FORM |
(Exact name of Registrant as specified in its charter) |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||||||||
(Address of principal executive offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Exhibit No. | Description | |||||||
99.1 | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
WARNER MUSIC GROUP CORP. | |||||||||||
Date: August 8, 2023 | By: | /s/ Eric Levin | |||||||||
Eric Levin | |||||||||||
Executive Vice President and Chief Financial Officer |
Total WMG Summary Results | |||||||||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
Revenue | $ | 1,564 | $ | 1,432 | 9 | % | $ | 4,451 | $ | 4,422 | 1 | % | |||||||||||||||||||||||
Recorded Music revenue | 1,282 | 1,189 | 8 | % | 3,664 | 3,722 | -2 | % | |||||||||||||||||||||||||||
Music Publishing revenue | 283 | 245 | 16 | % | 790 | 704 | 12 | % | |||||||||||||||||||||||||||
Digital revenue | 1,027 | 944 | 9 | % | 2,921 | 2,877 | 2 | % | |||||||||||||||||||||||||||
Operating income | 189 | 146 | 29 | % | 578 | 551 | 5 | % | |||||||||||||||||||||||||||
Adjusted operating income(1) | 211 | 168 | 26 | % | 665 | 627 | 6 | % | |||||||||||||||||||||||||||
OIBDA(1) | 275 | 233 | 18 | % | 831 | 808 | 3 | % | |||||||||||||||||||||||||||
Adjusted OIBDA(1) | 297 | 255 | 16 | % | 918 | 884 | 4 | % | |||||||||||||||||||||||||||
Net income | 124 | 125 | -1 | % | 285 | 405 | -30 | % | |||||||||||||||||||||||||||
Adjusted net income(1) | 146 | 147 | -1 | % | 372 | 481 | -23 | % | |||||||||||||||||||||||||||
Net cash provided by operating activities | 146 | 163 | -10 | % | 349 | 336 | 4 | % | |||||||||||||||||||||||||||
Free Cash Flow | 113 | 128 | -12 | % | 260 | 239 | 9 | % | |||||||||||||||||||||||||||
(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures. |
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | For the Twelve Months Ended June 30, 2023 | For the Twelve Months Ended June 30, 2022 | % Change | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
Adjusted EBITDA(1) | $ | 311 | $ | 263 | 18 | % | $ | 1,260 | $ | 1,184 | 6 | % | |||||||||||||||||||||||
(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures. |
Recorded Music Summary Results | |||||||||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
Revenue | $ | 1,282 | $ | 1,189 | 8 | % | $ | 3,664 | $ | 3,722 | -2 | % | |||||||||||||||||||||||
Digital revenue | 846 | 801 | 6 | % | 2,445 | 2,475 | -1 | % | |||||||||||||||||||||||||||
Operating income | 207 | 166 | 25 | % | 641 | 631 | 2 | % | |||||||||||||||||||||||||||
Adjusted operating income(1) | 210 | 173 | 21 | % | 652 | 647 | 1 | % | |||||||||||||||||||||||||||
OIBDA(1) | 261 | 224 | 17 | % | 801 | 804 | — | % | |||||||||||||||||||||||||||
Adjusted OIBDA(1) | 264 | 231 | 14 | % | 812 | 820 | -1 | % | |||||||||||||||||||||||||||
(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures. |
Recorded Music Revenue | |||||||||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | For the Three Months Ended June 30, 2022 | For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | For the Nine Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||
As reported | As reported | Constant | As reported | As reported | Constant | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
Digital | $ | 846 | $ | 801 | $ | 792 | $ | 2,445 | $ | 2,475 | $ | 2,409 | |||||||||||||||||||||||
Physical | 126 | 123 | 123 | 377 | 440 | 421 | |||||||||||||||||||||||||||||
Total Digital and Physical | 972 | 924 | 915 | 2,822 | 2,915 | 2,830 | |||||||||||||||||||||||||||||
Artist services and expanded-rights | 218 | 190 | 191 | 555 | 563 | 543 | |||||||||||||||||||||||||||||
Licensing | 92 | 75 | 74 | 287 | 244 | 234 | |||||||||||||||||||||||||||||
Total Recorded Music | $ | 1,282 | $ | 1,189 | $ | 1,180 | $ | 3,664 | $ | 3,722 | $ | 3,607 |
