Sphere Entertainment Co. Reports Fiscal 2023 Third Quarter Results
Spin-off of Traditional Live Entertainment Business Completed in April
Sale of Majority Interest in Tao Group Hospitality Completed Earlier this Month
Sphere in
On April 20, 2023, the Company completed the spin-off of its traditional live entertainment business. As a result of the timing of the spin-off, the Company’s fiscal 2023 third quarter consolidated results include the financial results of the traditional live entertainment business.
In addition, on May 3, 2023, the Company completed the sale of its
For the fiscal 2023 third quarter, the Company reported revenues of
Executive Chairman and CEO James L. Dolan said, “With the completion of the spin-off of our traditional live entertainment business and the sale of our interest in Tao Group Hospitality, our Company has enhanced flexibility to execute its business strategy. As we approach the opening of Sphere in
Segment Results for the Three and Nine Months Ended March 31, 2023 and 2022: |
||||||||||||||||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||||
|
|
March 31, |
|
Change |
|
March 31, |
|
Change |
||||||||||||||||||||||
$ millions |
|
2023 |
|
2022 |
|
$ |
|
% |
|
2023 |
|
2022 |
|
$ |
|
% |
||||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Entertainment |
|
$ |
201.9 |
|
|
$ |
194.6 |
|
|
$ |
7.3 |
|
|
4 |
% |
|
$ |
705.5 |
|
|
$ |
476.4 |
|
|
$ |
229.0 |
|
|
48 |
% |
MSG Networks |
|
|
161.4 |
|
|
|
167.6 |
|
|
|
(6.1 |
) |
|
(4 |
)% |
|
|
442.8 |
|
|
|
469.0 |
|
|
|
(26.2 |
) |
|
(6 |
)% |
Other(2) |
|
|
— |
|
|
|
(9.6 |
) |
|
|
9.6 |
|
|
100 |
% |
|
|
(8.8 |
) |
|
|
(17.0 |
) |
|
|
8.2 |
|
|
48 |
% |
Total Revenues |
|
$ |
363.3 |
|
|
$ |
352.5 |
|
|
$ |
10.8 |
|
|
3 |
% |
|
$ |
1,139.5 |
|
|
$ |
928.4 |
|
|
$ |
211.1 |
|
|
23 |
% |
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Entertainment |
|
$ |
(81.1 |
) |
|
$ |
(44.8 |
) |
|
$ |
(36.3 |
) |
|
(81 |
)% |
|
$ |
(119.9 |
) |
|
$ |
(172.8 |
) |
|
$ |
52.9 |
|
|
31 |
% |
MSG Networks |
|
|
10.4 |
|
|
|
45.9 |
|
|
|
(35.5 |
) |
|
(77 |
)% |
|
|
62.9 |
|
|
|
104.3 |
|
|
|
(41.5 |
) |
|
(40 |
)% |
Other(2) |
|
|
0.4 |
|
|
|
(0.3 |
) |
|
|
0.7 |
|
|
NM |
|
|
|
0.7 |
|
|
|
(0.9 |
) |
|
|
1.6 |
|
|
NM |
|
Total Operating Income (Loss) |
|
$ |
(70.3 |
) |
|
$ |
0.9 |
|
|
$ |
(71.1 |
) |
|
NM |
|
|
$ |
(56.4 |
) |
|
$ |
(69.4 |
) |
|
$ |
13.0 |
|
|
19 |
% |
Adjusted Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Entertainment |
|
$ |
(39.3 |
) |
|
$ |
(12.3 |
) |
|
$ |
(27.0 |
) |
|
NM |
|
|
$ |
(20.7 |
) |
|
$ |
(71.7 |
) |
|
$ |
51.1 |
|
|
71 |
% |
MSG Networks |
|
|
58.3 |
|
|
|
50.8 |
|
|
|
7.5 |
|
|
15 |
% |
|
|
130.5 |
|
|
|
150.5 |
|
|
|
(19.9 |
) |
|
(13 |
)% |
Other(2) |
|
|
0.4 |
|
|
|
(0.1 |
) |
|
|
0.5 |
|
|
NM |
|
|
|
1.3 |
|
|
|
(0.4 |
) |
|
|
1.7 |
|
|
NM |
|
Total Adjusted Operating Income |
|
$ |
19.4 |
|
|
$ |
38.5 |
|
|
$ |
(19.0 |
) |
|
(49 |
)% |
|
$ |
111.2 |
|
|
$ |
78.3 |
|
|
$ |
32.8 |
|
|
42 |
% |
Note: |
Amounts may not foot due to rounding |
|
(1) |
See page 4 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures. |
