Q2 2020 Wanda Sports Group Co Ltd Earnings Call
[music], ladies and gentlemen, thank you for standing by and so joining one does sports second quarter 2020 earnings.
The conference calls.
Well at this time all participants are in listen only mode. After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded if you have any objections you may disconnect at this time.
I'd like to turn the conference over to your hosts for today's call Mis as its Claude hate of Investor Relations at one does sports. Please go ahead.
Thank you.
Everyone, Frank let Charlie the second quarter 20, Twond here on his call with US today I haven't Guy Chief Executive Officer, why that's important.
While our Chief Financial Officer, I would play off the call will be Oh on our website. Later today. We have also posted a slide presentation on our website, which Brian will reveal during his remarks now let me quickly carpet assays Hopper today's discussion will contain forward looking statements.
Looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those expressed or implied forward looking statements and consequently could be affected by the uncertain and unprecedented impact on cobot 19 on offering says and operations and it relates the impact on out like when do they need.
For a detailed discussion topics reason certainties. Please refer to our earnings release, our annual report on form 20-F, while the year end at December 31st 2019 files with the FCC and available on the Fccs website at Www FCC Don Giovanni.
I saw that switch or filings that we make from time to time any forward looking statements that we make on todays call up based on assumptions sets off today and we did not undertake any obligation to update these statements except as required under applicable law. Please note that certain financial measures that we use on this call such as adjusted EBITDA.
I expressed on a lot I first basis, I personally south and reconciliation of I pressing on Iris measures can be found in our earnings release with that I'll now turn the call over to appeal kind of again time, Inc. Please proceed.
Okay. Thank you and you just and thanks, everyone for joining us today.
But first I hope you and your families all hopefully.
During the <unk> dynamic.
I would also like to recognize.
I sincerely think or people.
One of sports group for their dedication and hard work.
As we respond to the per phone churn and just.
Severely impacted nickel double community.
Turning to todays call Ari will first review over second quarter performance.
Then I have some updates or focused and disciplined action.
For the combined impact dynamic.
Let me start with the second quarter results.
I would like to remind you that given the sale of the I don't know group closing Gerard.
With few treated to the own bank group in a second quarter.
That's helpful sale.
And he's historical results are reflected as discontinued operations.
As expected second quarter 2020 was probably the most challenging operating environment in the history or company.
We were affected for the entire quarter part of the pandemic and its impact on the global economy.
Long live we still delivered.
Total revenue of 51.8 billion euros.
And for the Justice I'd be happy view of 17.9 million euros.
Despite the pokemon.
Oh, Okay cancellation of most every sport event worldwide in the second quarter.
I'm proud to report a number of achievements and business wins in maintaining or diversified portfolio and expanding or priorities.
To be clients, while undertaking structural cost reductions.
I was putting highlights for spectator sports business.
So who played football unions worked successfully completed after a relatively long period of locked them.
Including the return of German bump of legal.
The third quarter finals, and a final off do you have people appeal, which was a German up.
As well as the legal theory, a matches with the cope Taleo Coca Cola final.
Although this games were primarily played behind closed doors with no spectators.
We served as media and marketing partner in the poor <unk> in a broadening department.
With the client.
The cope with your Tonia Coca Cola final celebrated important cafs rich.
Over 10 million viewers with a much disputed to almost 220 territories globally.
[noise] you respect of major commercial contracts and extension of long term partnerships.
Extended for another three year, our agreement with the German ice Hockey Federation for exclusive media and marketing rights.
We also extended exclusive international media rights partnerships with the Republic and know what used to be federations for five years.
For the whole thing then I got from own extended its long running agreements with us for exclusive marketing right into the two fold in 29 to go to 30 season.
For facilitating sponsorships, we successfully brokered several commercial agreements with recognized brands.
Including night.
And the top 14, what could be club, maybe their own polar thing.
Oh, Gee and the World coding Federation.
For men and international quite often on Union.
In terms of new business wins.
We remain positive about or pipeline opportunities.
As we became the exclusive media rights partner with broadcaster.
Hey go sport hovering 15 media properties or period up to 2028.
We also completed and exclusive marketing and still with agreement with [laughter] basic stuff Sports club, Walt the Turkish pop football basketball volleyball, handful and he's sports clubs for 2021 to 2044.
In addition, we sign media agreements with the Scottish Premier Football League. It over 30 countries for three years.
We see these accomplishments in the second quarter as a strong testament to our operational excellence and our differentiated capabilities to stay ahead of the curve for clients and partners.
So that's our PBF. This business continued to adopt leading technology, which plays an ever increasing part of the daily operations of ours and our claims.
In the second quarter, we delivered a number of were two events, including the international ice hockey federations He's schools Digital Championship tournament.
Oh line, you sports matches 40, Tony football leagues easier <unk> a team clubs.
And virtual overlay yours.
For the Copart and tell Ya Coca Cola football fine.
Following our recent success in partnering with Verizon to launch a new Fiveg based in stadium experience, which allow fans equipped with a five just device to enjoys mounted camera live and on demand streams of the game.
Further bridged the agreement with the variable on four separate deals to continue to bring more real.
And excitement to the only thought experience for the games, including N.V., the NASCAR and Souffles.
Furthermore, we are experiencing heightened demand well marketing technology and content data management as evidenced by the various Protex men date is probably the profession of Golf Tour English Premier League Club, Chelsea Football club, but the Minton World Federation and Act.
Vision, but isn't.
In addition, we renewed the contract with from he got football professional for the next four seasons.
We were also awarded the outstanding production achievement event for it to production off the rugby World Cup, Japan 2019 by the Sports video group Europe TV, one of the most prestigious bodies for the sport forecasting and production across Europe.
Well This award we set new standards you wrote could be brought accounts production with the first 8-K protection. They use of augmented reality graphics and Hawk I smart related technology.
Now turning to more or less participation business.
Not surprisingly the pandemic spread across the globe all bets participation sports events were cancelled or postponed in the second quarter.
