TKO Transaction
Highlights
On September 12, 2023, Endeavor and WWE closed the transaction
to combine UFC and WWE to form a new, publicly listed company, TKO
Group Holdings, Inc. The reported results presented in this
earnings release cover the period from January 1, 2023 through
December 31, 2023 for UFC and the period from September 12, 2023
through December 31, 2023 for WWE.
Full Year 2023 Highlights and Recent
Developments
- The UFC segment delivered record financial results. Revenue
increased 13% to $1.3 billion and Adjusted EBITDA1 increased 11% to
$756 million
- UFC live events revenue increased 34% to a record $168 million,
driven by growth in ticket revenues and site fees. UFC held 43
events that generated significant viewership gains and set several
all-time records for gross revenue at respective arenas
- UFC sponsorship revenue increased 18% to a record $196 million,
driven by new brand partners and renewal increases
- UFC celebrated its 30th anniversary with a series of events
commemorating its history and current standing as the world’s
premier mixed martial arts organization
- Each WWE premium live event set a viewership record; total WWE
domestic viewership and hours viewed on Peacock increased 25% and
22%, respectively, as compared to the prior year
- WWE live event average attendance increased 34%
- In January 2024, WWE entered into a long-term media rights
agreement with Netflix beginning in January 2025 for Raw in the
United States and all WWE shows and specials outside the United
States
Full Year 2024 Guidance
- The Company is targeting revenue of $2.575 billion to $2.650
billion
- The Company is targeting Adjusted EBITDA of $1.150 billion to
$1.170 billion
- The Company is targeting Free Cash Flow Conversion2 in excess
of 50%
TKO Group Holdings, Inc. (“TKO” or the “Company”) (NYSE: TKO)
today announced financial results for its year ended December 31,
2023. The reported results presented in this earnings release cover
the period from January 1, 2023 through December 31, 2023 for
Ultimate Fighting Championship (“UFC”) and the period from
September 12, 2023 through December 31, 2023 for World Wrestling
Entertainment, Inc. (“WWE”).
“TKO is off to a strong start following record financial
performance in 2023 at both UFC and WWE,” said Ariel Emanuel, CEO
of TKO. “We secured Anheuser-Busch as the official beer partner of
UFC, delivered a transformative deal to bring WWE’s Raw to Netflix
beginning in 2025, and expanded our international footprint in
important growth markets. We have more conviction than ever in the
combination of these businesses and TKO’s ability to drive topline
growth and margin expansion, generate meaningful free cash flow,
and deliver sustainable long-term value for shareholders.”
Full Year Consolidated
Results
Revenue increased 47%, or $534.9 million, to $1.7
billion. The increase reflected an increase of $152.1 million at
UFC, to $1.3 billion, and the contribution of $382.8 million of
revenue at WWE associated with the period from September 12, 2023
through December 31, 2023.
Net Income was $175.7 million, a decrease of $213.3
million from $389.0 million in the prior year period. The decrease
primarily reflected an increase in operating expenses partially
offset by the increase in revenue. The increase in operating
expenses primarily reflected an increase in selling, general and
administrative expenses of $339.0 million, an increase in direct
operating costs of $189.0 million, an increase in depreciation and
amortization of $104.6 million, and an increase in interest expense
of $99.4 million. To a lesser extent, higher income taxes also
contributed to the decrease in net income.
Adjusted EBITDA1 increased 29%, or $180.4 million, to
$809.1 million, due to an increase of $75.1 million at UFC and the
contribution of $163.0 million of Adjusted EBITDA at WWE associated
with the period from September 12, 2023 through December 31, 2023,
partially offset by an increase of $57.7 million in corporate
expenses.
Cash flows generated by operating activities were $468.4
million, a decrease of $33.3 million from $501.7 million, primarily
due to lower net income.
Free Cash Flow2 was $419.8 million, a decrease of $69.5
million from $489.3 million, primarily due to the decrease in cash
flows generated by operating activities and an increase in capital
expenditures, which was primarily related to WWE’s new headquarter
facility.
