Warner Music Group Corp. today announced its fourth-quarter and
full-year financial results for the periods ended
September 30, 2021.
“Music is essential to billions of people across the globe. But
now, more than ever, great talent needs help to cut through the
noise. By delivering for new artists and songwriters, returning
superstars, and global legends, we’ve also delivered outstanding
results in 2021,” said Steve Cooper, CEO, Warner Music Group.
“Looking to 2022, we’re excited to release incredible new music
from the world’s hottest artists and most influential songwriters.
We’re also planning innovative moves and collaborations that will
strengthen our leadership position across a vast universe of
opportunities, in both the digital and physical worlds.”
“Our strong fourth-quarter results put an exclamation point on
an outstanding year,” said Lou Dickler, Acting CFO, Warner Music
Group. “Even as certain revenue was impacted by COVID, the strength
and resilience of our music propelled us to double-digit revenue
growth and margin expansion in 2021. As the possibilities for music
continue to evolve, we remain focused on delivering shareholder
value through our financially disciplined investment strategy and
positioning ourselves for the next wave of growth.”
Total WMG
| Total WMG
Summary Results |
|
|
|
|
|
|
|
|
|
|
| (dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
|
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
Revenue |
$ |
1,376 |
|
|
$ |
1,126 |
|
|
22 |
% |
|
$ |
5,301 |
|
|
$ |
4,463 |
|
|
19 |
% |
| Recorded Music revenue |
1,172 |
|
|
958 |
|
|
22 |
% |
|
4,544 |
|
|
3,810 |
|
|
19 |
% |
| Music Publishing revenue |
205 |
|
|
169 |
|
|
21 |
% |
|
761 |
|
|
657 |
|
|
16 |
% |
| Digital revenue |
926 |
|
|
778 |
|
|
19 |
% |
|
3,539 |
|
|
2,903 |
|
|
22 |
% |
| Operating income (loss) |
100 |
|
|
88 |
|
|
14 |
% |
|
609 |
|
|
(229 |
) |
|
— |
% |
| Adjusted operating
income(1) |
139 |
|
|
107 |
|
|
30 |
% |
|
712 |
|
|
529 |
|
|
35 |
% |
| OIBDA(1) |
179 |
|
|
155 |
|
|
15 |
% |
|
915 |
|
|
32 |
|
|
— |
% |
| Adjusted OIBDA(1) |
218 |
|
|
174 |
|
|
25 |
% |
|
1,018 |
|
|
790 |
|
|
29 |
% |
| Net income (loss) |
30 |
|
|
1 |
|
|
— |
% |
|
307 |
|
|
(470 |
) |
|
— |
% |
| Adjusted net income(1) |
69 |
|
|
20 |
|
|
— |
% |
|
410 |
|
|
288 |
|
|
42 |
% |
| Net cash provided by operating
activities |
228 |
|
|
176 |
|
|
30 |
% |
|
638 |
|
|
463 |
|
|
38 |
% |
| Free Cash Flow |
193 |
|
|
139 |
|
|
39 |
% |
|
545 |
|
|
378 |
|
|
44 |
% |
| Adjusted EBITDA(1) |
237 |
|
|
177 |
|
|
34 |
% |
|
1,090 |
|
|
837 |
|
|
30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
Fourth-Quarter Results
Revenue was up 22.2% (or 20.8% in constant currency). The
revenue increase in the quarter was driven by strong digital
revenue growth of 19.0% (or 17.5% in constant currency) across
Recorded Music and Music Publishing. Digital revenue represented
67.3% of total revenue in the quarter, compared to 69.1% in the
prior-year quarter. The decrease in digital revenue as a percentage
of total revenue is due to a partial recovery of certain
COVID-impacted revenue streams in the quarter, including Recorded
Music artist services and expanded-rights revenue which increased
71.4% (or 69.7% in constant currency). Recorded Music physical
revenue and Music Publishing synchronization and mechanical revenue
all had double-digit growth. Music Publishing performance revenue
increased 7.1% (or 3.4% in constant currency). Recorded Music
licensing revenue decreased 7.9% (or 9.1% in constant
currency).
Operating income was $100 million compared to $88 million in the
prior-year quarter. Net income was $30 million compared to $1
million in the prior-year quarter. OIBDA was $179 million, an
increase from $155 million in the prior-year quarter, and OIBDA
margin decreased 0.8 percentage points to 13.0% from 13.8% in the
prior-year quarter. The increases in operating income, net income
and OIBDA were primarily due to increased revenue. The decrease in
OIBDA margin was primarily due to an increase in lower-margin
artist services and expanded-rights revenue and an increase in
expenses related to restructuring and other transformation
initiatives.
Adjusted operating income, Adjusted OIBDA and Adjusted net
income exclude non-cash stock-based compensation and other related
expenses, COVID-related expenses and expenses related to
restructuring and other transformation initiatives in both the
quarter and the prior-year quarter. In the prior-year quarter,
costs associated with the Company’s IPO and the Company's Los
Angeles office consolidation are also excluded. Adjusted EBITDA
excludes these items and includes expected savings resulting from
transformation initiatives and the pro forma impact of certain
specified transactions. See below for calculations and
reconciliations of Adjusted operating income, Adjusted OIBDA,
Adjusted net income and Adjusted EBITDA.
Adjusted OIBDA increased 25.3% from $174 million to $218 million
and Adjusted OIBDA margin increased 0.3 percentage points to 15.8%
from 15.5% due to strong operating performance. Adjusted operating
income increased 29.9% from $107 million to $139 million due to the
same factors affecting Adjusted OIBDA, partially offset by higher
depreciation and amortization expenses due to recent acquisitions
and capital spending.
Adjusted EBITDA increased 33.9% from $177 million to $237
million with margins improving 1.5 percentage points from 15.7% to
17.2%. The increase was largely due to the same factors affecting
Adjusted OIBDA in addition to higher pro forma savings expected to
be realized from certain cost-savings initiatives and the impact of
certain specified transactions.
Adjusted net income was $69 million compared to $20 million in
the prior-year quarter. Adjusted net income grew due to an increase
in Adjusted operating income, the favorable impact of exchange
rates on the Company’s external euro-denominated debt and
intercompany loans and loss on extinguishment of debt on
refinancing activity which was $24 million lower than the
prior-year quarter, partially offset by unrealized losses on the
mark-to-market of certain investments and an increase in income tax
expense due to higher pre-tax income and higher withholding
taxes.
Basic and Diluted earnings per share was $0.05 for both the
Class A and Class B shareholders due to the net income attributable
to the Company in the quarter of $30 million.
As of September 30, 2021, the Company reported a cash
balance of $499 million, total debt of $3.346 billion and net debt
(defined as total debt, net of deferred financing costs, premiums
and discounts, minus cash and equivalents) of $2.847 billion.
Cash provided by operating activities increased 30% to $228
million from $176 million in the prior-year quarter. The change was
largely a result of strong operating performance and the benefit
from working capital. Capital expenditures were $35 million for the
quarter as compared to $37 million in the prior-year quarter. Free
Cash Flow, as defined below, increased 39% to $193 million from
$139 million in the prior-year quarter.
Full-Year Results
Total revenue increased 18.8% (or 15.4% in constant currency).
The revenue increase was driven by strong digital revenue growth of
21.9% (or 19.1% in constant currency) across Recorded Music and
Music Publishing. Digital revenue represented 66.8% of total
revenue, compared to 65.0% in the prior year. Recorded Music
physical revenue increased 26.5% (or 22.3% in constant currency)
and Recorded Music artist services and expanded-rights revenue and
Music Publishing synchronization revenue also had double-digit
growth. Recorded Music licensing revenue and Music Publishing
mechanical revenue both increased on an as-reported basis and
decreased in constant currency. Music Publishing performance
revenue decreased 14.1% (or 17.0% in constant currency). U.S.
revenue increased by 22.2% and international revenue rose 16.1% (or
10.5% in constant currency). Prior to intersegment
eliminations, U.S. and international revenue represented 44.5% and
55.5% of total revenue, respectively, compared to 43.3% and 56.7%
of total revenue, respectively, in the prior year.
Operating income was $609 million, compared to an operating loss
of $229 million in the prior year and operating margin was 11.5%,
up from (5.1)% in the prior year. Net income was $307 million
compared to a net loss of $470 million in the prior year. OIBDA was
$915 million, an increase from $32 million in the prior year and
OIBDA margin increased 16.6 percentage points to 17.3% from 0.7% in
the prior year. The increases in operating income, net income,
OIBDA and OIBDA margin were primarily due to strong operating
performance and non-cash stock-based compensation and other related
expenses which were $560 million lower than the prior year, as well
as $89 million in one-time costs associated with the Company’s IPO
in the prior year.