|
(2) |
Includes inter-segment eliminations and, for operating income (loss), purchase accounting adjustments. |
|
Entertainment
For the fiscal 2023 third quarter, the Entertainment segment generated revenues of
Fiscal 2023 third quarter direct operating expenses of
Fiscal 2023 third quarter selling, general and administrative expenses of
Fiscal 2023 third quarter operating loss of
MSG Networks
For the fiscal 2023 third quarter, the MSG Networks segment generated revenues of
Fiscal 2023 third quarter direct operating expenses of
Fiscal 2023 third quarter selling, general and administrative expenses of
Fiscal 2023 third quarter operating income of
Other Matters
The Company continues to make significant progress in its final phases of construction of Sphere in
As construction nears completion of Sphere in
As of May 9, 2023, the Company had over
About Sphere Entertainment Co.
Sphere Entertainment Co. is a premier live entertainment and media company. The Company includes Sphere, a next-generation entertainment medium powered by cutting-edge technologies to redefine the future of entertainment. The first Sphere venue is currently under construction in
Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) before (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) amortization for capitalized cloud computing arrangement costs, (iv) share-based compensation expense or benefit, (v) restructuring charges or credits, (vi) merger and acquisition-related costs, including litigation expenses, (vii) gains or losses on sales or dispositions of businesses and associated settlements, (viii) the impact of purchase accounting adjustments related to business acquisitions, and (ix) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan (which was established in November 2021). 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 and acquisition-related costs 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 Company’s Executive Deferred Compensation Plan (which was established in November 2021), provides investors with a clearer picture of the Company’s operating performance given that, in accordance with
We believe adjusted operating income (loss) is an appropriate measure 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 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 6 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
March 31, |
|
March 31, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Revenues |
|
$ |
363,297 |
|
|
$ |
352,534 |
|
|
$ |
1,139,492 |
|
|
$ |
928,442 |
|
Direct operating expenses |
|
|
(210,141 |
) |
|
|
(197,967 |
) |
|
|
(658,935 |
) |
|
|
(536,076 |
) |
Selling, general and administrative expenses |
|
|
(179,870 |
) |
|
|
(118,788 |
) |
|
|
(442,054 |
) |
|
|
(384,280 |
) |
Depreciation and amortization |
|
|
(22,999 |
) |
|
|
(20,463 |
) |
|
|
(68,090 |
) |
|
|
(63,050 |
) |
Impairment and other (losses) gains, net |
|
|
(51 |
) |
|
|
245 |
|
|
|
7,361 |
|
|
|
245 |
|
Restructuring charges |
|
|
(20,498 |
) |
|
|
(14,690 |
) |
|
|
(34,180 |
) |
|
|
(14,690 |
) |
Operating (loss) income |
|
|
(70,262 |
