Second Quarter 2020
Highlights
- Revenues were $223.4 million as compared to $268.9 million in
the prior year quarter reflecting the timing of the Company’s
large-scale event in Saudi Arabia; Revenues reached a record $514.4
million year-to-date, representing 14% growth from the prior year
period
- Operating income was $55.7 million as compared to $17.1 million
in the prior year quarter
- Adj. OIBDA1 increased to $73.5 million from $34.6 million in
the prior year quarter
- Free Version of WWE Network was announced on June 1, unlocking
a portion of WWE’s content library to expand reach and engagement
of its direct-to-consumer streaming service for all fans
- WWE Network average paid subscribers2 declined 1.5% to 1.66
million while ending paid subscribers increased 6% to 1.69
million
- Digital video views increased 10% to a record 9.9 billion and
hours consumed increased 15% to a record 374 million across digital
and social media platforms3
- eCommerce revenues nearly doubled to $12.6 million,
substantially offsetting the loss of venue merchandise sales with
76 fewer events in the quarter
COVID-19 Actions and Business
Outlook
- Due to COVID-19 and related government-mandated impacts on WWE,
the Company continued its various short-term cost reductions and
cash flow improvement actions. (See first quarter 2020 earnings
release). These actions contributed to WWE’s enhanced liquidity,
which reached $548 million in cash and short-term investments as of
June 30, 2020
- The Company is continuing to adapt its business to the changing
environment with a focus on enhancing the production of content and
furthering fan engagement
- Management may resume its opportunistic acquisition of stock
under the Company’s $500 million share repurchase program, subject
to WWE’s business outlook and liquidity as well as whether share
repurchases compare favorably to other capital allocation
alternatives
- Management continues to believe the Company’s growth prospects
remain strong and that WWE is well positioned to take full
advantage of the changing media landscape and increasing value of
live sports rights over the longer term (See COVID-19 Actions and
Business Outlook on page 7)
WWE (NYSE: WWE) today announced financial results for its second
quarter ended June 30, 2020.
“Our second quarter financial performance was strong and
demonstrated our ability to respond to the challenges posed by
COVID-19,” said Vince McMahon, WWE Chairman & CEO. “We continue
to adapt our business to the changing environment, focusing on the
development of new content for global distribution platforms and
increasing audience engagement to drive growth and value for our
shareholders.”
Frank Riddick, interim Chief Financial Officer, added “In the
quarter, we delivered revenue of $223 million and Adjusted OIBDA of
$73.5 million as we continued to offset the impact of cancelled
events by reducing costs. Our cash flow remains strong, and we
believe we have the capital resources to deliver on our strategic
initiatives and growth opportunities.”
Second-Quarter Consolidated
Results
Revenues decreased 17% to $223.4 million from $268.9
million in the prior year quarter primarily driven by decreased
sales of tickets and merchandise that resulted from the
cancellation, postponement and relocation of live events due to
public health concerns related to the COVID-19 outbreak. Media
segment revenue increased modestly as the escalation of core
content rights fees was substantially offset by the unfavorable
timing of the Company’s large-scale event in Saudi Arabia (held in
February 2020 vs. June 2019).
Operating Income was $55.7 million as compared to $17.1
million in the prior year quarter, primarily due to a decline in
operating expenses that reflected lower content-related production
and event costs, short-term cost reductions implemented as a result
of the COVID-19 outbreak and, to a lesser extent, a year-over-year
reduction in accrued management incentive compensation. The decline
in operating expenses was partially offset by a decrease in revenue
(as described above). The Company’s Operating income margin
increased to 25% from 6% in the prior year quarter.
Adjusted OIBDA (which excludes stock compensation)
increased to $73.5 million from $34.6 million in the prior year
quarter. The Company’s Adjusted OIBDA margin increased to 33% from
13%.
Net Income reached $43.8 million, or $0.52 per diluted
share, from $10.4 million, or $0.11 per diluted share, in the
second quarter 2019, primarily reflecting improved operating
performance. Current period results also included $7.7 million in
an unrealized gain related to a certain equity investment as well
as a lower effective tax rate, which were partially offset by the
impact of the finance lease that commenced in July 2019 related to
the Company’s new headquarters. Excluding the impact of an
unrealized gain on a certain equity investment, Adjusted Net
Income4 was $37.7 million, or $0.45 per diluted share.
