MADISON SQUARE GARDEN ENTERTAINMENT CORP. REPORTS FISCAL 2024 THIRD QUARTER RESULTS
FY24 Revenue Range Narrowed to
FY24 Operating Income Range Increased to
FY24 AOI Range Increased to
The fiscal 2024 third quarter was highlighted by the continued strength of the Company's bookings business, led by robust growth in the number of concerts held at the Company's venues. With these positive results, the Company remains on track to achieve a low double-digit percentage increase in the number of bookings events in fiscal 2024. During the fiscal 2024 third quarter, the Company also continued to host the
Financial results for the three and nine months ended
For the fiscal 2024 third quarter, the Company reported revenues of
Executive Chairman and CEO
Results for the Three and Nine Months Ended |
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Three Months Ended |
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Nine Months Ended |
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Change |
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Change |
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$ millions |
|
2024 |
|
2023 |
|
$ |
|
% |
|
2024 |
|
2023 |
|
$ |
|
% |
Revenues |
|
$ 228.3 |
|
$ 201.2 |
|
$ 27.1 |
|
13 % |
|
$ 773.2 |
|
$ 703.6 |
|
$ 69.6 |
|
10 % |
Operating Income |
|
$ 16.8 |
|
$ 24.7 |
|
$ (7.9) |
|
(32) % |
|
$ 120.8 |
|
$ 126.8 |
|
$ (6.0) |
|
(5) % |
Adjusted Operating Income(1) |
|
$ 38.5 |
|
$ 50.2 |
|
$ (11.6) |
|
(23) % |
|
$ 198.4 |
|
$ 200.9 |
|
$ (2.5) |
|
(1) % |
|
|
Note: Amounts may not foot due to rounding. |
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(1) |
See page 4 of this earnings release for the definition of adjusted operating income (loss) ("AOI") included in the discussion of non-GAAP financial measures. The Company has amended this definition so that the non-cash portion of operating lease revenue related to the Company's Arena License Agreements with Madison Square Garden Sports Corp. (" |
Entertainment Offerings,
Fiscal 2024 third quarter revenues from entertainment offerings of
- Event-related revenues increased
$10.7 million , as compared to the prior year quarter, primarily due to an increase in the number of concerts at the Company's venues, partially offset by the absence of a marquee sporting event that took place in the prior year quarter. - Revenues subject to the sharing of economics with
MSG Sports pursuant to the Arena License Agreements increased$6.8 million , primarily due to higher suite license fee revenues as compared to the prior year quarter.
Fiscal 2024 third quarter arena license fees and other leasing revenues of
Fiscal 2024 third quarter direct operating expenses associated with entertainment offerings, arena license fees and other leasing of
Food, Beverage and Merchandise
(2)
Fiscal 2024 third quarter food, beverage and merchandise revenues of
Fiscal 2024 third quarter food, beverage and merchandise direct operating expenses of
Selling, General and Administrative Expenses
Fiscal 2024 third quarter selling, general and administrative expenses of
Operating Income and Adjusted Operating Income
Fiscal 2024 third quarter operating income of
(2) |
Effective for the third quarter of fiscal 2024, the Company modified its presentation of revenues and direct operating expenses. As a result of this new disclosure, total revenue is now presented in three categories consisting of i) Revenues from entertainment offerings, ii) Food, beverage and merchandise revenues, and iii) Arena license fees and other leasing revenues. In addition, total direct operating expenses is now presented in two categories consisting of i) Entertainment offerings, arena license fees and other leasing direct operating expenses and ii) food, beverage, and merchandise direct operating expenses. Prior period financial information has been revised to conform with the current period presentation. |
Financial Guidance
As a result of the positive momentum across its operations, the Company is narrowing its fiscal 2024 guidance for revenues and increasing its fiscal 2024 guidance for operating income and adjusted operating income. The Company currently expects the following:
