Michael Rapino, President and Chief Executive Officer of Live Nation commented, “Our vision is to build a global live music network that provides touring artists the opportunity to maximize their revenues and expand fan reach all under one aligned platform. We are already a leader in the global concert industry with tremendous fan access and we seek to augment and solidify that position and grow our business by providing artists with the ‘triple play’ of services:
-- Leadership in global concert promotion and venue services
-- One-stop-shop that can provide products and services to artists
in-house
-- Direct sales channel to fans through livenation.com and via our
extensive fan database
To achieve this vision, we have a well-defined strategy to transform our business by (i) fixing our core North American business and improving margin and (ii) expanding our platform and service offerings. During the second quarter, we have made great progress on both fronts.”
Improved Core Business Despite Softer 2007 Concert Season
Results for the second quarter of 2007 were improved over the second quarter of 2006 both on a pro forma and as reported basis despite a weaker concert season.
($ in thousands)
Total Company
Pro Forma(1)
Three Months Ended,
6/30/2007 6/30/2006 Variance % Variance
Revenue $1,068,703 $914,936 $153,767 16.8 %
Adjusted OIBDAN 46,634 29,540 17,093 57.9 %
% Margin 4.4 % 3.2 % 1.1 % --
Operating Income
(Loss) 38,999 11,609 27,390 235.9 %
% Margin 3.6 % 1.3 % 2.4 % --
Total Company
As Reported
Three Months Ended,
6/30/2007 6/30/2006 Variance % Variance
Revenue $1,039,565 $768,230 $271,335 35.3 %
Adjusted OIBDAN 45,560 27,014 18,546 68.7 %
% Margin 4.4 % 3.5 % 0.9 % --
Operating Income
(Loss) 36,387 11,682 24,705 211.5 %
% Margin 3.5 % 1.5 % 2.0 % --
Note: Variances may differ due to rounding
(1) Includes the divestiture of a portion of our North American sports
representation business and our UK sports representation business
throughout 2006, the acquisition of CPI in May 2006, the acquisition
of Trunk in June 2006, the acquisition of Musictoday in September
2006, the acquisition of House of Blues in November 2006, the
acquisition of Gamerco in December 2006, the divestiture of Donington
Racetrack in January 2007, the divestiture of the remaining stake in
Phantom - The Vegas Spectacular in March 2007, the divestiture of the
Nashville amphitheater in April 2007, the divestiture of Hammersmith
Apollo and the Forum in June 2007, the acquisition of the remaining
50% interest in House of Blues Concerts Canada and consolidation of
those results in June 2007 as if all of these transactions were
completed on the first day of the period presented, does not include
the consolidation of Academy Music Group's financial results which
occurred in July 2007.
The increase in revenue was due primarily to:
-- higher ticket prices at arena events and an increased number of
third-party promoted events and events in our own small and mid-sized
music venues in North America,
-- increased promotion activities internationally,
-- timing of global tours, and
-- for the as-reported figures only, the impact of our acquisitions of
CPI, House of Blues, Musictoday, Gamerco and Jackie Lombard Productions
which were not included in the results of the second quarter of 2006.
The improvement in Adjusted OIBDAN and operating income was due primarily to:
-- improved amphitheater operations in North America which was achieved
with 40 fewer amphitheater shows on a pro forma basis (217 in the
second quarter of 2007 versus 257 in the second quarter of 2006) and
execution on cost savings associated with the acquisition of House of
Blues,
-- increased promotion activities internationally, and
-- for the as reported figures only, the impact of our acquisitions of
CPI, House of Blues, Musictoday, Gamerco and Jackie Lombard Productions
which were not included in the results of the second quarter of 2006.
Increased North American Music Margins Resulting from Amphitheater Initiatives
Our strong second quarter 2007 North American Music results were driven by the consolidation of higher margin House of Blues clubs for the full quarter and the improvement in our North American operations as a result of the successful implementation of booking and cost saving initiatives at our amphitheaters. As a result of the amphitheater initiatives, on a pro forma basis amphitheater Adjusted OIBDAN margin has doubled, increasing North American Music Adjusted OIBDAN and operating income margins by 0.5% and 2.0%, respectively. Improvement in the North American amphitheater business was offset, in part, by increased legal costs, increased costs associated with our Live Nation Studios’ initiatives and reduced contribution from promotion of third-party arena events.
North American Music
Pro Forma(2)
Three Months Ended,
6/30/2007 6/30/2006 Variance % Variance
Revenue $493,979 $441,901 $52,078 11.8 %
Adjusted OIBDAN 15,080 11,197 3,882 34.7 %
% Margin 3.1 % 2.5 % 0.5 % --
Operating Income
(Loss) 9,495 (227) 9,722 *
% Margin 1.9 % (0.1%) 2.0 % --
North American Music
As Reported
Three Months Ended,
6/30/2007 6/30/2006 Variance % Variance
Revenue $462,769 $314,410 $148,359 47.2 %
Adjusted OIBDAN 13,696 7,776 5,919 76.1 %
% Margin 3.0 % 2.5 % 0.5 % --
Operating Income
(Loss) 6,482 (734) 7,216 *
% Margin 1.4 % (0.2%) 1.6 % --
Note: Variances may differ due to rounding;* Denotes variance not
meaningful
(2) Includes the acquisition of House of Blues in November 2006, the
divestiture of the Nashville amphitheater in April 2007 and the
acquisition of the remaining 50% interest in House of Blues Concerts
Canada and consolidation of those results in June 2007 as if all of
these transactions were completed on the first day of the period
presented.