But if we successfully launched a few virtual events, including the online hi, real fits in its competition.
Which attracted 5000 participants from 50 251 countries and a virtual long distance hiking challenge.
Our advanced digital technology enabled us to continue to engage and connect with diverse athletes and the spectators from multiple markets globally, regardless of the <unk> 19 crisis.
As this experience demonstrates the qubic 19 situation sexually inspired new innovative formats that could become a complimentary commercially viable mess participation event.
Looking forward.
For China business.
Unfortunately, more almost all sporting events in China.
Also were cancelled and postponed in a second quarter as a result of the pandemic disruptions.
However.
We remain confident of these significant opportunities in the China market.
And we'll continue to repair or team to expand premium sporting event in the future.
Now let me provide some updates on how we see the impact of us of the carbon tomorrow.
You know addressing the cobot 19th disruptions, we were fortunate that due to the immediate implementation of remote working protocols.
All of our employees were saying.
But as part of our cost reduction efforts in aligning stuff level with the client demand, we made it difficult position to decrease headcount by about 13% compared to the beginning of 2020.
Our other priority of planning with our partners.
And at times for the safe assumption.
Sporting events.
To join US one of the founding members.
They spoke for recovery initiated.
Which launched Ang its national campaign to encourage policymakers to safely reopened organizing events.
In addition to communicating with the policymakers. This campaign aims to collaborate with scientific community for necessary majors, such as testing social distancing define hiking majors as well as monitoring and it trucking protocols sanction like government authorities.
You know spectators in our spectator sports separately.
Due to the slow and of course of real putting a football our 2019 twenties season, what they like into the third quarter with the P.F.B. Cup final taking place early July behind closed doors.
Equally.
Yeah, Hey was completed in August with old games played.
We are looking forward other leaks and the clubs gradually resuming with the 2020 and 21 season scheduled to start in September.
Regarding summer sports events, some postpone event work <unk> are gradually being rescheduled.
For example, they seem Amex TP motocross World Championship presumed in August.
Uhhuh with fewer races, but.
But it means and work Federation World tour or find those and we mean European handful Federation Eurocheck you were a championship two of them 20 also kinda typically expect it to take place in December of this year.
You got to shift remain hopeful for upcoming winter sports season.
Including the fifth board to come up and I view work.
But the visibility you relatively limited.
Our calling plan, it's continued to prepare or team for the season, and we will provide pick up they had to the appropriate time as the year progresses.
RP PSS business has the impacted by lack of events during the pandemic.
Well as inter year cyclicality from the FIFA Women's World Cup, which was held in 2019, but not this year.
Well sports event to resume such as these delayed French open at Roland Garros.
We believe we are very well positioned to serve or clients in digital transformation services and data driven solutions.
Why are we continue to focus on our long term strategy in building a leading global spoke event media animosity platform.
I would like to provide us some updates since our last call our near to midterm initiatives related to facing that them endemic crisis. This initiatives, we hope will be a key driver being enabling us to emerge from the pandemic even stronger.
First we have made great progress you resorbing contractual issues with our partners you affair and a straightforward manner.
As evidenced by the prolongation and new commercial contracts signed in the second quarter.
We appreciate the value of or a long term partners and we will continue to collaborate effectively.
Having long term objectives for all parties.
Secondly, we continue to be at the forefront of industry as we accelerated the pursue of innovative content and the digital initiatives.
Some examples include the international Ice Hockey Federation of virtual World Championship.
And the newly developed digital ecosystem for European Handball Federation into second quarter.
Sure. This <unk> were outstanding team effort and demonstrate our ability.
In this new virtual world to bring together, the best marketing intelligence media strategy creativity, and advanced technology or clients.
Hi, known.
Our cost containment and loop liquidity protection efforts continue.
As you attempt to manage operating expense by tourettes into reality of covered macroeconomic situation, while maintaining well positioned.
For every four revenue gross way mock red button.
In summary, while the macroeconomic environment is challenging we are confident or solid business fundamentals.
Namely or core global resources and capabilities.
Our performance so far in the first half of 2020 demonstrated the trust or long term commercial clients.
As well as the confidence or new business partners.
Especially as overall spending in or Mark.
<unk> titles.
Well, we'll continue to print or engagement with clients and partners as we support each other in navigating the unprecedented disruptions.
Now I would love to invite our CFO Bryan now to shed more light.
Some highlights on the quarter to find insurers presentation.
Thank you want me.
Hello, everyone I wouldn't like to also take a moment two weeks that all of you under your family stay safe and a healthy.
Before I started a second quarter discussion I would like to make us feel comments.
First.
Yes, I mean just mentioned.
We I intend to lay focused oh, aligning our beaches model to the reality of the current economic environment, while preparing waste opposed to pull off all kinds of for the recovery of the industry.
We have ongoing reviews to streamline our business the operation to create a leaner organization with a greatest.
Flexibility, that's a well continue to be highly focused on TV building value for all stakeholders.
For the short term.
These reviews the results that E M commanders, the cost of savings weak in lots of hot.
And at the offsetting the decline in back new in order to protect our profitability.
For the medium to longer term, we are focused on realizing our full potential to achieve sustainable and a healthy pace for future opportunities.
No.
The closing of Arrow myself was completed in July.
For the second quarter you. According to the with the accounting rules, we have adjusted our reporting to exclude the IRO Memphis need Undertreated, a it's a asset held for sale.
That does continue to operations.
I realize the resolves to an operating data also have been exclude either from the comp comparison for second quarter tend to 19 result on the operation They test as well.
Unless otherwise indicated the financial statement lie items on a long I I S of financial matters, I reported Oh, I continuing operation basis.
Now for the second quarter financial reviews.
You May follow my remarks in the earnings conference call presentation on our website.
If you turn to slide.
None of the six.
For the second quarter of Twentytwenty.
Our total revenue was 51.8 million euro.
The decline of 75% year over year was mainly due to postponement all constellations of almost the all you balance due to the damage during the quarter.