Adjusted operating income, Adjusted OIBDA and Adjusted net
income exclude non-cash stock-based compensation and other related
expenses, COVID-related expenses and expenses related to
restructuring and other transformation initiatives in both the year
and the prior year. In the prior year, costs associated with the
Company’s IPO and the Company's Los Angeles office consolidation
are also excluded. Adjusted EBITDA excludes these items and
includes expected savings resulting from transformation initiatives
and the pro forma impact of certain specified transactions. See
below for calculations and reconciliations of Adjusted operating
income, Adjusted OIBDA, Adjusted net income and Adjusted
EBITDA.
Adjusted OIBDA increased 28.9% from $790 million to $1,018
million and Adjusted OIBDA margin increased 1.5 percentage points
from 17.7% to 19.2% due to strong operating performance. Adjusted
operating income increased 34.6% from $529 million to $712 million
in the year due to the same factors affecting Adjusted OIBDA,
partially offset by higher depreciation and amortization expenses
due to recent acquisitions and capital spending.
Adjusted EBITDA increased 30.2% from $837 million to $1,090
million with margins improving 1.8 percentage points from 18.8% to
20.6%. The increase was largely due to the same factors affecting
Adjusted OIBDA in addition to higher pro forma savings expected to
be realized from certain cost-savings initiatives and the impact of
certain specified transactions.
Adjusted net income was $410 million compared to $288 million in
the prior year. The increase in Adjusted net income was primarily
due to higher Adjusted operating income, the favorable impact of
exchange rates on the Company’s external euro-denominated debt,
loss on extinguishment of debt on refinancing activity which was
$12 million lower than the prior year and lower interest expense
resulting from refinancing activity, partially offset by unrealized
losses on the mark-to-market of certain investments and an increase
in income tax expense due to higher pre-tax income and release of a
valuation allowances of foreign tax credits for the prior year.
Net debt (defined as total debt, net of deferred financing
costs, premiums and discounts, minus cash and equivalents) at the
end of the year was $2.847 billion compared to $2.551 billion at
the end of the prior year.
Basic and Diluted earnings per share was $0.58 for both the
Class A and Class B shareholders due to the net income attributable
to the Company in the year of $307 million.
Cash provided by operating activities increased 38% to $638
million from $463 million in the prior year due to strong operating
performance, partially offset by continued A&R investment and
timing of working capital. Capital expenditures were $93
million for the year as compared to $85 million in the prior year
driven by spending related to transformation initiatives. Free Cash
Flow, as defined below, increased 44% to $545 million from $378
million in the prior year.
Recorded Music
| Recorded
Music Summary Results |
|
|
|
|
|
|
|
|
|
|
| (dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
|
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
Revenue |
$ |
1,172 |
|
|
$ |
958 |
|
|
22 |
% |
|
$ |
4,544 |
|
|
$ |
3,810 |
|
|
19 |
% |
| Digital revenue |
807 |
|
|
679 |
|
|
19 |
% |
|
3,105 |
|
|
2,568 |
|
|
21 |
% |
| Operating income |
129 |
|
|
108 |
|
|
19 |
% |
|
733 |
|
|
175 |
|
|
— |
% |
| Adjusted operating
income(1) |
151 |
|
|
118 |
|
|
28 |
% |
|
772 |
|
|
582 |
|
|
33 |
% |
| OIBDA(1) |
182 |
|
|
151 |
|
|
21 |
% |
|
936 |
|
|
349 |
|
|
— |
% |
| Adjusted OIBDA(1) |
204 |
|
|
161 |
|
|
27 |
% |
|
975 |
|
|
756 |
|
|
29 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
Fourth-Quarter Results
| Recorded
Music Revenue |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
For the Three Months Ended September 30, 2020 |
| |
As reported |
|
As reported |
|
Constant |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| Revenue by
Segment: |
|
|
|
|
|
| Recorded Music |
|
|
|
|
|
|
Digital |
$ |
807 |
|
|
$ |
679 |
|
|
$ |
688 |
|
|
Physical |
127 |
|
|
105 |
|
|
104 |
|
|
Total Digital and Physical |
934 |
|
|
784 |
|
|
792 |
|
|
Artist services and expanded-rights |
168 |
|
|
98 |
|
|
99 |
|
|
Licensing |
70 |
|
|
76 |
|
|
77 |
|
| Total Recorded
Music |
$ |
1,172 |
|
|
$ |
958 |
|
|
$ |
968 |
|
Recorded Music revenue was up 22.3% (or 21.1% in constant
currency). The revenue increase was primarily due to increases in
digital revenue, which reflects the continuing growth in streaming,
the Company’s largest source of revenue. Digital revenue grew 18.9%
(or 17.3% in constant currency) due to the strong performance of
new and carryover releases, as well as accelerated revenue growth
from emerging streaming platforms such as Facebook, TikTok and
Peloton. Digital revenue represented 68.9% of total Recorded Music
revenue versus 70.9% in the prior-year quarter. The decrease in
digital revenue as a percentage of total Recorded Music revenue is
due to the partial recovery of certain COVID-impacted revenue
streams in the quarter. Artist services and expanded-rights revenue
increased 71.4% (or 69.7% in constant currency), reflecting an
increase in merchandising and concert promotion revenue, both of
which were disrupted by COVID in the prior-year quarter. Physical
revenue grew 21.0% (or 22.1% in constant currency) primarily due to
an increasing demand for vinyl products and continued recovery from
COVID disruption. Licensing revenue was down mainly due to one-time
licensing settlements in the prior-year quarter, partially offset
by higher synchronization revenue as businesses continued to
recover from COVID disruption. Major sellers included Iron Maiden,
Dua Lipa, Ed Sheeran, Masked Wolf and Ava Max.
Recorded Music operating income was $129 million, up from $108
million in the prior-year quarter and operating margin was down 0.3
percentage points to 11.0% versus 11.3% in the prior-year quarter.
OIBDA increased to $182 million from $151 million in the prior-year
quarter and OIBDA margin decreased 0.3 percentage points to 15.5%.
Adjusted OIBDA was $204 million versus $161 million in the
prior-year quarter with Adjusted OIBDA margin up 0.6 percentage
points to 17.4%. The increases in operating income, OIBDA and
Adjusted OIBDA were driven by increased revenue. The decreases in
operating margin and OIBDA margin were primarily due to an increase
in lower-margin artist services and expanded-rights revenue and an
increase in expenses related to restructuring initiatives. The
increase in Adjusted OIBDA margin was due to strong operating
performance.
Full-Year Results
| Recorded
Music Revenue |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
For the Twelve Months Ended September 30,
2020 |
| |
As reported |
|
As reported |
|
Constant |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| Revenue by
Segment: |
|
|
|
|
|
| Recorded Music |
|
|
|
|
|
|
Digital |
$ |
3,105 |
|
|
$ |
2,568 |
|
|
$ |
2,628 |
|
|
Physical |
549 |
|
|
434 |
|
|
449 |
|
|
Total Digital and Physical |
3,654 |
|
|
3,002 |
|
|
3,077 |
|
|
Artist services and expanded-rights |
599 |
|
|
525 |
|
|
551 |
|
|
Licensing |
291 |
|
|
283 |
|
|
292 |
|
| Total Recorded
Music |
$ |
4,544 |
|
|
$ |
3,810 |
|
|
$ |
3,920 |
|
Recorded Music revenue increased 19.3% (or 15.9% in constant
currency). The revenue increase was primarily due to increases in
digital revenue, which reflects the continuing growth in streaming,
the Company’s largest source of revenue. Digital revenue grew 20.9%
(or 18.2% in constant currency) due to the strong performance of
new and carryover releases, as well as accelerated revenue growth
from emerging streaming platforms such as Facebook, TikTok and
Peloton. Digital revenue represented 68.3% of total Recorded Music
revenue versus 67.4% in the prior year. U.S. Recorded Music digital
revenue was $1.531 billion, or 77.1% of total U.S. Recorded Music
revenue, versus 80.3% in the prior year. Physical revenue grew
26.5% (or 22.3% in constant currency) primarily due to an
increasing demand for vinyl products and continued recovery from
COVID disruption. Artist services and expanded-rights revenue
increased 14.1% (or 8.7% in constant currency) reflecting an
increase in merchandising revenue, partially offset by the impact
of COVID disruption on concert touring and live events. Licensing
revenue was up 2.8% on an as-reported basis and down 0.3% in
constant currency mainly due to higher synchronization revenue as
businesses continued to partially recover from COVID disruption and
the favorable impact of foreign currency exchange rates, partially
offset by lower compilation revenue and other COVID-impacted
licensing revenue. Major sellers included Dua Lipa, Ed Sheeran, Ava
Max, Cardi B and the Hamilton original cast recording.
