GlobeNewswire Inc | Aug 6, 2021 07:00AM EDT

August 06, 2021

NEW YORK, Aug. 06, 2021 (GLOBE NEWSWIRE) -- AMC Networks Inc. (AMC Networks or the Company) (NASDAQ: AMCX) today reported financial results for the second quarter ended June 30, 2021.

President and Chief Executive Officer Josh Sapan said: AMC Networks had a strong second quarter with impressive financial results domestically as well as internationally, driven by robust growth in revenues for our targeted streaming services, particularly strong advertising growth, and high demand for our world-class content. We continue to advance our position as the worldwide leader in targeted streaming, with high subscriber satisfaction and strong consumption for our services. AMC+, our premium bundled offering, has quickly become our fastest-growing service, driven by expanding distribution and the strong, character-driven dramas that power it. Our streaming momentum and our expanding advertising efforts are enabling us to continue to meaningfully reconstitute the revenue mix of our company and to deliver continued growth and shareholder value.

Second Quarter Financial Highlights:

-- Net revenues increased 19% to $771 million as compared to the prior year quarter -- Operating income of $68 million; Adjusted Operating Income(1) increased 11% to $251 million as compared to the prior year quarter -- Diluted EPS of $0.83; Adjusted Diluted EPS(1) of $3.45

Dollars inthousands, Three Months Ended June 30, Six Months Ended June 30,except pershareamounts 2021 2020 Change 2021 2020 Change

Net $ 771,392 $ 646,291 19.4 % $ 1,463,133 $ 1,380,666 6.0 % RevenuesOperating $ 68,256 $ 48,802 39.9 % $ 237,964 $ 221,772 7.3 % IncomeAdjustedOperating $ 250,637 $ 225,278 11.3 % $ 488,616 $ 447,732 9.1 % Income DilutedEarnings $ 0.83 $ 0.28 196.4 % $ 2.84 $ 1.54 84.4 % Per ShareAdjustedDiluted $ 3.45 $ 2.39 44.4 % $ 6.43 $ 3.83 67.9 % EarningsPer Share Net cashprovidedby $ 23,604 $ 226,504 (89.6 ) % $ 131,167 $ 424,912 (69.1 ) % operatingactivitiesFree Cash $ 3,844 $ 209,722 (98.2 ) % $ 100,406 $ 392,133 (74.4 ) % Flow^(^1)

Operational Highlights:

-- On track to achieve previously communicated full year 2021 revenue, Adjusted Operating Income and streaming subscriber targets -- Expanded international distribution of Acorn TV with Amazon Prime Video Channels and Orange TV in Spain -- Launched AMC+ on YouTube TV -- Greenlit new AMC+ and AMC series including Moonhaven, Dark Winds and Anne Rices Interview with the Vampire -- Debuted dark comedy Kevin Can F*** Himself, starring Emmy Award-winning actress Annie Murphy, on AMC+ and AMC

Segment Results(dollars in thousands)

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 Change 2021 2020 ChangeNet Revenues: Domestic $ 639,015 $ 562,932 13.5 % $ 1,212,984 $ 1,174,825 3.2 %OperationsInternational 138,277 90,682 52.5 % 259,444 215,510 20.4 %and OtherCorporate /Inter-segment (5,900 ) (7,323 ) 19.4 % (9,295 ) (9,669 ) 3.9 %EliminationsTotal Net $ 771,392 $ 646,291 19.4 % $ 1,463,133 $ 1,380,666 6.0 %Revenues Operating Income:Domestic $ 88,116 $ 217,586 (59.5 ) % $ 304,575 $ 442,187 (31.1 ) %OperationsInternational 19,963 (125,562 ) 115.9 % 16,801 (121,201 ) 113.9 %and OtherCorporate /Inter-segment (39,823 ) (43,222 ) 7.9 % (83,412 ) (99,214 ) 15.9 %EliminationsTotalOperating $ 68,256 $ 48,802 39.9 % $ 237,964 $ 221,772 7.3 %Income AdjustedOperating Income:Domestic $ 250,140 $ 236,353 5.8 % $ 492,673 $ 477,386 3.2 %OperationsInternational 25,105 15,583 61.1 % 48,668 33,426 45.6 %and OtherCorporate /Inter-segment (24,608 ) (26,658 ) 7.7 % (52,725 ) (63,080 ) 16.4 %EliminationsTotalAdjusted $ 250,637 $ 225,278 11.3 % $ 488,616 $ 447,732 9.1 %OperatingIncome

