SPHERE ENTERTAINMENT CO. REPORTS FISCAL 2024 THIRD QUARTER RESULTS
Recent Sphere highlights include:
- The conclusion of U2's sold-out 40-show run in March and Phish's sold-out 4-night run in April;
-
Dead & Co.'s extension of its upcoming residency from 18 to 24 shows due to strong ticket demand; - The Sphere Experience featuring Postcard from Earth, generated over
one million dollars in average daily ticket sales on the days it ran during the fiscal third quarter; - Sphere's Exosphere featured campaigns from numerous global brands during the quarter, and generated a record-setting week of advertising revenue around the
Super Bowl in February; and - Sphere announced that in June it will host both its first corporate keynote event with Hewlett Packard Enterprise, as well as this year's NHL Draft.
Subsequent to the end of the quarter,
For the fiscal 2024 third quarter, the Company reported revenues of
Executive Chairman and CEO
Segment Results for the Three and Nine Months Ended
(In millions) |
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
Change |
|
|
|
Change |
||||||||
|
|
2024 |
|
2023 |
|
$ |
|
% |
|
2024 |
|
2023 |
|
$ |
|
% |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sphere |
|
$ 170.4 |
|
$ 0.6 |
|
$ 169.7 |
|
NM |
|
$ 345.9 |
|
$ 1.9 |
|
$ 344.0 |
|
NM |
|
|
151.0 |
|
161.4 |
|
(10.5) |
|
(6) % |
|
407.6 |
|
442.8 |
|
(35.3) |
|
(8) % |
Total Revenues |
|
$ 321.3 |
|
$ 162.1 |
|
$ 159.3 |
|
98 % |
|
$ 753.5 |
|
$ 444.7 |
|
$ 308.8 |
|
69 % |
Operating Income (Loss) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sphere |
|
$ (83.5) |
|
|
|
$ 28.9 |
|
26 % |
|
|
|
|
|
|
|
(37) % |
|
|
43.1 |
|
10.4 |
|
32.7 |
|
NM |
|
$ 106.0 |
|
71.7 |
|
34.3 |
|
48 % |
Total Operating Loss |
|
$ (40.4) |
|
|
|
$ 61.5 |
|
60 % |
|
|
|
|
|
$ (67.2) |
|
(33) % |
Adjusted Operating Income (Loss): (1)(2) |
|
|
|
|
|
|
|
|
||||||||
Sphere |
|
$ 12.9 |
|
$ (77.0) |
|
$ 90.0 |
|
NM |
|
$ (56.1) |
|
|
|
$ 145.9 |
|
72 % |
|
|
48.6 |
|
58.3 |
|
(9.7) |
|
(17) % |
|
111.1 |
|
139.3 |
|
(28.2) |
|
(20) % |
Total Adjusted Operating Income |
|
$ 61.5 |
|
$ (18.7) |
|
$ 80.2 |
|
NM |
|
$ 55.1 |
|
$ (62.7) |
|
$ 117.8 |
|
NM |
|
|
Note: Does not foot due to rounding. NM — Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are considered not meaningful. |
|
(1) |
For the three and nine months ended |
(2) |
See page 4 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures. |
Sphere
For the fiscal 2024 third quarter, the Sphere segment reported revenues of
For the fiscal 2024 third quarter, the Sphere segment had direct operating expenses of
Fiscal 2024 third quarter selling, general and administrative expenses of
Fiscal 2024 third quarter operating loss of
For the fiscal 2024 third quarter, the
Distribution revenue decreased
As a result of the launch of MSG+ in
Advertising revenue decreased
Fiscal 2024 third quarter direct operating expenses of
Fiscal 2024 third quarter selling, general and administrative expenses of
Fiscal 2024 third quarter operating income of
About
Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) before (i) depreciation, amortization and impairments of property and equipment, goodwill and intangible assets, (ii) amortization for capitalized cloud computing arrangement costs, (iii) share-based compensation expense or benefit, (iv) restructuring charges or credits, (v) merger and acquisition-related costs, including merger-related litigation expenses, (vi) gains or losses on sales or dispositions of businesses and associated settlements, (vii) the impact of purchase accounting adjustments related to business acquisitions, and (ix) gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of our business without regard to the settlement of an obligation that is not expected to be made in cash. We eliminate merger 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 Company's 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 our business segments and the Company on a consolidated 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:
