Fiscal 2017 second quarter revenue of $445.2 million, an increase of 8% versus the prior year quarter
Fiscal 2017 second quarter operating income of $58.3 million, an increase of 19% versus the prior year quarter
Fiscal 2017 second quarter adjusted operating income of $96.0 million, an increase of 17% versus the prior year quarter
NEW YORK, Feb. 03, 2017 (GLOBE NEWSWIRE) -- The Madison Square Garden Company (NYSE:MSG) today reported financial results for the second quarter ended December 31, 2016.
Financial results for both the fiscal 2017 and fiscal 2016 second quarters reflect the Company's financial results on a standalone basis, including the Company's actual corporate general and administrative costs.
For the fiscal 2017 second quarter, the Company generated revenues of $445.2 million, an increase of 8% as compared with the prior year period. In addition, the Company generated fiscal 2017 second quarter operating income of $58.3 million and adjusted operating income of $96.0 million, which represent increases of 19% and 17%, respectively, both as compared to the prior year second quarter. (1) (2) (3)
President and CEO David O’Connor said, “For the fiscal 2017 second quarter, we delivered robust top-line and adjusted operating income growth - driven by broad-based strength across our Entertainment and Sports businesses. In addition to a strong quarter for our core operations, we took an important step in expanding our live offerings with our purchase of a majority interest in TAO Group, which adds a complementary world-class entertainment dining and hospitality group that generates substantial adjusted operating income, with significant growth potential. Looking ahead, we are confident that with our continued commitment to delivering exceptional live experiences, we are well-positioned for attractive long-term growth and asset value creation for our shareholders.”
Results from Operations
Segment results for the quarters ended December 31, 2016 and 2015 are as follows:
| Revenues | Operating Income (Loss) | Adjusted Operating Income (Loss) | ||||||||||||||||||||||
| $ millions | F’Q2 2017 | F’Q2 2016 | % Change | F’Q2 2017 | F’Q2 2016 | % Change | F’Q2 2017 | F’Q2 2016 | % Change | |||||||||||||||
| MSG Entertainment | $ | 192.5 | $ | 181.1 | 6 | % | $ | 56.7 | $ | 44.3 | 28 | % | $ | 63.7 | $ | 48.9 | 30 | % | ||||||
| MSG Sports | 252.7 | 229.5 | 10 | % | 40.2 | 40.5 | (1 | )% | 47.2 | 45.8 | 3 | % | ||||||||||||
| Other | — | 0.2 | NM | (38.7 | ) | (35.8 | ) | (8 | )% | (14.9 | ) | (12.6 | ) | (19 | )% | |||||||||
| Total Company | $ | 445.2 | $ | 410.8 | 8 | % | $ | 58.3 | $ | 49.0 | 19 | % | $ | 96.0 | $ | 82.1 | 17 | % | ||||||
Note: Does not foot due to rounding
(1) The Company formerly referred to adjusted operating income (loss) as adjusted operating cash flow. The components of adjusted operating income (loss) are identical to the components of adjusted operating cash flow. See page 3 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures.
(2) During the fiscal 2017 first quarter, the Company refined its approach to allocating its corporate, venue operating and other shared expenses. Prior period results are reflected as originally reported and have not been restated. Had this approach been used in fiscal 2016, MSG Sports and MSG Entertainment operating income for the fiscal 2016 second quarter would have improved by approximately $0.7 million and less than $0.1 million, respectively, while Other operating loss would have increased by $0.8 million. Further, MSG Sports and MSG Entertainment adjusted operating income for the fiscal 2016 second quarter would have improved by approximately $0.8 million and $0.7 million, respectively, while Other adjusted operating loss would have increased by $1.5 million.
(3) During the fiscal 2016 second quarter, for segment reporting purposes, ad sales commission revenues and associated expenses were allocated 50% to each of the MSG Entertainment and MSG Sports segments. Effective January 1, 2016, the Company began presenting all of its ad sales commission revenues and associated expenses within the MSG Sports segment. The segments’ operating results for the fiscal 2016 second quarter have been restated to reflect this change.
