Viacom Reports Second Quarter Results
Quarterly Revenues Increased 8%, Driven by Strong Improvements across
Year-to-Date Net Cash Provided by Operating Activities Increased to
Company Continued Execution of its Strategic Plan
This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20170504005628/en/
In less than a year, Nickelodeon's The Loud House has already become a worldwide ratings success. (Photo: Nickelodeon)
"Viacom also took significant steps forward on our plan to strengthen
our balance sheet, improve our leverage profile and enhance liquidity.
Since the end of our first fiscal quarter, we completed a successful
hybrid debt offering, redeemed outstanding debt and executed on the sale
of non-core assets, including the pending sale of our stake in
FISCAL YEAR 2017 RESULTS |
||||||||||||||||||||||
(in millions, except per share amounts) |
Quarter Ended |
B/(W) |
Six Months Ended |
B/(W) |
||||||||||||||||||
2017 |
2016 |
2017 vs.
2016 |
2017 |
2016 |
2017 vs.
2016 |
|||||||||||||||||
GAAP |
||||||||||||||||||||||
Revenues |
$ | 3,256 | $ | 3,001 | 8 | % | $ | 6,580 | $ | 6,155 | 7 | % | ||||||||||
Operating income |
332 |
586 |
(43 | ) |
1,038 |
1,425 |
(27 | ) | ||||||||||||||
Net earnings attributable to |
121 |
303 |
(60 | ) |
517 |
752 |
(31 | ) | ||||||||||||||
Diluted EPS |
0.30 |
0.76 |
(61 | ) |
1.30 |
1.89 |
(31 | ) | ||||||||||||||
Non-GAAP* |
||||||||||||||||||||||
Adjusted operating income |
$ |
612 |
$ |
586 |
4 |
% |
$ |
1,360 |
$ |
1,425 |
(5 |
)% |
||||||||||
Adjusted net earnings attributable to |
317 |
303 |
5 |
% |
730 |
773 |
(6 |
) |
||||||||||||||
Adjusted diluted EPS |
0.79 |
0.76 |
4 |
% |
1.83 |
194 |
(6 |
) |
* Non-GAAP measures referenced in this release are detailed in the Supplemental Disclosures at the end of this release.
Revenues in the second fiscal quarter were
MEDIA NETWORKS
Media Networks revenues increased 1% to
Affiliate revenues grew 2% to
Advertising revenues decreased 1% to
Ancillary revenues remained flat at
Media Networks reported adjusted operating income was
Performance highlights:
- Nickelodeon achieved year-over-year ratings growth of 6% with kids 6-11 and 5% with kids 2-11. In the quarter, the network also had 10 of the top 10 TV shows with kids 2-11 and 6-11, and four of the top five shows with kids 2-5.
-
Comedy Central's
The Daily Show withTrevor Noah - the number one daily late night show with millennials - delivered its most-watched quarter to date, and digital viewing was up 37% versus the prior year, marking its best quarter ever for digital consumption. -
In March,
Viacom announced programming for the launch of theParamount Network in 2018. Four original productions (American Woman; Heathers; Waco; and I AmMartin Luther King , Jr.) will premiere in the second fiscal quarter along with new seasons of Lip Sync Battle; Ink Master; and Bar Rescue; and new events from Bellator MMA. -
VH1 continues its resurgence with a seventh consecutive quarter of year-over-year ratings growth, whileTV Land and CMT achieved their best quarterly ratings in three years. -
Telefe was
Argentina's monthly ratings leader in every major time period, while Colors inIndia co-led primetime ratings across Hindi general entertainment channels in the quarter.
FILMED ENTERTAINMENT
Theatrical revenues rose 10% to
Licensing revenues increased 45% to
Home entertainment revenues increased 29% to
Ancillary revenues increased 149% to
Performance highlights:
-
In March,
Viacom announced the appointment of industry veteranJim Gianopulos , as Chairman and CEO of Paramount Pictures, whose responsibilities include the implementation of a new strategic plan for the studio. -
Paramount achieved significant revenue gains across all of its business units: theatrical, home entertainment, licensing and ancillary. -
xXx: Return of
Xander Cage showed global strength, grossing more than$346 million at the worldwide box office. - Paramount Television continues to build on its growing success as a premier content producer, delivering multiple hits including original series 13 Reasons Why and Shooter.
