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Madison Square Garden Entertainment Corp

MADISON SQUARE GARDEN ENTERTAINMENT CORP. REPORTS FISCAL 2025 FIRST QUARTER RESULTS

NEW YORK , Nov. 8, 2024 /PRNewswire/ -- Madison Square Garden Entertainment Corp. (NYSE: MSGE) ("MSG Entertainment" or the "Company") today reported financial results for the fiscal first quarter ended September 30, 2024.

Since the start of fiscal 2025, the Madison Square Garden Arena ("The Garden") has hosted a record number of concerts for a fiscal first quarter and, last month, welcomed back the New York Knicks ("Knicks") and the New York Rangers ("Rangers") for the start of their 2024-25 regular seasons at The Garden. Later today, the Christmas Spectacular production kicks off its 2024 holiday season at Radio City Music Hall with 199 performances currently on sale as compared to 193 shows in fiscal 2024. In addition, new sales and renewal activity in the Company's premium hospitality business remains strong, while the Company also recently announced new multi-year sponsorship deals with Lenovo and its subsidiary Motorola Mobility and the Department of Culture and Tourism – Abu Dhabi, as well as a multi-year extension of its sponsorship deal with Verizon.

For the fiscal 2025 first quarter, the Company reported revenues of $138.7 million, a decrease of $3.5 million, or 2%, as compared to the prior year quarter. In addition, the Company reported an operating loss of $18.5 million, an improvement of $14.9 million, or 45%, and adjusted operating income of $1.9 million, an increase of $2.1 million, both as compared to the prior year quarter.(1)

Executive Chairman and CEO James L. Dolan said, "With fiscal '25 underway, we expect our portfolio of assets and brands to continue benefiting from demand for shared experiences, including this year's Christmas Spectacular production. Looking ahead, we remain confident in the strength of our Company and believe we are well positioned to generate long-term value for our shareholders."

Results for the Three Months Ended September 30, 2024 and 2023:




Three Months Ended



September 30,


Change

$ millions


2024


2023


$


%

Revenues


$    138.7


$    142.2


$     (3.5)


(2) %

Operating Loss


$    (18.5)


$    (33.4)


$     14.9


45 %

Adjusted Operating Income (Loss)(1)


$        1.9


$      (0.2)


$       2.1


NM


Note: Amounts may not foot due to rounding. NM - Absolute percentages greater than 200% and comparisons from positive to negative values or to zero values are not considered meaningful.

(1)

See page 3 of this earnings release for the definition of adjusted operating income (loss) ("AOI") included in the discussion of non-GAAP financial measures. During the fiscal 2024 third quarter, the Company 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. ("MSG Sports") is no longer excluded in all periods presented. For the three months ended September 30, 2024 and the three months ended September 30, 2023, the non-cash portion of operating lease revenue was $0.5 million.

 

Entertainment Offerings, Arena License Fees and Other Leasing
 Fiscal 2025 first quarter revenues from entertainment offerings of $115.1 million decreased $1.4 million, or 1%, as compared to the prior year period, primarily due to lower event-related revenues.

Event-related revenues decreased $1.5 million, primarily due to lower revenues from concerts. This reflects lower per-concert revenues primarily due to a shift in the mix of events at The Garden from promoted events to rentals and a decrease in the number of concerts at the Company's theaters, partially offset by an increase in the number of concerts at The Garden.

Fiscal 2025 first quarter arena license fees and other leasing revenues of $4.7 million increased $2.2 million, or 90%, as compared to the prior year period, due to an increase in other leasing revenues.

Fiscal 2025 first quarter direct operating expenses associated with entertainment offerings, arena license fees and other leasing of $86.5 million decreased $4.1 million, or 5%, as compared to the prior year quarter, primarily due to lower event-related expenses of $3.5 million. The decrease in event-related expenses was primarily due to lower expenses from concerts, mainly driven by lower per-concert expenses due to a shift in the mix of events at The Garden from promoted events to rentals, partially offset by an increase in the number of events at The Garden.

Food, Beverage and Merchandise
 Fiscal 2025 first quarter food, beverage and merchandise revenues of $19.0 million decreased $4.3 million, or 18%, as compared to the prior year period. This was primarily due to lower food and beverage sales at concerts held at the Company's venues as compared to the prior year quarter, primarily due to lower per-concert food and beverage revenues and, to a lesser extent, the decrease in the number of events at the Company's theaters, partially offset by the increase the number of events at The Garden.

