WWE Q4 2019

WWE revealed the company’s fourth quarter results for 2019 on Thursday morning.

Q4 Highlights include:

— Revenues increased to $322.8 million, an 18% increase from the prior year quarter, due to increased revenue from the new television contracts particularly with FOX and USA Network, but was offset partially by lower revenue from the Live Event segment.

— Operating income increased to $99.8 million, an 87% increase, due to the Media segment.

— Adjusted OIBDA was $107.6 million compared to $64.4 million in the prior year quarter, a 67% increase.

— WWE Network subscriptions dropped 10% to approximately 1.42 million subscribers.

2019 Highlights include:

— $960.4 million in revenues, a 3% increase from $930.2 million in 2018, a new record for the company.

— Operating income increased to $116.5 million, but was offset by increases in other fixed costs.

— WWE touted SmackDown moving to FOX, which helped viewership increase 20% in the fourth quarter, as well as NXT appearing on the USA Network.

— New distribution agreements with BT Sport and ViacomCBS’ Channel 5 in the U.K., Fox Sports in Latin America, PP Sports in China and SuperSport in Africa were also celebrated in the report.

— Growth was partially offset by lower live event ticket sales (56 fewer events and lower attendance), as well as a decline in WWE Network subscriptions, no Mixed Match Challenge on Facebook, and lower consumer product sales.

— Digital engagement saw video views increase increase 10% to 34.5 billion. Overall hours consumed grew 7% to nearly 1.3 billion across digital and social media platforms.

WWE Chairman and CEO Vince McMahon was quoted in the release as believing the value of live sports will continue to increase, which is something the company is positioned to take advantage of:

“During the fourth quarter, we expanded the reach of WWE’s live programming and further engaged with diverse audiences across platforms and formats. We believe the value of live sports will continue to increase, particularly in today’s evolving media landscape, and we are well positioned to take advantage of this trend to maximize the value of our content.”

You can check out the press release below:

WWE® Reports 2019 Results and 2020 Business Outlook

STAMFORD, Conn., February 6, 2020 – WWE (NYSE: WWE) today announced financial results for its fourth quarter and year ended December 31, 2019.

“During the fourth quarter, we expanded the reach of WWE’s live programming and further engaged with diverse audiences across platforms and formats,” said Vince McMahon, WWE Chairman & Chief Executive Officer. “We believe the value of live sports will continue to increase, particularly in today’s evolving media landscape, and we are well positioned to take advantage of this trend to maximize the value of our content.”

“For the year, we achieved record revenue and Adjusted OIBDA. However, with the delay in completing a Middle East distribution agreement as well as lower business performance than anticipated, our results were at the low-end of guidance,” added Frank Riddick, interim Chief Financial Officer. “As we work to strengthen engagement in 2020, we are pursuing several strategic initiatives that could increase the monetization of our content, including the distribution of content in the Middle East and India as well as strategic alternatives for our direct-to-consumer service, WWE Network. Excluding the potential impact of these initiatives, we expect significant revenue growth based on the full year impact of our new content distribution agreements in the U.S. and anticipate Adjusted OIBDA of $250 to $300 million. Management believes it has the potential to exceed this range, but is unable to provide additional guidance at this time.”

Fourth-Quarter Consolidated Results

Revenues increased 18% to $322.8 million from the prior year quarter as increased revenue in the Media segment, primarily driven by the monetization of core content, was partially offset by lower revenue from the Company’s Live Events segment.

Operating Income increased 87% to $99.8 million driven by increased profits from the Media segment. The Company’s Operating income margin increased to 31% from 20% in the prior year quarter.

Adjusted OIBDA (which excludes stock compensation) increased 67% to $107.6 million as compared to $64.4 million in the prior year quarter. The Company’s Adjusted OIBDA margin increased to 33% from 24% in the prior year quarter.

Net Income was $69.3 million, or $0.78 per diluted share, as compared to $41.2 million, or $0.46 per diluted share, in the fourth quarter of 2018. This increase was primarily driven by improved operating performance, partially offset by the impact of the finance lease related to the Company’s new headquarters.5

Effective Tax Rate increased to 26% from 23% in the prior year quarter.

Cash flows generated by operating activities increased to $119.4 million as compared to $65.2 million in the prior year quarter driven by improved operating performance and the favorable timing of working capital.

Free Cash Flow totaled $106.6 million as compared to $54.3 million in the fourth quarter of 2018 primarily driven by the change in operating cash flow.6

The Company returned $84.2 million to shareholders in the fourth quarter 2019, including $75.0 million in share repurchases and $9.2 million in dividends paid. Under the Company’s existing stock repurchase program nearly 1.3 million shares were repurchased at an average price of $58.78 per share.

Full Year 2019 Consolidated Results

For the twelve months ended December 31, 2019, revenues increased 3% to $960.4 million from $930.2 million driven primarily by the escalation of core content rights fees in the Media segment. The growth was partially offset by lower live event ticket sales (56 fewer events and lower average attendance), a decline in WWE Network subscription revenue, the absence of Mixed Match Challenge on Facebook Watch, as well as lower consumer product sales across distribution channels. Operating income increased to $116.5 million from $114.5 million as the growth in revenue and reduced management incentive compensation associated with the Company’s full year performance was partially offset by increases in other fixed costs, including the impact of certain strategic investments to support content creation.

Adjusted OIBDA (which excludes stock compensation) increased to $180.0 million.

Net income decreased to $77.1 million ($0.85 per diluted share) from $99.6 million ($1.12 per diluted share) in the prior year primarily due to the impact of the finance lease related to the Company’s new headquarters, as well as a higher effective tax rate in the current year.

Effective Tax Rate increased to 19% from 6% in the prior year, where the current year reflected $9.4 million of excess tax benefits related to the Company’s share-based compensation awards at vesting, as compared to a $22.5 million of benefits in the prior year. This tax benefit is driven by the increase in the Company’s stock price between the original grant date of the awards and their subsequent vesting date in the third quarter of the respective year. Excluding this discrete tax item, our effective tax rate was 29% in the current year as compared to 27% in the prior year.

Cash flows generated by operating activities were $121.7 million as compared to $186.7 million in the prior year driven by unfavorable changes in working capital primarily related to our fourth quarter event in Saudi Arabia and the payment of the prior year’s accrued management incentive compensation.

Free Cash Flow totaled $52.6 million as compared to $154.4 million in the prior year period driven by the change in operating cash flow and an increase in capital expenditures primarily associated with the Company’s workspace plan.5,6

Cash, cash equivalents and short-term investments were approximately $250 million as of December 31, 2019, and the Company estimates debt capacity under its revolving line of credit of approximately $200 million.

The Company returned $120.8 million to shareholders in 2019, including $83.4 million in share repurchases and $37.4 million in dividends paid. Under the Company’s existing stock repurchase program nearly 1.4 million shares were repurchased at an average price of $59.67 per share.

Click here to view the full press release.