President and Chief Executive Officer
First Quarter Financial Highlights:
- New segment reporting structure
- Net revenues of
$692 million - Operating income of
$170 million ; Adjusted Operating Income(1) of$238 million - Diluted EPS of
$2.02 ; Adjusted EPS(1) of$2.98 - Net cash provided by operating activities of
$108 million ; Free Cash Flow(1) of$97 million
| Three Months Ended |
||||||||||||
| Dollars in thousands, except per share amounts | 2021 | 2020 | Change | |||||||||
| Net Revenues | $ | 691,741 | $ | 734,375 | (5.8 | ) | % | |||||
| Operating Income | $ | 169,708 | $ | 172,970 | (1.9 | ) | % | |||||
| Total Adjusted Operating Income | $ | 237,979 | $ | 222,454 | 7.0 | % | ||||||
| Diluted Earnings Per Share | $ | 2.02 | $ | 1.22 | 65.6 | % | ||||||
| Adjusted Diluted Earnings Per Share | $ | 2.98 | $ | 1.47 | 102.6 |
% | ||||||
| Net cash provided by operating activities | $ | 107,563 | $ | 198,408 | (45.8 | ) | % | |||||
| Free Cash Flow | $ | 96,562 | $ | 182,411 | (47.1 | ) | % | |||||
| (1) | See page 6 of this earnings release for a discussion of non-GAAP financial measures used in this release. This discussion includes the definition of Adjusted Operating Income (Loss), Adjusted EPS and Free Cash Flow. | |
Operational Highlights:
- On track to achieve previously communicated 2021 and long-term financial and subscriber targets
- Expanded distribution of AMC+ with launch on YouTube TV
- Launched five free ad-supported streaming (FAST) channels on VIZIO SmartCast
- Entered into a strategic partnership with
Toronto -based Shaftesbury, an award-winning creator and producer of original TV, film and digital content - Premiered Shudder’s “Halfway to
Halloween Month” in April, with Shudder’s biggest slate of programming ever - Unveiled Upfront Connect 2.0, a powerful planning, creative content, and information tool for advertising clients
- Launched Acorn TV on Amazon Prime Video Channels in
Spain - Completed two first-to-market national linear addressable campaigns, a significant and long-awaited step to unleash the potential of addressable advertising on television at scale
- Completed spin-off of Levity’s live comedy and talent management businesses and related lease obligations(2)
Changes to Segment Reporting:
In the first quarter of 2021, the Company changed its presentation of operating segments, reflecting a reorganized operating structure focused on a multi-platform distribution approach to content monetization. The Company’s streaming services and
- Domestic Operations: Includes activities of our five national programming networks, our streaming services, our
AMC Studios operation,IFC Films andAMC Broadcasting & Technology . Our national programming networks are AMC, WE tv, BBC AMERICA, IFC, and SundanceTV. Our streaming services consist of our targeted subscription streaming services (Acorn TV, Shudder, Sundance Now, and ALLBLK), AMC+ and other streaming initiatives. OurAMC Studios operation produces original programming for our programming networks and also licenses such programming worldwide.IFC Films is our film distribution business andAMC Networks Broadcasting & Technology is our technical services business, which primarily services most of the national programming networks. - International and Other:
Includes AMC Networks International (“AMCNI”), our international programming businesses consisting of a portfolio of channels around the world and 25/7Media Holdings LLC (formerly Levity), our production services business.