Domestic Operations

-- Domestic Operations revenues for the second quarter increased 14% to $639 million compared to the prior year quarter Advertising revenues increased 13% to $212 million due to higher pricing and ad-supported streaming growth, partially offset by a reduction in the number of episodes of our original programming and lower ratingsDistribution revenues increased 14% to $427 million including the one-time beneficial impact of a distribution agreement renewal; excluding this one-time impact, distribution revenues increased 10% Subscription revenues increased 21% driven by robust growth in streaming revenues, attributable to increased paid streaming subscribers, as well as the one-time beneficial impact of a distribution agreement renewal; excluding this one-time impact, subscription revenues increased 17%Normalized affiliate revenues declined in the low-single digits, attributable to subscriber universe declinesContent licensing revenues decreased 10%, driven by the reduced availability of original programming, as the result of pandemic-related production delays -- Operating Income, which included the $143 million impact in Impairment and Other Charges related to the previously disclosed Settlement Agreement, which is described below, was $88 million for the quarter -- Adjusted Operating Income increased 6% to $250 million, reflecting increases in advertising and distribution revenues, partially offset by an increase in operating expenses including higher levels of programming and marketing investments to support the continued growth of streaming revenues

International and Other

-- International and Other revenues for the second quarter of 2021 increased 53% to $138 million compared to the prior year quarter Advertising revenues increased 75% to $26 million largely related to higher pricing, better ratings and the favorable impact of foreign currency translation at AMCNIDistribution and Other revenues increased 48% to $112 million primarily due to the resumption of production at 25/7 Media as well as the favorable impact of foreign currency translation at AMCNI -- Operating Income was $20 million compared to an Operating Loss of $126 million in the prior year period; Adjusted Operating Income increased 61% to $25 million Operating Income and Adjusted Operating Income reflected the increase in revenues partially offset by an increase in operating expenses, including an increase in production-related expenses at 25/7 Media and an increase in selling expenses at AMCNI

Other Matters

Settlement Agreement

On July 16, 2021, the Company entered into a settlement agreement (the Settlement Agreement) with Frank Darabont, Ferenc, Inc., Darkwoods Productions, Inc., and Creative Artists Agency, LLC (together, the "Plaintiffs") in actions brought in connection with Frank Darabonts rendering services as a writer, director and producer of the television series entitled The Walking Dead. The consolidated cases were initially brought in 2013 and 2018 and the trial of the consolidated cases was scheduled to commence on April 4, 2022. The Settlement Agreement provides for a cash payment of $200 million (the Settlement Payment) to the Plaintiffs and future revenue sharing related to certain future streaming exhibition of The Walking Dead and Fear The Walking Dead. With regard to the Settlement Payment, the Company recorded a charge of $143.0 million, included in Impairment and Other Charges in consideration for the extinguishment of Plaintiffs rights to any compensation in connection with The Walking Dead and any related programs and the dismissal of the actions with prejudice, which amount is net of $57.0 million of ordinary course accrued participations.

Stock Repurchase Program & Outstanding Shares

As previously disclosed, the Company's Board of Directors has authorized a program to repurchase up to $1.5 billion of the Companys outstanding shares of common stock. The Stock Repurchase Program has no pre-established closing date and may be suspended or discontinued at any time. During the second quarter 2021, the Company did not repurchase any shares. As of June 30, 2021, the Company had $135 million of authorization remaining for repurchase under the Stock Repurchase Program.

As of June 30, 2021 the Company had 30,731,275 shares of Class A Common Stock and 11,484,408 shares of Class B Common Stock outstanding.

Please see the Companys Form 10-Q for the period ended June 30, 2021 for further details regarding the above matters.

Description of Non-GAAP Measures

The Company defines Adjusted Operating Income (Loss), which is a non-GAAP financial measure, as operating income (loss) before depreciation and amortization, cloud computing amortization, share-based compensation expense or benefit, impairment and other charges (including gains or losses on sales or dispositions of businesses), restructuring and other related charges, and including the Companys proportionate share of adjusted operating income (loss) from majority owned equity method investees. From time to time, we may exclude the impact of certain events, gains, losses or other charges (such as significant legal settlements) from AOI that affect our operating performance. Because it is based upon operating income (loss), Adjusted Operating Income (Loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. The Company believes that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of the business without regard to the effect of the settlement of an obligation that is not expected to be made in cash.