Recorded Music operating income was $733 million up from $175
million in the prior year and operating margin was up 11.5
percentage points to 16.1% versus 4.6% in the prior year. Recorded
Music OIBDA increased to $936 million from $349 million and OIBDA
margin increased 11.4 percentage points to 20.6%. Recorded Music
Adjusted OIBDA improved 29.0% to $975 million and Recorded Music
Adjusted OIBDA margin increased 1.7 percentage points to 21.5%. The
increases in operating income and OIBDA were primarily driven by
strong operating performance and non-cash stock-based compensation
and other related expenses which were $367 million lower than the
prior year. The increases in Adjusted OIBDA and Adjusted OIBDA
margin were primarily due to strong operating performance.
Music Publishing
| Music
Publishing Summary Results |
|
|
|
|
|
|
|
|
|
|
| (dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
|
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
|
Revenue |
$ |
205 |
|
|
$ |
169 |
|
|
21 |
% |
|
$ |
761 |
|
|
$ |
657 |
|
|
16 |
% |
| Digital revenue |
120 |
|
|
100 |
|
|
20 |
% |
|
436 |
|
|
337 |
|
|
29 |
% |
| Operating income |
28 |
|
|
23 |
|
|
22 |
% |
|
89 |
|
|
81 |
|
|
10 |
% |
| Adjusted operating
income(1) |
28 |
|
|
23 |
|
|
22 |
% |
|
94 |
|
|
84 |
|
|
12 |
% |
| OIBDA(1) |
49 |
|
|
43 |
|
|
14 |
% |
|
174 |
|
|
157 |
|
|
11 |
% |
| Adjusted OIBDA(1) |
49 |
|
|
43 |
|
|
14 |
% |
|
179 |
|
|
160 |
|
|
12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
Fourth-Quarter Results
| Music
Publishing Revenue |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
For the Three Months Ended September 30, 2020 |
| |
As reported |
|
As reported |
|
Constant |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| Revenue by
Segment: |
|
|
|
|
|
| Music Publishing |
|
|
|
|
|
|
Performance |
$ |
30 |
|
|
$ |
28 |
|
|
$ |
29 |
|
|
Digital |
120 |
|
|
100 |
|
|
101 |
|
|
Mechanical |
13 |
|
|
10 |
|
|
11 |
|
|
Synchronization |
39 |
|
|
27 |
|
|
28 |
|
|
Other |
3 |
|
|
4 |
|
|
3 |
|
| Total Music
Publishing |
$ |
205 |
|
|
$ |
169 |
|
|
$ |
172 |
|
Music Publishing revenue increased 21.3% (or 19.2% in constant
currency). The revenue increase was driven by growth in digital,
synchronization, mechanical and performance revenue. Digital
revenue increased 20.0% (or 18.8% in constant currency) reflecting
the continuing growth in streaming, including emerging streaming
platforms, and timing of new digital deals. Digital revenue growth
in the quarter was impacted by a favorable one-time settlement in
the prior-year quarter, as well as a shift in the collection of
writer’s share of U.S. digital performance income from certain
digital service providers. This change has no impact on Music
Publishing OIBDA, but results in a slight improvement to OIBDA
margin. Digital revenue represented 58.5% of total Music Publishing
revenue versus 59.2% in the prior-year quarter. The decrease in
digital revenue as a percentage of total Music Publishing revenue
is due to partial recovery of certain COVID-impacted revenue
streams in the quarter. Synchronization revenue increased due to
higher motion picture and commercial income and a one-time
licensing settlement. Mechanical revenue increased as businesses
continued to recover from COVID disruption and from an increase in
physical sales. Performance revenue increased as bars, restaurants,
concerts and live events continued to recover from COVID
disruption.
Music Publishing operating income was $28 million compared to
$23 million in the prior-year quarter largely driven by increased
revenue. Operating margin increased 0.1 percentage point to 13.7%.
Music Publishing OIBDA and Adjusted OIBDA increased 14.0% to $49
million, and OIBDA margin and Adjusted OIBDA margin decreased 1.5
percentage points to 23.9%. The decreases in OIBDA margin and
Adjusted OIBDA margin were primarily due to revenue mix.
Full-Year Results
| Music
Publishing Revenue |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Twelve Months EndedSeptember 30, 2021 |
|
For the Twelve Months EndedSeptember 30, 2020 |
|
For the Twelve Months EndedSeptember 30, 2020 |
| |
As reported |
|
As reported |
|
Constant |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| Revenue by
Segment: |
|
|
|
|
|
| Music Publishing |
|
|
|
|
|
|
Performance |
$ |
122 |
|
|
$ |
142 |
|
|
$ |
147 |
|
|
Digital |
436 |
|
|
337 |
|
|
346 |
|
|
Mechanical |
49 |
|
|
48 |
|
|
52 |
|
|
Synchronization |
144 |
|
|
119 |
|
|
121 |
|
|
Other |
10 |
|
|
11 |
|
|
10 |
|
| Total Music
Publishing |
$ |
761 |
|
|
$ |
657 |
|
|
$ |
676 |
|
Music Publishing revenue increased 15.8% (or 12.6% in constant
currency). The revenue increase was driven by growth in digital,
synchronization and mechanical revenue, partially offset by a
decline in performance revenue. Music Publishing digital revenue
increased 29.4% (or 26.0% in constant currency) reflecting the
continuing growth in streaming, including emerging streaming
platforms, and timing of new digital deals. Digital revenue growth
in the year was impacted by a favorable one-time settlement in the
prior year, as well as a shift in the collection of writer’s share
of U.S. digital performance income from certain digital service
providers. This change has no impact on Music Publishing OIBDA, but
results in a slight improvement to OIBDA margin. Digital revenue
represented 57.3% of total Music Publishing revenue versus 51.3% in
the prior year. Synchronization revenue increased due to growth in
motion picture and commercial income and a one-time licensing
settlement. Mechanical revenue increased on an as-reported basis
and decreased in constant currency. Performance revenue decreased
driven by the ongoing COVID-related impact on bars, restaurants,
concerts and live events.
Music Publishing operating income was $89 million, up 9.9% from
$81 million in the prior year driven largely by increased revenue,
partially offset by higher overhead due to employee-related costs
and an increase in amortization expense. Operating margin was
11.7%, down 0.6 percentage points from 12.3% in the prior
year. Music Publishing OIBDA increased 10.8% to $174 million,
and Music Publishing OIBDA margin declined 1.0 percentage point to
22.9%. Adjusted OIBDA increased 11.9% to $179 million and Music
Publishing Adjusted OIBDA margin declined to 23.5%. The decreases
in OIBDA margin and Adjusted OIBDA margin were primarily due to
revenue mix.
This morning, management will be hosting a conference call to
discuss the results at 8:30 A.M. EST. The call will be webcast on
www.wmg.com.
About Warner Music Group
With a legacy extending back over 200 years, Warner Music Group
today is home to an unparalleled family of creative artists,
songwriters, and companies that are moving culture across the
globe. At the core of WMG’s Recorded Music division are four of the
most iconic companies in history: Atlantic, Elektra, Parlophone and
Warner Records. They are joined by renowned labels such as Asylum,
Big Beat, Canvasback, East West, Erato, FFRR, Fueled by Ramen,
Nonesuch, Reprise, Rhino, Roadrunner, Sire, Spinnin’ Records,
Warner Classics and Warner Music Nashville. Warner Chappell Music -
which traces its origins back to the founding of Chappell &
Company in 1811 - is one of the world's leading music publishers,
with a catalog of more than one million copyrights spanning every
musical genre from the standards of the Great American Songbook to
the biggest hits of the 21st century.
"Safe Harbor" Statement under Private Securities
Litigation Reform Act of 1995
This communication includes forward-looking statements that
reflect the current views of Warner Music Group about future events
and financial performance. Words such as "estimates," "expects,"
"anticipates," "projects," "plans," "intends," "believes,"
"forecasts" and variations of such words or similar expressions
that predict or indicate future events or trends, or that do not
relate to historical matters, identify forward-looking statements.
All forward-looking statements are made as of today, and we
disclaim any duty to update such statements. Our expectations,
beliefs and projections are expressed in good faith and we believe
there is a reasonable basis for them. However, we cannot assure you
that management's expectations, beliefs and projections will result
or be achieved. Investors should not rely on forward-looking
statements because they are subject to a variety of risks,
uncertainties, and other factors that could cause actual results to
differ materially from our expectations. Please refer to our Form
10-K, Form 10-Qs and our other filings with the U.S. Securities and
Exchange Commission concerning factors that could cause actual
results to differ materially from those described in our
forward-looking statements.
