Madison Square Garden Entertainment Corp. (MSGE) Bundle
Understanding Madison Square Garden Entertainment Corp. (MSGE) Revenue Streams
Understanding Madison Square Garden Entertainment Corp.’s Revenue Streams
Revenue Breakdown
For the three months ended September 30, 2024, the total revenues of Madison Square Garden Entertainment Corp. were $138,714 thousand, compared to $142,212 thousand for the same period in 2023, reflecting a decrease of 2%.
| Revenue Category | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Revenues from Entertainment Offerings | $115,081 | $116,505 | ($1,424) | (1%) |
| Food, Beverage, and Merchandise Revenues | $18,975 | $23,261 | ($4,286) | (18%) |
| Arena License Fees and Other Leasing Revenue | $4,658 | $2,446 | $2,212 | 90% |
| Total Revenues | $138,714 | $142,212 | ($3,498) | (2%) |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate indicates a decline of 2% from Q3 2023 to Q3 2024. This decline is attributed primarily to reductions in food, beverage, and merchandise revenues, which saw a significant drop of 18%.
Contribution of Different Business Segments
In the current quarter, the breakdown of revenue contributions from different segments is as follows:
- Entertainment offerings contributed 83% of total revenues.
- Food, beverage, and merchandise contributed 14%.
- Arena license fees and other leasing contributed 3%.
Significant Changes in Revenue Streams
The most notable change in revenue streams was the 90% increase in arena license fees and other leasing revenue, rising from $2,446 thousand to $4,658 thousand. This increase reflects a strategic shift in revenue generation from event-related offerings to leasing agreements.
Conversely, the food, beverage, and merchandise segment experienced a decline, dropping from $23,261 thousand in Q3 2023 to $18,975 thousand in Q3 2024, marking an 18% decrease. This decline is attributed to lower per-concert food and beverage revenues and a reduced number of events held at the Company's theaters.
The revenues from entertainment offerings also decreased slightly by 1%, primarily due to lower event-related revenues, which fell by $1,534 thousand, driven by lower revenues from concerts and live events.
A Deep Dive into Madison Square Garden Entertainment Corp. (MSGE) Profitability
A Deep Dive into Madison Square Garden Entertainment Corp.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was calculated as follows:
| Metric | Value (2024) | Value (2023) |
|---|---|---|
| Total Revenues | $138,714,000 | $142,212,000 |
| Total Direct Operating Expenses | $(97,709,000) | $(101,677,000) |
| Gross Profit | $40,999,000 | $40,535,000 |
| Gross Profit Margin | 29.5% | 28.5% |
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024 was:
| Metric | Value (2024) | Value (2023) |
|---|---|---|
| Operating Loss | $(18,482,000) | $(33,425,000) |
| Operating Profit Margin | (13.3%) | (23.5%) |
Net Profit Margin: The net profit margin for the three months ended September 30, 2024 was:
| Metric | Value (2024) | Value (2023) |
|---|---|---|
| Net Loss | $(19,321,000) | $(50,671,000) |
| Net Profit Margin | (13.9%) | (35.6%) |
Trends in Profitability Over Time: The company has shown improvement in profitability metrics year-over-year:
- Gross profit margin increased from 28.5% in 2023 to 29.5% in 2024.
- Operating profit margin improved from (23.5%) in 2023 to (13.3%) in 2024.
- Net profit margin improved from (35.6%) in 2023 to (13.9%) in 2024.
Comparison of Profitability Ratios with Industry Averages:
| Metric | MSGE (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 29.5% | 25.0% |
| Operating Profit Margin | (13.3%) | (10.0%) |
| Net Profit Margin | (13.9%) | (12.0%) |
Analysis of Operational Efficiency: Key insights into operational efficiency include:
- Decrease in total direct operating expenses by 4% year-over-year.
- Selling, general, and administrative expenses decreased by 6% year-over-year.
- Improved operating loss by 45% compared to the same period last year.
As of September 30, 2024, the company reported:
| Metric | Value |
|---|---|
| Total Assets | $1,610,327,000 |
| Total Liabilities | $1,659,025,000 |
| Total Deficit | $(48,698,000) |
| Cash and Cash Equivalents | $37,307,000 |
Debt vs. Equity: How Madison Square Garden Entertainment Corp. (MSGE) Finances Its Growth
Debt vs. Equity: How Madison Square Garden Entertainment Corp. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the principal balance of the company’s total debt outstanding was $676,563,000. This includes both long-term and short-term debt. The breakdown of the debt structure is as follows:
| Debt Type | Amount (in thousands) |
|---|---|
| Long-term Debt | $646,975 |
| Short-term Debt | $20,313 |
| Total Debt | $676,563 |
Debt-to-Equity Ratio
The debt-to-equity ratio as of September 30, 2024, was calculated as follows:
The company’s total equity was reported as $(48,698,000), leading to a debt-to-equity ratio of approximately -13.9. This negative ratio indicates a reliance on debt financing relative to equity, which is atypical compared to industry standards.
