FY24 Revenue Range Increased to
$930-950 Million, a 10% Increase
Year-Over-Year at Midpoint of Range
FY24 Operating Income Range Increased to
$95-105 Million and AOI Range
Increased to $170-180
Million
Record-Setting Revenues for Christmas
Spectacular Production, With Over One Million Tickets
Sold
Bookings Business Remains On Track to
Deliver Low Double-Digit Percentage Increase in Events in
FY2024
NEW
YORK, Feb. 7, 2024 /PRNewswire/ -- Madison
Square Garden Entertainment Corp. (NYSE: MSGE) ("MSG Entertainment"
or the "Company") today reported financial results for the fiscal
second quarter ended December 31,
2023.
The fiscal 2024 second quarter was highlighted by the
Christmas Spectacular production's record-setting holiday
season run and robust growth across the Company's bookings
business. After extending its run by 8 performances due to strong
demand, the Christmas Spectacular concluded its
90th holiday season in early January with over one
million tickets sold across 193 shows, marking a return to
pre-pandemic attendance levels. In addition, the Company hosted a
busy schedule of events across its portfolio of venues and remains
well-positioned to achieve a low double-digit percentage increase
in the number of bookings events in fiscal 2024.
Financial results for the three and six months ended
December 31, 2023 reflect the Company
on a fully standalone basis. Results for the three and six months
ended December 31, 2022, which were
prior to the spin-off from Sphere Entertainment Co. ("Sphere
Entertainment"), are presented in accordance with generally
accepted accounting principles ("GAAP") for the preparation of
carve-out financial statements. These prior year results do not
include all of the expenses that would have been incurred by MSG
Entertainment had it been a standalone company for the periods
presented. Therefore, results for the three and six months ended
December 31, 2023 are not fully
comparable with results for the prior year period.
For the fiscal 2024 second quarter, the Company reported
revenues of $402.7 million, an
increase of $46.8 million, or 13%, as
compared to the prior year quarter. In addition, the Company
reported operating income of $137.4
million and adjusted operating income of $151.0 million, increases of $24.0 million and $24.7
million, respectively, as compared to the prior year
quarter.(1)
Executive Chairman and CEO James L.
Dolan said, "We continue to see robust demand for our
portfolio of live entertainment offerings, which led to record
results for this year's Christmas Spectacular production.
Looking ahead, we remain on track to deliver solid growth in fiscal
'24 and believe we are well positioned to generate long-term value
for shareholders."
Results for the
Three and Six Months Ended December 31, 2023 and
2022:
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
December
31,
|
|
Change
|
|
December
31,
|
|
Change
|
$ millions
|
|
2023
|
|
2022
|
|
$
|
|
%
|
|
2023
|
|
2022
|
|
$
|
|
%
|
Revenues
|
|
$
402.7
|
|
$
355.9
|
|
$ 46.8
|
|
13 %
|
|
$
544.9
|
|
$
502.3
|
|
$ 42.5
|
|
8 %
|
Operating
income
|
|
$
137.4
|
|
$
113.4
|
|
$ 24.0
|
|
21 %
|
|
$
104.0
|
|
$
102.1
|
|
$
1.9
|
|
2 %
|
Adjusted Operating
Income(1)
|
|
$
151.0
|
|
$
126.3
|
|
$ 24.7
|
|
20 %
|
|
$
150.2
|
|
$
137.8
|
|
$ 12.4
|
|
9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 considered not 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.
|
Summary of Reported Results of Operations for the Fiscal 2024
Second Quarter
For the fiscal 2024 second quarter, the
Company reported revenues of $402.7
million, an increase of $46.8
million, or 13%, as compared to the prior year quarter.
Event-related revenues increased $44.3
million as compared to the prior year period. This primarily
reflected an increase in the number of concerts and other live
entertainment and sporting events held at the Company's venues as
compared to the prior year quarter and, to a lesser extent, higher
per-event revenues in the current year period. Revenues from the
presentation of the Christmas Spectacular production
increased $17.9 million, primarily
due to higher ticket-related revenues, which reflected higher
per-show revenue and, to a lesser extent, nine additional
performances as compared to the prior year quarter.
The increase in revenues was partially offset by a decrease in
advertising sales commissions of $8.4
million in the current year period due to the termination of
the Company's advertising sales representation agreement with MSG
Networks as of December 31, 2022. In
addition, revenues related to the Company's arena license
agreements with the Madison Square Garden Sports Corp. ("MSG
Sports") decreased $9.8 million. This
included a $7.3 million decrease in
arena license fee revenues and a $2.5
million decrease in revenues subject to the sharing of
economics with MSG Sports, both primarily due to nine fewer Knicks
and Rangers games played at the Madison Square Garden Arena ("The
Garden") in the current year period.