| (2) | See page 4 for information related to the spin-off of the Levity LiveCo. | |
| (3) | See page 12 for a summary of segment reporting changes. | |
Segment Results
(dollars in thousands)
| Three Months Ended |
||||||||||||
| 2021 | 2020 | Change | ||||||||||
| Net Revenues: | ||||||||||||
| Domestic Operations | $ | 573,969 | $ | 611,893 | (6.2 | ) | % | |||||
| International and Other | 121,167 | 124,828 | (2.9 | ) | % | |||||||
| Corporate / Inter-segment Eliminations | (3,395 | ) | (2,346 | ) | n/m | |||||||
| Total Net Revenues | $ | 691,741 | $ | 734,375 | (5.8 | ) | % | |||||
| Operating Income (Loss): | ||||||||||||
| Domestic Operations | $ | 216,459 | $ | 224,600 | (3.6 | ) | % | |||||
| International and Other | (3,162 | ) | 4,361 | (172.5 | ) | % | ||||||
| Corporate / Inter-segment Eliminations | (43,589 | ) | (55,991 | ) | n/m | |||||||
| Total Operating Income | $ | 169,708 | $ | 172,970 | (1.9 | ) | % | |||||
| Adjusted Operating Income (Loss): | ||||||||||||
| Domestic Operations | $ | 242,533 | $ | 241,033 | 0.6 | % | ||||||
| International and Other | 23,563 | 17,843 | 32.1 | % | ||||||||
| Corporate / Inter-segment Eliminations | (28,117 | ) | (36,422 | ) | n/m | |||||||
| Total Adjusted Operating Income | $ | 237,979 | $ | 222,454 | 7.0 | % | ||||||
Domestic Operations
- Domestic Operations revenues for the first quarter decreased 6% to
$574 million compared to the prior year quarter- Advertising revenues decreased 7% to
$199 million due to shifts in the timing of the airing of original programming and lower delivery, partially offset by higher pricing and ad-supported streaming growth - Distribution revenues decreased 6% to
$375 million - Content licensing revenues decreased 54%, driven by the timing and availability of original programming, as the result of pandemic-related production delays
- Subscription revenues increased 14% driven by robust growth in streaming revenues, attributable to increased paid streaming subscribers, partially offset by a low-single digit decrease in affiliate revenue, attributable to subscriber universe declines
- Advertising revenues decreased 7% to
- Operating Income decreased 4% to
$216 million , and Adjusted Operating Income increased 1% to$243 million , reflecting a decrease in operating expenses including lower programming expenses, partly offset by increased marketing investments to support the growth of streaming revenue
International and Other
- International and Other revenues for the first quarter of 2021 decreased 3% to
$121 million compared to the prior year quarter- Distribution and Other revenues decreased 6% to
$100 million primarily due to live venue closures and the timing of productions at Levity (prior to theLiveCo spin-off) and a decrease in distribution revenues at AMCNI - Advertising revenues increased 11% largely related to the favorable impact of foreign currency translation at AMCNI
- Distribution and Other revenues decreased 6% to
- Operating Loss was
$3 million compared to Operating Income of$4 million in the prior year period; Adjusted Operating Income increased 32% to$24 million - Operating Loss and Adjusted Operating Income reflected the decrease in revenues partially offset by the favorable impact of foreign currency translation and the recovery of bad debt
- Operating Loss reflected a
$16 million charge related to the Levity LiveCo spin-off transaction
Other Matters
Levity Spin-off Transaction
In
Amendment to Amended and Restated Credit Agreement
As previously disclosed, on February 8, 2021, AMC Networks entered into Amendment No. 1 to its existing Credit Agreement. Amendment No. 1 extends the maturity dates of the $675 million term loan A facility and $500 million revolving credit facility under the Credit Agreement to February 8, 2026, and makes certain other amendments to the covenants and other provisions of the Credit Agreement.
Senior Notes Issuance / Debt Redemption
As previously disclosed, on February 8, 2021, AMC Networks issued $1.0 billion aggregate principal amount of 4.25% senior notes due February 15, 2029 in a registered public offering and received net proceeds of $982.3 million, after deducting underwriting discounts, commissions and expenses. The Company used the net proceeds to redeem (i) the remaining $400 million principal amount of the Company’s 4.75% senior notes due 2022 and (ii) $600 million principal amount of the Company’s 5.00% senior notes due 2024 on February 26, 2021.