Fiscal 2025 first quarter food, beverage and merchandise direct operating expenses of $11.2 million increased $0.1 million, or 1%, as compared to the prior year period.

Selling, General and Administrative Expenses
 Fiscal 2025 first quarter selling, general and administrative expenses of $45.7 million decreased $3.1 million, or 6%, as compared to the prior year period. The decrease was primarily due to (i) lower professional fees, mainly due to the absence of non-recurring costs incurred by the Company in the prior year period in connection with the registration and sale of the Company's Class A common stock by Sphere Entertainment Co.; (ii) a decrease in employee compensation and benefits; and (iii) lower other costs, all as compared to the prior year period. These decreases were partially offset by higher rent expense as compared to the prior year period.

Operating Loss and Adjusted Operating Income (Loss)
 Fiscal 2025 first quarter operating loss of $18.5 million improved $14.9 million, or 45%, as compared to the prior year period, primarily due to lower restructuring charges and, to a lesser extent, the decrease in direct operating expenses and selling, general and administrative expenses, partially offset by the decrease in revenues. Fiscal 2025 first quarter adjusted operating income of $1.9 million increased $2.1 million as compared to the prior year quarter, primarily due to lower direct operating expenses and selling, general and administrative expenses (excluding merger, spin-off and acquisition-related costs), partially offset by the decrease in revenues. 

About Madison Square Garden Entertainment Corp.
 Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment, delivering unforgettable experiences while forging deep connections with diverse and passionate audiences. The Company's portfolio includes a collection of world-renowned venues – New York's Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall, and Beacon Theatre; and The Chicago Theatre – that showcase a broad array of sporting events, concerts, family shows, and special events for millions of guests annually. In addition, the Company features the original production, the Christmas Spectacular Starring the Radio City Rockettes, which has been a holiday tradition for more than 90 years. More information is available at www.msgentertainment.com.

Non-GAAP Financial Measures
 During the fiscal 2024 third quarter the Company amended its 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 MSG Sports is no longer excluded in all periods presented.

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) amortization for capitalized cloud computing arrangement costs and (viii) gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan. 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 U.S. generally accepted accounting principles, gains and losses related to the remeasurement of liabilities under the executive deferred compensation plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the executive deferred compensation plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Other income (expense), net, which is not reflected in Operating income (loss).

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 5 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 Securities and Exchange Commission, including the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

Contacts:

Ari Danes, CFA

Senior Vice President, Investor Relations, Financial Communications & Treasury

Madison Square Garden Entertainment Corp.

(212) 465-6072

Justin Blaber

Vice President, Financial Communications

Madison Square Garden Entertainment Corp.

(212) 465-6109



Grace Kaminer

Vice President, Investor Relations & Treasury

Madison Square Garden Entertainment Corp.

(212) 631-5076

Sarah Rothschild

Senior Director, Investor Relations & Treasury

Madison Square Garden Entertainment Corp.

(212) 631-5345

Conference Call Information:
 The conference call will be Webcast live today at 8:30 a.m. ET at investor.msgentertainment.com
 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 November 15, 2024
 Investor presentation available at investor.msgentertainment.com/events-and-presentations

 

 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)




Three Months Ended
September 30,


2024


2023

Revenues





Revenues from entertainment offerings


$       115,081


$       116,505

Food, beverage, and merchandise revenues


18,975


23,261

Arena license fees and other leasing revenue


4,658


2,446

Total revenues


138,714


142,212

Direct operating expenses





Entertainment offerings, arena license fees, and other leasing direct operating expenses


(86,466)


(90,559)

Food, beverage, and merchandise direct operating expenses


(11,243)


(11,118)

Total direct operating expenses


(97,709)


(101,677)

Selling, general, and administrative expenses


(45,746)


(48,822)

Depreciation and amortization


(13,781)


(13,585)

Restructuring credits (charges)


40


(11,553)

Operating loss


(18,482)


(33,425)

Interest income


372


851

Interest expense


(14,043)


(14,287)

Other expense, net


(769)


(4,469)

Loss from operations before income taxes


(32,922)


(51,330)

Income tax benefit


13,601


659

Net loss


$       (19,321)


$       (50,671)






Loss per share attributable to MSG Entertainment's stockholders:





Basic and diluted


$            (0.40)


$            (1.00)