) |
|
|
871 |
|
|
|
(56,406 |
) |
|
|
(69,409 |
) |
Interest income |
|
|
2,640 |
|
|
|
767 |
|
|
|
10,161 |
|
|
|
2,311 |
|
Interest expense |
|
|
— |
|
|
|
(5,528 |
) |
|
|
— |
|
|
|
(22,051 |
) |
Other income (expense), net |
|
|
4,994 |
|
|
|
(10,052 |
) |
|
|
1,939 |
|
|
|
(32,304 |
) |
Loss from continuing operations before income taxes |
|
|
(62,628 |
) |
|
|
(13,942 |
) |
|
|
(44,306 |
) |
|
|
(121,453 |
) |
Income tax benefit (expense) |
|
|
8,649 |
|
|
|
(6,349 |
) |
|
|
4,717 |
|
|
|
10,112 |
|
Loss from continuing operations |
|
|
(53,979 |
) |
|
|
(20,291 |
) |
|
|
(39,589 |
) |
|
|
(111,341 |
) |
(Loss) income from discontinued operations, net of taxes |
|
|
(4,576 |
) |
|
|
985 |
|
|
|
7,548 |
|
|
|
20,399 |
|
Net loss |
|
|
(58,555 |
) |
|
|
(19,306 |
) |
|
|
(32,041 |
) |
|
|
(90,942 |
) |
Less: Net loss attributable to nonredeemable noncontrolling interests from continuing operations |
|
|
— |
|
|
|
(212 |
) |
|
|
(554 |
) |
|
|
(579 |
) |
Less: Net loss attributable to nonredeemable noncontrolling interests from discontinued operations |
|
|
(216 |
) |
|
|
(1,161 |
) |
|
|
(128 |
) |
|
|
(323 |
) |
Less: Net (loss) income attributable to redeemable noncontrolling interests from discontinued operations |
|
|
(1,492 |
) |
|
|
(442 |
) |
|
|
2,661 |
|
|
|
4,412 |
|
Net loss attributable to Sphere Entertainment Co.’s stockholders |
|
$ |
(56,847 |
) |
|
$ |
(17,491 |
) |
|
$ |
(34,020 |
) |
|
$ |
(94,452 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted (loss) earnings per common share |
|
|
|
|
|
|
|
|
||||||||
Continuing operations |
|
$ |
(1.55 |
) |
|
$ |
(0.59 |
) |
|
$ |
(1.13 |
) |
|
$ |
(3.24 |
) |
Discontinued operations |
|
$ |
(0.09 |
) |
|
$ |
0.08 |
|
|
$ |
0.15 |
|
|
$ |
0.48 |
|
Basic and diluted loss per common share attributable to Sphere Entertainment Co.’s stockholders |
|
$ |
(1.64 |
) |
|
$ |
(0.51 |
) |
|
$ |
(0.98 |
) |
|
$ |
(2.76 |
) |
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted weighted-average number of common shares outstanding |
|
|
34,727 |
|
|
|
34,320 |
|
|
|
34,604 |
|
|
|
34,230 |
|
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)
(Unaudited)
The following is a description of the adjustments to operating income (loss) 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.
- 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, Sphere Entertainment Non-Employee Director Plan and MSG Networks 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.
- Impairment and other (gains) losses, 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.
- Restructuring charges. This adjustment eliminates costs related to termination benefits provided to employees as part of the Company's full-time workforce reductions.
- Merger and acquisition related costs. This adjustment eliminates costs related to mergers and acquisitions, including litigation expenses, in all periods.
- Amortization for capitalized cloud computing arrangement costs. This adjustment eliminates amortization of capitalized cloud computing arrangement costs.
- 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.