Cash and cash equivalents were $235.8 million as of
December 31, 2023. Gross debt was $2.761 billion as of
December 31, 2023.
Results by Operating
Segment3
The schedule below reflects TKO’s performance by operating
segment:
Three Months Ended
Twelve Months Ended
(in millions)
December 31,
December 31,
2023
2022
2023
2022
Revenue:
UFC
$
282.8
$
271.7
$
1,292.2
$
1,140.1
WWE
331.2
—
382.8
—
Total Revenue
$
614.0
$
271.7
$
1,675.0
$
1,140.1
Adjusted EBITDA:
UFC
$
142.9
$
154.1
$
755.7
$
680.6
WWE
141.0
—
163.0
—
Corporate
(60.7
)
(13.4
)
(109.6
)
(51.9
)
Total Adjusted EBITDA
$
223.2
$
140.7
$
809.1
$
628.7
UFC
Three Months Ended
Twelve Months Ended
(in millions)
December 31,
December 31,
2023
2022
2023
2022
UFC Revenue:
Media Rights & Content
$
168.1
$
172.9
$
870.6
$
794.4
Live Events
52.3
45.5
167.9
125.3
Sponsorship
48.3
39.9
196.3
166.8
Consumer Products
14.1
13.4
57.4
53.6
Total Revenue
$
282.8
$
271.7
$
1,292.2
$
1,140.1
Full Year 2023
Revenue increased 13%, or $152.1 million, to $1.3
billion, primarily driven by a $76.2 million increase in media
rights and content fees, a $42.6 million increase in live events
revenue and a $29.5 million increase in sponsorship revenue. The
increase in media rights and content fees was primarily related to
higher domestic and international rights fees resulting from
increases in contractual revenues, higher fees associated with
international renewals and one additional pay-per-view event in
2023 as compared to the prior year period. The increase in live
events revenue was primarily related to 5 additional events with a
live audience (26 in 2023 as compared to 21 in the prior year) and
higher site fees. The increase in sponsorship revenue was primarily
related to new sponsors and increases in fees from renewals.
Adjusted EBITDA increased 11%, or $75.1 million, to
$755.7 million, as the increase in revenue (as described above) was
partially offset by an increase in expenses. The increase in
expenses primarily reflected an increase of $57.8 million in direct
operating costs. The increase in direct operating costs was
primarily due to an increase of $45.7 million in athlete costs from
different matchups as well as higher production costs associated
with having one additional pay-per-view event and five additional
international events as compared to the prior year. Marketing and
venue costs also increased due to five additional events with live
audiences in 2023. Selling, general and administrative expenses
increased by $16.9 million, primarily driven by higher personnel
costs from greater headcount and increased travel and other
expenses associated with the additional pay-per-view event and
international events.
Adjusted EBITDA margin decreased to 58% from
60%.
WWE
Three Months Ended
Twelve Months Ended
(in millions)
December 31,
December 31,
2023
2022
2023
2022
WWE Revenue:
Media Rights & Content
$
212.2
$
—
$
249.5
$
—
Live Events
82.3
—
87.7
—
Sponsorship
15.4
—
18.0
—
Consumer Products
21.3
—
27.6
—
Total Revenue
$
331.2
$
—
$
382.8
$
—
Full Year 2023
Revenue was $382.8 million for the period from September
12, 2023 through December 31, 2023.
Including WWE activity for the periods from January 1, 2023
through September 11, 2023 and for the full year 2022, WWE combined
revenue3 was $1.326 billion, as compared to $1.292 billion for the
period from January 1, 2022 through December 31, 2022. The increase
of 3%, or $34 million, was primarily due to an increase in live
events revenue, an increase in media rights and content revenue and
an increase in sponsorship revenue partially offset by a decrease
in consumer products licensing revenue. The increase in live events
revenue was primarily related to an increase in domestic and
international ticket sales. The increase in media rights and
content fees was primarily related to the contractual escalation of
media rights fees for WWE’s flagship weekly programming, Raw and
SmackDown, and premium live events, which more than offset a
decline in third-party original programming due to the timing of
delivery. The decline in consumer products licensing revenue was
due to the previously disclosed transition of our digital retail
platform and venue merchandise business to Fanatics as well as a
decrease in collectibles revenue.
