Post on 05-Jul-2020
October 2013
Forward-Looking Statements
Certain statements in this presentation may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including long-term projections of Live Nation’s financial results. We wish to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to operational challenges in achieving strategic objectives and executing on our plans, competition in our industry, the risk that our markets do not evolve as anticipated, the risk that consumer demand weakens and other challenges associated with any economic slowdown. When no source is provided, numbers are based on management
projections / estimates.
We refer you to the documents that we file from time to time with the SEC, specifically the section titled “Risk Factors” of our most recent Annual Report filed on Form 10-K and Quarterly Reports on Form 10-Q, which contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. All subsequent written and oral forward-looking statements by or concerning Live Nation Entertainment are expressly qualified in their entirety by the cautionary statements above. We do not undertake any obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.
Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures as defined by SEC Regulation G. An explanation of why management believes that these non-GAAP financial measures provide useful information to investors is provided below.
Adjusted Operating Income (Loss), or AOI, is a non-GAAP financial measure that the company defines as operating income (loss) before acquisition expenses (including transaction costs, changes in the fair value of accrued acquisition-related contingent consideration arrangements, payments under the Azoff Trust note and acquisition-related severance), depreciation and amortization (including goodwill impairment), loss (gain) on disposal of operating assets and non-cash and certain stock-based
compensation expense (including expense associated with grants of certain stock-based awards which were classified as liabilities). The company uses AOI to evaluate the performance of its operating segments. The company believes that information about AOI assists investors by allowing them to evaluate changes in the operating results of the portfolio of the businesses separate from non-operational factors that affect net income, thus providing insights into both operations and the other factors that affect reported results. AOI is not calculated or presented in accordance with GAAP. A limitation of the use of AOI as a performance measure is that it does not reflect the periodic costs of certain amortizing assets used in generating revenue in the company’s business. Accordingly, AOI should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, AOI as presented herein may not be comparable to similarly titled measures of other companies.
Free Cash Flow is a non-GAAP financial measure that the company defines as Adjusted Operating Income (Loss) less maintenance capital expenditures, less net cash interest expense, less cash taxes, less net distributions to noncontrolling interest partners, plus distributions from investments in nonconsolidated affiliates net of contributions to investments in nonconsolidated affiliates. The company uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than maintenance capital expenditures. The company believes that information about free cash flow provides investors with an important perspective on the cash available to service debt and make acquisitions. Free cash flow is not calculated or presented in accordance with GAAP. A limitation of the use of free cash flow as a performance measure is that it does not necessarily represent funds available for operations and is not necessarily a measure of the company’s ability to fund its cash needs. Accordingly, free cash flow should be considered in addition to, and not as a substitute for, operating income (loss) and other measures of financial performance reported in accordance with GAAP. Furthermore, this measure may vary among other companies; thus, free cash flow as
presented herein may not be comparable to similarly titled measures of other companies. 1
2
Growing global concerts industry
0
2
4
6
8
10
12
14
$ Billion
North
America
Western
Europe
Japan &
Australia
Emerging
Markets
2012 1998
$1.8B
$2.6B
$4.9B
$4.7B
$14B
Global
Market
+10% CAGR
3
Globalization of Rihanna’s music fans
Western
Europe
North
America
Rest of
World
Japan &
Australia
Percent of fans
56
40
17
20
27
25
23
30
53
1
3
5
4
2013 continues Live Nation concerts growth
z
+27%
Note: Comparison is of tickets sold as of September 30th for events playing off in that year
2012 2013
North America
Europe
Asia
+63%
2012 2013
+29%
2012 2013
+24%
2012 2013
Top 10 tours driven by young artists
1
6
1
7
2
8
3
9
4
1
5
0
Pink Rihanna Maroon 5 Jason Aldean Luke Bryan
Fleetwood Mac Beyoncé Depeche Mode One Direction Kid Rock
5
Over 800 Sponsors
70% MARGIN
6
Live Nation concert flywheel
20% MARGIN
Over 230 Artists
Note: Margin for Artist Nation is for management business only.
Margin for Venues is for on-site ancillaries.
10M Fans
3M Fans
55M Fans
20% MARGIN
100M Tickets
12M Tickets
450M Tickets
50% MARGIN
55M Fans
21M Fans
21M Fans
17M Fans
7
Expanding concerts scale
Top 15 NA Festivals Attendance (in K)
Expanded NA festival portfolio
— Voodoo Experience
— Music Midtown — Made In America
— Sasquatch
— Bottlerock — Governor’s Ball — Electric Forest
— TomorrowWorld
— Bonnaroo
— Outside Lands
— Austin City Limits
— Lollapalooza
— Electric Daisy Carnival
— Ultra
— Coachella
2012 2013 2011
Expanded EDM portfolio
+95%
2012 2013
1.4
2.6
Strong EU festivals portfolio
— Lowlands — Wireless
— Creamfields
— Tomorrowland
— Pinkpop
— Pukkelpop
— T in the Park
— Download
— Exit
— V Festival
— Werchter
— Sziget
— Roskilde
— Reading / Leeds
2012 2013 2011
— Glastonbury
Top 15 EU Festivals Attendance (in K) LN EDM Attendance (in MM)
92 92 92 100
42 40 80 80 180
225
270
329
150
225
480
165
329
270
225
195 100 93 80
78 85
110
480
330
318
300
225
195 150 140 129 120 120 112 112 110
525
487
390
390
331
345
300 167 257 188 180 180 139 172 142
487
390
390
392
345
186
274
262 188 180
169 172 80
180
525
486
390
390
373
345
286
268
238 188 180 180 175 173 144
8
Expanding ad units
z
Major music media channel
Media Channel
70
58
34
25
21
7
8
6
2
Monthly Uniques (MM)
Source: ComScore, August 2013
z
+85-90%
LN Online advertising revenue
Online advertising growth
2010 2011 2012 2013
9
Expanding ad units leveraging 22,000 shows
Original Content
Behind the Scenes
Live Events
► TM+ is first product launched using new ticketing system technology
► Development planned to be 70% complete at year-end 2013
► Expect to have spent $70M as of year-end 2013
► Full new concert ticketing system planned launch by end of 2014
10
New ticketing platform
11
Growing in new market – secondary
z
Major growth
+30%
2012 2013
TM Secondary Gross Transaction Value
12
Driving mobile tickets
z
High mobile penetration SAME TICKET ECONOMICS
ALL FAN DATA
NEW AD UNITS
BETTER FAN EXPERIENCE
TRANSFERABLE DIGITAL TICKET
Mobile only share of digital audience
39% 37%
29%
24%
21%
Source: ComScore, June 2013
* 2013 is YTD through August
z
Mobile share of TM NA ticket sales
2%
6%
10%
Growing mobile ticket sales
2011 2012 2013*
Adjusted Operating Income
+27%
13
Continued AOI growth
+30-35%
2011 2012 2010 2013 2015 2014
Free Cash Flow
+52%
14
Continued FCF growth
+40-45%
2011 2012 2010 2013 2015 2014
Note: Adjusted to remove $26M tax refunds received in 2012; LNE will record one-time refinancing costs of $43M in Q3 2013
Live Nation Entertainment Investment Thesis
15
+ GROWING GLOBAL CONCERTS INDUSTRY
+ SUPERIOR ECOSYSTEM SCALE CREATING COMPETITIVE ADVANTAGE
+ TECHNOLOGY INVESTMENT ENABLING 450M DIRECT FAN RELATIONSHIPS
+ INCREASING LEVERAGE AGAINST EXPENSES
= LONG TERM AOI AND FREE CASH FLOW GROWTH