We maintain an Internet site at www.wmg.com. We use our website
as a channel of distribution for material company information.
Financial and other material information regarding Warner Music
Group is routinely posted on and accessible at
http://investors.wmg.com. In addition, you may automatically
receive email alerts and other information about Warner Music Group
by enrolling your email address through the “email alerts” section
at http://investors.wmg.com. Our website and the information posted
on it or connected to it shall not be deemed to be incorporated by
reference into this communication.
Basis of Presentation
The Company maintains a 52-53 week fiscal year ending on the
last Friday in each reporting period. As such, all references to
September 30, 2021 and September 30, 2020 relate to the
periods ended September 24, 2021 and September 25, 2020,
respectively. For convenience purposes, the Company continues to
date its financial statements as of September 30.
| Figure 1.
Warner Music Group Corp. - Consolidated Statements of Operations,
Three and Twelve Months Ended September 30, 2021 versus September
30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
Revenue |
$ |
1,376 |
|
|
|
$ |
1,126 |
|
|
|
22 |
% |
| Cost and
expenses: |
|
|
|
|
|
| Cost of revenue |
(752 |
) |
|
|
(606 |
) |
|
|
24 |
% |
| Selling, general and
administrative expenses |
(465 |
) |
|
|
(383 |
) |
|
|
21 |
% |
| Amortization expense |
(59 |
) |
|
|
(49 |
) |
|
|
20 |
% |
| Total costs and
expenses |
$ |
(1,276 |
) |
|
|
$ |
(1,038 |
) |
|
|
23 |
% |
| Operating
income |
$ |
100 |
|
|
|
$ |
88 |
|
|
|
14 |
% |
| Loss on extinguishment of
debt |
(10 |
) |
|
|
(34 |
) |
|
|
-71 |
% |
| Interest expense, net |
(29 |
) |
|
|
(29 |
) |
|
|
— |
% |
| Other expense, net |
(9 |
) |
|
|
(45 |
) |
|
|
-80 |
% |
| Income (loss) before
income taxes |
$ |
52 |
|
|
|
$ |
(20 |
) |
|
|
— |
% |
| Income tax (expense)
benefit |
(22 |
) |
|
|
21 |
|
|
|
— |
% |
| Net
income |
$ |
30 |
|
|
|
$ |
1 |
|
|
|
— |
% |
| Less: Income attributable to
noncontrolling interest |
(2 |
) |
|
|
(2 |
) |
|
|
— |
% |
| Net income (loss)
attributable to Warner Music Group Corp. |
$ |
28 |
|
|
|
$ |
(1 |
) |
|
|
— |
% |
| |
|
|
|
|
|
| Net income (loss) per
share attributable to common stockholders: |
|
|
|
|
|
|
Class A – Basic and Diluted |
$ |
0.05 |
|
|
|
$ |
0.00 |
|
|
|
|
|
Class B – Basic and Diluted |
$ |
0.05 |
|
|
|
$ |
0.00 |
|
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(audited) |
|
|
|
Revenue |
$ |
5,301 |
|
|
|
$ |
4,463 |
|
|
|
19 |
% |
| Cost and
expenses: |
|
|
|
|
|
| Cost of revenue |
(2,742 |
) |
|
|
(2,333 |
) |
|
|
18 |
% |
| Selling, general and
administrative expenses |
(1,721 |
) |
|
|
(2,169 |
) |
|
|
-21 |
% |
| Amortization expense |
(229 |
) |
|
|
(190 |
) |
|
|
21 |
% |
| Total costs and
expenses |
$ |
(4,692 |
) |
|
|
$ |
(4,692 |
) |
|
|
— |
% |
| Operating income
(loss) |
$ |
609 |
|
|
|
$ |
(229 |
) |
|
|
— |
% |
| Loss on extinguishment of
debt |
(22 |
) |
|
|
(34 |
) |
|
|
-35 |
% |
| Interest expense, net |
(122 |
) |
|
|
(127 |
) |
|
|
-4 |
% |
| Other expense, net |
(9 |
) |
|
|
(57 |
) |
|
|
-84 |
% |
| Income (loss) before
income taxes |
$ |
456 |
|
|
|
$ |
(447 |
) |
|
|
— |
% |
| Income tax expense |
(149 |
) |
|
|
(23 |
) |
|
|
— |
% |
| Net income
(loss) |
$ |
307 |
|
|
|
$ |
(470 |
) |
|
|
— |
% |
| Less: Income attributable to
noncontrolling interest |
(3 |
) |
|
|
(5 |
) |
|
|
-40 |
% |
| Net income (loss)
attributable to Warner Music Group Corp. |
$ |
304 |
|
|
|
$ |
(475 |
) |
|
|
— |
% |
| |
|
|
|
|
|
| Net income (loss) per
share attributable to common stockholders: |
|
|
|
|
|
|
Class A – Basic and Diluted |
$ |
0.58 |
|
|
|
$ |
(0.82 |
) |
|
|
|
|
Class B – Basic and Diluted |
$ |
0.58 |
|
|
|
$ |
(0.95 |
) |
|
|
|
| Figure 2.
Warner Music Group Corp. - Consolidated Balance Sheets at September
30, 2021 versus September 30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
September 30, 2021 |
|
September 30, 2020 |
|
% Change |
| |
(unaudited) |
|
(audited) |
|
|
| Assets |
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
Cash and equivalents |
$ |
499 |
|
|
|
$ |
553 |
|
|
|
-10 |
% |
|
Accounts receivable, net |
839 |
|
|
|
771 |
|
|
|
9 |
% |
|
Inventories |
99 |
|
|
|
79 |
|
|
|
25 |
% |
|
Royalty advances expected to be recouped within one year |
373 |
|
|
|
220 |
|
|
|
70 |
% |
|
Prepaid and other current assets |
86 |
|
|
|
55 |
|
|
|
56 |
% |
| Total current
assets |
$ |
1,896 |
|
|
|
$ |
1,678 |
|
|
|
13 |
% |
| Royalty advances expected to
be recouped after one year |
457 |
|
|
|
269 |
|
|
|
70 |
% |
| Property, plant and equipment,
net |
364 |
|
|
|
331 |
|
|
|
10 |
% |
| Operating lease right-of-use
assets, net |
268 |
|
|
|
273 |
|
|
|
-2 |
% |
| Goodwill |
1,830 |
|
|
|
1,831 |
|
|
|
— |
% |
| Intangible assets subject to
amortization, net |
2,017 |
|
|
|
1,653 |
|
|
|
22 |
% |
| Intangible assets not subject
to amortization |
154 |
|
|
|
154 |
|
|
|
— |
% |
| Deferred tax assets, net |
31 |
|
|
|
68 |
|
|
|
-54 |
% |
| Other assets |
194 |
|
|
|
153 |
|
|
|
27 |
% |
| Total
assets |
$ |
7,211 |
|
|
|
$ |
6,410 |
|
|
|
12 |
% |
| Liabilities and Equity
(Deficit) |
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
Accounts payable |
$ |
302 |
|
|
|
$ |
264 |
|
|
|
14 |
% |
|
Accrued royalties |
1,880 |
|
|
|
1,628 |
|
|
|
15 |
% |
|
Accrued liabilities |
461 |
|
|
|
382 |
|
|
|
21 |
% |
|
Accrued interest |
14 |
|
|
|
30 |
|
|
|
-53 |
% |
|
Operating lease liabilities, current |
43 |
|
|
|
39 |
|
|
|
10 |
% |
|
Deferred revenue |
348 |
|
|
|
297 |
|
|
|
17 |
% |
|
Other current liabilities |
102 |
|
|
|
80 |
|
|
|
28 |
% |
| Total current
liabilities |
$ |
3,150 |
|
|
|
$ |
2,720 |
|
|
|
16 |
% |
| Long-term debt |
3,346 |
|
|
|
3,104 |
|
|
|
8 |
% |
| Operating lease liabilities,
noncurrent |
287 |
|
|
|
299 |
|
|
|
-4 |
% |
| Deferred tax liabilities,
net |
207 |
|
|
|
163 |
|
|
|
27 |
% |
| Other noncurrent
liabilities |
175 |
|
|
|
169 |
|
|
|
4 |
% |
| Total
liabilities |
$ |
7,165 |
|
|
|
$ |
6,455 |
|
|
|
11 |
% |
| Equity (deficit): |
|
|
|
|
|
| Class A common stock |
$ |
— |
|
|
|
$ |
— |
|
|
|
— |
% |
| Class B common stock |
1 |
|
|
|
1 |
|
|
|
— |
% |
| Additional paid-in
capital |
1,942 |
|
|
|
1,907 |
|
|
|
2 |
% |
| Accumulated deficit |
(1,710 |
) |
|
|
(1,749 |
) |
|
|
-2 |
% |
| Accumulated other
comprehensive loss, net |
(202 |
) |
|
|
(222 |
) |
|
|
-9 |
% |
| Total Warner Music
Group Corp. equity (deficit) |
$ |
31 |
|
|
|
$ |
(63 |
) |
|
|
— |
% |
| Noncontrolling interest |
15 |
|
|
|
18 |
|
|
|
-17 |
% |
| Total equity
(deficit) |
46 |
|
|
|
(45 |
) |
|
|
— |
% |
| Total liabilities and
equity (deficit) |
$ |
7,211 |
|
|
|
$ |
6,410 |
|
|
|
12 |
% |
| Figure 3.
