Raises Full Year 2018 Guidance
Second Quarter 2018
Highlights
- Revenues increased 31% to $281.6
million, which was the highest quarterly revenue in WWE
history
- Operating income nearly doubled to
$21.2 million from $10.7 million in the prior year quarter
- Adjusted OIBDA1 increased 79% to $43.5
million
- WWE completed agreements with USA
Network and Fox Sports, effective October 1, 2019, which increase
the average annual value (AAV) of WWE’s U.S. distribution to 3.6
times that of the prior deal with NBCU
- WWE Network average paid subscribers2
increased 10% to 1.80 million paid subscribers, consistent with the
Company’s guidance
- Digital engagement continued to grow
through the first six months of 2018 with video views up 58% to
14.4 billion and hours consumed up 71% to 509 million across
digital and social media platforms3
WWE (NYSE: WWE) today announced financial results for its second
quarter ended June 30, 2018.
“We’re pleased with our continued success in increasing the
monetization of WWE content globally,” said Vince McMahon, WWE
Chairman and Chief Executive Officer. “This success is evidenced by
the completion of our new U.S. distribution agreements with USA
Network and Fox Sports, the staging of another record-breaking
WrestleMania, and the development of a 10-year strategic
partnership with the Saudi General Sports Authority.”
George Barrios, Co-President, added, “During the second quarter,
we generated a 79% increase in Adjusted OIBDA. We are raising our
2018 Adjusted OIBDA target to a range of $160 million to $170
million, which would be an all-time record.4 By executing our
strategy and engaging our passionate global fan base, we can
continue to deepen the moat around our business. We believe this
will enable us to drive long-term growth and shareholder
value.”
Second-Quarter Consolidated
Results
Revenues increased 31% to $281.6 million driven by the
increased monetization of content as reflected in the Media
segment.
Operating Income nearly doubled to $21.2 million from
$10.7 million in the prior year quarter reflecting increased
profits from the Media segment, which were partially offset by an
increase in management incentive compensation based on anticipated
strong full-year results and the rise in the Company’s stock price.
The Company’s Operating income margin was 8% as compared to 5% in
the prior year quarter.
Adjusted OIBDA (which excludes stock compensation)
increased 79% to $43.5 million. The Company’s Adjusted OIBDA margin
increased to 15% from 11% in the prior year quarter.
Net Income increased to $10.0 million, or $0.11 per
diluted share, as compared to $5.1 million, or $0.06 per diluted
share, in the prior year quarter.
Effective Tax Rate declined to 31% from 35% in the prior
year quarter driven by the reduced federal income tax rate in the
Tax Cuts and Jobs Act of 2017 (the “Tax Act”).
During the third quarter of 2018, in connection with the vesting
of annual stock-based awards, the Company expects to recognize an
income tax benefit between $20 million and $25 million, as compared
to $1.6 million during the prior year quarter. This benefit results
from the difference between the deduction for tax purposes and the
compensation cost recognized related to these awards. The increase
in the tax benefit during the current year is driven by the
increase in the Company’s stock price. The Company expects this
benefit to have a significant impact on its effective tax rate
during the three months ended September 30, 2018.
Cash flows generated by operating activities reached
$74.2 million and Free Cash Flow totaled $66.4 million as
compared to $10.8 million and $2.6 million, respectively, in the
prior year quarter.5 The growth in both measures was primarily due
to improved operating performance.
Year-to-date 2018 Consolidated
Results
For the six months ended June 30, 2018, Revenues increased 16%
to $469.3 million from $403.0 million. Operating income increased
to $43.0 million from $14.7 million, and Adjusted OIBDA increased
to $78.7 million from $49.5 million. Net income increased to $24.8
million ($0.29 per diluted share) from $6.0 million ($0.08 per
diluted share) in the prior year period.
Cash flows generated by operating activities reached
$76.8 million and Free Cash Flow totaled $64.6 million as
compared to $13.8 million and $1.3 million, respectively, in the
prior year period.5 The growth in both measures was primarily due
to improved operating performance.