Effective Tax Rate decreased to 20% from 25% in the prior
year quarter, primarily driven by increased deductibility of
foreign derived intangible income.
Cash flows generated by operating activities reached
$74.8 million as compared to $7.6 million of cash used in operating
activities in the prior year quarter driven by stronger operating
performance as well as improved working capital reflecting the
timing of collections in the prior year quarter.
Free Cash Flow totaled $67.7 million as compared to a
$27.5 million use of cash in the second quarter 2019 primarily due
to the change in operating cash flow and, to a lesser extent, a
reduction in capital expenditures.5
Cash, cash equivalents and short-term investments were
$548 million as of June 30, 2020, which includes $200 million in
cash the Company borrowed under its revolving line of credit during
the second quarter 2020.
Return of Capital to
Shareholders
For the second quarter 2020, the Company paid $9.3 million in
dividends to shareholders.
Management may resume the Company’s $500 million share
repurchase program, which was temporarily suspended in April 2020.
WWE share repurchases under the program will be executed
opportunistically, i.e., when the repurchase price is below WWE’s
intrinsic value as conservatively estimated by management. Any
repurchase activity will be subject to WWE’s business outlook and
liquidity as well as whether share repurchases compare favorably to
other capital allocation alternatives.
The schedule below reflects WWE’s performance by operating
segment (in millions):1
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net Revenues:
Media
$
200.1
$
197.0
$
456.7
$
332.4
Live Events
1.0
48.8
18.5
75.0
Consumer Products
22.3
23.1
39.2
43.9
Total Net Revenues
$
223.4
$
268.9
$
514.4
$
451.3
Operating Income (Loss):
Media
$
81.6
$
26.9
$
170.9
$
43.2
Live Events
(4.5)
12.4
(7.7)
12.2
Consumer Products
7.6
5.2
10.5
10.2
Corporate
(29.0)
(27.4)
(64.7)
(55.3)
Total Operating Income
$
55.7
$
17.1
$
109.0
$
10.3
Adjusted OIBDA:
Media
$
90.5
$
37.5
$
193.1
$
66.0
Live Events
(4.2)
13.3
(6.8)
14.1
Consumer Products
8.1
6.2
11.9
12.2
Corporate
(20.9)
(22.4)
(47.4)
(45.3)
Total Adjusted OIBDA
$
73.5
$
34.6
$
150.8
$
47.0
Basis of Presentation
For the second quarter of 2020, net income included the impact
of an unrealized gain of $7.7 million related to the recognition of
an upward mark-to-market adjustment on a certain equity investment
and $6.5 million related to the finance lease for the Company’s new
headquarters, the latter of which is reflected in both interest and
depreciation and amortization expense. For the six-month period
ended June 30, 2020, net income included $12.9 million related to
the finance lease for the Company’s new headquarters as well as a
net loss of $3.8 million related to certain equity investments,
which included $11.5 million of impairment charges partially offset
by an unrealized holding gain of $7.7 million. As the underlying
market value of our marketable equity investments fluctuate, WWE is
exposed to future earnings volatility to the extent WWE continues
to hold these investments. A reconciliation of Net Income to
Adjusted Net Income for the three and six-month periods ended June
30, 2020 and 2019 can be found in the supplemental schedule on page
14 of this release.
Results by Operating
Segment
Media
Revenues were $200.1 million as compared to $197.0
million in the prior year quarter, as the escalation of core
content rights fees, primarily due to the renewal of the Company’s
domestic distribution agreements for its flagship programs, Raw and
SmackDown, was largely offset by the timing of the Company’s
large-scale international event, Super ShowDown (held in February
2020 vs. June 2019). The timing of this event accounted for
declines in Other media and Advertising and sponsorship
revenues.
WWE Network’s average paid subscribers declined 1.5% to 1.66
million while ending paid subscribers increased 6% to 1.69 million,
marking the first quarterly increase since the fourth quarter
2018.
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Revenues:
Network (including pay-per-view)
$
49.4
$
51.8
$
92.9
$
98.8
Core content rights fees 6
132.9
69.0
266.1
137.1
Advertising and sponsorship
13.3
18.9
30.7
29.8
Other 7
4.5
57.3
67.0
66.7
Total Revenues
$
200.1
$
197.0
$
456.7
$
332.4
Operating income increased by $54.7 million to $81.6
million primarily due to a reduction in operating expenses.
