Scripps Networks Interactive reports third quarter financial results
Scripps Networks Interactive reports third quarter financial results
Revenues of $566 million, up 12 percent
Segment profit of $251 million, up 15 percent
Income from continuing operations of $0.78 per share, up 20 percent
KNOXVILLE, Tenn.--(BUSINESS WIRE)-- Scripps Networks Interactive, Inc. (NYS: SNI) today reported operating results for the third quarter 2012.
Consolidated revenues for the quarter increased 12 percent to $566 million from the prior-year period. Results for the three-month period ended Sept. 30 reflect strong advertising revenue of $377 million, up 10 percent, and affiliate fee revenue of $175 million, up 18 percent year-over-year.
Expenses for the quarter increased 11 percent from the prior-year period to $315 million. The increase was driven primarily by higher employee costs and investments in planned domestic and international growth initiatives. Also contributing to the increase was higher marketing and promotional expenses to drive viewership at all of the company's lifestyle television networks.
Total segment profit increased 15 percent to $251 million. (See note 2 for a definition of segment profit).
Third quarter income from continuing operations attributable to Scripps Networks Interactive was $118 million, or $0.78 per diluted share, compared with $105 million, or $0.65 per diluted share, in the third quarter 2011.
"Our positive third quarter results demonstrate in a powerful way the ubiquitous nature of our popular lifestyle brands," said Kenneth W. Lowe, chairman, president and chief executive officer of Scripps Networks Interactive. "Our networks and related businesses engage millions of media consumers every day, not just on television, but on smart phones, tablets, newsstands and in thousands of retail outlets across America. We've established ourselves as clear leaders in our ability to influence consumer purchasing decisions in the home, food and travel categories. And in the process, we've created tremendous value for our shareholders," Lowe said.
Revenues by network were as follows:
Food Network was $199 million, up 11 percent.
HGTV was $195 million, up 8.1 percent.
Travel Channel was $68.9 million, up 10 percent.
DIY Network was $29.9 million, up 26 percent.
Cooking Channel was $21.6 million, up 31 percent.
Great American Country (GAC) was $6.9 million, up 15 percent.
Revenue from the company's digital businesses, which include its network-branded websites, was $27.7 million, up 12 percent.
Conference call
The senior management team of Scripps Networks Interactive will discuss the company's third quarter results during a telephone conference call at 10 a.m. ET today. Scripps Networks Interactive will offer a live webcast of the conference call. To access the webcast, visit www.scrippsnetworksinteractive.comand follow the Investors link at the top of the page. The webcast link can be found next to the microphone icon on the investor relations landing page.
To access the conference call by telephone, dial 800-230-1085 (U.S.) or 612-288-0337 (international) approximately ten minutes before the start of the call. Callers will need the name of the call, "SNI Third Quarter Earnings Call," to be granted access. Callers also will be asked to provide their name and company affiliation. The media and general public are granted access to the conference call on a listen-only basis.
A replay line will be open from 12:30 p.m. ET Nov. 1 until 11:59 p.m. ET Nov. 15. The domestic number to access the replay is 800-475-6701 and the international number is 320-365-3844. The access code for both numbers is 266000. A replay of the conference call also will be available online. To access the audio replay, visit www.scrippsnetworksinteractive.com approximately four hours after the call, choose Investors then follow the Audio Archives link on the top right side of the investor relations landing page.
Forward-looking statements
This press release contains certain forward-looking statements related to the company's businesses that are based on management's current expectations. Forward-looking statements are subject to certain risks, trends and uncertainties, including changes in advertising demand and other economic conditions that could cause actual results to differ materially from the expectations expressed in forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. The company's written policy on forward-looking statements can be found on page F-3 of its 2011 Form 10-K filed with the Securities and Exchange Commission.
The company undertakes no obligation to publicly update any forward-looking statements to reflect events or circumstances after the date the statement is made.
About Scripps Networks Interactive
Scripps Networks Interactive is one of the leading developers of lifestyle-oriented content for television and the Internet, where on-air programming is complemented with online video, social media areas and e-commerce components on companion websites and broadband vertical channels. The company's media portfolio includes popular lifestyle television and Internet brands Food Network, HGTV, Travel Channel, DIY Network, Cooking Channel and country music network Great American Country.
