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Madison Square Garden Entertainment Corp. (MSGE) SEC Filing 8-K Material Event for the period ending Wednesday, February 9, 2022

Madison Square Garden Entertainment Corp

CIK: 1795250 Ticker: MSGE

Exhibit 99.1

 

LOGO

MADISON SQUARE GARDEN ENTERTAINMENT CORP. REPORTS

FISCAL 2022 SECOND QUARTER RESULTS

FY2022 Second Quarter Results Reflect Continued Ramp-up of Live Events at Company’s Performance Venues

Tao Group Hospitality’s Results Reflect Ongoing Robust Demand in Las Vegas and New York Markets

NEW YORK, N.Y., February 9, 2022—Madison Square Garden Entertainment Corp. (NYSE: MSGE) (“MSG Entertainment”) today reported financial results for the fiscal second quarter ended December 31, 2021. While the Company completed the acquisition of MSG Networks on July 9, 2021, MSG Networks’ results are included on a combined basis with the Company for all periods presented.

During the fiscal 2022 second quarter, events at the Company’s performance venues continued to ramp up, highlighted by a busy schedule of concerts, New York Knicks (“Knicks”) and New York Rangers (“Rangers”) home games at The Garden, and the return of the Christmas Spectacular to Radio City Music Hall. In addition, MSG Networks commenced full regular season telecast schedules for its five professional teams across the NBA and NHL, while Tao Group Hospitality continued to benefit from strong consumer demand led by the Las Vegas and New York markets. The emergence of the Omicron variant impacted some of the Company’s operating momentum late in the quarter, most notably leading to the Christmas Spectacular production concluding its 2021 holiday season run earlier than anticipated, as well as the postponement or cancellation of a number of other events.

For the fiscal 2022 second quarter, the Company reported revenues of $516.4 million, an increase of $347.7 million as compared with the prior year quarter. In addition, the Company reported operating income of $35.4 million and adjusted operating income of $76.1 million for the fiscal 2022 second quarter, as compared to an operating loss of $46.8 million and adjusted operating income of $9.8 million in the prior year quarter.(1)

Executive Chairman and CEO James L. Dolan said, “The fiscal second quarter reflected the ramp up of live events at our venues, as well as continued activity in marketing partnerships and strong performance at Tao Group Hospitality. Looking ahead, we believe the positive momentum being generated across our business and the ongoing construction progress of MSG Sphere in Las Vegas position us well to create long-term shareholder value.”

Segment Results for the Three and Six Months Ended December 31, 2021 and 2020:

 

     Three Months Ended     Six Months Ended
     December 31,     Change     December 31,     Change
$ millions    2021     2020     $     %     2021     2020     $    

%

Revenues

                

Entertainment

   $     247.6     $ 12.7     $     234.9       NM     $     281.8     $ 20.2     $ 261.6     NM

MSG Networks

     160.0           146.2       13.7       9%       301.5           303.6       (2.1   (1)%

Tao Group Hospitality

     117.1       10.5       106.6       NM       236.6       17.7       218.8     NM

Other(2)

     (8.2     (0.6     (7.6     NM       (8.9     (2.2     (6.7   NM
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

Total Revenues

   $ 516.4     $ 168.8     $ 347.7       NM     $ 810.9     $ 339.3     $     471.7     139%

Operating Income (Loss)

                

Entertainment

   $ (10.3   $ (97.1   $ 86.8       89%     $ (125.0   $ (207.7   $ 82.8     40%

MSG Networks

     35.1       65.7       (30.6     (47)%       58.4       133.6       (75.3   (56)%

Tao Group Hospitality

     16.7       (11.2     27.9       NM       26.8       (22.4     49.2     NM

Other(2)

     (6.2     (4.3     (2.0     (46)%       (8.2     (9.0     0.7     8%
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

Total Operating Income (Loss)

   $ 35.4     $ (46.8   $ 82.2       NM     $ (48.0   $ (105.5   $ 57.5     55%

Adjusted Operating Income (Loss)

                

Entertainment

   $ 15.0     $ (55.3   $ 70.3       NM     $ (56.4   $ (113.5   $ 57.1     50%

MSG Networks

     43.8       73.8       (29.9     (41 )%      99.6       148.2       (48.5   (33)%

Tao Group Hospitality

     17.5       (8.4     25.9       NM       43.7       (17.5     61.2     NM

Other(2)

     (0.2     (0.3     0.1       26%       (0.5     (0.5     —       —  %
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

Total Adjusted Operating Income

   $ 76.1     $ 9.8     $ 66.3       NM     $ 86.4     $ 16.6     $ 69.8     NM

 

Note:

Does 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.