BALANCE SHEET AND LIQUIDITY
At
The Company's cash balance was
About
For more information about
Cautionary Statement Concerning Forward-Looking Statements
This news release contains both historical and forward-looking
statements. All statements that are not statements of historical fact
are, or may be deemed to be, forward-looking statements. Forward-looking
statements reflect our current expectations concerning future results,
objectives, plans and goals, and involve known and unknown risks,
uncertainties and other factors that are difficult to predict and which
may cause future results, performance or achievements to differ. These
risks, uncertainties and other factors include, among others: the effect
of recent changes in management and our board of directors; the ability
of our recently-announced strategic initiatives to achieve their
operating objectives; the public acceptance of our brands, programs,
motion pictures and other entertainment content on the various platforms
on which they are distributed; the impact of inadequate audience
measurement on our program ratings and advertising and affiliate
revenues; technological developments and their effect in our markets and
on consumer behavior; competition for content, audiences, advertising
and distribution; the impact of piracy; economic fluctuations in
advertising and retail markets, and economic conditions generally;
fluctuations in our results due to the timing, mix, number and
availability of our motion pictures and other programming; the potential
for loss of carriage or other reduction in the distribution of our
content; changes in the Federal communications or other laws and
regulations; evolving cybersecurity and similar risks; other domestic
and global economic, business, competitive and/or regulatory factors
affecting our businesses generally; and other factors described in our
news releases and filings with the
(Unaudited) |
|||||||||||||||||||
Quarter Ended |
Six Months Ended |
||||||||||||||||||
(in millions, except per share amounts) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Revenues | $ | 3,256 | $ | 3,001 | $ | 6,580 | $ | 6,155 | |||||||||||
Expenses: | |||||||||||||||||||
Operating | 1,944 | 1,654 | 3,763 | 3,247 | |||||||||||||||
Selling, general and administrative | 748 | 705 | 1,449 | 1,372 | |||||||||||||||
Depreciation and amortization | 58 | 56 | 114 | 111 | |||||||||||||||
Restructuring | 174 | — | 216 | — | |||||||||||||||
Total expenses | 2,924 | 2,415 | 5,542 | 4,730 | |||||||||||||||
Operating income | 332 | 586 | 1,038 | 1,425 | |||||||||||||||
Interest expense, net | (158 | ) | (155 | ) | (314 | ) | (310 | ) | |||||||||||
Equity in net earnings of investee companies | 18 | 35 | 31 | 66 | |||||||||||||||
Loss on extinguishment of debt | (30 | ) | — | (36 | ) | — | |||||||||||||
Other items, net | (8 | ) | (6 | ) | 1 | (4 | ) | ||||||||||||
Earnings before provision for income taxes | 154 | 460 | 720 | 1,177 | |||||||||||||||
Provision for income taxes | (26 | ) | (151 | ) | (184 | ) | (407 | ) | |||||||||||
Net earnings ( |
128 | 309 | 536 | 770 | |||||||||||||||
Net earnings attributable to noncontrolling interests | (7 | ) | (6 | ) | (19 | ) | (18 | ) | |||||||||||
Net earnings attributable to |
$ | 121 | $ | 303 | $ | 517 | $ | 752 | |||||||||||
Basic earnings per share attributable to |
$ |
0.30 |
$ |
0.76 |
$ |
1.30 |
$ |
1.90 |
|||||||||||
Diluted earnings per share attributable to |
$ | 0.30 | $ | 0.76 | $ | 1.30 | $ | 1.89 | |||||||||||
Weighted average number of common shares outstanding: | |||||||||||||||||||
Basic | 398.2 | 396.1 | 397.6 | 396.4 | |||||||||||||||
Diluted | 399.5 | 397.4 | 398.7 | 397.9 | |||||||||||||||
Dividends declared per share of Class A and Class B common stock | $ | 0.20 | $ | 0.40 | $ | 0.40 | $ | 0.80 |
|
||||||||
(Unaudited) |
||||||||
(in millions, except par value) |
|
|
||||||
2017 |
2016 |
|||||||
|
|
|||||||
ASSETS |
||||||||
Current assets: | ||||||||
