Good day, everyone. My name is Christina, and I will be your conference operator on today's call. At this time, I'd like to welcome everyone to the Live Nation Entertainment's First Quarter 2020 Earnings Conference Call. Today's conference is being recorded. Before we begin, Live Nation has asked me to remind you that this afternoon's call will contain certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ including statements related to the company's anticipated financial performance, business prospects, new developments, and similar matters. Please refer to Live Nation's SEC filings, including the risk factors and cautionary statements included in the company's most recent filings on Forms 10-K, 10-Q, and 8-K for a description of risks and uncertainties that could impact the actual results. Live Nation will also refer to some non-GAAP measures on this call. In accordance with the SEC Regulation G, Live Nation has provided a full reconciliation of the most comparable GAAP measures in their earnings release. The release, reconciliation and other financial statistical information to be discussed on this call can be found under the Financial Information section on Live Nation's website at investors.livenationentertainment.com. It is now my pleasure to turn the conference over to Michael Rapino, President and Chief Executive Officer of Live Nation Entertainment. Please go ahead, sir.

Good afternoon. Thank you for joining us. I hope that everyone out there is healthy and safe. On our last call, we were on track for tremendous growth across all our businesses, with both fan demand and artists touring increasing on a global basis. Then in mid-March, we came to a halt. We have held no concerts in almost two months. Despite these challenging times, we continue to have full confidence in the long-term supply and demand of the live concert industry, Live Nation's leadership position, and our business model's ability to successfully deliver AOI growth and shareholder value. With that context, let me update you on our top priorities at this point. Our top priority is to ensure the health and safety of our employees, fans, and artists. Like most of the world, we have been working remotely since mid-March, and we will return to work only after there is clear consensus that it is safe to do so, and then in appropriate numbers with expanding cleaning and social distancing protocols. Similarly, we recognize the experience that our venues will change when concerts start back up. And we're working with medical experts and public health officials on procedures to keep people safe while enjoying our shows. When we asked over 8,000 fans across North America about the requirements for returning to shows, they had two clear priorities, with 85% of fans stating they want increased cleaning and sanitizing of the venues and ready access to hand sanitizing stations, while no other action received more than 40%. In addition, we expect to have additional safety protocols in place, potentially including reduced capacity, touchless concessions and creative ways to apply our digital ticketing technology. Our next priority is planning for the reopening of concerts when the time is right. First and foremost, we will let the facts and science tell us when we should start putting on concerts again. We are working with government at federal and state levels in the U.S. and across all markets in building plans that fit with their reopening phases. In the meantime, we have fortified our balance sheet to have the resources to ramp up quickly when the time is right. We know from fans that demand will be there when the shows return. Globally, over 90% of fans are holding on to their tickets for rescheduled shows when refunds are available. That's the clearest demonstration of pent-up demand that will enable us to quickly start concerts back up. Looking a bit farther out, given that 80% of shows are rescheduled rather than canceled, and as noted, almost all fans are holding on to their tickets, we believe 2021 can return to show volume and fan attendance at levels consistent with what we've seen in recent years. As we plan the resumption of concerts, we're also seeing a number of innovations within our company as artists look to stay connected to fans. Almost 1 million fans have come to our Live at Home site to find virtual tours and acoustic performances from their home. And millions of fans in over 100 different countries have joined Insomniac's Virtual Rave-a-Thons, while drive-in concerts are finding a new purpose as socially-distant concert halls. Throughout all this, we are still motivated by the long-term potential of global live events. It's in our DNA to want to gather, socialize, and celebrate. And as we provide assurances on health and safety at the venue, we expect our business to build back. Live Nation is in the best position in the live ecosystem to play long and to capture new opportunities, continuing to lead the industry into the future. I'll now hand the call over to Joe, who will provide additional full details on our balance sheet.