 

1


Entertainment

For the fiscal 2022 second quarter, the Entertainment segment generated revenues of $247.6 million, an increase of $234.9 million as compared with the prior year period. Event-related revenues increased $80.0 million, suite license fee revenues increased $13.1 million and venue-related sponsorship and signage increased $4.6 million, all primarily due to the return of live events to the Company’s performance venues during the current year quarter, as compared to no events in the prior year period as a result of the COVID-19 pandemic. The current year quarter also included an increase in revenues of $71.6 million ($26.3 million of which was due to higher arena license fees) related to the Company’s Arena License Agreements with Madison Square Garden Sports Corp. (“MSG Sports”) due to the Knicks and Rangers playing a combined 35 pre/regular season home games at The Garden without any capacity restrictions in the current period as compared to four Knicks home games without fans in attendance due to government-mandated assembly restrictions in the prior year period. In addition, revenues from the Christmas Spectacular production increased $55.3 million compared to the prior year period in which the entire 2020 production was canceled as a result of the COVID-19 pandemic.

Fiscal 2022 second quarter direct operating expenses of $147.3 million increased $123.9 million, as compared with the prior year quarter. Event-related expenses increased $41.8 million primarily due to the return of live events to the Company’s performance venues during the current year quarter, as compared to no events in the prior year period due to the COVID-19 pandemic. Direct operating expenses associated with the Christmas Spectacular increased $38.9 million compared to the prior year period in which the 2020 production was canceled as a result of the COVID-19 pandemic. In addition, direct operating expenses associated with revenue or profit sharing under the Arena License Agreements with MSG Sports increased $32.7 million due to the Knicks and Rangers playing a combined 35 pre/regular season home games at The Garden without any capacity restrictions in the current year period as compared to four Knicks home games with no fans in attendance in the prior year period.

Fiscal 2022 second quarter selling, general and administrative expenses of $91.5 million increased $25.8 million, as compared with the prior year quarter. This increase primarily reflects higher employee compensation and related benefits of $14.1 million (which is net of a decrease in share-based compensation of $6.2 million), as well as higher professional fees of $7.8 million, which includes costs for MSG Sphere development.

Fiscal 2022 second quarter operating loss improved by $86.8 million to a loss of $10.3 million and adjusted operating income improved by $70.3 million to $15.0 million, both as compared with the prior year quarter. The improvements in operating loss and adjusted operating income were primarily due to the increase in revenue, offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.

MSG Networks

For the fiscal 2022 second quarter, the MSG Networks segment generated total revenues of $160.0 million, an increase of $13.7 million as compared with the prior year period. Affiliation fee revenue decreased $16.1 million, primarily due to the impact of the non-renewal of MSG Networks’ carriage agreement with Comcast as of October 1, 2021 and a decrease in subscribers of approximately 7% (excluding the impact of the non-renewal with Comcast). These decreases were partially offset by the impact of higher affiliation rates and a decrease in net unfavorable affiliate adjustments of $3.1 million.

Fiscal 2022 second quarter advertising revenue increased $28.3 million, as compared with the prior year period, primarily reflecting a greater number of NBA and NHL telecasts in the current year period as compared with the prior year period. As a result of the delayed start to the 2020-21 NBA and NHL seasons due to the COVID-19 pandemic, MSG Networks telecast nine NBA games and no NHL games in the prior year period, as compared with a regular NBA and NHL telecast schedule in the current year period.

Fiscal 2022 second quarter direct operating expenses of $85.9 million increased $28.9 million, as compared with the prior year quarter, primarily due to higher rights fees expense of $20.4 million and, to a lesser extent, an increase in other programming and production-related costs of $8.3 million. The increase in rights fees expense was primarily due to the impact of lower media rights fees in the prior year period as a result of rights fee reductions related to the shortened 2020-21 NHL season, the impact of the delayed start of the 2020-21 NBA and NHL regular seasons in the prior year period and annual contractual rate increases.    

Fiscal 2022 second quarter selling, general and administrative expenses of $37.2 million increased $15.5 million, as compared with the prior year quarter. The increase primarily reflects higher advertising and marketing expenses of approximately $7.0 million and higher advertising sales commissions of approximately $6.4 million.

Fiscal 2022 second quarter operating income of $35.1 million decreased $30.6 million and adjusted operating income of $43.8 million decreased $29.9 million, both as compared with the prior year quarter. The decreases in operating income and adjusted operating income were primarily due to the increases in direct operating expenses and selling, general and administrative expenses, partially offset by the increase in revenue.

