Market Overview

AMC Networks Inc. Reports Third Quarter 2019 Results

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Financial Highlights:

  • Net revenues increased 3.1% to $719 million
  • Operating income increased 2.3% to $168 million; Adjusted Operating Income1 increased 3.9% to $219 million
  • Diluted EPS increased 7.3% to $2.07; Adjusted EPS1 increased 8.4% to $2.33
  • Cash Provided by Operating Activities of $400 million and Free Cash Flow1 of $318 million for the nine months ended September 30, 2019
  • Reaffirms 2019 full-year outlook for total company revenue and adjusted operating income

Operational Highlights:

  • The Company continued to make significant progress with its targeted SVOD services including Acorn TV surpassing 1 million subscribers and Shudder premiering original series Creepshow to record viewership.  Reaffirms target of over 2 million subscribers by year-end 2019.
  • The Company announced an agreement with Charter Communications to launch AMC Networks' full suite of targeted SVOD services as well as AMC Premiere to Charter's Spectrum customers
  • The Company entered into an international sales agreement with Amazon Prime Video for the third series in The Walking Dead universe

NEW YORK, Oct. 31, 2019 (GLOBE NEWSWIRE) -- AMC Networks Inc. ("AMC Networks" or the "Company") (NASDAQ:AMCX) today reported financial results for the third quarter ended September 30, 2019.

President and Chief Executive Officer Josh Sapan said: "AMC Networks is well on its way to strategically transforming itself from a ‘cable channels company' into a premier content company with a suite of focused and targeted video entertainment products that are delivered to viewers on an expanding array of platforms. The underlying strategic priorities fueling our transformation have been and continue to be creating and owning great content and valuable IP, expanding our targeted direct-to-consumer services, maximizing the long-term value of our traditional linear business and diversifying our revenue by developing new avenues of content monetization. Recent successes include our Acorn TV streaming service surpassing one million subscribers, an outsized presence at this year's Emmy Awards with a number of key wins and a recent agreement with Charter Communications to launch our full suite of focused streaming services – Acorn TV, Shudder, Sundance Now and UMC – and our commercial-free AMC Premiere offering on their Spectrum platform. We are optimizing the value and reach of our content in a variety of ways and executing on a plan that will enable us to thrive in a very dynamic and competitive environment."

(1)  See page 5 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.

Third quarter net revenues increased 3.1%, or $22 million, to $719 million over the third quarter of 2018. The increase in net revenues reflected a decrease of 0.2% at National Networks and an increase of 20.5% at International and Other. Operating income was $168 million, an increase of 2.3%, or $4 million, versus the prior year period.  The operating income increase reflected a decrease of 3.0% at National Networks and a decrease of $5 million in operating loss at International and Other. Adjusted Operating Income2 was $219 million, an increase of 3.9%, or $8 million, versus the prior year period. The increase in adjusted operating income reflected a decrease of 1.0% at National Networks offset by an increase of $6 million at International and Other versus the prior year period. As discussed in the "Other Matters" section of the release, results include the impact of the acquisition of RLJ Entertainment ("RLJE").

For the nine months ended September 30, 2019, net revenues increased 3.5%, or $76 million, to $2.275 billion, operating income decreased 1.1%, or $6 million, to $584 million, and adjusted operating income increased 4.3%, or $31 million, to $744 million.

Third quarter net income was $117 million ($2.07 per diluted share), compared with $111 million ($1.93 per diluted share) in the prior year period. Third quarter Adjusted EPS2 was $132 million ($2.33 per diluted share), compared with $124 million ($2.15 per diluted share) in the prior year period. The increase in EPS and adjusted EPS was primarily related to the increase in adjusted operating income as well as a decrease in income tax expense partially offset by a decrease in miscellaneous, net.

Net income for the nine months ended September 30, 2019 was $389 million ($6.80 per diluted share), compared with $374 million ($6.31 per diluted share) in the prior year period. Adjusted EPS for the nine months ended September 30, 2019 was $433 million ($7.57 per diluted share), compared with $401 million ($6.76 per diluted share) in the prior year period.

For the nine months ended September 30, 2019, net cash provided by operating activities was $400 million, a decrease of $71 million versus the prior year period. The decrease was primarily the result of an increase in tax payments and working capital partially offset by an increase in adjusted operating income. Free Cash Flow2 for the nine months ended September 30, 2019 was $318 million, a decrease of $84 million versus the prior year period. The decrease primarily reflects the decrease in net cash provided by operating activities as well as an increase in capital expenditures and distributions to noncontrolling interests.

(2)  See page 5 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.

                                             
Segment Results                                            
(dollars in thousands)
  Three Months Ended September 30,   Nine Months Ended September 30,
      2019   2018   Change   2019   2018   Change
                                               
Net Revenues:                                            
  National Networks   $ 558,992     $ 560,321     (0.2 %)   $ 1,779,850     $ 1,820,638     (2.2 %)
  International and Other     182,839       151,772     20.5 %     533,454       409,873     30.2 %
  Inter-segment eliminations     (23,234 )     (15,218 )   n/m       (38,187 )     (31,428 )   n/m  
Total Net Revenues   $ 718,597     $ 696,875     3.1 %   $ 2,275,117     $ 2,199,083     3.5 %
                                               
Operating Income (Loss):                                            
  National Networks   $ 182,479     $ 188,107     (3.0 %)   $ 648,180     $ 647,965     0.0 %
  International and Other     (11,501 )     (16,749 )   31.3 %     (52,532 )     (44,899 )   (17.0 %)
  Inter-segment eliminations     (2,540 )     (6,759 )   n/m       (12,090 )     (13,281 )   n/m  
Total Operating Income (Loss)   $ 168,438     $ 164,599     2.3 %   $
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