Music Publishing Summary Results | |||||||||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||
Revenue | $ | 283 | $ | 245 | 16 | % | $ | 790 | $ | 704 | 12 | % | |||||||||||||||||||||||
Digital revenue | 182 | 144 | 26 | % | 477 | 404 | 18 | % | |||||||||||||||||||||||||||
Operating income | 50 | 33 | 52 | % | 151 | 103 | 47 | % | |||||||||||||||||||||||||||
Adjusted operating income(1) | 51 | 33 | 55 | % | 153 | 104 | 47 | % | |||||||||||||||||||||||||||
OIBDA(1) | 73 | 57 | 28 | % | 220 | 172 | 28 | % | |||||||||||||||||||||||||||
Adjusted OIBDA(1) | 74 | 57 | 30 | % | 222 | 173 | 28 | % | |||||||||||||||||||||||||||
(1) See "Supplemental Disclosures Regarding Non-GAAP Financial Measures" at the end of this release for details regarding these measures. |
Music Publishing Revenue | |||||||||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | For the Three Months Ended June 30, 2022 | For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | For the Nine Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||
As reported | As reported | Constant | As reported | As reported | Constant | ||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||
Performance | $ | 40 | $ | 45 | $ | 44 | $ | 130 | $ | 119 | $ | 114 | |||||||||||||||||||||||
Digital | 182 | 144 | 143 | 477 | 404 | 396 | |||||||||||||||||||||||||||||
Mechanical | 16 | 10 | 11 | 46 | 37 | 36 | |||||||||||||||||||||||||||||
Synchronization | 41 | 41 | 41 | 126 | 133 | 130 | |||||||||||||||||||||||||||||
Other | 4 | 5 | 5 | 11 | 11 | 11 | |||||||||||||||||||||||||||||
Total Music Publishing | $ | 283 | $ | 245 | $ | 244 | $ | 790 | $ | 704 | $ | 687 |
Figure 1. Warner Music Group Corp. - Condensed Consolidated Statements of Operations, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Revenue | $ | 1,564 | $ | 1,432 | 9 | % | |||||||||||
Costs and expenses: | |||||||||||||||||
Cost of revenue | (850) | (766) | 11 | % | |||||||||||||
Selling, general and administrative expenses | (461) | (451) | 2 | % | |||||||||||||
Amortization expense | (64) | (69) | -7 | % | |||||||||||||
Total costs and expenses | $ | (1,375) | $ | (1,286) | 7 | % | |||||||||||
Operating income | $ | 189 | $ | 146 | 29 | % | |||||||||||
Loss on extinguishment of debt | (4) | — | — | % | |||||||||||||
Interest expense, net | (38) | (32) | 19 | % | |||||||||||||
Other income, net | 20 | 50 | -60 | % | |||||||||||||
Income before income taxes | $ | 167 | $ | 164 | 2 | % | |||||||||||
Income tax expense | (43) | (39) | 10 | % | |||||||||||||
Net income | $ | 124 | $ | 125 | -1 | % | |||||||||||
Less: Income attributable to noncontrolling interest | (2) | (1) | 100 | % | |||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 122 | $ | 124 | -2 | % | |||||||||||
Net income per share attributable to common stockholders: | |||||||||||||||||
Class A – Basic and Diluted | $ | 0.23 | $ | 0.24 | |||||||||||||
Class B – Basic and Diluted | $ | 0.23 | $ | 0.24 | |||||||||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Revenue | $ | 4,451 | $ | 4,422 | 1 | % | |||||||||||
Costs and expenses: | |||||||||||||||||
Cost of revenue | (2,332) | (2,281) | 2 | % | |||||||||||||
Selling, general and administrative expenses | (1,353) | (1,392) | -3 | % | |||||||||||||
Restructuring | (41) | — | — | % | |||||||||||||
Amortization expense | (188) | (198) | -5 | % | |||||||||||||
Total costs and expenses | $ | (3,914) | $ | (3,871) | 1 | % | |||||||||||
Net gain on divestiture | 41 | — | — | % | |||||||||||||
Operating income | $ | 578 | $ | 551 | 5 | % | |||||||||||
Loss on extinguishment of debt | (4) | — | — | % | |||||||||||||
Interest expense, net | (105) | (94) | 12 | % | |||||||||||||
Other (expense) income, net | (72) | 96 | — | % | |||||||||||||
