Starz (STRZA) has reported a 43.02 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $34.30 million, or $0.34 a share in the quarter, compared with $60.20 million, or $0.57 a share for the same period last year.
Revenue during the quarter went up marginally by 0.92 percent to $407.80 million from $404.10 million in the previous year period. Gross margin for the quarter contracted 557 basis points over the previous year period to 42.99 percent. Total expenses were 81.85 percent of quarterly revenues, up from 74.81 percent for the same period last year. That has resulted in a contraction of 705 basis points in operating margin to 18.15 percent.
Operating income for the quarter was $74 million, compared with $101.80 million in the previous year period.
Chris Albrecht, Starz president and chief executive officer, added, “Starz continued its solid operational performance in the third quarter, delivering 6% year-over-year revenue growth at Starz Networks which is the largest increase since the second quarter of 2013. Third quarter performance also saw year-over-year subscriber growth of 1.2 million customers, with 300,000 added in the quarter, setting a new record high of 24.5 million subscribers for STARZ. The third season of “Power” established a STARZ record for viewership, surpassing 7.3 million multiplatform viewers per episode, and helping nearly drive OTT subscriptions close to the 1 million mark. The strong performance of our Amazon and Starz app initiatives complements the Starz Networks business with core distributors. The planned merger with Lionsgate continues to progress, and we are readying for the content opportunities that will come with being a robust combined company.”
Operating cash flow improves significantly
Starz has generated cash of $196.70 million from operating activities during the nine month period, up 122.26 percent or $108.20 million, when compared with the last year period.
The company has spent $29.90 million cash to meet investing activities during the nine month period as against cash outgo of $13.20 million in the last year period.
The company has spent $163.70 million cash to carry out financing activities during the nine month period as against cash outgo of $71.70 million in the last year period.
Cash and cash equivalents stood at $14 million as on Sep. 30, 2016, down 17.65 percent or $3 million from $17 million on Sep. 30, 2015.
Working capital decreases marginally
Starz has witnessed a decline in the working capital over the last year. It stood at $433.40 million as at Sep. 30, 2016, down 2.54 percent or $11.30 million from $444.70 million on Sep. 30, 2015. Current ratio was at 2.59 as on Sep. 30, 2016, down from 2.96 on Sep. 30, 2015.
Days sales outstanding went up to 61 days for the quarter compared with 59 days for the same period last year.
At the same time, days payable outstanding was almost stable at 2 days for the quarter, when compared with the previous year period.
Debt comes down
Starz has recorded a decline in total debt over the last one year. It stood at $995.60 million as on Sep. 30, 2016, down 14.77 percent or $172.60 million from $1,168.20 million on Sep. 30, 2015. Total debt was 63.19 percent of total assets as on Sep. 30, 2016, compared with 72.27 percent on Sep. 30, 2015. Debt to equity ratio was at 3.57 as on Sep. 30, 2016, down from 5.29 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 6.32 for the quarter from 8.85 for the same period last year.
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