Warner Music Group Corp. today announced its first-quarter
financial results for the period ended December 31, 2022.
“Music’s value, power, and ubiquity are among the many reasons I
decided to join WMG and lead the next phase of our evolution,” said
Robert Kyncl, CEO. “As we navigate a challenging business
environment, we expect to have a strong release schedule in the
second half of 2023 while managing our costs throughout. The
foundations of this company are strong, and our addressable market
is continuously growing. We are excited to drive new monetization
opportunities through our investments in new artists and
songwriters, our catalog, and our global expansion.”
“Our results reflect our resilience and operational discipline
in the face of macroeconomic headwinds, as well as the impact of
the extra week in the prior-year quarter,” said Eric Levin, CFO,
Warner Music Group. “Our continued focus on efficiency enabled us
to deliver strong operating and free cash flow growth, even while
certain revenue lines came under pressure. We are enthusiastic
about our release schedule for the second half of the fiscal year,
which will feature amazing music from some of our biggest
artists.”
Total WMG
Total WMG
Summary Results |
|
|
|
|
(dollars
in millions) |
|
|
|
|
|
For the ThreeMonths EndedDecember 31,2022 |
|
For the ThreeMonths EndedDecember 31,2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
$ |
1,488 |
|
$ |
1,614 |
|
-8 |
% |
Recorded Music revenue |
|
1,239 |
|
|
1,386 |
|
-11 |
% |
Music Publishing revenue |
|
250 |
|
|
229 |
|
9 |
% |
Digital revenue |
|
952 |
|
|
1,002 |
|
-5 |
% |
Operating income |
|
265 |
|
|
239 |
|
11 |
% |
Adjusted operating income(1) |
|
251 |
|
|
274 |
|
-8 |
% |
OIBDA(1) |
|
349 |
|
|
320 |
|
9 |
% |
Adjusted OIBDA(1) |
|
335 |
|
|
355 |
|
-6 |
% |
Net income |
|
124 |
|
|
188 |
|
-34 |
% |
Adjusted net income(1) |
|
110 |
|
|
223 |
|
-51 |
% |
Net cash provided by operating
activities |
|
209 |
|
|
129 |
|
62 |
% |
Free Cash Flow |
|
188 |
|
|
95 |
|
98 |
% |
|
|
|
|
|
|
(1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
|
For the ThreeMonths EndedDecember 31,2022 |
|
For the ThreeMonths EndedDecember 31,2021 |
|
% Change |
|
For the TwelveMonths EndedDecember 31,2022 |
|
For the TwelveMonths EndedDecember 31,2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
|
(unaudited) |
|
(unaudited) |
|
|
Adjusted EBITDA(1) |
$ |
350 |
|
$ |
389 |
|
-10% |
|
$ |
1,162 |
|
$ |
1,207 |
|
-4% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
Revenue was down 7.8% (or 2.7% in constant currency). Consistent
with the prior quarter, revenue growth was unfavorably impacted by
foreign currency exchange rates. As disclosed previously, the
prior-year quarter included an additional week, primarily reflected
in Recorded Music streaming revenue. Digital revenue decreased 5.0%
(or 0.9% in constant currency) and streaming revenue decreased 4.0%
(or was flat in constant currency). Growth in Music Publishing
streaming revenue of 13.2% (or 16.8% in constant currency) was
offset by a decline in Recorded Music streaming revenue of 6.7% (or
2.6% in constant currency) as a result of a lighter release
schedule and the impact of the additional week in the prior-year
quarter and exchange rates, as well as a market-related slowdown in
ad-supported revenue. Digital revenue represented 64.0% of total
revenue in the quarter, compared to 62.1% in the prior-year
quarter. Revenue decreases in the quarter were also driven by a
decline in Recorded Music physical and artist services and
expanded-rights revenue and Music Publishing synchronization
revenue, partially offset by growth in Recorded Music licensing
revenue and Music Publishing performance revenue. Music Publishing
mechanical revenue remained flat on an as-reported basis, but
increased in constant currency. Excluding the impact of the
additional week, total revenue was down 3.4% (or up 2.0% in
constant currency).
Operating income was $265 million compared to $239 million in
the prior-year quarter. OIBDA was $349 million, compared to $320
million in the prior-year quarter, an increase of 9.1% (or 16.3% in
constant currency), and OIBDA margin increased 3.7 percentage
points to 23.5% from 19.8% in the prior-year quarter (or increased
3.9 percentage points to 23.5% from 19.6% in constant currency).
The increases in operating income, OIBDA and OIBDA margin were
primarily due to the net gain on sale of the Company’s interest in
certain sound recording rights.
