Maintains Path to Record Full-Year
Performance
Third Quarter 2018
Highlights
- Revenues reached $188.4 million for the
third quarter 2018 and a record $657.7 million for the nine months
ended September 30, 2018, representing 12% growth over the prior
year period
- Operating income was $18.1 million.
Adjusted OIBDA1 of $35.8 million exceeded the Company’s
guidance
- Through the first nine months of 2018,
digital engagement increased with video views up 61% to 22.9
billion and hours consumed up 81% to 842 million across digital and
social media platforms2
2018 Business Outlook
- Full year 2018 Adjusted OIBDA is
expected to range from $160 million to $170 million, which would be
consistent with the Company’s previous guidance3
- WWE has operated in the Middle East for
nearly 20 years and has developed a sizable and dedicated fan base.
Considering the heinous crime committed at the Saudi consulate in
Istanbul, the Company faced a very difficult decision as it relates
to its event scheduled for November 2 in Riyadh. Similar to other
U.S.-based companies who plan to continue operations in Saudi
Arabia, the Company has decided to uphold its contractual
obligations to the General Sports Authority and stage the event.
Full year 2018 guidance is predicated on the staging of the Riyadh
event as scheduled4
WWE (NYSE:WWE) today announced financial results for its third
quarter ended September 30, 2018.
“During the quarter, we remained keenly focused on deepening
engagement with our global fan base by delivering compelling
original content across media platforms,” said Vince McMahon, WWE
Chairman and Chief Executive Officer. “We believe that deepening
engagement will enable us to take advantage of favorable global
industry trends and drive long-term growth.”
George Barrios, Co-President, added “We continue to effectively
execute our strategy and achieved Adjusted OIBDA that surpassed our
public guidance. Our performance maintains our path to achieve
record revenue, record Adjusted OIBDA and record subscribers for
the full year 2018.”
Third-Quarter Consolidated
Results
Revenues of $188.4 million increased slightly from the
third quarter 2017, as the increased monetization of content as
reflected in the Media segment was nearly offset by lower ticket
sales at the Company’s live events and a $2.6 million unfavorable
impact on licensing revenue due to the adoption of the new FASB
standard for revenue recognition (ASC Topic 606).
Operating Income decreased to $18.1 million from $33.9
million in the prior year quarter, reflecting the slight increase
in revenue, which was more than offset by increased operating
expenses, including increases in fixed costs, the timing of various
business initiatives, and higher management incentive compensation
based on anticipated strong full-year results as well as the rise
in the Company’s stock price. The Company’s Operating income margin
was 10% as compared to 18% in the prior year quarter.
Adjusted OIBDA (which excludes stock compensation) was
$35.8 million as compared to $45.6 million in the prior year
quarter. The Company’s Adjusted OIBDA margin decreased to 19% from
24%.
Net Income was $33.6 million, or $0.37 per diluted share,
as compared to $21.8 million, or $0.28 per diluted share, in the
prior year quarter.
Effective Tax Rate was (87%) as compared to 30% in the
prior year quarter driven by the recognition of $20.7 million of
excess tax benefits related to the Company’s share-based
compensation awards at vesting, as compared to $1.6 million in the
prior year quarter. Excluding this discrete tax item, our effective
tax rate was 28% in the current year quarter as compared to 35% in
the prior year quarter. The tax benefit recorded during the current
year is driven by the increase in the Company’s stock price between
the original grant date of the awards and their subsequent vesting
date in the third quarter of 2018. Further impacting the decline in
the effective tax rate was 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.
Cash flows generated by operating activities reached
$44.7 million and Free Cash Flow totaled $35.5 million as
compared to $27.2 million and $22.0 million, respectively, in the
prior year quarter.5 The growth in both measures was primarily due
to the favorable timing of working capital.
Year-to-date 2018 Consolidated
Results
For the nine months ended September 30, 2018, revenues increased
12% to $657.7 million from $589.4 million. Operating income
increased 26% to $61.1 million from $48.6 million, and Adjusted
OIBDA increased 20% to $114.5 million from $95.1 million. Net
income increased 110% to $58.4 million ($0.66 per diluted share)
from $27.8 million ($0.36 per diluted share) in the prior year
period.
