Live Nation Entertainment Reports First Quarter 2014 Financial Results

Live Nation Entertainment Reports First Quarter 2014 Financial Results

First Quarter Highlights (year over year):

- Revenue Up 22% to $1.1 Billion

- AOI Increased 56% to $83 Million

- Operating Income Improved 63% to ($12) Million

- Free Cash Flow Up 138% to $34 Million

- Event-Related Deferred Revenue Up 14% to $885 Million

- Concert Attendance Up 11%

- Ticketmaster Resale Volume Up 40% in April

LOS ANGELES, May 6, 2014 /PRNewswire/ -- Live Nation Entertainment (NYSE: LYV) today released financial results for the three months ended March 31, 2014.

http://photos.prnewswire.com/prnvar/20100603/LA14899LOGO

Coming off a record year in 2013, we are off to a strong start in the first quarter, setting us up for our fourth consecutive year of growth in 2014. Our first quarter delivered revenue growth of 22%, Adjusted Operating Income (AOI) growth of 56% and a free cash flow increase of 138%. Each of our businesses contributed to this growth, with all four segments delivering revenue and AOI growth for the quarter.

Concerts

Our Concerts division delivered revenue of $663 million in the first quarter of 2014, an increase of 29% over the same period in 2013. This strong revenue growth was driven primarily by more arena events which drove improvements in AOI of 80% and in operating income of 15%. Tickets sold through May 2 of this year for all events in 2014 are up 5% year-on-year. These higher ticket sales drove a 14% increase in our event-related deferred revenue as of March 31 as compared to last year. In total, we promoted over 4,800 events with more than 9 million attendees in the first quarter, an increase in attendance of 11% over last year.

Last year, we added 10 million fans across our Concert events, and expect to deliver continued growth and add more fans in 2014. We are off to a strong start for the year, and expect that we will continue to build our share and promote over 80% of the top 25 tours globally this year. With 5 million fans across 63 festivals, we believe Live Nation is the largest festival producer in the world and we expect to grow this fan base by another 10% this year. Our portfolio of 18 electronic festivals continues to be strong, led by Electric Daisy Carnival in Las Vegas, which is the largest electronic festival in the world with over 400,000 fans attending. Collectively, our global concert platform has never been stronger and we currently expect to promote over 23,000 shows again this year, in more than 40 countries with over 3,000 artists, and we expect to continue adding more markets, festivals and shows.

http://photos.prnewswire.com/prnvar/20140506/85045

Artist Nation

Our artist management business is becoming increasingly strategic for us as a pipeline into our concerts business, which in turn drives our high-margin on-site, sponsorship and ticketing businesses. Artist Nation's revenue in the first quarter of $73 million was an increase of 44% over last year, largely driven by higher management commissions. In 2014, we expect to promote approximately 30% more shows for major Artist Nation artists as compared to last year, a strong indicator that our strategy is succeeding and that this division is now contributing real growth to the company.

Ticketing

Our net renewal rate in Ticketing has continued at over 100% in 2014 and revenue was $355 million for the first quarter, an increase of 9% over last year. The number of primary tickets sold this quarter grew by 3% over last year, with a 17% increase in AOI and a 42% improvement in operating income. A top priority for our Ticketing business in 2014 continues to be delivering fans a fully integrated offering of primary and secondary tickets together on TM+. We now have 60 teams from the NFL, NBA and NHL and over 2,000 concerts that are now officially offering fans all of their legitimate ticketing options in one place. Looking at our most recent results, for the month of April, we grew our global resale volume by 40% relative to April of 2013.

http://photos.prnewswire.com/prnvar/20140506/85044

TM+ is one of the great new products that has come from our continuing investment in the Ticketmaster platform and products. Another area of ongoing innovation in 2014 is in our mobile products. We are deploying new apps and mobile web experiences with greater functionality, making it easier for fans to buy, transfer and sell their tickets across any mobile platform or device. As a result, our rapid sales shift to mobile continues and we saw 16% of all tickets sold in the first quarter being sold via mobile and tablet devices, up 33% from the same period last year.

