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Sphere (SPHR) Q4 Earnings Surpass Estimates, Revenues Miss

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Sphere Entertainment Co. (SPHR - Free Report) reported mixed fourth-quarter fiscal 2023 (ended Jun 30) results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. Furthermore, the top line declined while the bottom line increased on a year-over-year basis.

In fiscal 2023, the company completed certain transactions including the spin-off of approximately two-thirds of its traditional live entertainment business and sale of its 66.9% majority interest in Tao Group Hospitality. Also, the company is optimistic about the opening of Sphere in Las Vegas.

Following the results, shares of SPHR gained 7.7% on Aug 21. Investor’s sentiments are likely to have been boosted due to the company’s completed transactions in the last year, which positioned it well to generate long-term value for shareholders.

Earnings and Revenues

In the quarter under review, the company reported adjusted earnings per share of $10.21, beating the Zacks Consensus Estimate of adjusted loss per share of 40 cents. In the prior-year quarter, the company reported adjusted loss of $1.50 per share.

Sphere Entertainment Co. Price, Consensus and EPS Surprise

 

Sphere Entertainment Co. Price, Consensus and EPS Surprise

Sphere Entertainment Co. price-consensus-eps-surprise-chart | Sphere Entertainment Co. Quote

 

Total revenues of $129.1 million missed the consensus estimate of $140 million by 7.8% and decreased 8% on a year-over-year basis.

Segments Discussion

Sphere: Revenues of this segment amounted to $0.7 million, up 12% from the reported value of $0.6 million in the year-ago quarter. This segment faced adjusted operating loss of $90.4 million compared with the adjusted operating loss of $74.7 million reported in the prior-year quarter. The increase was mainly driven by the adverse impact of the company’s transition services agreement with MSG Entertainment, along with higher employee compensation and related benefits, and other cost increases.

MSG Networks: Revenues of this segment amounted to $128.4 million, down 8% from the reported value of $139.1 million in the year-ago quarter. This segment’s adjusted operating income was $30.6 million, down from $39.2 million reported in the prior-year quarter. This was driven by the decrease in revenues and increase in direct operating expenses, which was partially offset by the decline in selling, general and administrative expenses.

Costs

During fiscal fourth-quarter 2023, the company’s direct operating expenses were $82.7 million, up 5% year over year. Selling, general and administrative expenses declined 3.9% to $109.7 million year over year.

Fiscal 2023 Highlights

In fiscal 2023, the revenues of the company declined 6% to $573.8 million. Furthermore, the company faced adjusted operating loss of $122.5 million compared with the adjusted operating loss of $24.5 million reported in fiscal 2022.

Balance Sheet

At the end of fiscal 2023, Sphere had cash, cash equivalents and restricted cash of $429.1 million compared with $760.3 million as of fiscal 2022 end. As of Jun 30, 2023, the company’s long-term debt (net of deferred financing costs) was $1.12 billion compared with $929.5 million at fiscal 2022 end.  

For fiscal 2023, the company’s net cash provided by operating activities was $153.6 million compared with $141.3 million reported in the prior-year quarter.

Zacks Rank

Sphere currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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