Cash and cash equivalents |
$ |
671 |
$ |
379 | ||||
Receivables, net |
3,031 |
2,712 | ||||||
Inventory, net |
918 |
844 | ||||||
Prepaid and other assets |
508 |
587 | ||||||
Total current assets |
5,128 |
4,522 | ||||||
Property and equipment, net |
964 |
932 | ||||||
Inventory, net |
4,058 |
4,032 | ||||||
|
11,609 |
11,400 | ||||||
Intangibles, net |
325 |
315 | ||||||
Other assets |
1,258 |
1,307 | ||||||
Total assets | $ |
23,342 |
$ |
22,508 | ||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: | ||||||||
Accounts payable | $ |
347 |
$ |
453 | ||||
Accrued expenses |
791 |
773 | ||||||
Participants' share and residuals |
838 |
801 | ||||||
Program obligations |
716 |
692 | ||||||
Deferred revenue |
382 |
419 | ||||||
Current portion of debt |
18 |
17 | ||||||
Other liabilities |
468 |
517 | ||||||
Total current liabilities |
3,560 |
3,672 | ||||||
Noncurrent portion of debt |
12,171 |
11,896 | ||||||
Participants' share and residuals |
354 |
358 | ||||||
Program obligations |
548 |
311 | ||||||
Deferred tax liabilities, net |
292 |
381 | ||||||
Other liabilities |
1,434 |
1,349 | ||||||
Redeemable noncontrolling interest |
200 |
211 | ||||||
Commitments and contingencies |
||||||||
Class A common stock, par value |
— |
— |
||||||
Class B common stock, par value |
— |
— |
||||||
Additional paid-in capital |
10,143 |
10,139 |
||||||
|
(20,635 |
) |
(20,798 |
) |
||||
Retained earnings |
15,987 |
15,628 |
||||||
Accumulated other comprehensive loss |
(761 |
) |
(692 |
) |
||||
Total |
4,734 |
4,277 |
||||||
Noncontrolling interests |
49 |
53 |
||||||
Total equity |
4,783 |
4,330 |
||||||
Total liabilities and equity |
$ |
23,342 |
$ |
22,508 |
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(Unaudited) |
||||||||
Six Months Ended |
||||||||
(in millions) |
2017 |
2016 |
||||||
OPERATING ACTIVITIES | ||||||||
Net earnings ( |
$ |
536 |
$ | 770 | ||||
Reconciling items: | ||||||||
Depreciation and amortization |
114 |
111 | ||||||
Feature film and program amortization |
2,312 |
2,106 | ||||||
Equity-based compensation |
50 |
52 | ||||||
Equity in net earnings and distributions from investee companies |
(5 |
) |
|
(62 |
) |
|||
Deferred income taxes |
(150 |
) |
377 |
|||||
Operating assets and liabilities, net of acquisitions: | ||||||||
Receivables |
(199 |
) |
52 | |||||
Production and programming |
(2,048 |
) |
(2,500 | ) | ||||
Accounts payable and other current liabilities |
(258 |
) |
(508 | ) | ||||
Other, net |
53 |
(114 | ) | |||||
Net cash provided by operating activities |
405 |
284 | ||||||
INVESTING ACTIVITIES | ||||||||
Acquisitions and investments, net |
(343 |
) |
(44 | ) | ||||
Capital expenditures |
(95 |
) |
(54 | ) | ||||
Proceeds received from grantor trusts |
49 |
— | ||||||
Sale of marketable securities |
108 |
— | ||||||
Net cash flow used in investing activities |
(281 |
) |
(98 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Borrowings |
2,569 |
— | ||||||
Debt repayments |
(2,300 |
) |
— | |||||
Commercial paper |
|
— |
250 | |||||
Purchase of treasury stock |
|
— |
(100 | ) | ||||
Dividends paid |
(159 |
) |
(318 | ) | ||||
Exercise of stock options |
115 |
3 | ||||||
Other, net |
(34 |
) |
(43 | ) | ||||
Net cash provided by/(used in) financing activities |
191 |
(208 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
(23 |
) |
(4 | ) | ||||
Net change in cash and cash equivalents |
292 |
(26 | ) | |||||
Cash and cash equivalents at beginning of period |
379 |
506 | ||||||
Cash and cash equivalents at end of period | $ |
671 |
$ | 480 |
SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION
The following tables reconcile our results for the quarter and six
months ended
(in millions, except per share amounts) | |||||||||||||||||
|
Quarter Ended |
||||||||||||||||
|
Operating Income |
Earnings Before Provision for Income Taxes |
Provision for Income Taxes (1) |
Net Earnings Attributable to |
Diluted EPS |
||||||||||||
|
