Endeavor(US:EDR)2023-05-13 21:30Financial Data and Key Metrics Changes - The company generated $1.597 billion in consolidated revenue for Q1 2023, an increase of $123.1 million or 8.4% compared to the prior year [26] - Adjusted EBITDA for the quarter was $306.4 million, down $8.1 million or 2.6% from the prior year [26] - Free cash flow was $42 million, up $122 million over the prior year [26] Business Line Data and Key Metrics Changes - Owned Sports Properties segment revenue was $353.3 million, up $56.6 million or 19%, with adjusted EBITDA of $185.7 million, up 25% [26][30] - Events, Experiences & Rights segment reported revenue of $800.8 million, up $19.9 million or 2.5%, with adjusted EBITDA down 14.3% [28] - Representation segment revenue was $350.2 million, a decrease of $7.1 million or 2%, with adjusted EBITDA down 17% [29] - Sports Data & Technology segment revenue was $100.9 million, an increase of 124%, with adjusted EBITDA down 31% [30] Market Data and Key Metrics Changes - UFC events saw record-breaking attendance, with UFC 284 in Perth being the highest grossing event in Australia and UFC 285 in Las Vegas being the highest grossing Pay-Per-View event in the past 12 months [27] - PBR had its best start to the year in its 30-year history, with 24 sold-out performances and 31 event revenue records [20][27] Company Strategy and Development Direction - The company aims to integrate UFC and WWE under a new publicly listed company, TKO, to create a global live sports and entertainment entity [18] - The company is focused on capital allocation to fuel growth and leverage its portfolio effectively [18] - Plans to redeploy capital include paying down debt, stock buybacks, and initiating a quarterly dividend [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the theatrical business and the demand for premium content [9][22] - The company is monitoring the impact of the writers' strike on its Representation segment, with potential effects depending on the duration of the strike [22][45] - The company remains well-positioned to capitalize on resilient trends in premium content and live events [22] Other Important Information - The company sold IMG Academy for $1.25 billion and Endeavor Content for $1 billion, highlighting the value of its portfolio [11][18] - The company expects net leverage to decrease significantly by year-end following the IMG Academy sale and the anticipated close of the UFC-WWE transaction [30] Q&A Session All Questions and Answers Question: Can you discuss the rationale behind the dividend and buyback at this stage? - Management indicated that the sale of IMG Academy provides greater financial flexibility and an opportunity to return capital to shareholders while still pursuing growth [44] Question: What is the current status of the writers' strike and its potential impact? - Management stated that the duration of the strike is uncertain, and its impact will depend on various factors, including ongoing negotiations [45] Question: Can you elaborate on the opportunity to bundle UFC and WWE content? - Management is currently focused on integration and cost management rather than bundling content at this stage [47] Question: What is the optimal debt leverage for the company going forward? - Management aims to maintain a leverage ratio below 4x, with expectations to be in the mid-2s post-TKO transaction [50] Question: How is the operating free cash flow trending? - Management noted that Q1 free cash flow was $42 million, indicating a positive trend despite being seasonally light [52]