WWE released their first quarter earnings report for 2012, you can check it out below or download the PDF at this link.
WWE Reports 2012 First Quarter Results
STAMFORD, Conn.- WWE announced financial results for its first quarter ended March 31, 2012. Revenues totaled $123.1 million as compared to $119.9 million in the prior year quarter. Operating income was $16.0 million as compared to $13.2 million in the prior year quarter. Net income was $15.3 million, or $0.20 per share, as compared to $8.6 million, or $0.11 per share, in the prior year quarter. There were several items that impacted comparability on a year-over-year basis, including expenses incurred in conjunction with our potential network, recognition of previously unrecognized tax benefits and film impairments. Excluding the impact of these items, Adjusted Operating income in the current quarter was $18.9 million and Adjusted Net income was $13.1 million, or $0.18 per share. In the prior year quarter, Adjusted Operating income was $16.0 million and Adjusted Net income was $10.3 million, or $0.14 per share.
"In the first quarter, EBITDA grew 19%, reflecting increased profits across all our businesses. Our results were highlighted by the strong performance of our live events as we entered a new market in the Middle East. We are very pleased that our positive first quarter execution continued in April with the successful staging of WrestleMania, which is expected to deliver nearly 1.3 million pay-per-view buys globally," stated Vince McMahon, Chairman and Chief Executive Officer. "Through the first quarter, we made important progress on our key strategic initiatives, developing our foundation for creating and distributing new content, and building on our tremendous brand strength, especially in social media. Looking ahead, we are confident that we will leverage the broad appeal of our content to transform our business and drive long-term earnings growth."
Comparability of Results
Our current year quarter results included a $0.8 million film impairment charge, related to our film, Bending the Rules, $2.1 million in network related operating expenses and a $4.1 million benefit due to previously unrecognized tax benefits. Prior year quarter results included impairment charges of $2.8 million, related to our film 12 Rounds, and a $0.1 million tax benefit. In order to facilitate an analysis of our financial results on a more comparable basis, where noted, we have adjusted our results to exclude these items from our first quarter of 2012 results. (See Schedules of Adjustments in Supplemental Information).
First Quarter Results by Region and Business Segment
Revenues from North America increased 4%, led by the performance of our Live and Televised Entertainment segment. Revenues from outside North America were essentially unchanged from the prior year quarter. There was no significant impact from changes in foreign exchange rates in the current year quarter.
Live and Televised Entertainment
Revenues from our Live and Televised Entertainment businesses increased 8% to $75.7 million as compared to $70.4 million in the prior year quarter. The increase was primarily due to the performance of our live events and additional television rights fees, as described below.
* Live Event revenues increased 13% to $22.2 million from $19.6 million in the prior year quarter primarily due to the timing of our Fan Axxess events and the successful performance of our inaugural tour in Abu Dhabi. Fan Axxess was held in conjunction with WrestleMania XXVIII but occurred within our first quarter.
- There were 75 total events during the current quarter as compared to 77 events in the prior year quarter, with the variance primarily due to touring logistics. There were six international events performed in the current quarter as compared to four in the prior year quarter.
- North American events generated $18.9 million of revenues from 69 events as compared to $17.4 million from 73 events in the prior year quarter, reflecting the timing of Fan Axxess, which added $1.4 million in incremental revenue to the quarter with $1.6 million in the current year quarter. A 6% increase in average ticket prices to $38.50 for our North American events was offset by the impact of four fewer events in the quarter and a 3% decline in average attendance to 6,200.
- International events generated approximately $3.3 million of revenues from six events as compared to $2.2 million from four events in the prior year quarter. The growth was led by the impact of our strong tour in Abu Dhabi, which attracted a total of more than 15,000 fans at three events with an average price of $147 per ticket. Accordingly, average ticket prices at our international events increased 157% to $125.60 as compared to $48.88 in the prior year quarter. Average attendance at our international events, however, fell 60% to 3,400 reflecting the performance of our tour in Central America, which was staged in more economically challenged areas of that region than in the prior year quarter. For these events, our International revenue included the effect of minimum guarantees, which we negotiate to protect our interests when traveling to territories with higher economic risks. These guarantees partially offset the impact of lower average attendance.
* Pay-Per-View revenues were $13.5 million in both the current and prior year quarter, as a 3% increase in the average revenue per buy was offset by a comparable decline in current year buys. The increase in average revenue per buy was attributable to higher retail prices charged for viewing our events in high definition. The decline in buys for the two events in the quarter was driven by an 8% decline in international buys as domestic buys remain essentially unchanged.
- Television Rights Fees revenues were $32.5 million as compared to $31.6 million in the prior year quarter. The rise was primarily due to additional rights fees and contractual increases from our existing programs, partially offset by the absence of rights fees for our WWE Superstars program.
- Venue Merchandise revenues were $5.1 million as compared to $4.5 million in the prior year quarter, as the favorable impact associated with the timing of our Fan Axxess events was partially offset by a 13% decrease in total domestic attendance in the current year quarter.
- WWE Classics on Demand revenues were $1.0 million as compared to $1.1 million in the prior year quarter.