Investor Relations and (212) 465-6072 |
(212) 465-6109 |
|
|
Investor Relations (212) 631-5345 |
|
Conference Call Information:
The conference call will be Webcast live today at
Conference call dial-in number is 800-715-9871 / Conference ID Number 8089430
Conference call replay number is 800-770-2030 / Conference ID Number 8089430 until
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
|
||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||
|
|
|
|
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenues |
|
$ 321,330 |
|
$ 162,062 |
|
$ 753,494 |
|
$ 444,732 |
Direct operating expenses |
|
(154,040) |
|
(93,665) |
|
(398,305) |
|
(259,485) |
Selling, general, and administrative expenses |
|
(123,149) |
|
(143,433) |
|
(325,813) |
|
(342,479) |
Depreciation and amortization |
|
(79,867) |
|
(8,200) |
|
(174,157) |
|
(21,719) |
Impairment and other (losses) gains, net |
|
— |
|
— |
|
(115,738) |
|
3,000 |
Restructuring charges |
|
(4,667) |
|
(18,670) |
|
(9,345) |
|
(26,745) |
Operating loss |
|
(40,393) |
|
(101,906) |
|
(269,864) |
|
(202,696) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
7,654 |
|
3,374 |
|
17,958 |
|
9,376 |
Interest expense |
|
(27,119) |
|
— |
|
(52,947) |
|
— |
Other (expense) income, net |
|
(3,256) |
|
(4,182) |
|
37,810 |
|
(5,952) |
Loss from continuing operations before income taxes |
|
(63,114) |
|
(102,714) |
|
(267,043) |
|
(199,272) |
Income tax benefit (expense) |
|
15,874 |
|
(11,284) |
|
113,627 |
|
11,663 |
Loss from continuing operations |
|
(47,240) |
|
(113,998) |
|
(153,416) |
|
(187,609) |
Income (loss) from discontinued operations, net of taxes |
|
— |
|
55,443 |
|
(647) |
|
155,568 |
Net loss |
|
(47,240) |
|
(58,555) |
|
(154,063) |
|
(32,041) |
Less: Net loss attributable to nonredeemable noncontrolling |
|
— |
|
(216) |
|
— |
|
(682) |
Less: Net (loss) income attributable to redeemable |
|
— |
|
(1,492) |
|
— |
|
2,661 |
Net loss attributable to |
|
$ (47,240) |
|
$ (56,847) |
|
$ (154,063) |
|
$ (34,020) |
|
|
|
|
|
|
|
|
|
Basic loss per common share |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ (1.33) |
|
$ (3.28) |
|
$ (4.36) |
|
$ (5.42) |
Discontinued operations |
|
$ — |
|
$ 1.65 |
|
$ (0.02) |
|
$ 4.44 |
Basic loss per common share attributable to Sphere |
|
$ (1.33) |
|
$ (1.64) |
|
$ (4.38) |
|
$ (0.98) |
|
|
|
|
|
|
|
|
|
Diluted loss per common share |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ (1.33) |
|
$ (3.28) |
|
$ (4.36) |
|
$ (5.42) |
Discontinued operations |
|
$ — |
|
$ 1.65 |
|
$ (0.02) |
|
$ 4.44 |
Diluted loss per common share attributable to Sphere |
|
$ (1.33) |
|
$ (1.64) |
|
$ (4.38) |
|
$ (0.98) |
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares |
|
|
|
|
|
|
|
|
Basic and diluted |
|
35,418 |
|
34,727 |
|
35,212 |
|
34,604 |
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)
(In thousands)
(Unaudited)
The following is a description of the adjustments to operating loss in arriving at adjusted operating income (loss) as described in this earnings release:
-
Share-based compensation. This adjustment eliminates the compensation expense relating to restricted stock units and stock options granted under the Sphere Entertainment Employee Stock Plan, MSG Sports Employee Stock Plan, MSG Networks Employee Stock Plan, as amended and assumed by
Sphere Entertainment , and Sphere Entertainment Non-Employee Director Plan in all periods. - Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets in all periods.
