Second Quarter 2017
Highlights
- Revenue increased 8% to a record $214.6
million as WWE’s Live Event and Network segments achieved their
highest quarterly revenue in Company history
- Operating income was $10.7 million and
Adjusted OIBDA1 of $18.1 million was essentially in line with the
Company’s guidance
- WWE Network averaged more than 1.63
million average paid subscribers over the second quarter 2017,
which represented an 8% increase from the second quarter 2016
- Launched localized weekly TV shows in
India and Middle East. WWE Sunday Dhamaal in Hindi with Sony
Pictures Networks and WWE Wal3ooha in Arabic with OSN feature
highlights of Raw and SmackDown
- Completed multi-year agreement to
televise Raw and SmackDown on SuperSport, Africa’s premier sports
broadcaster. WWE programming will be broadcast live for the first
time in more than 50 countries
- Through the first six months of the
year, digital engagement metrics continued to grow with video views
up 18% to 9.1 billion and social media followers increasing 19% to
800 million
- Global sponsorship revenue increased
25% year-to-date, driven by new deals with blue-chip companies
(KFC, Nestle and AT&T) and gaming partners (Psyonix, Square
Enix & Activision)
- Lagardère Sports, a best-in-class
sports marketing agency, was selected to further develop the
Company’s global sponsorship business
- Completed agreements to develop new
mobile games with GLU Mobile, maker of Racing Rivals and Kim
Kardashian: Hollywood, and Sega, creator of Sonic the Hedgehog.
Sega’s WWE Tap Mania launched July 20
- Extended Mattel’s global master toy
licensing agreement through 2021. WWE action figures continued to
rank among the top three action figure properties in the U.S.
Selected WrestleMania
Highlights
WrestleMania (April 2, 2017) broke the attendance record for the
Orlando Citrus Bowl, attracting 75,245 fans, and reached a record
1.95 million global households on WWE Network alone, making it the
most-watched WrestleMania in history. WrestleMania was made
available live in China for the first time on PPTV Sports via
pay-per-view with a choice of Mandarin or English commentary.
During WrestleMania Week, WWE Network subscribers watched 22.5
million hours of content, averaging approximately 13 hours per
subscriber. WrestleMania was the most social event in WWE history
with 5.19 million interactions on Facebook and Twitter during the
broadcast alone. WrestleMania accounted for nearly 30% of all
social TV interactions on April 2nd, surpassing the Country Music
Awards (13%), The Walking Dead Season Finale (10%) and MLB Opening
Day on ESPN (10%). During WrestleMania, the Company launched its
first Snapchat show yielding over 5 million unique viewers. A
series of Snapchat shows, co-produced by NBCU, will start later
this year.
WWE (NYSE:WWE) today announced financial results for its second
quarter 2017. For the quarter, the Company reported Net income of
$5.1 million, or $0.06 per diluted share, as compared to Net Income
of $0.8 million, or $0.01 per diluted share, in the prior year
quarter. Operating income increased to $10.7 million from $1.5
million. Excluding items affecting comparability, Adjusted OIBDA1
increased to $18.1 million from $7.5 million.
“We are pleased with our ongoing efforts to execute our
multi-platform content strategy as evidenced by the continued
year-over-year growth of WWE Network, the increased production of
localized programming across platforms and markets, and the
attraction of new sponsors,” stated Vince McMahon, WWE Chairman and
Chief Executive Officer.
George Barrios, WWE Chief Strategy & Financial Officer,
added “We achieved record revenues in our Network and Live event
segments, continued to grow WWE Network’s subscriber base, and
generated results that were essentially in line with our guidance.
As we continue to drive WWE’s digital and direct-to-consumer
transformation, we remain on track to achieve our 2017 financial
objectives with record revenue, record Adjusted OIBDA results, and
record subscriber levels.”
Q3 2017 Business Outlook
For the third quarter 2017, the Company projects average paid
subscribers to WWE Network of 1.54 million (+/- 2%). The Company
also estimates third quarter 2017 Adjusted OIBDA of approximately
$31 million to $35 million.2 This range represents an expected
year-over-year increase from $24.5 million in the third quarter
2016 primarily due to the contractual escalation of television
rights fees and continued growth of WWE Network subscribers.
WWE is unable to provide a reconciliation of third quarter
guidance to GAAP measures as, at this time, WWE cannot accurately
determine all of the adjustments that would be required.
2017 Perspective
WWE management continues to expect the Company to achieve
another year of record revenue and has targeted Adjusted OIBDA of
$100 million, which would be an all-time record (up approximately
25% from 2016 Adjusted OIBDA of $80.1 million).2 Given that the
Company generated Adjusted OIBDA of $36.7 million in the first half
of 2017 and projects Adjusted OIBDA of $31 million to $35 million
for the third quarter, reaching the full year target indicates a
range of fourth quarter results of at least $28 million to $32
million. Estimates for the third and fourth quarter 2017 represent
significant year-over-year growth, which is based on sustained
revenue growth and more favorable year-over-year comparisons in the
Company’s fixed cost base.
Comparability of Results
For the second quarter of 2017, Operating income included $1.1
million in film impairment charges. For the six months ended June
30, 2017, Operating income included $5.6 million in expenses
primarily related to certain legal matters and other contractual
obligations, and $3.2 million in film impairment charges. As these
items impact the comparability of results on a year-over-year
basis, they have been excluded from the Company’s 2017 Adjusted
OIBDA. For the comparable periods of 2016, there were no such items
that impacted year-over-year comparability.
A reconciliation of 2017 Adjusted OIBDA to Operating income
(GAAP) for the three and six month periods ended June 30, 2017 can
be found in the supplemental schedules on pages 14-16 of this
release.