Adjusted OIBDA increased to $90.5 million as compared to
$37.5 million in the prior year quarter.
Key Highlights: WWE continued to produce its flagship
programming without interruption, created original content and
further developed its direct-to-consumer service, WWE Network.
During the quarter, the Company produced more than 600 hours of
content for its television, streaming and social/ digital
platforms. Monday Night Raw and NXT ranked as the highest-rated and
third highest-rated programs, respectively, on USA Network. The
Company also continued to develop new original content and expand
its reach across platforms. On television, WWE completed its fifth
season of Total Bellas, with average viewership increasing 9% to
nearly 1 million viewers per episode,8 and announced its sixth
season to premier on E! in Fall 2020. Building on the previously
announced partnership to air five “Biography” documentaries
featuring legendary WWE talent, WWE and A&E announced a new
series The Quest for Lost WWE Treasures, featuring WWE’s Stephanie
McMahon and Paul Levesque. WWE also increased its programming
presence on streaming services, recently announcing the
availability of more than 100 hours of library content on the
Peacock streaming service (August 2020). On WWE Network, the
Company created new content highlighted by the critically acclaimed
series, Undertaker: The Last Ride, which was among the most watched
originals on WWE Network. Engagement on the streaming service, as
measured by video views, increased 66% over the prior year period.
The Company capitalized on the favorable trend to launch the Free
Version of WWE Network on June 1, unlocking a portion of its
content library to provide fans the opportunity to experience
premium WWE content. The Company also made progress introducing
localized pricing in select international markets and in developing
the network’s advertising capabilities.
Live Events
Revenues declined to $1.0 million from $48.8 million in
the prior year quarter primarily due to the absence of live events
and a corresponding decrease in ticket sales in North American and
international markets. The government mandated cancellation and/ or
relocation of events contributed to the staging of 53 fewer events
in North America and 23 fewer events in international markets.
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Revenues:
North American ticket sales
$
—
$
33.6
$
15.2
$
57.7
International ticket sales
—
9.5
0.2
9.7
Advertising and sponsorship
0.3
0.8
0.4
1.2
Other 9
0.7
4.9
2.7
6.4
Total Revenues
$
1.0
$
48.8
$
18.5
$
75.0
Operating income reflected a loss of $4.5 million as
compared to income of $12.4 million in the prior year quarter, as
the decrease in North America and international ticket sales
(described above) was partially offset by a reduction in
event-related expenses.
Adjusted OIBDA reflected a loss of $4.2 million as
compared to income of $13.3 million in the prior year quarter.
Key Highlights: WWE’s ability to stage live events before
ticketed audiences continued to be impacted by government mandates
related to COVID-19 and public health concerns about in-person
gatherings. Despite the challenging environment, WWE displayed its
creativity throughout the quarter as the Company adapted its
business model to continue to safely stage in-ring performances.
Supporting this achievement, the Company established extensive
safety measures to protect the health and well-being of its talent
and employees. As a result, WWE was among the very few major sports
properties to hold live performances and produce new content
throughout the quarter, including its flagship programs, Raw and
SmackDown, and its premier annual event, WrestleMania.
Consumer Products
Revenues declined to $22.3 million from $23.1 million in
the prior year quarter reflecting lower sales of merchandise at the
Company’s live event venues driven by the absence of all
ticketed-audience events in the quarter (as described above).
Increased sales at the Company’s eCommerce site, WWE Shop,
substantially offset the absence of venue merchandise sales.
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Revenues:
Consumer product licensing
$
9.7
$
9.4
$
17.4
$
18.8
eCommerce
12.6
6.6
18.6
13.2
Venue merchandise
—
7.1
3.2
11.9
Total Revenues
$
22.3
$
23.1
$
39.2
$
43.9
Operating income was $7.6 million as compared to $5.2
million in the prior year quarter as higher sales of merchandise at
the Company’s e-commerce site, WWE Shop, and lower operating
expenses more than offset the decrease of venue-based merchandise
sales resulting from the absence of events.
Adjusted OIBDA was $8.1 million as compared to $6.2
million in the prior year quarter.
