Earnings call transcript Q3 2023

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Operator

Good morning. Thank you for standing by and welcome to the Madison Square Garden Entertainment Corp. Fiscal 2023 Third Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After the speakers remarks there will be a question-and-answer session.

to President call and Investor like Danes, to Treasury. now Vice Senior Relations, would turn over the Ari I Financial Communications Please go ahead.

Ari Danes

remarks, XXXX After of our as the EVP will morning, MSG call Chief as Financial we call. Good well welcome provide and our and today’s third an most for strategy will fiscal forward, overview On Byrnes, you. for conference business the quarter recent financial Dave Thank call prepared highlights Officer quarter. earnings the and open-up Entertainment's questions. to going

have If you section copy do release, earnings it corporate our available not Investors a the of today's in website. is of

Act note the risks such results from forward-looking of forward-looking the of of to discussion Today's statements statements are take not materially the meaning may performance involve Private forward-looking within the cause and guarantees or results contain could actual differ Reform statements. in XXXX. Please of future and Any following. Litigation that uncertainties those Securities

call. the today's any risks update and Please refer company this of a may discussed to The obligation during company's for SEC we to consolidated reconciliation be any disclaims measure. statements earnings uncertainties. discussion of that X and provide income forward-looking a On to of operations a release, the and adjusted income non-GAAP with financial X statements operating operating Pages AOI, of or filings

I’ll that, to turn the with now over And call Dave.

Dave Byrnes

everyone. morning you, Ari, good and Thank

our spin-off, chapter completion month of new for of the With exciting the Entertainment. successful last marked start MSG an

and our demand for leverage as benefiting we poised continue corporate strong live brands. the world-class from consumer we pure-play company, and experiences As assets are entertainment strength of a shared to

of X globally. Madison the number its led Square is by grossing portfolio venue size Our Garden, venue

is kind the the has been It Over its exceptional New entertainment, home a and Knicks the Rangers. performances franchises most helped setting the and in to world, which sports recognized history, and of have to culture. of sports, also two one the define moments, for XXX-year York Garden

Hall, own among Theatre with Madison the We size Theatre. the Music venues Chicago the the Beacon Theater ranked Radio City and world. places grossing the top also at their and of regularly show operate in or rich histories Square Garden, Storage

on ahead host this venues year, our continue and to first which venues, last The year's majority more at million results. Our of per the cap the well our third our pacing to spending XXX of X including nearly track than this onset pandemic. and events fiscal full-year year are events concerts since of guests in of is sell-out quarter, is

increase We fourth bookings are still events also a currently we for events while our fiscal a XXXX. anticipate solid in in percentage in business quarter double-digit our projecting increase early, for and

to the for Rockettes, our impacted pandemic, by the several this its see ago venues, City pleased return renowned complete XXth completed remarkable a to feature wholly-owned months In Radio Spectacular the our we production, year's we addition Starring run. After Christmas also production year. which two seasons were

year-over-year shows to across and pandemic. appeal. before was last year per up Average We revenue XXX,XXX XXX XX% shows, over XX%, tickets our show the up testament sold to over compared a enduring the

We show also the levels. were for at beverage, in ticket while and yields saw merchandise per solid caps, increases record food,

Spectacular All million generating for to year. company which our revenue led this Christmas of the over $XXX of

agreements and license Garden Knicks the we exclusive home make Sports, content, owned and venues the industry-leading also through in fiscal which valuable MSG place from the with have XXXX. Aside long-term Rangers arena of

fees. growing and we arena As part of recurring received substantial license these agreements,

to additional we Through and food, signage, related profit benefit suites, For are and also fiscal approximately sponsorship, expected be beverage, to from Knicks revenue each XXXX, merchandise fees year. these Rangers. and grow and $XX million will to sharing X% these sales and continue agreements, from every the

is base results revenue pre-pandemic our both levels. of and XX% fiscal exceed to of this on-track our related deliver that hospitality over sponsorship which year to addition, businesses, are premium In

a has of brands, the the value MSG our in business record country largest significant media partnerships or exposure our marketing opportunities through market proven sought delivering partners track Our with highly compelling after whether for it's in our cross-selling Sports.