Income before income taxes | $ | 397 | $ | 553 | -28 | % | |||||||||||
Income tax expense | (112) | (148) | -24 | % | |||||||||||||
Net income | $ | 285 | $ | 405 | -30 | % | |||||||||||
Less: Income attributable to noncontrolling interest | (7) | (2) | — | % | |||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 278 | $ | 403 | -31 | % | |||||||||||
Net income per share attributable to common stockholders: | |||||||||||||||||
Class A – Basic and Diluted | $ | 0.53 | $ | 0.77 | |||||||||||||
Class B – Basic and Diluted | $ | 0.53 | $ | 0.77 |
Figure 2. Warner Music Group Corp. - Condensed Consolidated Balance Sheets at June 30, 2023 versus September 30, 2022 | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
June 30, 2023 | September 30, 2022 | % Change | |||||||||||||||
(unaudited) | |||||||||||||||||
Assets | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and equivalents | $ | 600 | $ | 584 | 3 | % | |||||||||||
Accounts receivable, net | 1,113 | 984 | 13 | % | |||||||||||||
Inventories | 116 | 108 | 7 | % | |||||||||||||
Royalty advances expected to be recouped within one year | 390 | 372 | 5 | % | |||||||||||||
Prepaid and other current assets | 98 | 91 | 8 | % | |||||||||||||
Total current assets | $ | 2,317 | $ | 2,139 | 8 | % | |||||||||||
Royalty advances expected to be recouped after one year | 584 | 503 | 16 | % | |||||||||||||
Property, plant and equipment, net | 454 | 415 | 9 | % | |||||||||||||
Operating lease right-of-use assets, net | 252 | 226 | 12 | % | |||||||||||||
Goodwill | 1,962 | 1,920 | 2 | % | |||||||||||||
Intangible assets subject to amortization, net | 2,195 | 2,239 | -2 | % | |||||||||||||
Intangible assets not subject to amortization | 150 | 145 | 3 | % | |||||||||||||
Deferred tax assets, net | 27 | 29 | -7 | % | |||||||||||||
Other assets | 209 | 212 | -1 | % | |||||||||||||
Total assets | $ | 8,150 | $ | 7,828 | 4 | % | |||||||||||
Liabilities and Equity | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | $ | 249 | $ | 268 | -7 | % | |||||||||||
Accrued royalties | 2,239 | 1,918 | 17 | % | |||||||||||||
Accrued liabilities | 422 | 457 | -8 | % | |||||||||||||
Accrued interest | 29 | 17 | 71 | % | |||||||||||||
Operating lease liabilities, current | 41 | 40 | 3 | % | |||||||||||||
Deferred revenue | 226 | 423 | -47 | % | |||||||||||||
Other current liabilities | 84 | 245 | -66 | % | |||||||||||||
Total current liabilities | $ | 3,290 | $ | 3,368 | -2 | % | |||||||||||
Long-term debt | 3,988 | 3,732 | 7 | % | |||||||||||||
Operating lease liabilities, noncurrent | 264 | 241 | 10 | % | |||||||||||||
Deferred tax liabilities, net | 205 | 220 | -7 | % | |||||||||||||
Other noncurrent liabilities | 104 | 99 | 5 | % | |||||||||||||
Total liabilities | $ | 7,851 | $ | 7,660 | 2 | % | |||||||||||
Equity: | |||||||||||||||||
Class A common stock | $ | — | $ | — | — | % | |||||||||||
Class B common stock | 1 | 1 | — | % | |||||||||||||
Additional paid-in capital | 2,007 | 1,975 | 2 | % | |||||||||||||
Accumulated deficit | (1,450) | (1,477) | -2 | % | |||||||||||||
Accumulated other comprehensive loss, net | (277) | (347) | -20 | % | |||||||||||||
Total Warner Music Group Corp. equity | $ | 281 | $ | 152 | 85 | % | |||||||||||
Noncontrolling interest | 18 | 16 | 13 | % | |||||||||||||
Total equity | 299 | 168 | 78 | % | |||||||||||||
Total liabilities and equity | $ | 8,150 | $ | 7,828 | 4 | % |
Figure 3. Warner Music Group Corp. - Summarized Statements of Cash Flows, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||
(dollars in millions) | |||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | ||||||||||
(unaudited) | (unaudited) | ||||||||||
Net cash provided by operating activities | $ | 146 | $ | 163 | |||||||
Net cash used in investing activities | (53) | (114) | |||||||||