Key Highlights: During the quarter, the growth of WWE’s
e-commerce business was supported by the introduction and redesign
of six new title belts, such as the Rock Brahma Bull title and the
Triple H Signature Series title. Royalties from the sale of
licensed console and mobile games continued to benefit from recent
industry growth trends. Video game revenue reflected the licensing
of WWE Superstars and IP for integration into popular titles,
including The King of Fighters All-Star. Growth in the Company’s
mobile game portfolio was led by WWE SuperCard and WWE Champions,
which both generated revenue gains of more than 15% from the prior
year quarter. The Company plans to expand its game portfolio with
the launch of an arcade style game, WWE 2K Battlegrounds, in the
Fall of 2020.
COVID-19 Actions and Business
Outlook10
The spread of COVID-19 and related government mandates have
impacted WWE’s business as the Company has been directed to cancel,
postpone or relocate its live events beginning in mid-March. To
mitigate further potential risks to the Company’s financial
performance, management has implemented a comprehensive set of
short-term cost reductions and cash flow improvement actions. To
enhance WWE’s liquidity, management deferred spending on the
Company’s new headquarters, temporarily suspended the repurchase of
stock under our $500 million program and borrowed $200 million from
our revolving credit facility. For 2020, the Company reduced
capital expenditures by approximately $140 million, and now
estimates total capital expenditures of $40 - $50 million for the
year.
The Company is continuing to adapt its business to the changing
environment with a focus on enhancing the production of content and
furthering fan engagement. Currently, it is evaluating the
personnel requirements to meet these objectives as well as
potential investments to support our long-term growth strategy. As
the company drives further innovation, management intends to
demonstrate financial discipline, balancing its near-term
performance and long-term growth objectives.
The Company remains unable to quantify the potential impact of
COVID-19 on its business, but the financial impact to the Company
may be material. Accordingly, the Company previously withdrew its
full year 2020 guidance and based on sustained economic
uncertainties, is not reinstating guidance at this time. Management
continues to believe the Company’s growth prospects remain strong
and that WWE is well positioned to take full advantage of the
changing media landscape and increasing value of live sports rights
over the longer term.
Notes
- The definition of Adjusted OIBDA can be found in the Non-GAAP
Measures section of the release on pages 8-9. A reconciliation of
three and six months ended June 30, 2020 and 2019 Operating Income
to Adjusted OIBDA can be found in the Supplemental Information in
this release on page 15
- Average paid subscribers are calculated based on the arithmetic
daily mean over the relevant period, and may differ substantially
from paid subscribers at the end of any period due to the timing of
paid subscriber additions and losses
- Consumption includes videos viewed on third party (Facebook,
YouTube, Twitter, Instagram, Snapchat, TikTok, Twitch, etc.) and
WWE platforms (WWE.com and WWE App, including the Free Version of
WWE Network)
- A reconciliation of three and six months ended June 30, 2020
and 2019 Net Income to Adjusted Net Income can be found in the
Supplemental Information in this release on page 14
- A reconciliation of three and six months ended June 30, 2020
and 2019 Free Cash Flow to Net cash provided by operating
activities can be found in the Supplemental Information in this
release on page 16
- Core content rights fees consist primarily of licensing
revenues earned from the distribution of our flagship programs, Raw
and SmackDown, as well as our NXT programming, through global
broadcast, pay television and digital platforms
- Other forms of media monetization reflect revenues earned from
the distribution of other WWE content, including, but not limited
to, certain live in-ring programming content in international
markets, scripted, reality and other programming, as well as
theatrical and direct-to-home video releases
- Television viewership data based on Live+7 basis for Average
Viewers P2+ for season 4, which aired in 1Q 2019, and season 5,
which aired in 2Q 2020
- Other Live Events includes revenue from the sale of travel
packages associated with the Company’s global live events, and
commissions earned through secondary ticketing as well as revenue
from events for which the Company receives a fixed fee
- The Company’s business model and expected results will continue
to be subject to significant execution and other risks, including
risks relating to the impact of the COVID-19 outbreak on WWE’s
business, results of operations and financial condition, entering,
maintaining and renewing major distribution agreements,
uncertainties associated with international markets and risks
inherent in large live events, and other risk factors previously
disclosed in our annual report on Form 10-K for the year ended
December 31, 2019 and supplemented in our Current Report on Form
8-K filed with the SEC on March 17, 2020 and further supplemented
in Part II, Item 1A, Risk Factors, in our quarterly report on Form
10-Q for the period ended June 30, 2020 filed with the SEC on July
30, 2020
Non-GAAP Measures
The Company defines Adjusted OIBDA as operating income
excluding depreciation and amortization, stock-based compensation
expense, certain impairment charges and other non-recurring
material items that otherwise would impact the comparability of
results between periods. Adjusted OIBDA includes amortization and
depreciation expenses directly related to supporting the operations
of our segments, including content production asset amortization,
depreciation and amortization of costs related to content delivery
and technology assets utilized for the WWE Network, as well as
amortization of right-of-use assets related to finance leases of
equipment used to produce and broadcast our live events. The
Company believes the presentation of Adjusted OIBDA is relevant and
useful for investors because it allows them to view the Company’s
segment performance in the same manner as the primary method used
by management to evaluate segment performance and to make decisions
regarding the allocation of resources. Additionally, the Company
believes that Adjusted OIBDA is a primary measure used by media
investors, analysts and peers for comparative purposes.
