World Wrestling Entertainment, Inc. Q1 2010 Earnings Call Transcript

World Wrestling Entertainment, Inc. Q1 2010 Earnings Call Transcript
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World Wrestling Entertainment, Inc. (WWE)

Q1 2010 Earnings Call

May 6, 2010 11:00 a.m. ET

Executives

Michael Weitz - SVP, IR

Vince McMahon - CEO

George Barrios - CFO

Donna Goldsmith - COO

Analysts

Richard Ingrassia - Roth Capital

Michael Kupinski - Noble Financial Group

Marla Backer - Hudson Square Research

Luke Shagets - Sterne, Agee & Leach

Jamie Clement - Sidoti & Company

Presentation

Operator

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Good morning. My name is Cayce, and I will be your conference operator today. At this time, I would like to welcome everyone to the WWE First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. (Operator Instructions).

I would now like to turn the call over to your host Mr. Michael Weitz, Senior Vice President of Investor Relations. Sir, you may begin your conference.

Michael Weitz

Thank you and good morning, everyone. Welcome to World Wrestling Entertainment's 2009 first quarter 2010 earnings conference call. Joining me for today's discussion are Vince McMahon, our Chairman and CEO; Donna Goldsmith, our COO; and George Barrios, our CFO.

We issued our earnings releases earlier this morning and will be referencing a presentation as part of our discussion. These are available on our corporate website at corporate.wwe.com. We will be making several forward-looking statements today as part of our discussion. These statements are based on management's estimates. Actual results may differ due to numerous factors, which are referenced on page one of the presentation.

These risks and uncertainties are discussed in more detail in our filings with the SEC. Reconciliations for non-GAAP financial information discussed on this call can be found in our earnings release or on our website. Today, we will review our financial results for the first quarter and we will follow this review with a Q&A session.

At this time, it is my privilege to turn the call over to Vince.

Vince McMahon

Good morning, everyone. I think the most important thing to realize, the most important thing that would be proud of here at WWE is that we achieved our highest profit EBITDA margin of in recent history which is 24%, not bad. Now withstanding that as far as this quarter is concerned, we consider WrestleMania, we had $13 million in profit, which is okay and for WrestleMania is down about 12% from last year which I think is more due to more of a communal viewing habit much like Super Bowl parties and addiction to that I guess maybe the bottom line is, as far as the attraction is concerned, maybe it wasn't exactly what everyone wanted to see. None the less the brand remains very, very strong and its profit contribution is very strong as well.

One of the things I'd like to make mention of today is out television platform, especially on the SmackDown. RAW has been a staple of WWE for many, many years not just here in North America with the U.S.A network but quite frankly it's been our lead program all over the globe. Now SmackDown, we just secured a multi year deal with the Sci-Fi network, also one of the NBCU umbrella as is Monday Night RAW's network.

So the two of them together are going to be very, very complimentary on the same NBCU platforms. The cross promotion will be extraordinary. And again likewise, SmackDown, moving from a MyNet broadcast situation into a very secure and non preemptive time. Friday night at 8'o Clock eastern is very, very big for us because we're going to drive a lot of our overall revenues, not just SmackDown specifically and I think that in time SmackDown hopefully would have the same contributions in Monday Night RAW given its consistency and in fact we're on a very strong cable platform of Sci-Fi and the cross promotion of U.S.A again, both owned by the NBCU conglomer.

Internationally it remains strong for us. Revenue was up about 19% if you exclude live event touring, specifically down in Latin America which has been very strong, Mexico specifically very, very strong for us in terms of live attendance and per pay view, which is not about, I think its close. It's our second largest count contributor. Maybe it's just a little bit before, ahead or behind United Kingdom. I'm not sure.

Other than that, another really key point is the very strong launch of our of our toys with Mattel. This quarter you will see some mixed numbers with Mattel and our former distributor JAKKS very, very strong. We're very happy about how that kick off has been with [Michelle]. And again we look forward to achieving our same financial objectives of growth over anywhere from 15% to 20% over a longer period of time.

And now I'll turn it over to George.

George Barrios

Thanks Vince. I'd like to start by providing you with some additional perspective on our first quarter results. For the quarter we reported a 39% increase in revenue to $138.7 million --

Vince McMahon

Hang on. I said the launch of Michelle. It's Mattel, not Michelle. It's below too early for me. I'm sorry George, go ahead.

George Barrios

…and more than doubled our operating income to $37.3 million. However several items impacted the comparability of our results on a year-over-year basis. We've included the timing of WrestleMania, the receipt of certain tax credits related to our television production activity and a one time restructuring charge in the quarter last year. As a reminder, WrestleMania occurred in the first quarter of this year compared to the second quarter last year. The event contributed $28.8 million of revenues and $13.1 million of profit contribution, $8.8 million net of tax to our results for the first quarter of 2010.

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