The Madison Square Garden Company (NYSE: MSG) today reported
financial results for the fiscal first quarter ended
September 30, 2019.
For the fiscal 2020 first quarter, the Company
generated revenues of $214.8 million, a decrease of 2% as compared
to the prior year quarter. The Company also generated an
operating loss of $89.3 million and an adjusted operating loss of
$41.1 million, as compared to an operating loss of $50.8 million
and an adjusted operating loss of $9.9 million for the first
quarter of fiscal 2019.(1)(2) This was primarily due to
higher expenses in Corporate and Other, mainly the result of
increased employee compensation related to Corporate and the
Company's MSG Sphere initiative, as well as additional expenses in
MSG Sphere-related content development and technology. In
addition, results for the MSG Sports segment include a significant
charge related to a player waiver recorded during the fiscal 2020
first quarter.
Executive Chairman and CEO James L. Dolan said,
“We expect fiscal 2020 to be a defining year as we move forward
with our proposed spin-off and plans for MSG Sphere in Las
Vegas. We firmly believe the separation of our sports and
entertainment businesses would better highlight the unique value of
our assets and brands, while enabling both new companies to pursue
their own distinct business plan. In addition, we are
continuing to make significant progress on the construction of MSG
Sphere in Las Vegas. We remain confident that we are
executing on a strategy that positions our Company for long-term
growth and value creation for shareholders.”
Results from OperationsSegment results for the
quarters ended September 30, 2019 and 2018 are as follows:
|
Revenues |
OperatingIncome (Loss) |
Adjusted Operating Income
(Loss) |
$ millions |
F’Q12020 |
|
F’Q12019 |
|
%Change |
F’Q12020 |
|
F’Q12019 |
|
%Change |
F’Q12020 |
|
F’Q12019 |
|
%Change |
MSG Entertainment |
$ |
159.0 |
|
$ |
163.0 |
|
(2)% |
$ |
(2.6 |
) |
$ |
1.7 |
|
NM |
$ |
6.2 |
|
$ |
9.0 |
|
(31)% |
MSG Sports |
|
56.0 |
|
|
55.4 |
|
1 % |
|
(20.2 |
) |
|
(4.1 |
) |
NM |
|
(13.7 |
) |
|
0.6 |
|
NM |
Corporate and Other (3) |
|
(0.3 |
) |
|
(0.2 |
) |
NM |
|
(60.9 |
) |
|
(43.4 |
) |
(40)% |
|
(33.7 |
) |
|
(19.5 |
) |
(73)% |
Purchase accounting adjustments |
|
— |
|
|
— |
|
NM |
|
(5.7 |
) |
|
(5.0 |
) |
(13)% |
|
— |
|
|
— |
|
NM |
Total Company |
$ |
214.8 |
|
$ |
218.1 |
|
(2)% |
$ |
(89.3 |
) |
$ |
(50.8 |
) |
(76)% |
$ |
(41.1 |
) |
$ |
(9.9 |
) |
NM |
Note: Does not foot due to rounding
- See page 3 of this earnings release
for the definition of adjusted operating income (loss) included in
the discussion of non-GAAP financial measures.
- The Company records TAO Group’s
operating results in its consolidated statements of operations on a
three-month lag basis.
- Corporate and Other primarily
consists of i) unallocated corporate general and administrative
costs, including professional fees for initiatives such as the
Company's proposed spin-off of its Entertainment business; ii)
unallocated venue-related depreciation and amortization expense;
iii) MSG Sphere personnel, technology and content development; and
iv) inter-segment eliminations.
MSG EntertainmentFor the fiscal
2020 first quarter, MSG Entertainment revenues of $159.0 million
decreased 2%, as compared to the prior year period. During
the prior year first quarter, the Company hosted a large-scale
special event at Radio City Music Hall, but did not host a
comparable event during the fiscal 2020 first quarter. In
addition, the wind-down of Obscura Digital's third-party business
impacted the year-over-year comparability of revenue results.
These decreases were mostly offset by higher event-related revenues
from concerts and higher revenues at TAO Group.