Net cash used in financing activities | (90) | (83) | |||||||||
Effect of foreign currency exchange rates on cash and equivalents | (4) | (6) | |||||||||
Net decrease in cash and equivalents | $ | (1) | $ | (40) | |||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | ||||||||||
(unaudited) | (unaudited) | ||||||||||
Net cash provided by operating activities | $ | 349 | $ | 336 | |||||||
Net cash used in investing activities | (104) | (763) | |||||||||
Net cash (used in) provided by financing activities | (233) | 280 | |||||||||
Effect of foreign currency exchange rates on cash and equivalents | 4 | (7) | |||||||||
Net increase (decrease) in cash and equivalents | $ | 16 | $ | (154) |
Figure 4. Warner Music Group Corp. - Digital Revenue Summary, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Recorded Music | |||||||||||||||||
Streaming | $ | 822 | $ | 773 | 6 | % | |||||||||||
Downloads and Other Digital | 24 | 28 | -14 | % | |||||||||||||
Total Recorded Music Digital Revenue | $ | 846 | $ | 801 | 6 | % | |||||||||||
Music Publishing | |||||||||||||||||
Streaming | $ | 178 | $ | 140 | 27 | % | |||||||||||
Downloads and Other Digital | 4 | 4 | — | % | |||||||||||||
Total Music Publishing Digital Revenue | $ | 182 | $ | 144 | 26 | % | |||||||||||
Consolidated | |||||||||||||||||
Streaming | $ | 1,000 | $ | 913 | 10 | % | |||||||||||
Downloads and Other Digital | 28 | 32 | -13 | % | |||||||||||||
Intersegment Eliminations | (1) | (1) | — | % | |||||||||||||
Total Digital Revenue | $ | 1,027 | $ | 944 | 9 | % | |||||||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Recorded Music | |||||||||||||||||
Streaming | $ | 2,375 | $ | 2,385 | — | % | |||||||||||
Downloads and Other Digital | 70 | 90 | -22 | % | |||||||||||||
Total Recorded Music Digital Revenue | $ | 2,445 | $ | 2,475 | -1 | % | |||||||||||
Music Publishing | |||||||||||||||||
Streaming | $ | 466 | $ | 391 | 19 | % | |||||||||||
Downloads and Other Digital | 11 | 13 | -15 | % | |||||||||||||
Total Music Publishing Digital Revenue | $ | 477 | $ | 404 | 18 | % | |||||||||||
Consolidated | |||||||||||||||||
Streaming | $ | 2,841 | $ | 2,776 | 2 | % | |||||||||||
Downloads and Other Digital | 81 | 103 | -21 | % | |||||||||||||
Intersegment Eliminations | (1) | (2) | -50 | % | |||||||||||||
Total Digital Revenue | $ | 2,921 | $ | 2,877 | 2 | % |
Figure 5. Warner Music Group Corp. - Reconciliation of Net Income to OIBDA, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 122 | $ | 124 | -2 | % | |||||||||||
Income attributable to noncontrolling interest | 2 | 1 | 100 | % | |||||||||||||
Net income | $ | 124 | $ | 125 | -1 | % | |||||||||||
Income tax expense | 43 | 39 | 10 | % | |||||||||||||
Income including income taxes | $ | 167 | $ | 164 | 2 | % | |||||||||||
Other income, net | (20) | (50) | -60 | % | |||||||||||||
Interest expense, net | 38 | 32 | 19 | % | |||||||||||||
Loss on extinguishment of debt | 4 | — | — | % | |||||||||||||
Operating income | $ | 189 | $ | 146 | 29 | % | |||||||||||
Amortization expense | 64 | 69 | -7 | % | |||||||||||||
Depreciation expense | 22 | 18 | 22 | % | |||||||||||||
OIBDA | $ | 275 | $ | 233 | 18 | % | |||||||||||
Operating income margin | 12.1 | % | 10.2 | % | |||||||||||||
OIBDA margin | 17.6 | % | 16.3 | % | |||||||||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Net income attributable to Warner Music Group Corp. | $ | 278 | $ | 403 | -31 | % | |||||||||||
Income attributable to noncontrolling interest | 7 | 2 | — | % | |||||||||||||
Net income | $ | 285 | $ | 405 | -30 | % | |||||||||||
Income tax expense | 112 | 148 | -24 | % | |||||||||||||
Income including income taxes | $ | 397 | $ | 553 | -28 | % | |||||||||||
Other expense (income), net | 72 | (96) | — | % | |||||||||||||
