Summary
Warner Bros. Discovery, Inc. (WBD) has updated its 2023 financial guidance due to the ongoing WGA and SAG-AFTRA strikes. The company now anticipates lower Adjusted EBITDA, projected to be in the range of $10.5 billion to $11 billion, with an estimated negative impact of $300 million to $500 million directly attributable to the strikes. This revision reflects the assumption that the strikes will persist through the end of the year, impacting content production and release schedules. Despite the adjusted EBITDA outlook, WBD is raising its full-year Free Cash Flow (FCF) expectation to at least $5 billion, and anticipates exceeding $1.7 billion in FCF for the third quarter of 2023. This improved FCF outlook is partly driven by the strong performance of "Barbie" and the incremental effects of strike-related factors. The company also remains on track to achieve its net leverage targets, expecting to be below 4.0x by year-end 2023 and within the 2.5x-3.0x gross leverage range by the end of 2024.
Key Highlights
- 1WBD revising 2023 Adjusted EBITDA guidance downward to $10.5 - $11 billion due to prolonged WGA/SAG-AFTRA strikes.
- 2Expected negative impact on Adjusted EBITDA from strikes is estimated between $300 - $500 million.
- 3Raising full-year 2023 Free Cash Flow (FCF) guidance to at least $5 billion.
- 4Anticipating over $1.7 billion in Q3 2023 FCF, boosted by 'Barbie' performance and strike impacts.
- 5Maintaining net leverage target of below 4.0x by end of 2023.
- 6Maintaining gross leverage target range of 2.5x-3.0x by end of 2024.
- 7Company continues to work towards a fair resolution of the ongoing strikes.