Performance of Segments
The schedules below reflect WWE’s performance by line of
business (in millions):1
Three Months Ended
Six Months Ended June 30, June 30, Net
Revenues: 2017 2016 2017
2016 Media Division Network $ 54.9 $ 51.8 $
101.4 $ 92.1 Television 66.2 56.1 130.2 116.8 Home Entertainment
3.0 3.1 5.4 6.4 Digital Media 8.1 6.5 13.8 11.9 Live Events 52.8
51.9 84.9 77.2 Consumer Products Division Licensing 9.4 9.0 29.5
30.0 Venue Merchandise 6.8 8.7 13.9 14.2 WWEShop 8.4 7.5 16.3 14.3
WWE Studios 3.5 3.2 4.8 5.2 Corporate & Other 1.5
1.2 2.8 2.0
Total Net Revenues $ 214.6 $ 199.0
$ 403.0 $ 370.1
Operating Income: Media Division
Network $ 1.2 $ (8.3) $ 13.9 $ 7.5 Television 30.8 27.2 60.1 53.0
Home Entertainment 0.9 1.0 1.7 2.5 Digital Media 1.4 — 0.9 (0.2)
Live Events 21.6 23.4 29.7 29.5 Consumer Products Division
Licensing 4.5 3.9 17.9 18.2 Venue Merchandise 2.5 3.7 5.1 5.7
WWEShop 2.1 1.6 4.0 3.0 WWE Studios (0.7) 0.4 (3.6) — Corporate
& Other (53.6) (51.4) (115.0)
(95.7)
Total Operating Income $ 10.7 $ 1.5 $ 14.7 $ 23.5
Adjusted OIBDA: Media Division Network $ 3.0 $ (5.7)
$ 17.3 $ 10.1 Television 31.8 27.2 62.6 55.5 Home Entertainment 0.9
1.0 1.7 2.5 Digital Media 1.5 0.2 1.0 0.1 Live Events 21.6 23.4
29.7 29.5 Consumer Products Division Licensing 4.5 3.9 17.9 18.2
Venue Merchandise 2.5 3.7 5.1 5.7 WWEShop 2.1 1.6 4.0 3.0 WWE
Studios 0.4 0.4 (0.4) — Corporate & Other (50.2)
(48.2) (102.2) (89.5)
Total Adjusted OIBDA $
18.1 $ 7.5 $ 36.7 $ 35.1
The following table reflects net revenues by region (in
millions):
Three Months Ended
Six Months Ended June 30, June 30, 2017
2016 2017 2016
Net Revenues by Region: North America $ 159.4 $ 149.8 $
305.6 $ 279.8 Europe/Middle East/Africa (EMEA) 36.6 36.2 63.2 63.8
Asia Pacific (APAC) 15.5 11.2 28.5 22.8 Latin America 3.1
1.8 5.7 3.7
Total Net Revenues $ 214.6
$ 199.0 $ 403.0 $ 370.1
Three Months Ended June 30, 2017 -
Results by Region & Business Segment
Revenues increased 8% to a quarterly record high $214.6 million
from the prior year quarter, with the increase driven by the
monetization of video content across the Company’s Television,
Network and Digital Media business segments. North American
revenues increased 6%, or $9.6 million, primarily due to the
contractual escalation of television rights fees, the growth of WWE
Network subscribers, and the impact of airing three additional
episodes of the licensed reality series, Total Divas. These factors
were partially offset by a $3.8 million reduction in ticket sales
and venue merchandise at WrestleMania that primarily reflected
lower stadium seating capacity (Citrus Bowl, Orlando in Q2 2017 vs
AT&T Stadium, Texas in Q2 2016). Revenues from outside North
America increased 12%, or $6.0 million, driven by higher television
rights fees, increased consumer product sales in the EMEA and APAC
regions, as well as a rise in Live Event revenue with the staging
of seven additional events across APAC and Latin America. Changes
in foreign exchange rates adversely impacted revenues by $1.8
million, primarily from the Live Events and Network segments in the
EMEA region.
Three Months Ended June 30, 2017 –
Segment Performance Commentary
The year-over-year changes in the Company’s financial
performance were driven by its Network, Television, Live Events,
Digital Media, and Corporate & Other business segments. A
discussion of selected business segments is provided in the
narrative below. Refer to the second quarter 2017 Form 10-Q for
management’s discussion and analysis of financial condition and
results of operations pertaining to all segments.
Media Division
Revenues from the Company's Media division increased 13% to
$132.2 million, primarily due to the growth of WWE Network and the
contractual escalation of television rights fees, as well as the
impact of airing additional episodes of the licensed reality
series, Total Divas.
- Network revenues, which include
revenue generated by WWE Network and pay-per-view, increased 6% to
$54.9 million. WWE Network subscription revenue increased 7% to
$49.1 million from $45.9 million in the prior year quarter based on
an 8% year-over-year increase in average paid subscribers to over
1.63 million.3Network segment OIBDA increased $8.7 million due to
the growth in WWE Network subscription revenue, and as anticipated,
lower programming expenses from the broadcast timing of original
content, namely Camp WWE and Swerved, which aired in the prior year
quarter.The Company continued to increase the global subscriber
base of WWE Network, which had 1.57 million total paid subscribers
(1.16 million U.S. paid subscribers and 0.41 million international
paid subscribers) at the end of the second quarter, which
represented a 4% increase from June 30, 2016.