Cash flows generated by operating activities reached
$121.5 million and Free Cash Flow totaled $100.1 million as
compared to $41.0 million and $23.3 million, respectively, in the
prior year period.5 The growth in both measures was primarily due
to improved operating performance and favorable timing of working
capital.
Cash, cash equivalents and short-term investments were
approximately $316 million as of September 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 Nine
Months Ended September 30, September 30,
2018 2017 2018 2017 Net
Revenues: Media $ 142.1 $ 130.8 $ 478.1 $ 389.2 Live Events
26.7 31.6 109.8 116.5 Consumer Products 19.6 24.0
69.8 83.7
Total Net Revenues $ 188.4 $ 186.4 $
657.7 $ 589.4
Operating Income: Media $ 39.3 $ 42.9 $
107.2 $ 67.7 Live Events (1.1) 3.1 15.2 23.9 Consumer Products 2.8
7.3 13.4 27.2 Corporate (22.9) (19.4) (74.7)
(70.2)
Total Operating Income $ 18.1 $ 33.9 $ 61.1 $
48.6
Adjusted OIBDA: Media $ 50.4 $ 49.5 $ 138.5 $
92.4 Live Events 0.2 3.6 18.5 25.8 Consumer Products 4.0 7.8 17.8
29.3 Corporate (18.8) (15.3) (60.3)
(52.4)
Total Adjusted OIBDA $ 35.8 $ 45.6 $ 114.5 $ 95.1
Basis of Presentation
For the nine months ended September 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
nine-month periods ended September 30, 2018 can be found in the
supplemental schedules on pages 14-15 of this release.
For the third quarter of 2018, Net income included a $2.2
million upward adjustment of an equity investment which was
recorded below Operating income as a gain on investment. For the
nine-month period ended September 30, 2018, Net income included a
$0.8 million net impairment on investment which was recorded below
Operating income as a loss on investment. A reconciliation of Net
Income to Adjusted Net Income for the three and nine-month periods
ended September 30, 2018 and 2017 can be found in the supplemental
schedule on page 13 of this release.
Third-Quarter Results by Operating
Segment
Media
Revenues increased 9% to $142.1 million, primarily due to
the contractual escalation of core content rights fees, namely
license fees associated with the Company’s flagship programs Raw
and SmackDown, as well as the production and monetization of
programming reflected in “Other,” including the launch of Miz &
Mrs, an original series which debuted on USA Network, and the
season eight premiere of Total Divas. Additionally, the growth in
Media revenue reflected increased sales of advertising and
sponsorships across platforms, and the continued growth of WWE
Network that yielded a 9% increase in average paid subscribers to
more than 1.66 million.
Three Months
Ended September 30, 2018 2017
Revenues: Network (including pay-per-view) $ 49.5 $ 48.3
Core content rights fees 6 65.9 60.4 Advertising and sponsorship
15.0 13.0 Other 7 11.7 9.1
Total Revenues $
142.1 $ 130.8
Operating income declined to $39.3 million from $42.9
million in the prior year quarter as the growth in revenue was more
than offset by increased production costs associated with changes
in product mix and, more significantly, by increases in accrued
management incentive compensation, based on anticipated strong
full-year results and the rise in the Company’s stock price.
Adjusted OIBDA increased to $50.4 million from $49.5
million in the prior year quarter.
Key Highlights: During the quarter, WWE continued to
produce compelling content, monetize new opportunities across
platforms, and optimize its future distribution. Monday Night Raw
and SmackDown Live remained the highest-rated programs on USA
Network, which broadcast the 1,000th episode of SmackDown Live on
October 16, 2018. Extending its reach on television, WWE completed
its third captivating season of Total Bellas, successfully launched
a popular new series, Miz & Mrs., and recently premiered the
eighth season of Total Divas. On the Company’s streaming service,
WWE Network, live in-ring content and original series continued to
drive viewer engagement. Among the network’s most viewed programs
were its marquis pay-per-view event, SummerSlam, and the women’s
tournament, Mae Young Classic 2018, which culminates in the
first-ever all women’s pay-per-view event, WWE Evolution (October
28, 2018). In October, the Company continued to expand its offering
of live in-ring content with the launch of a new weekly series, NXT
UK, and the staging of WWE Super Show-Down, which was among the
most viewed programs to-date in 2018. For its social and digital
platforms, the Company produced more than 170 hours of content,
which were highlighted by the second season start of Mixed Match
Challenge on Facebook Watch.