Fiscal 2020 first quarter operating income
decreased by $4.3 million to a loss of $2.6 million and adjusted
operating income decreased by $2.8 million to $6.2 million, both as
compared to the prior year period. This primarily reflects
the decrease in revenues and higher selling, general and
administrative expenses, partially offset by lower direct operating
expenses. The increase in selling, general and administrative
expenses was primarily due to higher employee compensation and
related benefits and higher professional fees, partially offset by
lower costs related to Obscura Digital and the absence of
pre-opening expenses for TAO Group. The decrease in direct
operating expenses primarily reflects lower Obscura Digital costs,
the absence of a large-scale special event at Radio City Music
Hall, as well as other net expense decreases, partially offset by
higher expenses related to concerts and higher TAO Group costs.
MSG SportsFor the fiscal 2020
first quarter, MSG Sports revenues of $56.0 million increased 1%,
as compared to the prior year period. This primarily reflects
higher revenues from other live sporting events, slightly offset by
a decrease in ticket-related revenues, which includes the impact of
the absence of New York Liberty games as the professional sports
franchise was sold in January 2019.
Fiscal 2020 first quarter operating loss
increased by $16.1 million to $20.2 million and adjusted operating
income decreased by $14.2 million to a loss of $13.7 million, both
as compared to the prior year period. This primarily reflects
higher direct operating expenses and selling, general and
administrative expenses, slightly offset by the increase in
revenues. The increase in direct operating expenses was
primarily driven by a $10.2 million charge related to a player
waiver recorded during the fiscal 2020 first quarter, partially
offset by other net expense decreases. The increase in
selling, general and administrative expenses was primarily due to
higher employee compensation and related benefits.
Corporate and OtherFor the
fiscal 2020 first quarter, Corporate and Other’s operating loss of
$60.9 million and adjusted operating loss of $33.7 million
increased by $17.5 million and $14.2 million, respectively, both as
compared with the prior year period. The increased loss
reflects higher employee compensation related to Corporate and the
Company's MSG Sphere initiative, as well as additional expenses in
MSG Sphere-related content development and technology.
Other MattersThe Company
yesterday announced that its board of directors has unanimously
approved pursuing a revised plan for the proposed separation of its
sports and entertainment businesses. The Company is now pursuing a
spin-off of its entertainment businesses from its sports businesses
and, as part of this revised structure, the entertainment company
would not retain an equity interest in the sports company.
The proposed transaction is still expected to be completed during
the first quarter of calendar 2020, subject to certain
conditions.
About The Madison Square Garden
CompanyThe Madison Square Garden Company (MSG) is a world
leader in live sports and entertainment experiences. The
company presents or hosts a broad array of premier events in its
diverse collection of iconic venues: New York’s Madison Square
Garden, Hulu Theater at Madison Square Garden, Radio City Music
Hall and Beacon Theatre; the Forum in Inglewood, CA; and The
Chicago Theatre. Other MSG properties include legendary
sports franchises: the New York Knicks (NBA) and the New York
Rangers (NHL); two development league teams - the Westchester
Knicks (NBAGL) and the Hartford Wolf Pack (AHL); and esports teams
through Counter Logic Gaming, a leading North American esports
organization, and Knicks Gaming, MSG’s NBA 2K League franchise.
In addition, the Company features the popular original
production - the Christmas Spectacular Starring the Radio
City Rockettes - and through Boston Calling Events, produces New
England’s preeminent Boston Calling Music Festival. Also
under the MSG umbrella is Tao Group Hospitality, a world-class
hospitality group with globally-recognized entertainment, dining
and nightlife brands including Tao, Marquee, Lavo, Avenue, Beauty
& Essex and Cathédrale. More information is available
at www.themadisonsquaregardencompany.com.