Gross coffee was a 74.5 million euro.
Same thing a smaller decrease of 455% year over year.
Relative to revenue.
Effectively they used to resolve today in overall gross margin improvement also 67% for the second quarter compared to two statistics, but then in the same hero in 29 team.
The primary reason for the margin enhancement is they can increase the revenue contribution from the commission based the model for our football business.
Now, let's go to slide.
Number seven.
The next coffee for Q2, Twentytwenty was a 5.5 million euro.
With the margin enhancement.
Under the re gross operating cost reduction, partially offset in the significant revenue decline.
Our adjusted EBITDA was 20.9 million Euro.
Next.
I will provide detailed review of our three sacraments.
Stocking Lisa Spectator sports on slide number pad.
Revenue was certainly a poll for me there you know a decrease of offers 72% year over year, mainly due to multiple key events cancellations, all postponements, such as I I track and the Italia football.
Sensor to up to the gradual restart all for 2019 Twentytwenty football season, you May and June.
Italia under Jim football well demand drivers of the revenue for Spectator sports in the second quarter.
Come powder to the revenue our spectator sports cross palsy decreased to 48% year over year.
Representing a improved gross margin of 76% compared to 240% of last year.
The high gross margin was attributable to the commission based revenue model driven by football.
Looking at the hour FSS segment on slide number 12.
D. PFS, a revenue was 13.1 million euro.
Increase all for 76% year over year.
He PSS revenue.
Excluding reimbursement revenues.
I should tell proposed seven me the euro representing a decline of for 53% annually.
This is de P.S. as the revenue decline.
These are primarily driven by cycle ecology fat as the woman's the FIFA World Cup took place in 2019.
Also even events cancellations or on the postponement in the second quarter also that's under the production revenue for the quarter.
Gross coffee for this settlement was the six me the euro.
Decrease of 54% year over year.
The representing an increase gross margin of 46% compared to 24% for the same piero of penton 19th.
These okay.
Reflects the continued a marquee attractive needs of our innovative <unk> SSL solutions.
Lastly for our math participation Sackman on slide number 14.
In second quarter, Twentytwenty amassed participation Rab noon eastern close to Neil.
Many attributes of people to the full shutdown of all events during the quarter.
Now, let's move to slide number six team liquidity and attacks.
That's all for June 30, Twentytwenty, we had a strong liquidity position with the cash on the tax equivalent of a 167.5 Mena euro from continuing operations.
As of July 31st Twentytwenty posted the completion of the Iron Man group itself.
The company had a total cash on the cash equivalence of code 208.7 million Euro.
These extra liquidity further optimizing our capital structure under strengthens our balance sheet, we said greater financial flexibility to navigate that amazing and the to emerge a stronger from Cowen Nitin disruptions.
As a for the balance of the Tasha and the Arrow man sales to policies. He lives are all for the Manny and the significant uncertainty. So we ended the broader sports ecosystem fees due to the cover Nitin disruptions.
We continue to evaluate whether we should the apply the proceeds of for general cooperation purposed all subject to shareholder approval return capital to our shareholders.
Our second quarter contacts for continuing operations.
Well, it's a 0.6 Mena euro much less than the corresponding quarter in 29 team.
In the fall you slide number 17 on general expenditure.
In addition to pass.
For the second quarter each of our principal Expedia expanses of categories that decreased a lot.
Including personnel expenses wintry declined by 17% year over year.
Selling all things and the administrative expenses.
We could decrease the by 51.3% year over year.
As well as the finance cost.
Richard declined by 15.5% year over year.
These are strong testaments to the successful execution of our cost saving plants.
We believe for data provides us with a solid cash position under sustainable operations in the current environment.
I would also note.
As always we are committed to.
To being very disciplined and prudent.
In capital management in order to pursue for our financial position and the minimize the overall content make the impact of our business.
Let me conclude on slide 18 and 19.
Even the continued uncertainty related to the cover 19 crises.
We are not able to provide 2020 guidance.
We will reconsider providing guidance once the environments stabilized.
Having said that I would like to share with you on slide 18.
Better we used a part of the proceeds from the sale of for adamant group to repay.
D stat.
As a result as of July 31st our total indebtedness declined to approximately 473 million Euro from 685 million Euro.
And our social the non interest expenses.
6.7 million a euro for the second quarter of Twentytwenty, Richard piece of Amy the euro lower than the Samcyprone in 29 team.
We expect the net interest expenses.
Remain low for the rest of the year.
Finally, before I conclude I would like to mentioned that typically we do experience has some seasonality in our spectator sport settlement.
Because the revenue tends to be lower in the third quarter.
Our winter sports events have not yet commenced.
And that is less activities in European football compiled the with the other quarters.
Especially now during the pedometer.
Our Twentytwenty and 10 to 21 European football season East go into experience he laid a stop in the upcoming third quarter two September.
So in conclusion.
Our diversified portfolio under long term Klein said relations.
For enabled us to achieve a solid financial base in the first half of 10 to 20, despite the postponements and cancellations all for most events.
The evidence that by our Poland Asian, and the new business wins.
Looking ahead, while visibility is a steel limited we are seeking opportunities to improve the economics of our business model by adjusting our operations of quickly and optimally full enhanced outcome positive.
On page.
Continuing to deliver outstanding services to clients.
Focusing on Sanming investments in talent technology, and that differentiated capabilities that the wealthy bad debt position awesome. So gross in the longer term.
This concludes our prepared remarks.
Operator, we would like now to open the call for questions. Thanks.
Thank you, ladies and gentlemen, we will now begin to question and answer session.
If you wish you asked the question now please press star one on your telephone and light for your name to be announced.
If you wish to cancel your request. Please press the pound know how ski once again, it's style one so questions.
I'll first question comes from the line of Bryan Kraft from Deutsche Bank. Please go ahead.
Hi, good morning.
Once asked me a couple of questions I guess first can you just help us understand.
