Madison Square Garden Sports (MSGS) - 2024 Q3 - Quarterly Results

Madison Square Garden Sports Corp. Fiscal 2024 Third Quarter Results Q3 FY2024 Financial Highlights Madison Square Garden Sports Corp. reported strong Q3 FY2024 results, with revenues up 12% to $430.0 million, driven by Knicks and Rangers performance Q3 & Nine-Month FY2024 Financial Performance ($ millions) | | Three Months Ended March 31, | Change | | Nine Months Ended March 31, | Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Metric | 2024 | 2023 | % | 2024 | 2023 | % | | Revenues | $430.0 | $382.7 | 12% | $799.9 | $760.5 | 5% | | Operating Income | $79.7 | $81.8 | (2)% | $93.7 | $97.4 | (4)% | | Adjusted Operating Income | $88.7 | $86.2 | 3% | $115.7 | $122.8 | (6)% | - Operational growth was driven by increased average per-game paid attendance, higher average ticket prices, and greater ancillary per-capita spending on food, beverage, and merchandise[3] - Results were positively impacted by the New York Knicks playing five additional home games at The Garden compared to the prior year's third quarter[3] - Following the quarter's end, both the Knicks and Rangers qualified for the playoffs, and the 2024-25 season ticket renewal initiative has shown strong demand[4] Detailed Results of Operations Revenue increased 12% to $430.0 million, driven by ticket and suite sales, while operating expenses rose significantly Revenue Analysis Revenue growth was broad-based, with significant increases in ticket, suite, and food/merchandise sales - Ticket-related revenues increased by $29.9 million, primarily due to the Knicks playing more home games and higher average per-game revenue for both the Knicks and Rangers[9] - Suite revenues grew by $10.9 million, driven by the additional Knicks games and higher sales of suite products, including new premium hospitality offerings[10] - Food, beverage, and merchandise sales were up $4.3 million, reflecting higher per-game revenue, more Knicks games, and increased online merchandise sales[11] - Local media rights fees increased by $1.3 million due to contractual rate hikes, while league distributions rose by $0.6 million from higher national media rights fees[12] Expense Analysis Operating expenses increased significantly, with direct operating expenses up 14% and SG&A expenses surging 25% - Direct operating expenses increased by 14% ($34.0 million), mainly due to higher team personnel compensation (+$11.8M), league revenue sharing/NBA luxury tax (+$8.4M), and other team operating expenses (+$5.1M)[13] - Selling, general and administrative expenses rose by 25% ($15.3 million), largely reflecting a $12.2 million increase in employee compensation and related benefits, primarily from executive management transition costs[14] Financial Statements Consolidated financial statements detail Q3 net income, balance sheet figures, and cash flow information for the period Consolidated Statements of Operations Q3 FY2024 statements show revenues of $430.0 million and net income of $37.9 million, or $1.57 per diluted share Q3 FY2024 Statement of Operations (in thousands, except per share data) | | Three Months Ended March 31, | | | :--- | :--- | :--- | | | 2024 | 2023 | | Revenues | $429,954 | $382,744 | | Operating income | $79,742 | $81,751 | | Income before income taxes | $71,895 | $94,775 | | Net income | $37,877 | $51,813 | | Net income attributable to MSGS stockholders | $37,877 | $52,379 | | Diluted EPS | $1.57 | $2.18 | Consolidated Balance Sheets As of March 31, 2024, the balance sheet shows total assets of $1.39 billion, liabilities of $1.68 billion, and a stockholders' deficit Selected Balance Sheet Items (in thousands) | | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Total current assets | $250,645 | $149,233 | | Right-of-use lease assets | $697,464 | $715,283 | | Total assets | $1,388,471 | $1,315,017 | | Total current liabilities | $526,555 | $520,528 | | Long-term debt | $330,000 | $295,000 | | Operating lease liabilities, noncurrent | $756,871 | $746,437 | | Total liabilities | $1,682,426 | $1,652,251 | | Total equity | ($293,955) | ($337,234) | Selected Cash Flow Information Nine-month cash flow shows net cash used in operating activities of $16.2 million, a reversal from prior year's $114.8 million provided Nine-Month Cash Flow Summary (in thousands) | | Nine Months Ended March 31, | | | :--- | :--- | :--- | | | 2024 | 2023 | | Net cash (used in) provided by operating activities | $(16,220) | $114,801 | | Net cash used in investing activities | $(5,689) | $(10,366) | | Net cash provided by (used in) financing activities | $26,234 | $(129,618) | | Net increase (decrease) in cash | $4,325 | $(25,183) | Non-GAAP Financial Measures & Reconciliations Adjusted Operating Income, a non-GAAP measure, is used to evaluate performance, with Q3 FY2024 operating income reconciling to $88.7 million - Adjusted operating income is defined as operating income excluding depreciation, amortization, share-based compensation, restructuring charges, and certain other non-cash or non-recurring items[19] - The company believes this measure is an appropriate tool for evaluating operating performance and is a key indicator used internally by management[20] Reconciliation of Operating Income to Adjusted Operating Income (in thousands) | | Three Months Ended March 31, | | Nine Months Ended March 31, | | | :--- | :--- | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Operating income | $79,742 | $81,751 | $93,735 | $97,371 | | Depreciation and amortization | 788 | 840 | 2,372 | 2,703 | | Share-based compensation | 7,350 | 3,220 | 18,069 | 22,059 | | Remeasurement of deferred compensation plan liabilities | 821 | 368 | 1,556 | 714 | | Adjusted operating income | $88,701 | $86,179 | $115,732 | $122,847 |