- Restructuring charges. This adjustment eliminates costs related to termination benefits provided to certain executives and employees.
- Impairment and other losses (gains), net. This adjustment eliminates non-cash impairment charges and the impact of gains or losses from the disposition of assets or businesses in all periods.
- Merger and acquisition related costs. This adjustment eliminates costs related to mergers and acquisitions, including merger-related litigation expenses and litigation-related insurance recoveries, 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 Company's executive deferred compensation plan.
|
|
Three Months Ended |
|
Nine Months Ended |
||||
|
|
|
|
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Operating loss |
|
$ (40,393) |
|
$ (101,906) |
|
$ (269,864) |
|
$ (202,696) |
Share-based compensation |
|
16,724 |
|
9,105 |
|
33,523 |
|
36,950 |
Depreciation and amortization |
|
79,867 |
|
8,200 |
|
174,157 |
|
21,719 |
Restructuring charges |
|
4,667 |
|
18,670 |
|
9,345 |
|
26,745 |
Impairment and other losses (gains), net |
|
— |
|
— |
|
115,738 |
|
(3,000) |
Merger and acquisition related costs, net of insurance |
|
508 |
|
47,045 |
|
(8,155) |
|
57,181 |
Amortization for capitalized cloud computing |
|
22 |
|
168 |
|
66 |
|
416 |
Remeasurement of deferred compensation plan |
|
126 |
|
— |
|
264 |
|
— |
Adjusted operating income (loss) |
|
$ 61,521 |
|
$ (18,718) |
|
$ 55,074 |
|
$ (62,685) |
SEGMENT RESULTS |
||||||
|
||||||
BUSINESS SEGMENT RESULTS |
||||||
|
||||||
|
|
Three Months Ended |
||||
|
|
Sphere |
|
MSG |
|
Total |
Revenues |
|
$ 170,364 |
|
$ 150,966 |
|
$ 321,330 |
Direct operating expenses |
|
(62,294) |
|
(91,746) |
|
(154,040) |
Selling, general and administrative expenses |
|
(108,976) |
|
(14,173) |
|
(123,149) |
Depreciation and amortization |
|
(77,706) |
|
(2,161) |
|
(79,867) |
Restructuring charges |
|
(4,886) |
|
219 |
|
(4,667) |
Operating (loss) income |
|
$ (83,498) |
|
$ 43,105 |
|
$ (40,393) |
Reconciliation to adjusted operating income: |
|
|
|
|
|
|
Share-based compensation |
|
13,273 |
|
3,451 |
|
16,724 |
Depreciation and amortization |
|
77,706 |
|
2,161 |
|
79,867 |
Restructuring charges |
|
4,886 |
|
(219) |
|
4,667 |
Merger and acquisition related costs, net of insurance recoveries |
|
416 |
|
92 |
|
508 |
Amortization for capitalized cloud computing arrangement costs |
|
— |
|
22 |
|
22 |
Remeasurement of deferred compensation plan liabilities |
|
126 |
|
— |
|
126 |
Adjusted operating income |
|
$ 12,909 |
|
$ 48,612 |
|
$ 61,521 |
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
Sphere |
|
MSG |
|
Total |
Revenues |
|
$ 626 |
|
$ 161,436 |
|
$ 162,062 |
Direct operating expenses |
|
(4,414) |
|
(89,251) |
|
(93,665) |
Selling, general and administrative expenses |
|
(83,381) |
|
(60,052) |
|
(143,433) |
Depreciation and amortization |
|
(6,511) |
|
(1,689) |
|
(8,200) |
Restructuring charges |
|
(18,670) |
|
— |
|
(18,670) |
Operating (loss) income |
|
$ (112,350) |
|
$ 10,444 |
|