Live Events
Revenues declined to $26.7 million reflecting lower
average attendance at the Company’s events worldwide and a
reduction in the average ticket price at events held in
international markets. The year-over-year changes in ticket prices
and average attendance were due, in part, to changes in the mix of
venues and territories.
- There were 90 total events (excluding
NXT) in the current quarter, consisting of 86 events in North
America and four events in international markets, as compared to 96
events in the prior year quarter, including 89 events in North
America and seven in international markets.
- North American ticket sales declined
$2.9 million primarily due to an 8% decrease in average attendance
to 4,500 and three fewer events staged during the quarter. The
average ticket price of $53.68 was essentially unchanged from the
prior year quarter.
- International live event revenue
declined $2.8 million driven by an 18% decrease in average
attendance to 5,600 and a 13% reduction in the average ticket price
at these events to $93.18.
Three Months
Ended September 30, 2018 2017
Revenues: North American ticket sales $ 22.4 $ 25.3
International ticket sales 2.3 5.1 Advertising and sponsorship 0.4
0.4 Other 8 1.6 0.8
Total Revenues $ 26.7 $
31.6
Operating income reflected a loss of $1.1 million as
compared to income of $3.1 million in the prior year quarter,
primarily due to the reduction in ticket sales and an increase in
accrued stock compensation expense (as described above).
Adjusted OIBDA was $0.2 million as compared to $3.6
million in the prior year quarter.
Key Highlights: WWE continued to stage large-scale events
for engaging its fans with live, action-packed entertainment.
During the quarter, SummerSlam attracted more than 40,000 fans to
the related weekend events at the Barclays Center in Brooklyn, New
York. In October, WWE Super Show-Down attracted more than 70,000
attendees and became the highest attended event outside the U.S. in
the past 25 years. Continuing to strengthen and diversify its
global talent base, which makes such events possible, the Company
announced it will hold its first-ever talent tryouts in Germany and
Chile to attract talent from across Europe and Latin America,
respectively.
Consumer Products
Revenues declined 18% to $19.6 million primarily due to
the adoption of a new FASB standard for revenue recognition (ASC
Topic 606) that adversely impacted licensing revenue by $2.6
million and, to a lesser extent, lower sales of merchandise at WWE
venues and e-commerce site, WWE Shop.
Three Months
Ended September 30, 2018 2017
Revenues: Consumer product licensing $ 8.5 $ 11.3 eCommerce
6.8 7.2 Venue merchandise 4.3 5.5
Total
Revenues $ 19.6 $ 24.0
Operating income was $2.8 million as compared to $7.3
million in the prior year quarter reflecting the change in revenue
and an increase in accrued stock compensation expense (as described
above).
Adjusted OIBDA was $4.0 million as compared to $7.8
million in the prior year quarter based on the change in
revenue.
Key Highlights: During the quarter, the Company continued
to develop new products to serve the interests of its fans. The
Company introduced WWE Custom Tees, a new component of its
e-commerce website, WWE Shop, which enables fans to select apparel
that reflects their preferences for color and style. Additionally,
the Company continued to increase the penetration of its mobile
games. As of quarter-end, the Company had more than 95 million
installs across its game portfolio, led by WWE Champions and WWE
Supercard and including WWE’s newest game, WWE Mayhem, which
recently surpassed 15 million installs. WWE Champions generated
meaningful growth following the recent addition of the Women’s
division to the game.
Fourth Quarter and Full Year 2018
Business Outlook
In the first nine months of 2018, the Company achieved a 12%
increase in revenue to $657.7 million and a 20% increase in
Adjusted OIBDA to $114.5 million. As previously communicated, 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). The Company estimates fourth
quarter 2018 Adjusted OIBDA of approximately $45 million to $55
million.3 The Company also projects average paid subscribers to WWE
Network of approximately 1.56 million for the fourth quarter 2018,
which contributes to growth of approximately 8% for the full
year.3,9
The range of projected fourth quarter results would result in
full year 2018 Adjusted OIBDA of $160 million to $170 million,
which would be an all-time record consistent with the Company’s
previous guidance.3
Fourth quarter and full year 2018 guidance are predicated on the
staging of an event in Riyadh, Saudi Arabia on November 2,
2018.4
WWE is unable to provide a reconciliation of full year or fourth
quarter guidance to GAAP measures as, at this time, WWE cannot
accurately determine all of the adjustments that would be
required.
