NEW YORK, May 10, 2024 /PRNewswire/ -- Sphere Entertainment Co. (NYSE: SPHR) ("Sphere Entertainment" or the "Company") today reported financial results for the fiscal third quarter ended March 31, 2024.
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, MSG Networks concluded its full regular season telecast schedules for its five professional sports teams. In addition, MSG Networks aired first round playoff telecasts of the New York Knicks, New York Rangers and New York Islanders, and is currently providing comprehensive pre/post-game coverage of the second round of the postseason for both the Knicks and Rangers across its linear and digital platforms.
For the fiscal 2024 third quarter, the Company reported revenues of $321.3 million, an increase of $159.3 million, as compared to the prior year quarter. In addition, the Company reported an operating loss of $40.4 million, an improvement of $61.5 million as compared to the prior year quarter, and adjusted operating income of $61.5 million, as compared to an adjusted operating loss of $18.7 million in the prior year quarter.(1)(2)
Executive Chairman and CEO James L. Dolan said, "With the second consecutive quarter of robust revenues and positive adjusted operating income at the Sphere segment, our early results continue to demonstrate Sphere's potential to disrupt the traditional venue model. We are encouraged by the demand for this new medium and remain confident in our future growth opportunities."
Segment Results for the Three and Nine Months Ended March 31, 2024 and 2023:
(In millions) | Three Months Ended | Nine Months Ended | ||||||||||||||
March 31, | Change | March 31, | Change | |||||||||||||
2024 | 2023 | $ | % | 2024 | 2023 | $ | % | |||||||||
Revenues: | ||||||||||||||||
Sphere | $ 170.4 | $ 0.6 | $ 169.7 | NM | $ 345.9 | $ 1.9 | $ 344.0 | NM | ||||||||
MSG Networks | 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) | $ (112.4) | $ 28.9 | 26 % | $ (375.9) | $ (274.4) | $ (101.5) | (37) % | ||||||||
MSG Networks | 43.1 | 10.4 | 32.7 | NM | $ 106.0 | 71.7 | 34.3 | 48 % | ||||||||
Total Operating Loss | $ (40.4) | $ (101.9) | $ 61.5 | 60 % | $ (269.9) | $ (202.7) | $ (67.2) | (33) % | ||||||||
Adjusted Operating Income (Loss): (1)(2) | ||||||||||||||||
Sphere | $ 12.9 | $ (77.0) | $ 90.0 | NM | $ (56.1) | $ (202.0) | $ 145.9 | 72 % | ||||||||
MSG Networks | 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 March 31, 2023, results from continuing operations include certain corporate overhead expenses that the Company did not incur in the period after the completion of the spin-off of Madison Square Garden Entertainment Corp. ("MSG Entertainment") and does not expect to incur in future periods, but which did not meet the criteria for inclusion in discontinued operations. The reported financial results of the Company for the three and nine months ended March 31, 2024 reflect the Company's results on a fully standalone basis. |
(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
www.sphereentertainmentco.com.
Non-GAAP Financial Measures
Contacts:
Ari Danes, CFA Investor Relations and Financial Communications (212) 465-6072 | Justin Blaber Financial Communications (212) 465-6109 |
Sarah Rothschild Investor Relations (212) 631-5345 |
Conference Call Information:
The conference call will be Webcast live today at 10:00 a.m. ET at investor.sphereentertainmentco.com
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 May 17, 2024
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Three Months Ended | Nine Months Ended | |||||||
March 31, | March 31, | |||||||
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 Sphere Entertainment Co.'s stockholders | $ (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 | |||||||
March 31, | March 31, | |||||||
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 March 31, 2024 | ||||||
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 March 31, 2023 | ||||||
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 March 31, 2024 | ||||||
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 March 31, 2023 | ||||||
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 | ||||
March 31, | June 30, | |||
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 | ||
Goodwill | 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, $0.01 par value per share, 120,000 shares authorized; 28,461 and 27,812 shares issued and outstanding as of March 31, 2024 and June 30, 2023, respectively. |
(2) | Class B Common Stock, $0.01 par value per share, 30,000 shares authorized; 6,867 shares issued and outstanding as of March 31, 2024 and June 30, 2023. |
SELECTED CASH FLOW INFORMATION | ||||
Nine Months Ended | ||||
March 31, | ||||
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 |
SOURCE Sphere Entertainment Co.
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