Adjusted operating income, Adjusted OIBDA and Adjusted net
income exclude expenses related to restructuring and other
transformation initiatives and non-cash stock-based compensation
and other related expenses in both the quarter and the prior-year
quarter. In the quarter, the net gain on sale of the Company’s
interest in certain sound recording rights is 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 decreased 5.6% from $355 million to $335 million
(or was flat in constant currency) largely driven by lower revenue
and Adjusted OIBDA margin increased 0.5 percentage points to 22.5%
from 22.0% in the prior-year quarter (or increased 0.6 percentage
points to 22.5% from 21.9% in constant currency) primarily due to
the favorable impact of exchange rates. Excluding the impact of the
additional week, Adjusted OIBDA increased 6.0% (or 12.8% in
constant currency) and Adjusted OIBDA margin increased 2.0
percentage points to 22.5% from 20.5% in the prior-year quarter (or
increased 2.1 percentage points to 22.5% from 20.4% in constant
currency). Adjusted operating income decreased 8.4% from $274
million to $251 million due to the same factors affecting Adjusted
OIBDA and higher amortization expenses due to recent acquisitions
and capital spending. Adjusted EBITDA decreased, largely due to the
same factors affecting Adjusted OIBDA, including the impact of the
additional week.
Net income was $124 million compared to $188 million in the
prior-year quarter. Adjusted net income was $110 million compared
to $223 million in the prior-year quarter. The decrease in net
income and Adjusted net income was primarily due to the factors
described above and the impact of exchange rates on the Company’s
Euro-denominated debt, partially offset by a decrease in income tax
expense due to lower pre-tax income.
Basic and Diluted earnings per share was $0.23 for both the
Class A and Class B shareholders due to the net income attributable
to the Company in the quarter of $124 million.
As of December 31, 2022, the Company reported a cash
balance of $720 million, total debt of $3.946 billion and net debt
(defined as total debt, net of deferred financing costs, premiums
and discounts, minus cash and equivalents) of $3.226 billion.
Cash provided by operating activities increased 62% to $209
million from $129 million in the prior-year quarter. The increase
was largely a result of timing of A&R investments and other
movements within working capital. Capital expenditures decreased
38% to $21 million from $34 million in the prior-year quarter,
mainly due to lower investments in facilities. Free Cash Flow, as
defined below, increased 98% to $188 million from $95 million in
the prior-year quarter.
Recorded Music
Recorded
Music Summary Results |
|
|
|
|
(dollars
in millions) |
|
|
|
|
|
For the ThreeMonths EndedDecember 31,2022 |
|
For the ThreeMonths EndedDecember 31,2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
$ |
1,239 |
|
$ |
1,386 |
|
-11 |
% |
Digital revenue |
|
803 |
|
|
870 |
|
-8 |
% |
Operating income |
|
283 |
|
|
276 |
|
3 |
% |
Adjusted operating
income(1) |
|
245 |
|
|
282 |
|
-13 |
% |
OIBDA(1) |
|
337 |
|
|
330 |
|
2 |
% |
Adjusted OIBDA(1) |
|
299 |
|
|
336 |
|
-11 |
% |
|
|
|
|
|
|
(1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
Recorded
Music Revenue |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember
31, 2022 |
|
For the Three Months EndedDecember
31, 2021 |
|
For the Three Months EndedDecember
31, 2021 |
|
As reported |
|
As reported |
|
Constant |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Digital |
$ |
803 |
|
$ |
870 |
|
$ |
833 |
Physical |
|
133 |
|
|
195 |
|
|
181 |
Total Digital and Physical |
|
936 |
|
|
1,065 |
|
|
1,014 |
Artist services and
expanded-rights |
|
206 |
|
|
232 |
|
|
215 |
Licensing |
|
97 |
|
|
89 |
|
|
83 |
Total Recorded
Music |
$ |
1,239 |
|
$ |
1,386 |
|
$ |
1,312 |
Recorded Music revenue was down 10.6% (or 5.6% in constant
currency) driven by a decline in digital, physical and artist
services and expanded-rights revenue. Digital revenue was down 7.7%
(or 3.6% in constant currency). Streaming revenue was down 6.7% (or
2.6% in constant currency). Adjusted for the impact of the
additional week, Recorded Music streaming revenue was up 0.5% (or
4.8% in constant currency). Streaming revenue reflects a lighter
release schedule and a market-related slowdown in ad-supported
revenue. Digital revenue represented 64.8% of total Recorded Music
revenue versus 62.8% in the prior-year quarter. Physical revenue
was down 31.8% (or 26.5% in constant currency) primarily due to a
lighter release schedule. Artist services and expanded-rights
revenue decreased 11.2% (or 4.2% in constant currency) primarily
due to lower direct-to-consumer merchandising revenue at EMP and
lower advertising revenue. Licensing revenue increased 9.0% (or
16.9% in constant currency), due to an increase in broadcast fees,
synchronization and other third-party licensing, partially offset
by the impact of exchange rates. Excluding the impact of the
additional week, revenue decreased 5.6% (or 0.2% in constant
currency). Major sellers included Red Hot Chili Peppers, Zach
Bryan, Lizzo and Ed Sheeran.
