Teleconferência de Resultados do 1T Fiscal de 2027 da MSGE: Receita Salta 37% com Crescimento de Shows

Principais destaques

• A receita do primeiro trimestre fiscal de 2027 subiu 37% na comparação anual, atingindo US$ 217,1 milhões, impulsionada principalmente pelo maior número de shows no Madison Square Garden e pelo aumento da receita por show.
• O lucro operacional ajustado aumentou US$ 27,2 milhões, alcançando US$ 34,3 milhões, uma vez que o crescimento da receita compensou com folga o aumento das despesas operacionais diretas e das despesas gerais, administrativas e de vendas (SG&A).
• A MSG Entertainment recebeu mais de 1,3 milhão de espectadores em 160 eventos ao vivo. O Garden bateu o recorde trimestral de volume de shows, impulsionado por 16 apresentações da residência de 30 noites de Harry Styles.
• A administração projeta receber mais de 1,2 milhão de espectadores e registrar receita recorde na temporada de 2026 do Christmas Spectacular, que conta com um número recorde de 231 apresentações planejadas, em comparação com 215 no ano anterior.
• A empresa recomprou aproximadamente 314.000 ações da Classe A por US$ 25 milhões durante o trimestre. As recompras acumuladas desde a cisão (spin-off) em 2023 atingiram US$ 230 milhões.
• A administração continua projetando um forte crescimento da receita e do lucro operacional ajustado para todo o ano fiscal de 2027, além de um fluxo de caixa livre recorrente significativo.

Principais dados financeiros

O crescimento da receita refletiu principalmente o aumento na oferta de entretenimento, sobretudo mais shows no Garden e maior receita por show. As receitas de alimentação, bebidas e mercadorias também subiram. Esses ganhos foram parcialmente compensados pelo menor número de shows nos teatros da empresa.

Desempenho operacional e dos negócios

A demanda por shows permaneceu forte. A grande maioria dos shows teve ingressos esgotados no trimestre, enquanto o gasto combinado com alimentação, bebidas e mercadorias por espectador cresceu a uma taxa percentual de dois dígitos na comparação anual. As vendas de ingressos para os próximos dois trimestres também avançaram a um ritmo superior ao do mesmo período do ano anterior.

O Garden superou sua meta de agendamento de shows para o ano fiscal de 2027, enquanto o portfólio mais amplo de casas de eventos atingiu mais de 80% da sua meta. A administração continua projetando crescimento anual no volume de shows tanto no Garden quanto nos teatros, apesar de variações temporais ao longo dos trimestres.

Harry Styles concluiu uma residência de 30 noites no Garden, com 16 apresentações ocorrendo no primeiro trimestre fiscal. A administração afirmou que o Garden também registrou um forte crescimento recorrente de shows excluindo a residência, embora não tenha quantificado a contribuição incremental.

A 93ª temporada do Christmas Spectacular inclui 231 apresentações planejadas, o maior total da história da produção. A receita antecipada de ingressos avançava acima do mesmo período do ano passado. A produção também adicionou um novo segmento das Rockettes e tecnologia imersiva de câmeras no palco, mantendo o uso do Sphere Immersive Sound.

As parcerias de marketing e hospitalidade premium mantiveram momento positivo. As taxas de renovação de licenças de camarotes superaram 95%, e os camarotes reformados nos níveis do evento e Lexus geraram receita incremental.

Os Knicks e os Rangers iniciaram suas temporadas 2026–2027 no Garden, com os Knicks retornando como atuais campeões da NBA. O spin-off dos Rangers não alterou os Contratos de Licença de Arena da MSG Entertainment. A parcela em dinheiro das taxas de licença será de US$ 47 milhões no ano fiscal de 2027 e está programada para aumentar 3% ao ano até o ano fiscal de 2055.

Projeções da administração

A administração espera um forte crescimento da receita e do lucro operacional ajustado no ano fiscal de 2027. A empresa também continua antecipando um fluxo de caixa livre recorrente significativo, sustentado principalmente pelo maior lucro operacional ajustado.

Os fatores de compensação esperados incluem pagamentos líquidos de juros, o status integral de pagadora de impostos em dinheiro, investimentos em capital para tecnologia e reformas selecionadas de camarotes, além da sazonalidade do capital de giro. A reversão parcial do dinheiro devido aos promotores já começou a afetar o saldo de caixa reportado.

Quanto aos agendamentos, a administração prevê crescimento no total de eventos, shows e eventos especiais. A empresa agora antecipa menos espetáculos familiares e de artes cênicas do que o planejado anteriormente, mas mais eventos esportivos de grande destaque, incluindo o torneio regional da NCAA no Garden em março.

