California-based concert and entertainment company,
Live Nation Entertainment, Inc.
) reported mixed second-quarter results wherein earnings missed the
Zacks Consensus Estimate, but revenues surpassed the same.
Earnings of 11 cents per share missed the Zacks Consensus Estimate
of 16 cents by 31.3%. Further, earnings declined from the
prior-year figure of 30 cents by 63.3%. The downside reflects lower
revenues on a year-over-year basis and higher selling general and
Live Nation Entertainment, Inc - Earnings
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Revenues in Details
Quarterly revenues of $1.67 billion beat the Zacks Consensus
Estimate of $1.58 billion million by 5.7%. However, revenues
declined 1% year over year, mainly due to lower revenues in the
concert, Artist Nation as well as Other & Eliminations segment.
Declining concert attendance led to lower revenues, which
negatively impacted results.
The company operates under Concerts, Ticketing, Artist Nation and
Sponsorship & Advertising segments
: The concerts segment reported revenues of $1.17 billion, down 2%
year over year. During the quarter, the segment conducted
approximately 5,666 events in the quarter, of which 4,027 were
domestic and the remaining 1,639 were international events.
: The ticketing segment reported revenues of $371 million, up 10%
year over year. Ticketing was the only bright spot with the company
selling an approximate 36.9 million tickets in the quarter, up from
the prior quarter figure 36.2 million. The total number of tickets
sold excludes approximately 61 million tickets sold through
Ticketmaster, and season seat packages and venue clients' box
offices, for which the company does not receive a fee.
: This is the company's artist management business that acts as a
pipeline for concerts. The segment reported revenues of $79.2
million, down 21% year over year.
Sponsorship & Advertising
: The Sponsorship & Advertising segment reported revenues
of $70.9 million, down 0.4% year over year.
Other & Eliminations
: The segment reported negative revenues of $27.5 million, versus
negative revenues of $22.2 million in the prior-year quarter.
Behind the Headline Numbers
Selling, general and administrative expenses climbed 10.2% year
over year to $325.9 million. Direct operating expenses were $1.7
billion, down 0.8%.
Operating income declined 43.1% year over year to $55.7 million due
to increase in selling general and administrative expenses and
decline in revenues.
2014 Growth Expectations
Live Nation expects 2014 to be the fourth consecutive year of
revenue, adjusted operating income and free cash flow growth.
Further, the company expects to grow the profitability of each of
its businesses. The company believes that the underlying demand for
live events continues to be strong globally and on a long-term
basis the company's concerts as well as sponsorship and ticketing
businesses will continue to grow.
We are encouraged by Live Nation's ticketing business, which
operates under the well-known brand of Ticketmaster, the leading
ticketing sales platform. The company has a significant presence in
this high-margin agency business where it charges a fee to sell
tickets on behalf of its clients. We believe the ticketing segment
will continue its revenue growth momentum in the coming quarters.
However, we remain aware of the escalating costs, especially in the
Concerts segment. Despite achieving stellar revenue growth, high
operating costs associated with concert organizing led the segment
to post losses for the last three years. Such high operating costs
amid a sluggishly recovering economy is a concern.
Live Nation currently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the same industry include HomeAway, Inc. (
), Speedway Motorsports Inc. (
) and Vail Resorts Inc. (
). All these stocks carry a Zacks Rank #2 (Buy).
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