Cash, cash equivalents and short-term investments were
$342 million as of June 30, 2018, and the Company estimates
debt capacity under its revolving line of credit of
approximately $100 million.
The schedule below reflects WWE’s performance by operating
segment (in millions):1
Three Months Ended Six
Months Ended June 30, June 30, 2018
2017 2018 2017 Net Revenues: Media $
202.6 $ 137.2 $ 336.0 $ 258.4 Live Events 52.3 52.8 83.1 84.9
Consumer Products 26.7 24.6 50.2 59.7
Total Net Revenues $ 281.6 $ 214.6 $ 469.3 $ 403.0
Operating Income: Media $ 32.0 $ 9.6 $ 67.9 $ 24.8 Live
Events 13.4 17.1 16.3 20.8 Consumer Products 4.6 5.5 10.6 19.9
Corporate (28.8) (21.5) (51.8) (50.8)
Total Operating Income $ 21.2 $ 10.7 $ 43.0 $ 14.7
Adjusted OIBDA: Media $ 44.5 $ 17.8 $ 88.1 $ 42.9 Live
Events 14.7 17.7 18.3 22.2 Consumer Products 6.9 6.3 13.8 21.5
Corporate (22.6) (17.5) (41.5) (37.1)
Total Adjusted OIBDA $ 43.5 $ 24.3 $ 78.7 $ 49.5
Basis of Presentation
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. A reconciliation of 2018 Adjusted OIBDA to Operating income
(GAAP) for the three and six-month periods ended June 30, 2018 can
be found in the supplemental schedules on pages 14-15 of this
release.
For the second quarter and six-month period ended June 30, 2018,
net income included a $3.0 million impairment of an equity
investment which was recorded below Operating income as a Loss on
equity investment. A reconciliation of Net Income to Adjusted Net
Income for the three and six-month periods ended June 30, 2018 and
2017 can be found in the supplemental schedule on page 13 of this
release.
Second-Quarter Results by Operating
Segment
Media
Revenues increased 48% to $202.6 million, primarily due
to the distribution of certain programming content in international
markets as reflected in “Other.” Additionally, the growth in Media
revenue reflected increased sales of advertising and sponsorships
across platforms, the contractual escalation of core content rights
fees, including license fees from the distribution of the Company’s
flagship programs Raw and SmackDown, and the continued growth of
WWE Network that yielded a 10% increase in average paid subscribers
to 1.80 million.
Three Months Ended June 30,
2018 2017 Revenues: Network (including
pay-per-view) $ 56.2 $ 52.1 Core content rights fees 6 66.2 60.1
Advertising and sponsorship 19.6 13.1 Other 7 60.6
11.9
Total Revenues $ 202.6 $ 137.2
Operating income increased $22.4 million to $32.0 million
primarily due to the growth in revenue, which was partially offset
by associated production costs and an increase in accrued
management incentive compensation.
Adjusted OIBDA increased $26.7 million to $44.5
million.
Key Highlights: During the quarter, WWE continued to
produce compelling content, monetize new opportunities across
platforms, and optimize its future distribution. As Monday Night
Raw and SmackDown Live remained the highest-rated programs on USA
Network, WWE secured agreements with USA Network and Fox Sports,
effective October 1, 2019, that increase the programs’ combined
average annual value (AAV) in the U.S. to 3.6 times that of the
prior deal with NBCU. Extending its reach on television, WWE
delivered its third captivating season of Total Bellas, developed a
new series, Miz & Mrs., that premiered on July 24, and
announced the eighth season Fall return of Total Divas. On the
Company’s streaming service, WWE Network, pay-per-views and
original programming continued to drive viewer engagement. In
partnership with the Saudi General Sports Authority, the Company
produced the Greatest Royal Rumble, which was featured on WWE
Network. Other examples of exciting new programming on the network
included the UK Championship Tournament and a new season of Camp
WWE. To these, the Company added the promise of more in-ring
content to come with the next women’s tournament, Mae Young Classic
2018 and the first-ever all-women’s pay-per-view event, WWE
Evolution. For its social and digital platforms, the Company
produced more than 165 hours of content, including versions of its
Best of WWE series in Spanish, Portuguese, and German, and plans to
launch a new series, WWE Now in Arabic.