- Remeasurement of deferred compensation 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, |
||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||
Operating (loss) income |
|
$ |
(70,262 |
) |
|
$ |
871 |
|
|
$ |
(56,406 |
) |
|
$ |
(69,409 |
) |
Non-cash portion of arena license fees from MSG Sports(1) |
|
|
(12,149 |
) |
|
|
(12,073 |
) |
|
|
(25,078 |
) |
|
|
(23,962 |
) |
Share-based compensation |
|
|
10,899 |
|
|
|
12,157 |
|
|
|
39,846 |
|
|
|
51,987 |
|
Depreciation and amortization(2) |
|
|
22,999 |
|
|
|
20,463 |
|
|
|
68,090 |
|
|
|
63,050 |
|
Restructuring charges |
|
|
20,498 |
|
|
|
14,690 |
|
|
|
34,180 |
|
|
|
14,690 |
|
Impairment and other (losses) gains, net |
|
|
51 |
|
|
|
(245 |
) |
|
|
(7,361 |
) |
|
|
(245 |
) |
Merger and acquisition related costs, net of insurance recovery |
|
|
47,041 |
|
|
|
2,513 |
|
|
|
57,179 |
|
|
|
42,036 |
|
Amortization for capitalized cloud computing costs |
|
|
228 |
|
|
|
81 |
|
|
|
584 |
|
|
|
176 |
|
Remeasurement of deferred compensation plan liabilities |
|
|
126 |
|
|
$ |
— |
|
|
|
132 |
|
|
|
— |
|
Adjusted operating income |
|
$ |
19,431 |
|
|
$ |
38,457 |
|
|
$ |
111,166 |
|
|
$ |
78,323 |
|
_________________ |
|
(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) |
(2) |
Includes depreciation and amortization related to purchase accounting adjustments. |
SEGMENT RESULTS (Dollars in thousands) (Unaudited) |
||||||||||||||||
|
|
Three Months Ended March 31, 2023 |
||||||||||||||
|
|
Entertainment |
|
MSG Networks |
|
Other(1) |
|
Total |
||||||||
Revenues |
|
$ |
201,861 |
|
|
$ |
161,436 |
|
|
$ |
— |
|
|
$ |
363,297 |
|
Direct operating expenses |
|
|
(120,835 |
) |
|
|
(89,251 |
) |
|
|
(55 |
) |
|
|
(210,141 |
) |
Selling, general and administrative expenses |
|
|
(120,307 |
) |
|
|
(60,052 |
) |
|
|
489 |
|
|
|
(179,870 |
) |
Depreciation and amortization |
|
|
(21,310 |
) |
|
|
(1,689 |
) |
|
|
— |
|
|
|
(22,999 |
) |
Impairment and other losses, net |
|
|
(51 |
) |
|
|
— |
|
|
|
— |
|
|
|
(51 |
) |
Restructuring charges |
|
|
(20,498 |
) |
|
|
— |
|
|
|
— |
|
|
|
(20,498 |
) |
Operating (loss) income |
|
$ |
(81,140 |
) |
|
$ |
10,444 |
|
|
$ |
434 |
|
|
$ |
(70,262 |
) |
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
|
|
||||||||
Non-cash portion of arena license fees from MSG Sports(2) |
|
|
(12,149 |
) |
|
|
— |
|
|
|
— |
|
|
|
(12,149 |
) |
Share-based compensation |
|
|
10,259 |
|
|
|
640 |
|
|
|
— |
|
|
|
10,899 |
|
Depreciation and amortization |
|
|
21,310 |
|
|
|
1,689 |
|
|
|
— |
|
|
|
22,999 |
|
Restructuring charges |
|
|
20,498 |
|
|
|
— |
|
|
|
— |
|
|
|
20,498 |
|
Impairment and other losses, net |
|
|
51 |
|
|
|
— |
|
|
|
— |
|
|
|
51 |
|
Merger and acquisition related costs, net of insurance recovery |
|
|
1,528 |
|
|
|
45,513 |
|
|
|
— |
|
|
|
47,041 |
|
Amortization for capitalized cloud computing costs |
|
|
185 |
|
|
|
43 |
|
|
|
— |
|
|
|
228 |
|
Remeasurement of deferred compensation plan liabilities |
|
|
126 |
|
|
|
— |
|
|
|
— |
|
|
|
126 |
|
Adjusted operating (loss) income |
|
$ |
(39,332 |
) |
|
$ |
58,329 |
|
|
$ |
434 |
|
|
$ |