Recorded Music operating income was $283 million, up from $276
million in the prior-year quarter and operating margin was up 2.9
percentage points to 22.8% versus 19.9% in the prior-year quarter.
OIBDA increased 2.1% to $337 million from $330 million in the
prior-year quarter (or 8.0% in constant currency) and OIBDA margin
increased 3.4 percentage points to 27.2% from 23.8% in the
prior-year quarter (the same in constant currency). Adjusted OIBDA
decreased 11.0% from $336 million to $299 million (or 6.0% in
constant currency) with Adjusted OIBDA margin down 0.1 percentage
point to 24.1% from 24.2% in the prior-year quarter (the same in
constant currency). The increases in operating income, OIBDA,
operating margin and OIBDA margin were primarily due to the net
gain on sale of the Company’s interest in certain sound recording
rights. The decreases in Adjusted OIBDA and Adjusted OIBDA margin
were primarily driven by lower revenue, partially offset by the
favorable impact of exchange rates. Excluding the impact of the
additional week, Adjusted OIBDA increased 0.7% (or 6.8% in constant
currency) and Adjusted OIBDA margin increased 1.5 percentage points
to 24.1% from 22.6% in the prior-year quarter (the same in constant
currency).
Music Publishing
Music
Publishing Summary Results |
|
|
|
|
(dollars
in millions) |
|
|
|
|
|
For the ThreeMonths EndedDecember 31,2022 |
|
For the ThreeMonths EndedDecember 31,2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
$ |
250 |
|
$ |
229 |
|
9 |
% |
Digital revenue |
|
149 |
|
|
133 |
|
12 |
% |
Operating income |
|
49 |
|
|
32 |
|
53 |
% |
Adjusted operating
income(1) |
|
49 |
|
|
33 |
|
48 |
% |
OIBDA(1) |
|
72 |
|
|
54 |
|
33 |
% |
Adjusted OIBDA(1) |
|
72 |
|
|
55 |
|
31 |
% |
|
|
|
|
|
|
(1) See
"Supplemental Disclosures Regarding Non-GAAP Financial Measures" at
the end of this release for details regarding these measures. |
Music
Publishing Revenue |
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember
31, 2022 |
|
For the Three Months EndedDecember
31, 2021 |
|
For the Three Months EndedDecember
31, 2021 |
|
As reported |
|
As reported |
|
Constant |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Performance |
$ |
45 |
|
$ |
38 |
|
$ |
35 |
Digital |
|
149 |
|
|
133 |
|
|
129 |
Mechanical |
|
14 |
|
|
14 |
|
|
12 |
Synchronization |
|
39 |
|
|
42 |
|
|
41 |
Other |
|
3 |
|
|
2 |
|
|
2 |
Total Music
Publishing |
$ |
250 |
|
$ |
229 |
|
$ |
219 |
Music Publishing revenue increased 9.2% (or 14.2% in constant
currency). The increase was driven by growth in digital and
performance revenue. Digital revenue increased 12.0% (or 15.5% in
constant currency) and streaming revenue increased 13.2% (or 16.8%
in constant currency), reflecting the continued growth in streaming
and timing of new digital deals. Digital revenue represented 59.6%
of total Music Publishing revenue versus 58.1% in the prior-year
quarter. Performance revenue increased due to continued growth from
bars, restaurants, concerts and live events. Mechanical revenue
remained flat on an as-reported basis, but increased in constant
currency. Synchronization revenue was lower on both an as-reported
basis and in constant currency, primarily due to lower commercial
licensing activity in the U.S. and the timing of legal
settlements.
Music Publishing operating income was $49 million compared to
$32 million in the prior-year quarter and operating margin
increased 5.6 percentage points to 19.6%. Music Publishing OIBDA
increased 33.3% to $72 million (or 38.5% in constant currency) and
OIBDA margin increased 5.2 percentage points to 28.8% from 23.6% in
the prior-year quarter (or increased 5.1 percentage points to 28.8%
from 23.7% in constant currency). Adjusted OIBDA increased 30.9% to
$72 million (or 35.8% in constant currency) and Adjusted OIBDA
margin increased 4.8 percentage points to 28.8% from 24.0% in the
prior-year quarter (or increased 4.6 percentage points to 28.8%
from 24.2% in constant currency). The increases in operating
income, OIBDA and Adjusted OIBDA were primarily due to strong
operating performance and the favorable impact of exchange
rates.