innovative have our valuable a our built roster signature and Through of offerings, level of sponsorship represent the revenue. multi-year partnerships, which we marquee majority

to products range of of customers. amenities corporate options, offer allow we premier addition, to seating a to spaces In and suites a with us from wide premium first-class hospitality cater which private variety

Our also New relationship to with in And licenses Knicks events it's concerts tremendous XXX presence evident, the providing in the along York our benefits Fortune greatest with held clients under City, of to with and agreements MSG substantial Sports, majority addition to business premium suite Rangers in from Garden. companies our marquee our number see customers and hospitality home sporting our the offerings at games with of our with the annual value other escalators. multi-year access

our assets we ahead, unique entertainment for believe portfolio brands poised look live of and is growth. continued with its we company As

On we on profitability, are growth of also the revenues per event increasing while the our and driving bookings utilization venues. front, focused in

forge to improve customers with guest will will and believe direct We continue revenues. the grow look for event more ways experience, which per help to relationships we

of our types including events, new help businesses number also as profile well premium residencies our for ways, and and event high to as will variety more that such position types base also We at look shows, a pursuing increase partnership will growth. build our events Increasing of event as ongoing the attractive events. as in multi-night well exploring hospitality as marketing better the unique of venues of introducing number

We we hospitality last ways sponsorship and enhance as well betting underpenetrated to successfully categories year, emerging offerings. expand also as sports target like our with explore or did plan to

to number well of return tourism With complete the believe demand Christmas Spectacular, cases, have as the as sell-through, in and make the over a opportunity pandemic. we we as increase shows time drive both post more higher

going continued growing, social following where revenue via younger ability demographic reach forward rapidly a will number brand, the opportunities and we to a Rockettes sponsorship. create particularly such including new their audiences, brand's also focused as media is are believe of this We the demonstrates on building incremental which

I'd now and spin-off of on reported the the results like a carve-out our both XXXX requirements of completed close XXXX Since XX, third accounting then turn results capital to for discussion and on with are today's for based fiscal our was allocation April preparation financial statements. financial the priorities. presented quarter to

of of year both and quarter, the the XX% we million, quarter. of reported respectively, AOI million For increases as and represent compared revenues prior which to XX X% $XXX

with sales Excluding the impact agreement of MSG revenues increased would representation elimination our advertising have of Networks, X% the year-over-year.

financial February, if as fiscal a current the investor our XXXX entity an had company which from provided start guidance in for published we know, fiscal you As we been the independent presentation of year. standalone

XXXX, $XXX million. are reiterating of million fiscal million AOI in to remaining $XXX quarter projected one $XXX our revenue $XXX million to for range only our range refining we expected while to the With year,

million Moving flow, on unrestricted of fiscal primarily cash free our forward current debt maintenance to XXXX time; million in and a annual expectations: balance XX allocation had XX was approximately approximately Approximately that rates, priorities. by AOI capital on our basis, are time growing significant million minimal On to is and $XXX expense net XXXX and expenditures interest million. capital million XXX balance million to XXX fiscal related. over following At to sheet of based taxes the expect the which we cash market through underscored generate our approximately spin-off, and XXX of we go cash cash

of opportunistically capital In program, our balance of will authorized million Directors terms future. return and of plan our also are Board debt which repurchase capital to in paying option focused to available In us priorities, with shareholders. on be we allocation one conjunction $XXX down to share our a some the spin-off, our

continued excited and new our chapter as portfolio drive value. a renowned we shareholder poised this industry, on we for are are we live confident embark by for and entertainment business are bolstered venues positive well-positioned momentum growth we the summary, are with of to long-term that brands that of the In

now will call back turn Ari. I to the that, over With

Ari Danes

for Operator, Dave. the up we can you, please? Thank open call questions,

Operator

Ross LightShed our the [Operator we question of from Partners. Brandon from Instructions] have And line first

is line Your open.