19,431 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three Months Ended March 31, 2022 |
||||||||||||||
|
|
Entertainment |
|
MSG Networks |
|
Other(1) |
|
Total |
||||||||
Revenues |
|
$ |
194,585 |
|
|
$ |
167,569 |
|
|
$ |
(9,620 |
) |
|
$ |
352,534 |
|
Direct operating expenses |
|
|
(110,688 |
) |
|
|
(87,174 |
) |
|
|
(105 |
) |
|
|
(197,967 |
) |
Selling, general and administrative expenses |
|
|
(96,198 |
) |
|
|
(32,237 |
) |
|
|
9,647 |
|
|
|
(118,788 |
) |
Depreciation and amortization |
|
|
(18,522 |
) |
|
|
(1,764 |
) |
|
|
(177 |
) |
|
|
(20,463 |
) |
Impairment and other gains, net |
|
|
245 |
|
|
|
— |
|
|
|
— |
|
|
|
245 |
|
Restructuring charges |
|
|
(14,238 |
) |
|
|
(452 |
) |
|
|
— |
|
|
|
(14,690 |
) |
Operating (loss) income |
|
$ |
(44,816 |
) |
|
$ |
45,942 |
|
|
$ |
(255 |
) |
|
$ |
871 |
|
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
|
|
||||||||
Non-cash portion of arena license fees from MSG Sports(2) |
|
|
(12,073 |
) |
|
|
— |
|
|
|
— |
|
|
|
(12,073 |
) |
Share-based compensation |
|
|
10,399 |
|
|
|
1,758 |
|
|
|
— |
|
|
|
12,157 |
|
Depreciation and amortization |
|
|
18,522 |
|
|
|
1,764 |
|
|
|
177 |
|
|
|
20,463 |
|
Restructuring charges |
|
|
14,238 |
|
|
|
452 |
|
|
|
— |
|
|
|
14,690 |
|
Impairment and other gains, net |
|
|
(245 |
) |
|
|
— |
|
|
|
— |
|
|
|
(245 |
) |
Merger and acquisition related costs, net of insurance recovery |
|
|
1,647 |
|
|
|
866 |
|
|
|
— |
|
|
|
2,513 |
|
Amortization for capitalized cloud computing costs |
|
|
38 |
|
|
|
43 |
|
|
|
— |
|
|
|
81 |
|
Adjusted operating (loss) income |
|
$ |
(12,290 |
) |
|
$ |
50,825 |
|
|
$ |
(78 |
) |
|
$ |
38,457 |
|
|
|
Nine Months Ended March 31, 2023 |
||||||||||||||
|
|
Entertainment |
|
MSG Networks |
|
Other(1) |
|
Total |
||||||||
Revenues |
|
$ |
705,481 |
|
|
$ |
442,813 |
|
|
$ |
(8,802 |
) |
|
$ |
1,139,492 |
|
Direct operating expenses |
|
|
(403,642 |
) |
|
|
(255,071 |
) |
|
|
(222 |
) |
|
|
(658,935 |
) |
Selling, general and administrative expenses |
|
|
(336,421 |
) |
|
|
(115,951 |
) |
|
|
10,318 |
|
|
|
(442,054 |
) |
Depreciation and amortization |
|
|
(62,514 |
) |
|
|
(4,944 |
) |
|
|
(632 |
) |
|
|
(68,090 |
) |
Impairment and other gains, net |
|
|
7,361 |
|
|
|
— |
|
|
|
— |
|
|
|
7,361 |
|
Restructuring charges |
|
|
(30,192 |
) |
|
|
(3,988 |
) |
|
|
— |
|
|
|
(34,180 |
) |
Operating (loss) income |
|
$ |
(119,927 |
) |
|
$ |
62,859 |
|
|
$ |
662 |
|
|
$ |
(56,406 |
) |
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
|
|
||||||||
Non-cash portion of arena license fees from MSG Sports(2) |
|
|
(25,078 |
) |
|
|
— |
|
|
|
— |
|
|
|
(25,078 |
) |
Share-based compensation |
|
|
34,204 |
|
|
|
5,642 |
|
|
|
— |
|
|
|
39,846 |
|
Depreciation and amortization |
|
|
62,514 |
|
|
|
4,944 |
|
|
|
632 |
|
|
|
68,090 |
|
Restructuring charges |
|
|
30,192 |
|
|
|
3,988 |
|
|
|
— |
|
|
|
34,180 |
|
Impairment and other gains, net |
|
|
(7,361 |
) |
|
|
— |
|
|
|
— |
|
|
|
(7,361 |
) |
Merger and acquisition related costs, net of insurance recovery |
|
|
4,221 |
|
|
|
52,958 |
|
|
|
— |
|
|
|
57,179 |
|
