in modern television, winning top prizes at the Emmys, Golden Globes, SAG Awards, PGA, DGA, and WGA Awards, plus the international BAFTA award. - Other active and upcoming series include *Hunting Wives* (Netflix, season 2 wrapped), *The Rainmaker* (USA Network, season 2 in production), *Robin Hood* (season 2 upcoming), and multiple installments in the *Power* franchise.

Technology and Operations - Management has implemented an enterprise AI strategy to integrate the technology into the creative process and drive improved quality and efficiency across all business functions, with 80% of the workforce already using AI tools for productivity and analytics.

Consolidated: Total Q4 2026 revenue was $907 million, down year-over-year. Adjusted EBITDA hit a 12-year high of $165 million, up 17% YoY. Operating income was $118 million, up over 50% YoY. Diluted reported EPS was 23 cents, adjusted diluted EPS was 37 cents. Free cash flow was a positive $190 million. Trailing 12-month library revenue remained above $1 billion, growing 5% YoY, marking the third consecutive quarter above this threshold. Aggregate studio segment profit (before corporate overhead, comparable to peer adjusted EBITDA) increased 24% YoY to $218 million.

Motion Picture Segment: Revenue increased 23% YoY to $652 million, representing 71.9% of total Q4 2026 revenue. Segment profit grew 39% YoY to $187 million, accounting for 85.8% of total studio segment profit. The strong performance was driven by the theatrical and home entertainment success of *The Housemaid*, continued carryover revenue from *Now You See Me, Now You Don't*, and came even after the studio booked incremental pre-release P&A spending for *Michael*, the new *Hunger Games* installment, and *John Rambo* late in the quarter. *The Housemaid* became the highest-grossing PVOD title among all films with up to $150 million in domestic box office.

Television Segment: Revenue was $255 million, representing 28.1% of total Q4 2026 revenue. Segment profit was $31 million, accounting for 14.2% of total studio segment profit. Year-over-year profit was impacted by timing of episodic deliveries and lower volume of scripted deliveries compared to the prior year. Profit remained resilient, supported by strong ongoing library performance from hit series including *The Rookie* and *Mad Men*.

- Management confirms it expects significant adjusted EBITDA growth in fiscal 2027, with enhanced visibility into performance driven by strong carryover from fiscal 2026's theatrical slate, a highly anticipated upcoming release schedule, and the doubling of scripted episodic television deliveries. - Significant adjusted EBITDA growth is expected to drive substantial free cash flow growth and continued material deleveraging throughout fiscal 2027. Management targets leverage declining to 4.0x-4.5x by the end of fiscal 2027 via organic operational cash flow. - Fiscal 2027 profit cadence will be less back-end loaded than fiscal 2026. Television will be slightly more back-end loaded than motion picture, as ~90% of the doubled episodic delivery volume is scheduled for Q2, Q3, and Q4 of fiscal 2027, aligning with normal production and delivery cycles. - The company does not provide a specific numerical range for fiscal 2027 growth due to remaining timing uncertainty for release schedules, episodic deliveries, and P&A spending, but notes contractual backlog of $1.3 billion, 90% of which will be realized within the next 24 months, providing strong visibility for both fiscal 2027 and 2028 performance. - The release of the first *Resurrection of the Christ* film will be moved to 2026 and the second to 2027 (from the original clustered schedule); this change is roughly neutral to fiscal 2027 results, slightly weighting to a small downside, as a new release for *Day Drinker* is slotted into the original first film date.

- Forward-looking statements about future performance are inherently subject to risks and uncertainties that could cause actual results to differ materially from projections, including general industry disruption, changes in consumer behavior, and content performance risk. Key risk factors are detailed in the company's existing public filings. - Media market fragmentation has increased complexity in marketing and reaching audiences, requiring ongoing adaptation of go-to-market strategies. - Industry consolidation (such as the proposed Paramount Skydance-Warner Bros. Discovery combination) creates uncertainty, though management believes a stronger combined platform will ultimately create more buying opportunities for third-party content like Lionsgate's. - Content development and production carry inherent risk around commercial performance, even for established IP, and timing of releases and cash flows can shift materially throughout the fiscal year.

Q: Vikram Kasavabhotla (Baird) asked if the recent box office strength reflects sustainable consumer demand improvement, and what the fiscal 2027 profit cadence looks like. / A: Management noted movie theater attendance growth is being driven disproportionately by Gen Z, which now makes up 30-34% of the market, a demographic the studio is actively targeting. Premium large-format screens have also turned moviegoing into a premium event experience, boosting demand. Studios have adapted marketing to fragmented media landscapes, and management expects the current positive trend to be sustained. For fiscal 2027 cadence, the full year is less back-end loaded than fiscal 2026, with television slightly more back-end loaded than motion picture: ~90% of the doubled 2027 episodic deliveries are scheduled for the final three quarters of the fiscal year, consistent with normal production cycles.

Q: David Joyce (Seaport) asked for more detail on upcoming television content, and what impact the proposed Paramount Skydance-Warner Bros. Discovery combination will have on Lionsgate's library business. / A: Management highlighted additional upcoming series including *Hunting Wives* season 2 (Netflix), *The Rainmaker* season 2 (USA), *Robin Hood* season 2, and multiple new and returning installments in the *Power* franchise. For the proposed merger, management believes a stronger, better-capitalized combined streaming platform will be better able to purchase content from outside suppliers like Lionsgate, creating a positive environment for its original and library content. The Lionsgate TV library has grown from 4 series sold to the top 6 streamers in fiscal 2022 to 17 series in fiscal 2026, 10 of which ranked in the top 10 on their respective platforms, demonstrating ongoing strong demand.

Q: Omar Majias (Wells Fargo) asked for an update on deleveraging (including the role of 3Arts) and plans for a *Michael* sequel. / A: Management confirmed *Michael 2* is progressing well, with strong positive conversations with all stakeholders. There is substantial untapped, popular Michael Jackson story and music catalog not covered in the first film, and management is confident the sequel will have similarly strong global commercial appeal. 25-30% of the sequel footage is already complete from original production activities, delivering material cost benefit. For deleveraging, the company is on track to deliver organic deleveraging to 4.0x-4.5x leverage by the end of fiscal 2027 via core operating cash flow, and 3Arts is not material to this deleveraging path. The company can easily absorb the 3Arts put option in Q4 fiscal 2027 if required, with only an incremental 0.5x leverage impact.

Q: Sean Diffley (Morgan Stanley) asked how AI will change studio margins over time, and how management views the standalone opportunity versus a strategic combination. / A: Management says the post-separation standalone structure with a single share class provides maximum strategic optionality, maintains strong liquidity, and allows the studio to focus on maximizing shareholder value as a pure-play content studio with a large portfolio of well-known IP. AI is expected to be a net positive for margins: it is already deployed across 80% of the workforce to improve productivity and operational efficiency, and the studio plans to launch fan creator tools that leverage AI to extend engagement with its existing IP brands. Management expects margins to improve or hold steady in fiscal 2027, with growing motion picture margins and stable TV margins, as sophomore series build profitability.