Financial Performance - Revenues for the three months ended December 31, 2022, increased by $125,759, or 24%, to $642,198 compared to $516,439 in the prior year[172]. - Operating income for the three months ended December 31, 2022, rose by $38,600, or 109%, to $73,950 compared to $35,350 in the prior year[172]. - Net income for the three months ended December 31, 2022, increased significantly by $65,538, resulting in a net income of $70,557 compared to $5,019 in the prior year[172]. - Revenues for the six months ended December 31, 2022, increased by $232,467, or 29%, to $1,043,416 compared to $810,949 in the prior year[172]. - Net income attributable to Madison Square Garden Entertainment Corp.'s stockholders for the six months ended December 31, 2022, was $22,827, a significant increase from a net loss of $76,961 in the prior year[172]. - Adjusted operating income for the three months ended December 31, 2022 increased by $48,024 to $124,132, representing a 63% increase compared to the prior year[188]. - For the six months ended December 31, 2022, adjusted operating income increased by $40,546 to $126,911, a 47% increase compared to the prior year[188]. Debt and Financial Risks - The Company faces risks related to its substantial debt and the ability of its subsidiaries to manage payments and refinancing[151]. - The principal balance of the company's total debt outstanding as of December 31, 2022 was $2,010,725, an increase from $1,756,898 as of September 30, 2022[238]. - A hypothetical 200 basis point increase in floating interest rates would increase the Company's interest expense by $40,215[281]. - The MSGN Credit Agreement requires a maximum total leverage ratio of 5.50:1.00, with compliance confirmed as of December 31, 2022[254]. Operational Developments - The Company is currently building its first MSG Sphere venue in Las Vegas, which is part of its strategy to expand its entertainment offerings[156]. - The Company continues to explore additional opportunities for expansion in the entertainment industry, with new investments aimed at becoming operationally profitable over time[169]. - The company is exploring a sale of its interest in Tao Group Hospitality to advance the MSG Sphere initiative, which may include additional personnel and content development[239]. - The company is exploring additional domestic and international markets for next-generation venues like MSG Sphere[249]. Revenue Sources and Trends - The demand for the Christmas Spectacular and the performance of professional sports teams significantly influence the Company's revenue levels[166]. - The increase in revenues from the presentation of the Christmas Spectacular was $71,092 for the three months ended December 31, 2022, primarily due to higher ticket-related revenues[196]. - The increase in event-related revenues for the three months ended December 31, 2022 was primarily due to higher revenues from concerts of $7,866[199]. - The increase in advertising revenue for the three and six months ended December 31, 2022 was primarily due to a higher number of live professional sports telecasts and increased per-game advertising sales[217]. Cost Management - The Company is focused on successfully implementing cost reductions and managing discretionary capital projects to improve financial performance[151]. - Direct operating expenses for the three months ended December 31, 2022 were $181,042, an increase of 23% from $147,343 in the prior year[192]. - Selling, general and administrative expenses for the three months ended December 31, 2022 increased by $891 to $38,083, while for the six months ended December 31, 2022, they decreased by $29,268 to $55,899[219]. - Direct operating expenses for the three months ended December 31, 2022 increased by $15,603, or 26%, to $76,483, attributed to higher employee compensation and food and beverage costs[230]. Seasonal Trends - The Company experiences seasonality in revenue, with a disproportionate share earned in the second and third quarters, while the first quarter is typically lower[271]. Cash Flow and Liquidity - As of December 31, 2022, the company's unrestricted cash and cash equivalents were $432,173, a slight decrease from $441,350 as of September 30, 2022[238]. - Net cash provided by operating activities for the six months ended December 31, 2022, was $54.965 million, a decrease of $77.821 million compared to the prior year[268]. - Net cash used in investing activities increased by $243,377 to $575,909 for the six months ended December 31, 2022, primarily due to increased capital expenditures for the MSG Sphere[269]. - Net cash provided by financing activities increased by $286,814 to $229,175 for the six months ended December 31, 2022, mainly due to proceeds from the MSG Sphere Term Loan Facility[270].
Sphere Entertainment (SPHR) - 2023 Q2 - Quarterly Report