Forward-Looking Statements. Non-GAAP Financial Measures

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Transcription:

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 acquisitionrelated 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

Growing global concerts industry $ Billion 14 12 10 +10% CAGR Emerging Markets Japan & Australia $1.8B $2.6B 8 6 Western Europe $4.9B 4 2 North America $4.7B 0 1998 2012 $14B Global Market 2

Globalization of Rihanna s music fans Percent of fans Rest of World North America Western Europe Japan & Australia 17 25 53 5 40 27 30 3 56 20 23 1 3

2013 continues Live Nation concerts growth North America +24% +27% 2012 2013 Europe +29% z 2012 2013 Asia +63% 2012 2013 2012 2013 Note: Comparison is of tickets sold as of September 30 th for events playing off in that year 4

Top 10 tours driven by young artists 1 2 3 Pink Rihanna Maroon 5 Jason Aldean Luke Bryan 4 5 6 7 8 Fleetwood Mac Beyoncé Depeche Mode One Direction Kid Rock 9 10 5

Live Nation concert flywheel 50% MARGIN 55M Fans 21M Fans 21M Fans 17M Fans 20% MARGIN Over 230 Artists 10M Fans 3M Fans 55M Fans 70% MARGIN Over 800 Sponsors 20% MARGIN 450M Tickets Note: Margin for Artist Nation is for management business only. Margin for Venues is for on-site ancillaries. 100M Tickets 12M Tickets 6

Expanding concerts scale Expanded NA festival portfolio Strong EU festivals portfolio Expanded EDM portfolio Top 15 NA Festivals Attendance (in K) Top 15 EU Festivals Attendance (in K) LN EDM Attendance (in MM) 225 150 329 270 225 480 165 329 270 225 195 100 93 80 78 85 480 330 318 300 225 195 150 140 129 120 120 112 112 180 80 80 40 42 100 110 110 92 92 92 2011 2012 2013 Coachella Ultra Electric Daisy Carnival Lollapalooza Austin City Limits Outside Lands Bonnaroo TomorrowWorld Electric Forest Governor s Ball Bottlerock Made In America Music Midtown Sasquatch Voodoo Experience 525 487 390 390 331 345 300 167 257 188 180 180 139 172 142 2011 525 486 487 390 390 390 390 373 392 345 345 286 186 274 268 262 238 188 188 180 180 180 180 175 169 173 172 80 144 2012 2013 Glastonbury Reading / Leeds Roskilde Sziget Werchter V Festival Exit Download T in the Park Pukkelpop Pinkpop Tomorrowland Wireless Lowlands Creamfields +95% 2.6 1.4 2012 2013 7

Expanding ad units Major music media channel Media Channel Monthly Uniques (MM) 70 58 Online advertising growth LN Online advertising revenue +85-90% z 34 25 21 8 7 6 z 2 2010 2011 2012 2013 Source: ComScore, August 2013 8

Expanding ad units leveraging 22,000 shows Original Content Live Events Behind the Scenes 9

New ticketing platform 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

Growing in new market secondary Major growth TM Secondary Gross Transaction Value +30% z 2012 2013 11

Driving mobile tickets High mobile penetration Mobile only share of digital audience Growing mobile ticket sales Mobile share of TM NA ticket sales SAME TICKET ECONOMICS 39% 37% 29% 10% BETTER FAN EXPERIENCE z 24% 21% z 6% TRANSFERABLE DIGITAL TICKET 2% ALL FAN DATA 2011 2012 2013* NEW AD UNITS Source: ComScore, June 2013 * 2013 is YTD through August 12

Continued AOI growth Adjusted Operating Income +30-35% +27% 2010 2011 2012 2013 2014 2015 13

Continued FCF growth Free Cash Flow +40-45% +52% 2010 2011 2012 2013 2014 2015 Note: Adjusted to remove $26M tax refunds received in 2012; LNE will record one-time refinancing costs of $43M in Q3 2013 14

Live Nation Entertainment Investment Thesis + 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 15