Scripps Networks Interactive Inc. SNI performed reasonably well in the second quarter of 2015 reporting higher-than-expected earnings and sales. The lifestyle media company reported second-quarter 2015 earnings (excluding special items) of $1.47 per share, handily beating the Zacks Consensus Estimate of $1.26.
Earnings improved 28.9% on a year-over-year basis. Lower costs contributed to the earnings beat.
Scripps Networks reported operating revenues of $732.1 million which beat the Zacks Consensus Estimate of $729 million. Revenues were up 3.4% on a year-over-year basis.
The company’s operating income (on a reported basis) increased 17.1% to $332 million.
At the end of the quarter under review, Scripps Networks had $1.14 billion in cash & cash equivalents and $3.44 billion of outstanding debt on its balance sheet compared with $878.2 million and $1.5 billion, respectively, at the end of 2014. The debt-to-capitalization ratio stood at 0.68 versus 0.47 at the end of 2014.
Segment Performances
Lifestyle Media Segment
Quarterly revenues came in at $710 million, reflecting annualized growth of 3.2%. Within this segment, advertising revenues increased 1.4% to $496.9 million. The marginal increase was due to the softness in the advertising market and audience delivery issues at some networks. Network Affiliate fee revenues climbed 8.5% to $203.4 million. Other revenues declined 4% year over year to $9.7 million.
Brand-wise, HGTV revenues were approximately $271.8 million, up 10.2% year over year. Food Network revenues came in at $228.1 million, down 4.2%. Travel Channel revenues declined 4.1% year over year to $81.7 million. DIY Network revenues were $48 million, up 11.1%.
Cooking Channel revenues were $35.1 million, up 8.9% year over year. Great American Country revenues stood at $8.1 million, up 3.3%. Digital revenues improved 8.5% to approximately $34.3 million. Other revenues totaled $4.1 million, down 8.5% year over year.
Segmental profit improved 9.4% to $392.2 million. The improvement was attributable to revenue growth in addition to lower selling, general and administrative expenses.
Corporate Segment
Quarterly total revenue of $22.1 million was up 7.8% year over year. Loss in the segment stood at $33.7 million, down 14.4% year over year.
2015 Projection
Earlier in the year, Scripps Networks bought a 52.7% stake in Poland’s popular multi-platform media company, TVN. Taking that into consideration, the company now expects total revenue to increase 12% in 2015 over 2014 (earlier projection had called for a 4% growth).
Capital expenditure is forecast in the range of $65 million to $70 million (old guidance: $50 million to $60 million). Effective tax rate is still projected in the band of 30% to 32%.
Zacks Rank
Scripps Networks currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Gray Television, Inc. GTN, Salem Media Group, Inc. SALM and AMC Networks Inc. AMCX. Gray Television carries a Zacks Rank #2 (Buy) while Salem Media Group and AMC Networks sport a Zacks Rank #1 (Strong Buy).
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