 

2


Tao Group Hospitality

For the fiscal 2022 second quarter, the Tao Group Hospitality segment generated revenues of $117.1 million as compared with $10.5 million in the prior year period. Tao Group Hospitality acquired Hakkasan Group on April 27, 2021 and, as a result, revenues in the current year quarter reflect $51.6 million from Hakkasan Group. The portfolio of venues operated by Tao Group Hospitality prior to the acquisition of Hakkasan Group (which the Company refers to as the “legacy venues”) generated $65.5 million in revenues in the current year quarter as compared with $10.5 million in the prior year period, which primarily reflects the easing of government-mandated capacity restrictions.

Fiscal 2022 second quarter direct operating expenses of $60.9 million increased $49.9 million, as compared with the prior year quarter. The current year quarter included $24.6 million in direct operating expenses from Hakkasan Group. In addition, employee compensation and related benefits at legacy venues increased $11.6 million, primarily reflecting a staffing increase following the easing of government mandated capacity restrictions, while the cost of food, beverage and venue entertainment at legacy venues increased $10.9 million. Rent expense increased $2.6 million, primarily due to rent concessions in the prior year period resulting from the COVID-19 pandemic.

Fiscal 2022 second quarter selling, general and administrative expenses of $40.7 million increased $31.6 million as compared with the prior year quarter. This primarily reflects $16.0 million in selling, general and administrative expenses from Hakkasan Group; a $6.5 million increase in employee compensation and related benefits; a $4.5 million increase in professional fees, restaurant expenses and supplies, utilities, general liability insurance, pre-opening expenses and repairs and maintenance; and a $2.4 million increase in marketing.

Fiscal 2022 second quarter operating income improved by $27.9 million to $16.7 million while adjusted operating income improved by $25.9 million to $17.5 million, both as compared with the prior year quarter. The improvements in operating income and adjusted operating income primarily reflect the increase in revenues, partially offset by an increase in direct operating expenses and, to a lesser extent, an increase in selling, general and administrative expenses.

About Madison Square Garden Entertainment Corp.

Madison Square Garden Entertainment Corp. (MSG Entertainment) is a leader in live entertainment. The Company presents or hosts a broad array of events in its diverse collection of venues: New York’s Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; and The Chicago Theatre. MSG Entertainment is also building a new state-of-the-art venue in Las Vegas, MSG Sphere at The Venetian. In addition, the Company features the original production – the Christmas Spectacular Starring the Radio City Rockettes – and through Boston Calling Events, produces the Boston Calling Music Festival. The Company’s two regional sports and entertainment networks, MSG Network and MSG+, deliver a wide range of live sports content and other programming. Also under the MSG Entertainment umbrella is Tao Group Hospitality, with entertainment dining and nightlife brands including: Tao, Marquee, Lavo, Beauty & Essex, Cathédrale, Hakkasan and Omnia. More information is available at www.msgentertainment.com.

 

3


Non-GAAP Financial Measures

We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) before (i) adjustments to remove 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, and (viii) the impact of purchase accounting adjustments related to business acquisitions. 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 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 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.

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 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 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 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 industries in which it operates, the impact of the COVID-19 pandemic 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:

 

Mark Costiglio

Senior Vice President, Communications

Madison Square Garden Entertainment Corp.

(212) 465-4402

  

Ari Danes, CFA

Senior Vice President, Investor Relations & Treasury

Madison Square Garden Entertainment Corp.

(212) 465-6072

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 833-420-0364 / Conference ID Number 9077917

Conference call replay number is 855-859-2056

/ Conference ID Number 9077917 until February 16, 2022

 

4


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended   Six Months Ended
     December 31,   December 31,
     2021   2020   2021   2020

Revenues

    $     516,439      $     168,752      $     810,949      $     339,298  

Direct operating expenses

     296,258       92,497       462,019       191,728  

Selling, general and administrative expenses

     162,277       96,018       337,116       177,675  

Depreciation and amortization

     30,533       25,677       59,963       54,087  

Impairment and other (gains) loss, net

     (7,979           (161      

Restructuring charges

           1,372             21,299  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

     35,350       (46,812     (47,988     (105,491

Other income (expense):

        

Loss in equity method investments

     (1,774     (1,568     (2,981     (3,264

Interest income

     773       837       1,548       1,609  

Interest expense

     (8,167     (5,262     (17,415     (10,535

Miscellaneous income (expense), net

     (17,100     (7,568     (19,647     26,449  
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations before income taxes