Non-GAAP Financial MeasuresWe
define adjusted operating income (loss), which is a non-GAAP
financial measure, as operating income (loss) before 1)
depreciation, amortization and impairments of property and
equipment and intangible assets, 2) share-based compensation
expense or benefit, 3) restructuring charges or credits, 4) gains
or losses on sales or dispositions of businesses and 5) the impact
of purchase accounting adjustments related to business
acquisitions. 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 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 believe adjusted operating income (loss) are
appropriate measures 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 U.S. generally accepted accounting principles
(“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 StatementsThis
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:
Kimberly KernsEVP and Chief Communications OfficerThe Madison
Square Garden Company(212) 465-6442 |
Ari Danes, CFASenior Vice President, Investor Relations &
TreasuryThe Madison Square Garden Company(212) 465-6072 |
Conference Call Information:The conference call
will be Webcast live today at 10:00 a.m. ET at
www.themadisonsquaregardencompany.comConference call dial-in number
is 877-347-9170 / Conference ID Number 6172498Conference call
replay number is 855-859-2056 / Conference ID Number 6172498 until
November 15, 2019
CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)(Unaudited)
|
|
Three Months Ended |
|
|
September 30, |
|
|
2019 |
|
2018 |
Revenues |
|
$ |
214,782 |
|
|
$ |
218,135 |
|
Direct operating expenses |
|
132,464 |
|
|
123,909 |
|
Selling, general and
administrative expenses |
|
142,645 |
|
|
115,321 |
|
Depreciation and
amortization |
|
28,991 |
|
|
29,690 |
|
Operating loss |
|
(89,318 |
) |
|
(50,785 |
) |
Other income (expense): |
|
|
|
|
Earnings (loss) in equity method investments |
|
(1,473 |
) |
|
10,525 |
|
Interest income |
|
7,316 |
|
|
7,174 |
|
Interest expense |
|
(1,841 |
) |
|
(4,033 |
) |
Miscellaneous income, net |
|
5,078 |
|
|
3,767 |
|
Loss from operations before
income taxes |
|
(80,238 |
) |
|
(33,352 |
) |
Income tax expense |
|
(428 |
) |
|
(696 |
) |
Net loss |
|
(80,666 |
) |
|
(34,048 |
) |
Less: Net loss attributable to redeemable noncontrolling
interests |
|
(163 |
) |
|
(513 |
) |
Less: Net loss attributable to nonredeemable noncontrolling
interests |
|
(522 |
) |
|
(1,323 |
) |
Net loss attributable to The
Madison Square Garden Company’s stockholders |
|
$ |
(79,981 |
) |
|
$ |
(32,212 |
) |
Basic loss per common share
attributable to The Madison Square Garden Company’s
stockholders |
|
$ |
(3.36 |
) |
|
$ |
(1.36 |
) |
Diluted loss per common share
attributable to The Madison Square Garden Company’s
stockholders |
|
$ |
(3.36 |
) |
|
$ |
(1.36 |
) |
Basic weighted-average number
of common shares outstanding |
|
23,827 |
|
|
23,708 |
|
Diluted weighted-average
number of common shares outstanding |
|
23,827 |
|
|
23,708 |
|
|
|
|
|
|
|
|
ADJUSTMENTS TO RECONCILE OPERATING INCOME
(LOSS) TOADJUSTED OPERATING INCOME
(LOSS)
The following is a description of the adjustments to operating
income (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 our employee
stock plan and non-employee director plan in all periods.
- Depreciation and
amortization. This adjustment eliminates depreciation,
amortization and impairments of property and equipment and
intangible assets in all periods.
- Purchase accounting adjustments.
This adjustment eliminates the impact of various purchase
accounting adjustments related to business acquisitions, primarily
favorable / unfavorable lease agreements of the acquiree.
|
|
Three Months Ended |
|
|
September 30, |
|
|
2019 |
|
2018 |
Operating loss |
|
$ |
(89,318 |
) |
|
$ |
(50,785 |
) |
Share-based compensation |
|
16,891 |
|
|
10,189 |
|
Depreciation and amortization
(1) |
|
28,991 |
|
|
29,690 |
|
Other purchase accounting
adjustments |
|
2,332 |
|
|
1,013 |
|
Adjusted operating loss |
|
$ |
(41,104 |
) |
|
$ |
(9,893 |
) |
_________________
(1) Includes depreciation and amortization related
to purchase accounting adjustments.