MSG Entertainment
For the fiscal 2017 second quarter as compared to the prior year period, MSG Entertainment revenues of $192.5 million increased 6%. The increase was primarily due to higher revenues for the Christmas Spectacular Starring the Radio City Rockettes production and higher overall event-related revenues at the Company's venues, as well as higher venue-related sponsorship and signage and suite rental fee revenues. The increase in revenues for the Christmas Spectacular Starring the Radio City Rockettes production was primarily due to higher average ticket prices, while the increase in event-related revenues at the Company's venues was primarily due to higher revenues at the Forum and, to a lesser extent, at The Garden, partially offset by lower revenues at The Theater at Madison Square Garden.
Fiscal 2017 second quarter operating income of $56.7 million increased 28% and adjusted operating income of $63.7 million increased 30%, both as compared to the prior year period. The increase in operating income and adjusted operating income as compared to the prior year period primarily reflects the increase in revenues and a decrease in direct operating expenses, slightly offset by higher selling, general and administrative expenses.
The decrease in direct operating expenses primarily reflects lower expenses for the Christmas Spectacular Starring the Radio City Rockettes production, partially offset by other net increases.
MSG Sports
For the fiscal 2017 second quarter as compared to the prior year period, MSG Sports revenues of $252.7 million increased 10%. The increase in revenues was primarily due to higher league distributions and professional sports teams' ticket-related revenue. The increase in league distributions reflects the impact of the NBA’s new national media rights agreements which began with the 2016-17 NBA regular season, partially offset by other net decreases. The increase in professional sports teams' ticket-related revenue primarily reflects higher average per-game revenue and one more New York Rangers pre-season game as compared to the prior year period. In addition, MSG Sports revenues increased due to higher event-related revenues from other live sporting events, professional sports teams' food, beverage and merchandise sales, and local media rights fees from MSG Networks Inc.
Second quarter operating income decreased by $0.3 million to $40.2 million and adjusted operating income increased by $1.5 million to $47.2 million. The decrease in operating income primarily reflects an increase in direct operating expenses and, to a lesser extent, an increase in selling, general and administrative expenses (including stock-based compensation expense), largely offset by the increase in revenues. The increase in adjusted operating income primarily reflects the increase in revenues, largely offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses (excluding stock-based compensation expense).
The increase in direct operating expenses primarily reflects higher team personnel compensation costs and, to a lesser extent, higher net provisions for NBA and NHL revenue sharing expense, event-related expenses associated with other live sporting events, and other team operating expenses.
Other
For the fiscal 2017 second quarter, Other operating loss of $38.7 million and adjusted operating loss of $14.9 million increased by $2.9 million and $2.4 million, respectively, primarily due to higher employee compensation and related benefits and an increase in the Company's provision for New York State and City capital tax, partially offset by lower professional fees.
About The Madison Square Garden Company
The Madison Square Garden Company (MSG) is a world leader in live sports and entertainment that presents or hosts a broad array of world-class events — including concerts, sporting events, family shows and special events - in an unparalleled mix of celebrated venues that span four of the nation’s largest entertainment markets. Those venues are: New York’s Madison Square Garden, The Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, CA; The Chicago Theatre; and the Wang Theatre in Boston. In addition, MSG has a diverse collection of properties that includes some of the most widely-recognized sports franchises: the New York Knicks (NBA), the New York Rangers (NHL) and the New York Liberty (WNBA), along with two development league teams -- the Westchester Knicks (NBADL) and the Hartford Wolf Pack (AHL). The Company also features popular original entertainment productions -- the Christmas Spectacular and New York Spectacular - both starring the Radio City Rockettes, and through Boston Calling Events, produces outdoor festivals, including New England’s premier Boston Calling Music Festival. More information is available at www.themadisonsquaregardencompany.com.
Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) before 1) depreciation, amortization and impairments of property and equipment and intangible assets, 2) share-based compensation expense or benefit, 3) restructuring charges or credits and 4) gains or losses on sales or dispositions of businesses. Because it is based upon operating income (loss), adjusted operating income (loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of the various operating units of our business without regard to either the distortive effects of fluctuating stock prices or the settlement of an obligation that is not expected to be made in cash.