Amortization for capitalized cloud computing costs |
|
|
453 |
|
|
|
131 |
|
|
|
— |
|
|
|
584 |
|
Remeasurement of deferred compensation plan liabilities |
|
|
132 |
|
|
|
— |
|
|
|
— |
|
|
|
132 |
|
Adjusted operating (loss) income |
|
$ |
(20,650 |
) |
|
$ |
130,522 |
|
|
$ |
1,294 |
|
|
$ |
111,166 |
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Nine Months Ended March 31, 2022 |
||||||||||||||
|
|
Entertainment |
|
MSG Networks |
|
Other(1) |
|
Total |
||||||||
Revenues |
|
$ |
476,434 |
|
|
$ |
469,023 |
|
|
$ |
(17,015 |
) |
|
$ |
928,442 |
|
Direct operating expenses |
|
|
(294,333 |
) |
|
|
(241,521 |
) |
|
|
(222 |
) |
|
|
(536,076 |
) |
Selling, general and administrative expenses |
|
|
(283,715 |
) |
|
|
(117,404 |
) |
|
|
16,839 |
|
|
|
(384,280 |
) |
Depreciation and amortization |
|
|
(57,202 |
) |
|
|
(5,317 |
) |
|
|
(531 |
) |
|
|
(63,050 |
) |
Impairment and other gains, net |
|
|
245 |
|
|
|
— |
|
|
|
— |
|
|
|
245 |
|
Restructuring charges |
|
|
(14,238 |
) |
|
|
(452 |
) |
|
|
— |
|
|
|
(14,690 |
) |
Operating (loss) income |
|
$ |
(172,809 |
) |
|
$ |
104,329 |
|
|
$ |
(929 |
) |
|
$ |
(69,409 |
) |
Reconciliation to adjusted operating (loss) income: |
|
|
|
|
|
|
|
|
||||||||
Non-cash portion of arena license fees from MSG Sports(2) |
|
|
(23,962 |
) |
|
|
— |
|
|
|
— |
|
|
|
(23,962 |
) |
Share-based compensation |
|
|
36,697 |
|
|
|
15,290 |
|
|
|
— |
|
|
|
51,987 |
|
Depreciation and amortization |
|
|
57,202 |
|
|
|
5,317 |
|
|
|
531 |
|
|
|
63,050 |
|
Restructuring charges |
|
|
14,238 |
|
|
|
452 |
|
|
|
— |
|
|
|
14,690 |
|
Impairment and other gains, net |
|
|
(245 |
) |
|
|
— |
|
|
|
— |
|
|
|
(245 |
) |
Merger and acquisition related costs, net of insurance recovery |
|
|
17,095 |
|
|
|
24,941 |
|
|
|
— |
|
|
|
42,036 |
|
Amortization for capitalized cloud computing costs |
|
|
45 |
|
|
|
131 |
|
|
|
— |
|
|
|
176 |
|
Adjusted operating (loss) income |
|
$ |
(71,739 |
) |
|
$ |
150,460 |
|
|
$ |
(398 |
) |
|
$ |
78,323 |
|
_________________ |
|
(1) |
Includes inter-segment eliminations and, for operating (loss) income, purchase accounting adjustments. |
(2) |
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) |
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) |
||||||||
|
March 31,
|
June 30,
|
||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash, cash equivalents and restricted cash |
$ |
327,245 |
|
$ |
822,885 |
|
||
Accounts receivable, net |
|
214,443 |
|
|
188,012 |
|
||
Prepaid expenses and other current assets |
|
145,838 |
|
|
135,671 |
|
||
Current assets (Held for Sale) |
|
502,567 |
|
|
72,088 |
|
||
Total current assets |
|
1,190,093 |
|
|
1,218,656 |
|
||
Non-Current Assets: |
||||||||
Property and equipment, net |
|
3,690,234 |
|
|
2,853,656 |
|
||
Right-of-use lease assets |
|
339,601 |
|
|
337,305 |
|
||
Goodwill |
|
498,817 |
|
|
498,817 |
|
||
Intangible assets, net |
|
82,490 |
|
|
86,464 |
|
||
Other non-current assets |
|
248,246 |
|
|
173,298 |
|
||
Non-current assets (Held for Sale) |
|
— |
|
|
400,430 |
|
||
Total assets |
$ |
6,049,481 |
|
$ |
5,568,626 |
|
||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