CONSOLIDATED OPERATIONS
DATA(Dollars in
thousands)(Unaudited)
REVENUES
|
|
Three Months Ended |
|
|
|
|
September 30, |
|
|
|
|
2019 |
|
2018 |
|
% Change |
MSG Entertainment |
|
$ |
159,007 |
|
|
$ |
162,953 |
|
|
(2)% |
MSG
Sports |
|
56,034 |
|
|
55,352 |
|
|
1% |
Inter-segment
eliminations |
|
(259 |
) |
|
(170 |
) |
|
NM |
The Madison Square Garden Company Total |
|
$ |
214,782 |
|
|
$ |
218,135 |
|
|
(2)% |
OPERATING INCOME (LOSS) AND ADJUSTED OPERATING INCOME
(LOSS)
|
|
Operating Income(Loss) |
|
|
|
Adjusted OperatingIncome (Loss) |
|
|
|
|
Three Months EndedSeptember 30, |
|
|
|
Three Months EndedSeptember 30, |
|
|
|
|
2019 |
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
MSG Entertainment |
|
$ |
(2,552 |
) |
|
$ |
1,717 |
|
|
NM |
|
$ |
6,238 |
|
|
$ |
9,040 |
|
|
(31)% |
MSG
Sports |
|
(20,230 |
) |
|
(4,126 |
) |
|
NM |
|
(13,660 |
) |
|
588 |
|
|
NM |
Corporate and Other |
|
(60,862 |
) |
|
(43,367 |
) |
|
(40)% |
|
(33,682 |
) |
|
(19,521 |
) |
|
(73)% |
Purchase accounting
adjustments |
|
(5,674 |
) |
|
(5,009 |
) |
|
(13)% |
|
— |
|
|
— |
|
|
NM |
The Madison Square Garden Company Total |
|
$ |
(89,318 |
) |
|
$ |
(50,785 |
) |
|
(76)% |
|
$ |
(41,104 |
) |
|
$ |
(9,893 |
) |
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE
SHEETS(Dollars in
thousands)(Unaudited)
|
|
September 30, 2019 |
|
June 30, 2019 |
ASSETS |
|
|
|
|
Current Assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
952,186 |
|
|
$ |
1,086,372 |
|
Restricted cash |
|
31,349 |
|
|
31,529 |
|
Short-term investments |
|
104,597 |
|
|
108,416 |
|
Accounts receivable, net |
|
120,880 |
|
|
96,856 |
|
Net related party receivables |
|
1,528 |
|
|
1,483 |
|
Prepaid expenses |
|
82,134 |
|
|
45,150 |
|
Other current assets |
|
43,085 |
|
|
43,303 |
|
Total current assets |
|
1,335,759 |
|
|
1,413,109 |
|
Investments and loans to
nonconsolidated affiliates |
|
64,252 |
|
|
84,560 |
|
Property and equipment, net of
accumulated depreciation and amortization of $791,031 and $766,065
as of September 30, 2019 and June 30, 2019, respectively |
|
1,456,055 |
|
|
1,380,392 |
|
Right-of-use lease assets |
|
251,346 |
|
|
— |
|
Amortizable intangible assets,
net |
|
172,607 |
|
|
220,706 |
|
Indefinite-lived intangible
assets |
|
176,485 |
|
|
176,485 |
|
Goodwill |
|
392,513 |
|
|
392,513 |
|
Other assets |
|
112,617 |
|
|
95,786 |
|
Total assets |
|
$ |
3,961,634 |
|
|
$ |
3,763,551 |
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
(continued)(Dollars in
thousands)(Unaudited)
|
|
September 30, 2019 |
|
June 30, 2019 |
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts payable |
|
$ |
26,398 |
|
|
$ |
25,009 |
|
Net related party payables, current |
|
4,109 |
|
|
19,048 |
|
Current portion of long-term debt, net of deferred financing
costs |
|
4,792 |
|
|
6,042 |
|
Accrued liabilities: |
|
|
|
|
Employee related costs |
|
77,319 |
|
|
137,660 |
|
Other accrued liabilities |
|
214,599 |
|
|
211,403 |
|
Operating lease liabilities, current |