Financial Outlook 2019
The Company is developing its operating and financial plans for
2019 and subsequent years. Given the substantial revenue growth
provided by its new U.S. distribution agreements, the Company is
currently targeting Adjusted OIBDA of at least $200 million for
2019, during which the new agreements’ rates are effective for only
three months.3
Management recognizes the transformative nature of these
agreements and expects to provide additional long-term perspective
on the Company’s strategic and financial plans after its content
distribution strategies in international markets, including the
U.K. and India, have been finalized. Management currently expects
to finalize its content distribution plans in the U.K. by year-end
2018; and in India during the first half of 2019. The Company’s
content distribution strategy could be determined either before or
after these dates; therefore, current expectations should not be
considered a guarantee of when future announcements will be made.
The Company does not disclose the financial terms of individual
agreements but expects such future announcements will provide
perspective on the aggregate financial impact of its international
plans.
Notes
(1) The definition of Adjusted OIBDA can be found in the
Non-GAAP Measures section of the release on page 8. A
reconciliation of three and nine months ended September 30, 2018
and 2017 Operating Income to Adjusted OIBDA can be found in the
Supplemental Information in this release on pages 14-15(2)
Consumption includes videos viewed on third party (Facebook,
YouTube, Twitter, Instagram, Snapchat, etc.) and WWE platforms
(WWE.com and WWE App)(3) 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(4) The Company is continuing to monitor
ongoing developments in the region, and there can be no assurances
in this regard. If the event were to be cancelled, there could be a
material adverse impact on 2018 Adjusted OIBDA guidance. While not
anticipated, it is possible that a cancellation could also impact
expected results beyond 2018(5) A reconciliation of three and nine
months ended September 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(9) 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
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
October 25th to discuss the Company's earnings results for the
third 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: 1543754). 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 October 25, 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 Nine
Months Ended September 30, September 30,
2018 2017 2018 2017 Net revenues $
188.4 $ 186.4 $ 657.7 $ 589.4 Operating expenses 120.8 111.8 439.7
401.2 Marketing and selling expenses 23.5 18.3 73.1 60.4 General
and administrative expenses 20.1 15.9 64.7 59.5 Depreciation and
amortization 5.9 6.5 19.1 19.7
Operating income 18.1 33.9 61.1 48.6
Interest expense 3.6 3.5 11.8 10.7 Other income, net 3.5
0.7 3.3 2.4 Income before income taxes 18.0
31.1 52.6 40.3 (Benefit from) provision for income taxes
(15.6) 9.3 (5.8) 12.5 Net income $ 33.6 $ 21.8
$ 58.4 $ 27.8 Earnings per share: Basic $ 0.43 $ 0.28 $ 0.75
$ 0.36 Diluted $ 0.37 $ 0.28 $ 0.66 $ 0.36 Weighted average
common shares outstanding: Basic 77.8 77.0 77.4 76.6 Diluted 90.8
78.5 87.9 78.4 Dividends declared per common share (Class A and B)
$ 0.12 $ 0.12 $ 0.36 $ 0.36
World Wrestling Entertainment,
Inc.Consolidated Balance Sheets(In
millions)(Unaudited)
As of
September 30, December 31, 2018 2017
ASSETS CURRENT ASSETS: Cash and cash equivalents $ 126.1 $
137.7 Short-term investments, net 189.5 159.7 Accounts receivable,
net 84.4 65.3 Inventory 8.9 8.3 Prepaid expenses and other current
assets 40.0 20.0 Total current assets 448.9
391.0 PROPERTY AND EQUIPMENT, NET 135.5 131.3 FEATURE FILM
PRODUCTION ASSETS, NET 17.3 22.3 TELEVISION PRODUCTION ASSETS, NET
6.3 7.3 INVESTMENT SECURITIES 27.6 27.4 NON-CURRENT DEFERRED INCOME
TAX ASSETS 18.8 19.0 OTHER ASSETS, NET 10.9 16.2
TOTAL ASSETS $ 665.3 $ 614.5
LIABILITIES AND STOCKHOLDERS’
EQUITY CURRENT LIABILITIES: Current portion of long-term debt $