Stock Repurchase Program
As previously disclosed, the Company’s Board of Directors has authorized a program to repurchase up to
Restructuring and Other Related Charges
In
Please see the Company’s Form 10-Q for the period ended
Description of Non-GAAP Measures
The Company defines Adjusted Operating Income (Loss), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment and other charges (including gains or losses on sales or dispositions of businesses), restructuring and other related charges, and including the Company’s proportionate share of adjusted operating income (loss) from majority owned equity method investees. Because it is based upon operating income (loss), Adjusted Operating Income (Loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of the business without regard to the effect of the settlement of an obligation that is not expected to be made in cash.
The Company believes that Adjusted Operating Income (Loss) is an appropriate measure for evaluating the operating performance of the business segments and the Company on a consolidated basis. Adjusted Operating Income (Loss) and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in the industry.
Internally, the Company uses net revenues and Adjusted Operating Income (Loss) measures as the most important indicators of its business performance, and evaluates management’s effectiveness with specific reference to these indicators. Adjusted Operating Income (Loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with
The Company defines Free Cash Flow, which is a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures and cash distributions to noncontrolling interests, all of which are reported in our Consolidated Statement of Cash Flows. The Company believes the most comparable GAAP financial measure of its liquidity is net cash provided by operating activities. The Company believes that Free Cash Flow is useful as an indicator of its overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt repayment, investment, and other discretionary and non-discretionary cash uses. The Company also believes that Free Cash Flow is one of several benchmarks used by analysts and investors who follow the industry for comparison of its liquidity with other companies in the industry, although the Company’s measure of Free Cash Flow may not be directly comparable to similar measures reported by other companies. For a reconciliation of net cash provided by operating activities to Free Cash Flow, please see page 10 of this release.
The Company defines Adjusted Earnings per Diluted Share (“Adjusted EPS”), which is a non-GAAP financial measure, as earnings per diluted share excluding the following items: amortization of acquisition-related intangible assets; impairment and other charges (including gains or losses on sales or dispositions of businesses); non-cash impairments of goodwill, intangible and fixed assets; restructuring and other related charges; and gains and losses related to the extinguishment of debt; as well as the impact of taxes on the aforementioned items. The Company believes the most comparable GAAP financial measure is earnings per diluted share. The Company believes that Adjusted EPS is one of several benchmarks used by analysts and investors who follow the industry for comparison of its performance with other companies in the industry, although the Company’s measure of Adjusted EPS may not be directly comparable to similar measures reported by other companies. For a reconciliation of earnings per diluted share to Adjusted EPS, please see pages 11 of this release.
Forward-Looking Statements
This earnings release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industries in which it operates and the factors described in the Company’s filings with the
Conference Call Information
About
Contacts
| Investor Relations | Corporate Communications |
| nicholas.seibert@amcnetworks.com | georgia.juvelis@amcnetworks.com |