$ (101,906) |
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
Share-based compensation |
|
8,466 |
|
639 |
|
9,105 |
Depreciation and amortization |
|
6,511 |
|
1,689 |
|
8,200 |
Restructuring charges |
|
18,670 |
|
— |
|
18,670 |
Merger and acquisition related costs |
|
1,532 |
|
45,513 |
|
47,045 |
Amortization for capitalized cloud computing arrangement costs |
|
125 |
|
43 |
|
168 |
Adjusted operating (loss) income |
|
$ (77,046) |
|
$ 58,328 |
|
$ (18,718) |
SEGMENT RESULTS |
||||||
|
||||||
|
|
Nine Months Ended |
||||
|
|
Sphere |
|
MSG |
|
Total |
Revenues |
|
$ 345,942 |
|
$ 407,552 |
|
$ 753,494 |
Direct operating expenses |
|
(137,437) |
|
(260,868) |
|
(398,305) |
Selling, general and administrative expenses |
|
(290,930) |
|
(34,883) |
|
(325,813) |
Depreciation and amortization |
|
(168,127) |
|
(6,030) |
|
(174,157) |
Impairment and other losses, net |
|
(115,738) |
|
— |
|
(115,738) |
Restructuring charges |
|
(9,564) |
|
219 |
|
(9,345) |
Operating (loss) income |
|
$ (375,854) |
|
$ 105,990 |
|
$ (269,864) |
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
Share-based compensation |
|
28,177 |
|
5,346 |
|
33,523 |
Depreciation and amortization |
|
168,127 |
|
6,030 |
|
174,157 |
Restructuring charges |
|
9,564 |
|
(219) |
|
9,345 |
Impairment and other losses, net |
|
115,738 |
|
— |
|
115,738 |
Merger and acquisition related costs, net of insurance recoveries |
|
(2,086) |
|
(6,069) |
|
(8,155) |
Amortization for capitalized cloud computing arrangement costs |
|
— |
|
66 |
|
66 |
Remeasurement of deferred compensation plan liabilities |
|
264 |
|
— |
|
264 |
Adjusted operating (loss) income |
|
$ (56,070) |
|
$ 111,144 |
|
$ 55,074 |
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||
|
|
Sphere |
|
MSG |
|
Total |
Revenues |
|
$ 1,919 |
|
$ 442,813 |
|
$ 444,732 |
Direct operating expenses |
|
(4,414) |
|
(255,071) |
|
(259,485) |
Selling, general and administrative expenses |
|
(235,331) |
|
(107,148) |
|
(342,479) |
Depreciation and amortization |
|
(16,775) |
|
(4,944) |
|
(21,719) |
Other gains |
|
3,000 |
|
— |
|
3,000 |
Restructuring charges |
|
(22,757) |
|
(3,988) |
|
(26,745) |
Operating (loss) income |
|
$ (274,358) |
|
$ 71,662 |
|
$ (202,696) |
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
Share-based compensation |
|
31,308 |
|
5,642 |
|
36,950 |
Depreciation and amortization |
|
16,775 |
|
4,944 |
|
21,719 |
Restructuring charges |
|
22,757 |
|
3,988 |
|
26,745 |
Other gains |
|
(3,000) |
|
— |
|
(3,000) |
Merger and acquisition related costs |
|
4,223 |
|
52,958 |
|
57,181 |
Amortization for capitalized cloud computing arrangement costs |
|
285 |
|
131 |
|
416 |
Adjusted operating (loss) income |
|
$ (202,010) |
|
$ 139,325 |
|
$ (62,685) |
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
|
||||
|
|
|
|
|
|
|
2024 |
|
2023 |
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash, cash equivalents, and restricted cash |
|
$ 693,946 |
|
$ 429,114 |
Accounts receivable, net |
|
178,702 |
|
112,309 |