Financial details for the quarter can be found in the Company’s
current Quarterly Report on Form 10-Q for the period ended
December 31, 2022, filed today with the Securities and
Exchange Commission.
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 300
Entertainment, 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
Effective for the 2023 fiscal year, the Company’s fiscal year
was modified from a 52-53-week calendar, in which reporting periods
ended on the last Friday of the calendar quarter, to a reporting
calendar in which the reporting periods end on the last day of the
calendar quarter. The Company’s fiscal year will begin on October 1
and end on September 30 of each year. Prior to the start of the
2023 fiscal year, the Company maintained a 52-53 week fiscal year
ending on the last Friday in each reporting period. The fiscal year
ended September 30, 2022 included 53 weeks, with the additional
week falling in the fiscal quarter ended December 31, 2021.
Accordingly, the results of operations for the three months ended
December 31, 2021 reflect 14 weeks, or 98 days, compared to 92 days
for the three months ended December 31, 2022.
Figure 1.
Warner Music Group Corp. - Condensed Consolidated Statements of
Operations, Three Months Ended December 31, 2022 versus December
31, 2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Revenue |
$ |
1,488 |
|
|
$ |
1,614 |
|
|
-8 |
% |
Cost and
expenses: |
|
|
|
|
|
Cost of revenue |
|
(761 |
) |
|
|
(818 |
) |
|
-7 |
% |
Selling, general and
administrative expenses |
|
(440 |
) |
|
|
(497 |
) |
|
-11 |
% |
Amortization expense |
|
(63 |
) |
|
|
(60 |
) |
|
5 |
% |
Total costs and
expenses |
$ |
(1,264 |
) |
|
$ |
(1,375 |
) |
|
-8 |
% |
Net gain on divestiture |
|
41 |
|
|
|
— |
|
|
— |
% |
Operating
income |
$ |
265 |
|
|
$ |
239 |
|
|
11 |
% |
Interest expense, net |
|
(32 |
) |
|
|
(30 |
) |
|
7 |
% |
Other (expense) income,
net |
|
(61 |
) |
|
|
54 |
|
|
— |
% |
Income before income
taxes |
$ |
172 |
|
|
$ |
263 |
|
|
-35 |
% |
Income tax expense |
|
(48 |
) |
|
|
(75 |
) |
|
-36 |
% |
Net
income |
$ |
124 |
|
|
$ |
188 |
|
|
-34 |
% |
Less: Income attributable to
noncontrolling interest |
|
(2 |
) |
|
|
(1 |
) |
|
100 |
% |
Net income
attributable to Warner Music Group Corp. |
$ |
122 |
|
|
$ |
187 |
|
|
-35 |
% |
|
|
|
|
|
|
Net income per share
attributable to common stockholders: |
|
|
|
|
|
Class A – Basic and Diluted |
$ |
0.23 |
|
|
$ |
0.36 |
|
|
|
Class B – Basic and Diluted |
$ |
0.23 |
|
|
$ |
0.36 |
|
|
|
Figure 2.
Warner Music Group Corp. - Condensed Consolidated Balance Sheets at
December 31, 2022 versus September 30, 2022 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
December 31,2022 |
|
September 30,2022 |
|
% Change |
|
(unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and equivalents |
$ |
720 |
|
|
$ |
584 |
|
|
23 |
% |
Accounts receivable, net |
|
1,004 |
|
|
|
984 |
|
|
2 |
% |
Inventories |
|
102 |
|
|
|
108 |
|
|
-6 |
% |
Royalty advances expected to be recouped within one year |
|
405 |
|
|
|
372 |
|
|
9 |
% |
Prepaid and other current assets |
|
109 |
|
|
|
91 |
|
|
20 |
% |
Total current
assets |
$ |
2,340 |
|
|
$ |
2,139 |
|
|
9 |
% |
Royalty advances expected to
be recouped after one year |
|
546 |
|
|
|
503 |
|
|
9 |
% |
Property, plant and equipment,
net |
|
430 |
|
|
|
415 |
|
|
4 |
% |
Operating lease right-of-use
assets, net |
|
220 |
|
|
|
226 |
|
|
-3 |
% |
Goodwill |
|
1,951 |
|
|
|
1,920 |
|
|
2 |
% |
Intangible assets subject to
amortization, net |
|
2,266 |
|
|
|
2,239 |
|
|
1 |
% |
Intangible assets not subject
to amortization |
|
149 |
|
|
|
145 |
|
|
3 |
% |
Deferred tax assets, net |
|
29 |
|
|
|
29 |
|
|
— |
% |
Other assets |
|
198 |
|
|
|
212 |
|
|
-7 |
% |
Total
assets |
$ |
8,129 |
|
|
$ |
7,828 |
|
|
4 |
% |
Liabilities and
Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
220 |
|
|
$ |
268 |
|
|
-18 |
% |
Accrued royalties |
|
2,091 |
|
|
|
1,918 |
|
|
9 |
% |
Accrued liabilities |
|
477 |
|
|
|
457 |
|
|
4 |
% |
Accrued interest |
|
29 |
|
|
|
17 |
|
|
71 |
% |
Operating lease liabilities, current |
|
39 |
|
|
|
40 |
|
|
-3 |
% |
Deferred revenue |
|
327 |
|
|
|
423 |
|
|
-23 |
% |
Other current liabilities |
|
158 |
|
|
|
245 |
|
|
-36 |
% |
Total current
liabilities |
$ |
3,341 |
|
|
$ |
3,368 |
|
|
-1 |
% |
Long-term debt |
|
3,946 |
|
|
|
3,732 |
|
|
6 |
% |
Operating lease liabilities,
noncurrent |
|
234 |
|
|
|
241 |
|
|
-3 |
% |
Deferred tax liabilities,
net |
|
223 |
|
|
|
220 |
|
|
1 |
% |
Other noncurrent
liabilities |
|
103 |
|
|
|
99 |
|
|
4 |
% |
Total
liabilities |
$ |
7,847 |
|
|
$ |
7,660 |
|
|
2 |
% |
Equity: |
|
|
|
|
|
Class A common stock |
$ |
— |
|
|
$ |
— |
|
|
— |
% |
Class B common stock |
|
1 |
|
|
|
1 |
|
|
— |
% |
Additional paid-in
capital |
|
1,984 |
|
|
|
1,975 |
|
|
— |
% |
Accumulated deficit |
|
(1,439 |
) |
|
|
(1,477 |
) |
|
-3 |
% |
Accumulated other
comprehensive loss, net |
|
(276 |
) |
|
|
(347 |
) |
|
-20 |
% |
Total Warner Music
Group Corp. equity |
$ |
270 |
|
|
$ |
152 |
|
|
78 |
% |
Noncontrolling interest |
|
12 |
|
|
|
16 |
|
|
-25 |
% |
Total
equity |
|
282 |
|
|
|
168 |
|
|
68 |
% |
Total liabilities and
equity |
$ |
8,129 |
|
|
$ |
7,828 |
|
|
4 |
% |
Figure 3.
Warner Music Group Corp. - Summarized Statements of Cash Flows,
Three Months Ended December 31, 2022 versus December 31,
2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
(unaudited) |
|
(unaudited) |
Net cash provided by operating activities |
$ |
209 |
|
|
$ |
129 |
|
Net cash used in investing
activities |
|
(10 |
) |
|
|
(624 |
) |
Net cash (used in) provided by
financing activities |
|
(70 |
) |
|
|
448 |
|
Effect of foreign currency
exchange rates on cash and equivalents |
|
7 |
|
|
|
(2 |
) |
Net increase (decrease) in
cash and equivalents |
$ |
136 |
|
|
$ |
(49 |
) |
Figure 4.
Warner Music Group Corp. - Digital Revenue Summary, Three Months
Ended December 31, 2022 versus December 31, 2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Recorded
Music |
|
|
|
|
|
Streaming |
$ |
780 |
|
$ |
836 |
|
|
-7 |
% |
Downloads and Other Digital |
|
23 |
|
|
34 |
|
|
-32 |
% |
Total Recorded Music
Digital Revenue |
$ |
803 |
|
$ |
870 |
|
|
-8 |
% |
|
|
|
|
|
|
Music
Publishing |
|
|
|
|
|
Streaming |
$ |
146 |
|
$ |
129 |
|
|
13 |
% |
Downloads and Other Digital |
|
3 |
|
|
4 |
|
|
-25 |
% |
Total Music Publishing
Digital Revenue |
$ |
149 |
|
$ |
133 |
|
|
12 |
% |
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
Streaming |
$ |
926 |
|
$ |
965 |
|
|
-4 |
% |
Downloads and Other Digital |
|
26 |
|
|
38 |
|
|
-32 |
% |
Intersegment Eliminations |
|
— |
|
|
(1 |
) |
|
-100 |
% |
Total Digital
Revenue |
$ |
952 |
|
$ |
1,002 |
|
|
-5 |
% |
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 Months Ended December 31, 2022 versus December 31,
2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Net income attributable to Warner Music Group
Corp. |
$ |
122 |
|
|
$ |
187 |
|
|
-35 |
% |
Income attributable to
noncontrolling interest |
|
2 |
|
|
|
1 |
|
|
100 |
% |
Net
income |
$ |
124 |
|
|
$ |
188 |
|
|
-34 |
% |
Income tax expense |
|
48 |
|
|
|
75 |
|
|
-36 |
% |
Income including
income taxes |
$ |
172 |
|
|
$ |
263 |
|
|
-35 |
% |
Other expense (income),
net |
|
61 |
|
|
|
(54 |
) |
|
— |
% |
Interest expense, net |
|
32 |
|
|
|
30 |
|
|
7 |
% |
Operating
income |
$ |
265 |
|
|
$ |
239 |
|
|
11 |
% |
Amortization expense |
|
63 |
|
|
|
60 |
|
|
5 |
% |
Depreciation expense |
|
21 |
|
|
|
21 |
|
|
— |
% |
OIBDA |
$ |
349 |
|
|
$ |
320 |
|
|
9 |
% |
Operating income
margin |
|
17.8 |
% |
|
|
14.8 |
% |
|
|
OIBDA
margin |
|
23.5 |
% |
|
|
19.8 |
% |
|
|
Figure 6.