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended |
||||||||
| 2021 | 2020 | |||||||
| Revenues, net | $ | 691,741 | $ | 734,375 | ||||
| Operating expenses: | ||||||||
| Technical and operating (excluding depreciation and amortization) | 280,572 | 344,060 | ||||||
| Selling, general and administrative | 191,535 | 184,649 | ||||||
| Depreciation and amortization | 25,246 | 26,730 | ||||||
| Impairment and other charges | 16,055 | — | ||||||
| Restructuring and other related charges | 8,625 | 5,966 | ||||||
| 522,033 | 561,405 | |||||||
| Operating income | 169,708 | 172,970 | ||||||
| Other income (expense): | ||||||||
| Interest expense | (34,742 | ) | (37,564 | ) | ||||
| Interest income | 2,342 | 4,555 | ||||||
| Loss on extinguishment of debt | (22,074 | ) | (2,908 | ) | ||||
| Miscellaneous, net | 5,406 | (29,939 | ) | |||||
| (49,068 | ) | (65,856 | ) | |||||
| Income from operations before income taxes | 120,640 | 107,114 | ||||||
| Income tax expense | (25,915 | ) | (33,588 | ) | ||||
| Net income including noncontrolling interests | 94,725 | 73,526 | ||||||
| Net income attributable to noncontrolling interests | (7,704 | ) | (4,859 | ) | ||||
| Net income attributable to AMC Networks’ stockholders | $ | 87,021 | $ | 68,667 | ||||
| Net income per share attributable to AMC Networks’ stockholders: | ||||||||
| Basic | $ | 2.08 | $ | 1.24 | ||||
| Diluted | $ | 2.02 | $ | 1.22 | ||||
| Weighted average common shares: | ||||||||
| Basic | 41,930 | 55,477 | ||||||
| Diluted | 43,171 | 56,061 | ||||||
SUPPLEMENTAL FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
| Three Months Ended |
|||||||||||||||
| Domestic Operations | International and Other | Corporate / Inter-segment Eliminations |
Consolidated | ||||||||||||
| Operating income (loss) | $ | 216,459 | $ | (3,162 | ) | $ | (43,589 | ) | $ | 169,708 | |||||
| Share-based compensation expense | 5,639 | 1,231 | 6,576 | 13,446 | |||||||||||
| Depreciation and amortization | 13,373 | 4,949 | 6,924 | 25,246 | |||||||||||
| Impairment and other charges | — | 16,055 | — | 16,055 | |||||||||||
| Restructuring and other related charges | 2,427 | 4,490 | 1,708 | 8,625 | |||||||||||
| Cloud computing amortization | — | — | 264 | 264 | |||||||||||
| Majority owned equity investees AOI | 4,635 | — | — | 4,635 | |||||||||||
| Adjusted operating income (loss) | $ | 242,533 | $ | 23,563 | $ | (28,117 | ) | $ | 237,979 | ||||||
| Three Months Ended |
|||||||||||||||
| Domestic Operations | International and Other | Corporate / Inter-segment Eliminations |
Consolidated | ||||||||||||
| Operating income (loss) | $ | 224,600 | $ | 4,361 | $ | (55,991 | ) | $ | 172,970 | ||||||
| Share-based compensation expense | 2,724 | 609 | 12,179 | 15,512 | |||||||||||
| Depreciation and amortization | 10,951 | 8,896 | 6,883 | 26,730 | |||||||||||
| Restructuring and other related charges | 1,482 | 3,977 | 507 | 5,966 | |||||||||||
| Majority owned equity investees AOI | 1,276 | — | — | 1,276 | |||||||||||
| Adjusted operating income (loss) | $ | 241,033 | $ | 17,843 | $ | (36,422 | ) | $ | 222,454 | ||||||
SUPPLEMENTAL FINANCIAL DATA
(In thousands)
(Unaudited)
| Capitalization | ||||
| Cash and cash equivalents | $ | 993,123 | ||
| Credit facility debt (a) | $ | 675,000 | ||
| Senior notes (a) | 2,200,000 | |||
| Total debt | $ | 2,875,000 | ||
| Net debt | $ | 1,881,877 | ||
| Finance leases | 30,093 | |||
| Net debt and finance leases | $ | 1,911,970 | ||
| Twelve Months Ended |
||||
| Operating Income (GAAP) | $ | 439,382 | ||
| Share-based compensation expense | 50,842 | |||
| Depreciation and amortization | 103,122 | |||
| Impairment and other charges | 138,282 | |||
| Restructuring and other related charges | 37,727 | |||
| Cloud computing amortization | 464 | |||
| Majority owned equity investees | 12,317 | |||
| Adjusted Operating Income (Non-GAAP) | $ | 782,136 | ||
| Leverage ratio (b) | 2.4 | x | ||