Fiscal 2024 second quarter direct operating expenses of
$202.8 million increased $22.2 million, or 12%, as compared to the prior
year quarter. This primarily reflected higher event-related
expenses of $19.8 million, due to an
increase in the number of events at the Company's venues and, to a
lesser extent, higher per-event expenses in the current year
quarter. In addition, direct operating expenses associated with the
Christmas Spectacular production increased $3.6 million as compared to the prior year
quarter. The overall increase in direct operating expenses was
partially offset by other net cost decreases.
Fiscal 2024 second quarter selling, general and administrative
expenses of $48.4 million increased
$5.1 million, or 12%, as compared
with the prior year quarter. The fiscal 2024 second quarter
reflects the results of the Company on a fully standalone basis.
Results for the fiscal 2023 second quarter reflect the allocation
of corporate and administrative costs based on the accounting
requirements for the preparation of carve-out financial statements.
These results do not include all of the expenses that would have
been incurred by MSG Entertainment had it been a standalone company
in the prior year period. This was the primary driver of the
overall increase in selling, general and administrative expenses,
partially offset by the impact of the Company's transition services
agreement with Sphere Entertainment.
Fiscal 2024 second quarter operating income of $137.4 million increased $24.0 million, or 21%, and adjusted operating
income of $151.0 million increased
$24.7 million, or 20%, both as
compared to the prior year quarter. The increase in operating
income was primarily due to the increase in revenues and, to a
lesser extent, lower restructuring charges in the current year
period, partially offset by higher direct operating expenses and,
to a lesser extent, higher selling, general and administrative
expenses. The increase in adjusted operating income was primarily
due to the increase in revenues, partially offset by higher direct
operating expenses and, to a lesser extent, higher selling, general
and administrative expenses.
Financial Guidance
As a result of the positive momentum across its operations, the
Company is increasing its fiscal 2024 guidance for revenues,
operating income and adjusted operating income. The Company
currently expects the following:
- Revenues of $930 million to
$950 million.
- Operating income of $95 million
to $105 million.
- Adjusted operating income of $170
million to $180
million(2).
An updated version of the MSG Entertainment investor
presentation is now available at investor.msgentertainment.com.
(2) See appendix for a reconciliation of operating income
to adjusted operating income for fiscal 2024 financial
guidance.
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 90
years. More information is available at
www.msgentertainment.com.
Non-GAAP Financial Measures
We define adjusted
operating income (loss), which is a non-GAAP financial measure, as
operating income (loss) excluding (i) the impact of non-cash
straight-line leasing revenue associated with the arena license
agreements with MSG Sports, (ii) depreciation, amortization and
impairments of property and equipment, goodwill and other
intangible assets, (iii) share-based compensation expense or
benefit, (iv) restructuring charges or credits, (v) merger,
spin-off, and acquisition-related costs, including 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, (viii)
gains and losses related to the remeasurement of liabilities under
the executive deferred compensation plan, and (ix) amortization for
capitalized cloud computing arrangement costs. We believe that
given the length of the arena license agreements and resulting
magnitude of the difference in leasing revenue recognized and cash
revenue received, the exclusion of non-cash leasing revenue
provides investors with a clearer picture of the Company's
operating performance. We believe that this adjustment is
beneficial for other incremental reasons as well. This adjustment
provides senior management, investors and analysts with important
information regarding a long-term related party agreement with MSG
Sports. In addition, this adjustment is included under the
Company's debt covenant compliance calculations and is a component
of the performance measures used to evaluate, and compensate,
senior management of the Company. 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
Conference Call Information:
The conference call
will be Webcast live today at 10:00 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 February
14, 2024
MADISON SQUARE GARDEN ENTERTAINMENT
CORP.