The Company believes that Adjusted Operating Income (Loss) is an appropriate measure for evaluating the operating performance of the business segments and the Company on a consolidated basis. Adjusted Operating Income (Loss) and similar measures with similar titles are common performance measures used by investors, analysts and peers to compare performance in the industry.

Internally, the Company uses net revenues and Adjusted Operating Income (Loss) measures as the most important indicators of its business performance, and evaluates managements effectiveness with specific reference to these indicators. Adjusted Operating Income (Loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), and other measures of performance presented in accordance with U.S. generally accepted accounting principles ("GAAP"). Since Adjusted Operating Income (Loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of operating income (loss) to Adjusted Operating Income (Loss), please see pages 7-8 of this release.

The Company defines Free Cash Flow, which is a non-GAAP financial measure, as net cash provided by operating activities less capital expenditures and cash distributions to noncontrolling interests, all of which are reported in our Consolidated Statement of Cash Flows. The Company believes the most comparable GAAP financial measure of its liquidity is net cash provided by operating activities. The Company believes that Free Cash Flow is useful as an indicator of its overall liquidity, as the amount of Free Cash Flow generated in any period is representative of cash that is available for debt repayment, investment, and other discretionary and non-discretionary cash uses. The Company also believes that Free Cash Flow is one of several benchmarks used by analysts and investors who follow the industry for comparison of its liquidity with other companies in the industry, although the Companys measure of Free Cash Flow may not be directly comparable to similar measures reported by other companies. For a reconciliation of net cash provided by operating activities to Free Cash Flow, please see page 9 of this release.

The Company defines Adjusted Earnings per Diluted Share (Adjusted EPS), which is a non-GAAP financial measure, as earnings per diluted share excluding the following items: amortization of acquisition-related intangible assets; impairment and other charges (including gains or losses on sales or dispositions of businesses); non-cash impairments of goodwill, intangible and fixed assets; restructuring and other related charges; and gains and losses related to the extinguishment of debt; as well as the impact of taxes on the aforementioned items. The Company believes the most comparable GAAP financial measure is earnings per diluted share. The Company believes that Adjusted EPS is one of several benchmarks used by analysts and investors who follow the industry for comparison of its performance with other companies in the industry, although the Companys measure of Adjusted EPS may not be directly comparable to similar measures reported by other companies. For a reconciliation of earnings per diluted share to Adjusted EPS, please see pages 10-11 of this release.

Forward-Looking Statements

This earnings release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results or developments may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industries in which it operates and the factors described in the Companys filings with the Securities and Exchange Commission, including the sections entitled "Risk Factors" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

Conference Call Information

AMC Networks will host a conference call today at 8:30 a.m. ET to discuss its second quarter 2021 results. To listen to the call, visit http://www.amcnetworks.com or dial 833-714-3268, using the following conference ID: 5273816.

About AMC Networks Inc.

AMC Networks is a global entertainment company known for its popular and critically-acclaimed content. Its portfolio of brands includes AMC, BBC AMERICA (operated through a joint venture with BBC Studios), IFC, SundanceTV, WE tv, IFC Films, and a number of fast-growing streaming services, including the AMC+ premium streaming bundle, Acorn TV, Shudder, Sundance Now and ALLBLK. AMC Studios, the Companys in-house studio, production and distribution operation, is behind award-winning owned series and franchises, including The Walking Dead, the highest-rated series in cable history. The Company also operates AMC Networks International, its international programming business, and 25/7 Media, its production services business.

Contacts

Investor Relations Corporate CommunicationsNicholas Seibert (646) 740-5749 Georgia Juvelis (917) 542-6390nicholas.seibert@amcnetworks.com georgia.juvelis@amcnetworks.com

AMC NETWORKS INC.CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts)(unaudited)

Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Revenues, net $ 771,392 $ 646,291 $ 1,463,133 $ 1,380,666 Operating expenses:Technical andoperating(excluding 338,841 282,503 619,413 626,563 depreciationandamortization)Selling,general and 198,618 155,163 390,153 339,812 administrativeDepreciationand 22,604 25,905 47,850 52,635 amortizationImpairment and 142,918 130,411 158,973 130,411 other chargesRestructuringand other 155 3,507 8,780 9,473 relatedcharges 703,136 597,489 1,225,169 1,158,894 Operating 68,256 48,802 237,964 221,772 incomeOther income (expense):Interest (31,519 ) (34,301 ) (66,261 ) (71,865 ) expenseInterest 3,008 3,727 5,350 8,282 incomeLoss onextinguishment ? ? (22,074 ) (2,908 ) of debtMiscellaneous, 14,174 8,713 19,580 (21,226 ) net (14,337 ) (21,861 ) (63,405 ) (87,717 ) Income fromoperations 53,919 26,941 174,559 134,055 before incometaxesIncome tax (11,321 ) (9,707 ) (37,236 ) (43,295 ) expenseNet incomeincluding 42,598 17,234 137,323 90,760 noncontrollinginterestsNet incomeattributableto (6,713 ) (2,273 ) (14,417 ) (7,132 ) noncontrollinginterestsNet incomeattributableto AMC $ 35,885 $ 14,961 $ 122,906 $ 83,628 Networks?stockholders Net income per share attributable to AMC Networks? stockholders:Basic $ 0.84 $ 0.29 $ 2.91 $ 1.55 Diluted $ 0.83 $ 0.28 $ 2.84 $ 1.54 Weightedaverage common shares:Basic 42,481 52,311 42,207 53,894 Diluted 43,382 52,797 43,277 54,429

AMC NETWORKS INC.SUPPLEMENTAL FINANCIAL DATA (Dollars in thousands)(Unaudited)

Three Months Ended June 30, 2021 Domestic International Corporate / Operations and Inter-segment Consolidated Other EliminationsOperating income $ 88,116 $ 19,963 $ (39,823 ) $ 68,256 Share-basedcompensation 7,292 913 8,057 16,262 expenseDepreciation and 11,716 4,328 6,560 22,604 amortizationImpairment and 143,000 (82 ) ? 142,918 other chargesRestructuring andother related 216 (17 ) (44 ) 155 chargesCloud computing ? ? 642 642 amortizationMajority ownedequity investees (200 ) ? ? (200 ) AOIAdjusted $ 250,140 $ 25,105 $ (24,608 ) $ 250,637 operating income

Three Months Ended June 30, 2020 Domestic International Corporate / Operations and Inter-segment Consolidated Other EliminationsOperating income $ 217,586 $ (125,562 ) $ (43,222 ) $ 48,802 (loss)Share-basedcompensation 4,844 909 9,482 15,235 expenseDepreciation and 11,301 7,563 7,041 25,905 amortizationImpairment and ? 130,411 ? 130,411 other chargesRestructuringand other 1,204 2,262 41 3,507 related chargesMajority ownedequity investees 1,418 ? ? 1,418 AOIAdjusted $ 236,353 $ 15,583 $ (26,658 ) $ 225,278 operating income

Six Months Ended June 30, 2021 Domestic International Corporate / Operations and Inter-segment Consolidated Other EliminationsOperating income $ 304,575 $ 16,801 $ (83,412 ) $ 237,964 Share-basedcompensation 12,931 2,144 14,633 29,708 expenseDepreciation and 25,089 9,277 13,484 47,850 amortizationImpairment and 143,000 15,973 ? 158,973 other chargesRestructuring andother related 2,643 4,473 1,664 8,780 chargesCloud computing ? ? 906 906 amortizationMajority ownedequity investees 4,435 ? ? 4,435 AOIAdjusted $ 492,673 $ 48,668 $ (52,725 ) $ 488,616 operating income

Six Months Ended June 30, 2020 Domestic International Corporate / Operations and Inter-segment Consolidated Other EliminationsOperating income $ 442,187 $ (121,201 ) $ (99,214 ) $ 221,772 (loss)Share-basedcompensation 7,568 1,518 21,661 30,747 expenseDepreciation and 22,251 16,459 13,925 52,635 amortizationImpairment and ? 130,411 ? 130,411 other chargesRestructuringand other 2,686 6,239 548 9,473 related chargesMajority ownedequity investees 2,694 ? ? 2,694 AOIAdjusted $ 477,386 $ 33,426 $ (63,080 ) $ 447,732 operating income

AMC NETWORKS INC.SUPPLEMENTAL FINANCIAL DATA (In thousands)(Unaudited)

Capitalization June 30, 2021 Cash and cash equivalents $ 980,726 Credit facility debt ^(^a) $ 675,000 Senior notes ^(^a) 2,200,000 Total debt $ 2,875,000 Net debt $ 1,894,274 Finance leases 29,271 Net debt and finance leases $ 1,923,545 Twelve Months Ended June 30, 2021Operating Income (GAAP) $ 458,836 Share-based compensation expense 51,869 Depreciation and amortization 99,821 Impairment and other charges 150,789 Restructuring and other related charges 34,375 Cloud computing amortization 1,106 Majority owned equity investees 10,699 Adjusted Operating Income (Non-GAAP) $ 807,495 Leverage ratio ^(^b) 2.4 x

(a) Represents the aggregate principal amount of the debt. Represents net debt and finance leases divided by Adjusted Operating Income for the twelve months ended June 30, 2021. This ratio differs(b) from the calculation contained in the Company's credit facility. No adjustments have been made for consolidated entities that are not 100% owned.

