AMC Networks(US:AMCX)2025-08-08 20:01PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents AMC Networks Inc.'s unaudited condensed consolidated financial statements for Q2 2025, including balance sheets, income statements, cash flows, and detailed accounting notes Condensed Consolidated Balance Sheets The balance sheet as of June 30, 2025, shows total assets increased to $4.42 billion, cash and cash equivalents rose to $866.4 million, and long-term debt decreased to $2.13 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $4,421,567 | $4,362,221 | | Cash and cash equivalents | $866,407 | $784,649 | | Program rights, net | $1,729,327 | $1,713,952 | | Total Liabilities | $3,354,830 | $3,422,080 | | Long-term debt, net | $2,127,822 | $2,328,719 | | Total Stockholders' Equity | $1,007,707 | $884,260 | Condensed Consolidated Statements of Income (Loss) AMC Networks reported Q2 2025 net income of $50.3 million, a significant turnaround from a $29.2 million net loss in Q2 2024, despite a 4.1% revenue decrease, with six-month net income reaching $68.3 million Q2 Financial Performance (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenues, net | $600,024 | $625,934 | | Operating income | $64,469 | $10,788 | | Net income (loss) attributable to stockholders | $50,289 | $(29,234) | | Diluted EPS | $0.91 | $(0.66) | Six-Month Financial Performance (in thousands, except per share) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenues, net | $1,155,257 | $1,222,395 | | Operating income | $128,666 | $120,966 | | Net income attributable to stockholders | $68,338 | $16,569 | | Diluted EPS | $1.25 | $0.37 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities for H1 2025 was $211.6 million, a decrease from $255.3 million in H1 2024, while net cash used in financing activities significantly increased to $126.2 million due to debt and treasury stock repurchases Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $211,596 | $255,272 | | Net cash used in investing activities | $(22,360) | $(12,022) | | Net cash used in financing activities | $(126,230) | $(5,922) | | Net increase in cash | $63,006 | $237,328 | Notes to Condensed Consolidated Financial Statements The notes detail the company's Domestic and International segments, updated revenue recognition, $8.3 million in H1 2025 restructuring charges, significant debt management, and ongoing 'The Walking Dead' litigation - The company operates through two segments: Domestic Operations (including programming networks like AMC, streaming services like AMC+, and AMC Studios) and International (AMCNI)2330 - In Q1 2025, the company updated its definitions of 'affiliate revenues' and 'streaming revenues' to better classify fees from distributors who bundle streaming services with traditional programming networks3233 - Restructuring charges of $8.3 million were recorded in H1 2025, primarily related to the wind-down of a U.K. joint venture and streamlining operations in Southern Europe within the International segment44 - The company is involved in ongoing 'MFN Litigation' with producers of 'The Walking Dead', who claim over $200 million in damages related to a prior settlement with Frank Darabont. The trial is scheduled for March 202686 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses a 5.5% decline in consolidated revenues for H1 2025, driven by decreases in advertising and subscription revenues, detailing segment performance, liquidity, and recent debt management activities Consolidated Financial Highlights (in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenues, net | $1,155,257 | $1,222,395 | | Operating Income | $128,666 | $120,966 | | Adjusted Operating Income | $213,871 | $301,931 | Consolidated Results of Operations Q2 2025 total revenues fell 4.1% to $600.0 million, primarily due to a 20.4% drop in advertising revenue, while operating income surged to $64.5 million due to the absence of prior-year impairment charges Q2 2025 vs Q2 2024 Revenue Breakdown (in thousands) | Revenue Stream | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Subscription | $367,428 | $372,180 | (1.3)% | | Advertising | $148,609 | $186,723 | (20.4)% | | Content licensing and other | $83,987 | $67,031 | 25.3% | | Total revenues, net | $600,024 | $625,934 | (4.1)% | - The significant increase in operating income in Q2 2025 was primarily due to the absence of a $96.8 million impairment charge that was recorded in Q2 2024141162 - A gain on extinguishment of debt of $25.7 million was recognized in Q2 2025 from repurchasing $99.1 million of Senior Notes at a discount141167 Segment Results of Operations Domestic Operations saw a 2.1% revenue decline in Q2 2025 despite a 12.5% increase in streaming revenue, while International revenue fell 16.2%, leading to decreased adjusted operating income for both segments Domestic Operations Performance - Q2 2025 (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenues, net | $526,853 | $538,291 | (2.1)% | | Segment adjusted operating income | $126,339 | $155,348 | (18.7)% | - Domestic streaming revenues grew 12.5% to $169.0 million in Q2 2025, driven by price increases. Streaming subscribers reached 10.4 million at June 30, 2025179180 International Performance - Q2 2025 (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenues, net | $75,535 | $90,095 | (16.2)% | | Segment adjusted operating income | $14,737 | $29,265 | (49.6)% | - International advertising revenue decline was primarily due to a one-time $13.4 million retroactive adjustment recognized in Q2 2024192199 Liquidity and Capital Resources As of June 30, 2025, the company held $866.4 million in cash, was compliant with debt covenants at a 4.45:1.00 net leverage ratio, and issued $400 million in new Senior Secured Notes in July 2025 to fund debt tenders - The company held $866.4 million in cash and cash equivalents as of June 30, 2025201 - The company was in compliance with its debt covenants, with a total net leverage ratio of approximately 4.45:1.00 and an interest coverage ratio of approximately 2.46:1.00205 - Subsequent to the quarter end, on July 3, 2025, the company issued $400 million of 10.500% Senior Secured Notes due 2032. Proceeds were used to tender for $600 million of existing Senior Notes and repay other borrowings209 - Under its stock repurchase program, the company bought back 1.6 million shares for approximately $10.3 million in H1 2025. $124.9 million of authorization remained as of June 30, 2025211217 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates and foreign currency fluctuations, with 85% of debt at fixed rates, and a 100 basis point interest rate increase would raise annual interest expense by $3.3 million on variable-rate debt - A hypothetical 100 basis point increase in interest rates would increase annual interest expense by $3.3 million on the company's $329.4 million of variable-rate debt233 - The company recognized foreign currency transaction gains of $16.7 million for the six months ended June 30, 2025, compared to losses of $3.9 million in the prior year period236 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025238 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls239 PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 14 of the financial statements for a detailed description of the company's legal proceedings, which includes ongoing litigation related to 'The Walking Dead' franchise - For details on legal proceedings, the report refers to Note 14 in the financial statements240 Item 1A. Risk Factors A key risk factor is the potential for the Trump administration to impose tariffs on movies produced outside the U.S., which could materially increase production costs and adversely affect financial results - A key risk factor discussed is the potential for the Trump administration to impose tariffs on movies produced outside the U.S., which could materially increase production costs and adversely affect financial results242 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, the company repurchased 1,594,254 shares of Class A Common Stock, with $124.9 million remaining authorized for future repurchases under the program as of June 30, 2025 Q2 2025 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | — | $— | | May 2025 | 1,194,254 | $6.42 | | June 2025 | 400,000 | $6.65 | | Total Q2 | 1,594,254 | N/A | - As of June 30, 2025, $124.9 million remained authorized for repurchase under the company's stock buyback program243 Item 6. Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including incorporation by reference of articles of incorporation, bylaws, and debt indentures, as well as certifications from the CEO and CFO