Warner Music Group Corp. - Summarized Statements of Cash Flows,
Three and Twelve Months Ended September 30, 2021 versus September
30, 2020 |
| (dollars in
millions) |
|
|
|
| |
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
| |
(unaudited) |
|
(unaudited) |
|
Net cash provided by operating activities |
$ |
228 |
|
|
|
$ |
176 |
|
|
| Net cash used in investing
activities |
(72 |
) |
|
|
(132 |
) |
|
| Net cash used in financing
activities |
(96 |
) |
|
|
(28 |
) |
|
| Effect of foreign currency
exchange rates on cash and equivalents |
(3 |
) |
|
|
5 |
|
|
| Net increase in cash and
equivalents |
$ |
57 |
|
|
|
$ |
21 |
|
|
| |
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
| |
(unaudited) |
|
(audited) |
| Net cash provided by operating
activities |
$ |
638 |
|
|
|
$ |
463 |
|
|
| Net cash used in investing
activities |
(638 |
) |
|
|
(219 |
) |
|
| Net cash used in financing
activities |
(61 |
) |
|
|
(316 |
) |
|
| Effect of foreign currency
exchange rates on cash and equivalents |
7 |
|
|
|
6 |
|
|
| Net decrease in cash and
equivalents |
$ |
(54 |
) |
|
|
$ |
(66 |
) |
|
| Figure 4.
Warner Music Group Corp. - Recorded Music Digital Revenue Summary,
Three and Twelve Months Ended September 30, 2021 versus September
30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
Streaming |
$ |
777 |
|
|
$ |
639 |
|
|
22 |
% |
| Downloads and Other
Digital |
30 |
|
|
40 |
|
|
-25 |
% |
| Total Recorded Music
Digital Revenue |
$ |
807 |
|
|
$ |
679 |
|
|
19 |
% |
| |
|
|
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
| Streaming |
$ |
2,972 |
|
|
$ |
2,403 |
|
|
24 |
% |
| Downloads and Other
Digital |
133 |
|
|
165 |
|
|
-19 |
% |
| Total Recorded Music
Digital Revenue |
$ |
3,105 |
|
|
$ |
2,568 |
|
|
21 |
% |
Supplemental Disclosures Regarding Non-GAAP Financial
Measures
We evaluate our operating performance based on several factors,
including the following non-GAAP financial measures:
OIBDA
OIBDA reflects our operating income before non-cash depreciation
of tangible assets and non-cash amortization of intangible assets.
We consider OIBDA to be an important indicator of the operational
strengths and performance of our businesses, and believe the
presentation of OIBDA helps improve the ability to understand our
operating performance and evaluate our performance in comparison to
comparable periods. However, a limitation of the use of OIBDA as a
performance measure is that it does not reflect the periodic costs
of certain capitalized tangible and intangible assets used in
generating revenue in our businesses. Accordingly, OIBDA should be
considered in addition to, not as a substitute for, operating
income (loss), net income (loss) and other measures of financial
performance reported in accordance with U.S. GAAP. In addition,
OIBDA, as we calculate it, may not be comparable to similarly
titled measures employed by other companies.
| Figure 5.
Warner Music Group Corp. - Reconciliation of Net Income to OIBDA,
Three and Twelve Months Ended September 30, 2021 versus September
30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
Net income (loss) attributable to Warner Music Group
Corp. |
$ |
28 |
|
|
$ |
(1 |
) |
|
|
— |
% |
| Income attributable to
noncontrolling interest |
2 |
|
|
2 |
|
|
|
— |
% |
| Net
income |
$ |
30 |
|
|
$ |
1 |
|
|
|
— |
% |
| Income tax expense
(benefit) |
22 |
|
|
(21 |
) |
|
|
— |
% |
| Income including
income taxes |
$ |
52 |
|
|
$ |
(20 |
) |
|
|
— |
% |
| Other expense, net |
9 |
|
|
45 |
|
|
|
-80 |
% |
| Interest expense, net |
29 |
|
|
29 |
|
|
|
— |
% |
| Loss on extinguishment of
debt |
10 |
|
|
34 |
|
|
|
-71 |
% |
| Operating
income |
$ |
100 |
|
|
$ |
88 |
|
|
|
14 |
% |
| Amortization expense |
59 |
|
|
49 |
|
|
|
20 |
% |
| Depreciation expense |
20 |
|
|
18 |
|
|
|
11 |
% |
| OIBDA |
$ |
179 |
|
|
$ |
155 |
|
|
|
15 |
% |
| Operating income
margin |
7.3 |
% |
|
7.8 |
|
% |
|
|
| OIBDA
margin |
13.0 |
% |
|
13.8 |
|
% |
|
|
| |
|
|
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
| Net income (loss)
attributable to Warner Music Group Corp. |
$ |
304 |
|
|
$ |
(475 |
) |
|
|
— |
% |
| Income attributable to
noncontrolling interest |
3 |
|
|
5 |
|
|
|
-40 |
% |
| Net income
(loss) |
$ |
307 |
|
|
$ |
(470 |
) |
|
|
— |
% |
| Income tax expense |
149 |
|
|
23 |
|
|
|
— |
% |
| Income including
income taxes |
$ |
456 |
|
|
$ |
(447 |
) |
|
|
— |
% |
| Other expense, net |
9 |
|
|
57 |
|
|
|
-84 |
% |
| Interest expense, net |
122 |
|
|
127 |
|
|
|
-4 |
% |
| Loss on extinguishment of
debt |
22 |
|
|
34 |
|
|
|
-35 |
% |
| Operating income
(loss) |
$ |
609 |
|
|
$ |
(229 |
) |
|
|
— |
% |
| Amortization expense |
229 |
|
|
190 |
|
|
|
21 |
% |
| Depreciation expense |
77 |
|
|
71 |
|
|
|
8 |
% |
| OIBDA |
$ |
915 |
|
|
$ |
32 |
|
|
|
— |
% |
| Operating income
margin |
11.5 |
% |
|
-5.1 |
|
% |
|
|
| OIBDA
margin |
17.3 |
% |
|
0.7 |
|
% |
|
|
| Figure 6.