Brandon Ross

guys business. buying some that by comes the few for Especially, flow fact asked Sphere's capital finance Thanks generation sell yourself? some spoke they buyback If to Thanks. of it that potentially would has the taking but stake the sale, for in the here, impact on biggest authorization. mitigate the to conjunction overhang state you just question. to that weeks I think that to willing free retained the I cash the be and you needs and could your the with been past the morning. Good Not obvious stock

Dave Byrnes

mentioned earlier, authorization That's performing is aware repurchase the Thanks, in put well We're the returning to that The to question why after capital your Sure. short we at $XXX right our after volatile as priorities. our time Brandon. yes. one And spin. share I spin. million recently a of place is, initially well of stock the has been shareholders opportunistically answer

So, an opportunity our at seriously it. amount course, a itself, presented stock efficiently sizable look to if of repurchase we would of

Sphere on keep It's has have Entertainment Co. $XX draw delayed repay the the if the to Co. the holds. with loan to mind million thing in it [ph] in loan to the [MSGE decides And place retained is term Another using future, in it we draw the shares] facility. facility facility a Sphere short-term ability relatively

the and retained amount should of Sphere it's it shares, would efficiently – way significant actually us be is using of stock. Co. this decide for this So, our to feature pay a repurchase a also another to loan novel

Brandon Ross

little you the willing us across could drivers get XXXX, to for Spectacular window giving across In XXXX growth out the a larger wondering in XXXX Christmas of business. maybe suites, Great. Thanks. was in you're sponsorship growth event Anything the spoke I since guidance. double-digit give if anything? prepared to a you you're bit

Dave Byrnes

by industry really here remains Sure, the York start saying strong. across demand experiences Brandon. for in share and I'll our New that especially

content And any unique portfolio primary signs venues we're a to seen haven't well-positioned We be of beneficiary. of and given slowdown. our

earlier quarter mentioned our the heard at sales the concerts continue third that the remained and including recent majority on venues, me sell-out You to majority our strong. have – of

our really the the quarter, fourth our solid ahead increase concert in same to at as Garden. the are August, We slate call early by mentioned in and most expect fiscal promising. where you on And share in we do while the notably earnings to year year-end anticipate driven events we more our facing bookings. here very concert time have in XXXX, We're last in were at for currently of venues signs

is early same double-digit to bookings in over the our a compared Across XX%, very all sales percentage it This where coming the while from And again, encouraging currently business, lagging out events year-over-year [ph] year. particularly in sales of being Christmas very which up is the Christmas in category last sales, stages, increase the higher early recovery a are in cycle. group [they’re] Spectacular seen is expecting pandemic. XXXX. time we're of ticket entire Spectacular driven fiscal by we've But

seeing corporate we have built growth carry and a tailwinds XXXX. you will a Rangers suites From to this know, both we've season. next and profit and standpoint, revenue related sponsorships year we're based Knicks this and in teams performed And streams year momentum we on as over demand the into to various see how

see So, we opportunities business it's across really next year. growth drive virtually every to continued of our area the

Brandon Ross

much. so Thanks

Operator

And from Stanley. Ben line Morgan Swinburne question your next of comes from the

line open. Your is

Ben Swinburne

Good the to events. morning, wanted Dave. just double-digit I clarify

a Spectacular? to said it's include Christmas across that games? Ranger the Knicks And portfolio? but I and just be business, you that that entire is Does whole Does had think include booking I follow-up. specific, your

Dave Byrnes

bookings, not except All Spectacular. Just the Spectacular. the bookings

Ben Swinburne

Okay.

Dave Byrnes

And then… Ben. follow-up, Your

Ben Swinburne

Yes.