Sponsorship & Advertising

Our Sponsorship & Advertising business for the first quarter of this year had revenue of $45 million, which is up 13% over last year, with increases in both sponsorships and online advertising globally, driving AOI improvement of 8% and operating income up 7%. Recent sponsorship activity includes JBL sponsoring our Pier 97 venue in New York along with JCPenney as a new festival sponsor in North America. New content partners for 2014 include Absolut, in a campaign focused on the discovery of developing artists, and AT&T around the role of mobile in helping artists stay connected while on the road.

http://photos.prnewswire.com/prnvar/20140506/85046

Last week we took a major step forward in transforming our advertising business towards a true media and content company with the announcement of our Live Nation Channel on Yahoo. While others have streamed shows in the past, we believe that only Live Nation, with its scale of 23,000 shows globally, can consistently deliver programming and establish a network with an ongoing advertising base. With this channel, we will co-sell advertising and we are currently attracting large commitments that will drive advertising revenue. We have been building our advertising team in preparation for launching the channel on Yahoo!, deploying additional content verticals and building our current Live Nation and Ticketmaster sites. I expect that as our ventures with Yahoo and other content initiatives prove successful, you will see us further leveraging our content and the Live Nation brand, to deliver an acceleration in the growth of our advertising business over the next few years.

2014 Growth Expectations

Given our momentum coming out of 2013, our strong early success with the first quarter and solid leading indicators for the year, I am confident that in 2014 we will (1) deliver our fourth consecutive year of revenue, AOI and free cash flow growth, (2) grow the profitability of each of our businesses, (3) stay on track to deliver our 2015 financial plans, and (4) operationally continue to invest in and build all of our businesses to drive continued growth.

Michael Rapino
President and Chief Executive Officer
Live Nation Entertainment, Inc.

The company will webcast a teleconference today at 5:00 p.m. Eastern Time to discuss its financial performance. Interested parties should visit the Investor Relations section of the company's website at investors.livenationentertainment.com to register for the webcast. Supplemental statistical and financial information provided on the call, if any, will be available under the same link. A replay of the webcast will also be available on the Live Nation website.




FINANCIAL HIGHLIGHTS - 1st QUARTER
----------------------------------

(unaudited; $ in millions)
-------------------------


Q1 2014 Q1
2013 Growth
------- ----- ------

Revenue

Concerts $662.5 $513.5 29%

Ticketing 354.5 325.1 9%

Artist
Nation 72.6 50.3 44%

Sponsorship
&
Advertising 45.4 40.1 13%

Other &
Eliminations (7.7) (5.3) (45)%
---- ---- ----

$1,127.3 $923.7 22%
====== ====== ===


Adjusted Operating
Income (Loss)

Concerts $(2.6) $(13.1) 80%

Ticketing 70.0 59.6 17%

Artist
Nation 5.1 (1.1) **

Sponsorship
&
Advertising 25.8 23.8 8%

Other &
Eliminations 0.4 0.7 (43)%

Corporate (16.1) (17.0) 5%
----- ----- ---

$82.6 $52.9 56%
===== ===== ===


Operating Income
(Loss)

Concerts $(33.9) $(39.8) 15%

Ticketing 21.9 15.4 42%

Artist
Nation (3.6) (11.0) 67%

Sponsorship
&
Advertising 25.2 23.5 7%

Other &
Eliminations 0.9 1.0 (10)%

Corporate (22.8) (22.3) (2)%
----- ----- ---

$(12.3) $(33.2) 63%
====== ===== ===


** percentages are not
meaningful


As of March 31, 2014, total cash and cash equivalents were $1.6 billion, which includes $569 million in ticketing client cash and $363 million in free cash. Event-related deferred revenue was $885 million as of March 31, 2014, compared to $774 million as of the same date in 2013. Free cash flow was $34 million for the first quarter of 2014 as compared to $14 million in the first quarter of last year.



About Live Nation Entertainment:

Live Nation Entertainment (NYSE: LYV) is the world's leading live entertainment company comprised of global market leaders: Ticketmaster, Live Nation & House of Blues Concerts, LN Media and Artist Nation Management. For additional information, visit investors.livenationentertainment.com.



Follow us @twitter.com/LiveNationInc











LIVE NATION ENTERTAINMENT, INC.

KEY OPERATING METRICS


Three Months Ended
March 31,

2014 2013
---- ----

Concerts (1)

Total estimated events:

North America 3,243 3,280

International 1,559 1,622
----- -----

Total estimated events 4,802 4,902
----- -----

Total estimated fans (rounded):

North America 5,731,000 5,060,000

International 3,297,000 3,050,000
--------- ---------

Total estimated fans 9,028,000 8,110,000
--------- ---------

Ticketing (2)

Number of tickets sold (in
thousands):

Concerts 17,487 16,672

Sports 8,033 8,521

Arts and theater 4,489 4,264

Family 4,806 4,570

Other (3) 1,837 1,721
----- -----

36,652 35,748
------ ------


Gross transaction value of
tickets sold (in
thousands) $2,357,204 $2,170,035


Sponsorship & Advertising

Sponsorship revenue (in
thousands) $32,063 $28,253

Online advertising revenue
(in thousands) $13,325 $11,894

_________

(1) Events generally represent a
single performance by an
artist. Fans generally
represent the number of
people who attend an event.
Festivals are counted as one
event in the quarter in
which the festival begins,
but number of fans is based
on the days the fan was
present at the festival and
thus can be reported across
multiple quarters. Events
and fan attendance metrics
are estimated each quarter.