The following table provides WWE Network subscriber performance
3, 4
As of / Three Month Ended
As of June 30, June 30,
Dec. 31, 2017 2016 2016
Ending Total
Subscribers
1,633 1,560 1,473
Ending Paid
Subscribers
U.S. 1,158 1,130 1,033 International 410 381 370 Total paid
subscribers 1,568 1,511 1,403
Average Paid
Subscribers
Quarter 1,634 1,517 1,407 Year-to-date 1,563 1,403 1,418
WWE Network content, including the Company’s
premier event, WrestleMania (April 2, 2017), other pay-per-views,
original series, NXT Takeover, and specials have continued to drive
viewer engagement. During the quarter, the Company introduced
compelling new content for WWE Network, including live in-ring
programs, such as the UK Championship Special, as well as new
episodes of WWE 24 and the weekly series 205 Live. The Company
added more than 75 hours of original content to WWE Network’s
featured programming and more than 800 hours of archival content,
which resulted in an on-demand library of over 8,300 hours at
quarter-end.
- Television revenues increased
18% to $66.2 million from $56.1 million in the prior year quarter
primarily due to contractual increases in key distribution
agreements. Revenue growth also reflected the impact of WWE’s
reality series, Total Divas, which aired six episodes in the
current year quarter as compared to three episodes in the prior
year quarter.
Live Events
Live Event revenues increased to a quarterly record of $52.8
million as compared to $51.9 million in the prior year quarter.
Increased revenue from the staging of 11 additional events
worldwide was partially offset by a reduction in WrestleMania
ticket revenue, which primarily reflected lower stadium attendance
capacity.
- There were 92 total events (excluding
NXT) in the current quarter, consisting of 66 events in North
America and 26 events in international markets, as compared to 81
events in the prior year quarter, including 62 events in North
America and 19 in international markets.
- North American live event revenues were
$40.0 million in the current year quarter as compared to $40.9
million in the prior year quarter. Increased revenue from the
staging of four additional events in North America was more than
offset by lower WrestleMania ticket sales, which derived from the
aforementioned reduction in stadium capacity and attendance.
Excluding the impact of WrestleMania in both the current and prior
year quarter, average attendance and average ticket price were
essentially flat to the prior year quarter.
- International live event revenue
increased 16% to $12.8 million from $11.0 million in the prior year
quarter. The staging of seven additional events during the quarter
and a 12% increase in average ticket price to $72.75 (which was
adversely impacted by changes in foreign exchange rates) was
partially offset by a 21% reduction in average attendance to 6,300
fans. The year-over-year changes in average attendance and ticket
prices were due, in part, to changes in the mix of venues and
territories.
As part of the Company’s international growth strategy, it
announced the return of a WWE live event to China with its
first-ever show in Shenzhen on Sunday, September 17, 2017.
Consumer Products
Division
Revenues from Consumer Products were essentially flat to the
prior year quarter. WWE Shop revenues increased 12% to $8.4 million
with higher online sales of merchandise at the Company’s e-commerce
sites. Licensing revenue increased 4% to $9.4 million primarily due
to higher sales of the Company’s mobile video game, WWE Supercard.
These growth drivers were offset by a $1.9 million reduction in the
sale of branded merchandise at the Company’s live event venues that
stemmed from lower stadium capacity and attendance at its premiere
annual event, WrestleMania (as described above).
Corporate and Other
Corporate and Other expenses were $51.7 million in the current
year quarter as compared to $49.4 million in the prior year
quarter. As defined, these expenses include corporate G&A
expenses as well as Business Support costs, such as sales,
marketing, and talent development costs, which are not allocated to
specific segments. The $2.3 million rise in Corporate & Other
expense was predominantly due to the timing of key strategic
initiatives and an increase in staff costs.
Operating Income
Operating income increased to $10.7 million as compared to $1.5
million in the prior year quarter, reflecting the increased
monetization of content across all platforms driven by the
Company’s Network and Television segments. This increase in income
was partially offset by a decline in Live Event and Venue
Merchandise profits, and $1.1 million in film impairment charges
that have been excluded from Adjusted OIBDA (see discussion of
Adjusted OIBDA below). The Company’s Operating income margin was 5%
as compared to less than 1% in the prior year quarter.
Adjusted Operating Income Before
Depreciation and Amortization (Adjusted
OIBDA)1
Adjusted OIBDA increased to $18.1 million from $7.5 million in
the prior year quarter. The $10.6 million increase was primarily
due to the increased monetization of content as reflected in the
Company’s Media Division. Media division profits increased $14.5
million due to the growth in WWE Network subscription revenue and
lower programming costs reflecting the timing of new original
programming, the contractual escalation of key distribution
agreements, as well as increased global sponsorship sales. These
factors were partially offset by a $3.0 million decline in combined
Live Event and Venue Merchandise profits, which stemmed from higher
event operating costs and lower attendance capacity at
WrestleMania. Additionally, the overall increase in profits was
reduced by the timing of Corporate & Other expense (as
described above). The Company’s Adjusted OIBDA margin increased to
8% from 4% in the prior year quarter.
Six Months Ended June 30,
2017 - Results Overview
Total revenues for the six months ended June 30, 2017 were
$403.0 million as compared to $370.1 million in the prior year
period. Net income was $6.0 million, or $0.08 per share, as
compared to Net income of $14.7 million, or $0.19 per share, in the
prior year period. Operating income was $14.7 million as compared
to $23.5 million. Excluding items affecting comparability, Adjusted
OIBDA1 increased to $36.7 million from $35.1 million.