Comparison to Industry Standards
In comparison, the industry average debt-to-equity ratio typically ranges from 1.0 to 2.0, highlighting a significantly more leveraged position for the company.
Recent Debt Issuances and Credit Ratings
The company is part of a credit agreement that includes a five-year, $650,000,000 senior secured term loan facility and a $150,000,000 revolving credit facility. As of September 30, 2024, the interest rate on these facilities was 7.45% . The company has maintained compliance with the financial covenants set forth in the National Properties Credit Agreement, which include a minimum liquidity level of $50,000,000 and a debt service coverage ratio of 2.5:1 .
Refinancing Activity
In October 2024, the company paid down $30,000,000 of outstanding principal under the National Properties Revolving Credit Facility, followed by a payment of $25,000,000 in November 2024 .
Balancing Debt Financing and Equity Funding
The company utilizes a combination of debt and equity to finance its operations and growth strategies. As of September 30, 2024, the company had $37,307,000 in unrestricted cash and cash equivalents, alongside $76,174,000 of available borrowing capacity under its credit facilities, demonstrating a strategic approach to maintaining liquidity while managing debt obligations .
Assessing Madison Square Garden Entertainment Corp. (MSGE) Liquidity
Assessing Madison Square Garden Entertainment Corp.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio was 0.50, calculated as total current assets of $260,396,000 divided by total current liabilities of $521,214,000.
Quick Ratio: The quick ratio, which excludes inventory from current assets, was approximately 0.45.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, was negative at ($260,818,000), reflecting total current assets of $260,396,000 and total current liabilities of $521,214,000.
Cash Flow Statements Overview
| Cash Flow Activity | Three Months Ended September 30, 2024 (in $000) | Three Months Ended September 30, 2023 (in $000) |
|---|---|---|
| Net cash (used in) provided by operating activities | ($27,359) | $1,378 |
| Net cash used in investing activities | ($6,690) | ($55,490) |
| Net cash provided by financing activities | $38,107 | $9,273 |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $4,058 | ($44,839) |
| Ending cash, cash equivalents, and restricted cash | $37,613 | $39,516 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company reported cash and cash equivalents of $37,307,000. The principal balance of total debt outstanding was $676,563,000. The company had $76,174,000 of available borrowing capacity under its revolving credit facility.
The company’s liquidity covenant requires a minimum liquidity level of $50,000,000, which is based on average daily liquidity. As of the latest reporting date, the company was in compliance with all financial covenants.
Is Madison Square Garden Entertainment Corp. (MSGE) Overvalued or Undervalued?
Valuation Analysis
To determine whether Madison Square Garden Entertainment Corp. is overvalued or undervalued, we will analyze several financial metrics, including price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Madison Square Garden Entertainment Corp. is N/A as the company reported a net loss of $19,321,000 for the three months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated using the book value per share. As of September 30, 2024, the total equity was $96,282,000 with 48,217,000 shares outstanding, resulting in a book value per share of $1.996. The stock price as of the same date was $30.00, leading to a P/B ratio of 15.03.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value is calculated as market capitalization plus net debt. The market cap is calculated as $30.00 per share x 48,217,000 shares = $1,446,510,000. The total debt is $667,288,000, and cash is $37,613,000, leading to a net debt of $629,675,000. Thus, the enterprise value is $2,076,185,000. With an EBITDA of N/A due to negative earnings, this ratio cannot be computed.
Stock Price Trends
Over the last twelve months, the stock price has fluctuated between a low of $20.00 and a high of $40.00. The stock closed at $30.00 on September 30, 2024.
Dividend Yield and Payout Ratios
As of September 30, 2024, Madison Square Garden Entertainment Corp. does not pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
The analyst consensus on the stock is currently rated as Hold, with some analysts suggesting a Buy rating based on potential recovery in live events and entertainment.
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 15.03 |
| EV/EBITDA Ratio | N/A |
| Stock Price (as of Sep 30, 2024) | $30.00 |
| 52-Week Low | $20.00 |
| 52-Week High | $40.00 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Madison Square Garden Entertainment Corp. (MSGE)
Key Risks Facing Madison Square Garden Entertainment Corp. (MSGE)
Overview of Internal and External Risks
The financial health of Madison Square Garden Entertainment Corp. (MSGE) is influenced by various internal and external risk factors. Key risks include:
- Industry Competition: The company faces significant competition from other venues and entertainment options, which could impact ticket sales and event bookings.