CONDENSED
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(in thousands,
except per share data)
(Unaudited)
|
|
|
|
Three Months
Ended December 31,
|
|
Six Months
Ended December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
$
402,666
|
|
$
355,880
|
|
$
544,878
|
|
$
502,332
|
Direct operating
expenses
|
|
(202,761)
|
|
(180,603)
|
|
(304,438)
|
|
(282,265)
|
Selling, general, and
administrative expenses
|
|
(48,389)
|
|
(43,301)
|
|
(97,211)
|
|
(83,415)
|
Depreciation and
amortization
|
|
(13,205)
|
|
(15,586)
|
|
(26,789)
|
|
(31,571)
|
Gains, net on
dispositions
|
|
—
|
|
4,412
|
|
—
|
|
4,412
|
Restructuring
charges
|
|
(888)
|
|
(7,359)
|
|
(12,441)
|
|
(7,359)
|
Operating
income
|
|
137,423
|
|
113,443
|
|
103,999
|
|
102,134
|
Interest
income
|
|
1,083
|
|
1,812
|
|
1,935
|
|
3,322
|
Interest
expense
|
|
(15,049)
|
|
(13,205)
|
|
(29,336)
|
|
(24,632)
|
Other income
(expense), net
|
|
2,846
|
|
(2,172)
|
|
(1,625)
|
|
(1,286)
|
Income from operations
before income taxes
|
|
126,303
|
|
99,878
|
|
74,973
|
|
79,538
|
Income tax
expense
|
|
(1,054)
|
|
(2,797)
|
|
(395)
|
|
(731)
|
Net income
|
|
125,249
|
|
97,081
|
|
74,578
|
|
78,807
|
Less: Net loss
attributable to nonredeemable noncontrolling interest
|
|
—
|
|
(181)
|
|
—
|
|
(553)
|
Net income attributable
to MSG Entertainment's stockholders
|
|
$
125,249
|
|
$
97,262
|
|
$
74,578
|
|
$
79,360
|
|
|
|
|
|
|
|
|
|
Income per share
attributable to MSG Entertainment's stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
2.61
|
|
$
1.88
|
|
$
1.52
|
|
$
1.53
|
Diluted
|
|
$
2.59
|
|
$
1.88
|
|
$
1.52
|
|
$
1.53
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of shares of common stock:
|
|
|
|
|
|
|
|
|
Basic
|
|
48,029
|
|
51,768
|
|
48,955
|
|
51,768
|
Diluted
|
|
48,293
|
|
51,768
|
|
49,168
|
|
51,768
|
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
income in arriving at adjusted operating income as described in
this earnings release:
- Non-cash portion of arena license fees from MSG Sports. This
adjustment removes the impact of non-cash straight-line leasing
revenue associated with the arena license agreements with MSG
Sports.
- 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.
- 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
December 31,
|
|
Six Months Ended
December 31,
|
$ thousands
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
income
|
|
$
137,423
|
|
$
113,443
|
|
$ 103,999
|
|
$
102,134
|
Non-cash portion of
arena license fees from MSG Sports(1)
|
|
(9,120)
|
|
(12,410)
|
|
(9,615)
|
|
(12,929)
|
Depreciation and
amortization
|
|
13,205
|
|
15,586
|
|
26,790
|
|
31,571
|
Share-based
compensation (excluding share-based compensation in restructuring
charges)
|
|
7,773
|
|
6,555
|
|
13,950
|
|
13,965
|
Gains, net on
dispositions
|
|
—
|
|
(4,412)
|
|
—
|
|
(4,412)
|
Restructuring
charges
|
|
888
|
|
7,359
|
|
12,441
|
|
7,359
|
Merger, spin-off, and
acquisition-related costs(2)
|
|
—
|
|
—
|
|
2,035
|
|
—
|
Amortization for
capitalized cloud computing arrangement costs
|
|
448
|
|
29
|
|
448
|
|
104
|
Remeasurement of
deferred compensation plan liabilities
|
|
343
|
|
160
|
|
198
|
|
6
|
Adjusted operating
income
|
|
$
150,960
|
|
$
126,310
|
|
$ 150,246
|
|
$
137,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
This adjustment
represents the non-cash portion of operating lease revenue related
to the Company's Arena License Agreements with MSG Sports. 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. Operating income on a GAAP basis includes lease income
of (i) $15,409 and $16,238 of revenue collected in cash for the
three and six months ended December 31, 2023, respectively,
and $19,416 and $20,220 of revenue collected in cash for the three
and six months ended December 31, 2022, respectively, and (ii)
a non-cash portion of $9,120 and $9,615 for the three and six
months ended December 31, 2023, respectively, and $12,410 and
$12,929 for the three and six months ended December 31, 2022,
respectively.
|
(2)
|
This adjustment
represents non-recurring costs incurred and paid by the Company for
the sale of the retained interest by Sphere Entertainment
Co.