Six Months Ended June 30,
2017 – Segment Performance Commentary
Revenues increased 9% to $403.0 million with growth driven by
the Company’s Television, Network and Live Events segments. North
American revenues increased 9%, or $25.8 million, primarily due to
the contractual escalation of television rights fees, the growth of
WWE Network subscribers, and the performance of Live Events, which
reflected the staging of 23 additional events in the current
period. Revenues from outside North America increased 8%, or $7.1
million, driven by higher television rights fees, particularly in
the APAC region, the growth of WWE Network subscribers, and the
staging of five additional live events in APAC and Latin America.
Changes in foreign exchange rates adversely impacted revenues by
$3.1 million, primarily from the Live Events and Network segments
in the EMEA region.
Media Division
Revenues from the Company's Media division increased 10% to
$250.8 million from $227.2 million in the prior year period
primarily due to the contractual escalation of television rights
fees and growth of WWE Network subscription revenue.
Live Events
Live Event revenues increased 10% to $84.9 million from $77.2
million in the prior year period primarily due to the staging of 28
additional global events (23 in North America and 5
International).
Consumer Products
Division
Revenues from our Consumer Products division increased to $59.7
million from $58.5 million in the prior year period, with growth
driven by higher sales of branded merchandise through WWE Shop’s
e-commerce sites and distribution channels including Amazon.
WWE Studios
WWE Studios recognized revenue of $4.8 million as compared to
revenue of $5.2 million in the prior year period. The decrease in
revenue was primarily due to the performance and timing of results
from the Company’s portfolio of movies.
Corporate and Other
Corporate and Other expenses were $110.6 million as compared to
$91.5 million in the prior year period. As defined, these expenses
include corporate G&A expenses as well as Business Support
costs such as sales, marketing, international management and talent
development costs, which are not allocated to specific segments.
For the current period, Corporate and Other included non-recurring
expenses of $5.6 million primarily related to certain legal matters
and other contractual obligations. Excluding these costs, Corporate
and Other expenses increased $13.5 million primarily due to
increases in stock compensation ($2.3 million) that derived from a
rise in the Company’s stock price and increases in other expenses
($11.2 million) that primarily reflected the timing of key
strategic initiatives and an increase in staff costs.
Operating Income
Operating income was $14.7 million as compared to $23.5 million
in the prior year period, primarily due to the $8.8 million related
to items that impacted the comparability of results on a
year-over-year basis (as described on page 2 of this release). The
Company’s Operating income margin was 4% as compared to 6% in the
prior year period.
Adjusted Operating Income Before
Depreciation and Amortization (Adjusted
OIBDA)1
Adjusted OIBDA increased 5% to $36.7 million primarily due to
growth in WWE Network subscriptions and the contractual escalation
of key content distribution agreements. These factors were
partially offset by the rise in Corporate and Other expense, which
derived predominately from timing (as described above). The
Company’s Adjusted OIBDA margin was 9% in the current and prior
year period.
Cash Flows &
Liquidity
Cash generated from operating activities was $13.8 million in
the current six-month period, compared to $2.8 million in the prior
year period, as favorable changes in working capital more than
offset the impact of lower operating performance.
Free Cash Flow increased $14.0 million as compared to the prior
year period reflecting the change in cash from operating activities
and a $3.0 million decrease in capital expenditures.5
As of June 30, 2017, the Company held $262.3 million in
cash and cash equivalents and short-term investments, and estimates
debt capacity under its revolving line of credit of approximately
$100 million.
Notes
(1) The definition of OIBDA, Adjusted OIBDA as well as a
reconciliation of Operating Income to Adjusted OIBDA for the three
and six-month periods ending June 30, 2017 and 2016 can be found in
the Supplemental Information in this release on pages 14-16. (2)
The Company’s business model and expected results will continue to
be subject to significant execution risks, including those risks
outlined in the Company’s Form 10-K filing with the SEC. (3)
Average paid subscribers are calculated based on the arithmetic
daily mean over the relevant period, and may differ substantially
from paid subscribers at the end of any period due to the timing of
paid subscriber additions and losses. (4) Metrics reflect
subscribers who are direct customers of WWE Network and subscribers
reported under licensed partner agreements, which have different
economic terms for the network. (5) A reconciliation of Free Cash
Flow to Net cash provided by operating activities for the three and
six-month periods ending June 30, 2017 and 2016 can be found in the
Supplemental Information in this release on page 18.
Additional Information
Additional business metrics are made available to investors on
the corporate website - corporate.wwe.com/investors. Note: As previously
announced WWE will host a conference call at 11:00 a.m. ET on July
27th to discuss the Company's earnings results for the second
quarter of 2017. All interested parties are welcome to listen to a
live web cast that will be hosted through the Company’s web site at
corporate.wwe.com/investors.
Participants can access the conference call by dialing
1-855-200-4993 (toll free) or 1-323-794-2092 from outside the U.S.
(conference ID for both lines: 3947310). Please reserve a line 5-10
minutes prior to the start time of the conference call.
The earnings presentation referenced during the call will be
made available on July 27, 2017 at corporate.wwe.com/investors. A replay of the call
will be available approximately two hours after the conference call
concludes, and can be accessed on the Company’s web site.
About WWE
WWE, a publicly traded company (NYSE: WWE), is an integrated
media organization and recognized leader in global entertainment.
The Company consists of a portfolio of businesses that create and
deliver original content 52 weeks a year to a global audience. WWE
is committed to family friendly entertainment on its television
programming, pay-per-view, digital media and publishing platforms.
WWE programming reaches more than 650 million homes worldwide in 20
languages. WWE Network, the first-ever 24/7 over-the-top premium
network that includes all live pay-per-views, scheduled programming
and a massive video-on-demand library, is now available in almost
all international markets other than the People’s Republic of China
and embargoed countries. The Company is headquartered in Stamford,
Conn., with offices in New York, Los Angeles, London, Mexico City,
Mumbai, Shanghai, Singapore, Dubai, Munich and Tokyo.