     9,082       (60,373     (86,483     (91,232

Income tax benefit (expense)

     (4,063     298       14,847       (9,159
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

     5,019       (60,075     (71,636     (100,391

Less: Net income (loss) attributable to redeemable noncontrolling interests

     2,642       (3,342     4,854       (7,231

Less: Net income (loss) attributable to nonredeemable noncontrolling interests

     106       (902     471       (1,532
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Madison Square Garden Entertainment Corp.’s stockholders

    $ 2,271      $ (55,831    $ (76,961    $ (91,628
  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share attributable to Madison Square Garden Entertainment Corp.’s stockholders

    $ 0.07      $ (1.64    $ (2.25    $ (2.70

Diluted earnings (loss) per common share attributable to The Madison Square Garden Company’s stockholders

    $ 0.07      $ (1.64    $ (2.25    $ (2.70

Basic weighted-average number of common shares outstanding

     34,278       34,021       34,186       33,961  

Diluted weighted-average number of common shares outstanding

     34,436       34,021       34,186       33,961  

 

 

 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

 

5


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

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 (loss) 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 MSG Entertainment Employee Stock Plan, MSG Sports Employee Stock Plan, MSG Networks Employee Stock Plan, as amended and assumed by MSG Entertainment, MSG 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.

 

   

Amortization for capitalized cloud computing arrangement costs. This adjustment eliminates amortization of capitalized cloud computing arrangement costs.

 

   

Merger and acquisition related costs. This adjustment eliminates costs related to mergers and acquisitions, including litigation expenses, in all periods.

 

   

Impairment and other (gains) loss, 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.

 

   

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   Six Months Ended  
     December 31,   December 31,  
     2021   2020   2021     2020

Operating income (loss)

    $ 35,350      $ (46,812    $ (47,988    $ (105,491

Non-cash portion of arena license fees from MSG Sports

     (11,346     (1,176     (11,889     (1,176

Share-based compensation

     24,171           29,828           43,699       45,984  

Depreciation and amortization(1)

     30,533       25,677       59,963       54,087  

Amortization for capitalized cloud computing costs

     10             95        

Merger and acquisition related costs

     2,331             39,523        

Impairment and other (gains) loss, net

     (7,979           (161      

Restructuring charges

           1,372             21,299  

Other purchase accounting adjustments

     3,038       924       3,123       1,848  
  

 

 

 

 

 

 

 

 

 

 

   

 

 

 

Adjusted operating income

    $     76,108      $ 9,813      $ 86,365      $ 16,551  
  

 

 

 

 

 

 

 

 

 

 

   

 

 

 

 

 

 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

(1)

Includes depreciation and amortization related to purchase accounting adjustments.

 

6


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SEGMENT RESULTS

(Dollars in thousands)

(Unaudited)

BUSINESS SEGMENT RESULTS

 

     Three Months Ended December 31, 2021
     Entertainment   Networks    Tao Group
Hospitality
  Other(2)   Total

Revenues

    $ 247,610      $ 159,981       $ 117,086      $ (8,238    $ 516,439  

Direct operating expenses

     147,343       85,924        60,880       2,111       296,258  

Selling, general and administrative expenses

     91,516       37,192        40,685       (7,116     162,277  

Depreciation and amortization

     19,024       1,756        6,243       3,510       30,533  

Impairment and other (gains) loss, net

                  (7,443     (536     (7,979
  

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

    $ (10,273    $ 35,109       $ 16,721      $ (6,207    $ 35,350  

Reconciliation to adjusted operating income (loss):

           

Non-cash portion of arena license fees from MSG Sports

     (11,346                        (11,346

Share-based compensation

     16,155       6,058        1,958             24,171  

Depreciation and amortization(1)

     19,024       1,756        6,243       6,548       33,571  

Amortization for capitalized cloud computing costs

     (34     44                    10  

Merger and acquisition related costs

     1,456       875                    2,331  

Impairment and other (gains) loss, net

                  (7,443     (536     (7,979
  

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

    $ 14,982      $ 43,842       $ 17,479      $ (195    $ 76,108  
  

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

    

 

Three Months Ended December 31, 2020

     Entertainment   Networks    Tao Group
Hospitality
  Other(2)   Total

Revenues

    $             12,669      $         146,239       $           10,491      $ (647    $         168,752  

