Madison Square Garden Entertainment Corp. (NYSE:MSGE) Q2 2023 Earnings Call Transcript

Dave Byrnes: Sure, Paul. First on your cost reduction question, while we’re not providing specifics, I’ll say that we identified a number of efficiencies across, both entertainment and MSG Networks. That included targeted headcount reductions, which resulted in the $13.7 million of restructuring charges that you see in the second quarter. We also identified and implemented a number of nonlabor-related cost reductions. And as Andrea has mentioned that we expect these initiatives will result in meaningful cost savings going forward, particularly at MSG Networks. On your capital allocation question for SpinCo. Yes, as we think about our capital allocation priorities for that business the first is always to maintain adequate liquidity to fund operations.

Second is to ensure that we have a strong balance sheet. And as you know the live entertainment business took on debt during the pandemic. There’s currently a little less than $680 million outstanding under that facility. So in the nearer term, we expect our priority would be debt pay down for SpinCo. And then third over time, we would certainly explore other uses of cash flow including return of capital. Just a note on that. We expect SpinCo will be well-positioned to generate cash, which will allow for rapid deleveraging and this starts with our expectation for strong AOI on an annual basis for SpinCo. And just on that point, again, note that we plan to issue an investor presentation on SpinCo with certain financial projections that will illustrate this profitability.

So again, we think this will position SpinCo well to quickly delever, which will then open the door for other potential uses of cash flow for SpinCo.

Paul Golding: Great. Thank you so much.

Dave Byrnes: You’re welcome, Paul. Thanks.

Ari Danes: Well, thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a good day.

Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.