Additional information on WWE (NYSE: WWE) can be found at
wwe.com and corporate.wwe.com. For information on our global
activities, go to http://www.wwe.com/worldwide/.
Trademarks: All WWE programming,
talent names, images, likenesses, slogans, wrestling moves,
trademarks, logos and copyrights are the exclusive property of WWE
and its subsidiaries. All other trademarks, logos and copyrights
are the property of their respective owners.
Forward-Looking Statements: This
press release contains forward-looking statements pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of
1995, which are subject to various risks and uncertainties. These
risks and uncertainties include, without limitation, risks relating
to: WWE Network (including the risk that we are unable to attract,
retain and renew subscribers); major distribution agreements; our
need to continue to develop creative and entertaining programs and
events; the possibility of a decline in the popularity of our brand
of sports entertainment; the continued importance of key performers
and the services of Vincent K. McMahon; possible adverse changes in
the regulatory atmosphere and related private sector initiatives;
the highly competitive, rapidly changing and increasingly
fragmented nature of the markets in which we operate and greater
financial resources or marketplace presence of many of our
competitors; uncertainties associated with international markets;
our difficulty or inability to promote and conduct our live events
and/or other businesses if we do not comply with applicable
regulations; our dependence on our intellectual property rights,
our need to protect those rights, and the risks of our infringement
of others’ intellectual property rights; the complexity of our
rights agreements across distribution mechanisms and geographical
areas; potential substantial liability in the event of accidents or
injuries occurring during our physically demanding events
including, without limitation, claims relating to CTE; large public
events as well as travel to and from such events; our feature film
business; our expansion into new or complementary businesses and/or
strategic investments; our computer systems and online operations;
privacy norms and regulations; a possible decline in general
economic conditions and disruption in financial markets; our
accounts receivable; our indebtedness; litigation; our potential
failure to meet market expectations for our financial performance,
which could adversely affect our stock; Vincent K. McMahon
exercises control over our affairs, and his interests may conflict
with the holders of our Class A common stock; a substantial number
of shares are eligible for sale by the McMahons and the sale, or
the perception of possible sales, of those shares could lower our
stock price; and the relatively small public “float” of our Class A
common stock. In addition, our dividend is dependent on a number of
factors, including, among other things, our liquidity and
historical and projected cash flow, strategic plan (including
alternative uses of capital), our financial results and condition,
contractual and legal restrictions on the payment of dividends
(including under our revolving credit facility), general economic
and competitive conditions and such other factors as our Board of
Directors may consider relevant. Forward-looking statements made by
the Company speak only as of the date made and are subject to
change without any obligation on the part of the Company to update
or revise them. Undue reliance should not be placed on these
statements. For more information about risks and uncertainties
associated with the Company’s business, please refer to the
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” and “Risk Factors” sections of the Company’s
SEC filings, including, but not limited to, our annual report on
Form 10-K and quarterly reports on Form 10-Q.
World Wrestling Entertainment,
Inc.
Consolidated Income Statements
(In millions, except per share
data)
(Unaudited)
Three Months Ended
Six Months Ended June 30, June 30,
2017 2016 2017
2016 Net revenues $ 214.6 $ 199.0 $ 403.0 $ 370.1 Cost of
revenues 136.4 132.1 245.5 225.4 Selling, general and
administrative expenses 61.2 59.4 129.6 109.6 Depreciation and
amortization 6.3 6.0 13.2 11.6
Operating income 10.7 1.5 14.7 23.5
Interest expense 3.7 0.6 7.2 1.2 Investment income, net 0.9 0.6 1.7
1.2 Other income (expense), net (0.1) (0.6) —
(1.2) Income before income taxes 7.8 0.9 9.2 22.3 Provision
for income taxes 2.7 0.1 3.2 7.6 Net
income $ 5.1 $ 0.8 $ 6.0 $ 14.7 Earnings per share: Basic $
0.07 $ 0.01 $ 0.08 $ 0.19 Diluted $ 0.06 $ 0.01 $ 0.08 $ 0.19
Weighted average common shares outstanding: Basic 76.5 76.0
76.4 75.9 Diluted 78.6 77.4 78.4 77.3 Dividends declared per common
share (Class A and B) $ 0.12 $ 0.12 $ 0.24 $ 0.24
World Wrestling Entertainment,
Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)
As of June 30,
December 31, 2017 2016 ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 132.8 $ 212.0
Short-term investments, net 129.4 55.1 Accounts receivable, net
55.5 53.2 Inventory 8.4 6.5 Prepaid expenses and other current
assets 27.7 22.5 Total current assets 353.8
349.3 PROPERTY AND EQUIPMENT, NET 131.6 132.6 FEATURE FILM
PRODUCTION ASSETS, NET 29.1 27.1 TELEVISION PRODUCTION ASSETS, NET
9.4 12.5 INVESTMENT SECURITIES 25.1 25.0 NON-CURRENT DEFERRED
INCOME TAX ASSETS 32.6 32.6 OTHER ASSETS, NET 17.7
21.8 TOTAL ASSETS $ 599.3 $ 600.9
LIABILITIES AND STOCKHOLDERS’
EQUITY CURRENT LIABILITIES: Current portion of long-term debt $
7.2 $ 6.1 Accounts payable and accrued expenses 60.4 70.4 Deferred
income 57.8 56.6 Total current liabilities
125.4 133.1 LONG-TERM DEBT 33.3 35.6 CONVERTIBLE DEBT 175.4
161.0 NON-CURRENT INCOME TAX LIABILITIES 0.6 0.7 NON-CURRENT
DEFERRED INCOME 22.3 30.7 Total liabilities
357.0 361.1 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’
EQUITY: Class A common stock 0.4 0.4 Class B convertible common
stock 0.4 0.4 Additional paid-in capital 418.3 403.4 Accumulated
other comprehensive income 2.9 2.9 Accumulated deficit
(179.7) (167.3) Total stockholders’ equity 242.3
239.8 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 599.3 $
600.9
World Wrestling Entertainment,
Inc.