-- On a pro forma basis Adjusted OIBDAN from our North American
amphitheaters improved in the quarter by $11.7 million to $24.6 million
on reduced revenue which had the impact of doubling margin from 8.0% to
15.9%. Similarly, on a pro forma basis operating income from our North
American amphitheaters improved in the quarter by $11.5 million to
$19.0 million which had the impact of increasing margin from 4.6% to
12.3%. The financial improvement was the result of implementing a
number of successful new initiatives, including:
-- Improved Contribution from Amphitheater Events with Less than 7,500
Attendees: During the second quarter of 2007, we reduced the number
of events with less than 7,500 attendees by 47, or 33% from the
second quarter of 2006, and improved the contribution from the
events we continued to promote. The second quarter 2007 events
contributed $3.9 million to our Adjusted OIBDAN versus a loss of
($0.4) million during the second quarter of 2006, resulting in a
total improvement of $4.3 million.
-- Improved Food and Beverage per Head: Excluding the impact of venue
rentals, we increased our food and beverage per head during the
second quarter of 2007 by 2.2% from the second quarter of 2006 on a
pro forma basis.
-- Reduced Costs: We reduced our costs as a percentage of revenue at
our amphitheaters primarily by better talent buying and reducing
show costs.
Further Consolidation of Global Distribution Platform and Ancillary Service Offerings
We continue to successfully and aggressively execute on our strategy to build our core platform and expand our services by:
-- acquiring the remaining interest that we did not already own in House
of Blues Concerts Canada (June 2007), which extends our reach in
Canada, the 6th largest recorded music market,
-- formally entering into an agreement to operate, manage and exclusively
book the Jackie Gleason Theater in Miami Beach (June 2007) which will
re-open in the Fall under our Fillmore brand,
-- exercising our option to require our joint venture partner to
contribute its remaining 12% stake in Academy Music Group, or AMG,
(July 2007) to our joint venture which now holds a 55.9% interest in
the company. AMG operates 12 small and mid-sized music venues that
attract over 3 million fans per year and augments our presence in the
UK, and
-- consolidating and aligning our newly formed Artist Nation division -
which will provide artists with comprehensive services - by acquiring
the remaining stakes that we did not already own in Musictoday (July
2007) and Trunk (April 2007), both critical elements of the division.
Successful Online Business Attracts Largest Audience Since Inception
We are very enthusiastic about our initiatives to expand our online presence which are beginning to flourish. During June 2007, our domestic websites had over 4.1 million unique visitors as measured by Nielsen//Net Ratings, the highest number of visitors to date. Based on our internal estimates, if we aggregate the traffic on all of the websites which we operate, we had 11.9 million visitors during that month. Our strong traffic was driven in part by the exclusive ticket and other related product inventory we have for sale on livenation.com, of which we currently have sold over $2.6 million since we first made the products available on April 16, 2007, and our successful distribution of over 400,000 tickets for Ozzfest through our in- house ticketing system.
Conference Call
The company will also host a teleconference to discuss its second quarter 2007 financial results on Thursday, August 9th at 5:00 p.m. Eastern Time. To access the teleconference, please dial 800-690-3108 (U.S.) or 973-935-8753 (Int’l) ten minutes prior to the start time and reference passcode 9086688. The teleconference will also be available via live webcast at the Investor Relations section of the company’s website located at www.livenation.com under “About Us.”
If you cannot listen to the teleconference at its scheduled time, there will be a replay available through Thursday, August 16th which can be accessed by dialing 877-519-4471 (U.S.) or 973-341-3080 (Int’l), passcode 9086688. The webcast will also be archived on the company’s website for 30 days.
Forward Looking Statements, Non-GAAP Financial Measures and Reconciliations
Certain statements in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Live Nation to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements include statements regarding certain of Live Nation’s goals, expectations, operational plans and strategies and any other statements preceded by, followed by or that include the words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “outlook” and similar words or expressions. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. Various risks that could cause future results to differ from those expressed by forward-looking statements include, but are not limited to, those factors discussed in Live Nation’s filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements by or concerning Live Nation are expressly qualified in their entirety by the cautionary statements above. Live Nation does not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
This press release contains certain non-GAAP financial measures as defined by SEC Regulation G. A reconciliation of each such measure to its most directly comparable GAAP financial measure, together with an explanation of why management believes that these non-GAAP financial measures provide useful information to investors, is provided below.