Warner Music Group Corp. - Reconciliation of Segment Operating
Income to OIBDA, Three Months Ended December 31, 2022 versus
December 31, 2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
% Change |
|
(unaudited) |
|
(unaudited) |
|
|
Total WMG operating income – GAAP |
$ |
265 |
|
|
$ |
239 |
|
|
11 |
% |
Depreciation and amortization
expense |
|
(84 |
) |
|
|
(81 |
) |
|
4 |
% |
Total WMG
OIBDA |
$ |
349 |
|
|
$ |
320 |
|
|
9 |
% |
Operating income
margin |
|
17.8 |
% |
|
|
14.8 |
% |
|
|
OIBDA
margin |
|
23.5 |
% |
|
|
19.8 |
% |
|
|
|
|
|
|
|
|
Recorded Music
operating income – GAAP |
$ |
283 |
|
|
$ |
276 |
|
|
3 |
% |
Depreciation and amortization
expense |
|
(54 |
) |
|
|
(54 |
) |
|
— |
% |
Recorded Music
OIBDA |
$ |
337 |
|
|
$ |
330 |
|
|
2 |
% |
Recorded Music
operating income margin |
|
22.8 |
% |
|
|
19.9 |
% |
|
|
Recorded Music OIBDA
margin |
|
27.2 |
% |
|
|
23.8 |
% |
|
|
|
|
|
|
|
|
Music Publishing
operating income – GAAP |
$ |
49 |
|
|
$ |
32 |
|
|
53 |
% |
Depreciation and amortization
expense |
|
(23 |
) |
|
|
(22 |
) |
|
5 |
% |
Music Publishing
OIBDA |
$ |
72 |
|
|
$ |
54 |
|
|
33 |
% |
Music Publishing
operating income margin |
|
19.6 |
% |
|
|
14.0 |
% |
|
|
Music Publishing OIBDA
margin |
|
28.8 |
% |
|
|
23.6 |
% |
|
|
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 Months Ended December 31, 2022 versus December 31,
2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
$ |
265 |
|
|
$ |
283 |
|
|
$ |
49 |
|
|
$ |
349 |
|
|
$ |
337 |
|
|
$ |
72 |
|
|
$ |
124 |
|
Factors Affecting
Comparability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other Transformation Related Costs |
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
Gain on Divestiture |
|
(41 |
) |
|
|
(41 |
) |
|
|
— |
|
|
|
(41 |
) |
|
|
(41 |
) |
|
|
— |
|
|
|
(41 |
) |
Non-Cash Stock-Based Compensation and Other Related Costs |
|
15 |
|
|
|
3 |
|
|
|
— |
|
|
|
15 |
|
|
|
3 |
|
|
|
— |
|
|
|
15 |
|
Adjusted Results |
$ |
251 |
|
|
$ |
245 |
|
|
$ |
49 |
|
|
$ |
335 |
|
|
$ |
299 |
|
|
$ |
72 |
|
|
$ |
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Margin |
|
16.9 |
% |
|
|
19.8 |
% |
|
|
19.6 |
% |
|
|
22.5 |
% |
|
|
24.1 |
% |
|
|
28.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended December 31, 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 |
$ |
239 |
|
|
$ |
276 |
|
|
$ |
32 |
|
|
$ |
320 |
|
|
$ |
330 |
|
|
$ |
54 |
|
|
$ |
188 |
|
Factors Affecting
Comparability: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and Other Transformation Related Costs |
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
Non-Cash Stock-Based Compensation and Other Related Costs |
|
24 |
|
|
|
6 |
|
|
|
1 |
|
|
|
24 |
|
|
|
6 |
|
|
|
1 |
|
|
|
24 |
|
Adjusted Results |
$ |
274 |
|
|
$ |
282 |
|
|
$ |
33 |
|
|
$ |
355 |
|
|
$ |
336 |
|
|
$ |
55 |
|
|
$ |
223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Margin |
|
17.0 |
% |
|
|
20.3 |
% |
|
|
14.4 |
% |
|
|
22.0 |
% |
|
|
24.2 |
% |
|
|
24.0 |
% |
|
|