Adjusted EBITDA was $163.0 million for the period from
September 12, 2023 through December 31, 2023.
Including WWE activity for the periods from January 1, 2023
through September 11, 2023 and for the full year 2022, WWE combined
Adjusted EBITDA3 was $533.1 million, as compared to $512.5 million
for the period from January 1, 2022 through December 31, 2022. The
increase of 4%, or $20.6 million, was primarily due to the increase
in revenue (as described above) partially offset by an increase in
expenses. The increase in expenses primarily reflected an increase
in content creation costs partially offset by lower expenses
related to the timing of third-party original programming and the
transition of our digital retail platform and venue merchandise
business to Fanatics.
Adjusted EBITDA margin was 43% for the period from
September 12, 2023 through December 31, 2023. Including WWE
activity for the periods from January 1, 2023 through September 11,
2023 and for full year 2022, WWE combined Adjusted EBITDA margin3
was flat at 40% in both 2023 and 2022.
Corporate
Full Year 2023
Corporate Adjusted EBITDA was a loss of $109.6 million,
as compared to a loss of $51.9 million in the prior year
period.
Including WWE activity for the periods from January 1, 2023
through September 11, 2023 and for full year 2022, Corporate
combined Adjusted EBITDA3 was a loss of $196.3 million, as compared
to a loss of $179.8 million for the period from January 1, 2022
through December 31, 2022. The decrease of $16.5 million was
primarily due to an increase in personnel costs, including TKO
executive compensation, and other general and administrative
expenses, including public company expenses, following the
formation of TKO in September 2023. The decrease also reflected an
increase in service fees paid to Endeavor under the Company’s
Services Agreement. These increases more than offset savings
associated with restructuring activities following the formation of
TKO.
Full Year 2024 Guidance
For the full year 2024, the Company is targeting revenue of
$2.575 billion - $2.650 billion and Adjusted EBITDA of $1.150
billion - $1.170 billion. The Company is also targeting full year
2024 Free Cash Flow Conversion in excess of 50%.
Management will provide more detail including key assumptions
related to 2024 guidance on today’s earnings call.
TKO Transaction
As previously disclosed, on September 12, 2023, Endeavor Group
Holdings Inc. (“Endeavor”) and World Wrestling Entertainment, LLC
(“WWE”) closed the transaction to combine the Ultimate Fighting
Championship (“UFC”) and WWE to form a new, publicly listed
company, TKO Group Holdings, Inc. (“TKO”). For the twelve months
ended December 31, 2023, the Company’s consolidated pre-tax results
included $83.8 million of merger and acquisition related costs. For
the twelve months ended December 31, 2023, the Company’s
consolidated pre-tax results also included $41.4 million (inclusive
of $19.9 million of equity-based compensation expense) of
restructuring, severance and impairment costs resulting from the
Company’s cost reduction program, which was implemented to realize
synergy opportunities and integrate the combined operations of WWE
and UFC.
Other Matters
For the twelve-month period ended December 31, 2023, the
Company’s consolidated pre-tax results included $34.2 million in
costs related to certain litigation matters at UFC and WWE,
including the impact of a $20.0 million charge related to the
settlement of an antitrust lawsuit at WWE. A reconciliation of Net
Income to Adjusted EBITDA for the three and twelve-month periods
ended December 31, 2023 and 2022 can be found in the supplemental
schedule on page 14 of this release.
Notes
(1)
The definition of Adjusted EBITDA can be
found in the Non-GAAP Financial Measures section of the release on
page 7. A reconciliation of Net Income to Adjusted EBITDA for the
three and twelve-month periods ended December 31, 2023 and 2022 can
be found in the Supplemental Information in this release on page
14.