Live Events
Revenues of $52.3 million were essentially unchanged from
the prior year quarter as increases in the average ticket price at
events in both North America and international markets was offset
by a reduction in average attendance for the Company’s events
worldwide. The year-over-year changes in ticket prices and average
attendance were primarily due to changes in the mix of venues and
territories.
- There were 90 total events (excluding
NXT) in the current quarter, consisting of 61 events in North
America and 29 events in international markets, as compared to 92
events in the prior year quarter, including 66 events in North
America and 26 in international markets.
- North American ticket sales declined
$2.4 million primarily due to the staging of five fewer events and
an 8% decline in average attendance to 5,900. Partially offsetting
these factors, the average ticket price increased 5% to
$81.71.
- International live event revenue
increased 9% to $13.5 million from $12.4 million in the prior year
quarter. The staging of three additional events during the quarter
and an 8% increase in average ticket price to $78.31 was partially
offset by a 10% reduction in average attendance to approximately
5,700 fans.
Three Months Ended June 30, 2018 2017
Revenues: North American ticket sales $ 33.5 $ 35.9
International ticket sales 13.5 12.4 Advertising and sponsorship
0.9 0.7 Other 8 4.4 3.8
Total Revenues $ 52.3
$ 52.8
Operating income was $13.4 million as compared to $17.1
million in the prior year quarter, primarily due to a rise in
production costs, including talent pay, an increase in accrued
management incentive compensation and the reduction in ticket sales
(as described above).
Adjusted OIBDA was $14.7 million as compared to $17.7
million in the prior year quarter.
Key Highlights: WWE continued to stage and plan
remarkable events for engaging its fans with live, action-packed
entertainment. During the quarter, WrestleMania attracted 78,133
fans and broke the record for the Mercedes-Benz Superdome’s highest
grossing entertainment event at $14.1 million. The Greatest Royal
Rumble in Jeddah, Saudi Arabia, became the largest WWE event held
outside the U.S. in the past 16 years. In addition, the Company
announced that it will return to China for the third straight year
when WWE LIVE Shanghai comes to the Mercedes Benz Arena in
September, and will hold a historic event in Australia, with WWE
Super Show-Down in October, featuring the largest roster of WWE
Superstars to ever appear in that country.
Consumer Products
Revenues increased 9% to $26.7 million primarily due to
higher royalties from the sale of licensed consumer products and
the timing of merchandise sales related to WWE’s WrestleMania Fan
Axxess. The increase in licensing revenues reflected higher
royalties from the sale of video games, including the company’s
franchise game, WWE 2K19, and the mobile game, WWE Champions
(Scopely).
Three Months Ended June 30,
2018 2017 Revenues: Consumer product licensing
$ 10.8 $ 9.4 eCommerce 8.1 8.4 Venue merchandise 7.8
6.8
Total Revenues $ 26.7 $ 24.6
Operating income was $4.6 million as compared to $5.5
million in the prior year quarter as the change in revenue was
offset by an increase in operating expenses, including accrued
management incentive compensation.
Adjusted OIBDA increased 10% to $6.9 million from $6.3
million in the prior year quarter based on the change in
revenue.
Key Highlights: During the quarter, the Company continued
to develop new licensing partnerships, such as those with Carl’s
Jr.’s and Guardian Essentials to promote kids meals and
multivitamins (shaped like WWE Championship belts), respectively,
and to expand the presence of WWE among children. The vitamins
were made available on WWE’s ecommerce site, WWE Shop, and
Amazon.com. The Company also continued to increase the penetration
of its mobile games. As of quarter-end, the Company had more than
90 million installs across its game portfolio, led by WWE Champions
and WWE Supercard and including WWE’s newest game, WWE Mayhem which
recently surpassed 12 million installs.