| (a) | Represents the aggregate principal amount of the debt. |
| (b) | Represents net debt and finance leases divided by Adjusted Operating Income for the twelve months ended |
| Free Cash Flow | Three Months Ended |
||||||
| 2021 | 2020 | ||||||
| Net cash provided by operating activities | $ | 107,563 | $ | 198,408 | |||
| Less: capital expenditures | (8,537) | (12,916) | |||||
| Less: distributions to noncontrolling interests | (2,464) | (3,081) | |||||
| Free cash flow | $ | 96,562 | $ | 182,411 | |||
| Adjusted Earnings Per Diluted Share | |||||||||||||||||||
| Three Months Ended |
|||||||||||||||||||
| Income from operations before income taxes | Income tax expense | Net income attributable to noncontrolling interests | Net income attributable to |
Diluted EPS attributable to |
|||||||||||||||
| Reported Results (GAAP) | $ | 120,640 | $ | (25,915) | $ | (7,704) | $ | 87,021 | $ | 2.02 | |||||||||
| Adjustments: | |||||||||||||||||||
| Amortization of acquisition-related intangible assets | 9,541 | (1,496) | (3,027) | 5,018 | 0.11 | ||||||||||||||
| Impairment and other charges | 16,055 | (3,824) | — | 12,231 | 0.28 | ||||||||||||||
| Restructuring and other related charges | 8,625 | (986) | (29) | 7,610 | 0.18 | ||||||||||||||
| Loss on extinguishment of debt | 22,074 | (5,257) | — | 16,817 | 0.39 | ||||||||||||||
| Adjusted Results (Non-GAAP) | $ | 176,935 | $ | (37,478) | $ | (10,760) | $ | 128,697 | $ | 2.98 | |||||||||
| Three Months Ended |
|||||||||||||||||||
| Income from operations before income taxes | Income tax expense | Net income attributable to noncontrolling interests | Net income attributable to |
Diluted EPS attributable to |
|||||||||||||||
| Reported Results (GAAP) | $ | 107,114 | $ | (33,588 | ) | $ | (4,859 | ) | $ | 68,667 | $ | 1.22 | |||||||
| Adjustments: | |||||||||||||||||||
| Amortization of acquisition-related intangible assets | 12,132 | (2,023 | ) | (3,027 | ) | 7,082 | 0.13 | ||||||||||||
| Restructuring and other related charges | 5,966 | (1,458 | ) | — | 4,508 | 0.08 | |||||||||||||
| Loss on extinguishment of debt | 2,908 | (693 | ) | — | 2,215 | 0.04 | |||||||||||||
| Adjusted Results (Non-GAAP) | $ | 128,120 | $ | (37,762 | ) | $ | (7,886 | ) | $ | 82,472 | $ | 1.47 | |||||||
Summary of Segment Reporting Changes
The following tables present a reconciliation from our historical segments to our new segments for three months ended
- The Company’s streaming services and
IFC Films , previously in International and Other are now included within the Domestic Operations Segment (formerly referred to as the National Networks segment) - Corporate overhead costs will no longer be allocated to the operating segments. Corporate overhead includes such costs as executive salaries and benefits, costs of maintaining corporate headquarters, facilities and common support functions (such as human resources, legal, finance, strategic planning and information technology).
| Three months ended |
|||||||||||||||
| As Originally Reported | Segment Changes | Corporate / Inter-segment Eliminations | Recast | ||||||||||||
| Revenue | |||||||||||||||
| National Networks/Domestic Operations | $ | 566,939 | $ | 51,042 | $ | (6,088 | ) | $ | 611,893 | ||||||
| International and Other | 170,494 | (51,042 | ) | 5,376 | 124,828 | ||||||||||
| Inter-segment Eliminations | (3,058 | ) | — | 712 | (2,346 | ) | |||||||||
| Total Consolidated Revenue | $ | 734,375 | $ | — | $ | — | $ | 734,375 | |||||||
| Adjusted Operating Income | |||||||||||||||
| National Networks/Domestic Operations | $ | 217,587 | $ | (3,731 | ) | $ | 27,177 | $ | 241,033 | ||||||
| International and Other | 7,671 | 3,731 | 6,441 | 17,843 | |||||||||||
| Corporate / Inter-segment Eliminations | (2,804 | ) | — | (33,618 | ) | (36,422 | ) | ||||||||
| Total Consolidated Adjusted Operating Income | $ | 222,454 | $ | — | $ | — | $ | 222,454 | |||||||
Source: AMC Networks Inc.