(2)
The definition of Free Cash Flow and Free Cash Flow Conversion can
be found in the Non-GAAP Financial Measures section of the release
on page 7. A reconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow for the three and twelve-month periods
ended December 31, 2023 and 2022 can be found in the Supplemental
Information in this release on page 15.
(3)
An explanation of the basis of presentation can be found in this
release on page 8.
Non-GAAP Financial
Measures
The Company refers to certain financial measures that are not
recognized under United States generally accepted accounting
principles (“GAAP”). This press release includes financial measures
that are not calculated in accordance with GAAP, including Adjusted
EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free Cash Flow
Conversion Rate. Please see the definitions below and the
reconciliation tables included in this release for additional
information and a reconciliation of the Non-GAAP financial measures
to the most comparable GAAP financial measures.
The Company defines Adjusted EBITDA as net income excluding
income taxes, net interest expense, depreciation and amortization,
equity-based compensation, merger and acquisition costs, certain
legal costs, restructuring, severance and impairment charges, and
certain other items when applicable. Adjusted EBITDA margin is
defined as Adjusted EBITDA divided by Revenue.
TKO management believes that Adjusted EBITDA is useful to
investors as it eliminates the significant level of non-cash
depreciation and amortization expense that results from its capital
investments and intangible assets, and improves comparability by
eliminating the significant level of interest expense associated
with TKO’s debt facilities, as well as income taxes which may not
be comparable with other companies based on TKO’s tax and corporate
structure. Adjusted EBITDA and Adjusted EBITDA margin are used as
the primary bases to evaluate TKO’s consolidated operating
performance.
Adjusted EBITDA and Adjusted EBITDA margin have limitations as
analytical tools, and you should not consider them in isolation or
as a substitute for analysis of TKO’s results as reported under
GAAP. Some of these limitations are:
- they do not reflect every cash expenditure, future requirements
for capital expenditures, or contractual commitments;
- Adjusted EBITDA does not reflect the significant interest
expense or the cash requirements necessary to service interest or
principal payments on TKO’s debt;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced or require improvements in the future, and Adjusted EBITDA
and Adjusted EBITDA margin do not reflect any cash requirement for
such replacements or improvements; and
- they are not adjusted for all non-cash income or expense items
that are reflected in TKO’s statements of cash flows.
TKO management compensates for these limitations by using
Adjusted EBITDA and Adjusted EBITDA margin along with other
comparative tools, together with GAAP measurements, to assist in
the evaluation of TKO’s operating performance.
Adjusted EBITDA and Adjusted EBITDA margin should not be
considered substitutes for the reported results prepared in
accordance with GAAP and should not be considered in isolation or
as alternatives to net income as indicators of TKO’s financial
performance, as measures of discretionary cash available to it to
invest in the growth of its business or as measures of cash that
will be available to TKO to meet its obligations. Although TKO uses
Adjusted EBITDA and Adjusted EBITDA margin as financial measures to
assess the performance of its business, such use is limited because
it does not include certain material costs necessary to operate
TKO’s business. TKO’s presentation of Adjusted EBITDA and Adjusted
EBITDA margin should not be construed as indications that its
future results will be unaffected by unusual or nonrecurring items.
These non-GAAP financial measures, as determined and presented by
TKO, may not be comparable to related or similarly titled measures
reported by other companies. Set forth below are reconciliations of
TKO’s most directly comparable financial measures calculated in
accordance with GAAP to these non-GAAP financial measures on a
consolidated basis.
The Company defines Free Cash Flow as net cash provided by
operating activities less cash used for capital expenditures. TKO
views net cash provided by operating activities as the most
directly comparable GAAP measure. Free Cash Flow Conversion is
defined as Free Cash Flow divided by Adjusted EBITDA. Although they
are not recognized measures of liquidity under U.S. GAAP, Free Cash
Flow and Free Cash Flow Conversion provide useful information
regarding the amount of cash TKO’s continuing business generates
after capital expenditures and is available for reinvesting in the
business, debt service, share repurchases and payment of dividends.