No Garden, espera-se que o volume de shows aumente no trimestre encerrado em dezembro, mas atualmente avança em ritmo menor no segundo semestre do ano fiscal de 2027 devido ao calendário de eventos. Espera-se que o volume de shows nos teatros caia no trimestre encerrado em dezembro, mas suba no segundo semestre.

Riscos e pontos de atenção

A administração está monitorando a volatilidade macroeconômica, embora tenha afirmado que a demanda corporativa e dos consumidores permaneceu forte durante o trimestre.

O fluxo de caixa livre será afetado por pagamentos de juros, impostos, despesas de capital e movimentações de capital de giro. Os pagamentos líquidos de juros no ano fiscal de 2026 relacionados às linhas de crédito da empresa somaram US$ 32 milhões.

A potencial transferência do Infosys Theater permanece sujeita a acordos definitivos com um desenvolvedor principal. Nenhuma decisão foi tomada sobre o uso dos recursos. A administração disse que reinvestir todos os recursos potenciais em outra casa de eventos no país seria a principal forma de minimizar perdas fiscais, sendo provável que Nova York seja considerada em primeiro lugar.

Destaques das perguntas e respostas dos analistas

• Christmas Spectacular: A administração afirmou que a receita antecipada de ingressos avançava acima do ano anterior e reiterou as expectativas de receber mais de 1,2 milhão de espectadores e registrar receita recorde.
• Pipeline de shows: O Garden superou ligeiramente sua meta de agendamento para o ano fiscal de 2027, enquanto o portfólio de casas de eventos está mais de 80% reservado em relação à sua meta. As conversas continuam com artistas sobre futuras residências nas casas de eventos da empresa.
• Gastos dos consumidores: A maioria dos shows teve ingressos esgotados, o gasto per capita com alimentação, bebidas e mercadorias subiu a uma taxa percentual de dois dígitos, e vários artistas adicionaram apresentações para atender à demanda.
• Alocação de capital: As prioridades da empresa continuam sendo a solidez do balanço patrimonial, a flexibilidade para oportunidades atraentes e o retorno oportunista aos acionistas. A administração citou a recompra de US$ 25 milhões em setembro como exemplo dessa abordagem.
• Infosys Theater: O prazo e o tratamento fiscal de uma potencial transferência dependerão da estrutura final da transação. A administração espera ter tempo suficiente para determinar como quaisquer recursos seriam alocados.

Transcrição completa da teleconferência de resultados

Transcrição completa da teleconferência de resultados

Comentários da administração

Operator

Good morning. Thank you for standing by, and welcome to the Madison Square Garden Entertainment Corp. Fiscal 2027 First Quarter Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Ari Danes, Senior Vice President, Investor Relations and Treasury. Ari, please go ahead.

Ari Danes

Thank you, and welcome to MSG Entertainment's Fiscal 2027 First Quarter Earnings Conference Call. On today's call, David Collins, our EVP and Chief Financial Officer, will provide an update on the company's operations and review our financial results for the period. After our prepared remarks, we'll open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website.

Please take note of the following. Today's discussion may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call.

On Pages 4 and 5 of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to adjusted operating income, or AOI, a non-GAAP financial measure.

And with that, I'll turn the call over to David.

David Collins

Thank you, Ari, and good morning, everyone. I'm pleased to report that we're off to a strong start in fiscal 2027. For our first quarter, we generated revenues of $217 million and adjusted operating income of $34 million. These results represent significant year-over-year increases as we continue to benefit from robust ongoing demand for our offerings.

This past quarter, that strength was most notably reflected in our bookings business. And looking ahead, we anticipate that demand will also drive another record-setting run for the Christmas Spectacular, along with robust growth in revenue and AOI for the full fiscal year '27. That confidence in our outlook for the business also led us to repurchase approximately $25 million of our Class A common stock this past quarter as we continue to look for opportunities to return capital to our shareholders.

Let's now review some key operational highlights. During the quarter, we hosted over 1.3 million guests across 160 live events. This reflected broad-based booking strength from concerts, performing art shows to special events. That included the start of Harry Styles' 30-night residency during the quarter, which helped us deliver a new record for the number of concerts in any quarter at the Garden.