The Company formerly referred to adjusted operating income (loss) as adjusted operating cash flow. The components of adjusted operating income (loss) are identical to the components of adjusted operating cash flow.
We believe adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of our business segments and the Company on a consolidated basis. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and adjusted operating income (loss) measures as the most important indicators of our business performance, and evaluate management’s effectiveness with specific reference to these indicators. Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of adjusted operating income (loss) to operating income (loss), please see page 4 of this release.
Forward-Looking Statements
This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments and events may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industry in which it operates and the factors described in the Company’s filings with the Securities and Exchange Commission, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.
Conference Call Information:
The conference call will be Webcast live today at 10:00 a.m. ET at www.themadisonsquaregardencompany.com
Conference call dial-in number is 877-347-9170 / Conference ID Number 52564839
Conference call replay number is 855-859-2056 / Conference ID Number 52564839 until February 10, 2017
| THE MADISON SQUARE GARDEN COMPANY | ||||||||||||||||
| CONSOLIDATED/COMBINED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues | $ | 445,150 | $ | 410,838 | $ | 626,845 | $ | 561,219 | ||||||||
| Direct operating expenses | 266,673 | 249,632 | 378,080 | 320,982 | ||||||||||||
| Selling, general and administrative expenses | 94,260 | 86,262 | 171,281 | 144,630 | ||||||||||||
| Depreciation and amortization | 25,966 | 25,905 | 52,076 | 51,145 | ||||||||||||
| Operating income | 58,251 | 49,039 | 25,408 | 44,462 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Earnings (loss) in equity method investments | (1,188 | ) | (2,475 | ) | (2,182 | ) | 204 | |||||||||
| Interest income | 2,692 | 1,448 | 5,091 | 2,405 | ||||||||||||
| Interest expense | (491 | ) | (514 | ) | (901 | ) | (1,054 | ) | ||||||||
| Miscellaneous income (expense) | 1,405 | (4,080 | ) | 1,405 | (4,080 | ) | ||||||||||
| Income from operations before income taxes | 60,669 | 43,418 | 28,821 | 41,937 | ||||||||||||
| Income tax benefit (expense) | (3,248 | ) | 70 | (314 | ) | (52 | ) | |||||||||
| Net income | 57,421 | 43,488 | 28,507 | 41,885 | ||||||||||||
| Less: Net loss attributable to noncontrolling interests | (305 | ) | — | (593 | ) | — | ||||||||||
| Net income attributable to The Madison Square Garden Company’s stockholders | $ | 57,726 | $ | 43,488 | $ | 29,100 | $ | 41,885 | ||||||||
| Basic earnings per common share attributable to The Madison Square Garden Company’s stockholders | $ | 2.41 | $ | 1.74 | $ | 1.21 | $ | 1.68 | ||||||||
| Diluted earnings per common share attributable to The Madison Square Garden Company’s stockholders | $ | 2.39 | $ | 1.74 | $ | 1.20 | $ | 1.67 | ||||||||
| Basic weighted-average number of common shares outstanding | 23,971 | 24,971 | 24,013 | 24,949 | ||||||||||||
| Diluted weighted-average number of common shares outstanding | 24,143 | 25,055 | 24,192 | 25,031 | ||||||||||||
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)
(Dollars in thousands)
The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating income (loss) as described in this earnings release:
- Share-based compensation expense. This adjustment eliminates the compensation expense relating to restricted stock units granted under our employee stock plan and non-employee director plan in all periods.
- Depreciation and amortization. This adjustment eliminates depreciation, amortization and impairments of property and equipment and intangible assets in all periods.