|||||||||||||||||
Reported results (GAAP) |
$ |
332 |
$ |
154 |
$ |
26 |
|
$ |
121 |
$ |
0.30 |
||||||
Factors Affecting Comparability: | |||||||||||||||||
Restructuring and programming charges (2) |
280 |
280 |
100 |
|
180 |
0.45 |
|||||||||||
Loss on extinguishment of debt (3) |
— |
30 |
10 |
|
20 |
0.05 |
|||||||||||
Discrete tax benefit (4) |
— |
— |
4 |
|
(4 |
) |
(0.01 |
) |
|||||||||
Adjusted results (Non-GAAP) |
$ |
612 |
$ |
464 |
$ |
140 |
|
$ |
317 |
$ |
0.79 |
||||||
Six Months Ended |
|||||||||||||||||
|
Operating Income |
Earnings Before Provision for Income Taxes |
Provision for Income Taxes (1) |
Net Earnings Attributable to |
Diluted EPS |
||||||||||||
|
|||||||||||||||||
|
|||||||||||||||||
Reported results (GAAP) |
$ |
1,038 |
$ |
720 |
$ |
184 |
|
$ |
517 |
$ |
1.30 |
||||||
Factors Affecting Comparability: | |||||||||||||||||
Restructuring and programming charges(2) |
322 |
322 |
114 |
|
208 |
0.52 |
|||||||||||
Loss on extinguishment of debt(3) |
— |
36 |
12 |
|
24 |
0.06 |
|||||||||||
Discrete tax benefit(4) |
— |
— |
19 |
|
(19 |
) |
(0.05 |
) |
|||||||||
Adjusted results (Non-GAAP) |
$ |
1,360 |
$ |
1,078 |
$ |
329 |
|
$ |
730 |
$ |
1.83 |
||||||
|
Six Months Ended |
||||||||||||||||
Operating Income |
Earnings Before Provision for Income Taxes |
Provision for Income Taxes (1) |
Net Earnings Attributable to |
Diluted EPS |
|||||||||||||
Reported results (GAAP) |
$ |
1,425 |
$ |
1,177 |
$ |
407 |
|
$ |
752 |
$ |
1.89 |
||||||
Factors Affecting Comparability: | |||||||||||||||||
Discrete tax expense (5) |
— |
— |
(21 |
) |
|
21 |
0.05 |
||||||||||
Adjusted results (Non-GAAP) |
$ |
1,425 |
$ |
1,177 |
$ |
386 |
|
$ |
773 |
$ |
1.94 |
(1) | The tax impact has been calculated by applying the tax rates applicable to the adjustments presented. | |
(2) |
In connection with strategic initiatives, we recognized pre-tax
restructuring and programming charges of |
|
(3) |
In 2017, we redeemed |
|
(4) |
The net discrete tax benefit in the quarter ended |
|
(5) | The net discrete tax expense was principally related to a reduction in qualified production activity tax benefits as a result of retroactively reenacted legislation. |
The following table includes a reconciliation of net cash provided by operating activities (GAAP) to free cash flow and operating free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus capital expenditures, plus excess tax benefits from equity-based compensation awards (actual tax deductions in excess of amounts previously recognized, which is included within financing activities in the statement of cash flows), as applicable. We define operating free cash flow as free cash flow, excluding the impact of the cash premium on the extinguishment of debt, as applicable. Free cash flow and operating free cash flow are non-GAAP measures. Management believes the use of these measures provides investors with an important perspective on, in the case of free cash flow, our liquidity, including our ability to service debt and make investments in our businesses, and, in the case of operating free cash flow, our liquidity from ongoing activities.
Reconciliation of net cash provided by operating activities |
Six Months Ended |
Better/ |
|||||||||||||
(in millions) | 2017 | 2016 | $ | ||||||||||||
Net cash provided by operating activities (GAAP) | $ | 405 | $ | 284 | $ | 121 | |||||||||
Capital expenditures | (95 | ) | (54 | ) | (41 | ) | |||||||||
Free cash flow (Non-GAAP) | 310 | 230 | 80 | ||||||||||||
Debt retirement premium | 33 | — | 33 | ||||||||||||
Operating free cash flow (Non-GAAP) | $ | 343 | $ | 230 | $ | 113 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20170504005628/en/
Press:
Vice President, Corporate Communications and Corporate
Affairs
jeremy.zweig@viacom.com
or
Investors:
Senior Vice President, Investor Relations
james.bombassei@viacom.com
or
Vice President, Investor Relations
kareem.chin@viacom.com
Source:
News Provided by Acquire Media