5.1 $ 4.6 Convertible debt 181.8 — Accounts payable and accrued
expenses 94.5 77.7 Deferred income 75.9 55.9 Total
current liabilities 357.3 138.2 LONG-TERM DEBT 27.0
31.0 CONVERTIBLE DEBT — 177.9 OTHER NON-CURRENT LIABILITIES
1.8 14.5 Total liabilities 386.1 361.6
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 410.2 422.2 Accumulated other comprehensive income
1.5 2.4 Accumulated deficit (133.2) (172.4) Total
stockholders’ equity 279.2 252.9 TOTAL LIABILITIES
AND STOCKHOLDERS’ EQUITY $ 665.3 $ 614.5
World Wrestling Entertainment,
Inc.Consolidated Statements of Cash Flows(In
millions)(Unaudited)
Nine Months
Ended September 30, 2018 2017 OPERATING
ACTIVITIES: Net income $ 58.4 $ 27.8 Adjustments to reconcile net
income to net cashprovided by operating activities: Amortization
and impairments of feature film production assets 5.9 9.1
Amortization of television production assets 20.5 13.6 Depreciation
and amortization 24.1 24.3 Loss on equity investments, net 0.8 —
Services provided in exchange for equity instruments (2.3) (2.1)
Other amortization 4.7 4.8 Stock-based compensation 34.3 18.0
(Benefit from) provision for deferred income taxes (2.7) 4.5 Other
non-cash adjustments 1.9 0.3 Cash (used in) provided by changes in
operating assets and liabilities: Accounts receivable (8.2) (19.0)
Inventory (0.6) (1.9) Prepaid expenses and other assets (20.4)
(8.8) Feature film production assets (0.9) (9.6) Television
production assets (20.3) (12.5) Accounts payable, accrued expenses
and other liabilities 9.1 (5.9) Deferred income 17.2
(1.6) Net cash provided by operating activities 121.5
41.0 INVESTING ACTIVITIES: Purchases of property and equipment and
other assets (21.4) (17.7) Purchases of short-term investments
(82.1) (123.8) Proceeds from sales and maturities of investments
50.8 24.0 Purchase of investment securities (1.0) (2.1) Other
1.0 — Net cash used in investing activities
(52.7) (119.6) FINANCING ACTIVITIES: Repayment of debt (3.5)
(3.7) Dividends paid (27.9) (27.6) 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 (50.7)
(9.2) Proceeds from issuance of stock 1.7 1.5 Net
cash used in financing activities (80.4) (24.2) NET
DECREASE IN CASH AND CASH EQUIVALENTS (11.6) (102.8) CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD 137.7 212.0 CASH AND
CASH EQUIVALENTS, END OF PERIOD $ 126.1 $ 109.2 NON-CASH INVESTING
TRANSACTIONS: Purchases of property and equipment recorded in
accounts payable
and accrued expenses
$ 5.6 $ 4.6
World Wrestling Entertainment,
Inc.Supplemental Information – Reconciliation of Adjusted
Net Income(In millions, except per share
data)(Unaudited)
Three Months
Ended September 30, 2018 2017
AsReported
Gain onInvestment
Adjusted AsReported Adjusted
Operating income $ 18.1 $ — $ 18.1 $ 33.9 $ 33.9 Interest
expense 3.6 — 3.6 3.5 3.5 Other income, net (1) 3.5
(2.2) 1.3 0.7 0.7 Income before taxes 18.0
(2.2) 15.8 31.1 31.1 (Benefit from) provision forincome taxes (2)
(15.6) (0.5) (16.1) 9.3 9.3
Net income $ 33.6 $ (1.7) $ 31.9 $ 21.8 $ 21.8 Earnings per
share - diluted (3) $ 0.37 $ (0.02) $ 0.35 $ 0.28 $ 0.28
Nine Months Ended September 30,
2018 2017 AsReported
Loss onInvestment
Adjusted AsReported
FilmImpairments Other (4)
Adjusted
Operating income $ 61.1 $ — $ 61.1 $ 48.6 $ 3.2 $ 5.6 $ 57.4
Interest expense 11.8 — 11.8 10.7 — — 10.7 Other income, net (1)
3.3 0.8 4.1 2.4 — —
2.4 Income before taxes 52.6 0.8 53.4 40.3 3.2 5.6 49.1
(Benefit from) provision forincome taxes
(2)
(5.8) 0.2 (5.6) 12.5 1.1
2.0 15.6
Net income $ 58.4 $ 0.6 $ 59.0 $ 27.8 $ 2.1
$ 3.6 $ 33.5 Earnings per share - diluted (3) $ 0.66 $ 0.01 $ 0.67
$ 0.36 $ 0.03 $ 0.05 $ 0.43
(1) During the second quarter of 2018, the
Company recorded an impairment charge of $3.0 million to write off
an equity investment in a mobile video publishing business due to
issues of the underlying investee company. This charge was
partially offset by an upward adjustment of $2.2 million to the
carrying value of an equity investment without readily determinable
fair values resulting from an observable pricing event completed
during the third quarter of 2018.
