News (US:NWSA)2024-05-09 10:59Part I. Financial Information Financial Statements The company reported Q3 fiscal 2024 revenues of $2.42 billion and nine-month operating cash flow of $844 million Consolidated Statements of Operations | Financial Metric | Q3 2024 (ended Mar 31) | Q3 2023 (ended Mar 31) | YoY Change | Nine Months 2024 | Nine Months 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,423 M | $2,447 M | -1% | $7,508 M | $7,446 M | +1% | | Net Income | $42 M | $59 M | -29% | $283 M | $219 M | +29% | | Net Income to Stockholders | $30 M | $50 M | -40% | $216 M | $157 M | +38% | | Diluted EPS | $0.05 | $0.09 | -44% | $0.38 | $0.27 | +41% | Consolidated Balance Sheets | Balance Sheet Item | March 31, 2024 (unaudited) | June 30, 2023 (audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $1,943 M | $1,833 M | | Total current assets | $4,128 M | $4,053 M | | Total assets | $16,544 M | $16,921 M | | Total current liabilities | $3,042 M | $3,165 M | | Total borrowings | $2,900 M | $2,967 M | | Total equity | $8,908 M | $8,945 M | Consolidated Statements of Cash Flows | Cash Flow Item (Nine Months Ended Mar 31) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $844 M | $670 M | | Net cash used in investing activities | ($404 M) | ($440 M) | | Net cash used in financing activities | ($317 M) | ($382 M) | | Net change in cash and cash equivalents | $123 M | ($152 M) | Notes to the Unaudited Consolidated Financial Statements - For the nine months ended March 31, 2024, the company recorded restructuring charges of $62 million related to employee termination benefits39 - During the nine months ended March 31, 2024, both the Foxtel Group and REA Group completed significant debt refinancing activities5255 - As of March 31, 2024, the company had approximately $495 million remaining under its $1 billion stock repurchase program6263 - The company has accrued approximately $70 million for liabilities related to the U.K. Newspaper Matters, which are largely indemnified by FOX Corporation9192 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses a 1% Q3 revenue decline, flat Segment EBITDA, and strong operating cash flow of $844 million Overview of the Company's Businesses - The company's 5% headcount reduction initiative is expected to generate at least $160 million in annualized gross cost savings126 - News UK and DMG Media received regulatory approval for a proposed joint venture to combine certain printing operations127 Results of Operations | Performance Metric | Q3 2024 | Q3 2023 | YoY Change | Nine Months 2024 | Nine Months 2023 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,423 M | $2,447 M | -1% | $7,508 M | $7,446 M | +1% | | Total Segment EBITDA | $322 M | $320 M | +1% | $1,159 M | $1,079 M | +7% | - The Q3 revenue decrease was driven by lower advertising and currency headwinds, partially offset by growth at Digital Real Estate Services and Dow Jones130 - Equity losses of affiliates decreased by $38 million for the nine-month period due to the absence of prior-year losses from an investment143 Segment Analysis | Segment | Q3 2024 Revenue | YoY Change | Q3 2024 Segment EBITDA | YoY Change | | :--- | :--- | :--- | :--- | :--- | | Digital Real Estate Services | $388 M | +7% | $104 M | +2% | | Subscription Video Services | $455 M | -5% | $66 M | -3% | | Dow Jones | $544 M | +3% | $118 M | +8% | | Book Publishing | $506 M | -2% | $62 M | +2% | | News Media | $530 M | -6% | $26 M | -24% | - Digital Real Estate: Growth was driven by a 15% revenue increase at REA Group, which offset a 6% decline at Move158 - Dow Jones: Growth was led by a 10% increase in professional information business revenues, with total subscriptions for The Wall Street Journal growing 8%177179181 - News Media: Performance was negatively impacted by a 13% decline in advertising revenues, attributed to lower print and digital advertising194 Liquidity and Capital Resources - The company's principal source of liquidity is internally generated funds and cash on hand, which stood at $1.9 billion as of March 31, 2024202 | Cash Flow Metric (Nine Months Ended Mar 31) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $844 M | $670 M | | Free cash flow | $491 M | $320 M | | Free cash flow available to News Corporation | $378 M | $258 M | - During the nine-month period, the Foxtel Group refinanced its debt with a new A$1.2 billion syndicated credit facility221226 Quantitative and Qualitative Disclosures About Market Risk The company's market risk sensitivity assessment remains unchanged from the last annual report - There has been no material change in the Company's assessment of its sensitivity to market risk since its last annual report236 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective237 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls238 Part II. Other Information Legal Proceedings This section details ongoing legal matters, including antitrust complaints and U.K. Newspaper claims - For details on legal proceedings, the report refers to Note 9 in the financial statements, which covers matters such as the HarperCollins antitrust complaints and the U.K. Newspaper Matters2418990 Risk Factors No material changes to risk factors have occurred since the last annual report - There have been no material changes to the risk factors described in the 2023 Form 10-K242 Issuer Purchases of Equity Securities The company repurchased $27 million of its shares in Q3, with $495 million remaining under its program | Period (2024) | Class A Shares Purchased (M) | Class B Shares Purchased (M) | Total Shares Purchased (M) | Approx. Value (M) | | :--- | :--- | :--- | :--- | :--- | | Jan 1 - Jan 28 | 0.1 | 0.1 | 0.2 | $4.9 | | Jan 29 - Mar 3 | 0.3 | 0.1 | 0.4 | $10.4 | | Mar 4 - Mar 31 | 0.3 | 0.1 | 0.4 | $10.5 | | Total Q3 | 0.7 | 0.3 | 1.0 | $25.8 | - As of March 31, 2024, the remaining authorized amount under the company's stock repurchase program was approximately $495 million205244 Other Information The company amended the employment agreement for its General Counsel, extending the term to 2028 - The company entered into an amended employment agreement with General Counsel David B. Pitofsky, effective July 1, 2024, extending his term to June 30, 2028248 Exhibits This section lists filed exhibits, including executive agreements, certifications, and XBRL data - Exhibits filed with the report include the amended employment agreement for David Pitofsky, CEO/CFO certifications, and financial statements in Inline XBRL format255