I that was with one the if you events been over venues, sense thoughts to seen? a over longer-term what's of your the the I share business events be first or but just in would growth look to decade? CAGR for biggest on artists back volume historical there's post-pandemic, have up the your of You rate could get might think Garden. I'm but about opportunities more talked growth for demand, last you. know the is full-year love And us, you what XXX a tour the I particularly for you just Thank side? we there. more, Do the of want XXX sort sense to the of utilization sustainable So, trying long-term, a curious, drive sort you've just

Dave Byrnes

venues. of Okay. Look, of have a number long-term record at terrific the we Thanks our track increasing concerts Ben.

number you the If Garden year have Garden the at XXXX. in the fiscal the our after venues. back, the annual across and would driven been transformation other transformation, first We've since mid-single-digit concerts look growth of Garden

As we for a forward, growing think bookings continues going about utilization increasing the to business significant venue us. opportunity be

City Radio projected including is events and Garden home example, this four XXX our the our that is has for which and the Rangers, is is Knicks Christmas fiscal track anchor So, on The theaters [XXX to the [ph]. Garden while spectacular, to excluding host like the Spectacular. an only for Rangers, Knicks and nearly venue events] the over other tenant, year, are

So, large slate available work our to venues generally have from. of to a dates continue

benefiting events addition had categories focused to residencies in multi-night runs, for growth our And with as just recurring from continued success some in different and our shows opportunities. which in a or or additional theatrical on market, third-party new Exploring expected unique utilization more and such we've ways, few expos example event recently. be events could we're

per Garden, particularly creative day. maximize getting to the in event ways types could at the utilization, And multiple we look we host

always. us which also while the make weighing, for course, most Of and sense strategic events financial

the as our So, venue business. for we see opportunity a significant growth increasing utilization

Ben Swinburne

so Great. much. you Thank

Dave Byrnes

You're welcome.

Operator

line from Joyce from of And your question next David Seaport. comes the

Your line is open.

David Joyce

the utilization. strategy was One another you mention, capacity property, a Dave, employed you. past you What owned lines? the and didn't might would Thank another you – York volumes develop know, question fill the was spectacular, such in management’s of in strategy those smooth looking the the to event year. New seasonality as, item business, which you parts] you [underutilized which the because of [ph] be know, the would, you some along on out

Dave Byrnes

time, any this David. we to plans Sure, develop At new no have productions.

as driving in make As unique mentioned, very yield, know, tourism more This on demand just ticket we number of Christmas focused a increasing higher continuing you both time grow and post-pandemic. as mentioned the sell-through well we're And I slowly complete it Spectacular. return organically. over shows as and have includes to franchise the a

as Christmas merchandise, the outside online like expanded We're well offering to also season. partnerships, focused ancillary an as on core see items opportunity create and increasing we marketing revenue merchandise from Spectacular an of

Whether will lead other the sponsorship. that's on opportunities, media to focused social partnerships, incremental brand revenue also through building broadly. Rockettes and We're more initiatives or we think which including

David Joyce

theater, question. Separate talks have you [indiscernible] yesterday right. on dollars or Do a comments article any negotiations There Square that, for developer. please? at Garden Madison was the a sell an All potential billion regarding a to to

Dave Byrnes

to our Penn stakeholders invested closely range of community, we All improving is, I'll this on area. deeply as the options and and the to say to with strategic collaborate the And continue members would advance more always we shared this theater, our have goal. to but company, With to share of we're station on nothing committed surrounding wide to we make regard today. consider that financial a sense

David Joyce

the, Okay. back one. you Thanks. of what And supply social are can, one final seeing kind in flow the if artists and I the capacity In terms artists, through thinking of the about, to and helping that and again? it developing just of us media are utilization and smaller you that to food more in platforms chain digital might something it be other venues drive Thanks. they as the up involved is know, in that migrate business venues? or strategy the – Is your