||||||||
Current Liabilities: |
|
|
||||||
Accounts payable, accrued and other current liabilities |
$ |
699,769 |
|
$ |
529,083 |
|
||
Current portion of long-term debt |
|
98,750 |
|
|
74,762 |
|
||
Operating lease liabilities, current |
|
46,086 |
|
|
45,559 |
|
||
Deferred revenue |
|
265,611 |
|
|
208,895 |
|
||
Current liabilities (Held for Sale) |
|
289,817 |
|
|
102,801 |
|
||
Total current liabilities |
|
1,400,033 |
|
|
961,100 |
|
||
Non-Current Liabilities: |
|
|
||||||
Long-term debt, net of deferred financing costs |
|
1,781,748 |
|
|
1,584,446 |
|
||
Operating lease liabilities, non-current |
|
342,629 |
|
|
338,534 |
|
||
Deferred tax liabilities, net |
|
209,742 |
|
|
209,907 |
|
||
Other non-current liabilities |
|
142,531 |
|
|
144,103 |
|
||
Non-current liabilities (Held for Sale) |
|
— |
|
|
170,960 |
|
||
Total liabilities |
|
3,876,683 |
|
|
3,409,050 |
|
||
Redeemable noncontrolling interests |
|
138,812 |
|
|
184,192 |
|
||
Equity: |
|
|
||||||
Class A Common Stock(1) |
|
277 |
|
|
273 |
|
||
Class B Common Stock(2) |
|
69 |
|
|
69 |
|
||
Additional paid-in capital |
|
2,391,409 |
|
|
2,301,970 |
|
||
Accumulated deficit |
|
(324,756 |
) |
|
(290,736 |
) |
||
Accumulated other comprehensive loss |
|
(46,439 |
) |
|
(48,355 |
) |
||
Total Sphere Entertainment Co. stockholders’ equity |
|
2,020,560 |
|
|
1,963,221 |
|
||
Nonredeemable noncontrolling interests |
|
13,426 |
|
|
12,163 |
|
||
Total equity |
|
2,033,986 |
|
|
1,975,384 |
|
||
Total liabilities, redeemable noncontrolling interests and equity |
$ |
6,049,481 |
|
$ |
5,568,626 |
|
||
_________________ |
|
(1) |
Class A Common stock, par value |
(2) |
Class B Common stock, par value |
SELECTED CASH FLOW INFORMATION (Dollars in thousands) (Unaudited) |
||||||||
|
|
Nine Months Ended |
||||||
|
|
March 31, |
||||||
|
|
2023 |
|
2022 |
||||
Net cash provided by operating activities |
|
$ |
137,824 |
|
|
$ |
106,201 |
|
Net cash used in investing activities |
|
|
(825,484 |
) |
|
|
(547,926 |
) |
Net cash provided by (used in) financing activities |
|
|
200,485 |
|
|
|
(77,520 |
) |
Effect of exchange rates on cash, cash equivalents and restricted cash |
|
|
(729 |
) |
|
|
22 |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(487,904 |
) |
|
|
(519,223 |
) |
Cash, cash equivalents and restricted cash from continuing operations, beginning of period |
|
|
822,885 |
|
|
|
1,508,174 |
|
Cash, cash equivalents and restricted cash from discontinued operations, beginning of period |
|
|
23,125 |
|
|
|
31,802 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
846,010 |
|
|
|
1,539,976 |
|
Cash, cash equivalents and restricted cash from continuing operations, end of period |
|
|
327,245 |
|
|
|
987,922 |
|
Cash, cash equivalents and restricted cash from discontinued operations, end of period |
|
|
30,861 |
|
|
|
32,831 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
358,106 |
|
|
$ |
1,020,753 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20230510005360/en/
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
Source: Sphere Entertainment Co.