Consolidated Statements of Cash
Flows
(In millions)
(Unaudited)
Six Months Ended June 30,
2017 2016 OPERATING ACTIVITIES: Net
income $ 6.0 $ 14.7
Adjustments to reconcile net income to net
cashprovided by operating activities:
Amortization and impairments of feature film production assets 5.8
2.7 Amortization of television production assets 10.7 17.6
Depreciation and amortization 16.6 13.9 Services provided in
exchange for equity instruments (1.4) (1.7) Equity in earnings of
affiliate, net of dividends received — (0.1) Other amortization 3.2
1.2 Stock-based compensation 12.8 9.6 Provision for (recovery from)
doubtful accounts 0.3 (0.2) Provision for deferred income taxes —
2.1 Other non-cash adjustments 0.1 0.3 Cash (used in)/provided by
changes in operating assets and liabilities: Accounts receivable
(2.6) 3.2 Inventory (1.8) (1.2) Prepaid expenses and other assets
(5.4) (12.0) Feature film production assets (7.8) (5.0) Television
production assets (7.6) (15.1) Accounts payable, accrued expenses
and other liabilities (9.2) (10.4) Deferred income (5.9)
(16.8) Net cash provided by operating activities 13.8
2.8 INVESTING ACTIVITIES: Purchases of property and
equipment and other assets (12.5) (15.5) Purchases of short-term
investments (88.7) — Proceeds from sales and maturities of
investments 13.7 0.4 Purchase of equity investments (0.1)
(1.3) Net cash used in investing activities (87.6)
(16.4) FINANCING ACTIVITIES: Repayment of long-term debt
(2.6) (2.2) Dividends paid (18.3) (18.2) Proceeds from borrowings
under the credit facilities 1.4 11.6 Proceeds from borrowings on
convertible notes, net of issuance costs 14.5 — Proceeds from
issuance of warrants 1.5 — Purchase of convertible note hedge (2.6)
— Taxes paid related to net settlement upon vesting of equity
awards (0.1) (0.1) Proceeds from issuance of stock 0.8
0.7 Net cash provided by (used in) financing activities
(5.4) (8.2) NET DECREASE IN CASH AND CASH EQUIVALENTS
(79.2) (21.8) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
212.0 38.0 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 132.8
$ 16.2 NON-CASH INVESTING TRANSACTIONS: Non-cash purchase of
property and equipment $ 2.0 $ 0.8
World Wrestling Entertainment,
Inc.
Supplemental Information – Schedule of
Adjustments
(In millions, except per share
data)
(Unaudited)
Three Months Ended June
30, 2017 2016
AsReported
Film Impairments
Other Adjusted As
Reported (1) Operating income $ 10.7 $ 1.1 $ —
$ 11.8 $ 1.5 Interest expense 3.7 — — 3.7 0.6 Investment and other
income (expense), net 0.8 — — 0.8
— Income before taxes 7.8 1.1 — 8.9 0.9 Provision for income
taxes 2.7 0.4 — 3.1 0.1
Net
income $ 5.1 $ 0.7 $ — $ 5.8 $ 0.8 Earnings per share - diluted
$ 0.06 $ 0.01 $ — $ 0.07 $ 0.01
Reconciliation of Operating
income to OIBDA Operating income $ 10.7 $ 1.1 $ — $ 11.8 $ 1.5
Depreciation & amortization 6.3 — —
6.3 6.0 OIBDA $ 17.0 $ 1.1 $ — $ 18.1 $ 7.5
Six Months Ended June 30, 2017
2016 AsReported
Film Impairments
Other (2)
Adjusted
As Reported (1) Operating income $ 14.7
$ 3.2 $ 5.6 $ 23.5 $ 23.5 Interest expense 7.2 — — 7.2 1.2
Investment and other income (expense), net 1.7 —
— 1.7 — Income before taxes 9.2 3.2 5.6 18.0
22.3 Provision for income taxes 3.2 1.1 2.0
6.3 7.6
Net income $ 6.0 $ 2.1 $ 3.6 $ 11.7 $
14.7 Earnings per share - diluted $ 0.08 $ 0.03 $ 0.05 $ 0.15 $
0.19
Reconciliation of Operating income to OIBDA Operating
income $ 14.7 $ 3.2 $ 5.6 $ 23.5 $ 23.5 Depreciation &
amortization 13.2 — — 13.2 11.6
OIBDA $ 27.9 $ 3.2 $ 5.6 $ 36.7 $ 35.1
Non-GAAP Measures:
We define OIBDA as operating income before depreciation
and amortization, excluding feature film and television production
amortization and related impairments. OIBDA is a non-GAAP financial
measure and may be different than similarly-titled non-GAAP
financial measures used by other companies. A limitation of OIBDA
is that it excludes depreciation and amortization, which represents
the periodic charge for certain fixed assets and intangible assets
used in generating revenues for the Company's business. OIBDA
should not be regarded as an alternative to operating income or net
income as an indicator of operating performance, or to the
statement of cash flows as a measure of liquidity, nor should it be
considered in isolation or as a substitute for financial measures
prepared in accordance with GAAP. We believe that operating income
is the most directly comparable GAAP financial measure to
OIBDA.