The impact to no debt and cash from the Iron man sale, a little bit better.
I thought the purchase price was around 700 million, but I think net debt only change by about 260 million.
So just trying to understand you know that gap there and then I knew the visibility is limited and you're not providing guidance as a result, but can you just talk qualitatively about the relative size of the impacts you expect in spectator sports and T. P. S. S. A at least at this point in time from.
You know lifts in Threeq, you from timing shifts of events from Twoq to Threeq, you and then the negative impact from the cancellations. Another losses of revenue from you know things that are maybe more related to people actually attending the events you know it seems like there's some.
Positive impact negative impacts in the third quarter and to just wanted to take your temperature on at this point, what you think the size of those those negative in positives are gonna be an aggregate. Thanks.
Maybe.
A couple of cash.
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Yeah for four or a for the Ireland sell or the price was the EUR 730 million.
But the we do have a then and that there I think if it was around a horrible.
For so I remember, who is our run to EUR 290.
290 meeting.
And the we system or net working capital adjustment.
So the gap majorly come from this and not that and networking capital Jasmine.
Okay. All right can you help us understand how big that net working capital adjustment was.
Sorry can you say that game Brian.
So there were the there was a pretty large working capital adjustment, you're saying and that's that's what drives the difference.
I don't see today said too.
Big.
Net working capital Jasmine.
I think in Napa sees a decent run two or 392 full handy.
430.
So that the leader Jasmine really come from net debt.
And that the than net working capital Jasmine, maybe about the though the timing probably fine.
ER S.P.A. in March and though we close in July so that Dal tile.
Of the working capital change there won't be.
Huge.
Okay.
Thanks.
So Brian regarding your second question from quantitative.
The impact on it sort of quarter in remaining here.
I think that you know as you as you know we said a lot of things will still be dependent.
Apparently when and how those events will be resumed.
So so that's why we're just going back to give a straight forward.
Our view on what the year look like.
A third quarter traditionally is a movie season.
Of the.
You know the.
Clubs are.
Lagers are actually at holiday flu season traditionally so we would expect third quarter movie to lose season.
A couple it with the impact of pandemic.
If the events, we foresee that are coming back after the second season, which is actually the season put on 2200 21.
ER and summer sports, if we anticipate it's a schedule to coming back.
In the fourth quarter.
I think fourth quarter, we'll just we'll be better than third quarter.
That's what dependent on the event.
You know, we anticipated were coming back.
Okay. Thank you.
Yep.
Thank you next question comes from the line up Allen goes from the loop capital. Please go ahead.
Hi, there. Thank you let me just follow up on Brian's question, a little bit on the Oh, well the net debt. So the net debt at June Thirtyth was 518 million Euro.
In July 31st Pro forma 264 million Euro so to 254 million Euro improvement.
And I was thinking that the net proceeds was about 350 million euros. So I'm just trying to figure out what the differences there.
So so by an awful.
July 31st the right.
Yes.
So what's your calculation there was a chain say that guy like that then natural visa Europe right Yep.
So the net debt was a 518 at June Thirtyth.
And and to 64 at July 31st based on the sides.
So that's an improvement of 254 million euros.
And the big difference between June Thirtyth on July 31st of course is the sale of Iron Man.
And I thought that was about a 360 million.
Proceed.
I think there's two reasons the poverty Oh, Juan Ace ER.
We repaid a C S alone and the increase I do believe you'll candidates are right basically so apologies on to either on the also we pay all for.
Shareholder loan a 54 million.
Shareholder of on was that.
It was the shareholder loan previously something you could sort of part of interest bearing indebtedness.
No I don't think so that's a promissory note.
Okay, that's probably the biggest difference there.
Okay, and then the second and a related question.
Is the 473 million of in front that it looks like it.
Classified as short term debt.
Can you tell us one that is the one that mature.
Full Andre.
Okay, Yeah, you're right you're in front that is classified as short term debt. So I assume it matures and less than 12 months.
Because it is due to.
You saw this summer.
That then tell from us.
Yeah, the the facility or it is that it is a term loan but did the or do they said.
2021.
June June 20 different your Walker, so less than 12 month basis.
Good.
So so so from accounting perspective.
It was reclassified to show to short term loan, but we are pending.
To have a refinance studying thesis later this year.
Okay, and I know you're talking about using some of the net proceeds from the Iron Man deal, there's a return of capital to shareholders.
You're giving money what is your thoughts on what the proper leverage ratio going forward on the company should be what sort of debt to EBITDA.
We have not really decided yet given the uncertainty we are still reviewing and.
Researching what's the best way.
Or whether we keep the supersedes with net proceeds.
For general, calling falsely business those old a return to tools to the shareholder. So so easy it is not a decided yet to deepen the I'm certainly after the and Bamaca environment.
Okay and then my last question you've had a number of contract wins some contract extensions. So there's also a few contract losses that come up you have any sort of a backlog number or way that we can you just like a one numbers the how how the trend is going.
Sorry can you repeat your question would you not capture.
Yeah, so hang on.
Yeah, So you've had a number of contract wins and contract extensions.
Was wondering if you have some sort of a backlog number I'm what your total where are your total contract future revenue stands for backlog.
It's not by Handy I think we may get off actually offline.
Okay.
Thank you.
But what I think when she gets you certainly have contract wins, a there will be sort of contracts started coming up we're still working on.
Enough for the renewable.
No. That's like you know major ones like I guess, you're right, it's coming up.
You know FIFA.
On the.
You're right.
Media productions coming up.
Mhm.
Yeah, So look let's get offline that will come back.
Okay. Thank you.
Thank you once again, ladies and gentlemen, if you wish to ask a question. Please press star one on your telephone.
[noise] reminder, ladies and gentlemen, this style one to questions.
Right so.
You know.
And then sort of questions I like chains, I must emphasize closing remarks.
Okay, well. Thank you everybody for joining us today on the call and we appreciate your interest in winter Sports group.
And you insightful questions.
And we'll look forward to continuing work conversation with you.