- Revenues of
$940 million to$950 million , as compared to its prior range of$930 to$950 million . - Operating income of
$100 million to$110 million , as compared to the prior range of$95 to$105 million . - Adjusted operating income of
$200 million to$210 million , as compared to the prior range of$195 to$205 million . The Company's AOI range now includes approximately$25 million in non-cash operating lease revenue related to the Company's Arena License Agreements withMSG Sports .(3)
An updated version of the
(3) |
See page 4 of this earnings release for the definition of adjusted operating income (loss) ("AOI") included in the discussion of non-GAAP financial measures. The Company has amended this definition so that the non-cash portion of operating lease revenue related to the Company's Arena License Agreements with Madison Square Garden Sports Corp. (" |
About
Non-GAAP Financial Measures
The Company has amended the definition of adjusted operating income so that the impact of the non-cash portion of operating lease revenue related to the Company's Arena License Agreements with
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) excluding (i) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, (iv) merger, spin-off, and acquisition-related costs, including merger-related litigation expenses, (v) gains or losses on sales or dispositions of businesses and associated settlements, (vi) the impact of purchase accounting adjustments related to business acquisitions, (vii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, and (viii) amortization for capitalized cloud computing arrangement costs. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of our business without regard to the settlement of an obligation that is not expected to be made in cash. We eliminate merger, spin-off, and acquisition-related costs, when applicable, because the Company does not consider such costs to be indicative of the ongoing operating performance of the Company as they result from an event that is of a non-recurring nature, thereby enhancing comparability. In addition, management believes that the exclusion of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan, provides investors with a clearer picture of the Company's operating performance given that, in accordance with
We believe adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of the Company on a consolidated and combined basis. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and adjusted operating income (loss) as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators. Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of operating income (loss) to adjusted operating income (loss), please see page 6 of this release.
Forward-Looking Statements
This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments or events may differ materially from those in the forward-looking statements as a result of various factors, including financial community perceptions of the Company and its business, operations, financial condition and the industries in which it operates and the factors described in the Company's filings with the
Contacts:
Senior Vice President, Investor Relations,
(212) 465-6072
Vice President,
(212) 465-6109
Conference Call Information:
The conference call will be Webcast live today at
Conference call dial-in number is 888-660-6386 / Conference ID Number 8020251
Conference call replay number is 800-770-2030 / Conference ID Number 8020251 until
CONDENSED CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (in thousands, except per share data) (Unaudited) |
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Three Months Ended |
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Nine Months Ended |
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|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Revenues |
|
|
|
|
|
|
|
|
Revenues from entertainment offerings |
|
$ 146,221 |
|
$ 129,260 |
|
$ 581,025 |
|
$ 524,331 |
Food, beverage, and merchandise revenues |
|
45,380 |
|
39,954 |
|
127,379 |
|
112,412 |
