Silver Spring, MD – Discovery, Inc. (“Discovery” or the “Company”) (NASDAQ: DISCA, DISCB, DISCK) today reported financial results for the second quarter ended June 30, 2018.
“We delivered solid financial results in our first full quarter as a combined company and continued to make great progress with our integration of Scripps Networks Interactive and our pivot to digital, mobile and direct to consumer products and services,” said David Zaslav, President and Chief Executive Officer for Discovery. “As the global leader in real life entertainment, we are uniquely positioned in the media marketplace to deliver long-term value for our passionate superfans, shareholders and business partners around the world.”
Second Quarter 2018 Results
Second quarter revenues of $2,845 million increased 63% on a reported basis compared with the prior year quarter. Excluding the impact of foreign currency fluctuations and the Scripps Networks Interactive (“Scripps Networks”), Motor Trend Group, LLC (“MTG”) and the Oprah Winfrey Network (“OWN”) transactions (collectively, “the Transactions”), revenues remained consistent, with a 5% increase in International Networks, offset by a 1% decrease in U.S. Networks and the sale of the education business on April 30, 2018. On a pro forma combined basis, excluding the impact of foreign currency fluctuations, total company second quarter revenues increased 1%, as International Networks revenues increased 5% and U.S. Networks revenues increased 1%, partially offset by a 69% decrease in Education and Other revenues.
Second quarter Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”) increased 69% to $1,214 million on a reported basis compared with the prior year quarter. Excluding the impact of the Transactions and foreign currency fluctuations, Adjusted OIBDA remained consistent with the prior year quarter with a 12% increase at International Networks, which was offset by a 4% decrease at U.S. Networks. On a pro forma combined basis, excluding the impact of foreign currency fluctuations, total company second quarter Adjusted OIBDA increased 5%, as International Networks’ Adjusted OIBDA increased 14% and U.S. Networks Adjusted OIBDA increased 1%.
Second quarter net income available to Discovery, Inc. (“DCI Net Income”) was $216 million, compared with $374 million in the prior year quarter, as improved operating results were more than offset by higher restructuring and other charges associated with the integration of Scripps Networks, higher interest expense and a gain related to the sale of the education business versus a small loss last year related to the sale of the Raw and Betty production studios. Diluted earnings per share decreased to $0.30 due to lower DCI Net Income. Adjusted Earnings Per Diluted Share (“Adjusted EPS”), which excludes the impact of amortization of acquisition-related intangible assets, net of tax was $0.66. Adjusted EPS excluding restructuring and other charges as well as this year’s gain on disposition versus last year’s small loss on disposition was $0.77, and included $140 million (or $0.20 per share) of after-tax restructuring and other charges and $64 million (or $0.09 per share) of after-tax impact from this year’s gain on disposition versus last year’s small loss on disposition.
Free cash flow increased to $522 million for the second quarter of 2018 as cash flow from operations increased to $556 million while capital expenditures of $34 million were relatively consistent with the prior year. Second quarter cash flow from operations increased primarily due to higher operating results due to the Transactions offset by higher content costs, higher interest expense and higher restructuring costs.
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DISCOVERY, INC. REPORTS SECOND QUARTER 2018 RESULTS