2018 Business Outlook
In the first half of 2018, the Company achieved a 59% increase
in Adjusted OIBDA to $78.7 million. In the second half of 2018, the
Company expects Adjusted OIBDA to be relatively flat
year-over-year. This includes projected third quarter Adjusted
OIBDA of $30 million to $34 million and strong fourth quarter
results.4 Based on its actual and projected performance, the
Company is raising its target for 2018 Adjusted OIBDA to a range of
$160 million to $170 million, which would be an all-time record,
exceeding its previous guidance of at least $150 million.4
The Company’s guidance for the second half of 2018 assumes a
continued rise in revenue, and the impact of increases in fixed
costs, strategic investments, and higher management compensation
based on 2018 overperformance. In addition to these items,
projected third quarter results also reflect the unfavorable timing
of various business initiatives. In the third quarter 2018, the
Company also projects average paid subscribers of approximately
1.67 million, which represents a 10% increase from the third
quarter 2017.
The Company anticipates meaningful revenue growth in the fourth
quarter based on the escalation of content rights fees and the
favorable timing of licensing revenue associated with the
implementation of a new FASB standard (ASC Topic 606).
WWE is unable to provide a reconciliation of full year or third
quarter guidance to GAAP measures as, at this time, WWE cannot
accurately determine all of the adjustments that would be
required.
In early 2018, management discussed a step-up in capital
expenditures to build-out the Company’s video production
infrastructure and support the Company’s growth. The Company has
decided to delay that spending as its plans continue to evolve. For
the full year 2018, the Company anticipates capital expenditures of
$30 million to $40 million. The Company expects to finalize its
plans this year and to provide further guidance at that time.
Notes
(1) The definition of Adjusted OIBDA can be found in the
Non-GAAP Measures section of the release on pages 7-8 (below). A
reconciliation of three and six months ended June 30, 2018 and 2017
Operating Income to Adjusted OIBDA can be found in the Supplemental
Information in this release on pages 14-15.
(2) 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.
(3) Consumption includes videos viewed on third party (Facebook,
YouTube, Twitter, Instagram, Snapchat, etc.) and WWE platforms
(WWE.com and WWE App).
(4) The Company’s business model and expected results will
continue to be subject to significant execution and other risks,
including those risks outlined in the Company’s Form 10-K filing
with the SEC.
(5) A reconciliation of three and six months ended June 30, 2018
and 2017 Free Cash Flow to Net cash provided by operating
activities can be found in the Supplemental Information in this
release on page 16.
(6) Core content rights fees consist primarily of licensing
revenues earned from the distribution of our flagship programs, Raw
and SmackDown, through global broadcast, pay television and digital
platforms.
(7) Other forms of media monetization reflect revenues earned
from the distribution of other content, including, but not limited
to, scripted, reality and other in-ring programming, as well as
theatrical and direct-to-home video releases.
(8) Other Live Events includes revenue from the sale of travel
packages associated with the Company’s live events, and commissions
earned through secondary ticketing.
Non-GAAP Measures
The Company defines Adjusted OIBDA as operating income
excluding depreciation and amortization, stock-based compensation
expense, certain impairment charges and other non-recurring
material items that otherwise would impact the comparability of
results between periods. Adjusted OIBDA includes amortization
expenses directly related to the Company's revenue generating
activities, including the amortization of feature film, television
production and WWE Network programming assets. The Company believes
the presentation of Adjusted OIBDA is relevant and useful for
investors because it allows them to view the Company’s segment
performance in the same manner as the primary method used by
management to evaluate segment performance and to make decisions
regarding the allocation of resources. Additionally, the Company
believes that Adjusted OIBDA provides a meaningful representation
of operating cash flows generated by our business segments, and is
a primary measure used by media investors, analysts and peers for
comparative purposes.
Adjusted OIBDA is a non-GAAP financial measure and may be
different than similarly-titled non-GAAP financial measures used by
other companies. WWE views operating income as the most directly
comparable GAAP measure. Adjusted OIBDA (and other non-GAAP
measures such as Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS presented to exclude certain material items that
impact the comparability between periods) should not be considered
in isolation from, or as a substitute for, operating income or
other GAAP measures, such as net income or operating cash flow, as
an indicator of operating performance or liquidity.