Arena license fees and other leasing revenue |
|
36,712 |
|
32,015 |
|
64,787 |
|
$ 66,818 |
Total revenues |
|
228,313 |
|
201,229 |
|
773,191 |
|
703,561 |
Direct operating expenses |
|
|
|
|
|
|
|
|
Entertainment offerings, arena license fees, and other leasing direct |
|
(112,997) |
|
(90,296) |
|
(375,786) |
|
(332,290) |
Food, beverage, and merchandise direct operating expenses |
|
(29,024) |
|
(24,837) |
|
(70,673) |
|
(65,108) |
Total direct operating expenses |
|
(142,021) |
|
(115,133) |
|
(446,459) |
|
(397,398) |
Selling, general, and administrative expenses |
|
(53,945) |
|
(44,122) |
|
(151,156) |
|
(127,537) |
Depreciation and amortization |
|
(13,182) |
|
(14,798) |
|
(39,972) |
|
(46,369) |
(Loss) gains, net on dispositions |
|
— |
|
(51) |
|
— |
|
4,361 |
Restructuring charges |
|
(2,362) |
|
(2,461) |
|
(14,803) |
|
(9,820) |
Operating income |
|
16,803 |
|
24,664 |
|
120,801 |
|
126,798 |
Interest income |
|
341 |
|
2,482 |
|
2,275 |
|
5,804 |
Interest expense |
|
(14,425) |
|
(13,423) |
|
(43,761) |
|
(38,055) |
Other income (expense), net |
|
78 |
|
8,070 |
|
(1,545) |
|
6,784 |
Income from operations before income taxes |
|
2,797 |
|
21,793 |
|
77,770 |
|
101,331 |
Income tax expense |
|
(2) |
|
(73) |
|
(397) |
|
(804) |
Net income |
|
2,795 |
|
21,720 |
|
77,373 |
|
100,527 |
Less: Net loss attributable to nonredeemable noncontrolling interest |
|
— |
|
— |
|
— |
|
(553) |
Net income attributable to |
|
$ 2,795 |
|
$ 21,720 |
|
$ 77,373 |
|
$ 101,080 |
|
|
|
|
|
|
|
|
|
Income per share attributable to |
|
|
|
|
|
|
|
|
Basic |
|
$ 0.06 |
|
$ 0.42 |
|
$ 1.59 |
|
$ 1.95 |
Diluted |
|
$ 0.06 |
|
$ 0.42 |
|
$ 1.58 |
|
$ 1.95 |
|
|
|
|
|
|
|
|
|
Weighted-average number of shares of common stock: |
|
|
|
|
|
|
|
|
Basic |
|
48,109 |
|
51,768 |
|
48,675 |
|
51,768 |
Diluted |
|
48,447 |
|
51,768 |
|
48,883 |
|
51,768 |
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)
(in thousands)
(Unaudited)
The following is a description of the adjustments to operating income in arriving at adjusted operating income as described in this earnings release:
- Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets in all periods.
-
Share-based compensation. This adjustment eliminates the compensation expense relating to restricted stock units and stock options granted under the Company's Employee Stock Plan, Sphere Entertainment's Employee Stock Plan, the Company's
Non-Employee Director Plan and Sphere Entertainment's Non-Employee Director Plan in all periods. - Loss (gains), net on dispositions. This adjustment eliminates the impact of gains or losses from the disposition of assets or businesses in all periods.
- Restructuring charges. This adjustment eliminates costs related to termination benefits provided to certain corporate executives and employees.
- Merger, spin-off , and acquisition-related costs. This adjustment eliminates costs related to mergers, spin-offs and acquisitions, including merger-related litigation expenses, in all periods.
- Amortization for capitalized cloud computing arrangement costs. This adjustment eliminates amortization of capitalized cloud computing arrangement costs.
- Remeasurement of deferred compensation plan liabilities. This adjustment eliminates the impact of gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan.
|
|
Three Months Ended |
|
Nine Months Ended |
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$ thousands |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Operating income |
|
$ 16,803 |
|
$ 24,664 |
|
$ 120,801 |
|
$ 126,798 |
Depreciation and amortization |
|
13,182 |
|
14,798 |
|
39,972 |
|
46,369 |
Share-based compensation (excluding share-based |
|
5,611 |
|
8,014 |
|
19,561 |
|
21,979 |
Loss (gains), net on dispositions |
|
— |
|
51 |
|
— |
|
(4,361) |
Restructuring charges |
|
2,362 |
|
2,461 |
|
14,803 |
|
9,820 |
Merger, spin-off, and acquisition-related costs(1) |
|
— |
|
— |
|
2,035 |
|
— |
Amortization for capitalized cloud computing arrangement costs |
|
388 |
|
65 |
|
836 |
|
169 |
Remeasurement of deferred compensation plan liabilities |
|
191 |
|
126 |
|
389 |
|
132 |
