SPY382.33-9.44 -2.41%
DIA313.98-5.55 -1.74%
IXIC13,119.43-478.54 -3.52%

Press Release: WWE(R) Reports Record 2020 Results -2-

· 02/04/2021 16:11
(1) The definition of Adjusted OIBDA can be found in the Non-GAAP Measures section of the release on pages 7-8. A reconciliation of three and twelve months ended December 31, 2020 and 2019 Operating Income to Adjusted OIBDA can be found in the Supplemental Information in this release on page 16 (2) 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 (3) 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) (4) 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 COVID-19 on WWE's business, results of operations and financial condition;entering, maintaining and renewing major distribution agreements; WWE Network; uncertainties associated with international markets and risks inherent in large live events, and other risk factors disclosed in our annual report on Form 10-K for the year ended December 31, 2020 (5) A reconciliation of three and twelve months ended December 31, 2020 and 2019 Net Income to Adjusted Net Income can be found in the Supplemental Information in this release on page 15 (6) A reconciliation of three and twelve months ended December 31, 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 17

For the fourth quarter of 2020, the Company's consolidated pre-tax results included the impact of an $8.6 million loss on investments, primarily related to $4.4 million of impairment charges coupled with $4.2 million in fair market value adjustments of marketable securities prior to their sale, and $1.5 million in severance expense resulting from a reduction in force due to COVID-19. For the twelve-month period ended December 31, 2020, the Company's consolidated pre-tax results included $13.4 million of incremental costs related to the finance lease for the Company's new headquarters, $7.0 million in severance expense resulting from a reduction in force due to COVID-19, and a net loss of $5.7 million related to certain equity investments, which included $15.9 million of impairment charges partially offset by $10.2 million in fair market value adjustments of marketable securities prior to their sale. A reconciliation of Net Income to Adjusted Net Income for the three and twelve-month periods ended December 31, 2020 and 2019 can be found in the supplemental schedule on page 15 of this release.

Results by Operating Segment*

* (All comparisons are versus the prior year period unless stated otherwise)

Media

Fourth-Quarter 2020

Revenue was $210.5 million, a decrease of 20% or $54.1 million, primarily driven by the absence of the Company's large-scale event in Saudi Arabia and, to a lesser extent, decreased sales of advertising and

sponsorship. These factors were partially offset by growth in WWE Network subscription revenue.

WWE Network's average paid subscribers were 1.5 million, an increase of 6%.

Operating income was $67.1 million, a decrease of 41% or $47.5 million, primarily due to a decrease in revenue (as described above), partially offset by a corresponding reduction in event-related and content creation expenses.

Adjusted OIBDA was $73.0 million, representing a decrease of 37% or $43.6 million.

Full Year 2020

Revenue was $868.2 million, an increase of 17% or $125.1 million, primarily driven by the growth of domestic core content rights fees for the Company's flagship programs Raw and SmackDown, partially offset by the absence of a large-scale international event in Saudi Arabia.

WWE Network's average paid subscribers were 1.6 million (flat on a year-over-year basis).

Operating income was $332.5 million, an increase of 74% or $141.7 million, primarily due to an increase in revenue (as described above) and, to a lesser extent, a reduction in operating expenses.

Adjusted OIBDA was $367.8 million, representing an increase of 64% or $143.7 million.

Live Events

Fourth-Quarter 2020

Revenue was $0.7 million, a decrease of 97% or $26.7 million, resulting from the absence of live events and a corresponding decline in ticket sales in North American and international markets. (The fourth quarter 2019 had 50 events in North America and 20 events in international markets.)

Operating income reflected a loss of $7.0 million, a decrease of $6.0 million, as the decline in North America and international ticket sales (as described above) was partially offset by a reduction in event-related expenses.

Adjusted OIBDA reflected a loss of $6.7 million, representing a decrease of $4.9 million.

Full Year 2020

Revenue was $19.9 million, a decrease of 84% or $105.7 million, resulting from the absence of live events and a corresponding decline in ticket sales in North American and international markets beginning in mid-March 2020. (310 events were held in 2019 compared to 42 events held in 2020.)

Operating income reflected a loss of $19.1 million, a decrease of $26.8 million, as the decline in North America and international ticket sales (as described above) was partially offset by a reduction in event-related expenses.

Adjusted OIBDA reflected a loss of $17.6 million, representing a decrease of $27.0 million.

Consumer Products

Fourth-Quarter 2020

Revenue was $27.0 million, a decrease of 12% or $3.8 million, primarily due to lower video game royalties, driven by the absence of a 2021 release of the Company's franchise console game, as well as the decline in venue merchandise sales resulting from the absence of ticketed live events in the quarter (as described above). These factors were partially offset by an increase in eCommerce merchandise sales.

Operating income was $8.9 million, a decrease of 30% or $3.9 million, reflecting a decline in revenue (as described above).

Adjusted OIBDA was $9.1 million, representing a decrease of 26% or $3.2 million.

Full Year 2020

Revenue was $86.1 million, a decrease of 6% or $5.6 million, primarily driven by lower venue merchandise sales resulting from the absence of ticketed-audience events beginning in mid-March 2020, partially offset by increased eCommerce sales.

Operating income was $24.8 million, a decrease of 6% or $1.6 million, reflecting a decline in revenue (as described above) partially offset by lower operating expenses.

Adjusted OIBDA was $26.6 million, representing a decrease of 7% or $1.9 million.

2021 Business Outlook(4)

On January 25, 2021, WWE issued guidance for 2021 Adjusted OIBDA. As previously indicated, management expects restrictions related to COVID-19, particularly related to the cancellation, postponement or reduced capacity of ticketed live events, to continue at least through the first half of 2021. Additionally, management anticipates a significant year-over-year increase in WWE's expense base due to the return of employees from furlough and continued higher expenses associated with the production of its weekly Raw and SmackDown television content at the WWE ThunderDome from its stadium residence at Tropicana Field. The Company estimates it can achieve 2021 Adjusted OIBDA of $270 - $305 million as revenue growth, driven by the impact of the Peacock transaction, the gradual ramp-up of ticketed live events, including large-scale international events, and the escalation of core content rights fees, is offset by the increase in personnel and production expenses.

Management estimates that the stated 2021 Adjusted OIBDA guidance range would be 15% - 20% higher without the ongoing impact of COVID-19, which includes the loss of ticket and merchandise sales at live events and the increased investment in production to further fan engagement. Estimates of future performance beyond 2021 will be impacted by the return of these businesses and various other factors.

Although the Company continues to adapt its business to the changing environment, the timing and rate of returning ticket audiences to its live events remains subject to significant uncertainty, and as such management is not reinstating quarterly guidance at this time.

Management continues to believe that WWE has significant long-term opportunities and is well positioned, particularly given its substantial cash and liquidity, to deliver on its strategic initiatives and to drive long-term shareholder value.

Notes

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.

(MORE TO FOLLOW) Dow Jones Newswires

February 04, 2021 16:11 ET (21:11 GMT)