The Company defines Free Cash Flow as net cash provided
by operating activities less cash used for capital expenditures.
WWE views net cash provided by operating activities as the most
directly comparable GAAP measure. Although it is not a recognized
measure of liquidity under U.S. GAAP, Free Cash Flow provides
useful information regarding the amount of cash WWE’s continuing
business generates after capital expenditures and is available for
reinvesting in the business, debt service, and payment of
dividends.
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
26th to discuss the Company's earnings results for the second
quarter of 2018. 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: 3327842). 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 26, 2018 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’s TV-PG, family-friendly programming can be seen in more than
800 million homes worldwide in 24 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 currently available in more than 180 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: entering, maintaining and renewing major distribution
agreements; WWE Network (including the risk that we are unable to
attract, retain and renew subscribers); 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 June
30, Six Months Ended June 30, 2018
2017 2018 2017 Net revenues $ 281.6 $ 214.6 $
469.3 $ 403.0 Operating expenses 198.9 158.0 318.9 289.4 Marketing
and selling expenses 29.7 21.6 49.6 42.1 General and administrative
expenses 24.9 18.0 44.6 43.6 Depreciation and amortization
6.9 6.3 13.2 13.2 Operating income 21.2
10.7 43.0 14.7 Interest expense 4.7 3.7 8.2
7.2 Loss on equity investment 3.0 — 3.0 — Investment income, net
1.4 0.8 2.8 1.7 Other income (expense), net (0.4) —
— — Income before income taxes 14.5 7.8 34.6 9.2
Provision for income taxes 4.5 2.7 9.8
3.2 Net income $ 10.0 $ 5.1 $ 24.8 $ 6.0 Earnings per share:
Basic $ 0.13 $ 0.07 $ 0.32 $ 0.08 Diluted $ 0.11 $ 0.06 $ 0.29 $
0.08 Weighted average common shares outstanding: Basic 77.2
76.5 77.2 76.4 Diluted 87.1 78.6 85.2 78.4 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,
2018
December 31,
2017
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 154.8 $
137.7 Short-term investments, net 186.8 159.7 Accounts receivable,
net 83.0 65.3 Inventory 8.6 8.3 Prepaid expenses and other current
assets 24.8 20.0 Total current assets 458.0
391.0 PROPERTY AND EQUIPMENT, NET 130.1 131.3 FEATURE FILM
PRODUCTION ASSETS, NET 19.3 22.3 TELEVISION PRODUCTION ASSETS, NET
8.2 7.3 INVESTMENT SECURITIES 24.3 27.4 NON-CURRENT DEFERRED INCOME
TAX ASSETS 16.2 19.0 OTHER ASSETS, NET 12.8 16.2
TOTAL ASSETS $ 668.9 $ 614.5
LIABILITIES AND STOCKHOLDERS’
EQUITY CURRENT LIABILITIES: Current portion of long-term debt $
5.0 $ 4.6 Convertible debt 180.4 — Accounts payable and accrued
expenses 89.9 77.7 Deferred income 66.6 55.9 Total
current liabilities 341.9 138.2 LONG-TERM DEBT 28.3
31.0 CONVERTIBLE DEBT — 177.9 NON-CURRENT INCOME TAX LIABILITIES
0.5 0.5 NON-CURRENT DEFERRED INCOME 5.3 14.0 Total
liabilities 376.0 361.6 COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY: Class A common stock 0.4 0.4 Class B
convertible common stock 0.3 0.3 Additional paid-in capital 446.8
422.2 Accumulated other comprehensive income 1.4 2.4 Accumulated
deficit (156.0) (172.4) Total stockholders’ equity
292.9 252.9 TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY $ 668.9 $ 614.5
World Wrestling Entertainment,
Inc.
