NEW YORK, Nov. 2, 2023 /PRNewswire/ -- Madison Square
Garden Sports Corp. (NYSE: MSGS) today reported financial results
for the fiscal first quarter ended September 30,
2023.
With the 2023-24 New York Knicks ("Knicks") and New York Rangers
("Rangers") seasons now underway, the Company is seeing continued
positive operating momentum across its business. The combined
season ticket renewal rate for the Knicks and Rangers is over 94%,
which is on a larger renewable base than the prior year.
Renewal and new sales activity remains robust in suites, and, in
sponsorships, the Company has signed a number of new marketing
partners leading into the seasons. In addition, the Company
anticipates continued growth in both local and national media
rights fees in fiscal 2024 due to ongoing annual contractual rate
escalators.
For the fiscal 2024 first quarter, the Company generated
revenues of $43.0 million, an
increase of $19.0 million, or 79%, as
compared to the prior year period. In addition, the Company
reported an operating loss of $14.8
million, an improvement of $21.1
million, or 59%, and an adjusted operating loss of
$10.0 million, an improvement of
$17.8 million, or 64%, both as
compared to the prior year period. (1)
Madison Square Garden Sports Corp. Executive Chairman
James L. Dolan said, "We are pleased
with the positive momentum we have seen in our business so far this
fiscal year. We are confident that the enduring popularity of our
teams and strength of our operations has us well-positioned to
drive long-term shareholder value."
Results from
Operations
|
Results for the three
months ended September 30, 2023 and 2022 were as
follows:
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
September
30,
|
|
Change
|
|
$ millions
|
|
2023
|
|
2022
|
|
$
|
|
%
|
|
Revenues
|
|
$
43.0
|
|
$ 24.1
|
|
$ 19.0
|
|
79 %
|
|
Operating
loss
|
|
$ (14.8)
|
|
$ (35.9)
|
|
$ 21.1
|
|
59 %
|
|
Adjusted operating
loss(1)
|
|
$ (10.0)
|
|
$ (27.8)
|
|
$ 17.8
|
|
64 %
|
|
|
Note: Does not foot due
to rounding
|
1.
|
See page 3 of this
earnings release for the definition of adjusted operating income
(loss) included in the discussion of non-GAAP financial measures.
During the fourth quarter of fiscal 2023, the Company amended this
definition so that the impact of the non-cash portion of operating
lease costs (which was $0.5 million for the three months ended
September 30, 2023 and $0.5 million for the three months ended
September 30, 2022) related to the Company's arena license
agreements with Madison Square Garden Entertainment Corp. ("MSG
Entertainment") is no longer excluded in all periods
presented.
|
Summary of Reported Results from Operations
For the
fiscal 2024 first quarter, revenues of $43.0
million increased $19.0
million, or 79%, as compared to the prior year period. This
increase primarily reflects higher revenues of $17.0 million due to an increase in and the
timing of recognition of certain league distributions unrelated to
national media rights fees.
Direct operating expenses of $3.5
million decreased $0.2
million, or 4%, as compared to the prior year period. This
decrease was primarily driven by lower team personnel compensation
of $1.3 million, partially offset by
an increase of $1.0 million in net
provisions for league revenue sharing expense (net of escrow and
excluding playoffs) and NBA luxury tax.
Selling, general and administrative expenses of $53.6 million decreased $1.7 million, or 3%, as compared to the prior
year period. This decrease was driven by lower employee
compensation and related benefits of $2.7
million, primarily due to executive management transition
costs recognized in the prior year period, partially offset by
higher other expenses.
Operating loss of $14.8 million
improved $21.1 million, or 59%, as
compared to the prior year period, primarily due to the increase in
revenues and, to a lesser extent, the decrease in selling, general
and administrative expenses (including share-based compensation).
Adjusted operating loss of $10.0
million improved $17.8
million, or 64%, as compared to the prior year period,
primarily due to the increase in revenues, partially offset by an
increase in selling, general and administrative expenses (excluding
share-based compensation).
About Madison Square Garden Sports Corp.
Madison
Square Garden Sports Corp. (MSG Sports) is a leading
professional sports company, with a collection of assets that
includes the New York Knicks (NBA) and the New York
Rangers (NHL), as well as two development league teams –
the Westchester Knicks (NBAGL) and the Hartford Wolf Pack
(AHL). MSG Sports also operates a professional sports
team performance center – the MSG Training Center in
Greenburgh, NY. More information is available
at www.msgsports.com.