Free Cash Flow and Free Cash Flow Conversion have certain
limitations in that they do not represent the total increase or
decrease in the cash balance for the period, nor do they represent
the residual cash flow for discretionary expenditures.
Reconciliations of the Company’s Adjusted EBITDA, Adjusted
EBITDA Margin, Free Cash Flow and Free Cash Flow Conversion
guidance to the most directly comparable GAAP financial measures
cannot be provided without unreasonable efforts and are not
provided herein because of the inherent difficulty in forecasting
and quantifying certain amounts that are necessary for such
reconciliations and certain other items reflected in our
reconciliation of historical Adjusted EBITDA and Free Cash Flow,
the amounts of which, could be material.
Basis of Presentation
As a result of the timing of the consummation of the business
combination on September 12, 2023, TKO’s consolidated financial
information presented herein include UFC’s results for the three
and twelve months ended December 31, 2023 and 2022, and only
includes WWE’s results for the period from September 12, 2023
through December 31, 2023 following the closing of the
transaction.
Information in this release includes results for the WWE segment
and Corporate on a combined basis to include periods prior to the
business combination. Information presented on a combined basis
does not reflect any pro forma adjustments or other adjustments for
costs related to integration activities, cost savings or synergies
that have been or may be achieved if the business combination
occurred on January 1, 2022.
Effective September 12, 2023, the Company operates its business
under two reportable segments, UFC and WWE. The UFC segment
consists entirely of the operations of the Company’s UFC business
which was the sole reportable segment prior to the acquisition of
WWE, while the WWE segment consists entirely of the operations of
the WWE business acquired on September 12, 2023. In addition, it
reports results for the “Corporate” group, which incurs expenses
that are not allocated to the business segments. The Corporate
group consists of general and administrative expenses that relate
largely to corporate activities, including information technology,
facilities, legal, human resources finance, accounting, treasury,
investor relations, corporate communications, community relations
and compensation to TKO’s management and board of directors, which
support both reportable segments. Corporate expenses also include
service fees paid by the Company to Endeavor under the Services
Agreement. All prior period amounts related to the segment change
have been retrospectively reclassified to conform to the new
presentation. The profitability measure employed by the Company in
assessing operating performance, including that of its segments, is
Adjusted EBITDA. The Company defines Adjusted EBITDA as net income,
excluding income taxes, net interest expense, depreciation and
amortization, equity-based compensation, merger and acquisition
costs, certain legal costs, restructuring, severance and impairment
charges, and certain other items when applicable. Adjusted EBITDA
includes amortization expenses directly related to supporting the
operations of the Company’s segments, including content production
asset amortization.
Additional Information
As previously announced, TKO will host a conference call at 5:00
p.m. ET on February 27, 2024, to discuss its full year 2023
results. All interested parties are welcome to listen to a live
webcast that will be hosted through the Company’s website at
investor.tkogrp.com. Participants can access the conference call by
dialing 1-833-470-1428 (conference ID: 436087). Please reserve a
line 5-10 minutes prior to the start time of the conference
call.
Any accompanying materials referenced during the call will be
made available on February 27, 2024, at investor.tkogrp.com. A
replay of the call will be available approximately two hours after
the conference call concludes and can be accessed on the Company’s
website.
About TKO
TKO Group Holdings, Inc. (NYSE: TKO) is a premium sports and
entertainment company that comprises UFC, the world’s premier mixed
martial arts organization, and WWE, an integrated media
organization and the recognized global leader in sports
entertainment. Together, our organizations reach more than 1
billion households in approximately 170 countries, and we organize
more than 350 live events year-round, attracting over one million
fans. TKO is majority owned by Endeavor Group Holdings, Inc. (NYSE:
EDR), a global sports and entertainment company.
Website Disclosure
Investors and others should note that TKO announces material
financial and operational information to its investors using press
releases, SEC filings and public conference calls and webcasts, as
well as its Investor Relations site at investor.tkogrp.com. TKO may
also use its website as a distribution channel of material
information about the Company. In addition, you may automatically
receive email alerts and other information about TKO, UFC and WWE
when you enroll your email address by visiting the “Investor Email
Alerts” option under the Resources tab on investor.tkogrp.com.