Adjusted OIBDA is a non-GAAP financial measure and may be
different than similarly titled non-GAAP financial measures used by
other companies. WWE views operating income as the most directly
comparable GAAP measure. Adjusted OIBDA (and other non-GAAP
measures such as Adjusted Operating Income, Adjusted Net
Income and Adjusted EPS which are defined as the GAAP
measures excluding certain nonrecurring, material items that impact
the comparability between periods) should not be considered in
isolation from, or as a substitute for, operating income, net
income, EPS or other GAAP measures, such as operating cash flow, as
an indicator of operating performance or liquidity.
The Company defines Free Cash Flow as net cash provided
by operating activities less cash used for capital expenditures.
WWE views net cash provided by operating activities as the most
directly comparable GAAP measure. Although it is not a recognized
measure of liquidity under U.S. GAAP, Free Cash Flow provides
useful information regarding the amount of cash WWE’s continuing
business generates after capital expenditures and is available for
reinvesting in the business, debt service, and payment of
dividends.
Additional Information
Additional business metrics are made available to investors on
the corporate website - corporate.wwe.com/investors. Note: As previously
announced WWE will host a conference call at 5:00 p.m. ET on July
30th to discuss the Company's earnings results for the second
quarter of 2020. All interested parties are welcome to listen to a
live web cast that will be hosted through the Company’s website at
corporate.wwe.com/investors.
Participants can access the conference call by dialing
1-855-200-4993 (toll free) or 1-323-794-2092 from outside the U.S.
(conference ID for both lines: 1180126). Please reserve a line 5-10
minutes prior to the start time of the conference call.
The earnings presentation referenced during the call will be
made available on July 30, 2020 at corporate.wwe.com/investors. A replay of the call
will be available approximately two hours after the conference call
concludes and can be accessed on the Company’s website.
About WWE
WWE, a publicly traded company (NYSE: WWE), is an integrated
media organization and recognized leader in global entertainment.
The Company consists of a portfolio of businesses that create and
deliver original content 52 weeks a year to a global audience. WWE
is committed to family friendly entertainment on its television
programming, pay-per-view, digital media and publishing platforms.
WWE’s TV-PG, family-friendly programming can be seen in more than
800 million homes worldwide in 28 languages. WWE Network, the
first-ever 24/7 over-the-top premium network that includes all live
pay-per-views, scheduled programming and a massive video-on-demand
library, is currently available in more than 180 countries. The
Company is headquartered in Stamford, Conn., with offices in New
York, Los Angeles, London, Mexico City, Mumbai, Shanghai,
Singapore, Dubai, Munich and Tokyo.
Additional information on WWE (NYSE: WWE) can be found at
wwe.com and corporate.wwe.com. For information on our global
activities, go to http://www.wwe.com/worldwide/.
Trademarks: All WWE programming,
talent names, images, likenesses, slogans, wrestling moves,
trademarks, logos and copyrights are the exclusive property of WWE
and its subsidiaries. All other trademarks, logos and copyrights
are the property of their respective owners.