Non-GAAP Financial Measures
During the fourth
quarter of fiscal 2023, the Company amended its definition of
adjusted operating income (loss) so that the impact of the non-cash
portion of operating lease costs related to the Company's arena
license agreements with MSG Entertainment is no longer excluded in
the calculation of adjusted operating income (loss) 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) gains or losses on sales or dispositions of
businesses, (v) the impact of purchase accounting adjustments
related to business acquisitions, and (vi) gains and losses related
to the remeasurement of liabilities under the Company's Executive
Deferred Compensation Plan. Because it is based upon operating
income (loss), adjusted operating income (loss) also excludes
interest expense (including cash interest expense) and other
non-operating income and expense items. 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. In addition, we believe 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 U.S. generally accepted
accounting principles ("GAAP"), gains and losses related to the
remeasurement of liabilities under the Company's Executive Deferred
Compensation Plan are recognized in Operating (income) loss whereas
gains and losses related to the remeasurement of the assets under
the Company's 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 Miscellaneous
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 our
Company. 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 and events may differ materially from those in the
forward-looking statements as a result of various factors,
including financial community and rating agency perceptions of the
Company and its business, operations, financial condition and the
industry 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
Investor Relations and
Financial Communications
(212)
465-6072
|
Justin
Blaber
Financial
Communications
(212)
465-6109
|
|
|
Grace
Kaminer
Investor
Relations
(212)
631-5076
|
|
MADISON SQUARE
GARDEN SPORTS CORP.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2023
|
|
2022
|
Revenues
|
|
$
43,046
|
|
$
24,089
|
Direct operating
expenses
|
|
3,520
|
|
3,681
|
Selling, general and
administrative expenses
|
|
53,556
|
|
55,281
|
Depreciation and
amortization
|
|
794
|
|
1,025
|
Operating
loss
|
|
(14,824)
|
|
(35,898)
|
Other income
(expense):
|
|
|
|
|
Interest
income
|
|
453
|
|
356
|
Interest
expense
|
|
(6,929)
|
|
(3,312)
|
Miscellaneous expense,
net
|
|
(12,665)
|
|
(166)
|
Loss before income
taxes
|
|
(33,965)
|
|
(39,020)
|
Income tax
benefit
|
|
15,144
|
|
20,493
|
Net loss
|
|
(18,821)
|
|
(18,527)
|
Less: Net loss
attributable to nonredeemable noncontrolling interests
|
|
—
|
|
(707)
|
Net loss attributable
to Madison Square Garden Sports Corp.'s stockholders
|
|
$ (18,821)
|
|
$ (17,820)
|
|
|
|
|
|
Basic loss per common
share attributable to Madison Square Garden Sports Corp.'s
stockholders
|
|
$
(0.79)
|
|
$
(0.73)
|
Diluted loss per common
share attributable to Madison Square Garden Sports Corp.'s
stockholders
|
|
$
(0.79)
|
|
$
(0.73)
|
|
|
|
|
|
Basic weighted-average
number of common shares outstanding
|
|
23,971
|
|
24,295
|
Diluted
weighted-average number of common shares outstanding
|
|
23,971
|
|
24,295
|
MADISON SQUARE GARDEN SPORTS CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS)
TO
ADJUSTED OPERATING INCOME (LOSS)
(In
thousands)
The following is a description of the adjustments to operating
loss in arriving at adjusted operating loss as described in this
earnings release:
- Depreciation and amortization. This adjustment eliminates
depreciation, amortization and impairments of property and
equipment, goodwill and other intangible assets in all
periods.
- Share-based compensation. This adjustment eliminates the
compensation expense related to restricted stock units and stock
options granted under the Company's employee stock plan and
non-employee director plan in all periods.
- 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
|
|
|
September
30,
|
|
|
2023
|
|
2022
|
Operating
loss
|
|
$
(14,824)
|
|
$
(35,898)
|
Depreciation and
amortization
|
|
794
|
|
1,025
|
Share-based
compensation
|
|
4,149
|
|
7,220
|
Remeasurement of
deferred compensation plan liabilities
|
|
(104)
|
|
(103)
|
Adjusted operating
loss(1)
|
|
$
(9,985)
|
|
$
(27,756)
|
|
____________________
|
|
(1) During the
fourth quarter of fiscal 2023, the Company amended its definition
of adjusted operating income (loss) so that the impact of the
non-cash portion of operating lease costs related to the Company's
arena license agreements with MSG Entertainment is no longer
excluded. Pursuant to GAAP, recognition of operating lease costs 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 costs is comprised of a
contractual cash component plus or minus a non-cash component for
each period presented. Adjusted operating loss includes operating
lease costs of (i) $829 and $805 of expense paid in cash for the
three months ended September 30, 2023 and 2022, respectively, and
(ii) a non-cash expense of $482 and $506, for the three months
ended September 30, 2023 and 2022, respectively.