Forward-Looking
Statements:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. We intend such forward-looking statements to be covered by
the safe harbor provisions for forward-looking statements contained
in Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements in this press release that do not relate to matters of
historical fact should be considered forward-looking statements,
including statements regarding TKO’s business strategy and plans,
financial condition, and anticipated financial or operational
performance. The words “believe,” “may,” “will,” “estimate,”
“potential,” “continue,” “anticipate,” “intend,” “expect,” “could,”
“would,” “project,” “plan,” “target,” and similar expressions are
intended to identify forward-looking statements, though not all
forward-looking statements use these words or expressions. These
forward-looking statements are based on management’s current
expectations. These statements are neither promises nor guarantees
and involve known and unknown risks, uncertainties and other
important factors that may cause actual results, performance or
achievements to be materially different from what is expressed or
implied by the forward-looking statements, including, but not
limited to: TKO’s ability to generate revenue from discretionary
and corporate spending on events; TKO’s dependence on key
relationships with television and cable networks, satellite
providers, digital streaming partners and other distribution
partners; TKO’s ability to adapt to or manage new content
distribution platforms or changes in consumer behavior; adverse
publicity concerning the Company or its key personnel; the highly
competitive, rapidly changing and increasingly fragmented nature of
the markets in which TKO operates; financial risks with owning and
managing events for which TKO sells media and sponsorship rights,
ticketing and hospitality; risks related to the integration and
realization of the expected benefits of the business combination of
UFC and WWE; the Company’s substantial indebtedness; and other
important factors discussed in the section entitled “Risk Factors”
in TKO’s final prospectus on Form 424(b)(3) filed with the United
States Securities and Exchange Commission (the “SEC”) on September
19, 2023, as any such factors may be updated from time to time in
TKO’s other filings with the SEC, including, without limitation,
TKO’s Annual Report on Form 10-K for the fiscal year ended December
31, 2023 to be filed by TKO, accessible on the SEC’s website at
www.sec.gov and TKO’s investor relations site at
investor.tkogrp.com. Forward-looking statements speak only as of
the date they are made and, except as may be required under
applicable law, TKO undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
TKO Group Holdings,
Inc.
Consolidated Income
Statements
(In millions, except per share
data)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Revenue
$
614.0
$
271.7
$
1,675.0
$
1,140.1
Operating expenses:
Direct operating costs
212.3
82.1
514.6
325.6
Selling, general and administrative
expenses
236.1
54.4
549.1
210.1
Depreciation and amortization
102.7
15.0
164.6
60.0
Total operating expenses
551.1
151.5
1,228.3
595.7
Operating income
62.9
120.2
446.7
544.4
Other expenses:
Interest expense, net
(66.6
)
(48.8
)
(239.0
)
(139.6
)
Other (expense) income, net
1.4
(0.9
)
(0.2
)
(1.3
)
(Loss) income before income taxes and
equity losses of affiliates
(2.3
)
70.5
207.5
403.5
Provision for income taxes
13.8
1.8
31.5
14.3
(Loss) income before equity losses of
affiliates
(16.1
)
68.7
176.0
389.2
Equity losses of affiliates, net of
tax
—
0.2
0.3
0.2
Net (loss) income
(16.1
)
68.5
175.7
389.0
Less: Net (loss) income attributable to
non-controlling interests
(10.8
)
0.1
(32.5
)
1.7
Less: Net income attributable to TKO
Operating Company, LLC prior to the Transactions
8.0
68.4
243.4
387.3
Net loss attributable to TKO Group
Holdings, Inc.
$
(13.3
)
$
—
$
(35.2
)
$
—
Basic and diluted net loss per share of
Class A common stock
$
(0.16
)
N/A
$
(0.43
)
N/A
Weighted average number of common shares
used in computing basic and diluted net loss per share
82,735,036
N/A
82,808,019
N/A
TKO Group Holdings,
Inc.