|
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEETS
(unaudited)
|
(in
thousands)
|
|
|
|
|
|
December 31,
2023
|
|
June 30,
2023
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash, cash
equivalents, and restricted cash
|
|
$
37,572
|
|
$
84,355
|
Accounts receivable,
net
|
|
101,955
|
|
63,898
|
Related party
receivables, current
|
|
41,318
|
|
69,466
|
Prepaid expenses and
other current assets
|
|
69,408
|
|
77,562
|
Total current
assets
|
|
250,253
|
|
295,281
|
Non-Current
Assets:
|
|
|
|
|
Property and equipment,
net
|
|
626,172
|
|
628,888
|
Right-of-use lease
assets
|
|
310,219
|
|
235,790
|
Goodwill
|
|
69,041
|
|
69,041
|
Intangible assets,
net
|
|
63,801
|
|
63,801
|
Other non-current
assets
|
|
100,789
|
|
108,356
|
Total
assets
|
|
$
1,420,275
|
|
$
1,401,157
|
LIABILITIES AND
RETAINED EARNINGS (DEFICIT)
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable,
accrued and other current liabilities
|
|
$
197,256
|
|
$
214,725
|
Related party
payables, current
|
|
52,677
|
|
47,281
|
Long-term debt,
current
|
|
16,250
|
|
16,250
|
Operating lease
liabilities, current
|
|
35,539
|
|
36,529
|
Deferred
revenue
|
|
236,349
|
|
225,855
|
Total current
liabilities
|
|
538,071
|
|
540,640
|
Non-Current
Liabilities:
|
|
|
|
|
Long-term debt, net of
deferred financing costs
|
|
605,685
|
|
630,184
|
Operating lease
liabilities, non-current
|
|
310,952
|
|
219,955
|
Deferred tax
liabilities, net
|
|
24,070
|
|
23,518
|
Other non-current
liabilities
|
|
43,544
|
|
56,332
|
Total
liabilities
|
|
1,522,322
|
|
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
|
|
25,339
|
|
17,727
|
Treasury stock at cost
(4,365 and 840 shares outstanding as of December 31, 2023 and June
30, 2023, respectively)
|
|
(140,512)
|
|
(25,000)
|
Retained earnings
(deficit)
|
|
45,881
|
|
(28,697)
|
Accumulated other
comprehensive loss
|
|
(33,279)
|
|
(34,021)
|
Total
deficit
|
|
(102,047)
|
|
(69,472)
|
Total liabilities and
deficit
|
|
$
1,420,275
|
|
$
1,401,157
|
|
|
|
|
|
|
|
(a)
|
Class A Common Stock,
$0.01 par value per share, 120,000 shares authorized; 45,487 and
45,024 shares issued as of December 31, 2023 and June 30, 2023,
respectively.
|
(b)
|
Class B Common Stock,
$0.01 par value per share, 30,000 shares authorized; 6,867 shares
issued as of December 31, 2023 and June 30, 2023,
respectively.
|
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
SELECTED CASH FLOW INFORMATION
(in
thousands)
(Unaudited)
|
|
|
|
Six Months
Ended
|
|
|
December
31,
|
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
|
$
105,232
|
|
$
69,336
|
Net cash (used in)
provided by investing activities
|
|
(62,731)
|
|
22,390
|
Net cash used in
financing activities
|
|
(89,284)
|
|
(553)
|
Net (decrease) increase
in cash, cash equivalents, and restricted cash
|
|
(46,783)
|
|
91,173
|
Cash, cash equivalents,
and restricted cash, beginning of period
|
|
84,355
|
|
62,573
|
Cash, cash equivalents,
and restricted cash, end of period
|
|
$
37,572
|
|
$
153,746
|
MADISON SQUARE GARDEN ENTERTAINMENT CORP.
APPENDIX
FISCAL 2024
FINANCIAL GUIDANCE
ADJUSTMENTS TO
RECONCILE OPERATING INCOME TO
ADJUSTED OPERATING
INCOME
(in
millions)
|
|
|
|
Fiscal Year
2024
|
Operating
income
|
|
$95 - $105
|
Non-cash portion of
arena license fees from MSG Sports
|
|
(25)
|
Depreciation and
amortization
|
|
55
|
Share-based
compensation
|
|
30
|
Restructuring
charges
|
|
13
|
Merger, spin-off and
acquisition-related costs
|
|
2
|
Adjusted operating
income
|
|
$170 - $180
|
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SOURCE Madison Square Garden Entertainment Corp.