It also reflected a number of other unique events across our venues. That included Les Mis' multi-night run, and the return of the New York Philharmonic at Radio City Music Hall, both utilizing the venue's groundbreaking audio technology, Sphere Immersive Sound. In terms of consumer demand, the significant majority of our concerts were again sold out during the quarter. In addition, combined food, beverage and merchandise per cap spending at concerts was up a double-digit percentage year-over-year. Looking ahead, we remain on track to grow the total number of events at our venues in fiscal '27. This includes our expectations for growth in concerts this year at the Garden and our theaters.

With regards to the Knicks and Rangers, the teams began their '26-'27 regular seasons at the Garden last month, with the Knicks returning as defending NBA Champions. I would also note that last week, the Rangers business became a stand-alone public company after completing a spin-off from the Knicks business. The spin-off did not impact our Arena License Agreements with either team. This fiscal year, the cash component of the Arena license fees from those agreements will be $47 million and will continue to grow at 3% each year through fiscal 2055. And while still early, we are seeing positive momentum across our share of food, beverage and merchandise sales at Knicks and Rangers home games.

Turning to the Christmas Spectacular. The 93rd holiday season kicks off later today with 231 shows planned for this year's run. This represents the most shows ever in a season and compares to 215 performances last year. This year's production features several new elements, including the addition of a new Rockettes number. It also integrates multiple on-stage cameras to give audiences different perspectives of the Rockettes in real time as we leverage immersive technology to continue enhancing the experience.

Based on the demand we are seeing, we anticipate welcoming over 1.2 million guests to the Christmas Spectacular this holiday season, and we are confident we are on track to deliver another year of record revenues for the production.

Turning to marketing partnerships. We are seeing the positive momentum from fiscal '26 carry over into this new fiscal year. And in terms of premium hospitality, we are again seeing strong new sales and renewal activity for suites at the Garden. We also recently completed the renovation of several event and Lexus-level suites and are benefiting from the incremental revenue driven by these enhanced spaces.

Lastly, on the Penn Station redevelopment, we continue to work towards definitive agreements with a master developer on the potential transfer of the Infosys Theater at Madison Square Garden as part of their plans. We will keep you updated as we have more to share.

Now let's turn to our financial results. For the fiscal '27 first quarter, revenues were $217.1 million, up 37% year-over-year. This primarily reflected an increase in revenues from entertainment offerings and to a lesser extent, higher food, beverage and merchandise revenues. The increase in revenues from entertainment offerings as well as food, beverage and merchandise primarily reflected the increase in the number of concerts at the Garden during the quarter as well as higher per concert revenues.

In addition, revenues from other live entertainment and sporting events increased year-over-year, primarily due to an increase in the number of events at the company's venues and higher per event revenue. These increases were partially offset by fewer concerts at our theaters. First quarter adjusted operating income of $34.3 million increased $27.2 million as compared to the prior year quarter. This primarily reflects the robust increase in revenues, partially offset by higher direct operating and SG&A expenses.

Turning to our balance sheet. As of September 30, we had $194 million of unrestricted cash, while our debt balance was approximately $571 million. With respect to fiscal '27, we continue to expect to generate significant free cash flow on an underlying basis. This will primarily be driven by our substantial and growing adjusted operating income, partially offset by ongoing net interest payments related to our credit facilities, which totaled $32 million in fiscal '26, our status as a full cash taxpayer, capital expenditures, which will reflect some incremental spend related to technology investments across the company, and select suite renovations at the Garden, and the timing of working capital, including the partial reversal of the balance of our cash due to promoters due to the timing of events. You can see the start of that reversal in today's reported cash balance.

As I mentioned earlier, during the quarter, we repurchased approximately 314,000 shares of our Class A common stock for $25 million. Since our spin-off in 2023, we have repurchased approximately 6.4 million shares for $230 million. And going forward, we'll continue to explore ways to opportunistically return capital to shareholders.

So in summary, we are off to a great start this fiscal year. We remain confident in both the near- and long-term outlook for our business and our ability to drive shareholder value.

Before I turn the call back to Ari, I would like to take a moment to congratulate Josephine Vaccarello, who was recently named President of MSG Entertainment. Josephine, who has been with the company for nearly 30 years and previously served as Executive Vice President of Live, now oversees strategy and operations of multiple areas of our business. We look forward to having Josephine join us on future earnings calls.

With that, I'll now turn the call back over to Ari.

Ari Danes

Thanks, David. Operator, can we now open up the call for questions?

Operator

[Operator Instructions] Your first question comes from the line of Peter Henderson with Bank of America.

Perguntas e respostas

Peter Henderson

So with the Christmas Spectacular having its first show later today, as you mentioned, could you provide an update on like sell-through trends and pricing? And then just any thoughts you have on how the season will progress.

