Sphere Entertainment (US:SPHR)2021-08-23 18:37Financial Data and Key Metrics Changes - In the fiscal fourth quarter, the company generated revenues of $99.8 million with an adjusted operating loss of $70 million [32] - Tao Group contributed $69.7 million in revenue, driven by strong reopening in key markets, particularly Las Vegas [32] - The company had approximately $1.17 billion in cash as of June 30, and $1.52 billion including MSG Networks' cash [35] Business Line Data and Key Metrics Changes - Tao Group's fourth quarter results included the impact of the Hakkasan Group acquisition, which significantly expanded its revenue base [18][60] - Hakkasan contributed approximately $28 million of revenue, representing 40% of Tao's total revenue for the quarter [61] - MSG Networks' standalone results will be discussed in detail starting next quarter, as the acquisition was completed on July 9 [31] Market Data and Key Metrics Changes - The best performing market for Tao Group in the fourth quarter was Las Vegas, which benefited from the Hakkasan acquisition [20] - The company noted that New York City has one of the highest vaccination rates in the country, positively impacting attendance at events [12][13] Company Strategy and Development Direction - The company is focused on the MSG Sphere project in Las Vegas, with an updated cost estimate of approximately $1.865 billion and an expected opening in calendar 2023 [34][22] - The acquisition of MSG Networks is expected to create a company with greater scale and revenue diversity, enhancing financial flexibility [10] - The company is exploring opportunities in mobile sports gaming, anticipating a competitive market in New York [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, citing strong pent-up demand for live events and a busy year ahead [25][15] - The company expects concert touring to ramp up in late September, with fiscal 2022 pacing ahead of fiscal 2020 [15] - Management acknowledged the fluid environment due to the Delta variant but believes vaccination policies will be beneficial [14] Other Important Information - The company completed a $650 million debt raise to strengthen its balance sheet during the pandemic [11] - A long-term lease renewal for Radio City Music Hall was secured, extending the lease until 2038 [17] Q&A Session Summary Question: Thoughts on sports betting and competition - Management highlighted the opportunity presented by mobile gaming legislation and the potential for multiple operators in the market, which could enhance competition and revenue [39][40] Question: Stock buyback considerations - Management stated that the priority is to protect and invest in core assets, with a focus on MSG Sphere and refinancing existing debt [43][44] Question: Update on MSG Sphere costs and inflation impact - Management discussed actions taken to manage costs amid inflation, including securing structural steel and monitoring supply chains [49][50] Question: Direct-to-consumer offering update - Management is exploring various options for direct-to-consumer products and is in the process of renewing agreements with the NBA and NHL [53][55] Question: Hakkasan's pre-pandemic performance - Management noted that Hakkasan nearly doubled Tao's revenue base based on 2019 results and highlighted the transformative potential of the acquisition [60][61] Question: Long-term recovery outlook - Management expressed confidence in a strong booking calendar for fiscal 2022, driven by rescheduled shows and new events [64][65] Question: Cost synergies post-merger - Management expects to realize savings in taxes, operating expenses, and interest payments, with specific figures provided for each category [71]