10-QPeriod: Q2 FY2012

Warner Bros. Discovery, Inc. Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 31, 2012For Securities:WBD

Summary

Warner Bros. Discovery, Inc. (WBD) reported its second-quarter 2012 financial results, demonstrating continued revenue growth across its key segments. Total revenues increased by 7% to $1.14 billion for the quarter ended June 30, 2012, compared to the same period in 2011, driven by strong performance in both distribution and advertising. For the six-month period, revenues grew 11% to $2.24 billion. The company's operational efficiency is evident in its controlled cost increases, leading to a 9% rise in operating income for the quarter to $487 million, though operating income for the six-month period saw a slight decrease of 2% to $933 million, influenced by a gain on disposition in the prior year. Net income available to stockholders for the quarter rose 15% to $293 million. Key financial strengths include a solid cash position of $1.7 billion, an increase from $1.05 billion at the end of 2011, and significant financial flexibility with a $1.0 billion revolving credit facility. The company actively returned capital to shareholders through a substantial stock repurchase program, repurchasing $404 million worth of stock in the second quarter. Long-term debt increased primarily due to a new $1 billion senior note issuance, indicating strategic use of debt financing. Overall, WBD appears to be executing its strategy effectively, driving revenue growth while managing costs and investing in its content library.

Financial Highlights

50 data points
Beta

Revenue

$1.13B

73.5% Gross Margin

Net Income

$293.00M

26.0% Net Margin

EPS (Diluted)

$0.76

Total Assets

$12.81B

Cash & Equivalents

$1.70B

Free Cash Flow

$138.00M

Financial Statements
Beta
Revenue$1.13B
Cost of Revenue$298.00M
Gross Profit$828.00M
SG&A Expenses$307.00M
Operating Expenses$638.00M
Operating Income$488.00M
Interest Expense$61.00M
Net Income$293.00M
EPS (Basic)$0.77
EPS (Diluted)$0.76
Shares Outstanding (Basic)381.00M
Shares Outstanding (Diluted)384.00M

Key Highlights

  • 1Total revenues increased 7% year-over-year to $1.14 billion for the second quarter of 2012.
  • 2Distribution and advertising revenues showed robust growth, increasing by 8% and 8% respectively for the quarter.
  • 3Net income available to Discovery Communications, Inc. stockholders rose 15% to $293 million for the second quarter.
  • 4Cash and cash equivalents grew to $1.7 billion as of June 30, 2012, up from $1.05 billion at the end of 2011.
  • 5The company repurchased $404 million of its common stock during the second quarter of 2012, reflecting a commitment to shareholder returns.
  • 6Long-term debt increased significantly due to a $1 billion issuance of senior notes, strengthening the company's capital structure.
  • 7Adjusted OIBDA for the U.S. Networks segment increased 8% year-over-year to $426 million, indicating strong operational performance in its largest segment.

Frequently Asked Questions

WBD reported a 7% increase in total revenues for the second quarter ended June 30, 2012, reaching $1.14 billion. This growth was primarily driven by an 8% rise in distribution revenue and an 8% increase in advertising revenue, demonstrating continued demand for its content and platforms.

Costs of revenues, excluding depreciation and amortization, increased by 9% to $314 million, and selling, general, and administrative expenses rose by 3% to $308 million for the second quarter. While costs increased, they generally grew at a slower pace than revenues, contributing to a 9% increase in operating income to $487 million for the quarter.

WBD significantly improved its cash position, with cash and cash equivalents totaling $1.7 billion as of June 30, 2012, a substantial increase from $1.05 billion at the end of 2011. The company also issued $1 billion in senior notes during the quarter, increasing its total long-term debt to $5.2 billion but also enhancing its financial flexibility and providing capital for operations and strategic initiatives.

WBD actively engaged in its stock repurchase program, buying back $404 million worth of its common stock during the second quarter of 2012. This demonstrates a commitment to returning capital to shareholders and potentially increasing per-share value.