Consolidated Statements of Cash
Flows
(In millions)
(Unaudited)
Six Months Ended June 30, 2018
2017 OPERATING ACTIVITIES: Net income $ 24.8 $ 6.0
Adjustments to reconcile net income to net cashprovided by
operating activities: Amortization and impairments of feature film
production assets 3.5 5.8 Amortization of television production
assets 12.8 10.7 Depreciation and amortization 16.6 16.6 Loss on
equity investment 3.0 — Services provided in exchange for equity
instruments (1.6) (1.4) Other amortization 3.1 3.2 Stock-based
compensation 22.5 12.8 Benefit from deferred income taxes (0.1) —
Other non-cash adjustments 2.1 0.4 Cash (used in) provided by
changes in operating assets and liabilities: Accounts receivable
(7.2) (2.6) Inventory (0.3) (1.8) Prepaid expenses and other assets
(5.2) (5.4) Feature film production assets (0.6) (7.8) Television
production assets (14.4) (7.6) Accounts payable, accrued expenses
and other liabilities 6.4 (9.2) Deferred income 11.4
(5.9) Net cash provided by operating activities 76.8
13.8 INVESTING ACTIVITIES: Purchases of property and equipment and
other assets (12.2) (12.5) Purchases of short-term investments
(64.5) (88.7) Proceeds from sales and maturities of investments
36.1 13.7 Purchase of investment securities — (0.1) Other
1.0 — Net cash used in investing activities (39.6)
(87.6) FINANCING ACTIVITIES: Repayment of debt (2.3) (2.6)
Dividends paid (18.5) (18.3) Proceeds from borrowings under the
credit facilities — 1.4 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 (0.2)
(0.1) Proceeds from issuance of stock 0.9 0.8 Net
cash used in financing activities (20.1) (5.4) NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 17.1 (79.2) CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD 137.7 212.0
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 154.8 $ 132.8 NON-CASH
INVESTING TRANSACTIONS: Purchases of property and equipment
recorded in accounts payableand accrued expenses $ 3.6 $ 2.0
World Wrestling Entertainment,
Inc.
Supplemental Information –
Reconciliation of Adjusted Net Income
(In millions, except per share
data)
(Unaudited)
Three Months Ended
June 30, 2018 2017 AsReported
Loss on Investment Adjusted AsReported
FilmImpairments Adjusted Operating
income $ 21.2 $ — $ 21.2 $ 10.7 $ 1.1 $ 11.8 Interest expense
4.7 — 4.7 3.7 — 3.7 Loss on equity investment (1) 3.0 (3.0) — — — —
Investment and other income, net 1.0 — 1.0
0.8 — 0.8 Income before taxes 14.5 3.0 17.5
7.8 1.1 8.9 Provision for income taxes (2) 4.5 0.6
5.1 2.7 0.4 3.1
Net income $
10.0 $ 2.4 $ 12.4 $ 5.1 $ 0.7 $ 5.8 Earnings per share - diluted
(3) $ 0.11 $ 0.03 $ 0.14 $ 0.06 $ 0.01 $ 0.07
Six Months Ended June 30,
2018 2017 AsReported Loss on
Investment Adjusted AsReported
FilmImpairments Other (4)
Adjusted
Operating income $ 43.0 $ — $ 43.0 $ 14.7 $ 3.2 $ 5.6 $ 23.5
Interest expense 8.2 — 8.2 7.2 — — 7.2 Loss on equity investment
(1) 3.0 (3.0) — — — — — Investment and other income, net 2.8
— 2.8 1.7 — — 1.7 Income
before taxes 34.6 3.0 37.6 9.2 3.2 5.6 18.0 Provision for income
taxes (2) 9.8 0.6 10.4 3.2 1.1
2.0 6.3
Net income $ 24.8 $ 2.4 $ 27.2 $ 6.0 $
2.1 $ 3.6 $ 11.7 Earnings per share - diluted (3) $ 0.29 $ 0.03 $
0.32 $ 0.08 $ 0.03 $ 0.05 $ 0.15
(1) During the second quarter of 2018, we
recorded an impairment charge of $3.0 million on our investment in
a mobile
video publishing business for the excess
of the carrying value over its estimated fair value resulting from
going concern
issues of the underlying investee
company.
(2) The reduction in the effective tax
rate in the current year quarter was primarily driven by the
reduction of the federal
corporate income tax rate as a result of
the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), which was
enacted on December
22, 2017.
