Time Warner reports Q1 results, separates out Time Inc. P&L
Separated, Time Inc. shows revenue increase, but also large operating loss
NEW YORK, NY – April 30, 2014 — Time Warner Inc. today reported financial results for its first quarter ended March 31, 2014.
Chairman and Chief Executive Officer Jeff Bewkes said: “We are off to a very strong start in 2014, with results that demonstrate both the returns we can achieve on our investments in great storytelling and the growth potential of our businesses. Excluding Time Inc., which we expect to spin off as an independent publicly-traded company this quarter, we grew first quarter Revenues by 10%, Adjusted Operating Income by 12%, and Adjusted EPS by 26%. In the first quarter, Warner Bros. picked up where it left off after a record-breaking year in 2013, with The LEGO Movie launching yet another franchise for us and leading all releases at the domestic box office. Combined with its promising slate of movies for the rest of the year and strong lineup of TV shows to be unveiled at the upfronts, Warner Bros. is positioned to have another excellent year in 2014. Home Box Office continues to be red hot, led by the debut of True Detective, the most-watched freshman series in HBO’s history. And the Season 4 premiere of Game of Thrones on April 6 drew HBO’s largest audience since The Sopranos finale. Turner also made history by bringing the NCAA Men’s Basketball Final Four to cable for the first time ever. The success of the NCAA Tournament also helped TBS maintain its position as ad-supported cable’s #1 network in primetime among adults 18-34 and 18-49. It also showcased the importance and vibrancy of our TV Everywhere initiatives, with a more than 40% increase in streams for our March Madness Live service over last year. Another standout at Turner was Adult Swim, which again finished the quarter as the #1 ad-supported cable network in total day for Adults 18-34. And CNN reaffirmed that it is the place the world goes for authoritative coverage during major news events, with delivery in its key demographic up over 50% in March. Further demonstrating our commitment to shareholder returns, during the quarter we returned almost $1.3 billion to our shareholders in the form of share buybacks and dividends.”
Company Results Including Time Inc.
Revenues increased 9% to $7.5 billion in the first quarter of 2014. Adjusted Operating Income grew 7% to $1.5 billion. Operating Income increased 37% to $1.9 billion. Adjusted Operating Income and Operating Income margins were 20% and 26% in the first quarter of 2014, respectively, compared to 21% and 20% in the prior year quarter, respectively.
The Company posted Adjusted Diluted Income per Common Share from Continuing Operations (“Adjusted EPS”) of $0.91, up 20% from $0.76 for the year-ago quarter. Diluted Income per Common Share from Continuing Operations was $1.42 compared to $0.79 in the prior year quarter.
For the first three months of 2014, Cash Provided by Operations from Continuing Operations reached $1.7 billion and Free Cash Flow totaled $1.7 billion. As of March 31, 2014, Net Debt was $16.7 billion, down from $18.3 billion at the end of 2013, due to the generation of Free Cash Flow and proceeds from the sale of the Company’s office space in Time Warner Center, offset in part by cash used for share repurchases and dividends.
Company Results Excluding Time Inc.
Revenues increased 10% to $6.8 billion in the first quarter of 2014 due to growth at Warner Bros., Turner and Home Box Office. Adjusted Operating Income grew 12% to $1.6 billion also due to increases at Warner Bros., Turner and Home Box Office. Operating Income increased 44% to $2.0 billion. Adjusted Operating Income and Operating Income margins were 24% and 30% in the first quarter of 2014, respectively, compared to 23% and 23% in the prior year quarter, respectively.
In the first quarter, the Company posted Adjusted EPS excluding Time Inc. of $0.97 versus $0.77 for the year-ago quarter. Diluted Income per Common Share from Continuing Operations was $1.50 for the three months ended March 31, 2014 compared to $0.80 for last year’s first quarter.
For the first three months of 2014, Cash Provided by Operations from Continuing Operations excluding Time Inc. reached $1.7 billion and Free Cash Flow excluding Time Inc. totaled $1.7 billion.
Refer to “Use of Non-GAAP Financial Measures” in this release for a discussion of the non-GAAP financial measures used in this release and the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Stock Repurchase Program Update
In January 2014, the Company’s Board of Directors authorized a total of $5 billion in share repurchases beginning January 1, 2014, which replaced the amount remaining under the prior authorization.
From January 1, 2014 through April 25, 2014, the Company repurchased approximately 20 million shares of common stock for approximately $1.3 billion.
The schedule below reflects Time Warner’s financial performance for the three months ended March 31, by line of business (millions).