Weighted-average number of shares of common stock:





Basic and diluted


48,217


50,437

 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.
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:

  • Depreciation and amortization. This adjustment eliminates depreciation and amortization of property and equipment and intangible assets.
  • 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 and the Company's Non-Employee Director Plan.
  • 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.
  • 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
September 30,

$ thousands


2024


2023

Operating loss


$       (18,482)


$       (33,425)

Depreciation and amortization


13,781


13,585

Share-based compensation (excluding share-based compensation included in restructuring charges)


6,262


6,177

Restructuring (credits) charges


(40)


11,553

Merger, spin-off, and acquisition-related costs (1)


—


2,035

Amortization for capitalized cloud computing arrangement costs


168


—

Remeasurement of deferred compensation plan liabilities


220


(145)

Adjusted operating income (loss) (2)


$           1,909


$             (220)










(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)

During the fiscal 2024 third quarter the Company amended the definition of adjusted operating income so that the non-cash portion of operating lease revenue related to the Company's Arena License Agreements with MSG Sports is no longer excluded in all periods presented. Pursuant to GAAP, recognition of operating lease revenue is recorded on a straight-line basis over the term of the agreement based upon the value of total future payments under the arrangement. As a result, operating lease revenue is comprised of a contractual cash component plus or minus a non-cash component for each period presented. Adjusted operating income includes operating lease revenue of (i) $854 and $829 of revenue collected in cash for the three months ended September 30, 2024 and September 30, 2023, respectively, and (ii) a non-cash portion of $470 and $495 for the three months ended September 30, 2024 and September 30, 2023, respectively.



 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(Unaudited)






September 30,
2024


June 30,
2024

ASSETS





Current Assets:





Cash, cash equivalents, and restricted cash


$             37,613


$             33,555

Accounts receivable, net


95,525


77,259

Related party receivables, current


20,768


17,469

Prepaid expenses and other current assets


106,490


90,801

Total current assets


260,396


219,084

Non-Current Assets:





Property and equipment, net


642,338


633,533

Right-of-use lease assets


391,058


388,658

Goodwill


69,041


69,041

Indefinite-lived intangible assets


63,801


63,801

Deferred tax assets, net


81,733


68,307

Other non-current assets


101,960


110,283

Total assets


$        1,610,327


$        1,552,707

LIABILITIES AND DEFICIT





Current Liabilities:





Accounts payable, accrued and other current liabilities


$           159,261


$           203,750

Related party payables, current


43,671


42,506

Long-term debt, current


20,313


16,250

Operating lease liabilities, current


27,014


27,736

Deferred revenue


270,955


215,581

Total current liabilities


521,214


505,823

Non-Current Liabilities:





Long-term debt, net of deferred financing costs


646,975


599,248

Operating lease liabilities, non-current


451,071


427,014

Other non-current liabilities


39,765


43,787

Total liabilities


1,659,025


1,575,872

Commitments and contingencies





Deficit:





Class A Common Stock (a)


460


456

Class B Common Stock (b)


69


69

Additional paid-in-capital


26,909


33,481

Treasury stock at cost (4,365 shares outstanding as of September 30, 2024 and June 30, 2024)


(140,512)


(140,512)

Retained earnings


96,282


115,603

Accumulated other comprehensive loss


(31,906)


(32,262)

Total deficit


(48,698)


(23,165)

Total liabilities and deficit


$        1,610,327


$        1,552,707










(a)

Class A Common Stock, $0.01 par value per share, 120,000 shares authorized; 45,958 and 45,556 shares issued as of September 30, 2024 and June 30, 2024, respectively.

(b)

Class B Common Stock, $0.01 par value per share, 30,000 shares authorized; 6,867 shares issued as of September 30, 2024 and June 30, 2024.

 

MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SELECTED CASH FLOW INFORMATION

(in thousands)

(Unaudited)




Three Months Ended



September 30,



2024


2023

Net cash (used in) provided by operating activities


$       (27,359)


$           1,378

Net cash used in investing activities


(6,690)


(55,490)

Net cash provided by financing activities


38,107


9,273

Net increase (decrease) in cash, cash equivalents, and restricted cash


4,058


(44,839)

Cash, cash equivalents, and restricted cash, beginning of period


33,555


84,355

Cash, cash equivalents, and restricted cash, end of period


$         37,613


$         39,516

 

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SOURCE Madison Square Garden Entertainment Corp.