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Operating income | $ | 58,251 | $ | 49,039 | $ | 25,408 | $ | 44,462 | ||||||||
| Share-based compensation | 11,743 | 7,154 | 20,098 | 10,259 | ||||||||||||
| Depreciation and amortization | 25,966 | 25,905 | 52,076 | 51,145 | ||||||||||||
| Adjusted operating income | $ | 95,960 | $ | 82,098 | $ | 97,582 | $ | 105,866 | ||||||||
| THE MADISON SQUARE GARDEN COMPANY | ||||||||||||||||||||||
| CONSOLIDATED/COMBINED OPERATIONS DATA | ||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| REVENUES | ||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||
| 2016 | 2015 | % Change | ||||||||||||||||||||
| MSG Entertainment | $ | 192,485 | $ | 181,087 | 6 | % | ||||||||||||||||
| MSG Sports | 252,665 | 229,533 | 10 | % | ||||||||||||||||||
| All other | — | 218 | NM | |||||||||||||||||||
| The Madison Square Garden Company Total | $ | 445,150 | $ | 410,838 | 8 | % | ||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||
| December 31, | ||||||||||||||||||||||
| 2016 | 2015 | % Change | ||||||||||||||||||||
| MSG Entertainment | $ | 303,183 | $ | 258,113 | 17 | % | ||||||||||||||||
| MSG Sports | 323,662 | 302,681 | 7 | % | ||||||||||||||||||
| All other | — | 425 | NM | |||||||||||||||||||
| The Madison Square Garden Company Total | $ | 626,845 | $ | 561,219 | 12 | % | ||||||||||||||||
| OPERATING INCOME (LOSS) AND ADJUSTED OPERATING INCOME (LOSS) | ||||||||||||||||||||||
| Operating Income (Loss) | Adjusted Operating Income (Loss) | |||||||||||||||||||||
| Three Months Ended December 31, | Three Months Ended December 31, | |||||||||||||||||||||
| 2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||||
| MSG Entertainment | $ | 56,746 | $ | 44,276 | 28 | % | $ | 63,655 | $ | 48,892 | 30 | % | ||||||||||
| MSG Sports | 40,205 | 40,534 | (1 | )% | 47,210 | 45,756 | 3 | % | ||||||||||||||
| All other | (38,700 | ) | (35,771 | ) | (8 | )% | (14,905 | ) | (12,550 | ) | (19 | )% | ||||||||||
| The Madison Square Garden Company Total | $ | 58,251 | $ | 49,039 | 19 | % | $ | 95,960 | $ | 82,098 | 17 | % | ||||||||||
| Operating Income (Loss) | Adjusted Operating Income (Loss) | |||||||||||||||||||||
| Six Months Ended December 31, | Six Months Ended December 31, | |||||||||||||||||||||
| 2016 | 2015 | % Change | 2016 | 2015 | % Change | |||||||||||||||||
| MSG Entertainment | $ | 49,460 | $ | 43,919 | 13 | % | $ | 62,594 | $ | 52,025 | 20 | % | ||||||||||
| MSG Sports | 49,522 | 60,513 | (18 | )% | 62,629 | 70,169 | (11 | )% | ||||||||||||||
| All other | (73,574 | ) | (59,970 | ) | (23 | )% | (27,641 | ) | (16,328 | ) | (69 | )% | ||||||||||
| The Madison Square Garden Company Total | $ | 25,408 | $ | 44,462 | (43 | )% | $ | 97,582 | $ | 105,866 | (8 | )% | ||||||||||
| THE MADISON SQUARE GARDEN COMPANY | ||||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
| (Unaudited) | ||||||||||||
| December 31, 2016 | June 30, 2016 | |||||||||||
| ASSETS | ||||||||||||
| Current Assets: | ||||||||||||
| Cash and cash equivalents | $ | 1,410,345 | $ | 1,444,317 | ||||||||
| Restricted cash | 19,652 | 27,091 | ||||||||||
| Accounts receivable, net | 90,837 | 75,998 | ||||||||||
| Net related party receivables, current | 3,996 | 4,079 | ||||||||||
| Prepaid expenses | 40,460 | 27,031 | ||||||||||
| Other current assets | 23,710 | 25,337 | ||||||||||
| Total current assets | 1,589,000 | 1,603,853 | ||||||||||
| Net related party receivables, noncurrent | — | 1,710 | ||||||||||