(2) The number and gross
transaction value of tickets
sold includes primary
tickets only. These metrics
include tickets sold during
the period regardless of
event timing except for our
promoted events in our owned
or operated venues and in
certain European territories
where these tickets are
reported as the events
occur. The total number of
tickets sold reported above
for the three months ended
March 31, 2014 and 2013
excludes approximately 74
million and 73 million
tickets sold, respectively,
using our Ticketmaster
systems, through season seat
packages and our venue
clients' box offices, for
which we do not receive a
fee.

(3) Other category includes
tickets for comedy shows,
facility tours, donations,
lectures, seminars and
cinemas.







LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


Three Months Ended
March 31,
---------

2014 2013
---- ----

(in thousands except
share and per share
data)

Revenue $1,127,316 $923,698

Operating expenses:

Direct operating
expenses 731,151 576,934

Selling, general and
administrative
expenses 302,405 279,522

Depreciation and
amortization 82,588 82,165

Loss (gain) on
disposal of operating
assets 506 (3,597)

Corporate expenses 21,174 20,655

Acquisition
transaction expenses 1,800 1,208
----- -----

Operating loss (12,308) (33,189)

Interest expense 24,492 28,151

Interest income (666) (1,768)

Equity in earnings of
nonconsolidated
affiliates (2,806) (2,582)

Other (income)
expense, net (1,176) 3,638
------ -----

Loss before income
taxes (32,152) (60,628)

Income tax (benefit)
expense (2,055) 3,559
------ -----

Net loss (30,097) (64,187)

Net income (loss)
attributable to
noncontrolling
interests 2,351 (948)
----- ----

Net loss attributable
to common
stockholders of Live
Nation Entertainment,
Inc. $(32,448) $(63,239)
======== ========


Basic and diluted net
loss per common share
attributable to
common stockholders
of Live Nation
Entertainment, Inc. $(0.16) $(0.33)
====== ======


Basic and diluted
weighted average
common shares
outstanding 197,857,662 188,827,190







LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)


March 31, December
31,
2014 2013
---- ----

(in thousands)

ASSETS

Current assets

Cash and cash equivalents $1,629,142 $1,299,184

Accounts receivable, less
allowance of $19,089 and
$19,850, respectively 509,119 439,151

Prepaid expenses 514,111 378,342

Other current assets 59,385 43,427
------ ------

Total current assets 2,711,757 2,160,104

Property, plant and equipment

Land, buildings and
improvements 806,476 816,931

Computer equipment and
capitalized software 432,676 421,846

Furniture and other
equipment 203,708 210,866

Construction in progress 54,321 52,883
------ ------

1,497,181 1,502,526

Less accumulated
depreciation 799,203 795,726
------- -------

697,978 706,800

Intangible assets

Definite-lived intangible
assets, net 664,187 676,564

Indefinite-lived
intangible assets 376,193 376,736

Goodwill 1,493,536 1,466,983

Other long-term assets 316,524 296,334
------- -------

Total assets $6,260,175 $5,683,521
======== ========

LIABILITIES AND EQUITY

Current liabilities

Accounts payable, client
accounts $750,852 $656,253

Accounts payable 107,333 111,320

Accrued expenses 622,021 668,799

Deferred revenue 1,020,775 486,433

Current portion of long-
term debt 284,059 278,403

Other current liabilities 51,377 54,310
------ ------

Total current liabilities 2,836,417 2,255,518

Long-term debt, net 1,523,657 1,530,484

Long-term deferred income
taxes 161,437 161,637

Other long-term
liabilities 104,227 85,035

Commitments and contingent
liabilities

Redeemable noncontrolling
interests 61,009 61,041

Stockholders' equity

Common stock 1,989 1,978

Additional paid-in capital 2,376,354 2,368,281

Accumulated deficit (984,244) (951,796)

Cost of shares held in
treasury (6,865) (6,865)