Adjusted OIBDA, Adjusted Operating income,
Adjusted Net income and Adjusted Earnings per share
exclude certain material items, which otherwise would impact the
comparability of results between periods. These should not be
considered as an alternative to net income, cash flows from
operations or any other indicator of WWE's performance or
liquidity, determined in accordance with U.S. GAAP.
Our management uses OIBDA and Adjusted OIBDA measures to
evaluate operating performance of the consolidated business and to
set goals for operating managers. As such, we believe these
measures provide relevant and useful information to our current and
potential investors.
(1)
For the first quarter and six-month period
ended June 30, 2016, there were no items that impacted the
comparability of results on a year-over -year basis. For these
periods, Adjusted results were equal to As Reported results.
(2)
Adjustment to Operating income and OIBDA
reflects non-recurring expenses of $5.6 million primarily related
to certain legal matters and other contractual obligations.
World Wrestling Entertainment,
Inc.
Supplemental Information –
Reconciliation of Adjusted OIBDA
(In millions, except per share
data)
(Unaudited)
Three Months Ended June 30, 2017
Operating Income
Depreciation OIBDA
Adjustments to OIBDA
Adjusted OIBDA
Media Division Network $ 1.2 $ 1.8 $ 3.0 $ — $ 3.0 Television 30.8
1.0 31.8 — 31.8 Home Entertainment 0.9 — 0.9 — 0.9 Digital Media
1.4 0.1 1.5 — 1.5 Live Events 21.6 — 21.6 — 21.6 Consumer Products
Division Licensing 4.5 — 4.5 — 4.5 Venue Merchandise 2.5 — 2.5 —
2.5 WWEShop 2.1 — 2.1 — 2.1 WWE Studios (1) (0.7) — (0.7) 1.1 0.4
Corporate & Other (53.6) 3.4 (50.2)
— (50.2)
Total Operating Income $ 10.7 $ 6.3 $ 17.0 $
1.1 $ 18.1
Three Months Ended June 30, 2016
Operating Income
Depreciation OIBDA
Adjustments to OIBDA
Adjusted OIBDA
Media Division Network $ (8.3) $ 2.6 $ (5.7) $ — $ (5.7) Television
27.2 — 27.2 — 27.2 Home Entertainment 1.0 — 1.0 — 1.0 Digital Media
— 0.2 0.2 — 0.2 Live Events 23.4 — 23.4 — 23.4 Consumer Products
Division Licensing 3.9 — 3.9 — 3.9 Venue Merchandise 3.7 — 3.7 —
3.7 WWEShop 1.6 — 1.6 — 1.6 WWE Studios 0.4 — 0.4 — 0.4 Corporate
& Other (51.4) 3.2 (48.2) —
(48.2)
Total Operating Income $ 1.5 $ 6.0 $ 7.5 $ — $ 7.5
Non-GAAP Measures:
We define OIBDA as operating income before depreciation
and amortization, excluding feature film and television production
amortization and related impairments. OIBDA is a non-GAAP financial
measure and may be different than similarly-titled non-GAAP
financial measures used by other companies. A limitation of OIBDA
is that it excludes depreciation and amortization, which represents
the periodic charge for certain fixed assets and intangible assets
used in generating revenues for the Company's business. OIBDA
should not be regarded as an alternative to operating income or net
income as an indicator of operating performance, or to the
statement of cash flows as a measure of liquidity, nor should it be
considered in isolation or as a substitute for financial measures
prepared in accordance with GAAP. We believe that operating income
is the most directly comparable GAAP financial measure to
OIBDA.
Adjusted OIBDA, Adjusted Operating income,
Adjusted Net income and Adjusted Earnings per share
exclude certain material items, which otherwise would impact the
comparability of results between periods. These should not be
considered as an alternative to net income, cash flows from
operations or any other indicator of WWE's performance or
liquidity, determined in accordance with U.S. GAAP.
Our management uses OIBDA and Adjusted OIBDA measures to
evaluate operating performance of the consolidated business and to
set goals for operating managers. As such, we believe these
measures provide relevant and useful information to our current and
potential investors.
(1)
Adjustment to OIBDA reflects film
impairment charges of $1.1 million.
World Wrestling Entertainment,
Inc.
