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SFX Entertainment Inc. (SFXE)

Q4 2013 Earnings Conference Call

March 27, 2014 10:00 AM ET


Joe Jaffoni - IR

Bob Sillerman - Chairman and CEO

Richard Rosenstein - CFO


Brian Fritz - Jefferies

Ben Lowe - Stifel, Nicolaus & Co

Doug Mitchelson - Deutsche Bank

Todd Morgan - Jefferies

Ben Green - BD Capital Partners LLC.

Rich Tullo - Albert Fried & Company



Greetings and welcome to SFX Entertainment Fourth Quarter and Full Year 2013 Conference Call. At this time all participants are in a listen-only mode. A question-and-answer will follow the formal presentation. (Operator Instructions). As a reminder this conference is being recorded. I would now like to turn the conference over to Joe Jaffoni; Investor Relations please go ahead sir.

Joe Jaffoni

Thank you operator and good morning everyone. In a moment SFX Chairman and CEO Robert F. X. Sillerman and CFO Richard Rosenstein will review recent operating and financial developments. I would like to remind everyone that management will also review a presentation that is available on the investor relations section of the company’s website at We’ll get to management’s presentation and comments momentarily as well as your questions and answers. But first I’ll review the Safe Harbor disclosure.

This morning SFX issued a press release announcing its fourth quarter and full year financial results for the period ended December 31, 2013. The release is available on the investor relations section of the company’s website at Before we get started, I’d like to remind everyone that this call is being recorded and a webcast replay will be available for 90 days, the details of which are in our press release issued this morning.

During the call we may make certain forward looking statements about the company’s performance, such forward-looking statements are not guarantees of future performance and therefore one should not place undue reliance upon them. Forward-looking statements are also subject to inherent risk and uncertainties that could cause actual results to differ materially from those expressed. For additional information concerning factors that could cause actual results to differ from those discussed in our forward-looking statements, you should refer to the cautionary statements contained in our press release as well as the risk factors contained in the company’s filings with the SEC. Also during today’s call the company may discuss non-GAAP financial measures as defined by SEC regulation G. The GAAP financial measures most directly comparable to each non-GAAP financial measure discussed and the reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure can be found on the company’s website at by selecting the press release regarding the company’s full year 2013 earnings.

With that I’d like to turn the call over to SFX Chairman Bob Sillerman. Bob.

Bob Sillerman

Thank you, good morning everybody. It’s very exciting to be on this call. The principle focus of all our conversations with investors has been more impact, being able to realize the vision that we expressed about engaging the marketing partners and a broad conference and global program. And although we specifically don’t issue guidance as all of you know the analyst that suggested that in calendar year 2014 marketing partners would generate over $40 million in EBITDA. When we last presented, we indicated that there were three very likely in the pipeline and also dug [indiscernible] a year from now how many partners magnitude we might have, I said six and I am pretty sure that number is wrong.

We already have achieved four, and we have already achieved estimate of others for 2014 and there are no other dramatic and significant ones that we expect to let people know about the principle festival season which means we’ll be at six. No with this kind of effort and actually do a bit better than the six I have mentioned. These results don’t give you a good snapshot of the way I believe that we should operate this company. I never drive the quarterly results; many of you invested with me in the past know this. This quarter was a spectacular example of that, there was a brand that we already do business with, wanted to do a very limited and targeted transaction in the low eight (Ph) figures. And having done that, we have added well above $10 million to the quarterly EBITDA. I made a very conscious decision not to bring that in for only one reason that particular category provides much greater potential and this year we will in fact realize that. We do additional partnerships we have announced here will be named when the consumer facing announcement is made which will probably be the third week of April in rather large fun event. The partnerships are each five years in term and provide a minimum threshold as well as very realistic potential for participating in upside. One of them is a very well-known global financial services partner and the other is someone who already has been very helpful to the predecessor companies in helping them remain contact and maximize access to the individuals. Each of them represents a minimum of 75 million over the five years obviously 15 million per year. We expect them to be significantly larger.

The reason we are not mentioning them is pure and simply it’s a dramatic announcement for our fans and the message must be properly communicated. It’s a very exciting ride (Ph) engagement methodology that is something that has never been done like the Clear Channel deal, has never been done before with this twist. With those and others already announced conservatively we therefore booked over 40 million in EBITDA, revenue and EBITDA for marketing partnerships. That to me is confirmation that the vision we had is spot on and it’s increasingly being recognized. The two incrementals we anticipate announcing shortly are somewhat more traditional but like what we did for Anheuser-Busch which those of you who will enter to the Website you will see, is anything but traditional reflects our approach.

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