Warner Music Group Corp. - Reconciliation of Segment Operating
Income to OIBDA, Three and Twelve Months Ended September 30, 2021
versus September 30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
|
Total WMG operating income – GAAP |
$ |
100 |
|
|
|
$ |
88 |
|
|
|
14 |
% |
| Depreciation and amortization
expense |
(79 |
) |
|
|
(67 |
) |
|
|
18 |
% |
| Total WMG
OIBDA |
$ |
179 |
|
|
|
$ |
155 |
|
|
|
15 |
% |
| Operating income
margin |
7.3 |
|
% |
|
7.8 |
|
% |
|
|
| OIBDA
margin |
13.0 |
|
% |
|
13.8 |
|
% |
|
|
| |
|
|
|
|
|
| Recorded Music
operating income – GAAP |
$ |
129 |
|
|
|
$ |
108 |
|
|
|
19 |
% |
| Depreciation and amortization
expense |
(53 |
) |
|
|
(43 |
) |
|
|
23 |
% |
| Recorded Music
OIBDA |
$ |
182 |
|
|
|
$ |
151 |
|
|
|
21 |
% |
| Recorded Music
operating income margin |
11.0 |
|
% |
|
11.3 |
|
% |
|
|
| Recorded Music OIBDA
margin |
15.5 |
|
% |
|
15.8 |
|
% |
|
|
| |
|
|
|
|
|
| Music Publishing
operating income – GAAP |
$ |
28 |
|
|
|
$ |
23 |
|
|
|
22 |
% |
| Depreciation and amortization
expense |
(21 |
) |
|
|
(20 |
) |
|
|
5 |
% |
| Music Publishing
OIBDA |
$ |
49 |
|
|
|
$ |
43 |
|
|
|
14 |
% |
| Music Publishing
operating income margin |
13.7 |
|
% |
|
13.6 |
|
% |
|
|
| Music Publishing OIBDA
margin |
23.9 |
|
% |
|
25.4 |
|
% |
|
|
| |
|
|
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
% Change |
| |
(unaudited) |
|
(unaudited) |
|
|
| Total WMG operating
income (loss) – GAAP |
$ |
609 |
|
|
|
$ |
(229 |
) |
|
|
— |
% |
| Depreciation and amortization
expense |
(306 |
) |
|
|
(261 |
) |
|
|
17 |
% |
| Total WMG
OIBDA |
$ |
915 |
|
|
|
$ |
32 |
|
|
|
— |
% |
| Operating income
(loss) margin |
11.5 |
|
% |
|
-5.1 |
|
% |
|
|
| OIBDA
margin |
17.3 |
|
% |
|
0.7 |
|
% |
|
|
| |
|
|
|
|
|
| Recorded Music
operating income – GAAP |
$ |
733 |
|
|
|
$ |
175 |
|
|
|
— |
% |
| Depreciation and amortization
expense |
(203 |
) |
|
|
(174 |
) |
|
|
17 |
% |
| Recorded Music
OIBDA |
$ |
936 |
|
|
|
$ |
349 |
|
|
|
— |
% |
| Recorded Music
operating income margin |
16.1 |
|
% |
|
4.6 |
|
% |
|
|
| Recorded Music OIBDA
margin |
20.6 |
|
% |
|
9.2 |
|
% |
|
|
| |
|
|
|
|
|
| Music Publishing
operating income – GAAP |
$ |
89 |
|
|
|
$ |
81 |
|
|
|
10 |
% |
| Depreciation and amortization
expense |
(85 |
) |
|
|
(76 |
) |
|
|
12 |
% |
| Music Publishing
OIBDA |
$ |
174 |
|
|
|
$ |
157 |
|
|
|
11 |
% |
| Music Publishing
operating income margin |
11.7 |
|
% |
|
12.3 |
|
% |
|
|
| Music Publishing OIBDA
margin |
22.9 |
|
% |
|
23.9 |
|
% |
|
|
Adjusted Operating Income (Loss), Adjusted OIBDA and
Adjusted Net Income (Loss)
Adjusted operating income (loss), Adjusted OIBDA and Adjusted
net income (loss) is operating income (loss), OIBDA and net income
(loss), respectively, adjusted to exclude the impact of certain
items that affect comparability. Factors affecting period-to-period
comparability of the unadjusted measures in the quarter included
the items listed in Figure 7 below. We use Adjusted operating
income (loss), Adjusted OIBDA and Adjusted net income (loss) to
evaluate our actual operating performance. We believe that the
adjusted results provide relevant and useful information for
investors because they clarify our actual operating performance,
make it easier to compare our results with those of other companies
in our industry and allow investors to review performance in the
same way as our management. Since these are not measures of
performance calculated in accordance with U.S. GAAP, they should
not be considered in isolation of, or as a substitute for,
operating income (loss), OIBDA and net income (loss) as indicators
of operating performance, and they may not be comparable to
similarly titled measures employed by other companies.
| Figure 7.
Warner Music Group Corp. - Reconciliation of Reported to Adjusted
Results, Three and Twelve Months Ended September 30, 2021 versus
September 30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total WMG Operating Income |
|
Recorded Music Operating Income |
|
Music Publishing Operating Income |
|
Total WMG OIBDA |
|
Recorded Music OIBDA |
|
Music Publishing OIBDA |
|
Net Income |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
Reported Results |
$ |
100 |
|
|
|
$ |
129 |
|
|
$ |
28 |
|
|
$ |
179 |
|
|
|
$ |
182 |
|
|
$ |
49 |
|
|
$ |
30 |
|
|
| Factors Affecting
Comparability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other Transformation Related Costs |
26 |
|
|
|
15 |
|
|
— |
|
|
26 |
|
|
|
15 |
|
|
— |
|
|
26 |
|
|
|
COVID-19 Related Costs |
1 |
|
|
|
1 |
|
|
— |
|
|
1 |
|
|
|
1 |
|
|
— |
|
|
1 |
|
|
|
Non-Cash Stock-Based Compensation and Other Related Costs |
12 |
|
|
|
6 |
|
|
— |
|
|
12 |
|
|
|
6 |
|
|
— |
|
|
12 |
|
|
| Adjusted Results |
$ |
139 |
|
|
|
$ |
151 |
|
|
$ |
28 |
|
|
$ |
218 |
|
|
|
$ |
204 |
|
|
$ |
49 |
|
|
$ |
69 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted Margin |
10.1 |
|
% |
|
12.9 |
% |
|
13.7 |
% |
|
15.8 |
|
% |
|
17.4 |
% |
|
23.9 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total WMG Operating Income |
|
Recorded Music Operating Income |
|
Music Publishing Operating Income |
|
Total WMG OIBDA |
|
Recorded Music OIBDA |
|
Music Publishing OIBDA |
|
Net Income |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| Reported Results |
$ |
88 |
|
|
|
$ |
108 |
|
|
$ |
23 |
|
|
$ |
155 |
|
|
|
$ |
151 |
|
|
$ |
43 |
|
|
$ |
1 |
|
|
| Factors Affecting
Comparability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other Transformation Related Costs |
7 |
|
|
|
1 |
|
|
— |
|
|
7 |
|
|
|
1 |
|
|
— |
|
|
7 |
|
|
|
IPO Related Costs |
(1 |
) |
|
|
— |
|
|
— |
|
|
(1 |
) |
|
|
— |
|
|
— |
|
|
(1 |
) |
|
|
COVID-19 Related Costs |
4 |
|
|
|
1 |
|
|
— |
|
|
4 |
|
|
|
1 |
|
|
— |
|
|
4 |
|
|
|
L.A. Office Consolidation |
1 |
|
|
|
— |
|
|
— |
|
|
1 |
|
|
|
— |
|
|
— |
|
|
1 |
|
|
|
Non-Cash Stock-Based Compensation and Other Related Costs |
8 |
|
|
|
8 |
|
|
— |
|
|
8 |
|
|
|
8 |
|
|
— |
|
|
8 |
|
|
| Adjusted Results |
$ |
107 |
|
|
|
$ |
118 |
|
|
$ |
23 |
|
|
$ |
174 |
|
|
|
$ |
161 |
|
|
$ |
43 |
|
|
$ |
20 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted Margin |
9.5 |
|
% |
|
12.3 |
% |
|
13.6 |
% |
|
15.5 |
|
% |
|
16.8 |
% |
|
25.4 |
% |
|
|
|
For the Twelve Months Ended September 30,
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total WMG Operating Income |
|
Recorded Music Operating Income |
|
Music Publishing Operating Income |
|
Total WMG OIBDA |
|
Recorded Music OIBDA |
|
Music Publishing OIBDA |
|
Net Income |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
Reported Results |
$ |
609 |
|
|
|
$ |
733 |
|
|
$ |
89 |
|
|
$ |
915 |
|
|
$ |
936 |
|
|
$ |
174 |
|
|
$ |
307 |
|
|
| Factors Affecting
Comparability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other Transformation Related Costs |
54 |
|
|
|
15 |
|
|
3 |
|
|
54 |
|
|
15 |
|
|
3 |
|
|
54 |
|
|
|
COVID-19 Related Costs |
1 |
|
|
|
— |
|
|
— |
|
|
1 |
|
|
— |
|
|
— |
|
|
1 |
|
|
|
Non-Cash Stock-Based Compensation and Other Related Costs |
48 |
|
|
|
24 |
|
|
2 |
|
|
48 |
|
|
24 |
|
|
2 |
|
|
48 |
|
|
| Adjusted Results |
$ |
712 |
|
|
|
$ |
772 |
|
|
$ |
94 |
|
|
$ |
1,018 |
|
|
$ |
975 |
|
|
$ |
179 |
|
|
$ |
410 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted Margin |
13.4 |
|
% |
|
17.0 |
% |
|
12.4 |
% |
|
19.2 |
% |
|
21.5 |
% |
|
23.5 |
% |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Twelve Months Ended September 30,
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total WMG Operating (Loss) Income |
|
Recorded Music Operating Income |
|
Music Publishing Operating Income |
|
Total WMG OIBDA |
|
Recorded Music OIBDA |
|
Music Publishing OIBDA |
|
Net (Loss) Income |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| Reported Results |
$ |
(229 |
) |
|
|
$ |
175 |
|
|
$ |
81 |
|
|
$ |
32 |
|
|
$ |
349 |
|
|
$ |
157 |
|
|
$ |
(470 |
) |
|
| Factors Affecting
Comparability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other Transformation Related Costs |
42 |
|
|
|
1 |
|
|
3 |
|
|
42 |
|
|
1 |
|
|
3 |
|
|
42 |
|
|
|
IPO Related Costs |
89 |
|
|
|
— |
|
|
— |
|
|
89 |
|
|
— |
|
|
— |
|
|
89 |
|
|
|
COVID-19 Related Costs |
17 |
|
|
|
13 |
|
|
— |
|
|
17 |
|
|
13 |
|
|
— |
|
|
17 |
|
|
|
L.A. Office Consolidation |
2 |
|
|
|
2 |
|
|
— |
|
|
2 |
|
|
2 |
|
|
— |
|
|
2 |
|
|
|
Non-Cash Stock-Based Compensation and Other Related Costs |
608 |
|
|
|
391 |
|
|
— |
|
|
608 |
|
|
391 |
|
|
— |
|
|
608 |
|
|
| Adjusted Results |
$ |
529 |
|
|
|
$ |
582 |
|
|
$ |
84 |
|
|
$ |
790 |
|
|
$ |
756 |
|
|
$ |
160 |
|
|
$ |
288 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted Margin |
11.9 |
|
% |
|
15.3 |
% |
|
12.8 |
% |
|
17.7 |
% |
|
19.8 |
% |
|
24.4 |
% |
|
|
Constant Currency
Because exchange rates are an important factor in understanding
period-to-period comparisons, we believe the presentation of
revenue on a constant-currency basis in addition to reported
revenue helps improve the ability to understand our operating
results and evaluate our performance in comparison to prior
periods. Constant-currency information compares results between
periods as if exchange rates had remained constant period over
period. We use results on a constant-currency basis as one measure
to evaluate our performance. We calculate constant-currency results
by applying current-year foreign currency exchange rates to
prior-year results. However, a limitation of the use of the
constant-currency results as a performance measure is that it does
not reflect the impact of exchange rates on our revenue. These
results should be considered in addition to, not as a substitute
for, results reported in accordance with U.S. GAAP. Results on a
constant-currency basis, as we present them, may not be comparable
to similarly titled measures used by other companies and are not a
measure of performance presented in accordance with U.S. GAAP.