Revenues from our Consumer Products businesses increased 2%, to $35.5 million from $34.8 million in the prior year quarter, primarily due to increased revenue in our Home Video business, partially offset by a decline in our Magazine Publishing business.
* Home Video net revenues were $9.2 million as compared to $8.1 million in the prior year quarter, representing a 14% increase that was primarily due to higher than anticipated sell-through rates for releases in prior periods. The resulting increase in sales was partially offset by a 27% decline in average price and a 5% decrease in units shipped, where these factors stemmed from ongoing discounts and promotional activity primarily related to our catalog titles. Additionally, there was one fewer title released in the current year quarter.
* Licensing revenues were $24.2 million as compared to $23.9 million in the prior year quarter, as the recognition of minimum guarantees was offset by a decline in royalties earned from several product categories, including video games and toys. The decline in these categories was primarily due to difficult trends in our international markets. Overall revenue from the sale of video games declined 11%, or $1.5 million, while revenue from the sale of toys declined 6% or $0.4 million. Shipments of our franchise video game, WWE '12, declined 25% to 2.0 million units, driven by a reduction in the number of platforms supported by the current release and reflecting broader industry challenges.
* Magazine Publishing net revenues were $1.4 million as compared to $2.2 million in the prior year quarter, reflecting lower newsstand sales in the current quarter.
Revenues from our Digital Media related businesses were $7.1 million as compared to $6.1 million in the prior year quarter, representing a 16% increase.
* WWE.com revenues increased to $3.9 million as compared to $2.7 million in the prior year quarter, primarily due to increased rights fees and higher online advertising sales. The increase in rights fees was driven by a new programming agreement, which licenses original, short-form content to YouTube.
* WWEShop revenues of $3.2 million were essentially unchanged from the prior year quarter as an 18% increase in the average revenue per order to $48.04 was offset by a 20% decrease in the sales volume to approximately 66,000 orders. Discounted sales and promotional activity accounted for the relatively lower price and higher sales volume in the prior year quarter.
During the quarter, WWE Studios recognized revenue of $4.8 million as compared to $8.6 million in the prior year, reflecting the relative performance and timing of releases from our movie portfolio. In the prior year quarter, we released The Chaperone. In the current quarter, we released Bending the Rules, which has generated lower than anticipated home video receipts in its initial weeks of release. As a result, we revised our long-term ultimate projections for this film and recorded an impairment charge of $0.8 million contributing to an overall WWE Studios loss of $1.0 million in the current year quarter. This result compared to a loss of $3.6 million in the prior year quarter driven by the $2.8 million impairment for our film 12 Rounds.
Profit Contribution (Net revenues less cost of revenues)
Profit contribution increased 17% to $54.7 million reflecting better results across all of our businesses. Reduced losses from our movie business, improved sell-through rates in home video, and incremental rights fees for our online programming content contributed to the expansion in profit and overall profitability. Gross contribution margins increased to 44% from 39% in the prior year quarter. Excluding the impact of film impairments, Adjusted Profit contribution increased 12% to $55.5 million and Adjusted Profit contribution margin increased to 45% from 41% in the prior year quarter.
Selling, general and administrative expenses
SG&A expenses were $34.7 million for the current quarter as compared to $29.9 million in the prior year quarter reflecting increased staffing costs, a $1.4 million rise in bad debt expense and to a lesser extent an increase in legal and professional fees. The increase in staffing costs was incurred primarily to support our content and distribution initiatives. Total network-related costs reached approximately $2.1 million in the current year quarter. Excluding these network expenses, adjusted SG&A expenses increased 9% to $32.6 million from the prior year quarter.
Depreciation and amortization
Depreciation and amortization expense was $4.0 million for the current quarter as compared to $3.6 million in the prior year quarter.
EBITDA increased 19% to $20.0 million from $16.8 million in the prior year quarter. The increase was primarily due to the expansion in profit contribution across our businesses, partially offset by the increase in SG&A expenses as described above. Excluding the impact of network related expenses and film impairments in both the current and prior year quarter, Adjusted EBITDA increased 17% to $22.9 million as compared to $19.6 million in the prior year quarter.
Investment, Interest and Other Income
Investment income of $0.5 million was unchanged from the prior year quarter. Other income and expense was essentially flat to the prior year quarter as benefits from changes in certain state taxes were offset by interest expense related to our revolving credit facility.
Effective tax rate
In the current year quarter, the effective tax rate was 7% as compared to 37% in the prior year quarter. The decrease in tax rate from our anticipated rate of 35% was primarily due to the recognition of a $4.1 million benefit relating to previously unrecognized tax benefits. The prior year rate was also impacted by a $0.1 million unrecognized tax benefit.
Net cash provided by operating activities was $27.2 million for the three months ended March 31, 2012 as compared to $28.9 million in the prior year quarter. Improved current year operating performance was offset by an increase in television production spending and other changes in working capital.
Purchases of property and equipment increased $5.6 million from the prior year quarter, primarily due to a $6.4 million investment in assets to support our efforts to create and distribute new content, including through a potential network. Partially offsetting the increase was a $1.6 million purchase of music rights in the prior year quarter.