Direct operating expenses

     23,409       57,033        10,980                 1,075       92,497  

Selling, general and administrative expenses

     65,730       21,692        9,131       (535     96,018  

Depreciation and amortization

     19,246       1,802        1,563       3,066       25,677  

Restructuring charges

     1,372                          1,372  
  

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

    $ (97,088    $ 65,712       $ (11,183    $ (4,253    $ (46,812

Reconciliation to adjusted operating income (loss):

           

Non-cash portion of arena license fees from MSG Sports

     (1,176                        (1,176

Share-based compensation

     22,374       6,266        1,188             29,828  

Depreciation and amortization(1)

     19,246       1,802        1,563       3,990       26,601  

Restructuring charges

     1,372                          1,372  
  

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

    $ (55,272    $ 73,780       $ (8,432    $ (263    $ 9,813  
  

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Depreciation and amortization includes other purchase accounting adjustments of $3,038 and $924 for the three months ended December 31, 2021 and 2020, respectively.

(2)

Includes inter-segment eliminations and, for operating income (loss), purchase accounting adjustments.

 

7


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SEGMENT RESULTS (continued)

(Dollars in thousands)

(Unaudited)

 

     Six Months Ended December 31, 2021  
     Entertainment     MSG
Networks
     Tao Group
Hospitality
  Other(2)   Total

Revenues

    $ 281,849      $ 301,454       $ 236,550      $ (8,904    $ 810,949  

Direct operating expenses

     183,645       154,347        121,973       2,054       462,019  

Selling, general and administrative expenses

     184,478       85,167        74,779       (7,308     337,116  

Depreciation and amortization

     38,680       3,553        12,621       5,109       59,963  

Impairment and other (gains) loss, net

                  375       (536     (161
  

 

 

   

 

 

    

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

    $ (124,954    $ 58,387       $ 26,802      $ (8,223    $ (47,988

Reconciliation to adjusted operating income (loss):

           

Non-cash portion of arena license fees from MSG Sports

     (11,889                        (11,889

Share-based compensation

     26,298       13,532        3,869             43,699  

Depreciation and amortization(1)

     38,680       3,553        12,621       8,232       63,086  

Amortization for capitalized cloud computing costs

     7       88                    95  

Merger and acquisition related costs

     15,448       24,075                    39,523  

Impairment and other (gains) loss, net

                  375       (536     (161
  

 

 

   

 

 

    

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

    $ (56,410    $ 99,635       $ 43,667      $ (527    $ 86,365  
  

 

 

   

 

 

    

 

 

 

 

 

 

 

 

 

 

 

     Six Months Ended December 31, 2020  
     Entertainment     MSG
Networks
     Tao Group
Hospitality
  Other(2)   Total

Revenues

    $ 20,224      $ 303,602       $ 17,712      $ (2,240    $ 339,298  

Direct operating expenses

     47,024       122,105        20,808       1,791       191,728  

Selling, general and administrative expenses

     118,380       44,219        16,734       (1,658     177,675  

Depreciation and amortization

     41,260       3,630        2,609       6,588       54,087  

Restructuring charges

     21,299                          21,299  
  

 

 

   

 

 

    

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

    $ (207,739    $ 133,648       $ (22,439    $ (8,961    $ (105,491

Reconciliation to adjusted operating income (loss):

           

Non-cash portion of arena license fees from MSG Sports

     (1,176                        (1,176

Share-based compensation

     32,807       10,893        2,284             45,984  

Depreciation and amortization(1)

     41,260       3,630        2,609       8,436       55,935  

Restructuring charges

     21,299                          21,299  
  

 

 

   

 

 

    

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

    $ (113,549    $ 148,171       $ (17,546    $ (525    $ 16,551  
  

 

 

   

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

(1)

Depreciation and amortization includes other purchase accounting adjustments of $3,123 and $1,848 for the six months ended December 31, 2021 and 2020, respectively.

(2)

Includes inter-segment eliminations and, for operating income (loss), purchase accounting adjustments.