|
51,426 |
|
|
— |
|
Collections due to promoters |
|
65,104 |
|
|
67,212 |
|
Deferred revenue |
|
416,475 |
|
|
293,410 |
|
Total current liabilities |
|
860,222 |
|
|
759,784 |
|
Related party payables,
noncurrent |
|
172 |
|
|
172 |
|
Long-term debt, net of
deferred financing costs |
|
47,378 |
|
|
48,556 |
|
Operating lease liabilities,
noncurrent |
|
198,709 |
|
|
— |
|
Defined benefit and other
postretirement obligations |
|
33,920 |
|
|
41,318 |
|
Other employee related
costs |
|
66,862 |
|
|
62,015 |
|
Deferred tax liabilities,
net |
|
79,399 |
|
|
79,098 |
|
Other liabilities |
|
62,526 |
|
|
66,221 |
|
Total liabilities |
|
1,349,188 |
|
|
1,057,164 |
|
Commitments and contingencies |
|
|
|
|
Redeemable noncontrolling
interests |
|
67,464 |
|
|
67,627 |
|
The
Madison Square Garden Company Stockholders’ Equity: |
|
|
|
|
Class A Common stock, par value $0.01, 120,000 shares
authorized; 19,353 and 19,229 shares outstanding as of September
30, 2019 and June 30, 2019, respectively |
|
204 |
|
|
204 |
|
Class B Common stock, par value $0.01, 30,000 shares
authorized; 4,530 shares outstanding as of September 30, 2019 and
June 30, 2019 |
|
45 |
|
|
45 |
|
Preferred stock, par value $0.01, 15,000 shares authorized; none
outstanding as of September 30, 2019 and June 30, 2019 |
|
— |
|
|
— |
|
Additional paid-in capital |
|
2,819,449 |
|
|
2,845,961 |
|
Treasury stock, at cost, 1,094 and 1,219 shares as of September 30,
2019 and June 30, 2019, respectively |
|
(186,583 |
) |
|
(207,790 |
) |
Retained earnings (accumulated deficit) |
|
(50,978 |
) |
|
29,003 |
|
Accumulated other comprehensive loss |
|
(56,602 |
) |
|
(46,923 |
) |
Total The Madison Square Garden Company stockholders’ equity |
|
2,525,535 |
|
|
2,620,500 |
|
Nonredeemable noncontrolling
interests |
|
19,447 |
|
|
18,260 |
|
Total equity |
|
2,544,982 |
|
|
2,638,760 |
|
Total liabilities, redeemable noncontrolling interests and
equity |
|
$ |
3,961,634 |
|
|
$ |
3,763,551 |
|
|
|
|
|
|
|
|
|
|
SELECTED CASH FLOW
INFORMATION(Dollars in
thousands)(Unaudited)
|
|
Three Months Ended |
|
|
September 30, |
|
|
2019 |
|
2018 |
Net cash used in operating activities |
|
$ |
(34,234 |
) |
|
$ |
(44,672 |
) |
Net cash used in investing
activities |
|
(74,236 |
) |
|
(94,503 |
) |
Net cash used in financing
activities |
|
(23,946 |
) |
|
(16,632 |
) |
Effect of exchange rates on
cash, cash equivalents and restricted cash |
|
(1,950 |
) |
|
400 |
|
Net decrease in cash, cash
equivalents and restricted cash |
|
(134,366 |
) |
|
(155,407 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
1,117,901 |
|
|
1,256,620 |
|
Cash, cash equivalents and
restricted cash at end of period |
|
$ |
983,535 |
|
|
$ |
1,101,213 |
|
Grafico Azioni Madison Square Garden (NYSE:MSG)
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Da Mag 2024 a Giu 2024
Grafico Azioni Madison Square Garden (NYSE:MSG)
Storico
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