Our investor community. So thank you again.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you make all disconnect.
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No.
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Ladies and gentlemen, thank you for standing by and for joining one does spot second quarter 2020 earnings conference call.
Well at this time all participants are in listen only mode. After managements prepared remarks, there will be a question and answer session.
Today's conference call is being recorded if you have any objections you may disconnect at this time.
Like to turn the conference over to your host for today's call Mis as is common Hayden Investor Relations at one down sports. Please go ahead.
Thank you Amber Hello, everyone. Thanks for Charlie the second quarter 20, Twond your earnings call with US today, I haven't Yang Chief Executive Officer, Wanda and.
And Brian allow our Chief Financial Officer, I would play off the call will be available on our website. Later today. We have also posted a slide presentation on our website, which Brian will reveal during his remarks now let me quickly carpet assays Hopper today's discussion will contain forward looking statements.
Forward looking statements involve inherent risks and uncertainties that could cause actual results may differ materially from those expressed or implied forward looking statements and consequently could be affected by the end Saxon and unprecedented impact our corporate 19 on optics as an operations and it relates the impact on now that come to the.
But these habits catches up is raised uncertainties. Please refer to our earnings release, our annual report on form 20-F for the year end at December 31st 2019 filed with the FCC and available on the Fccs website at Www Sep Don Giovanni.
I saw that such as filings that we may from time to time any forward looking statements that we make on todays call at based on assumptions that's up today and we did not undertake any obligation to update these statements except as required under applicable law. Please note that certain financial measures that we use on this call such as adjusted EBITDA.
Right on a non anchor spaces.
3000 reconciliation of I press and on average measures can be found in our earnings release with that I'll now turn the call offer to our PR happening yet highly please proceed.
Okay. Thank you this and thanks to everyone for joining us today.
Our first I hope you and your families are healthy and the say touring and dynamic.
I would also like to recognize and a sincerely thank our people.
One of sports group for their dedication and highly effective work as we respond to the per phone challenges that have severely impacted equitable community.
Turning to today's call I will first review our second quarter performance.
Then I have some updates our focused and disciplined action.
After they couldn't 19 pandemic.
Let me start with the second quarter results.
I would like to remind you that given the sale of the Ireland group closed in July.
We still cheated the owned bank group in the second quarter as an asset held for sale.
Andy historical results are reflected as discontinued operations.
As expected second quarter 2020 was probably the most challenging operating environment in the history of our company.
As we were affected for the entire quarter by the pandemic and impact on the global economy.
Lastly, we still delivered.
Total revenue of 51.8 million euros.
And at adjusted EBITDA of 17.9 million euros.
Despite the postponement.
Ill or cancellation of most every sport event worldwide in the second quarter.
I'm proud to report a number of achievement and business wins in maintaining our diversified portfolio and expanding or per hour. It is serving clients.
While undertaking structural cost reductions.
As for the highlights for our Spectator sports business.
Federal Collate football events were successfully completed after a relatively long period of long term.
Including the return of German Bundesliga.
Semifinals, and a final up yes, pill, which is a terming up.
As well as the legacy area a matches with the cope Italia Coca Cola final.
Although this games were primarily played behind closed doors with no spectators.
We serve as media and marketing partner in the Port.
Broadening your margins.
With the.
Clients.
The Copa Italia, Coca Cola final celebrated a broadcast rich.
Over 10 million viewers with a match disputed to almost 220 territories globally.
You respect of major commercial contracts and extension of long term partnerships.
Extended for another three year, our agreement with the German ice Hockey Federation for exclusive media and marketing rights.
Also extended exclusive international media rights partnerships with SEC Republic, and Norway ski federations for five years.
For the whole thing then I guess alone extended its long running agreement with us.
Diluted marketing right until the 2029 2030 season.
For facilitating sponsorships, we successfully brokered several commercial agreements with recognized brands.
Including night.
And the top 14 run could be club names that whole coalescing.
LGT and the World coding Federation.
For men and international by ethanol Union.
In terms of new business wins.
We remain positive about or pipeline opportunities.
As we became the exclusive media rights partner with broadcaster.
Paygo sport covering 15 Bcf per hour properties for a period up to 2028.
We also completed and exclusive marketing and sales agreement with epic Ethics tough Sports club one of the Turkish top football basketball volatile handful and sports clubs.
2021 to 2044.
In addition, we signed media agreements with the Scottish Premier foot Foley.
Over 30 countries for three years.
We see these accomplishments in the second quarter as a strong testament to our operational excellence and our differentiated capabilities to stay ahead of the curve for clients and partners.
So next our TPS.
This continued to adopt leading technology.
Which plays an ever increasing part of the daily operations of hours and our claims.
The second quarter, we delivered a number of virtual events, including the international ice hockey federations dispose Digital Championship tournament.
Oh line esports matches for Tony Football leagues theory, a team clubs.
And virtual overlays.
For the co packing Talia Coca Cola football fine.
Following our recent success in partnering with Verizon to launch a new Fiveg based in stadium experience, which allows fans equipped with a five device to enjoy multi camera live and on demand streams of the game.
We have further reached agreement with variable.
Four separate deals to continue to bring more through.
And excitement to the on site experience for the cage, including MBJ.
Yes car and Souffles.
Furthermore, we are experiencing high can demand for marketing technology and content data management as evidenced by the various protect mandated by the profession of tour English Premier League Club Chelsea Football club at the Minton World Federation and Act.
Vision, but is it.
In addition, we renewed the contract with France Threega foot for professional for the next four seasons.
We were also awarded the outstanding production achievement event for its production of the rugby World Cup, Japan 2019 by the Sports video group Europe TV, one of the most prestigious bodies for the spot forecasting and protection across Europe.
This award we set new standards you look at before to cast production with the first 8-K production as you saw augmented reality graphic and Hawk.
Mark relays technology.
Now turning to our map participation business.
Not surprisingly as the pandemic spread across the globe.