Dave Byrnes

David. Thanks, Sure.

digital start that venue under First, growing capacity approximately other in a benefit City working with our to and little or it they Beacon Radio portfolio whether And traditional we're or of up at at is X,XXX a arena. XX,XXX X,XXX ranges the via at channels. talent, developing the always from

careers So, artists shepherd various them us along enables growth through stages their those lines. to with work in and this their

Radio playing their several host we've hosted is after we've viral beyond last venues regardless new month, social And Charlie played of original Olivia played year. past Rodrigo, the start. years, playing few fall. City the acts. In our of seen example, last there for Puth acts a Beacon at this, having next media fiscal

range to shows, attract new wide multi-night supply we really about etcetera. acts, as So, genres, repeat acts, our venues good of continue feel

David Joyce

very you Dave. Thank Great. much,

Dave Byrnes

You're welcome.

Ari Danes

will one we Operator, last David. Thanks caller, take please.

Operator

final question Research. And your the comes Brisco Devin from Wolfe from line of

Your line open. is

Devin Brisco

like MSG if for flow. renovations? assets cash are bridge and one-off you free Thanks help CapEx this how cash future looked thinking And historically? your AOI maintenance wondering the about is guidance question. was flow I of to us conversion you What could free

Dave Byrnes

mentioned earlier, Sure, but repeat it. it Devin. I'll I

We expect expense parameters from AOI on to cash growing. fiscal modeling substantial generate some million cash approximately interest net in based to our XXX XXX free XX of million, to approximately XX and XXXX help start. We earlier market company the million million provided current right rates. flow to with Annual

minimal fiscal fiscal if through March the at XXXX We you also primarily Form through in million, approximately expect add the XX XXXX. the And to XX. year and intermediate that, be about taxpayer CapEx to financials And to carve-out was near is date be on will cash some a CapEx in color to maintenance Fiscal XXXX related. XX, look term just

So, tracking significantly. like venues look plans some as helpful. to similar to have we our other, we of don't just that's forward, any if last year, And renovate

We debt while have some earlier, to of one to in de-lever on no current do at down to any that setting pay target our this not flow, And And during additional took our we're time growth as free rapidly. business we mentioned a priorities is I venues. the public pandemic. the plans expect leverage robust between acquire and of we cash

Returning shareholders is another capital of our to priorities.

its We we'll our act including all continue in share is and in the take shareholders. allocation performing and the variables have to best account in interest $XXX how we'll million the terms place of decisions, the of stock capital repurchase company into and

Devin Brisco

you Thank how at separation the have that didn't change if before? strategy have you you. complete, And the for will is what do flexibility all, that MSG now now

Dave Byrnes

the more for on revenue and We're driving for for per Sure. we venues, than across operate growth focused we the revenues operations. growth this Driving to is for I'd corporate before. to yes, the at business Christmas ways efficiently, how profitability, different also our Spectacular event partnerships in organic strategy increasing no marketing that really will primarily say continue example. initiatives Christmas our it utilization and look Spectacular, operate expanding to more profit effective and the businesses, maximizing was

changed the that appropriate as that's capital we flexibility strategy as the One result is, spin allocation of though a for pursue a thing have a the has standalone company business. now to

includes on So, debt today. capital, say focus opportunistically a us heard it's this several times obviously – again pay down, you've returning which

confident excited value. well-positioned for long-term So, to chapter new that we're Entertainment MSG we're shareholder drive and this for we're

Devin Brisco

you. Thank

Operator

comments. of final And Danes, the for Ari turn reached over our end the I'll question-and-answer we closing you session. call back have to Mr. some

Ari Danes

forward Have day. you Thank look great in us. year-end for a on August. We all call joining our you speaking to with

Operator

today's for you Thank This conference call. participation. your concludes

now may You disconnect.

Madison Square Garden Entertainment (MSGE) 18 May 232023 Q3 Earnings call transcript