Consolidated Balance
Sheets
(In millions)
(Unaudited)
As of
December 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
235.8
$
180.6
Accounts receivable, net
135.4
45.4
Other current assets
121.2
42.3
Total current assets
492.4
268.3
Property, buildings and equipment, net
608.4
175.0
Intangible assets, net
3,563.7
475.8
Finance lease right-of-use assets, net
255.7
—
Operating lease right-of-use assets,
net
35.5
23.3
Goodwill
7,666.5
2,602.6
Investments
16.4
5.4
Other assets
52.1
30.3
Total assets
$
12,690.7
$
3,580.7
Liabilities, Non-controlling Interests
and Stockholders'/Members' Equity
Current liabilities:
Accounts payable
$
42.0
$
16.9
Accrued liabilities
267.4
108.2
Current portion of long-term debt
22.4
22.7
Current portion of finance lease
liabilities
8.1
—
Current portion of operating lease
liabilities
4.2
1.8
Deferred revenue
119.0
71.6
Other current liabilities
9.0
9.0
Total current liabilities
472.1
230.2
Long-term debt
2,713.9
2,736.3
Long-term finance lease liabilities
245.3
—
Long-term operating lease liabilities
32.9
22.6
Deferred tax liabilities
372.9
—
Other non-current liabilities
3.0
12.8
Total liabilities
3,840.1
3,001.9
Commitments and contingencies
Redeemable non-controlling interests
11.6
9.9
Stockholders'/Members' equity:
Class A common stock
—
—
Class B common stock
—
—
Members capital
—
568.1
Additional paid-in capital
4,244.5
—
Accumulated other comprehensive (loss)
income
(0.3
)
0.8
Accumulated deficit
(135.2
)
—
Total TKO Group Holdings, Inc.
stockholders’/members' equity
4,109.0
568.9
Nonredeemable non-controlling
interests
4,730.0
—
Total stockholders'/members' equity
8,839.0
568.9
Total liabilities, nonredeemable
non-controlling interests and stockholders'/members' equity
$
12,690.7
$
3,580.7
TKO Group Holdings,
Inc.
Consolidated Statements of
Cash Flows
(In millions)
(Unaudited)
Twelve Months Ended
December 31,
2023
2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
175.7
$
389.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
164.6
60.0
Amortization and impairments of content
costs
23.8
14.5
Amortization of original issue discount
and deferred financing cost
10.6
10.6
Equity-based compensation
57.1
23.7
Income taxes
6.8
2.3
Equity losses of affiliates
0.3
0.2
Net provision for allowance for doubtful
accounts
0.2
3.3
Other, net
1.3
—
Changes in operating assets and
liabilities, net of acquisition:
Accounts receivable
15.1
(26.4
)
Other current assets
11.6
10.0
Other noncurrent assets
(17.1
)
(16.7
)
Accounts payable and accrued
liabilities
38.2
19.7
Deferred revenue
(17.2
)
10.7
Other liabilities
(2.6
)
0.8
Net cash provided by operating
activities
468.4
501.7
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, buildings and
equipment and other assets
(48.6
)
(12.4
)
Investment in affiliates, net
0.7
(0.8
)
Cash acquired from WWE
381.2
—
Payment of deferred consideration in the
form of a dividend to former WWE shareholders
(321.0
)
—
Net cash provided by (used in) investing
activities
12.3
(13.2
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings
100.0
—
Repayment of long-term debt
(133.4
)
(82.6
)
Repurchase of Class A common stock
(100.0
)
—
Redemption of profit units
—
(2.9
)
Payments for financing costs
(0.3
)
—
Distributions to members
(296.6
)
(1,095.9
)
Proceeds from principal shareholder
contributions
5.8
—
Net cash used in financing activities
(424.5
)
(1,181.4
)
Effects of exchange rate movements on
cash
(1.0
)
(1.2
)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
55.2
(694.1
)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
180.6
874.7
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
235.8
$
180.6
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest
$
226.5
$
118.3
Cash payments for income taxes
$
23.2
$
14.8
NON-CASH INVESTING AND FINANCING
TRANSACTIONS:
Purchases of property and equipment
recorded in accrued expenses and accounts payable
$
22.8
$
3.8
Acquisition of WWE, net of deferred
considerations
$
8,111.1
$
—
Accretion of redeemable non-controlling
interests
$
—
$
(1.5
)
Capital contribution from parent for
equity-based compensation
$
18.6
$
23.7
Principal stockholder contributions
$
9.0
$
—
Convertible notes exchanged for common
stock
$
4.2
$
—
TKO Group Holdings,
Inc.