Interest expense, net | 105 | 94 | 12 | % | |||||||||||||
Loss on extinguishment of debt | 4 | — | — | % | |||||||||||||
Operating income | $ | 578 | $ | 551 | 5 | % | |||||||||||
Amortization expense | 188 | 198 | -5 | % | |||||||||||||
Depreciation expense | 65 | 59 | 10 | % | |||||||||||||
OIBDA | $ | 831 | $ | 808 | 3 | % | |||||||||||
Operating income margin | 13.0 | % | 12.5 | % | |||||||||||||
OIBDA margin | 18.7 | % | 18.3 | % |
Figure 6. Warner Music Group Corp. - Reconciliation of Segment Operating Income to OIBDA, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Total WMG operating income – GAAP | $ | 189 | $ | 146 | 29 | % | |||||||||||
Depreciation and amortization expense | (86) | (87) | -1 | % | |||||||||||||
Total WMG OIBDA | $ | 275 | $ | 233 | 18 | % | |||||||||||
Operating income margin | 12.1 | % | 10.2 | % | |||||||||||||
OIBDA margin | 17.6 | % | 16.3 | % | |||||||||||||
Recorded Music operating income – GAAP | $ | 207 | $ | 166 | 25 | % | |||||||||||
Depreciation and amortization expense | (54) | (58) | -7 | % | |||||||||||||
Recorded Music OIBDA | $ | 261 | $ | 224 | 17 | % | |||||||||||
Recorded Music operating income margin | 16.1 | % | 14.0 | % | |||||||||||||
Recorded Music OIBDA margin | 20.4 | % | 18.8 | % | |||||||||||||
Music Publishing operating income – GAAP | $ | 50 | $ | 33 | 52 | % | |||||||||||
Depreciation and amortization expense | (23) | (24) | -4 | % | |||||||||||||
Music Publishing OIBDA | $ | 73 | $ | 57 | 28 | % | |||||||||||
Music Publishing operating income margin | 17.7 | % | 13.5 | % | |||||||||||||
Music Publishing OIBDA margin | 25.8 | % | 23.3 | % | |||||||||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | % Change | |||||||||||||||
(unaudited) | (unaudited) | ||||||||||||||||
Total WMG operating income – GAAP | $ | 578 | $ | 551 | 5 | % | |||||||||||
Depreciation and amortization expense | (253) | (257) | -2 | % | |||||||||||||
Total WMG OIBDA | $ | 831 | $ | 808 | 3 | % | |||||||||||
Operating income margin | 13.0 | % | 12.5 | % | |||||||||||||
OIBDA margin | 18.7 | % | 18.3 | % | |||||||||||||
Recorded Music operating income – GAAP | $ | 641 | $ | 631 | 2 | % | |||||||||||
Depreciation and amortization expense | (160) | (173) | -8 | % | |||||||||||||
Recorded Music OIBDA | $ | 801 | $ | 804 | — | % | |||||||||||
Recorded Music operating income margin | 17.5 | % | 17.0 | % | |||||||||||||
Recorded Music OIBDA margin | 21.9 | % | 21.6 | % | |||||||||||||
Music Publishing operating income – GAAP | $ | 151 | $ | 103 | 47 | % | |||||||||||
Depreciation and amortization expense | (69) | (69) | — | % | |||||||||||||
Music Publishing OIBDA | $ | 220 | $ | 172 | 28 | % | |||||||||||
Music Publishing operating income margin | 19.1 | % | 14.6 | % | |||||||||||||
Music Publishing OIBDA margin | 27.8 | % | 24.4 | % |
Figure 7. Warner Music Group Corp. - Reconciliation of Reported to Adjusted Results, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
Total WMG Operating Income | Recorded Music Operating Income | Music Publishing Operating Income | Total WMG OIBDA | Recorded Music OIBDA | Music Publishing OIBDA | Net Income | |||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
Reported Results | $ | 189 | $ | 207 | $ | 50 | $ | 275 | $ | 261 | $ | 73 | $ | 124 | |||||||||||||||||||||||||||
Factors Affecting Comparability: | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Transformation Related Costs | 13 | — | — | 13 | — | — | 13 | ||||||||||||||||||||||||||||||||||
Executive Transition Costs | 1 | — | — | 1 | — | — | 1 | ||||||||||||||||||||||||||||||||||
Non-Cash Stock-Based Compensation and Other Related Costs | 8 | 3 | 1 | 8 | 3 | 1 | 8 | ||||||||||||||||||||||||||||||||||
