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SFX flops in 2Q
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July 28, 1999: 10:04 a.m. ET
Show producer posts quarter loss, but cash flow soars as summer season rolls
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NEW YORK (CNNfn) - SFX Entertainment Inc. Wednesday reported a narrower loss in its second quarter amid a solid summer season for its concerts and Broadway shows - although analysts had expected a profit for the period.
New York-based SFX (SFX), the nation's leading producer of concerts and Broadway shows, posted a second-quarter loss of $11 million, or 20 cents a diluted share, compared with a loss of $40.6 million, or $1.12 a share, in the same period a year earlier.
Analysts expected SFX to report earnings of 20 cents per share, according to a survey conducted by research firm First Call Corp.
Revenue rose 75 percent to $408 million, while earnings before taxes, interest, depreciation, amortization and other non-cash charges -- known as EBITDA - soared 176 percent to $50.2 million.
EBITDA, an indicator of the cash flow that can be used for investments in a company's growth, is far more important for SFX and its fellow entertainment companies than net earnings, said one analyst who did not want to be identified.
"Nobody looks at earnings per share for this company," said the analyst. "The focal point is that EBITDA is at $50 million -- at the high end of expectations."
In a news release, SFX offered no explanation for the loss, and a spokesman could not be reached for comment early Wednesday. But its chief executive said SFX expects solid results in coming quarters.
"The impressive results we have reported this quarter confirm the success of our strategy thus far and bolster our confidence in the future," said Robert Sillerman, SFX's executive chairman, in a statement. "In particular, these results also indicate the vitality of the summer concert season and the performance of our other operations as well."
SFX said the results allowed the company to speed up investment in Internet development, marketing and promotion. Also, SFX said it plans to make acquisitions in Europe with proceeds from a $1.1 billion bank loan that will also contribute to its growth.
Last month, SFX agreed to buy most of the assets of the financially-troubled theater company Livent.
Shares of SFX (SFX), which owns or operates 82 venues in 31 of the nation's largest 50 markets, fell 1/16 to 49 Wednesday morning.
Goldman Sachs recently put SFX shares on its "recommended list." SG Cowen has a "strong buy" rating and Bear Stearns has a "buy" on the stock.
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SFX Entertainment
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