Supplemental Information –
Reconciliation of Adjusted OIBDA
(In millions, except per share
data)
(Unaudited)
Six Months Ended June 30, 2017
Operating Income
Depreciation OIBDA
Adjustments to OIBDA
Adjusted OIBDA
Media Division Network $ 13.9 $ 3.4 $ 17.3 $ — $ 17.3 Television
60.1 2.5 62.6 — 62.6 Home Entertainment 1.7 — 1.7 — 1.7 Digital
Media 0.9 0.1 1.0 — 1.0 Live Events 29.7 — 29.7 — 29.7 Consumer
Products Division Licensing 17.9 — 17.9 — 17.9 Venue Merchandise
5.1 — 5.1 — 5.1 WWEShop 4.0 — 4.0 — 4.0 WWE Studios (1) (3.6) —
(3.6) 3.2 (0.4) Corporate & Other (2) (115.0) 7.2
(107.8) 5.6 (102.2)
Total Operating
Income $ 14.7 $ 13.2 $ 27.9 $ 8.8 $ 36.7
Six Months
Ended June 30, 2016
Operating Income
Depreciation OIBDA
Adjustments to OIBDA
Adjusted OIBDA
Media Division Network $ 7.5 $ 2.6 $ 10.1 $ — $ 10.1 Television
53.0 2.5 55.5 — 55.5 Home Entertainment 2.5 — 2.5 — 2.5 Digital
Media (0.2) 0.3 0.1 — 0.1 Live Events 29.5 — 29.5 — 29.5 Consumer
Products Division Licensing 18.2 — 18.2 — 18.2 Venue Merchandise
5.7 — 5.7 — 5.7 WWEShop 3.0 — 3.0 — 3.0 WWE Studios — — — — —
Corporate & Other (95.7) 6.2 (89.5)
— (89.5)
Total Operating Income $ 23.5 $ 11.6 $ 35.1
$ — $ 35.1
Non-GAAP Measures:
We define OIBDA as operating income before depreciation
and amortization, excluding feature film and television production
amortization and related impairments. OIBDA is a non-GAAP financial
measure and may be different than similarly-titled non-GAAP
financial measures used by other companies. A limitation of OIBDA
is that it excludes depreciation and amortization, which represents
the periodic charge for certain fixed assets and intangible assets
used in generating revenues for the Company's business. OIBDA
should not be regarded as an alternative to operating income or net
income as an indicator of operating performance, or to the
statement of cash flows as a measure of liquidity, nor should it be
considered in isolation or as a substitute for financial measures
prepared in accordance with GAAP. We believe that operating income
is the most directly comparable GAAP financial measure to
OIBDA.
Adjusted OIBDA, Adjusted Operating income,
Adjusted Net income and Adjusted Earnings per share
exclude certain material items, which otherwise would impact the
comparability of results between periods. These should not be
considered as an alternative to net income, cash flows from
operations or any other indicator of WWE's performance or
liquidity, determined in accordance with U.S. GAAP.
Our management uses OIBDA and Adjusted OIBDA measures to
evaluate operating performance of the consolidated business and to
set goals for operating managers. As such, we believe these
measures provide relevant and useful information to our current and
potential investors.
(1)
Adjustment to OIBDA reflects film
impairments charges of $3.2 million.
(2)
Adjustment to OIBDA reflects non-recurring
expenses of $5.6 million primarily related to certain legal matters
and other contractual obligations.
World Wrestling Entertainment,
Inc.
Supplemental Information -
Reconciliation of Business Outlook
(In millions, except per share
data)
(Unaudited)
Reconciliation of Adjusted OIBDA to
Operating Income
Q2 2017 Q2 2017
YTD Q3 2017 FY 2017
Adjusted OIBDA (1)
$ 18.1 $ 36.7
$31 - $35 $100 Depreciation & amortization (6.3)
(13.2) — — Film Impairments (2) (1.1) (3.2) — — Asset Impairments
(2) — — — — Gain (losses) on operating assets (2) — — — —
Restructuring charges (2) — — — — Other operating income items (2)
— (5.6) — —
Operating income (U.S. GAAP Basis)
$ 10.7 $ 14.7 Not estimable
Not estimable (1)
WWE defines OIBDA as operating income
before depreciation and amortization, excluding feature film and
television production asset amortization and impairments. OIBDA is
a non-GAAP financial measure and may be different than
similarly-titled non-GAAP financial measures used by other
companies. A limitation of OIBDA is that it excludes depreciation
and amortization, which represents the periodic charge for certain
fixed assets and intangible assets used in generating revenues for
the Company's business. OIBDA should not be regarded as an
alternative to operating income or net income as an indicator of
operating performance, or to the statement of cash flows as a
measure of liquidity, nor should it be considered in isolation or
as a substitute for financial measures prepared in accordance with
GAAP. We believe that operating income is the most directly
comparable GAAP financial measure to OIBDA.
sup> Adjusted OIBDA, Adjusted Operating income, Adjusted
Net income and Adjusted Earnings per share exclude certain material
items, which otherwise would impact the comparability of results
between periods. These items include, but are not limited to,
non-cash impairments of film, intangible and fixed assets, gains
and losses on asset sales, as well as material restructuring
charges. The adjusted measures should not be considered as an
alternative to net income, cash flows from operations or any other
indicator of WWE's performance or liquidity, determined in
accordance with U.S. GAAP. The Company believes the
presentation of OIBDA and Adjusted OIBDA is relevant and useful for
investors because it allows investors to view our operating
performance in the same primary method used by management to
evaluate operating performance. Additionally, we believe they
provide a meaningful representation of operating cash flows.
(2)
Because of the nature of the footnoted
items, WWE is unable to estimate the amounts of any adjustments for
these items for periods after June 30, 2017 due to its inability to
forecast if or when such items will occur. These items are
inherently unpredictable and may not be reliably quantified.
World Wrestling Entertainment,
Inc.
Supplemental Information - Free Cash
Flow
(In millions)
(Unaudited)
Three Months Ended
Six Months Ended June 30, June 30, 2017
2016 2017 2016 Net cash provided
by operating activities $ 10.8 $ 1.3 $ 13.8 $ 2.8 Less cash used
for capital expenditures: Purchase of property and equipment and
other assets (8.2) (8.8) (12.5) (15.5)
Free Cash Flow $ 2.6 $ (7.5) $ 1.3 $ (12.7)
Non-GAAP Measure:
We define Free Cash Flow as net cash provided by
operating activities less cash used for capital expenditures.
Although it is not a recognized measure of liquidity under U.S.
GAAP, Free Cash Flow provides useful information regarding the
amount of cash our continuing business is generating after capital
expenditures, available for reinvesting in the business, debt
service, and payment of dividends.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170727005469/en/
WWEInvestors:Michael Weitz,
203-352-8642orMichael Guido, CFA, 203-352-8779orMedia:Christopher Bellitti, 203-352-8759
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