David Collins

Peter. Great. Thanks for the question. I mean, I have to say this year's production is seeing strong demand, and we are pleased to say that we expect to again host over 1.2 million guests at the show this holiday season. Advanced ticket revenue is currently pacing up as compared to the same time last year. Also, in terms of show count, we have 231 planned performances as compared to 215 last year. And that equates to a mid-single-digit percent increase in show count for this year.

In addition, the Christmas Spectacular continues to be a premium entertainment product and is still priced well below average ticket prices for comparable entertainment options. With that said, we continue to strategically manage, market and price our ticket inventory to make sure that we maximize revenue for every show.

I would again note that this year's show will include a new Rockettes scene as well as new immersive on-stage camera technology that will -- it will give audiences a different perspective on the production. In addition, this will be the second season that the production is utilizing Radio City's groundbreaking audio technology, what we call Sphere Immersive Sound. We believe that our continued innovation helps to drive interest in the show. And with that said, we remain confident in our ability to deliver strong growth in this business for this fiscal year.

Operator

Your next question comes from the line of Cameron Mansson-Perrone with Morgan Stanley.

Cameron Mansson-Perrone

I wanted to follow up on the concert outlook, specifically, any color you could share regarding bookings pacing across the venue portfolio through the remainder of fiscal '27? And then relatedly, the night splits, I think, were pretty equal from the Harry Styles residency between fiscal 1Q, fiscal 2Q. Just any color you'd be willing to provide on how that run specifically contributed to the concert strength in the quarter would be appreciated.

David Collins

Sure, Cameron. Thanks. As far as the concert bookings, as I mentioned earlier, we had a robust fiscal first quarter with the Garden shattering our record for the number of concerts in any quarter at the venue. Looking ahead, we now have -- we've slightly exceeded our concert bookings goal at the Garden for this fiscal year, and we are over 80% of the way there across our venue portfolios. And our goal does contemplate growth at both the Garden and our theaters.

So in the terms of the upcoming quarters, starting with the Garden, we continue to expect to be up in the December quarter in terms of the number of concerts, but we are currently pacing down in the back half of the year. However, we view that as just timing based on where concerts are landing during the fiscal year. At the theaters, we do continue to expect to be down in terms of the number of concerts in the December quarter. However, we are currently pacing up for the second half of fiscal '27. So I would say, all in all, we feel good about our start and remain confident that we're on track for growth at both the Garden and the theaters for this year.

As far as your question on the Harry Styles run, let me just say, obviously, we were pleased to have hosted Harry Styles for his record-setting 30-night run, which ended just this past weekend. That run took place every Wednesday, Friday and Saturday night at the Garden for 10 straight weeks. 16 of those shows fell in our first fiscal quarter, so a little over half of the residency.

In terms of your question on incrementality, while it's difficult to answer that question with precision, we believe that the Garden did deliver robust growth in the number of concerts year-over-year on an underlying basis. Obviously, Harry Styles' run was an additional positive on top of that underlying strength. But we do believe the Garden delivered robust growth. So I would say the same also goes from a financial standpoint. So it's difficult to quantify, but I hope that's helpful.

Operator

Your next question comes from the line of David Karnovsky with JPMorgan.

David Karnovsky

Just regarding Infosys Theater, on a prior earnings call, you talked about potentially shielding tax gains with reinvestment. Can you talk a little bit more to the mechanics here? So for instance, is there a time limit on when you'd have to invest? Do you have to use the full proceeds? And does that specifically have to be in New York City? Just any additional color would be great.

David Collins

Yes. Great, David. Thanks. Good question. As I had mentioned earlier, we are currently working through the definitive documents with the master developer team. And as of now, no decisions have been made in terms of the use of proceeds should the transfer actually be completed. That said, we remain mindful of the potential tax implications related to the transfer of the Infosys Theater.

As you alluded to in your question, the primary way for us to minimize the tax leakage would be to reinvest all of the potential proceeds in another domestic venue. So I would say that we are not limited to just the New York City market. However, I would also say that New York City is our core operating market. And with us having one less theater here, we would definitely most likely look to the New York market first.

In terms of any time limit that you had mentioned, it would ultimately depend on how the transfer of the theater ends up being structured. But in any case, we would expect to have ample time to determine the appropriate path forward. So we will definitely have more to share with you as we move through the process.

Operator

Your next question comes from the line of Stephen Laszczyk with Goldman Sachs.