All best participation sports events were kind of so Paulo.
Postponed in the second quarter.
But if we successfully launched a few virtual events, including the online hi rocks fitness competition.
Which at attractive 5000 participants from 50, 151 countries and a virtual long distance hiking challenge.
Our advanced digital technology enabled us to continue to engage.
With diverse athletes and a spectators from multiple markets globally, regardless of the Coke 19 crisis.
As this experience demonstrates the coding 19 situation sexual inspired new innovative formats.
Become a complimentary commercially viable mess participation event going forward.
For China business.
Fortunately more almost all sports events in China.
Also were cancelled and it puts formed in the second quarter as a result of the pandemic disruptions. However.
We remain confident of significant opportunities in the China market.
And we'll continue to repair or team to expand premium sporting event in the future.
Now let me provide some updates on how we see the impact of us of carbon tomorrow.
You know addressing the cobot 19 disruptions, we were fortunate that due to the immediate implementation of remote working protocols.
All of our employees were setting.
But.
As part of our cost reduction efforts in aligning stuff level with the client demand, we made it difficult position to decrease headcount by about 13% compared to the beginning of 2020.
Our other priority of planning with our partners.
And at times for the safe assumption.
Event.
To join US one of the founding members.
Sport for recovery initiative.
Which launched and its national campaign to encourage policymakers to safely reopened organizing events.
In addition to communicating with the policymakers. This campaign aims to collaborate with scientific community for necessary majors, such as testing social distancing define hygiene majors as well as monitoring and tracking poscos sanctioned by government authorities.
In all spectators, our spectator sports separately.
Due to the slow and cautious reopening of football our 2019 twenties season was delayed into the third quarter with a PFP Cup final taking place early July.
And closed stores.
Play.
Yeah, Hey was completed in August with all games played.
We are looking forward other fleets and the clubs president resuming with the 2020 and 21 season scheduled to start in September.
Regarding summer sports events, some postpone event work our threats really think rescheduled.
For example, they fame Pemex GP Motor Cross border Championship presumed in August.
With fewer races.
I mean can work Federation work to refine owns and women's European handful Federation Eurocheck, you're attempting shift to more than 20 also tentatively expected to take place in December of this year.
You got to shift we remain hopeful for upcoming winter sports season.
Including the fifth floor to Cup and I view work.
But the visibility still relatively limited.
Our current plan is continue to prepare or team for the season, and we will provide think update at an appropriate time as the year progresses.
Our PSS business heavily impacted by lack of events during the pandemic as well as inter year cyclicality from the FIFA Women's World Cup.
For the Hell out in 2019, but not this year.
Hello sports events resume such as these delayed French open.
Roland Garros.
We believe we are very well positioned to serve or clients in digital transformation services and data driven solutions.
While we continue to focus on our long term strategy in building, a leading global sport event media and marketing platform.
I would like to provide us some updates since our last call our near to midterm initiatives related to facing that them and them in crisis. This initiative, we hope will be a key driver being enabling us to emerge from the pandemic even stronger.
First we have made great progress in resolving contractual issues with our partners in a fair and a straightforward manner.
As evidenced by the prolongation and new commercial contracts signed in the second quarter.
We appreciate the value of our long term partners and we will continue to collaborate effectively.
Having long term objectives for all parties.
Secondly, we continue to be at the forefront of industry as we accelerated the pursuit of innovative content and the digital initiatives.
Some examples include the international Ice Hockey Federation of virtual World Championship.
And the newly developed digital ecosystem for European handful Federation in a second quarter.
There were outstanding team effort and demonstrate our ability.
In this new virtual world to bring together the test marketing intelligence media strategy creativity and had advanced technology or clients.
Finally.
Our cost containment and loop liquidity protection efforts continue.
As we attempt to manage operating expense by dressing the reality of coverage macroeconomic situation, while maintaining well positioned.
For every four revenue gross where market rebound.
In summary, while the macroeconomic environment is challenging we are confident or solid business fundamentals.
Namely or core global resources and capabilities.
Our performance so far in the first half of 2020 demonstrated the trust or long term commercial clients.
As well as the confidence of or new business partners.
Especially as overall spending in or Mark.
Or markets pipelines.
We will continue to deepen our engagement with clients and partners as we support each other in navigating the unprecedented disruptions.
Now I would like to invite our CFO Bryan now to shed more light.
Some highlights on the quarter to find answers Brent thanks.
Thank you for me.
Hello, everyone I would like to also take a moment to wish that all of you under your family stay safe and healthy.
Before I started a second quarter discussion I would like to make a few comments.
First.
I mean just mentioned.
Hi, intently focused on aligning our business model to the reality of the current economic environment, while preparing which the full support of all kinds of for the recovery of the industry.
We have ongoing reviews to streamline our business operation to create a lean organization, which the greatest.
Flexibility, that's a well continue to be highly focused.
On delivering value for all stakeholders.
For the short term.
These reviews the results of that E in tremendous cost a savings which in lots of hot.
And at the offsetting the decline in revenue in order to protect our profitability.
For the medium to longer term, we are focused on realizing our full potential to achieve sustainable and the healthy pace for future opportunities.
NAC.
The closing of enrollment sales was completed in July.
For the second quarter.
Pardon team with the accounting rules, we have adjusted EBTIDA, our reporting to exclude the IRO Memphis knees.
The treaty that.
The ahead for sale and the discontinued operations.
I realize the results on the operating data also have been excluded.
On the comp comparative for second quarter 29 in these out on the operation They test as well.
Unless otherwise indicated.
The financial statement line items on a non I as a financial matters.
Reported up our continuing operation basics.
Now for the second quarter financial reviews.
You may follow my remarks in the earning conference call presentation on our website.
If you turn to slide.
Number six.
For the second quarter of Twentytwenty.
Our total revenue was 51.8 million euro.
The decline of 75% year over year was mainly due to postponement all constellations of almost all you balance due to the damage during the quarter.
Cross coffee was 74.5 million euro.