Reconciliation of Adjusted
EBITDA and Adjusted EBITDA Margin
(In millions, except
percentages)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Net (loss) income
$
(16.1
)
$
68.5
$
175.7
$
389.0
Provision for income taxes
13.8
1.8
31.5
14.3
Interest expense, net
66.6
48.8
239.0
139.6
Depreciation and amortization
102.7
15.0
164.6
60.0
Equity-based compensation expense (1)
21.0
5.6
57.1
23.7
Merger and acquisition costs (2)
1.3
—
83.8
—
Certain legal costs (3)
27.4
0.2
34.2
0.8
Restructuring, severance and impairment
(4)
6.4
—
21.5
—
Other adjustments (5)
0.1
0.8
1.7
1.3
Total Adjusted EBITDA
$
223.2
$
140.7
$
809.1
$
628.7
Net (loss) income margin
(3
)%
25
%
10
%
34
%
Adjusted EBITDA margin
36
%
52
%
48
%
55
%
(1)
Equity-based compensation represents
primarily non-cash compensation expense for awards issued under
Endeavor’s 2021 Plan subsequent to its April 28, 2021 IPO, for the
Replacement Awards and for awards issued under the 2023 Incentive
Award Plan. For the three and twelve months ended December 31,
2023, equity-based compensation includes $3.4 million and $19.9
million, respectively, of expense associated with accelerated
vesting of the Replacement Awards related to the workforce
reduction of certain employees in the WWE segment and
Corporate.
(2)
Includes certain costs of professional
fees and bonuses related to the TKO transaction and payable
contingent on the closing of the TKO transaction.
(3)
Includes costs related to certain
litigation matters including antitrust matters for UFC and WWE,
matters where Vincent K. McMahon has agreed to make future payments
to certain counterparties personally and, for the three and twelve
months ended December 31, 2023, the settlement of a WWE antitrust
matter for $20.0 million.
(4)
For the three and twelve months ended
December 31, 2023 includes costs resulting from the Company’s cost
reduction program. For more information, please refer to the
Company’s various filings with the SEC, including, but not limited
to, Note 17, Restructuring Charges, of its Form 10-K for the year
ended December 31, 2023.
(5)
For the three and twelve months ended
December 31, 2023, other adjustments was comprised primarily of
losses of $1.4 million and $1.4 million, respectively, on the
disposal of assets as well as gains of $0.5 million and losses of
$1.1 million, respectively, on foreign exchange transactions. For
the three and twelve months ended December 31, 2022, other
adjustments was comprised primarily of losses of $0.9 million and
$1.3 million, respectively, on foreign exchange transactions.
TKO Group Holdings,
Inc.
Reconciliation of Free Cash
Flow
(In millions)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2023
2022
2023
2022
Net cash provided by operating
activities
$
220.7
$
124.9
$
468.4
$
501.7
Less cash used for capital
expenditures:
Purchases of property, buildings and
equipment and other assets (1)
(36.0
)
(2.9
)
(48.6
)
(12.4
)
Free Cash Flow
$
184.7
$
122.0
$
419.8
$
489.3
(1)
Purchases of property, buildings and
equipment and other assets includes approximately $24.9 million and
$25.1 million of capital expenditures related to WWE’s new
headquarter facility for the three and twelve months ended December
31, 2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227867298/en/
Investors: Seth Zaslow szaslow@tkogrp.com
Media: press@tkogrp.com
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