Accumulated other
comprehensive income
(loss) 7,493 (2,370)
----- ------

Total Live Nation
Entertainment, Inc.
stockholders' equity 1,394,727 1,409,228

Noncontrolling interests 178,701 180,578
------- -------

Total equity 1,573,428 1,589,806
--------- ---------

Total liabilities and
equity $6,260,175 $5,683,521
======== ========







LIVE NATION ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


Three Months Ended
March 31,
---------

2014 2013
---- ----

(in thousands)

CASH FLOWS FROM OPERATING
ACTIVITIES

Net loss $(30,097) $(64,187)

Reconciling items:

Depreciation 30,619 30,328

Amortization 51,969 51,837

Deferred income tax
benefit (8,729) (3,229)

Amortization of debt
issuance costs and
discount/premium, net 4,737 5,170

Non-cash compensation
expense 10,018 6,305

Loss (gain) on disposal
of operating assets 506 (3,597)

Equity in earnings of
nonconsolidated
affiliates (2,806) (2,582)

Other, net (2,336) 691

Changes in operating assets and
liabilities, net of effects of
acquisitions and dispositions:

Increase in accounts
receivable (77,980) (63,146)

Increase in prepaid
expenses (137,308) (180,243)

Increase in other assets (47,784) (32,474)

Increase in accounts
payable, accrued
expenses and other
liabilities 43,550 21,773

Increase in deferred
revenue 531,338 503,814
------- -------

Net cash provided by
operating activities 365,697 270,460
------- -------

CASH FLOWS FROM INVESTING
ACTIVITIES

Distributions from
nonconsolidated
affiliates 911 1,767

Investments made in
nonconsolidated
affiliates (823) (1,963)

Purchases of property,
plant and equipment (24,523) (25,670)

Proceeds from disposal of
operating assets, net of
cash divested (539) 8,100

Cash paid for
acquisitions, net of
cash acquired (11,634) (339)

Purchases of intangible
assets (75) (17)

Other, net 60 (514)


Net cash used in
investing activities (36,623) (18,636)
------- -------

CASH FLOWS FROM FINANCING
ACTIVITIES

Proceeds from long-term
debt, net of debt
issuance costs 43 89,267

Payments on long-term
debt (6,547) (96,674)

Contributions from
noncontrolling interests 81 267

Distributions to
noncontrolling interests (4,195) (1,221)

Purchases and sales of
noncontrolling
interests, net (102) -

Proceeds from exercise of
stock options 7,919 22,332

Payments for deferred and
contingent consideration (1,951) (750)

Net cash (used in)
provided by financing
activities (4,752) 13,221
------ ------

Effect of exchange rate
changes on cash and cash
equivalents 5,636 (19,685)
----- -------

Net increase in cash and
cash equivalents 329,958 245,360

Cash and cash equivalents
at beginning of period 1,299,184 1,001,055
--------- ---------

Cash and cash equivalents
at end of period $1,629,142 $1,246,415
======== ========


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 include, but are not limited to, statements regarding the company's prospects for growth in 2014 and beyond, including with respect to company and/or divisional profitability, revenue, AOI, free cash flow, market share, event attendance, festival attendance and promotion of shows by major Artist Nation artists; the company's expectations regarding its recently-announced Live Nation Channel on Yahoo and plans to further leverage its content and brand to accelerate growth in its advertising business; and the company's plans to continue to add more markets, festivals and shows to its portfolio. Live Nation wishes to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on the company's plans, the risk that the company's markets do not evolve as anticipated, the potential impact of any economic slowdown and operational challenges associated with selling tickets and staging events.

Live Nation refers you to the documents it files from time to time with the U.S. Securities and Exchange Commission, or SEC, specifically the section titled "Item 1A. Risk Factors" of the company's most recent Annual Report filed on Form 10-K, and Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, which contain and identify other important factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date on which they are made. 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 Operating Income (Loss), or AOI, is a non-GAAP financial measure that the company defines as operating income (loss) before acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration arrangements and acquisition-related severance), depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets and non-cash and certain stock-based compensation expense. The company uses AOI to evaluate the performance of its operating segments. The company believes that information about AOI assists investors by allowing them to evaluate changes in the operating results of the portfolio of the businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in the company's business. Accordingly, AOI 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 GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.

