SFX Posts Disappointing Q4, Predicts Strong 2015

SFX Entertainment
Robert Sillerman of SFX Entertainment

EDM-focused promoter SFX Entertainment hasn't found its groove yet. On Friday, the company reported a weak fourth quarter and a loss of $131 million on revenue of $354.4 million for 2014.

Pro forma revenue, which includes revenue from acquisitions prior to SFX's ownership, grew 8.2% to $386.2 million from $356.7 million in 2013. This is currently the most useful way to measure SFX's revenue growth. Pro forma revenue provides an apples-to-apples comparison as the company adds promoters and other strategic pieces.

Shares of SFX dropped 8% to $4.30. Analysts at Maxim Group downgraded the stock to "Hold" from "Buy" in a report issued Friday. Albert Fried & Co. downgraded SFX on Wednesday from an "overweight" rating to a "market perform" rating.

Pro forma attendance for all SFX events rose 8.9% to 88 from 71 in 2013. Pro forma festival attendance increased 1.5% to approximately 2.9 million and attendance at non-festival events increased 19.5% to approximately 2.4 million. Excluding the Rock in Rio festivals, festival attendance in 2014 grew 18.7%.

As for the fourth quarter, pro forma revenues declined 7.6% to $95.9 million from $103.9 million. Stereosonic festival in Australia received some of the blame. Greater interest in single-day shows mean "tickets sales did not meet expectations," explained CFO Richard Rosenstein.

SFX says it expects 2015 revenues to exceed $500 million and anticipates investor sponsorship and brand partnership revenue will exceed $100 million, up from $35 million last year. The company believes earnings before interest, taxes, amortization and depreciation (EBITDA) will be $60 million to $70 million.