(2) The reduction in the effective tax
rate in the current year quarter was primarily driven by the
recognition of $20.7 million of excess tax benefits related to the
Company’s share-based compensation awards at vesting, as compared
to $1.6 million in the prior year quarter. Excluding this discrete
tax item, our effective tax rates were 28% and 35% in the three and
nine-month periods ended September 30, 2018 and 2017, respectively.
The tax benefit recorded during the current year is driven by the
increase in the Company’s stock price between the original grant
date of the awards and their subsequent vesting date in the third
quarter of 2018. Further impacting the decline in the effective tax
rate was 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 had a
$0.05 and $0.07 per share impact on diluted earnings per share for
the three and nine months ended September 30, 2018, respectively,
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 nine months ended
September 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 September 30, 2018
OperatingIncome
Depreciation&Amortization
StockCompensation
OtherAdjustments
AdjustedOIBDA
Media $ 39.3 $ 3.1 $ 8.0 $ — $ 50.4 Live Events (1.1) — 1.3 — 0.2
Consumer Products 2.8 — 1.2 — 4.0 Corporate (22.9)
2.8 1.3 — (18.8)
Total $ 18.1 $ 5.9 $
11.8 $ — $ 35.8
Three Months Ended September 30, 2017
OperatingIncome
Depreciation&Amortization
StockCompensation
OtherAdjustments
AdjustedOIBDA
Media $ 42.9 $ 2.9 $ 3.7 $ — $ 49.5 Live Events 3.1 — 0.5 — 3.6
Consumer Products 7.3 — 0.5 — 7.8 Corporate (19.4)
3.6 0.5 — (15.3)
Total $ 33.9 $ 6.5 $
5.2 $ — $ 45.6
Nine Months Ended September 30, 2018
OperatingIncome
Depreciation&Amortization
StockCompensation
OtherAdjustments
AdjustedOIBDA
Media $ 107.2 $ 9.1 $ 22.2 $ — $ 138.5 Live Events 15.2 — 3.3 —
18.5 Consumer Products 13.4 — 4.4 — 17.8 Corporate (74.7)
10.0 4.4 — (60.3)
Total $ 61.1 $
19.1 $ 34.3 $ — $ 114.5
Nine Months Ended September 30,
2017
OperatingIncome
Depreciation&Amortization
StockCompensation
OtherAdjustments
(1)
AdjustedOIBDA
Media $ 67.7 $ 8.9 $ 12.6 $ 3.2 $ 92.4 Live Events 23.9 — 1.9 —
25.8 Consumer Products 27.2 — 2.1 — 29.3 Corporate (70.2)
10.8 1.4 5.6 (52.4)
Total $ 48.6
$ 19.7 $ 18.0 $ 8.8 $ 95.1
(1) Other adjustments during the nine
months ended September 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
Q3 2018 Q3 2018
YTD Q4 2018 FY 2018 Adjusted OIBDA
$ 35.8 $ 114.5 $45 - $55 $160
- $170 Depreciation & amortization (5.9) (19.1) — —
Stock-based compensation (11.8) (34.3) — — 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) $ 18.1 $ 61.1 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 September 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 Nine
Months Ended September 30, September 30,
2018 2017 2018 2017 Net cash provided
by operating activities $ 44.7 $ 27.2 $ 121.5 $ 41.0 Less cash used
for capital expenditures: Purchase of property and equipment and
other assets (9.2) (5.2) (21.4) (17.7)
Free Cash Flow $ 35.5 $ 22.0 $ 100.1 $ 23.3
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181025005300/en/
For WWEInvestors:Michael Weitz,
203-352-8642orMichael Guido, CFA
203-352-8779orMedia:Matthew Altman, 203-352-1177
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