Thanks, Michael, and good afternoon, everyone. Before getting into the quarter, I want to give a quick update on our cost and cash management programs, which we launched in March. We previously announced initiatives to cut costs by $500 million this year. And we've surpassed that goal and are now targeting $600 million in cost reductions. We've also expanded our cash management program, which including our cost initiatives, now eliminates or defers $1 billion in cash requirements this year. As a result, we project our monthly operational cost burn rate to be approximately $150 million per month for the second quarter and through the remainder of the year. Now I will walk through the impact of the COVID shutdown on each of our businesses during the first quarter. As we previously indicated, at the end of February, we were headed toward delivering Q1 AOI in line with last year, approximately $115 million. Instead, with the shutdown, we had a $21 million AOI loss for the quarter. The direct COVID impact in the quarter was approximately $165 million, which was partially offset by approximately $30 million in cost savings during the quarter. Starting with concerts, our concerts division went from $5 million of AOI in the first quarter of last year to a loss of $88 million this year. Through February, we had promoted 5,500 shows for nearly 8 million fans, up year-on-year by 17% and 2%, respectively. We then ended the quarter with 7,100 shows for 10.4 million fans, down 14% and 30%, respectively, from last year. With 2,100 March shows canceled or rescheduled to a future date, we've lost approximately $40 million of anticipated contribution margin on those shows. Additionally, we had a one-time expense of approximately $25 million for sunk costs for canceled shows, which included the cost of paying show employees for those shows that didn't happen during the second half of March. We had always expected our concerts AOI to be down in Q1 given the show activity level and increased fixed costs of approximately $40 million largely associated with acquisitions made over the last year. But unfortunately, the March shutdown led to a substantially lower AOI. On a separate matter, our OCESA acquisition was approved by Mexico's regulators in April. We've now entered into discussions with CIE and Televisa regarding the timing and terms of the previously announced OCESA transaction. And we do not expect to close the transaction until we have greater clarity on the duration of the shutdown in Mexico and its impact on OCESA's business. Next, Ticketmaster. Our ticketing division AOI fell from $100 million in the first quarter last year to $45 million this year. Similar to our concerts division, through February, we were on track for a strong Q1 with fee-bearing GTV up 31% to $3.2 billion. Net of refunds, we then ended the quarter with $3.0 billion in fee-bearing GTV, down 22% from Q1 last year. This drastic reduction in fee-bearing GTV led to an approximately $65 million reduction in contribution margin relative to our February forecast for the business. In addition, we refunded 5.2 million tickets for $432 million of GTV during March. And along with an accrual for future refunds of shows canceled in April, this resulted in a $35 million reduction in contribution margin. To give you a little more color on our refunds through this past weekend, Ticketmaster has had 65,000 shows impacted by the virus. Virtually all canceled shows are currently refunding, and about 80% of rescheduled shows or postponed shows are currently offering refunds. For Live Nation concerts, about 9,000 shows have been impacted. Of those shows, about 20% have canceled and 80% are rescheduling. Again, almost all canceled shows are currently refunding. And over 90% of rescheduled shows are offering refunds with the remaining shows scheduled to be refunding in the near future. And as Michael said, less than 10% of fans are taking the refund for the rescheduled or postponed shows when given the choice, with over 90% of them holding on to their tickets for a future date. Finally, sponsorship. Our sponsorship business was the least impacted by the March shutdown, losing less than $5 million in contribution margin as a result, and this quarter delivered $47 million in AOI, up from $40 million in the first quarter last year. Overall, we recognize the next few quarters will not be business as usual, so we won't be giving any direction on key operating metrics until we start selling tickets and promoting concerts again. Our focus is on managing our cost structure and cash burn, ensuring a strong balance sheet as we come out of the shutdown. And with that, I will turn the call over to Kathy.

Thanks, Joe, and good afternoon to everyone joining us. I will briefly recap our first quarter results and provide an update on our liquidity position. For the quarter, we generated $1.4 billion in revenue, down 21% compared to last year as the shutdown due to COVID-19 reduced our revenue by approximately $435 million, primarily in concerts and also ticketing. Our AOI was a loss of $21 million for the quarter, down $136 million compared to last year, driven by approximately $165 million in COVID-related impacts. Our operating loss was $173 million, driven by an estimated $175 million COVID-19 impacts, including $10 million in intangible impairments in the quarter. Net loss for the quarter was $185 million, and net loss per share was $0.94. Now on to our balance sheet and liquidity position. We are actively managing our cash to preserve our strong liquidity position during the stoppage in shows. We have taken quick and aggressive actions to conserve cash, including our cost savings initiatives and cash management program, which eliminates or defers $1 billion in cash outflows for 2020 relative to our budget as Joe outlined. In addition to the $600 million in cost savings, these cash impacts include a reduction in capital expenditures, lower acquisition activity and deferrals of concert and ticketing advances. We now estimate an operational cash burn rate of approximately $150 million per month for the rest of the year, prior to interest expense, debt payments, capital expenditures, and other non-operational items. As of March 31, we had total cash of $3.3 billion, which includes a free cash balance of $817 million. In April, we completed an amendment to our credit agreement, which suspends our net leverage covenant for the second and third quarters of 2020, replaced with a minimum liquidity test for those quarters. Beginning in Q4 of this year, the net leverage covenant will use the bank-defined EBITDA from Q2 and Q3 of 2019 instead of the Q2 and Q3 2020 results. We continue to have a 20% add-back in that EBITDA calculation, which gives us added protection from our COVID-19 impacts during the period. We also added an incremental revolver of $130 million in April, providing us with additional financial and operational flexibility. That now gives us $963 million of available debt capacity between our revolvers and undrawn term loan A. And we will continue to monitor the capital markets for opportunities to expand liquidity at appropriate pricing. Our total cash includes $2 billion of event-related deferred revenue as of March 31. This is part of our operating cash and therefore, provides us additional liquidity. We believe that our free cash balance of $817 million, together with our $963 million of undrawn debt capacity, gives us sufficient liquidity to maintain critical operations for the remainder of the year, even in the extreme scenario that no major shows play off this year. As of the end of the quarter, our total net debt position was $3.7 billion, with a weighted average cost of 3.9%. We expect to be in compliance with our debt covenants around our corporate debt structure for all of 2020. Total capital expenditures for the quarter were $74 million. We are now estimating our full year CapEx to be approximately $200 million, down from our initial estimate at the beginning of the year of $375 million as part of our overall cash flow improvement process. Of the remaining $126 million in CapEx for the year, approximately $50 million is for capitalized labor in our ticketing segment, which we continue to rely on for our ticketing operations, with the remainder largely venue-related long-term projects. We will continue to evaluate all projects as the year progresses, particularly as we gain more insight into opening timelines by region. With that, we'll open it up to questions.