|
MADISON SQUARE
GARDEN SPORTS CORP.
|
CONSOLIDATED BALANCE
SHEETS
|
(In thousands,
except per share data)
|
|
|
|
September
30,
2023
|
|
June 30,
2023
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
51,208
|
|
$
40,398
|
Restricted
cash
|
|
1,211
|
|
61
|
Accounts receivable,
net of allowance for doubtful accounts of $0 and $0 as of
September 30, 2023 and June 30, 2023,
respectively
|
|
34,809
|
|
40,139
|
Net related party
receivables
|
|
18,280
|
|
15,969
|
Prepaid
expenses
|
|
71,422
|
|
24,768
|
Other current
assets
|
|
23,866
|
|
27,898
|
Total current
assets
|
|
200,796
|
|
149,233
|
Property and equipment,
net of accumulated depreciation and amortization of $49,911
and $49,117 as of September 30, 2023 and June 30, 2023,
respectively
|
|
30,244
|
|
30,501
|
Right-of-use lease
assets
|
|
713,350
|
|
715,283
|
Indefinite-lived
intangible assets
|
|
103,644
|
|
103,644
|
Goodwill
|
|
226,523
|
|
226,523
|
Investments
|
|
57,703
|
|
67,374
|
Other assets
|
|
33,825
|
|
22,459
|
Total
assets
|
|
$
1,366,085
|
|
$
1,315,017
|
MADISON SQUARE
GARDEN SPORTS CORP.
|
CONSOLIDATED BALANCE
SHEETS (continued)
|
(In thousands,
except per share data)
|
|
|
|
September
30,
2023
|
|
June 30,
2023
|
|
|
(Unaudited)
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
5,476
|
|
$
9,093
|
Net related party
payables
|
|
6,337
|
|
5,842
|
Debt
|
|
30,000
|
|
30,000
|
Accrued
liabilities:
|
|
|
|
|
Employee related
costs
|
|
70,152
|
|
144,310
|
League-related
accruals
|
|
80,184
|
|
106,926
|
Other accrued
liabilities
|
|
10,608
|
|
17,561
|
Operating lease
liabilities, current
|
|
50,530
|
|
49,745
|
Deferred
revenue
|
|
300,440
|
|
157,051
|
Total current
liabilities
|
|
553,727
|
|
520,528
|
Long-term
debt
|
|
370,000
|
|
295,000
|
Operating lease
liabilities, noncurrent
|
|
734,277
|
|
746,437
|
Defined benefit
obligations
|
|
4,532
|
|
4,526
|
Other employee related
costs
|
|
51,631
|
|
49,070
|
Deferred tax
liabilities, net
|
|
8,856
|
|
24,024
|
Deferred revenue,
noncurrent
|
|
1,605
|
|
12,666
|
Total
liabilities
|
|
1,724,628
|
|
1,652,251
|
Commitments and
contingencies
|
|
|
|
|
Madison Square Garden
Sports Corp. Stockholders' Equity:
|
|
|
|
|
Class A Common
stock, par value $0.01, 120,000 shares authorized; 19,404 and
19,364
shares outstanding as of September 30, 2023 and June 30,
2023, respectively
|
|
204
|
|
204
|
Class B Common
stock, par value $0.01, 30,000 shares authorized; 4,530 shares
outstanding as of September 30, 2023 and June 30,
2023
|
|
45
|
|
45
|
Preferred stock, par
value $0.01, 15,000 shares authorized; none outstanding as of
September 30, 2023 and June 30, 2023
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
7,553
|
|
16,846
|
Treasury stock, at
cost, 1,044 and 1,084 shares as of September 30, 2023 and
June 30,
2023, respectively
|
|
(172,605)
|
|
(179,410)
|
Accumulated
deficit
|
|
(192,737)
|
|
(173,910)
|
Accumulated other
comprehensive loss
|
|
(1,003)
|
|
(1,009)
|
Total
equity
|
|
(358,543)
|
|
(337,234)
|
Total liabilities and
equity
|
|
$
1,366,085
|
|
$
1,315,017
|
MADISON SQUARE
GARDEN SPORTS CORP.
|
SELECTED CASH FLOW
INFORMATION
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
September
30,
|
|
|
2023
|
|
2022
|
Net cash (used in)
provided by operating activities
|
|
$
(54,141)
|
|
$
1,285
|
Net cash used in
investing activities
|
|
(1,729)
|
|
(271)
|
Net cash provided by
(used in) financing activities
|
|
67,830
|
|
(10,996)
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
|
11,960
|
|
(9,982)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
40,459
|
|
91,018
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
52,419
|
|
$
81,036
|
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SOURCE Madison Square Garden Sports Corp.