| Investments and loans to nonconsolidated affiliates | 264,484 | 263,546 | ||||||||||
| Property and equipment, net of accumulated depreciation and amortization of $589,646 and $540,801 as of December 31, 2016 and June 30, 2016, respectively | 1,131,236 | 1,160,609 | ||||||||||
| Amortizable intangible assets, net | 24,297 | 15,729 | ||||||||||
| Indefinite-lived intangible assets | 166,850 | 166,850 | ||||||||||
| Goodwill | 289,704 | 277,166 | ||||||||||
| Other assets | 87,214 | 54,487 | ||||||||||
| Total assets | $ | 3,552,785 | $ | 3,543,950 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities: | ||||||||||||
| Accounts payable | $ | 29,204 | $ | 13,935 | ||||||||
| Net related party payables | 16,271 | 15,275 | ||||||||||
| Accrued liabilities: | ||||||||||||
| Employee related costs | 85,445 | 119,357 | ||||||||||
| Other accrued liabilities | 146,791 | 133,832 | ||||||||||
| Deferred revenue | 371,806 | 332,416 | ||||||||||
| Total current liabilities | 649,517 | 614,815 | ||||||||||
| Defined benefit and other postretirement obligations | 56,436 | 66,035 | ||||||||||
| Other employee related costs | 23,828 | 32,921 | ||||||||||
| Deferred tax liabilities, net | 194,897 | 194,583 | ||||||||||
| Other liabilities | 50,076 | 49,175 | ||||||||||
| Total liabilities | 974,754 | 957,529 | ||||||||||
| Commitments and contingencies | ||||||||||||
| The Madison Square Garden Company Stockholders’ Equity: | ||||||||||||
| Class A Common stock, par value $0.01, 120,000 shares authorized; 19,433 and 19,777 shares outstanding as of December 31, 2016 and June 30, 2016, respectively | 204 | 204 | ||||||||||
| Class B Common stock, par value $0.01, 30,000 shares authorized; 4,530 shares outstanding as of December 31, 2016 and June 30, 2016 | 45 | 45 | ||||||||||
| Preferred stock, par value $0.01,15,000 shares authorized; none outstanding as of December 31, 2016 and June 30, 2016 | — | — | ||||||||||
| Additional paid-in capital | 2,812,156 | 2,806,352 | ||||||||||
| Treasury stock, at cost, 1,015 and 671 shares as of December 31, 2016 and June 30, 2016, respectively | (166,815 | ) | (101,882 | ) | ||||||||
| Accumulated deficit | (46,587 | ) | (75,687 | ) | ||||||||
| Accumulated other comprehensive loss | (31,773 | ) | (42,611 | ) | ||||||||
| Total The Madison Square Garden Company stockholders’ equity | 2,567,230 | 2,586,421 | ||||||||||
| Noncontrolling interests | 10,801 | — | ||||||||||
| Total equity | 2,578,031 | 2,586,421 | ||||||||||
| Total liabilities and equity | $ | 3,552,785 | $ | 3,543,950 | ||||||||
| THE MADISON SQUARE GARDEN COMPANY | ||||||||
| SELECTED CASH FLOW INFORMATION | ||||||||
| (Dollars in thousands) | ||||||||
| (Unaudited) | ||||||||
| Six Months Ended | ||||||||
| December 31, | ||||||||
| 2016 | 2015 | |||||||
| Net cash provided by operating activities | $ | 109,932 | $ | 114,282 | ||||
| Net cash used in investing activities | (62,691 | ) | (79,130 | ) | ||||
| Net cash provided by (used in) financing activities | (81,213 | ) | 1,509,534 | |||||
| Net increase (decrease) in cash and cash equivalents | (33,972 | ) | 1,544,686 | |||||
| Cash and cash equivalents at beginning of period | 1,444,317 | 14,211 | ||||||
| Cash and cash equivalents at end of period | $ | 1,410,345 | $ | 1,558,897 | ||||
Contacts: Kimberly Kerns Senior Vice President Communications The Madison Square Garden Company (212) 465-6442 Ari Danes, CFA Senior Vice President Investor Relations The Madison Square Garden Company (212) 465-6072