Forward-Looking Statements: This
press release contains forward-looking statements pursuant to the
safe harbor provisions of the Securities Litigation Reform Act of
1995, which are subject to various risks and uncertainties. These
risks and uncertainties include, without limitation, risks relating
to: the impact of the COVID-19 outbreak on our business, results of
operations and financial condition; entering, maintaining and
renewing major distribution agreements; a rapidly evolving media
landscape; WWE Network (including the risk that we are unable to
attract, retain and renew subscribers); our need to continue to
develop creative and entertaining programs and events; the
possibility of a decline in the popularity of our brand of sports
entertainment; the continued importance of key performers and the
services of Vincent K. McMahon; possible adverse changes in the
regulatory atmosphere and related private sector initiatives; the
highly competitive, rapidly changing and increasingly fragmented
nature of the markets in which we operate and greater financial
resources or marketplace presence of many of our competitors;
uncertainties associated with international markets including
possible disruptions and reputational risks; our difficulty or
inability to promote and conduct our live events and/or other
businesses if we do not comply with applicable regulations; our
dependence on our intellectual property rights, our need to protect
those rights, and the risks of our infringement of others’
intellectual property rights; the complexity of our rights
agreements across distribution mechanisms and geographical areas;
potential substantial liability in the event of accidents or
injuries occurring during our physically demanding events including
without limitation, claims alleging traumatic brain injury; large
public events as well as travel to and from such events; our
feature film business; our expansion into new or complementary
businesses and/or strategic investments; our computer systems and
online operations; privacy norms and regulations; a possible
decline in general economic conditions and disruption in financial
markets; our accounts receivable; our indebtedness including our
convertible notes; litigation; our potential failure to meet market
expectations for our financial performance, which could adversely
affect our stock; Vincent K. McMahon exercises control over our
affairs, and his interests may conflict with the holders of our
Class A common stock; a substantial number of shares are eligible
for sale by the McMahons and the sale, or the perception of
possible sales, of those shares could lower our stock price; and
the volatility of our Class A common stock. In addition, our
dividend is dependent on a number of factors, including, among
other things, our liquidity and historical and projected cash flow,
strategic plan (including alternative uses of capital), our
financial results and condition, contractual and legal restrictions
on the payment of dividends (including under our revolving credit
facility), general economic and competitive conditions and such
other factors as our Board of Directors may consider relevant.
Forward-looking statements made by the Company speak only as of the
date made and are subject to change without any obligation on the
part of the Company to update or revise them. Undue reliance should
not be placed on these statements. For more information about risks
and uncertainties associated with the Company’s business, please
refer to the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Risk Factors” sections of
the Company’s SEC filings, including, but not limited to, our
annual report on Form 10-K and quarterly reports on Form 10-Q.
World Wrestling Entertainment,
Inc.
Consolidated Income
Statements
(In millions, except per share
data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net revenues
$
223.4
$
268.9
$
514.4
$
451.3
Operating expenses
117.4
197.4
292.8
332.8
Marketing and selling expenses
17.5
24.9
40.2
48.0
General and administrative expenses
22.0
23.6
50.7
47.9
Depreciation and amortization
10.8
5.9
21.7
12.3
Operating income
55.7
17.1
109.0
10.3
Interest expense
9.1
4.0
17.3
10.3
Other income (expense), net
8.5
0.8
(1.9)
2.6
Income before income taxes
55.1
13.9
89.8
2.6
Provision for income taxes
11.3
3.5
19.8
0.6
Net income
$
43.8
$
10.4
$
70.0
$
2.0
Earnings per share:
Basic
$
0.57
$
0.13
$
0.90
$
0.03
Diluted
$
0.52
$
0.11
$
0.83
$
0.02
Weighted average common shares
outstanding:
Basic
77.4
78.0
77.4
78.0
Diluted
83.9
91.1
84.5
91.1
Dividends declared per common share (Class
A and B)
$
0.12
$
0.12
$
0.24
$
0.24
World Wrestling Entertainment,
Inc.