Adjusted Results | $ | 211 | $ | 210 | $ | 51 | $ | 297 | $ | 264 | $ | 74 | $ | 146 | |||||||||||||||||||||||||||
Adjusted Margin | 13.5 | % | 16.4 | % | 18.0 | % | 19.0 | % | 20.6 | % | 26.1 | % | |||||||||||||||||||||||||||||
For the Three Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
Total WMG Operating Income | Recorded Music Operating Income | Music Publishing Operating Income | Total WMG OIBDA | Recorded Music OIBDA | Music Publishing OIBDA | Net Income | |||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
Reported Results | $ | 146 | $ | 166 | $ | 33 | $ | 233 | $ | 224 | $ | 57 | $ | 125 | |||||||||||||||||||||||||||
Factors Affecting Comparability: | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Transformation Related Costs | 16 | 4 | — | 16 | 4 | — | 16 | ||||||||||||||||||||||||||||||||||
Non-Cash Stock-Based Compensation and Other Related Costs | 6 | 3 | — | 6 | 3 | — | 6 | ||||||||||||||||||||||||||||||||||
Adjusted Results | $ | 168 | $ | 173 | $ | 33 | $ | 255 | $ | 231 | $ | 57 | $ | 147 | |||||||||||||||||||||||||||
Adjusted Margin | 11.7 | % | 14.6 | % | 13.5 | % | 17.8 | % | 19.4 | % | 23.3 | % | |||||||||||||||||||||||||||||
For the Nine Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||||||||
Total WMG Operating Income | Recorded Music Operating Income | Music Publishing Operating Income | Total WMG OIBDA | Recorded Music OIBDA | Music Publishing OIBDA | Net Income | |||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
Reported Results | $ | 578 | $ | 641 | $ | 151 | $ | 831 | $ | 801 | $ | 220 | $ | 285 | |||||||||||||||||||||||||||
Factors Affecting Comparability: | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Transformation Related Costs | 80 | 41 | — | 80 | 41 | — | 80 | ||||||||||||||||||||||||||||||||||
Executive Transition Costs | 4 | — | — | 4 | — | — | 4 | ||||||||||||||||||||||||||||||||||
Gain on Divestiture | (41) | (41) | — | (41) | (41) | — | (41) | ||||||||||||||||||||||||||||||||||
Non-Cash Stock-Based Compensation and Other Related Costs | 44 | 11 | 2 | 44 | 11 | 2 | 44 | ||||||||||||||||||||||||||||||||||
Adjusted Results | $ | 665 | $ | 652 | $ | 153 | $ | 918 | $ | 812 | $ | 222 | $ | 372 | |||||||||||||||||||||||||||
Adjusted Margin | 14.9 | % | 17.8 | % | 19.4 | % | 20.6 | % | 22.2 | % | 28.1 | % | |||||||||||||||||||||||||||||
For the Nine Months Ended June 30, 2022 | |||||||||||||||||||||||||||||||||||||||||
Total WMG Operating Income | Recorded Music Operating Income | Music Publishing Operating Income | Total WMG OIBDA | Recorded Music OIBDA | Music Publishing OIBDA | Net Income | |||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
Reported Results | $ | 551 | $ | 631 | $ | 103 | $ | 808 | $ | 804 | $ | 172 | $ | 405 | |||||||||||||||||||||||||||
Factors Affecting Comparability: | |||||||||||||||||||||||||||||||||||||||||
Restructuring and Other Transformation Related Costs | 39 | 4 | — | 39 | 4 | — | 39 | ||||||||||||||||||||||||||||||||||
Non-Cash Stock-Based Compensation and Other Related Costs | 37 | 12 | 1 | 37 | 12 | 1 | 37 | ||||||||||||||||||||||||||||||||||
Adjusted Results | $ | 627 | $ | 647 | $ | 104 | $ | 884 | $ | 820 | $ | 173 | $ | 481 | |||||||||||||||||||||||||||
Adjusted Margin | 14.2 | % | 17.4 | % | 14.8 | % | 20.0 | % | 22.0 | % | 24.6 | % |
Figure 8. Warner Music Group Corp. - Revenue by Geography and Segment, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 As Reported and Constant Currency | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | For the Three Months Ended June 30, 2022 | |||||||||||||||
As reported | As reported | Constant | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||
U.S. revenue | |||||||||||||||||
Recorded Music | $ | 557 | $ | 515 | $ | 515 | |||||||||||
Music Publishing | 147 | 137 | 137 | ||||||||||||||