Representing a smaller decrease of 455% year over year.
Relative to revenue.
Effectively this resulted in overall gross margin improvement also 67% for the second quarter compared the tools, 36% in December hero in 29 team.
The primary reason for the margin enhancement is saying increased a revenue contribution from the commission based model for our football business.
Now, let's go to slide.
Number seven.
The next coffee for Q2, Twentytwenty was a 5.5 neither euro.
With the margin enhancement.
Under the recourse operating cost reduction, partially offset in the significant revenue decline.
Our adjusted EBITDA was 20.9 million Euro.
Next.
I will provide detailed review of our three sacraments.
Stocking Lisa Spectator sports on slide number Pam.
Revenue was certainly April for me the Euro a decrease offers 72% year over year, mainly due to multiple key events cancellations office formats, such as I traffic on the Italia approval.
Thanks.
To the gradual restock all 410, igniting Twentytwenty football season, you May and June.
Italia and the German football well demand drivers of the revenue for spectator sports in the second quarter.
Come powder to the revenue our spectator sports gross coffee decreased 48% year over year.
Presenting on improved gross margin.
Of 76% compared to 240% of last year.
The high gross margin was attributable to the commission based revenue model driven by approval.
Looking at a out BP FSS segment on slide number trail.
As a revenue was 13.1 million euro.
Decrease of 76% year over year.
As a revenue.
Excluding reimbursement revenues.
It's a tale of pause seven meta euro representing a decline of for 53% annually.
It's an excess of revenue decline.
Lisa primarily driven by cycle ecology fat.
Movements, the FIFA World Cup took place in 29 team.
Also even events cancellations and the postponement in the second quarter also DAP and.
Production revenue for the quarter.
Gross coffee for this settlement was a six me the euro.
Decrease of 454% year over year.
That's a real dissenting increased gross margin of 46% compared to 24% for the same pirow of pension 19.
Steve.
Okay.
Lastly, the continued a maki attractive needs of our innovative deep SSL solutions.
Lastly for our market participation sacrament.
Slide number 14.
In second quarter Twentytwenty, a modest participation revenue is close to Neil.
Mainly attributable to both to the full shutdown of all events during the quarter.
Now, let's move to slide number 16.
Liquidity and attacks.
That's also June 30, Twentytwenty, we had a strong liquidity position with the cash on the cash increase lens.
A couple 167.5 Mena euro from continuing operations.
As of July 31st Twentytwenty posted the completion of the Iron Man group sale.
The company had a total cash cash equivalents.
For 208.7 million Euro.
These extra liquidity further optimizing our capital structure and the strengthens our balance sheet, we said greater financial flexibility to navigate that amazing and the two emerged stronger from coven Nitin disruptions.
As for the balance of the Tasha and the Arrow man sales policies Eli to offer the Manny and the significant uncertainty we ended the broader sports ecosystem fees due to the cover 19 disruptions.
We continue to evaluate whether we should apply the proceeds of for general cooperation purposed all subject to shareholders approval return capital to our shareholders.
Our second quarter Capex for continuing operations.
Well as a 0.6 amena euro much less than the corresponding quarter in 29 team.
In the fall you slide number 17 on general expenditure.
In addition to pack.
For the second quarter each of our principal Expedia expanses attach breeze decreased a lot.
Including personnel expenses, which it declined by 17% year over year.
Adding all states and administrative expenses.
Richard decreased by 51.3% year over year.
As well as a finance cost.
Richard declined by 15.5% year over year.
Based on our strong testaments to the successful execution of our cost saving plants.
We believe for page provides us with a solid cash position under sustainable operations in the current environment.
I would also note.
As always we are committed debt.
To being very disciplined and prudent.
In capital management in order to pursue our financial position on a minimize the overall pandemic impact on our business.
Let me conclude on slide 18 and 19.
Given the continued uncertainty related to the cover 19 crises.
We are not able to provide 2020 guidance.
We will reconsider providing guidance whilst the environment stabilized.
Having said that I would like to share with you on slide 18.
Better we used a part of the proceeds from the South all four armament group to repay Diverter Sq stat.
As our result as of July 31st our total indebtedness declined to approximately 473 million Euro from 685 million Euro.
And our social and that increase expenses.
6.7 million Euro for the second quarter of Twentytwenty, Richard piece, Amy the euro lower than the stem hero intently 19.
We expect a net interest expenses.
Remain low for the rest of the year.
Finally, before I conclude I would like to mentioned that typically we do experience has some seasonality in our spectator sport settlement.
The cost of revenue tends to be lower in the third quarter.
Our winter sports events have not yet commenced.
And that that is last activities in European football compounded with the other quarters.
Turning now during the pandemic.
Our 2020 on 10 to 21 European football season East go into Expedia is delayed a stop in the upcoming third quarter two September.
So in conclusion, our diversified portfolio under long term clientele relations.
As the enabled us to achieve a solid financial base in the first half of 10 to 20, despite the past performance on the cancellations offer most events.
Avidan step by our pollination and the new business wins.
Looking ahead, while visibility is a steel limited.
We are seeking opportunities to improve the economics of our business model by adjusting our operations of quickly and optimally full enhanced our competitive advantage.
Continuing to deliver outstanding services to clients.
Focusing on Sanming investments in talent technology, and the differentiated capabilities that the wealthy bad debt position awesome. So gross in the longer term.
This concludes our prepared remarks.
Operator, we would like now to open the call for questions sex.
Thank you, ladies and gentlemen, we will now begin to question and answer session.
If you wish you asked a question now please press star one on your telephone Downlight figure name to be announced.
If you wish to cancel your request. Please press the pound no hash key once again this star one for questions.
I will first question comes from the line of Bryan Kraft from Deutsche Bank. Please go ahead.
Hi, good morning.
Good to ask a couple of questions I guess first.
Can you just help us understand.
The impact to net debt and cash from the Iron man sale, a little bit better.
I thought the purchase price was around 700 million, but I think net debt only change by about $260 million.