| Figure 8.
Warner Music Group Corp. - Revenue by Geography and Segment, Three
and Twelve Months Ended September 30, 2021 versus September 30,
2020 As Reported and Constant Currency |
| (dollars in
millions) |
|
|
|
|
|
| |
|
|
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
|
For the Three Months Ended September 30, 2020 |
| |
As reported |
|
As reported |
|
Constant |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| U.S. revenue |
|
|
|
|
|
|
Recorded Music |
$ |
531 |
|
|
|
$ |
418 |
|
|
|
$ |
418 |
|
|
|
Music Publishing |
101 |
|
|
|
83 |
|
|
|
83 |
|
|
| International revenue |
|
|
|
|
|
|
Recorded Music |
641 |
|
|
|
540 |
|
|
|
550 |
|
|
|
Music Publishing |
104 |
|
|
|
86 |
|
|
|
89 |
|
|
| Intersegment eliminations |
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
| Total
Revenue |
$ |
1,376 |
|
|
|
$ |
1,126 |
|
|
|
$ |
1,139 |
|
|
| |
|
|
|
|
|
| Revenue by
Segment: |
|
|
|
|
|
| Recorded Music |
|
|
|
|
|
|
Digital |
$ |
807 |
|
|
|
$ |
679 |
|
|
|
$ |
688 |
|
|
|
Physical |
127 |
|
|
|
105 |
|
|
|
104 |
|
|
|
Total Digital and Physical |
934 |
|
|
|
784 |
|
|
|
792 |
|
|
|
Artist services and expanded-rights |
168 |
|
|
|
98 |
|
|
|
99 |
|
|
|
Licensing |
70 |
|
|
|
76 |
|
|
|
77 |
|
|
| Total Recorded
Music |
1,172 |
|
|
|
958 |
|
|
|
968 |
|
|
| Music Publishing |
|
|
|
|
|
|
Performance |
30 |
|
|
|
28 |
|
|
|
29 |
|
|
|
Digital |
120 |
|
|
|
100 |
|
|
|
101 |
|
|
|
Mechanical |
13 |
|
|
|
10 |
|
|
|
11 |
|
|
|
Synchronization |
39 |
|
|
|
27 |
|
|
|
28 |
|
|
|
Other |
3 |
|
|
|
4 |
|
|
|
3 |
|
|
| Total Music
Publishing |
205 |
|
|
|
169 |
|
|
|
172 |
|
|
| Intersegment eliminations |
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
|
| Total
Revenue |
$ |
1,376 |
|
|
|
$ |
1,126 |
|
|
|
$ |
1,139 |
|
|
| |
|
|
|
|
|
| Total Digital
Revenue |
$ |
926 |
|
|
|
$ |
778 |
|
|
|
$ |
788 |
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
|
For the Twelve Months Ended September 30,
2020 |
| |
As reported |
|
As reported |
|
Constant |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
| U.S. revenue |
|
|
|
|
|
|
Recorded Music |
$ |
1,985 |
|
|
|
$ |
1,609 |
|
|
|
$ |
1,609 |
|
|
|
Music Publishing |
378 |
|
|
|
325 |
|
|
|
325 |
|
|
| International revenue |
|
|
|
|
|
|
Recorded Music |
2,559 |
|
|
|
2,201 |
|
|
|
2,311 |
|
|
|
Music Publishing |
383 |
|
|
|
332 |
|
|
|
351 |
|
|
| Intersegment eliminations |
(4 |
) |
|
|
(4 |
) |
|
|
(4 |
) |
|
| Total
Revenue |
$ |
5,301 |
|
|
|
$ |
4,463 |
|
|
|
$ |
4,592 |
|
|
| |
|
|
|
|
|
| Revenue by
Segment: |
|
|
|
|
|
| Recorded Music |
|
|
|
|
|
|
Digital |
$ |
3,105 |
|
|
|
$ |
2,568 |
|
|
|
$ |
2,628 |
|
|
|
Physical |
549 |
|
|
|
434 |
|
|
|
449 |
|
|
|
Total Digital and Physical |
3,654 |
|
|
|
3,002 |
|
|
|
3,077 |
|
|
|
Artist services and expanded-rights |
599 |
|
|
|
525 |
|
|
|
551 |
|
|
|
Licensing |
291 |
|
|
|
283 |
|
|
|
292 |
|
|
| Total Recorded
Music |
4,544 |
|
|
|
3,810 |
|
|
|
3,920 |
|
|
| Music Publishing |
|
|
|
|
|
|
Performance |
122 |
|
|
|
142 |
|
|
|
147 |
|
|
|
Digital |
436 |
|
|
|
337 |
|
|
|
346 |
|
|
|
Mechanical |
49 |
|
|
|
48 |
|
|
|
52 |
|
|
|
Synchronization |
144 |
|
|
|
119 |
|
|
|
121 |
|
|
|
Other |
10 |
|
|
|
11 |
|
|
|
10 |
|
|
| Total Music
Publishing |
761 |
|
|
|
657 |
|
|
|
676 |
|
|
| Intersegment eliminations |
(4 |
) |
|
|
(4 |
) |
|
|
(4 |
) |
|
| Total
Revenue |
$ |
5,301 |
|
|
|
$ |
4,463 |
|
|
|
$ |
4,592 |
|
|
| |
|
|
|
|
|
| Total Digital
Revenue |
$ |
3,539 |
|
|
|
$ |
2,903 |
|
|
|
$ |
2,972 |
|
|
Free Cash Flow
Our definition of Free Cash Flow has been revised in the fourth
quarter of fiscal 2021 and is now defined as cash flow provided by
operating activities less capital expenditures. We use Free Cash
Flow, among other measures, to evaluate our operating performance.
Management believes Free Cash Flow provides investors with an
important perspective on the cash available to fund our debt
service requirements, ongoing working capital requirements, capital
expenditure requirements, strategic acquisitions and investments,
and any dividends, prepayments of debt or repurchases or retirement
of our outstanding debt or notes in open market purchases,
privately negotiated purchases, any repurchases of our common stock
or otherwise. As a result, Free Cash Flow is a significant measure
of our ability to generate long-term value. It is useful for
investors to know whether this ability is being enhanced or
degraded as a result of our operating performance. We believe the
presentation of Free Cash Flow is relevant and useful for investors
because it allows investors to view performance in a manner similar
to the method management uses.
