NEW YORK, May 05, May 05, 2020 (GLOBE NEWSWIRE via COMTEX) -- AMC Networks Inc. ("AMC Networks" or the "Company") /zigman2/quotes/202022116/composite AMCX +1.63% today reported financial results for the first quarter ended March 31, 2020.
President and Chief Executive Officer Josh Sapan said: "In what has been a unique operating environment, AMC Networks continues to generate significant levels of free cash flow and remains well capitalized with a strong balance sheet and strong liquidity. We continue to make significant progress on our digital initiatives, including strong subscriber growth across our Acorn TV, Shudder, Sundance Now and UMC (Urban Movie Channel) SVOD services, as well as Acorn TV launching in the UK. Our portfolio of networks is delivering increased viewership in recent weeks, including a strong debut of the third season of Killing Eve and strong performance for the most recent and exceptional season of Better Call Saul. Our continued investment in key areas - creating strong content and valuable IP; growing our targeted SVOD services; and maximizing the value of our linear channels - is enabling us to navigate this challenging time and will continue to serve us well when this environment stabilizes and as we look beyond this immediate period to the remainder of 2020 and ahead to 2021."
-- Access to $1.2 billion of cash and cash equivalents
º $704 million of cash and cash equivalents as of March 31, 2020
º $500 million undrawn revolving credit facility
-- Strong cash flow
º Cash Provided by Operating Activities of $198 million
º Free Cash Flow of $182 million
-- No significant debt maturities in 2020 or 2021
º Term Loan A Facility payments of $56 million and $75 million in 2020 and 2021, respectively
-- Opportunistic allocation of capital
º 4.0 million shares repurchased for $103 million year-to-date 2020
º $200 million partial redemption of $600 million 4.75% notes due December 2022 completed on March 4, 2020
-- Revenues of $734 million
-- Operating income of $173 million; Adjusted Operating Income of $222 million
-- Diluted EPS of $1.22; Adjusted EPS of $1.47
-- The Company continued to make significant progress on its digital initiatives
º The Company now expects 3.5 million to 4.0 million paid subscribers in aggregate for its four SVOD services: Acorn TV, Shudder, Sundance Now and UMC (Urban Movie Channel) by year-end 2020. A full two years ahead of the Company's original target of year-end 2022.
º Acorn TV launched in the United Kingdom
º Furthers AVOD strategy with launch on Pluto TV
-- The Company continues to experiment with new original programming genres and formats with the greenlighting of National Anthem and Pantheon
-- The Company's portfolio of networks saw a significant increase in viewership as of mid-March in connection with national social distancing measures put in place in response to COVID-19
First quarter net revenues decreased 6.4%, or $50 million, to $734 million over the first quarter of 2019. The decrease in net revenues reflected a 8.0% decline at National Networks and essentially flat revenues at International and Other. Operating income was $173 million, a decrease of 29.4%, or $72 million, versus the prior year period. The decrease reflected a 22.4% decline in operating income at National Networks and an increase of $6 million in operating loss at International and Other. Adjusted Operating Income was $222 million, a decrease of 24.1%, or $71 million, versus the prior year period. Results reflected a 21.4% decrease at National Networks and a decrease of $2 million at International and Other.
First quarter net income was $69 million ($1.22 per diluted share), compared with $143 million ($2.48 per diluted share) in the first quarter of 2019. EPS primarily reflected the decrease in operating income as well as an increase in miscellaneous expense, net. Miscellaneous expense, net primarily reflected an unfavorable variance in foreign currency transaction gains and losses. First quarter Adjusted EPS was $82 million ($1.47 per diluted share), compared with $152 million ($2.64 per diluted share) in the first quarter of 2019. Adjusted EPS primarily reflected a decrease in adjusted operating income as well as an increase in miscellaneous expense, net.
For the three months ended March 31, 2020, net cash provided by operating activities was $198 million, an increase of $27 million versus the prior year period. The increase was primarily the result of a decrease in working capital partially offset by a decrease in adjusted operating income. Free Cash Flow for the three months ended March 31, 2020 was $182 million, an increase of $38 million versus the prior year period. The increase primarily reflects the increase in net cash provided by operating activities as well as a decrease in capital expenditures and distributions to noncontrolling interests.
(dollars in thousands) Three Months Ended March 31, 2020 2019 Change Net revenues: National Networks $ 566,939 $ 616,118 (8.0%) International and Other 170,494 171,088 (0.3%) Inter-segment eliminations (3,058 ) (2,985 ) n/m Total net revenues $ 734,375 $ 784,221 (6.4%) Operating Income (Loss): National Networks $ 195,224 $ 251,502 (22.4%) International and Other (19,450 ) (13,748 ) (41.5%) Inter-segment eliminations (2,804 ) 7,109 n/m Total Operating Income (Loss) $ 172,970 $ 244,863 (29.4%)
Adjusted Operating Income (Loss): National Networks $ 217,587 $ 276,686 (21.4%) International and Other 7,671 9,941 (22.8%) Inter-segment eliminations (2,804 ) 6,413 n/m Total Adjusted Operating Income (Loss) $ 222,454 $ 293,040 (24.1%)
1. See page 4 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.
National Networks principally consists of the Company's five nationally distributed programming networks, AMC, BBC AMERICA, IFC, SundanceTV and WE tv; and AMC Studios, the Company's television production business.
National Networks revenues for the first quarter 2020 decreased 8.0% to $567 million, operating income decreased 22.4% to $195 million, and adjusted operating income decreased 21.4% to $218 million, all compared to the prior year period.
First quarter revenues reflected a 10.8% decrease in advertising revenues to $213 million. The decrease in advertising revenues principally related to lower delivery as well as the timing of the airing of original programming partially offset by higher pricing. Distribution revenues decreased 6.2% to $354 million. The decrease in distribution revenues was attributable to a decrease in subscription and content licensing revenues.
First quarter operating income and adjusted operating income reflected the decrease in revenues and an increase in operating expenses. The increase in operating expenses was primarily attributable to higher legal and marketing expenses.
International and Other
International and Other principally consists of AMC Networks International, the Company's international programming business; AMC Networks SVOD, the Company's targeted subscription streaming services, Acorn TV, Shudder, Sundance Now and UMC (Urban Movie Channel); Levity Entertainment Group, the Company's production services and comedy venues business; and IFC Films, the Company's independent film distribution business.
International and Other revenues for the first quarter of 2020 decreased 0.3% to $170 million, operating loss increased $6 million to a loss of $19 million, and adjusted operating income decreased $2 million to $8 million, all compared to the prior year period.
First quarter revenues primarily reflected an increase at AMC Networks SVOD offset by a decrease at the Company's international programming networks. To a lesser extent, revenues also decreased at IFC Films and Levity Entertainment.
First quarter operating income and adjusted operating income reflected the decrease in revenues and an increase in operating expenses. Operating income also reflected an increase in depreciation and amortization and restructuring and other related charges.