Free Cash Flow Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020Net cashprovided by $ 23,604 $ 226,504 $ 131,167 $ 424,912 operatingactivitiesLess: capital (10,312 ) (9,256 ) (18,849 ) (22,172 ) expendituresLess:distributionsto (9,448 ) (7,526 ) (11,912 ) (10,607 ) noncontrollinginterestsFree cash flow $ 3,844 $ 209,722 $ 100,406 $ 392,133

Adjusted Earnings Per Diluted Share Three Months Ended June 30, 2021 Net income Diluted EPS Income from Net income attributable attributable operations Income tax attributable to to to before expense noncontrolling AMC AMC income taxes interests Networks' Networks' stockholders stockholdersReported Results $ 53,919 $ (11,321 ) $ (6,713 ) $ 35,885 $ 0.83 (GAAP)Adjustments: Amortization ofacquisition-related 9,322 (1,474 ) (2,950 ) 4,898 0.11 intangible assetsImpairment and 142,918 (34,254 ) ? 108,664 2.51 other chargesRestructuring andother related 155 (46 ) 16 125 ? chargesLoss onextinguishment of ? ? ? ? ? debtAdjusted Results $ 206,314 $ (47,095 ) $ (9,647 ) $ 149,572 $ 3.45 (Non-GAAP)

Three Months Ended June 30, 2020 Income from Net income Net income Diluted EPS operations Income tax attributable to attributable attributable before expense noncontrolling to to income interests AMC Networks' AMC Networks' taxes stockholders stockholdersReported Results $ 26,941 $ (9,707 ) $ (2,273 ) $ 14,961 $ 0.28 (GAAP)Adjustments: Amortization ofacquisition-related 10,962 (1,855 ) (3,027 ) 6,080 0.12 intangible assetsImpairment charges 130,411 (27,984 ) ? 102,427 1.94 Restructuring andother related 3,507 (799 ) 13 2,721 0.05 chargesLoss onextinguishment of ? ? ? ? ? debtAdjusted Results $ 171,821 $ (40,345 ) $ (5,287 ) $ 126,189 $ 2.39 (Non-GAAP)

Six Months Ended June 30, 2021 Income from Net income Diluted EPS operations Net income attributable attributable before Income tax attributable to to to income expense noncontrolling AMC AMC taxes interests Networks' Networks' stockholders stockholdersReported Results $ 174,559 $ (37,236 ) $ (14,417 ) $ 122,906 $ 2.84 (GAAP)Adjustments: Amortization ofacquisition-related 18,863 (2,970 ) (5,977 ) 9,916 0.23 intangible assetsImpairment charges 158,973 (38,078 ) ? 120,895 2.79 Restructuring andother related 8,780 (1,032 ) (13 ) 7,735 0.18 chargesLoss onextinguishment of 22,074 (5,257 ) ? 16,817 0.39 debtAdjusted Results $ 383,249 $ (84,573 ) $ (20,407 ) $ 278,269 $ 6.43 (Non-GAAP)

Six Months Ended June 30, 2020 Income from Net income Net income Diluted EPS operations attributable attributable attributable before Income tax to to to income expense noncontrolling AMC Networks' AMC taxes interests stockholders Networks' stockholdersReported Results $ 134,055 $ (43,295 ) $ (7,132 ) $ 83,628 $ 1.54 (GAAP)Adjustments: Amortization ofacquisition-related 23,094 (3,949 ) (6,054 ) 13,091 0.24 intangible assetsImpairment charges 130,411 (27,984 ) ? 102,427 1.88 Restructuring andother related 9,473 (2,298 ) 13 7,188 0.13 chargesLoss onextinguishment of 2,908 (733 ) ? 2,175 0.04 debtAdjusted Results $ 299,941 $ (78,259 ) $ (13,173 ) $ 208,509 $ 3.83 (Non-GAAP)



(1)See page 4 of this earnings release for a discussion of non-GAAP financial measures used in this release. This discussion includes the definition of Adjusted Operating Income (Loss), Adjusted EPS and Free Cash Flow.