International revenue | |||||||||||||||||
Recorded Music | 725 | 674 | 665 | ||||||||||||||
Music Publishing | 136 | 108 | 107 | ||||||||||||||
Intersegment eliminations | (1) | (2) | (1) | ||||||||||||||
Total Revenue | $ | 1,564 | $ | 1,432 | $ | 1,423 | |||||||||||
Revenue by Segment: | |||||||||||||||||
Recorded Music | |||||||||||||||||
Digital | $ | 846 | $ | 801 | $ | 792 | |||||||||||
Physical | 126 | 123 | 123 | ||||||||||||||
Total Digital and Physical | 972 | 924 | 915 | ||||||||||||||
Artist services and expanded-rights | 218 | 190 | 191 | ||||||||||||||
Licensing | 92 | 75 | 74 | ||||||||||||||
Total Recorded Music | 1,282 | 1,189 | 1,180 | ||||||||||||||
Music Publishing | |||||||||||||||||
Performance | 40 | 45 | 44 | ||||||||||||||
Digital | 182 | 144 | 143 | ||||||||||||||
Mechanical | 16 | 10 | 11 | ||||||||||||||
Synchronization | 41 | 41 | 41 | ||||||||||||||
Other | 4 | 5 | 5 | ||||||||||||||
Total Music Publishing | 283 | 245 | 244 | ||||||||||||||
Intersegment eliminations | (1) | (2) | (1) | ||||||||||||||
Total Revenue | $ | 1,564 | $ | 1,432 | $ | 1,423 | |||||||||||
Total Digital Revenue | $ | 1,027 | $ | 944 | $ | 935 | |||||||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | For the Nine Months Ended June 30, 2022 | |||||||||||||||
As reported | As reported | Constant | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||
U.S. revenue | |||||||||||||||||
Recorded Music | $ | 1,618 | $ | 1,641 | $ | 1,641 | |||||||||||
Music Publishing | 415 | 369 | 369 | ||||||||||||||
International revenue | |||||||||||||||||
Recorded Music | 2,046 | 2,081 | 1,966 | ||||||||||||||
Music Publishing | 375 | 335 | 318 | ||||||||||||||
Intersegment eliminations | (3) | (4) | (3) | ||||||||||||||
Total Revenue | $ | 4,451 | $ | 4,422 | $ | 4,291 | |||||||||||
Revenue by Segment: | |||||||||||||||||
Recorded Music | |||||||||||||||||
Digital | $ | 2,445 | $ | 2,475 | $ | 2,409 | |||||||||||
Physical | 377 | 440 | 421 | ||||||||||||||
Total Digital and Physical | 2,822 | 2,915 | 2,830 | ||||||||||||||
Artist services and expanded-rights | 555 | 563 | 543 | ||||||||||||||
Licensing | 287 | 244 | 234 | ||||||||||||||
Total Recorded Music | 3,664 | 3,722 | 3,607 | ||||||||||||||
Music Publishing | |||||||||||||||||
Performance | 130 | 119 | 114 | ||||||||||||||
Digital | 477 | 404 | 396 | ||||||||||||||
Mechanical | 46 | 37 | 36 | ||||||||||||||
Synchronization | 126 | 133 | 130 | ||||||||||||||
Other | 11 | 11 | 11 | ||||||||||||||
Total Music Publishing | 790 | 704 | 687 | ||||||||||||||
Intersegment eliminations | (3) | (4) | (3) | ||||||||||||||
Total Revenue | $ | 4,451 | $ | 4,422 | $ | 4,291 | |||||||||||
Total Digital Revenue | $ | 2,921 | $ | 2,877 | $ | 2,804 |
Figure 9. Warner Music Group Corp. - OIBDA and Adjusted OIBDA by Segment, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 As Reported and Constant Currency | |||||||||||||||||
(dollars in millions) | |||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | For the Three Months Ended June 30, 2022 | |||||||||||||||
As reported | As reported | Constant | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||
Total WMG OIBDA | $ | 275 | $ | 233 | $ | 229 | |||||||||||
OIBDA margin | 17.6 | % | 16.3 | % | 16.1 | % | |||||||||||
Total WMG Adjusted OIBDA | $ | 297 | $ | 255 | $ | 251 | |||||||||||
Adjusted OIBDA margin | 19.0 | % | 17.8 | % | 17.6 | % | |||||||||||
Recorded Music OIBDA | $ | 261 | $ | 224 | $ | 221 | |||||||||||
Recorded Music OIBDA margin | 20.4 | % | 18.8 | % | 18.7 | % | |||||||||||
Recorded Music Adjusted OIBDA | $ | 264 | $ | 231 | $ | 228 | |||||||||||
Recorded Music Adjusted OIBDA margin | 20.6 | % | 19.4 | % | 19.3 | % | |||||||||||
Music Publishing OIBDA | $ | 73 | $ | 57 | $ | 56 | |||||||||||