Free Cash Flow is a non-GAAP financial measure that the company defines as AOI less maintenance capital expenditures, less net cash interest expense, less cash taxes, less net distributions to noncontrolling interest partners, plus distributions from investments in nonconsolidated affiliates net of contributions to investments in nonconsolidated affiliates. The company uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than maintenance capital expenditures. The company believes that information about free cash flow provides investors with an important perspective on the cash available to service debt and make acquisitions. Free cash flow is not calculated or presented in accordance with GAAP. A limitation of the use of free cash flow as a performance measure is that it does not necessarily represent funds available for operations and is not necessarily a measure of the company's ability to fund its cash needs. Accordingly, free cash flow should be considered in addition to, and not as a substitute for, operating income (loss) and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, free cash flow as presented herein may not be comparable to similarly titled measures of other companies.

Free Cash is a non-GAAP financial measure that the company defines as cash and cash equivalents less ticketing-related client funds, less event-related deferred revenue, less accrued expenses due to artists and cash collected on behalf of others for ticket sales, plus event-related prepaids. The company uses free cash as a proxy for how much cash it has available to, among other things, optionally repay debt balances, make acquisitions and fund revenue generating capital expenditures. Free cash is not calculated or presented in accordance with GAAP. A limitation of the use of free cash as a performance measure is that it does not necessarily represent funds available from operations and it is not necessarily a measure of our ability to fund our cash needs. Accordingly, free cash should be considered in addition to, and not as a substitute for, cash and cash equivalents and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, free cash as presented herein may not be comparable to similarly titled measures of other companies.








Reconciliations of Non-GAAP Measures to Their Most Directly Comparable GAAP Measures (Unaudited)


Reconciliation of Adjusted Operating Income (Loss) to Operating Income (Loss)
----------------------------------------------------------------------------


($ in Adjusted Loss Acquisition Operating
millions) operating (gain) expenses income
income on (loss)
(loss) disposal
of
operating
assets

Non-cash and Depreciation
stock-based and
compensation
expense

amortization


Three Months Ended March 31, 2014
---------------------------------


Concerts $(2.6) $1.9 $0.6 $28.5 $0.3 $(33.9)

Ticketing 70.0 2.2 (0.1) 46.0 - 21.9

Artist
Nation 5.1 0.4 - 7.8 0.5 (3.6)

Sponsorship
&
Advertising 25.8 0.4 - 0.2 - 25.2

Other and
Eliminations 0.4 - - (0.5) - 0.9

Corporate (16.1) 5.1 - 0.6 1.0 (22.8)
----- --- --- --- --- -----

Total
Live
Nation $82.6 $10.0 $0.5 $82.6 $1.8 $(12.3)
===== ===== ==== ===== ==== ======


Three Months Ended March 31, 2013
---------------------------------


Concerts $(13.1) $0.8 $(3.1) $28.7 $0.3 $(39.8)

Ticketing 59.6 1.5 (0.1) 42.8 - 15.4

Artist
Nation (1.1) 0.1 (0.4) 10.1 0.1 (11.0)

Sponsorship
&
Advertising 23.8 0.2 - 0.1 - 23.5

Other and
Eliminations 0.7 - - (0.3) - 1.0

Corporate (17.0) 3.7 - 0.8 0.8 (22.3)
----- --- --- --- --- -----

Total
Live
Nation $52.9 $6.3 $(3.6) $82.2 $1.2 $(33.2)
===== ==== ===== ===== ==== ======








Reconciliation of Adjusted Operating Income (Loss)
to Free Cash Flow
--------------------------------------------------


($ in millions) Q1 Q1
2014 2013
----- -----

Adjusted operating
income $82.6 $52.9

Less: Cash interest
expense -net (27.1) (22.5)

Cash taxes (7.4) (3.4)

Maintenance capital
expenditures (10.5) (11.5)

Distributions to
noncontrolling
interests (4.2) (1.2)

Distributions from
(contributions to)
investments in
nonconsolidated
affiliates 0.1 (0.2)
--- ----

Free cash flow $33.5 $14.1

Revenue generating
capital expenditures (10.1) (10.0)
----- -----

Net $23.4 $4.1
--- ----- ----





Reconciliation of Cash and Cash Equivalents to Free Cash
--------------------------------------------------------


($ in millions) March
31,
2014
----

Cash and cash equivalents $1,629.1

Client cash (568.8)

Deferred revenue - event-related (885.0)

Accrued artist fees (44.9)

Collections on behalf of others (52.1)

Prepaids related to artist
settlements/events 285.0
-----

Free cash $363.3
--------- ------


SOURCE Live Nation Entertainment

Photo:http://photos.prnewswire.com/prnh/20140506/85045
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Live Nation Entertainment

CONTACT: Investor Contact: Maili Bergman, (310) 867-7000, IR@livenation.com; or Media Contact: Jacqueline Peterson, (310) 360-3051, jacquelinepeterson@livenation.com


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