Endeavor Sets First Dividend, Stock Buyback Plan as it Awaits WWE Deal and IMG Academy Sale

Endeavor has big financial plans for the rest of the year as the company announced Tuesday it will declare its first dividend and begin its first stock buyback program as it awaits its acquisition of WWE and sale of IMG Academy.

Endeavor delivered solid first quarter results on Tuesday, powered by growth in its owned sports properties unit which is about to grow substantially as Endeavor closes its deal to acquire WWE and combine it with UFC in a $21 billion transaction. Endeavor’s events and experiences unit also was in positive territory for the quarter. But the hangover of the January 2022 sale of the Endeavor Content production unit put a dent in the representation unit’s quarterly numbers.

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The company’s newly created sports data and technology unit, which houses its OpenBet online wagering platform, saw its adjusted earnings before interest, taxes, depreciation and amortization sink on higher costs associated with IMG Arena.

The dividend of up to $25 million will be declared in the third quarter.

The $300 million stock buyback program will begin as soon as Endeavor has closed the deal to sell IMG Academy sports education brand to private equity firm EQT for $1.25 billion. Endeavor also plans to pay down another $50 million in debt, which will bring down its debt-to-equity ratio, as will the combination with cash-rich WWE. As of Q1, Endeavor’s debt load stood at $5.15 billion, with net leverage hitting the 3.8 times debt-to-equity ratio. Cash on hand at March was $718.7 million, down from $767.8 million at the end of 2022.

For the quarter, Owned Sports Properties delivered revenue of $353.3 million, up 19% from the year-ago period. Adjusted EBITDA of $185.7 million was up 25% year-over- year.

Events, Experiences and Rights came in at $800.8 million in revenue, up 2.5% for the quarter, with adjusted EBIDTA down 14% to $108 million.

Representation saw a 2% decline in revenue to $350.2 million, which included a $14 million dent from revenue recorded in the prior-year quarter from Endeavor Content (now rebranded as Fifth Season) prior to the closing of the sale of CJ ENM.

The new Sports Data and Technology wing got a big boost from the inclusion of OpenBet, which took revenue to $100.9 million, up 123%, but adjusted EBITDA fell 31% to $4.5 million.

As expected, Endeavor CEO Ariel Emanuel was pressed by Wall Street analysts on Endeavor’s earnings call about the impact of the writers strike that began May 2 on the company’s content and talent-focused businesses.

“We completely support our clients in this situation. There’s real issues that have to be addressed,” Emanuel said. He declined to make a prediction on the duration of the strike nor would Endeavor CFO Jason Lublin address the potential impact from the strike on Endeavor’s WME unit or other operations. The company is “monitoring the situation” closely and conversing with clients. If necessary, Endeavor will provide strike-related earnings guidance this summer with the release of its Q3 results.

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