Atlanta Braves (BATRA) - 2023 Q3 - Quarterly Report

Part I Part I – Financial Information This section provides the company's financial information, including statements, notes, and management's discussion and analysis Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for the nine months ended September 30, 2023, including balance sheets, statements of operations, comprehensive earnings, cash flows, and equity, along with detailed notes Condensed Consolidated Financial Statements The financial statements show total assets of $1.52 billion as of September 30, 2023, with total revenue of $572.9 million and a net loss of $92.9 million for the nine months ended September 30, 2023 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $106.7 | $150.7 | | Total current assets | $243.8 | $267.4 | | Total assets | $1,518.8 | $1,490.7 | | Total current liabilities | $189.3 | $240.9 | | Long-term debt | $547.5 | $467.2 | | Total liabilities | $943.2 | $1,191.2 | | Total equity | $575.7 | $299.5 | Condensed Consolidated Statements of Operations (Nine Months Ended Sep 30, in millions) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Total Revenue | $572.9 | $517.3 | | Operating Loss | $(14.1) | $(23.4) | | Net (Loss) Earnings | $(92.9) | $10.8 | | Diluted EPS | $(1.51) | $0.17 | Condensed Consolidated Statements of Cash Flows (Nine Months Ended Sep 30, in millions) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(21.3) | $19.4 | | Net cash (used in) provided by investing activities | $(45.3) | $29.4 | | Net cash provided by (used in) financing activities | $20.4 | $(119.6) | | Net decrease in cash | $(46.3) | $(70.8) | Notes to Condensed Consolidated Financial Statements The notes provide crucial context, detailing the basis of presentation following the July 18, 2023 Split-Off from Liberty Media, segment information, debt structure, and material contingencies - The company completed its Split-Off from Liberty Media on July 18, 2023, becoming a separate publicly traded entity, with financial statements prepared on a consolidated basis reflecting this change[32] Segment Revenue (Nine Months Ended Sep 30, 2023, in millions) | Segment | Revenue | | :--- | :--- | | Baseball | $528.8 | | Mixed-Use Development | $44.2 | | Total Revenue | $572.9 | - Total debt as of September 30, 2023, was $555.3 million, allocated between the Baseball and Mixed-Use Development segments[62] - The company faces a significant contingency from the Diamond Sports Group bankruptcy, including a potential requirement to repay up to $34.2 million and a risk of writing down accounts receivable and contract assets of approximately $45.9 million if the broadcasting agreement is rejected[106] - As of September 30, 2023, the company has long-term employment contract commitments totaling $931.8 million, with $231.9 million payable in the remainder of 2023 and $157.6 million in 2024[104] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for the third quarter and first nine months of 2023, focusing on the performance of its Baseball and Mixed-Use Development segments, highlighting revenue growth, increased operating costs, and a significant increase in Adjusted OIBDA Revenue by Segment (Nine Months Ended Sep 30, in millions) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Baseball | $528.8 | $478.0 | +$50.7 | | Mixed-Use Development | $44.2 | $39.3 | +$4.9 | | Total Revenue | $572.9 | $517.3 | +$55.6 | - Baseball event revenue for the nine months ended September 30, 2023, increased by $43.1 million year-over-year, driven by higher ticket demand and attendance[132] - Baseball operating costs for the nine months increased by $40.4 million, primarily due to a $23.0 million increase in major league player salaries[135] Adjusted OIBDA (Non-GAAP, in millions) | Period | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Q3 | $40.3 | $24.5 | +$15.8 | | Nine Months | $51.4 | $47.4 | +$4.0 | - As of September 30, 2023, the company had $106.7 million in cash and cash equivalents, with management believing available liquidity is sufficient to cover projected uses of cash, including player contracts, capital expenditures, and debt service[151][152] Item 3. Quantitative and Qualitative Disclosures about Market Risk The company discloses its exposure to market risks, primarily interest rate risk from borrowing activities, which is mitigated by maintaining a mix of fixed and variable rate debt and utilizing interest rate swaps - The company's primary market risk is from changes in interest rates affecting its variable rate debt[160] Debt Structure as of September 30, 2023 (in millions) | Debt Type | Principal Amount | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Floating Rate | $69.9 | 6.9% | | Fixed Rate | $489.2 | 4.4% | Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting identified during the quarter - The company's executives concluded that disclosure controls and procedures were effective as of September 30, 2023[162] - No material changes in the company's internal control over financial reporting occurred during the third quarter of 2023[163] Part II Part II — Other Information This section covers other required information, including legal proceedings, risk factors, equity security sales, and exhibits Item 1. Legal Proceedings This section refers to Note 7 of the financial statements for information on legal proceedings, including lawsuits arising in the normal course of business and the significant contingency related to the Diamond Sports Group bankruptcy - The company is involved in various lawsuits arising in the normal course of business, for which management does not expect the outcomes to be material[108][165] - A key legal contingency involves the Diamond Sports Group bankruptcy, which could require repayment of up to $34.2 million and a write-down of $45.9 million in receivables[106] Item 1A. Risk Factors The company incorporates by reference the risk factors detailed in its Form S-4 Registration Statement filed on June 8, 2023, covering uncertainties related to the Split-Off, financial obligations, economic conditions, and industry-specific challenges - Risk factors are incorporated by reference from the company's S-4 Registration Statement (File No. 333-268922) filed on June 8, 2023[166] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reports that no shares were surrendered by its officers and employees to pay withholding taxes in connection with the vesting or exercise of equity awards during the third quarter of 2023 - No shares were surrendered by employees for tax withholding on equity awards during the quarter ended September 30, 2023[166] Item 5. Other Information The company states that none of its directors or officers adopted or terminated a Rule 10b5-1 trading plan or any other non-Rule 10b5-1 trading arrangement during the third quarter of 2023 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended September 30, 2023[167] Item 6. Exhibits This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents, incentive plans, material contracts, and required certifications under Sarbanes-Oxley - The report lists exhibits filed, including the Amended and Restated Articles of Incorporation, Bylaws, various incentive and compensation plan documents, and required certifications[170]