Adjusted operating income(2) |
|
$ 38,537 |
|
$ 50,179 |
|
$ 198,397 |
|
$ 200,906 |
_________________ |
|
(1) |
This adjustment represents non-recurring costs incurred and paid by the Company for the sale of the retained interest by Sphere Entertainment Co. |
(2) |
The Company has amended the definition of adjusted operating income so that the impact of the non-cash portion of operating lease revenue related to the Company's Arena License Agreements with |
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CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS (unaudited) |
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(in thousands) |
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|
|
||
|
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|
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ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash, cash equivalents, and restricted cash |
|
$ 28,308 |
|
$ 84,355 |
Accounts receivable, net |
|
108,560 |
|
63,898 |
Related party receivables, current |
|
29,690 |
|
69,466 |
Prepaid expenses and other current assets |
|
89,240 |
|
77,562 |
Total current assets |
|
255,798 |
|
295,281 |
Non-Current Assets: |
|
|
|
|
Property and equipment, net |
|
636,014 |
|
628,888 |
Right-of-use lease assets |
|
307,435 |
|
235,790 |
|
|
69,041 |
|
69,041 |
Indefinite-lived intangible assets |
|
63,801 |
|
63,801 |
Other non-current assets |
|
126,482 |
|
108,356 |
Total assets |
|
$ 1,458,571 |
|
$ 1,401,157 |
LIABILITIES AND DEFICIT |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts payable, accrued and other current liabilities |
|
$ 205,076 |
|
$ 214,725 |
Related party payables, current |
|
46,596 |
|
47,281 |
Long-term debt, current |
|
16,250 |
|
16,250 |
Operating lease liabilities, current |
|
31,570 |
|
36,529 |
Deferred revenue |
|
251,270 |
|
225,855 |
Total current liabilities |
|
550,762 |
|
540,640 |
Non-Current Liabilities: |
|
|
|
|
Long-term debt, net of deferred financing costs |
|
602,468 |
|
630,184 |
Operating lease liabilities, non-current |
|
330,902 |
|
219,955 |
Deferred tax liabilities, net |
|
24,151 |
|
23,518 |
Other non-current liabilities |
|
44,851 |
|
56,332 |
Total liabilities |
|
1,553,134 |
|
1,470,629 |
Commitments and contingencies |
|
|
|
|
Deficit: |
|
|
|
|
Class A Common Stock (a) |
|
455 |
|
450 |
Class B Common Stock (b) |
|
69 |
|
69 |
Additional paid-in-capital |
|
29,656 |
|
17,727 |
|
|
(140,512) |
|
(25,000) |
Retained earnings (deficit) |
|
48,676 |
|
(28,697) |
Accumulated other comprehensive loss |
|
(32,907) |
|
(34,021) |
Total deficit |
|
(94,563) |
|
(69,472) |
Total liabilities and deficit |
|
$ 1,458,571 |
|
$ 1,401,157 |
_________________ |
|
(a) |
Class A Common Stock, |
(b) |
Class B Common Stock, |
(in thousands) (Unaudited) |
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|
|
Nine Months Ended |
||
|
|
|
||
|
|
2024 |
|
2023 |
Net cash provided by operating activities |
|
$ 111,054 |
|
$ 132,341 |
Net cash (used in) provided by investing activities |
|
(72,625) |
|
13,261 |
Net cash used in financing activities |
|
(94,476) |
|
(85,194) |
Net (decrease) increase in cash, cash equivalents, and restricted cash |
|
(56,047) |
|
60,408 |
Cash, cash equivalents, and restricted cash, beginning of period |
|
84,355 |
|
62,573 |
Cash, cash equivalents, and restricted cash, end of period |
|
$ 28,308 |
|
$ 122,981 |
APPENDIX FISCAL 2024 FINANCIAL GUIDANCE ADJUSTMENTS TO RECONCILE OPERATING INCOME TO ADJUSTED OPERATING INCOME (in millions) |
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|
|
Fiscal Year 2024 |
Operating income |
|
|
Depreciation and amortization |
|
54 |
Share-based compensation |
|
28 |
Restructuring charges |
|
15 |
Merger, spin-off and acquisition-related costs |
|
2 |
Other (1) |
|
1 |
Adjusted operating income |
|
|
(1) |
This adjustment reflects the elimination of amortization of capitalized cloud computing arrangement costs and the elimination of the impact of gains and losses related to the remeasurement for deferred compensation plan liabilities. |
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