(3) The convertible notes due 2023 have a
$0.01 per share impact on diluted earnings per share for the three
and six
months ended June 30, 2018, as the average
price of our common stock exceeded the conversion and warrant
prices of
$24.91 per share and $31.89 per share,
respectively, during the periods.
(4) Other during the six months ended June
30, 2017 reflects non-recurring expenses of $5.6 million primarily
related
to certain legal matters and other
contractual obligations within Corporate.
World Wrestling Entertainment,
Inc.
Supplemental Information –
Reconciliation of Adjusted OIBDA
(In millions, except per share
data)
(Unaudited)
Three Months Ended June 30,
2018 Operating Income Depreciation &
Amortization Stock Compensation Other Adjustments
Adjusted OIBDA Media $ 32.0 $ 3.0 $ 9.5 $ — $ 44.5 Live
Events 13.4 — 1.3 — 14.7 Consumer Products 4.6 — 2.3 — 6.9
Corporate (28.8) 3.9 2.3 —
(22.6)
Total $ 21.2 $ 6.9 $ 15.4 $ — $ 43.5
Three
Months Ended June 30, 2017 Operating Income
Depreciation & Amortization Stock Compensation
Other Adjustments (1) Adjusted OIBDA Media $
9.6 $ 2.9 $ 4.2 $ 1.1 $ 17.8 Live Events 17.1 — 0.6 — 17.7 Consumer
Products 5.5 — 0.8 — 6.3 Corporate (21.5) 3.4
0.6 — (17.5)
Total $ 10.7 $ 6.3 $ 6.2 $ 1.1 $
24.3
Six Months Ended June 30, 2018
Operating Income Depreciation & Amortization
Stock Compensation Other Adjustments Adjusted
OIBDA Media $ 67.9 $ 6.0 $ 14.2 $ — $ 88.1 Live Events 16.3 —
2.0 — 18.3 Consumer Products 10.6 — 3.2 — 13.8 Corporate
(51.8) 7.2 3.1 — (41.5)
Total $
43.0 $ 13.2 $ 22.5 $ — $ 78.7
Six Months Ended June 30,
2017 Operating Income Depreciation &
Amortization Stock Compensation Other Adjustments
(1) Adjusted OIBDA Media $ 24.8 $ 6.0 $ 8.9 $ 3.2 $
42.9 Live Events 20.8 — 1.4 — 22.2 Consumer Products 19.9 — 1.6 —
21.5 Corporate (50.8) 7.2 0.9 5.6
(37.1)
Total $ 14.7 $ 13.2 $ 12.8 $ 8.8 $ 49.5
(1) Other adjustments during the three and
six months ended June 30, 2017 include certain film impairment
charges
within our Media segment, and
non-recurring legal matters and other contractual obligations
within Corporate
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 2018 Q2 2018 YTD Q3
2018 FY 2018 Adjusted OIBDA $
43.5 $ 78.7 $30 - $34 $160 -
$170 Depreciation & amortization (6.9) (13.2) — —
Stock-based compensation (15.4) (22.5) — — Film impairments (1) — —
— — Asset impairments (1) — — — — Gain (losses) on operating assets
(1) — — — — Restructuring charges (1) — — — — Other operating
income items (1) — — — —
Operating income (U.S.
GAAP Basis) $ 21.2 $ 43.0 Not
estimable Not estimable
(1) Because of the nature of these items,
WWE is unable to estimate the amounts of any adjustments for these
items
for periods after June 30, 2018 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, 2018 2017
2018 2017 Net cash provided by operating activities $
74.2 $ 10.8 $ 76.8 $ 13.8 Less cash used for capital expenditures:
Purchase of property and equipment and other assets (7.8)
(8.2) (12.2) (12.5) Free Cash Flow $ 66.4 $
2.6 $ 64.6 $ 1.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180726005269/en/
For WWEInvestors:Michael Weitz, 203-352-8642orMichael Guido,
CFA, 203-352-8779orMedia:Matthew Altman, 203-352-1177
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