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
Months Ended December 31, 2022 versus December 31, 2021 As Reported
and Constant Currency |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
For the Three Months EndedDecember 31, 2021 |
|
As reported |
|
As reported |
|
Constant |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
U.S. revenue |
|
|
|
|
|
Recorded Music |
$ |
539 |
|
|
$ |
608 |
|
|
$ |
608 |
|
Music Publishing |
|
133 |
|
|
|
115 |
|
|
|
115 |
|
International revenue |
|
|
|
|
|
Recorded Music |
|
700 |
|
|
|
778 |
|
|
|
704 |
|
Music Publishing |
|
117 |
|
|
|
114 |
|
|
|
104 |
|
Intersegment eliminations |
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Total
Revenue |
$ |
1,488 |
|
|
$ |
1,614 |
|
|
$ |
1,530 |
|
|
|
|
|
|
|
Revenue by
Segment: |
|
|
|
|
|
Recorded Music |
|
|
|
|
|
Digital |
$ |
803 |
|
|
$ |
870 |
|
|
$ |
833 |
|
Physical |
|
133 |
|
|
|
195 |
|
|
|
181 |
|
Total Digital and Physical |
|
936 |
|
|
|
1,065 |
|
|
|
1,014 |
|
Artist services and expanded-rights |
|
206 |
|
|
|
232 |
|
|
|
215 |
|
Licensing |
|
97 |
|
|
|
89 |
|
|
|
83 |
|
Total Recorded
Music |
|
1,239 |
|
|
|
1,386 |
|
|
|
1,312 |
|
Music Publishing |
|
|
|
|
|
Performance |
|
45 |
|
|
|
38 |
|
|
|
35 |
|
Digital |
|
149 |
|
|
|
133 |
|
|
|
129 |
|
Mechanical |
|
14 |
|
|
|
14 |
|
|
|
12 |
|
Synchronization |
|
39 |
|
|
|
42 |
|
|
|
41 |
|
Other |
|
3 |
|
|
|
2 |
|
|
|
2 |
|
Total Music
Publishing |
|
250 |
|
|
|
229 |
|
|
|
219 |
|
Intersegment eliminations |
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Total
Revenue |
$ |
1,488 |
|
|
$ |
1,614 |
|
|
$ |
1,530 |
|
|
|
|
|
|
|
Total Digital
Revenue |
$ |
952 |
|
|
$ |
1,002 |
|
|
$ |
961 |
|
Figure 9.
Warner Music Group Corp. - OIBDA and Adjusted OIBDA by Segment,
Three Months Ended December 31, 2022 versus December 31, 2021 As
Reported and Constant Currency |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
For the Three Months EndedDecember 31, 2021 |
|
As reported |
|
As reported |
|
Constant |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Total WMG OIBDA |
$ |
349 |
|
|
$ |
320 |
|
|
$ |
300 |
|
OIBDA margin |
|
23.5 |
% |
|
|
19.8 |
% |
|
|
19.6 |
% |
Total WMG Adjusted OIBDA |
$ |
335 |
|
|
$ |
355 |
|
|
$ |
335 |
|
Adjusted OIBDA margin |
|
22.5 |
% |
|
|
22.0 |
% |
|
|
21.9 |
% |
|
|
|
|
|
|
Recorded Music OIBDA |
$ |
337 |
|
|
$ |
330 |
|
|
$ |
312 |
|
Recorded Music OIBDA
margin |
|
27.2 |
% |
|
|
23.8 |
% |
|
|
23.8 |
% |
Recorded Music Adjusted
OIBDA |
$ |
299 |
|
|
$ |
336 |
|
|
$ |
318 |
|
Recorded Music Adjusted OIBDA
margin |
|
24.1 |
% |
|
|
24.2 |
% |
|
|
24.2 |
% |
|
|
|
|
|
|
Music Publishing OIBDA |
$ |
72 |
|
|
$ |
54 |
|
|
$ |
52 |
|
Music Publishing OIBDA
margin |
|
28.8 |
% |
|
|
23.6 |
% |
|
|
23.7 |
% |
Music Publishing Adjusted
OIBDA |
$ |
72 |
|
|
$ |
55 |
|
|
$ |
53 |
|
Music Publishing Adjusted
OIBDA margin |
|
28.8 |
% |
|
|
24.0 |
% |
|
|
24.2 |
% |
Free Cash Flow
Our definition of Free Cash Flow is 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 10.
