01—Abstract
Summary
Summary of the 10-K filed February 28, 2019. Cited figures are marked; the original filing is the authoritative source.
Live Nation Entertainment, Inc. reported record 2018 revenue of $10.8 billiona, up $1.1 billion, or 11%, from $9.7 billion in 2017, which the company describes as its thirteenth consecutive year of revenue growth.
Operating income rose to $272.5 millionb from $91.4 million, and net income attributable to common stockholders was $60.2 million, compared with a net loss of $6.0 million in 2017. Basic and diluted net loss per share available to common stockholders improved to $(0.09) from $(0.48). Concerts generated $8.8 billion, or 81.3%, of revenue, and the company cited nearly 93 million fans attending events, an increase of 8%.
Ticketing revenue reached $1.5 billionc, with 217 million fee-bearing tickets sold. The 2017 comparison is affected by a $110.0 million legal settlement accrued in 2017 and entered into in January 2018, and by goodwill impairments of $10.5 million in 2018 and $20.0 million in 2017. Adjusted operating income, a non-GAAP measure the company defines, was $829.1 million in 2018 versus $625.1 million in 2017.
Operating cash flow increased to $941.6 milliond from $623.5 million. Total principal debt was $2.9 billion at December 31, 2018, with total net debt of $2.8 billion and cash and cash equivalents of $2.4 billion, of which $859.1 million was client cash. The company paid no dividends and expects capital expenditures of approximately $300 million in 2019.
The filing also highlights ongoing risk areas, including consumer class action lawsuits filed in late 2018 over secondary ticket pricing, for which the company says it cannot estimate a possible loss, regulatory restrictions on its secondary ticketing business, data security and privacy regulation including the EU GDPR, and labor and venue concentration risks. The company will adopt the new lease accounting standard on January 1, 2019, which it expects to add $1.1 billion to $1.3 billion of operating lease assets and liabilities to its balance sheet.
02—Key points
Key Highlights
- Record 2018 revenue of $10.8 billion, up $1.1 billion, or 11%, from $9.7 billion in 2017; the company's thirteenth consecutive year of revenue growth.
- Operating income increased to $272.5 million from $91.4 million, and net income attributable to common stockholders was $60.2 million versus a net loss of $6.0 million in 2017.
- Concerts revenue of $8.8 billion (81.3% of total) with nearly 93 million fans, an 8% increase; Sponsorship & Advertising revenue of $504 million (4.7%); Ticketing revenue of $1.5 billion (14.2%).
- Adjusted operating income (non-GAAP) of $829.1 million versus $625.1 million in 2017; operating cash flow of $941.6 million versus $623.5 million.
- Total principal debt of $2.9 billion, total net debt of $2.8 billion, and cash and cash equivalents of $2.4 billion (including $859.1 million of client cash); the senior secured credit facility's total leverage covenant is 5.0x through September 30, 2019.
- 2017 results include a $110.0 million legal settlement accrual, and goodwill impairments of $10.5 million in 2018 and $20.0 million in 2017 related to the Artist Services unit.
- Pending consumer class action lawsuits over secondary ticket practices, for which the company says it cannot estimate a possible loss or range of loss; no dividends are paid and capital expenditures are expected to be approximately $300 million in 2019.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 28, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $10.79B$9.69B | +11.4% |
| SG&A Expenses | $2.00B$1.91B | +4.7% |
| Operating Income | $272.54M$91.40M | +198.2% |
| Interest Expense | $140.98M$107.77M | +30.8% |
| Net Income | $60.25M-$6.01M | +1101.6% |
| EPS (Basic) | $-0.09$-0.48 | +81.3% |
| Shares Outstanding (Basic) | 207.44M204.92M | +1.2% |
05—Questions
Frequently Asked Questions
How did Live Nation's revenue and profitability change in 2018?
Revenue rose to $10.8 billion from $9.7 billion, an increase of $1.1 billion, or 11%. Operating income increased to $272.5 million from $91.4 million, and net income attributable to common stockholders was $60.2 million, compared with a net loss of $6.0 million in 2017. Net loss per share available to common stockholders improved to $(0.09) from $(0.48).
Which segments drove results, and how large are they?
Concerts was the largest segment at $8.8 billion of revenue (81.3% of the total), with operating loss of $36.2 million and AOI of $226.0 million. Sponsorship & Advertising generated $504 million of revenue with operating income of $283.2 million. Ticketing generated $1.5 billion of revenue with operating income of $201.9 million.
What is the company's debt and liquidity position?
Total principal debt was $2.9 billion at December 31, 2018, with total net debt of $2.8 billion. Cash and cash equivalents were $2.4 billion, including $859.1 million of client cash that is payable to ticketing clients. Available borrowing capacity under the revolving credit facility was $276.3 million. The company said it was in compliance with all debt covenants.
What are the main legal and regulatory risks disclosed?
The filing describes consumer class action lawsuits filed in September through December 2018 alleging conduct that encourages secondary ticket resale at elevated prices, and the company says it cannot estimate a possible loss or range of loss. It also discloses ongoing restrictions from agreements with the FTC and several states on its ticket resale practices, and data security and privacy obligations, including the EU General Data Protection Regulation.
Does the company pay dividends, and what capital spending is planned?
The company has not declared or paid any dividends and intends to retain future earnings for business expansion and debt repayment. Capital expenditures were $250.7 million in 2018, and the company expects capital expenditures of approximately $300 million for 2019.
06—Continue