Madison Square Garden Entertainment (MSGE) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenues of $460 million and adjusted operating income of $190 million for the fiscal second quarter, both representing double-digit percentage increases year-over-year [4][10][13] - Adjusted operating income increased by 16% compared to the prior year quarter, primarily reflecting the increase in revenues, partially offset by higher direct operating SG&A expenses [13] Business Line Data and Key Metrics Changes - The Christmas Spectacular generated approximately $195 million in total revenue this season, with 215 paid performances, an increase from 200 performances last year [5][10] - Per-show revenue increased by a mid-single-digit percentage compared to fiscal 2025, driven by higher ticket-related revenues and record levels of per caps on food, beverage, and merchandise [6][10] - The number of concerts at The Garden decreased compared to the prior year quarter, but the overall number of events across venues increased, driven by growth in concerts at the company's theaters and family shows [7][10] Market Data and Key Metrics Changes - The company welcomed approximately 2.9 million guests at over 475 events during the quarter, with strong demand leading to sold-out performances across the majority of concerts [5][45] - The Knicks and Rangers played a combined four more home games during the fiscal second quarter compared to the prior year quarter, contributing to increased revenues from these teams [11] Company Strategy and Development Direction - The company is focused on optimizing its schedule, pricing, and marketing for productions like the Christmas Spectacular, with plans to potentially increase show counts and ticket pricing in the future [19][20] - The company is actively booking concerts for the remainder of fiscal 2026 and has exceeded its concert bookings goal for The Garden, indicating strong growth prospects [26][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering robust growth in revenue and adjusted operating income for fiscal 2026, supported by strong consumer demand and successful events [4][15] - The company noted that consumer demand remains strong, with exceptional demand for the Christmas Spectacular and sold-out concerts, indicating positive trends for the upcoming quarters [44] Other Important Information - The company had $157 million of unrestricted cash as of December 31, up from $30 million as of September 30, reflecting strong cash flow generation [14] - The company repurchased approximately 623,000 shares of its Class A common stock for $25 million fiscal year to date, with $45 million remaining under its current buyback authorization [14] Q&A Session Summary Question: Insights on Christmas Spectacular performance and future growth - Management noted strong ticket demand and pricing, with opportunities to increase show counts and average ticket yields based on this year's performance [18][20] Question: Update on concert bookings trends - Management indicated a successful first half of the year with increased bookings, and strong visibility into concert bookings for the first half of fiscal 2027, including notable acts [25][28] Question: Incremental revenue from Harry Styles residency - Management expects the Harry Styles residency to be a meaningful contributor to concert growth, with strong presales indicating high demand [33][34] Question: Consumer demand trends and capital returns - Management reported strong consumer demand across events, with plans to continue returning capital to shareholders while maintaining a strong balance sheet [44][46] Question: Updates on Penn Station redevelopment - Management confirmed that the selection of a master developer is expected by May 2026, and reiterated the company's commitment to improving the area [51][52] Question: SG&A expenses and future outlook - Management explained that elevated SG&A expenses included nonrecurring items and higher labor costs, with expectations for normalization in the coming quarters [56][57]