Warner Music Group Corp. - Calculation of Free Cash Flow, Three
Months Ended December 31, 2022 versus December 31,
2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31, 2022 |
|
For the Three Months EndedDecember 31, 2021 |
|
(unaudited) |
|
(unaudited) |
Net cash provided by operating activities |
$ |
209 |
|
$ |
129 |
Less: Capital
expenditures |
|
21 |
|
|
34 |
|
|
|
|
Free Cash
Flow |
$ |
188 |
|
$ |
95 |
Adjusted EBITDA
Adjusted EBITDA is equivalent to “EBITDA” as defined in our
Revolving Credit Facility and our 2020 indenture and substantially
similar to “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
11. Warner Music Group Corp. - Reconciliation of Net Income to
Adjusted EBITDA, Three and Twelve Months Ended December 31, 2022
versus December 31, 2021 |
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months EndedDecember 31,
2022 |
|
For the Three Months EndedDecember 31,
2021 |
|
For the Twelve Months EndedDecember 31,
2022 |
|
For the Twelve Months EndedDecember 31,
2021 |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
|
(unaudited) |
Net Income |
$ |
124 |
|
|
$ |
188 |
|
|
$ |
491 |
|
|
$ |
396 |
|
Income tax expense |
|
48 |
|
|
|
75 |
|
|
|
158 |
|
|
|
189 |
|
Interest expense, net |
|
32 |
|
|
|
30 |
|
|
|
127 |
|
|
|
121 |
|
Depreciation and
amortization |
|
84 |
|
|
|
81 |
|
|
|
342 |
|
|
|
316 |
|
Loss on extinguishment of debt
(a) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
Net gains on divestitures and
sale of securities (b) |
|
(41 |
) |
|
|
— |
|
|
|
(32 |
) |
|
|
(3 |
) |
Restructuring costs (c) |
|
3 |
|
|
|
4 |
|
|
|
21 |
|
|
|
30 |
|
Net hedging and foreign
exchange losses (gains) (d) |
|
61 |
|
|
|
(41 |
) |
|
|
(93 |
) |
|
|
(78 |
) |
Transaction costs (e) |
|
— |
|
|
|
7 |
|
|
|
3 |
|
|
|
17 |
|
Business optimization expenses
(f) |
|
15 |
|
|
|
14 |
|
|
|
55 |
|
|
|
48 |
|
Non-cash stock-based
compensation expense (g) |
|
13 |
|
|
|
23 |
|
|
|
29 |
|
|
|
62 |
|
Other non-cash charges
(h) |
|
2 |
|
|
|
(11 |
) |
|
|
34 |
|
|
|
8 |
|
Pro forma impact of cost
savings initiatives and specified transactions (i) |
|
9 |
|
|
|
19 |
|
|
|
27 |
|
|
|
79 |
|
Adjusted
EBITDA |
$ |
350 |
|
|
$ |
389 |
|
|
$ |
1,162 |
|
|
$ |
1,207 |
|
______________________________________
(a) |
Reflects loss on extinguishment of debt, primarily including tender
fees and unamortized deferred financing costs. |
(b) |
Reflects net gains on sale of
securities and divestitures. |
(c) |
Reflects severance costs and
other restructuring related expenses. |
(d) |
Reflects unrealized (gains)
losses due to foreign exchange on our Euro-denominated debt, losses
(gains) from hedging activities and intercompany transactions. |
(e) |
Reflects mainly transaction
related costs and mark-to-market adjustments of an earn-out
liability related to a transaction in 2021. |
(f) |
Reflects costs associated with
our transformation initiatives and IT system updates, which
includes costs of $10 million and $41 million related to our
finance transformation and other related costs for the three and
twelve months ended December 31, 2022, respectively, as well as $10
million and $37 million for the three and twelve months ended
December 31, 2021, respectively. |
(g) |
Reflects non-cash stock-based
compensation expense related to the Omnibus Incentive Plan and the
Warner Music Group Corp. Senior Management Free Cash Flow
Plan. |
(h) |
Reflects non-cash activity,
including the unrealized losses (gains) on the mark-to-market
adjustment of equity investments, investment losses (gains),
mark-to-market adjustments of an earn-out liability in 2022 and
other non-cash impairments. |
(i) |
Reflects expected savings
resulting from transformation initiatives and the pro forma impact
of certain specified transactions for the three and twelve months
ended December 31, 2022. 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 $9 million decrease in the twelve months ended
December 31, 2022 Adjusted EBITDA, primarily driven by the shift in
the timing of the financial transformation initiative. |
|
|
Media Contact: |
Investor Contact: |
James
Steven |
Kareem Chin |
(212)
275-2213 |
|
James.Steven@wmg.com |
Investor.Relations@wmg.com |
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