Free Cash Flow is not a measure of performance calculated in
accordance with U.S. GAAP and therefore it should not be considered
in isolation of, or as a substitute for, net income (loss) as an
indicator of operating performance or cash flow provided by
operating activities as a measure of liquidity. Free Cash Flow, as
we calculate it, may not be comparable to similarly titled measures
employed by other companies. In addition, Free Cash Flow does not
necessarily represent funds available for discretionary use and is
not necessarily a measure of our ability to fund our cash needs.
Because Free Cash Flow deducts capital expenditures from “net cash
provided by operating activities” (the most directly comparable
U.S. GAAP financial measure), users of this information should
consider the types of events and transactions that are not
reflected. We provide below a reconciliation of Free Cash Flow to
the most directly comparable amount reported under U.S. GAAP, which
is “net cash provided by operating activities.”
| Figure 9.
Warner Music Group Corp. - Calculation of Free Cash Flow, Three and
Twelve Months Ended September 30, 2021 versus September 30,
2020 |
| (dollars in
millions) |
|
|
|
| |
|
|
|
| |
For the Three Months Ended September 30, 2021 |
|
For the Three Months Ended September 30, 2020 |
| |
(unaudited) |
|
(unaudited) |
|
Net cash provided by operating activities |
$ |
228 |
|
|
$ |
176 |
|
| Less: Capital
expenditures |
35 |
|
|
37 |
|
| |
|
|
|
| Free Cash
Flow |
$ |
193 |
|
|
$ |
139 |
|
| |
|
|
|
| |
For the Twelve Months Ended September 30,
2021 |
|
For the Twelve Months Ended September 30,
2020 |
| |
(unaudited) |
|
(unaudited) |
| Net cash provided by
operating activities |
$ |
638 |
|
|
$ |
463 |
|
| Less: Capital
expenditures |
93 |
|
|
85 |
|
| |
|
|
|
| Free Cash
Flow |
$ |
545 |
|
|
$ |
378 |
|
Adjusted EBITDA
Adjusted EBITDA is equivalent to “EBITDA” as defined in our
Revolving Credit Facility and our 2020 indenture and substantially
similar to “Consolidated EBITDA” as defined under our 2012 and 2014
indentures and “EBITDA” as defined under our Senior Term Loan
Facility, respectively. Adjusted EBITDA differs from the term
“EBITDA” as it is commonly used. The definition of Adjusted EBITDA,
in addition to adjusting net income to exclude interest expense,
income taxes, and depreciation and amortization, also adjusts net
income by excluding items or expenses such as, among other items,
(1) the amount of any restructuring charges or reserves; (2) any
non-cash charges (including any impairment charges); (3) any net
loss resulting from hedging currency exchange risks; (4) the amount
of management, monitoring, consulting and advisory fees paid to
Access under the Management Agreement or otherwise; (5) business
optimization expenses (including consolidation initiatives,
severance costs and other costs relating to initiatives aimed at
profitability improvement); (6) transaction expenses; (7)
equity-based compensation expense; and (8) certain extraordinary,
unusual or non-recurring items. The definition of EBITDA under the
Revolving Credit Facility also includes adjustments for the pro
forma impact of certain projected cost savings, operating expense
reductions and synergies and any quality of earnings analysis
prepared by independent certified public accountants in connection
with an acquisition, merger, consolidation or other investment.
Adjusted EBITDA is a key measure used by our management to
understand and evaluate our operating performance, generate future
operating plans and make strategic decisions regarding the
allocation of capital. Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as
a substitute for analysis of our results as reported under U.S.
GAAP. Some of those limitations include: (1) it does not reflect
the periodic costs of certain capitalized tangible and intangible
assets used in generating revenue for our business; (2) it does not
reflect the significant interest expense or cash requirements
necessary to service interest or principal payments on our
indebtedness; and (3) it does not reflect every cash expenditure,
future requirements for capital expenditures or contractual
commitments. In particular, this measure adds back certain
non-cash, extraordinary, unusual or non-recurring charges that are
deducted in calculating net income; however, these are expenses
that may recur, vary greatly and are difficult to predict. In
addition, Adjusted EBITDA is not the same as net income or cash
flow provided by operating activities as those terms are defined by
U.S. GAAP and does not necessarily indicate whether cash flows will
be sufficient to fund cash needs. Accordingly, Adjusted EBITDA
should be considered in addition to, not as a substitute for, net
income (loss) and other measures of financial performance reported
in accordance with U.S. GAAP.
| Figure
10. Warner Music Group Corp. - Reconciliation of Net Income to
Adjusted EBITDA, Three and Twelve Months Ended September 30, 2021
versus September 30, 2020 |
| (dollars in
millions) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| |
For the Three Months EndedSeptember 30, 2021 |
|
For the Three Months EndedSeptember 30, 2020 |
|
For the Twelve Months EndedSeptember 30, 2021 |
|
For the Twelve Months Ended September 30,
2020 |
| |
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
Net Income (Loss) |
$ |
30 |
|
|
|
$ |
1 |
|
|
|
$ |
307 |
|
|
|
$ |
(470 |
) |
|
| Income tax expense
(benefit) |
22 |
|
|
|
(21 |
) |
|
|
149 |
|
|
|
23 |
|
|
| Interest expense, net |
29 |
|
|
|
29 |
|
|
|
122 |
|
|
|
127 |
|
|
| Depreciation and
amortization |
79 |
|
|
|
67 |
|
|
|
306 |
|
|
|
261 |
|
|
| Loss on extinguishment of debt
(a) |
10 |
|
|
|
34 |
|
|
|
22 |
|
|
|
34 |
|
|
| Net gain on divestitures and
sale of securities (b) |
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(1 |
) |
|
| Restructuring costs (c) |
18 |
|
|
|
9 |
|
|
|
29 |
|
|
|
22 |
|
|
| Net hedging and foreign
exchange (gains) losses (d) |
(20 |
) |
|
|
51 |
|
|
|
11 |
|
|
|
61 |
|
|
| Management fees (e) |
— |
|
|
|
(3 |
) |
|
|
— |
|
|
|
20 |
|
|
| Transaction costs (f) |
5 |
|
|
|
(1 |
) |
|
|
10 |
|
|
|
76 |
|
|
| Business optimization expenses
(g) |
12 |
|
|
|
6 |
|
|
|
42 |
|
|
|
39 |
|
|
| Non-cash stock-based
compensation expense (h) |
12 |
|
|
|
8 |
|
|
|
45 |
|
|
|
608 |
|
|
| Other non-cash charges
(i) |
30 |
|
|
|
(6 |
) |
|
|
5 |
|
|
|
10 |
|
|
| Pro forma impact of cost
savings initiatives and specified transactions (j) |
10 |
|
|
|
3 |
|
|
|
45 |
|
|
|
27 |
|
|
| Adjusted
EBITDA |
$ |
237 |
|
|
|
$ |
177 |
|
|
|
$ |
1,090 |
|
|
|
$ |
837 |
|
|
|
______________________________________ |
|
(a) |
Reflects loss on extinguishment of debt, primarily including tender
fees and unamortized deferred financing costs. |
|
(b) |
Reflects net gain on sale of securities and divestitures. |
|
(c) |
Reflects severance costs and other restructuring related
expenses. |
|
(d) |
Reflects (gains) losses from hedging activities and unrealized
(gains) losses due to foreign exchange on our Euro-denominated debt
and intercompany transactions. |
|
(e) |
Reflects management fees and related expenses paid to Access
pursuant to the management agreement, which was terminated upon
completion of the IPO in June 2020. |
|
(f) |
Reflects mainly integration, transaction and qualifying IPO
costs. |
|
(g) |
Reflects costs associated with our transformation initiatives and
IT system updates, which includes costs of $10 million and $33
million related to our finance transformation for the three and
twelve months ended September 30, 2021, respectively, as well as $5
million and $30 million for the three and twelve months ended
September 30, 2020, respectively. |
|
(h) |
Reflects non-cash stock-based compensation expense related to the
Second Amended and Restated Warner Music Group Corp. Senior
Management Free Cash Flow Plan and the Omnibus Incentive Plan. |
|
(i) |
Reflects non-cash activity, including the unrealized losses (gains)
on the mark-to-market of an equity method investment, investment
losses (gains) and other non-cash impairments. |
|
(j) |
Reflects expected savings resulting from transformation initiatives
and the pro forma impact of specified transactions for the three
and twelve months ended September 30, 2021. Certain of these cost
savings initiatives and transactions impacted quarters prior to the
quarter during which they were identified within the last
twelve-month period. The pro forma impact of these specified
transactions and initiatives resulted in a $6 million increase in
the twelve months ended September 30, 2021 Adjusted EBITDA. |
| Media Contact: |
Investor Contact: |
| James
Steven |
Kareem Chin |
| (212)
275-2213 |
|
| James.Steven@wmg.com |
Investor.Relations@wmg.com |
| |
|
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