Stephen Laszczyk

David, curious how you would characterize the pacing of concert sell-through and per cap spending so far this year and maybe how it relates to what you saw this time last year. Just would be curious if you're seeing any signs of the broader macro volatility showing up in consumer demand or perhaps even audience demographic shifts.

David Collins

Great. Thanks, Stephen. As always, we are certainly keeping a close eye on the macro environment, especially given the macro volatility that you mentioned. But I have to say, we continue to see strong consumer demand. There are a number of factors that I can share to support this view. As I mentioned earlier, the significant majority of concerts at our venues were again sold out this past quarter.

In addition, throughout the first fiscal quarter, we saw concerts perform better than we initially expected. We also saw combined F&B and merchandise per cap spending at concerts up double-digit percentages year-over-year. There are also a number of upcoming acts across our venues that we've added additional shows due to strong demand. And when we look at the next 2 quarters, the sell-through rate for concerts is currently pacing ahead of where it was the same time last year.

And lastly, you also heard me mention that we are seeing positive momentum in marketing partnerships and premium hospitality, and that includes strong new sales and renewals for suites. In fact, our renewal rate for suite licenses this fiscal year is over 95%. So given all this, even though we're paying close attention to the macro environment, we continue to see strong demand from both consumers and our corporate clientele.

Operator

Your next question comes from the line of David Joyce with Seaport Research Partners.

David Joyce

I was wondering if you could please provide some more color on your outlook for the bookings growth by category and anything that we can be looking forward to for additional residencies? Just more color about the next year.

David Collins

Sure. Thanks, David. Well, let me start by saying that our financial outlook for our bookings business this year is stronger than when we last spoke to you in August. Underlying that statement is our continued expectation for growth in the number of booking events in fiscal '27. Starting with our concert category, as we've discussed, we anticipate another year of concert growth at the Garden as well as increases across our theaters. And we have continued to see concerts play out better than expected.

In terms of special events, we are also expecting an increase in the number of events, along with improved per-event economics. In terms of our family and performing arts category, we are now anticipating fewer shows than we initially contemplated. However, we are now expecting more marquee sports events than before, and that puts us on a path towards robust growth in that category. And obviously, that includes the NCAA regional tournament at the Garden in March.

So overall, we feel good about the outlook for our bookings business in fiscal '27.

Operator

Your next question comes from the line of Joe Stauff with Susquehanna.

Joseph Stauff

David, maybe a finer point to that last question and obviously related to others. But with the Harry Styles residency done, can you update us really on kind of what the pipeline looks like to replace and/or add on, whether it be this fiscal year or next?

David Collins

Sure, Joe. Thanks. Let me just say, we believe that there's a great value in bringing residencies to our venues. And as I've mentioned before, residencies build more of a recurring base of business for us, and they also increase visibility into our forward calendar. So booking residencies remains a really important area for our bookings business and is really a key focus of our team.

As you know, we have had a number of residencies across our venues in the first half of fiscal '27. Of course, that includes Harry Styles' 30 nights at the Garden. We had Bon Jovi and Phish also at the Garden this past summer. We have Joe Hisaishi at Radio City and Seth Meyers and John Oliver as well as Jerry Seinfeld have their long-running residencies at the Beacon Theater.

So just to reiterate, we are off to a strong start in terms of concert bookings for fiscal '27. And while it's early to discuss fiscal 2028 and beyond, let me just say that we are continuing to have discussions with other artists about future residences at all of our venues, including the Garden, and we will certainly keep you updated on that progress.

Operator

Your final question comes from the line of James Callahan with Piper Sandler.

James Callahan

David, as we move into 2027, how should investors think about free cash flow and therefore, return on capital?

David Collins

Sure, James. Thanks. As I had mentioned earlier, we continue to expect to generate significant free cash flow on an underlying basis in fiscal '27, and that will primarily be driven by our substantial and growing adjusted operating income. In terms of capital allocation, as you've heard us discuss before, we have 3 key priorities. The first is ensuring that we continue to have a strong balance sheet. Second is to ensure we have appropriate flexibility to pursue any compelling opportunities if and when they arise. And our third priority remains to opportunistically return capital to our shareholders.

So if we take a look at our recent buyback as an example, you saw in this past quarter that our stock price came down significantly. And we took advantage of that opportunity, and we repurchased $25 million of stock in September. And going forward, we will continue to explore ways such as that to opportunistically return capital to our shareholders.

Operator

We have reached the end of the Q&A session. I will now turn the call back to Ari for closing remarks.

Ari Danes

Thank you all for joining us. We will speak with you on our next earnings call. Have a good day.

Operator

This concludes today's call. Thank you for attending. You may now disconnect.