Consolidated Balance
Sheets
(In millions)
(Unaudited)
As of
June 30,
December 31,
2020
2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
424.6
$
90.4
Short-term investments, net
123.3
160.0
Accounts receivable, net
120.3
124.8
Inventory
7.5
8.3
Prepaid expenses and other current
assets
25.7
20.8
Total current assets
701.4
404.3
PROPERTY AND EQUIPMENT, NET
169.0
174.8
FINANCE LEASE RIGHT-OF-USE ASSETS, NET
313.2
289.9
OPERATING LEASE RIGHT-OF-USE ASSETS,
NET
15.7
20.8
CONTENT PRODUCTION ASSETS, NET
19.6
20.1
INVESTMENT SECURITIES
24.7
28.1
DEFERRED INCOME TAX ASSETS, NET
4.5
7.2
OTHER ASSETS, NET
47.0
47.0
TOTAL ASSETS
$
1,295.1
$
992.2
LIABILITIES AND STOCKHOLDERS’
EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt
$
201.2
$
3.6
Finance lease liabilities
8.2
7.9
Operating lease liabilities
4.1
6.6
Convertible debt
191.6
188.7
Accounts payable and accrued expenses
75.1
80.6
Deferred income
64.1
56.9
Total current liabilities
544.3
344.3
LONG-TERM DEBT
21.9
22.1
FINANCE LEASE LIABILITIES
371.3
335.5
OPERATING LEASE LIABILITIES
11.6
14.6
OTHER NON-CURRENT LIABILITIES
0.5
0.4
Total liabilities
949.6
716.9
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Class A common stock
0.5
0.5
Class B convertible common stock
0.3
0.3
Additional paid-in capital
424.2
405.4
Accumulated other comprehensive income
2.8
2.8
Accumulated deficit
(82.3)
(133.7)
Total stockholders’ equity
345.5
275.3
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
1,295.1
$
992.2
World Wrestling Entertainment,
Inc.
Consolidated Statements of
Cash Flows
(In millions)
(Unaudited)
Six Months Ended
June 30,
2020
2019
OPERATING ACTIVITIES:
Net income
$
70.0
$
2.0
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Amortization and impairments of content
production assets
12.0
14.7
Depreciation and amortization
24.3
16.0
Other amortization
8.8
7.0
Loss on equity investments, net
3.8
2.6
Services provided in exchange for equity
instruments
(0.2)
(1.1)
Stock-based compensation
20.1
24.4
Benefit from deferred income taxes
2.6
0.5
Other non-cash adjustments
9.6
1.5
Cash provided by (used in) changes in
operating assets and liabilities:
Accounts receivable
(6.2)
(53.3)
Inventory
0.4
0.1
Prepaid expenses and other assets
6.7
1.8
Content production assets
(14.7)
(15.7)
Accounts payable, accrued expenses and
other liabilities
(3.8)
(8.5)
Deferred income
7.3
7.1
Net cash provided by (used in) operating
activities
140.7
(0.9)
INVESTING ACTIVITIES:
Purchases of property and equipment and
other assets
(15.4)
(36.7)
Purchases of short-term investments
(31.0)
(63.6)
Proceeds from sales and maturities of
investments
67.7
58.8
Purchase of investment securities
—
(1.0)
Net cash provided by (used in) investing
activities
21.3
(42.5)
FINANCING ACTIVITIES:
Repayment of debt
(2.6)
(2.5)
Repayment of finance leases
(5.4)
(4.1)
Dividends paid
(18.6)
(18.7)
Debt issuance costs
—
(0.7)
Proceeds from borrowings under Revolving
Credit Facility
200.0
—
Taxes paid related to net settlement upon
vesting of equity awards
(2.6)
(0.3)
Proceeds from issuance of stock
1.4
1.3
Repurchase and retirement of common
stock
—
(0.9)
Net cash provided by (used in) financing
activities
172.2
(25.9)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
334.2
(69.3)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
90.4
167.5
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
424.6
$
98.2
NON-CASH INVESTING TRANSACTIONS:
Purchases of property and equipment
recorded in accounts payable and accrued expenses
$
3.4
$
13.8
World Wrestling Entertainment,
Inc.
