Warner Bros. Discovery now sees FY23 adjusted EBITDA $10.5B-$11B

.In a regulatory filing, Warner Bros. Discovery announced president and CEO, David Zaslav, will be participating at an investor conference on September 6 and expects to discuss, among other topics, the impacts of the ongoing WGA and SAG-AFTRA strikes. On its August 3 earnings call the company provided financial guidance for FY23, which assumed the strikes would be resolved by early September. The company noted on the earnings call that if the strikes were to continue through the end of the year, it expected incremental upside to free cash flow and incremental downside to adjusted EBITDA due to the strikes’ impact on timing and performance of the remainder of the 2023 film slate, as well as the company’s ability to produce and deliver content. With both guilds still on strike today, the company now assumes the financial impact to WBD of these strikes will persist through the end of 2023. The company is therefore revising its 2023 guidance as follows: Adjusted EBITDA: The company is expecting lower adjusted EBITDA for the full year in the range of $10.5B to $11B, reflecting the Company’s assumption that adjusted EBITDA will be negatively impacted by approximately $300 to $500 million, predominantly due to the impact of the strikes. The company’s previous FY23 adjusted EBITDA view was low- to mid-$11B range. The company is raising its free cash flow expectations for the full year to at least $5B. Further, the company now expects to exceed $1.7B in free cash flow for the third quarter, in part due to the strong performance of Barbie as well as incremental impact from strike-related factors. The company is maintaining its expectation of achieving net leverage below 4.0x by the end of 2023, as well as its target gross leverage range of 2.5x-3.0x by the end of 2024. The company will continue to update its assumptions based on the timing and any additional impacts of the eventual resolution of the strikes.