 

8


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

     December 31,
2021
   June 30,
2021

ASSETS

     

Current Assets:

     

Cash and cash equivalents

    $     1,258,105       $     1,516,992  

Restricted cash

     23,914        22,984  

Accounts receivable, net

     190,491        184,613  

Net related party receivables

     48,929        31,916  

Prepaid income taxes

     1,850        12,772  

Prepaid expenses

     69,476        67,445  

Other current assets

     42,637        36,014  
  

 

 

 

  

 

 

 

Total current assets

     1,635,402        1,872,736  

Investments in nonconsolidated affiliates

     46,412        49,221  

Property and equipment, net

     2,474,693        2,156,292  

Right-of-use lease assets

     470,253        280,579  

Amortizable intangible assets, net

     182,006        198,274  

Indefinite-lived intangible assets

     63,801        63,801  

Goodwill

     500,181        502,195  

Other assets

     150,326        166,781  
  

 

 

 

  

 

 

 

Total assets

    $     5,523,074       $     5,289,879  
  

 

 

 

  

 

 

 

 

 

 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

 

9


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)

(Unaudited)

 

     December 31,
2021
  June 30,
2021

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

    

Current Liabilities:

    

Accounts payable

    $ 43,815      $ 26,644  

Net related party payables, current

     56,597       23,173  

Current portion of long-term debt, net of deferred financing costs

     56,483       53,973  

Income taxes payable

     406       2,527  

Accrued liabilities:

    

Employee related costs

     73,078       91,853  

Other accrued liabilities

     268,135       210,749  

Operating lease liabilities, current

     65,663       73,423  

Collections due to promoters

     49,513       37,877  

Deferred revenue

     256,154       209,651  
  

 

 

 

 

 

 

 

Total current liabilities

     869,844       729,870  

Long-term debt, net of deferred financing costs

     1,606,759       1,650,628  

Operating lease liabilities, noncurrent

     450,019       233,556  

Defined benefit and other postretirement obligations

     52,653       54,179  

Other employee related costs

     17,814       21,193  

Collections due to promoters, noncurrent

           6,625  

Deferred tax liabilities, net

     181,214       200,325  

Other liabilities

     74,952       75,263  
  

 

 

 

 

 

 

 

Total liabilities

     3,253,255       2,971,639  
  

 

 

 

 

 

 

 

Redeemable noncontrolling interests

     142,004       137,834  

Madison Square Garden Entertainment Corp. Stockholders’ Equity:

    

Class A Common stock, par value $0.01, 120,000 shares authorized; 27,327 and 27,093 shares outstanding as of December 31, 2021 and June 30, 2021, respectively

     273       271  

Class B Common stock, par value $0.01, 30,000 shares authorized; 6,867 shares outstanding as of December 31, 2021 and June 30, 2021

     69       69  

Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of December 31, 2021 and June 30, 2021

            

Additional paid-in capital

     2,317,415       2,294,775  

Retained earnings

     (173,302     (96,341

Accumulated other comprehensive loss

     (32,632     (30,272
  

 

 

 

 

 

 

 

Total Madison Square Garden Entertainment Corp. stockholders’ equity

     2,111,823       2,168,502  

Nonredeemable noncontrolling interests

     15,992       11,904  
  

 

 

 

 

 

 

 

Total equity

     2,127,815       2,180,406  
  

 

 

 

 

 

 

 

Total liabilities, redeemable noncontrolling interests and equity

    $       5,523,074      $       5,289,879  
  

 

 

 

 

 

 

 

 

 

 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

 

10


MADISON SQUARE GARDEN ENTERTAINMENT CORP.

SELECTED CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

 

     Six Months Ended
     December 31,
     2021   2020

Net cash provided by (used in) operating activities

    $         132,786     $ (102,467

Net cash (used in) provided by investing activities

     (332,532             136,238  

Net cash (used in) provided by financing activities

     (57,639     598,512  

Effect of exchange rates on cash, cash equivalents and restricted cash

     (572     7,795  
  

 

 

 

 

 

 

 

Net (decrease) increase in cash, cash equivalents and restricted cash

     (257,957     640,078  

Cash, cash equivalents and restricted cash at beginning of period

     1,539,976       1,121,141  
  

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash at end of period

   $ 1,282,019     $ 1,761,219  
  

 

 

 

 

 

 

 

 

 

 

Note:

For all periods presented, the net assets of MSG Networks have been combined with those of the Company at their historical carrying amount. All prior periods balances in these consolidated financial statements (including share activities) have been retrospectively adjusted as if both companies had been operating as a single company.

 

11

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Madison Square Garden Entertainment Corp. provided additional information to their SEC Filing as exhibits

Ticker: MSGE
CIK: 1795250
Form Type: 8-K Corporate News
Accession Number: 0001193125-22-032730
Submitted to the SEC: Wed Feb 09 2022 4:27:57 PM EST
Accepted by the SEC: Wed Feb 09 2022
Period: Wednesday, February 9, 2022
Industry: Amusement And Recreation Services
Events:
  1. Earnings Release
  2. Financial Exhibit

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