Supplemental Information –
Reconciliation of Adjusted Net Income
(In millions, except per share
data)
(Unaudited)
Three Months Ended June
30,
2020
2019
As Reported
Gain on Investments
(1)
Adjusted
As Reported
Adjusted
Operating income
$
55.7
$
—
$
55.7
$
17.1
$
17.1
Interest expense
9.1
—
9.1
4.0
4.0
Other income, net
8.5
(7.7)
0.8
0.8
0.8
Income before taxes
55.1
(7.7)
47.4
13.9
13.9
Provision for income taxes
11.3
(1.6)
9.7
3.5
3.5
Net income
$
43.8
$
(6.1)
$
37.7
$
10.4
$
10.4
Earnings per share - diluted
$
0.52
$
(0.07)
$
0.45
$
0.11
$
0.11
Six Months Ended June
30,
2020
2019
As Reported
Loss on Investments
(2)
Adjusted
As Reported
Adjusted
Operating income
$
109.0
$
—
$
109.0
$
10.3
$
10.3
Interest expense
17.3
—
17.3
10.3
10.3
Other (expense) income, net
(1.9)
3.8
1.9
2.6
2.6
Income before taxes
89.8
3.8
93.6
2.6
2.6
Benefit from income taxes
19.8
0.8
20.6
0.6
0.6
Net income
$
70.0
$
3.0
$
73.0
$
2.0
$
2.0
Earnings per share - diluted
$
0.83
$
0.04
$
0.86
$
0.02
$
0.02
- During the second quarter of 2020, the Company recognized an
unrealized holding gain of $7.7 million on a certain equity
investment based on the closing stock price of the underlying
investee company as of the last trading day of the period. The
Company did not recognize any material net gains or losses related
to our equity investments during the three months ended June 30,
2019.
- During the first quarter of 2020, the Company recorded
impairment charges totaling $11.5 million on certain equity
investments as a result of our impairment evaluations. These
charges were partially offset by an unrealized holding gain of $7.7
million on a certain equity investment based on the closing stock
price of the underlying investee company as of the last trading day
of the period. The Company did not record any material net gains or
losses related to our equity investments during the six months
ended June 30, 2019.
World Wrestling Entertainment,
Inc.
Supplemental Information –
Reconciliation of Adjusted OIBDA
(In millions, except per share
data)
(Unaudited)
Three Months Ended June 30,
2020
Operating Income
Depreciation &
Amortization
Stock Compensation
Other Adjustments
Adjusted OIBDA
Media
$
81.6
$
3.8
$
5.1
$
—
$
90.5
Live Events
(4.5)
—
0.3
—
(4.2)
Consumer Products
7.6
—
0.5
—
8.1
Corporate
(29.0)
7.0
1.1
—
(20.9)
Total
$
55.7
$
10.8
$
7.0
$
—
$
73.5
Three Months Ended June 30,
2019
Operating Income
Depreciation &
Amortization
Stock Compensation
Other Adjustments
Adjusted OIBDA
Media
$
26.9
$
2.1
$
8.5
$
—
$
37.5
Live Events
12.4
—
0.9
—
13.3
Consumer Products
5.2
—
1.0
—
6.2
Corporate
(27.4)
3.8
1.2
—
(22.4)
Total
$
17.1
$
5.9
$
11.6
$
—
$
34.6
Six Months Ended June 30,
2020
Operating Income
Depreciation &
Amortization
Stock Compensation
Other Adjustments
Adjusted OIBDA
Media
$
170.9
$
7.7
$
14.5
$
—
$
193.1
Live Events
(7.7)
—
0.9
—
(6.8)
Consumer Products
10.5
—
1.4
—
11.9
Corporate
(64.7)
14.0
3.3
—
(47.4)
Total
$
109.0
$
21.7
$
20.1
$
—
$
150.8
Six Months Ended June 30,
2019
Operating Income
Depreciation &
Amortization
Stock Compensation
Other Adjustments
Adjusted OIBDA
Media
$
43.2
$
4.9
$
17.9
$
—
$
66.0
Live Events
12.2
—
1.9
—
14.1
Consumer Products
10.2
—
2.0
—
12.2
Corporate
(55.3)
7.4
2.6
—
(45.3)
Total
$
10.3
$
12.3
$
24.4
$
—
$
47.0
World Wrestling Entertainment,
Inc.
Supplemental Information -
Free Cash Flow
(In millions)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net cash provided by operating
activities
$
74.8
$
(7.6)
$
140.7
$
(0.9)
Less cash used for capital
expenditures:
Purchase of property and equipment and
other assets
(7.1)
(19.9)
(15.4)
(36.7)
Free Cash Flow
$
67.7
$
(27.5)
$
125.3
$
(37.6)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005806/en/
Investors: Michael Weitz
203-352-8642 Michael Guido, CFA 203-352-8779 Media: Matthew Altman 203-352-1177
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