Music Publishing OIBDA margin | 25.8 | % | 23.3 | % | 23.0 | % | |||||||||||
Music Publishing Adjusted OIBDA | $ | 74 | $ | 57 | $ | 56 | |||||||||||
Music Publishing Adjusted OIBDA margin | 26.1 | % | 23.3 | % | 23.0 | % | |||||||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | For the Nine Months Ended June 30, 2022 | |||||||||||||||
As reported | As reported | Constant | |||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||
Total WMG OIBDA | $ | 831 | $ | 808 | $ | 775 | |||||||||||
OIBDA margin | 18.7 | % | 18.3 | % | 18.1 | % | |||||||||||
Total WMG Adjusted OIBDA | $ | 918 | $ | 884 | $ | 851 | |||||||||||
Adjusted OIBDA margin | 20.6 | % | 20.0 | % | 19.8 | % | |||||||||||
Recorded Music OIBDA | $ | 801 | $ | 804 | $ | 774 | |||||||||||
Recorded Music OIBDA margin | 21.9 | % | 21.6 | % | 21.5 | % | |||||||||||
Recorded Music Adjusted OIBDA | $ | 812 | $ | 820 | $ | 790 | |||||||||||
Recorded Music Adjusted OIBDA margin | 22.2 | % | 22.0 | % | 21.9 | % | |||||||||||
Music Publishing OIBDA | $ | 220 | $ | 172 | $ | 169 | |||||||||||
Music Publishing OIBDA margin | 27.8 | % | 24.4 | % | 24.6 | % | |||||||||||
Music Publishing Adjusted OIBDA | $ | 222 | $ | 173 | $ | 170 | |||||||||||
Music Publishing Adjusted OIBDA margin | 28.1 | % | 24.6 | % | 24.7 | % |
Figure 10. Warner Music Group Corp. - Calculation of Free Cash Flow, Three and Nine Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||
(dollars in millions) | |||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | ||||||||||
(unaudited) | (unaudited) | ||||||||||
Net cash provided by operating activities | $ | 146 | $ | 163 | |||||||
Less: Capital expenditures | 33 | 35 | |||||||||
Free Cash Flow | $ | 113 | $ | 128 | |||||||
For the Nine Months Ended June 30, 2023 | For the Nine Months Ended June 30, 2022 | ||||||||||
(unaudited) | (unaudited) | ||||||||||
Net cash provided by operating activities | $ | 349 | $ | 336 | |||||||
Less: Capital expenditures | 89 | 97 | |||||||||
Free Cash Flow | $ | 260 | $ | 239 |
Figure 11. Warner Music Group Corp. - Reconciliation of Net Income to Adjusted EBITDA, Three and Twelve Months Ended June 30, 2023 versus June 30, 2022 | |||||||||||||||||||||||
(dollars in millions) | |||||||||||||||||||||||
For the Three Months Ended June 30, 2023 | For the Three Months Ended June 30, 2022 | For the Twelve Months Ended June 30, 2023 | For the Twelve Months Ended June 30, 2022 | ||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||
Net Income | $ | 124 | $ | 125 | $ | 435 | $ | 435 | |||||||||||||||
Income tax expense | 43 | 39 | 149 | 170 | |||||||||||||||||||
Interest expense, net | 38 | 32 | 136 | 123 | |||||||||||||||||||
Depreciation and amortization | 86 | 87 | 335 | 336 | |||||||||||||||||||
Loss on extinguishment of debt (a) | 4 | — | 4 | 10 | |||||||||||||||||||
Net (gains) losses on divestitures and sale of securities (b) | — | — | (42) | 9 | |||||||||||||||||||
Restructuring costs (c) | 1 | 6 | 60 | 29 | |||||||||||||||||||
Net foreign exchange (gains) losses (d) | (12) | (55) | 13 | (148) | |||||||||||||||||||
Transaction costs (e) | — | 1 | — | 13 | |||||||||||||||||||
Business optimization expenses (f) | 15 | 16 | 55 | 55 | |||||||||||||||||||
Non-cash stock-based compensation expense (g) | 7 | 5 | 46 | 46 | |||||||||||||||||||
Other non-cash charges (h) | (5) | (4) | 12 | 42 | |||||||||||||||||||
Pro forma impact of cost savings initiatives and specified transactions (i) | 10 | 11 | 57 | 64 | |||||||||||||||||||
Adjusted EBITDA | $ | 311 | $ | 263 | $ | 1,260 | $ | 1,184 |
Media Contact: | Investor Contact: | ||||
James Steven | Kareem Chin | ||||
(212) 275-2213 | |||||
James.Steven@wmg.com | Investor.Relations@wmg.com |
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