Related party receivables, current |
|
13,195 |
|
26,405 |
Prepaid expenses and other current assets |
|
30,216 |
|
56,085 |
Total current assets |
|
916,059 |
|
623,913 |
Non-Current Assets: |
|
|
|
|
Investments |
|
51,849 |
|
395,606 |
Property and equipment, net |
|
3,219,889 |
|
3,307,161 |
Right-of-use lease assets |
|
109,663 |
|
84,912 |
|
|
456,807 |
|
456,807 |
Intangible assets, net |
|
15,574 |
|
17,910 |
Other non-current assets |
|
98,971 |
|
86,706 |
Total assets |
|
$ 4,868,812 |
|
$ 4,973,015 |
LIABILITIES AND EQUITY |
|
|
|
|
Current Liabilities: |
|
|
|
|
Accounts payable, accrued and other current liabilities |
|
$ 423,113 |
|
$ 515,731 |
Related party payables, current |
|
11,263 |
|
56,446 |
Current portion of long-term debt, net |
|
869,776 |
|
82,500 |
Operating lease liabilities, current |
|
17,748 |
|
10,127 |
Deferred revenue |
|
76,712 |
|
27,337 |
Total current liabilities |
|
1,398,612 |
|
692,141 |
Non-Current Liabilities: |
|
|
|
|
Long-term debt, net |
|
522,057 |
|
1,118,387 |
Operating lease liabilities, non-current |
|
130,419 |
|
110,259 |
Deferred tax liabilities, net |
|
254,995 |
|
379,552 |
Other non-current liabilities |
|
119,130 |
|
88,811 |
Total liabilities |
|
2,425,213 |
|
2,389,150 |
Commitments and contingencies |
|
|
|
|
Equity: |
|
|
|
|
Class A Common Stock (1) |
|
284 |
|
278 |
Class B Common Stock (2) |
|
69 |
|
69 |
Additional paid-in capital |
|
2,392,247 |
|
2,376,420 |
Retained earnings |
|
57,973 |
|
212,036 |
Accumulated other comprehensive loss |
|
(6,974) |
|
(4,938) |
Total stockholders' equity |
|
2,443,599 |
|
2,583,865 |
Total liabilities and equity |
|
$ 4,868,812 |
|
$ 4,973,015 |
_________________ |
|
(1) |
Class A Common Stock, |
(2) |
Class B Common Stock, |
SELECTED CASH FLOW INFORMATION |
||||
|
||||
|
|
Nine Months Ended |
||
|
|
|
||
|
|
2024 |
|
2023 |
Net cash provided by operating activities |
|
$ 52,780 |
|
$ 137,824 |
Net cash used in investing activities |
|
(20,240) |
|
(825,484) |
Net cash provided by financing activities |
|
233,010 |
|
200,485 |
Effect of exchange rates on cash, cash equivalents, and restricted cash |
|
(718) |
|
(729) |
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
264,832 |
|
(487,904) |
Cash, cash equivalents, and restricted cash from continuing operations, beginning of period |
|
429,114 |
|
760,312 |
Cash, cash equivalents, and restricted cash from discontinued operations, beginning of period |
|
— |
|
85,698 |
Cash, cash equivalents, and restricted cash at beginning of period |
|
429,114 |
|
846,010 |
Cash, cash equivalents and restricted cash from continuing operations, end of period |
|
693,946 |
|
204,264 |
Cash, cash equivalents and restricted cash from discontinued operations, end of period |
|
— |
|
153,842 |
Cash, cash equivalents, and restricted cash at end of period |
|
$ 693,946 |
|
$ 358,106 |
View original content to download multimedia:https://www.prnewswire.com/news-releases/sphere-entertainment-co-reports-fiscal-2024-third-quarter-results-302142003.html
SOURCE