SCRIPPS NETWORKS INTERACTIVE, INC. | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(unaudited) | Three months ended | Nine months ended | ||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
(in thousands, except per share data) | 2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||||
Operating revenues | $ | 566,186 | $ | 503,744 | 12.4 | % | $ | 1,702,517 | $ | 1,518,559 | 12.1 | % | ||||||||
Cost of services, excluding depreciation and amortization of intangible assets | (156,297 | ) | (147,563 | ) | 5.9 | % | (444,981 | ) | (383,271 | ) | 16.1 | % | ||||||||
Selling, general and administrative | (158,823 | ) | (137,710 | ) | 15.3 | % | (482,554 | ) | (415,466 | ) | 16.1 | % | ||||||||
Depreciation and amortization of intangible assets | (28,978 | ) | (22,736 | ) | 27.5 | % | (79,432 | ) | (66,471 | ) | 19.5 | % | ||||||||
Gains (losses) on disposal of property and equipment | (16 | ) | 82 | (102 | ) | 63 | ||||||||||||||
Operating income | 222,072 | 195,817 | 13.4 | % | 695,448 | 653,414 | 6.4 | % | ||||||||||||
Interest expense | (12,518 | ) | (9,157 | ) | 36.7 | % | (37,945 | ) | (26,348 | ) | 44.0 | % | ||||||||
Equity in earnings of affiliates | 11,240 | 7,035 | 59.8 | % | 46,267 | 29,717 | 55.7 | % | ||||||||||||
Miscellaneous, net | 1,667 | (23,972 | ) | 12,689 | (23,504 | ) | ||||||||||||||
Income from continuing operations before income taxes | 222,461 | 169,723 | 31.1 | % | 716,459 | 633,279 | 13.1 | % | ||||||||||||
Provision for income taxes | (65,653 | ) | (33,183 | ) | 97.9 | % | (211,277 | ) | (174,866 | ) | 20.8 | % | ||||||||
Income from continuing operations, net of tax | 156,808 | 136,540 | 14.8 | % | 505,182 | 458,413 | 10.2 | % | ||||||||||||
Income (loss) from discontinued operations, net of tax | (6,552 | ) | (61,252 | ) | ||||||||||||||||
Net income | 156,808 | 129,988 | 20.6 | % | 505,182 | 397,161 | 27.2 | % | ||||||||||||
Net income attributable to noncontrolling interests | (38,398 | ) | (31,385 | ) | 22.3 | % | (129,505 | ) | (120,604 | ) | 7.4 | % | ||||||||
Net income attributable to SNI | $ | 118,410 | $ | 98,603 | 20.1 | % | $ | 375,677 | $ | 276,557 | 35.8 | % | ||||||||
Income from continuing operations attributable to SNI common shareholders per basic share of common stock | $ | 0.79 | $ | 0.65 | $ | 2.46 | $ | 2.03 | ||||||||||||
Income from continuing operations attributable to SNI common shareholders per diluted share of common stock | $ | 0.78 | $ | 0.65 | $ | 2.44 | $ | 2.02 | ||||||||||||
Weighted average basic shares outstanding | 149,985 | 161,789 | 152,731 | 166,318 | ||||||||||||||||
Weighted average diluted shares outstanding | 151,201 | 162,276 | 153,905 | 167,314 | ||||||||||||||||
Net income per share amounts may not foot since each is calculated independently. | ||||||||||||||||||||
SCRIPPS NETWORKS INTERACTIVE, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(unaudited) | As of | |||||||
September 30, | December 31, | |||||||
2012 | 2011 | |||||||
(in thousands, except per share data) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 439,238 | $ | 760,092 | ||||
Accounts receivable (less allowances: 2012- $5,344; 2011- $5,000) | 530,178 | 553,022 | ||||||
Programs and program licenses | 392,141 | 336,305 | ||||||
Other current assets | 71,203 | 66,549 | ||||||
Total current assets | 1,432,760 | 1,715,968 | ||||||
Investments | 477,551 | 455,267 | ||||||
Property and equipment, net | 223,205 | 219,845 | ||||||
Goodwill | 573,482 | 510,484 | ||||||
Other intangible assets, net | 648,243 | 556,095 | ||||||
Programs and program licenses (less current portion) | 367,642 | 299,089 | ||||||
Unamortized network distribution incentives | 27,842 | 46,239 | ||||||
Other non-current assets | 149,248 | 158,683 | ||||||
Total Assets | $ | 3,899,973 | $ | 3,961,670 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,422 | $ | 12,482 | ||||
Program rights payable | 42,422 | 50,402 | ||||||
Customer deposits and unearned revenue | 38,276 | 52,814 | ||||||
Employee compensation and benefits | 47,694 | 49,920 | ||||||
Accrued marketing and advertising costs | 7,662 | 6,838 | ||||||
Other accrued liabilities | 64,440 | 60,443 | ||||||
Total current liabilities | 209,916 | 232,899 | ||||||
Deferred income taxes | 65,935 | 100,002 | ||||||
Long-term debt | 1,384,148 | 1,383,945 | ||||||
Other liabilities (less current portion) | 209,964 | 148,429 | ||||||
Total liabilities | 1,869,963 | 1,865,275 | ||||||
Redeemable noncontrolling interest | 115,722 | 162,750 | ||||||
Equity: | ||||||||
SNI shareholders' equity: | ||||||||
Preferred stock, $.01 par - authorized: 25,000,000 shares; none outstanding | ||||||||
Common stock, $.01 par: | ||||||||
Class A - authorized: 240,000,000 shares; issued and outstanding: 2012 - 115,461,988 shares; 2011 - 122,828,359 shares | 1,155 | 1,228 | ||||||
Voting - authorized: 60,000,000 shares; issued and outstanding: 2012 - 34,317,173 shares; 2011 - 34,317,173 shares | 343 | 343 | ||||||
Total | 1,498 | 1,571 | ||||||
Additional paid-in capital | 1,381,362 | 1,346,429 | ||||||
Retained earnings | 272,750 | 364,073 | ||||||
Accumulated other comprehensive income (loss) | (24,701 | ) | (33,347 | ) | ||||
Total SNI shareholders' equity | 1,630,909 | 1,678,726 | ||||||
Noncontrolling interest | 283,379 | 254,919 | ||||||
Total equity | 1,914,288 | 1,933,645 | ||||||
Total Liabilities and Equity | $ | 3,899,973 | $ | 3,961,670 | ||||
SCRIPPS NETWORKS INTERACTIVE, INC. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(unaudited) | Nine months ended | ||||||
September 30, | |||||||
(in thousands) | 2012 | ||||||