So just trying to understand that gap there and then I know the visibility is limited and you're not providing guidance as a result, but can you just talk qualitatively about the relative size of the impacts you expect inspectors sports and Cpss.
At least at this point in time from.
Lift in Threeq, you from timing shifts of events from Twoq to Threeq, you and then the negative impact from the cancellations and other losses of revenue from things that are maybe more related to people actually attending the events you know it seems like theres, some seem positive impacts and negative impacts in the third quarter and to just wanted.
Take your temperature on at this point, what you think the size of those those negative in positives are going to be in aggregate. Thanks.
They did tick up the cash.
Okay.
Yes for full.
For the Ireland sell.
Price was.
730 million.
But we do have done that net that I think if it was our runs.
Hopeful.
Fulfil Ironman group run to.
290.
290 million.
And with some.
Net working capital adjustment.
So the gap majorly come from this and net debt and networking capital investment.
Okay. All right can you help us understand that net working capital adjustment warrants.
Sorry, Okay said again, Brian.
So there was a there was a pretty large working capital adjustment you are saying and that's that's what drives the difference.
I don't have the days at too.
Big.
Net working capital adjustment.
I think inadequacies diesel run to.
300, Nike to 480.
430.
So the LIFO adjustment really come from net debt.
And that the net working capital adjustment, maybe about the though the timing round we find.
ESP a much here and we close in July so that Dal tile.
Of the working capital change that won't repeat.
Huge.
Okay.
Thanks.
So Brian regarding your second question from quantitative.
Impact on the sort of quarter and remaining here.
Hi, thank.
As you know we said so a lot of things we'd still be dependent.
Apparently when and how those events will be resumed.
So so thats why were just could actually give a straight forward.
What the year look like.
Third quarter traditionally is a loose season.
Of the.
You know.
Clubs are lagers are actually at holiday flu season traditionally so we would expect third quarter movie to lose season.
A couple it with the impact of pandemic.
If the events, we foresee the coming back after the second season, which is actually the season for 2020 221.
ER and other sports.
Anticipated schedule to coming back.
In the fourth quarter.
I think fourth quarter, we'll just we'll be better than third quarter.
But that's more dependent on the event.
We anticipated were coming back.
Okay. Thank you.
Yep.
Thank you. Our next question comes from the line of Allen goes from the loop capital. Please go ahead.
Hi, there. Thank you let me just follow up on Brian's question, a little bit on the.
The net debt so net debt at June Thirtyth was 518 million Euro and July 31st pro forma 264 million Euro so to 254 million Euro improvement.
And I was thinking that the net proceeds was about 350 million euros. So I'm just trying to figure out what the differences there.
So so by an accrual.
[music].
July 31st the right.
Yes.
So what's your calculation was can say that guy let.
Then naturally pizza, you're there are great yeah.
Yes, so the net debt was 518 at June Thirtyth and.
And to 64 at July 30, Onest based on the sides.
So that's an improvement of 254 million euros.
And the big difference between June Thirtyth on July 30, Onest of course is the sale of Iron Man.
And I thought that was about a 360 million.
Proceeds.
I think two reasons the property Oh Juan Ace.
We repaid the CS alone and the team Chaser I do believe you're kinda base IRI basically so I apologize.
To eat it and also we pay all four.
Shareholder loan.
Q4 million.
Shareholder loan was that.
It was the shareholder loan previously something you considered part of interest bearing indebtedness.
No I don't think so thats.
From me sorry note.
Okay, that's probably the biggest difference there.
Okay, and then the second and a related question.
The 473 million of in front that it looks like it.
So far this short term debt.
Can you tell us one that is when that mature.
400 way.
Okay.
Gary you're in front that is classified as short term debt. So I assume it matures in less than 12 months.
Because it's due to.
So on this summer.
Yeah.
Let's turn tell from us.
Yeah, the the facility.
It is a term loan but at the.
Do they said.
2021.
June June 20 different your one so less than 12 month basis.
Yeah.
So so so from accounting perspective.
It was a reclassified to too short term short term loan, but we are pending.
To have the refining starting thesis later this year.
Okay, and I know you're talking about using some of the net proceeds from the Iron man deal as a return of capital to shareholders.
You're giving any what is your thoughts on what the proper leverage ratio going forward on the company should be what sort of debt to EBITDA.
We have not really decided yet given the uncertainty we are still reviewing and the.
Researching what's the best we.
Whether we keep days the proceeds net proceeds.
For general Coughing, hopefully business, but those all a return to tools to the shareholder so so.
It is not a society and given the uncertainty of to the.
And dynamic environment.
Okay and then my last question you've had a number of contract wins some contract extensions. So there's also a few contract losses that come up you have any sort of a backlog number or way that we can you just look at one numbers, we'll see how how the trend is going.
Sorry can you repeat your question, we do not capture.
Sure hang on.
Yeah, So you've had a number of contract wins and contract extensions.
I was wondering if you have some sort of a backlog number on what your total where your total contract future revenue stands the backlog.
It's not by handy, but I think we may get off the actual flying.
Okay.
Thank you.
But but I think yes, you said, we have contract wins, there will be sort of contract started coming up we're still working on.
For the renewable.
[noise], that's like major ones like vigorously Ray just coming up.
FIFA.
On the.
You're right.
Media productions coming up.
No.
Yeah, So let's get offline that we'll get back to you.
Okay. Thank you.
Thank you once again, ladies and gentlemen, if you wish to ask the questions. Please press star one on your telephone.
[noise] reminder, ladies and gentle Nustar one questions.
Okay. So.
Sure.
Hey, Dan So the question like chains I missed the answer is closing remarks.
Okay, well. Thank you everybody for joining us today on the call and we appreciate your interest in winter Sports group.
And you cite for questions.
And we'll look forward to continuing or conversation with you.
Or investor community. So thank you again.
Thank you, ladies and gentlemen that does conclude our conference for today. Thank you for participating you may now disconnect.