AMC Networks(AMCX) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights AMC Networks reported a 4.1% decrease in Q2 2025 net revenues to $600 million, but saw a significant increase in operating income, highlighting accelerated streaming revenue growth, strength in content licensing, and healthy free cash flow - CEO Kristin Dolan emphasized the company's strategy focusing on programming, partnerships, and profitability, leading to accelerated streaming revenue growth and strong free cash flow generation[2] Q2 2025 Consolidated Financial Results (dollars in thousands, except per share) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $600,024 | $625,934 | (4.1)% | | Operating Income | $64,469 | $10,788 | n/m | | Adjusted Operating Income | $109,386 | $152,807 | (28.4)% | | Diluted Earnings Per Share | $0.91 | $(0.66) | n/m | | Adjusted Earnings Per Share | $0.69 | $1.24 | (44.4)% | | Free Cash Flow | $95,741 | $95,165 | 0.6% | - Operational progress includes 25%+ growth in digital advertising commitments, launch of 11 new FAST channels, renewal of NCTC affiliate agreement, and a new partnership with Runway to incorporate AI into development processes[6] - The company strengthened its balance sheet by reducing gross debt by approximately $400 million and capturing $138 million of debt discount since March 31, 2025[6][13] Segment Performance The company's performance varied by segment, with Domestic Operations seeing a slight revenue decrease offset by streaming and content licensing growth, while International Operations experienced a more significant revenue drop due to prior-year adjustments and non-renewals Domestic Operations Domestic Operations revenue decreased 2% to $527 million, as a 12% increase in streaming revenue and a 26% rise in content licensing were not enough to offset declines in advertising and affiliate revenue, leading to a 19% fall in Segment Adjusted Operating Income Domestic Operations Q2 Performance (dollars in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $526,853 | $538,291 | (2.1)% | | Segment Adjusted Operating Income | $126,339 | $155,348 | (18.7)% | - Streaming revenues grew 12% to $169 million, mainly due to price increases, with streaming subscribers increasing 2% year-over-year to 10.4 million[11] - Linear business headwinds included an 18% decrease in advertising revenues due to ratings declines and lower pricing, and a 12% decrease in affiliate revenues from subscriber declines[11] - Content licensing revenues increased 26% to $84 million, boosted by the timing of deliveries, the sale of a music catalog, and fees related to Apple TV+'s "Silo"[11] International Operations International revenues fell 16% to $76 million, heavily impacted by a $13.4 million retroactive advertising adjustment in the prior-year quarter and the non-renewal of a distribution agreement in Spain, resulting in a 50% decrease in Segment Adjusted Operating Income International Operations Q2 Performance (dollars in thousands) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $75,535 | $90,095 | (16.2)% | | Segment Adjusted Operating Income | $14,737 | $29,265 | (49.6)% | - Prior period advertising revenues included a one-time $13.4 million retroactive adjustment, and excluding this and currency impacts, International revenues decreased 6%[12] - Subscription revenues decreased 5% to $47 million, primarily due to the non-renewal of a distribution agreement in Spain during Q4 2024[12] Capital Management and Shareholder Returns The company actively managed its capital structure in Q2 and July 2025 by issuing new Senior Secured Notes, tendering and repurchasing existing notes at a discount, and making a debt prepayment, which collectively reduced gross debt by approximately $400 million, while also repurchasing 1.6 million shares - Completed a series of financing transactions that extended debt maturity, reduced gross debt by approximately $400 million, and captured approximately $138 million in debt discount since March 31, 2025[13] - Key transactions include issuing $400 million of 10.50% Senior Secured Notes due 2032, tendering $600 million of 4.25% Senior Notes due 2029 at a $111 million discount, and repurchasing $99 million of the same notes at a $27 million discount[14][15][16] - Repurchased 1.6 million shares of Class A Common Stock at an average price of $6.48 per share in Q2, with $125 million remaining authorized for future repurchases[18] Outlook AMC Networks has raised its full-year 2025 guidance for free cash flow, reflecting confidence in its operational execution and financial management - The company increased its free cash flow outlook for the full year 2025 and now expects approximately $250 million[2] Financial Statements The consolidated financial statements detail the company's performance, showing a significant turnaround to a net income of $50.3 million for Q2 2025, driven by lower impairment charges and a gain on debt extinguishment, alongside a strong balance sheet and cash flow from operations - Q2 2025 Net Income attributable to stockholders was $50.3 million, compared to a Net Loss of $29.2 million in Q2 2024, largely due to the absence of a $96.8 million impairment charge and a $25.7 million gain on extinguishment of debt[30] - For the six months ended June 30, 2025, net cash provided by operating activities was $211.6 million, a decrease from $255.3 million in the prior year period, primarily due to changes in program rights and obligations[31] - As of June 30, 2025, the company held $866.4 million in cash and cash equivalents and had total debt (net) of $2.13 billion[33] Supplemental Information & Non-GAAP Reconciliations This section provides definitions for non-GAAP measures and detailed reconciliations to GAAP equivalents, along with the company's capitalization as of June 30, 2025, and a pro forma view adjusted for July 2025 financing activities, showing a reduced leverage ratio - The company defines and uses non-GAAP measures such as Adjusted Operating Income (AOI), Free Cash Flow (FCF), and Adjusted EPS to evaluate business performance[20][21][24][25] Pro Forma Capitalization and Leverage (As Adjusted June 30, 2025, in thousands) | Metric | June 30, 2025 | As Adjusted | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $866,407 | $699,690 | $(166,717) | | Total Debt | $2,233,991 | $1,963,991 | $(270,000) | | Net debt | $1,367,584 | $1,264,301 | $(103,283) | | Leverage ratio | 2.9x | 2.7x | (0.2x) | Reconciliation of Operating Income to Adjusted Operating Income (Q2, in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Operating income (GAAP) | $64,469 | $10,788 | | Share-based compensation | $8,043 | $8,457 | | Depreciation and amortization | $26,446 | $26,493 | | Restructuring charges | $3,529 | $2,931 | | Impairment and other charges | — | $96,819 | | Other adjustments | $6,899 | $7,319 | | Adjusted operating income (Non-GAAP) | $109,386 | $152,807 | Reconciliation of Diluted EPS to Adjusted EPS (Q2 2025, per share) | Metric | Amount | | :--- | :--- | | Reported Diluted EPS (GAAP) | $0.91 | | Amortization of intangibles | $0.10 | | Restructuring charges | $0.03 | | Gain on extinguishment of debt | $(0.35) | | Adjusted EPS (Non-GAAP) | $0.69 |