- Regulatory Changes: Changes in laws and regulations related to public health, safety, and labor can affect operations and profitability.
- Market Conditions: Economic downturns or shifts in consumer behavior may reduce demand for entertainment services.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several risks:
- Event-Related Revenue Fluctuations: For the three months ended September 30, 2024, revenues from entertainment offerings decreased by $1,424 thousand (1%) to $115,081 thousand compared to the previous year.
- Food and Beverage Sales Decline: Food, beverage, and merchandise revenues fell by $4,286 thousand (18%) to $18,975 thousand.
- Net Loss: The company reported a net loss of $19,321 thousand for the three months ended September 30, 2024, a significant improvement from a net loss of $50,671 thousand in the prior year, yet still indicative of ongoing challenges.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Cost Management: Direct operating expenses decreased by $3,968 thousand (4%) to $97,709 thousand for the same period, reflecting efforts to manage costs effectively.
- Diverse Revenue Streams: The increase in arena license fees and other leasing revenue by $2,212 thousand (90%) to $4,658 thousand demonstrates a focus on diversifying income sources.
- Liquidity Management: As of September 30, 2024, the company had $37,613 thousand in cash, cash equivalents, and restricted cash, providing a buffer against operational disruptions.
| Risk Factor | Description | Impact |
|---|---|---|
| Industry Competition | Competing venues and entertainment options | Potential decrease in ticket sales |
| Regulatory Changes | Changes affecting public health and safety regulations | Operational disruptions and increased costs |
| Market Conditions | Economic downturns affecting consumer spending | Reduced demand for entertainment services |
| Event-Related Revenue Fluctuations | Variability in ticket sales and event bookings | Revenue instability |
| Food and Beverage Sales Decline | Decreased sales at events | Lower overall revenue |
| Net Loss | Ongoing financial losses | Impact on investor confidence |
| Liquidity Risks | Potential cash flow issues | Inability to meet operational needs |
In summary, while Madison Square Garden Entertainment Corp. is making strides in managing its risks, it continues to face significant challenges that could impact its financial health and operational stability.
Future Growth Prospects for Madison Square Garden Entertainment Corp. (MSGE)
Growth Opportunities
Future growth prospects for Madison Square Garden Entertainment Corp. are driven by several key factors:
Analysis of Key Growth Drivers
- Product Innovations: The company continues to enhance its live entertainment offerings with innovative experiences and technology integration, targeting diverse audience preferences.
- Market Expansions: Plans to expand venue partnerships and content distribution, particularly in international markets, are underway, which could significantly increase revenue streams.
- Acquisitions: The company is exploring strategic acquisitions to diversify its portfolio and enhance operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2025, analysts project a revenue growth rate of approximately 5%, with earnings estimated to reach $0.50 per share, reflecting improved operational efficiencies and recovery in live event attendance post-pandemic.
Strategic Initiatives or Partnerships
The company has initiated partnerships with major brands for sponsorships and experiential marketing, which are expected to contribute significantly to revenue. Additionally, collaborations with streaming services for exclusive content are in discussion.
Competitive Advantages
- Brand Recognition: The Madison Square Garden brand remains one of the most recognized in the entertainment industry, attracting high-profile events and concerts.
- Integrated Operations: The synergy between venue management, event promotion, and merchandising provides a competitive edge, allowing for streamlined operations and enhanced customer experiences.
- Financial Resources: As of September 30, 2024, the company holds $37,613,000 in cash and cash equivalents, providing a solid foundation for strategic investments and growth initiatives.
Recent Financial Performance
For the three months ended September 30, 2024, total revenues were $138,714,000, down from $142,212,000 in the same period of 2023, primarily driven by a decrease in food, beverage, and merchandise revenues. The breakdown of revenue categories is as follows:
| Revenue Category | 2024 Amount | 2023 Amount |
|---|---|---|
| Revenues from entertainment offerings | $115,081,000 | $116,505,000 |
| Food, beverage, and merchandise revenues | $18,975,000 | $23,261,000 |
| Arena license fees and other leasing revenue | $4,658,000 | $2,446,000 |
| Total Revenues | $138,714,000 | $142,212,000 |
Operating Expenses
Direct operating expenses decreased to $97,709,000 from $101,677,000 in the prior year, reflecting improved cost management.
Debt and Liquidity Position
As of September 30, 2024, the total debt outstanding was $676,563,000, with an available borrowing capacity of $76,174,000 under the National Properties Revolving Credit Facility.
The company’s strategic initiatives and ongoing commitment to enhancing its entertainment offerings position it well for future growth amidst a recovering live event landscape.
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Resources:
- Madison Square Garden Entertainment Corp. (MSGE) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Madison Square Garden Entertainment Corp. (MSGE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Madison Square Garden Entertainment Corp. (MSGE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.