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World Wrestling Entertainment Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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World Wrestling Entertainment Inc. (WWE) filed Quarterly Report for the period ended 2012-09-30.

World Wrestling Entertainment, Inc. has a market cap of $609.2 million; its shares were traded at around $8.2 with a P/E ratio of 14.6 and P/S ratio of 1.3. The dividend yield of World Wrestling Entertainment, Inc. stocks is 5.9%. World Wrestling Entertainment, Inc. had an annual average earning growth of 3.2% over the past 10 years.

Highlight of Business Operations:

Overall live events revenues remained relatively flat in the current year quarter as compared to the prior year quarter. Revenues from our North America live events business increased $2.8 million or 20% reflecting increases in the number of events, average attendance and average ticket prices. Our international live events business decreased $3.0 million primarily the result of WWE holding half the number of events it did in the comparable prior year period. This impact however was mitigated by a 17% increase in average attendance and a 23% increase in average ticket prices. Cost of revenue for live events decreased by $0.1 million from the prior year quarter. The live events profit contribution margin was 25% in the current year quarter compared to 26% in the prior year quarter.

Venue merchandise revenues increased by $0.9 million in the current year quarter as compared to the prior year quarter. This 25% increase was primarily due to a 26% increase in total domestic attendance and a 1% increase in domestic per capita merchandise sales to $10.28 in the current year quarter. Cost of revenue for venue merchandise increased by $0.5 million from the prior year quarter, driven by the increased sales. The venue merchandise profit contribution margin increased to 40% from 39% in the prior year quarter.

Licensing revenues decreased by $1.9 million in the current year quarter as compared to the prior year quarter, as a result of reduced sales of video games and novelty products. Royalties earned from the sale of video games declined by $1.2 million due primarily to one fewer release, WWE All Stars, in the current year period. WWE All Stars was released in March 2011 and was not refreshed in the current year. Shipments of our franchise video game, WWE'12, also declined 5% in the current year quarter to 127,000 units. Royalties from the sale of toys, however, increased 16%, or $0.5 million, reflecting the introduction of our Brawlin' Buddies toy by Mattel and strong domestic retail support. Licensing cost of revenues decreased by $0.4 million from the prior year quarter, primarily due to lower commission and talent participations driven by decreased revenues. The licensing profit contribution margin was 75% in the current year quarter compared to 76% in the prior year quarter.

Home video revenues decreased by $1.9 million in the current year quarter as compared to the prior year quarter. The 23% decline in revenue reflected a reduction in average unit price and lower sell-through rates that was partially offset by an increase in shipments. Although shipments increased 36% to 933,100 units, a majority of this growth was derived from lower priced new releases and catalog titles; the resulting change in product mix contributed to a 16% reduction in average price to $11.01. In the prior year quarter, we received a retroactive price adjustment of $1.1 million from one of our suppliers. The impact of this pricing adjustment was the primary reason for the deterioration in the home video profit contribution margin to 44% from 69%.

Live events revenues increased by $2.6 million in the current year period as compared to the prior year period. Our North American live events business increased by $6.0 million, primarily due to the strong performance of our annual WrestleMania event during the current year period compared to the prior year period. Average ticket prices for our North America events increased by 9% to $45.57. We also experienced an increase in sponsorship revenues of $0.9 million. Our international live events business decreased by $3.4 million, primarily driven by a decrease in the number of events during the third quarter of 2012. We experienced weak attendance at our events held in Mexico and changes in territory mix during the second quarter of 2012. This decrease was partially offset by the successful performance of our inaugural tour in Abu Dhabi during the first quarter of 2012. Average attendance at our international events declined 10% to 6,200 attendees and international ticket prices increased by 8% in the current period as compared to the prior year period. Cost of revenue for live events increased by $0.9 million, primarily reflecting additional sponsorship expenses. The live events profit contribution margin was 30% and 29% and in the current and prior year periods, respectively.

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