10-QPeriod: Q1 FY2016

Warner Bros. Discovery, Inc. Quarterly Report for Q1 Ended Mar 31, 2016

Filed May 5, 2016For Securities:WBD

Summary

Warner Bros. Discovery, Inc. (WBD) reported modest revenue growth and a slight increase in net income for the first quarter of 2016 compared to the prior year. Total revenues increased by 2% to $1.56 billion, driven by a 6% rise in distribution revenue, which benefited from contractual rate increases and subscriber growth in key international markets. Advertising revenue remained flat year-over-year. The company's operating income saw a marginal increase of 1% to $489 million. While costs of revenue and SG&A expenses also rose, they were largely offset by a gain on disposition. Debt levels increased slightly, with outstanding borrowings under the revolving credit facility at $614 million. The company maintained a strong liquidity position with $333 million in cash and cash equivalents and an undrawn revolving credit facility of $1.385 billion, indicating sound financial health to support ongoing operations and strategic initiatives.

Financial Highlights

44 data points
Beta

Revenue

$1.56B

62.1% Gross Margin

Net Income

$263.00M

16.8% Net Margin

Total Assets

$15.88B

Cash & Equivalents

$333.00M

Free Cash Flow

$47.00M

Financial Statements
Beta
Revenue$1.56B
Cost of Revenue$592.00M
Gross Profit$969.00M
SG&A Expenses$408.00M
Operating Expenses$1.07B
Operating Income$489.00M
Interest Expense$85.00M
Net Income$263.00M

Key Highlights

  • 1Total revenues increased by 2% to $1.56 billion in Q1 2016, up from $1.54 billion in Q1 2015.
  • 2Distribution revenue grew by 6% to $801 million, driven by U.S. Networks (8% increase) and International Networks (7% increase, excluding currency impacts).
  • 3Operating income saw a modest increase of 1% to $489 million.
  • 4Net income available to Discovery Communications, Inc. stockholders rose by 5% to $263 million.
  • 5The company's cash and cash equivalents stood at $333 million, with $1.385 billion in unused capacity under its revolving credit facility, indicating strong liquidity.
  • 6The company issued $500 million in senior notes in March 2016.
  • 7The company announced a cost-savings plan expected to be substantially completed by the end of Q3 2016, with estimated expenses of $40 million to $60 million.

Frequently Asked Questions

For the three months ended March 31, 2016, Warner Bros. Discovery, Inc. (WBD) reported total revenues of $1.56 billion, a 2% increase compared to $1.54 billion in the same period last year. This growth was primarily driven by an increase in distribution revenue, which rose by 6% to $801 million.

As of March 31, 2016, WBD had $333 million in cash and cash equivalents. The company had $614 million in outstanding borrowings under its $2.0 billion revolving credit facility, leaving $1.385 billion in unused capacity, indicating strong liquidity. Additionally, the company issued $500 million in senior notes in March 2016.

The U.S. Networks segment showed strong performance with an 8% increase in revenue and an 11% increase in Adjusted OIBDA, driven by growth in distribution and advertising. The International Networks segment experienced a 3% decrease in revenue, although distribution revenue grew, this was offset by a decline in advertising and other revenues, leading to a 14% decrease in Adjusted OIBDA for the segment.

Yes, WBD announced a cost-savings plan on May 4, 2016, which is expected to be substantially completed by the end of the third quarter of 2016. This plan includes personnel adjustments and budget re-allocations, with estimated severance and related expenses ranging between $40 million and $60 million.