Adjusted OIBDAN is a non-GAAP financial measure that the company defines as operating income (loss) before certain unusual and/or non-cash charges, depreciation and amortization, loss (gain) on sale of operating assets and non-cash compensation expense. The company uses Adjusted OIBDAN to evaluate the performance of its operating segments. The company believes that information about Adjusted OIBDAN assists investors by allowing them to evaluate changes in the operating results of the company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. Adjusted OIBDAN is not calculated or presented in accordance with U.S. generally accepted accounting principles. A limitation of the use of Adjusted OIBDAN as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company’s business. Accordingly, Adjusted OIBDAN should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with U.S. GAAP. Furthermore, this measure may vary among other companies; thus, Adjusted OIBDAN as presented herein may not be comparable to similarly titled measures of other companies.
Reconciliation of Total Company Adjusted OIBDAN to Operating Income /
(Loss)
($ in thousands)
As Reported Acquisitions/ Pro Forma
Divestitures (1)
Three Three Three Three Three Three
Months Months Months Months Months Months
Ended Ended Ended Ended Ended Ended
6/30/2007 6/30/2006 6/30/2007 6/30/2006 6/30/2007 6/30/2006
Adjusted
OIBDAN $45,560 $27,014 $1,073 $2,526 $46,634 $29,540
Depreciation
and
amortization 25,027 16,306 (1,539) 2,599 23,488 18,905
Loss (gain) on
sale of
operating
assets (19,268) (1,682) 0 0 (19,268) (1,682)
Non-cash
compensation
expense 3,414 708 0 0 3,414 708
Non-cash
impairment
charge 0 0 0 0 0 0
Operating
Income
(Loss) 36,387 11,682 2,612 (73) 38,999 11,609
Reconciliation of North American Music Adjusted OIBDAN to Operating Income
/ (Loss)
($ in thousands)
As Reported Acquisitions/ Pro Forma
Divestitures (2)
Three Three Three Three Three Three
Months Months Months Months Months Months
Ended Ended Ended Ended Ended Ended
6/30/2007 6/30/2006 6/30/2007 6/30/2006 6/30/2007 6/30/2006
Adjusted
OIBDAN $13,696 $7,776 $1,384 $3,421 $15,080 $11,197
Depreciation
and
amortization 12,463 8,343 (1,629) 2,915 10,834 11,258
Loss (gain) on
sale of
operating
assets (6,060) (1) 0 0 (6,060) (1)
Non-cash
compensation
expense 811 168 0 0 811 168
Non-cash
impairment
charge 0 0 0 0 0 0
Operating
Income
(Loss) 6,482 (734) 3,013 507 9,495 (227)
Reconciliation of North American Amphitheaters Adjusted OIBDAN to
Operating Income / (Loss)
($ in thousands)
As Reported Acquisitions/ Pro Forma
Divestitures (2)
Three Three Three Three Three Three
Months Months Months Months Months Months
Ended Ended Ended Ended Ended Ended
6/30/2007 6/30/2006 6/30/2007 6/30/2006 6/30/2007 6/30/2006
Adjusted
OIBDAN $25,055 $13,019 ($471) ($153) $24,584 $12,866
Depreciation
and
amortization 6,121 6,668 (6) (1,281) 6,115 5,387
Loss (gain) on
sale of
operating
assets (519) 0 0 0 (519) 0
Non-cash
compensation
expense 0 0 0 0 0 0
Non-cash
impairment
charge 0 0 0 0 0 0
Operating
Income
(Loss) 19,453 6,351 (465) 1,128 18,988 7,479
(1) Includes the divestiture of a portion of our North American sports
representation business and our UK sports representation business
throughout 2006, the acquisition of CPI in May 2006, the acquisition
of Trunk in June 2006, the acquisition of Musictoday in September
2006, the acquisition of House of Blues in November 2006, the
acquisition of Gamerco in December 2006, the divestiture of Donington
Racetrack in January 2007, the divestiture of the remaining stake in
Phantom - The Vegas Spectacular in March 2007, the divestiture of the
Nashville amphitheater in April 2007, the divestiture of Hammersmith
Apollo and the Forum in June 2007, the acquisition of the remaining
50% interest in House of Blues Concerts Canada and consolidation of
those results in June 2007 as if all of these transactions were
completed on the first day of the period presented, does not include
the consolidation of Academy Music Group's financial results which
occurred in July 2007.
(2) Includes the acquisition of House of Blues in November 2006, the
divestiture of the Nashville amphitheater in April 2007 and the
acquisition of the remaining 50% interest in House of Blues Concerts
Canada and consolidation of those results in June 2007 as if all of
these transactions were completed on the first day of the period
presented.
First Call Analyst:
FCMN Contact:
SOURCE: Live Nation
CONTACT: Investors, Lee Ann Gliha, +1-310-867-7000, or Media, John
Vlautin, +1-310-867-7127, both of Live Nation
Web site: http://www.livenation.com/