Live Nation Entertainment (LYV) Q4 2011 earnings summary

Executive summary

• 2011 revenue rose 6% YoY to $5.384B; operating income was $18.3M versus a $63.7M loss, while net loss attributable to shareholders narrowed to $83.0M from $228.4M.

• Adjusted operating income increased to $437.9M from $362.8M; reported results included significant depreciation and amortization and acquisition-related costs.

• Results improved through higher ticket sales, stronger arena and stadium shows, sponsorship growth, and cost improvements; the strategic focus remained on expanding markets, sponsorship and online revenue, and ticket sales.

Financial highlights

• Revenue increased $320.3M, or 6%, YoY; excluding $132.9M from foreign exchange, revenue rose $187.4M, or 4%.

• Direct operating expenses rose 4% and SG&A rose 10%; D&A totaled $343.0M, including $24.1M of 2011 impairment charges.

• Continuing-operations net loss was $70.4M versus $203.8M; net loss attributable to shareholders was $83.0M, or $0.46/share, versus $228.4M, or $1.39/share.

• Operating cash flow was $135.7M, down from $158.5M; cash and cash equivalents were $844.3M, including $373.9M of ticketing client funds.

Outlook and guidance

• 2012 capital expenditures were expected to be approximately $125M, with investment focused in part on ticketing systems and venue improvements.

• Management expected operating cash flow, the senior secured credit facility and other financing alternatives to cover working capital, capital expenditures and debt service for at least the succeeding year.

• Management expected compliance with debt covenants throughout 2012; the maximum leverage covenant tightens to 4.0x on September 30, 2012, and minimum interest coverage rises to 3.0x on that date.

• Concerts and Artist Nation typically generate higher operating income in Q2 and Q3; ticketing results vary with client event schedules and on-sales.