First, Michael, I'd be interested to get your view on the long-term impact of COVID-19. Across a lot of industries right now, there's talk of huge acceleration in consumer trends. So I'm wondering what you think this potentially means for the concerts and ticketing industry.

Thank you, David. We're continuously analyzing data to understand our consumers on a global scale and any long-term impacts. It was crucial for us to launch one of our surveys today because general surveys often lack usefulness. We engaged with 10,000 casual and regular ticket buyers worldwide, and the results are quite remarkable. Ninety percent of fans expressed that they are eager to return to shows. Our refund rate reflects this sentiment, and for anyone questioning whether consumers will return or change their behavior, we are currently experiencing a refund rate between 5% and 10% globally, which is significantly lower in Europe. These figures align with traditional tour rescheduling rates for various reasons. So, seeing that 90% of fans are willing to hold onto their tickets because they're excited to attend shows is compelling evidence that consumers will return strongly. Attending events is a vital part of their social lives, bringing them together with friends and family. We have no doubts about the return of both consumers and artists to touring. People have gathered around artists for ages, and we believe this will continue long into the future. We're not uncertain about when to resume, as we don't see concerning consumer trends in our industry. There hasn’t been an acceleration in decline; rather, we are witnessing a global resurgence as emerging markets become more refined and receptive to traditional concerts. We anticipate that shows will return with demand as robust as ever. Additionally, a unique aspect is the supply side; many artists are eager to tour again for financial reasons and to connect with fans and create long-lasting relationships. We speak with these artists regularly, and they are looking forward to hitting the road when it's safe for themselves and their audiences. The dynamics of supply and demand indicate that fans truly value those few hours spent watching their favorite performers live. Artists are ready to return, and we will ensure that we proceed safely and in a scalable manner. We believe that demand in 2021 and beyond will reach levels comparable to 2019.

Okay. And I was hoping you could expand a bit on your liquidity position. In a scenario of extended shutdowns, how long can you continue to operate? And what options do you see in terms of additional financing? And maybe as a follow-on to that, what is the right way for investors to view your available cash position, including the deferred revenue portion?

Yes, David, let's begin with our current situation. We have $800 million in available cash and $900 million in untapped debt, totaling $1.7 billion in available liquidity. With an operational cash burn of around $150 million per month, we can navigate through this year without any shows without worry. Although we do not anticipate a large number of shows this year, we expect that by Q4, ticket sales for next year's larger shows will begin. The NFL has already released its schedule, and many teams will start ticket sales soon. Even without current shows, this will help boost our ticketing and sponsorship businesses. In general, we can definitely get through this year without needing additional liquidity. Looking at the markets, spreads have returned to normal levels, and the capital markets are accessible to us and many others seeking increased liquidity. We will monitor opportunities and see what makes sense. Regarding deferred revenue, it hasn't historically influenced our assessment of operational liquidity. Currently, with very low refund levels, this represents a pool we can tap into for short- to medium-term needs if necessary, but it is not part of our basic scenarios.

Thanks for all the color on the cash front. Two questions. Michael, could you talk about the sort of operational approach and process of sort of rescheduling all of these events around the world? I mean the complexity, I think you've talked about in the press is significant. But I'm wondering as you start to go down that path, if you could just spend a few minutes on sort of how you go about doing that and what your opportunities and options are, and how you may or may not be working with other promoters and artists and things along those lines. And then just another cash question on the liability side. You guys have some accrued expenses and accounts payable at the end of the quarter. And I didn't know what we should be thinking about those liabilities, whether or not you need to pay those down over the next couple of quarters. Is there any color you can give us on the accrued expense account payable front?

Thank you. Yes, you're correct. We have many shows. Looking on the bright side, our shows are not dependent on specific timing. Unlike other event companies where missing a major event means you can't experience it again, we don’t have that restriction. Fans eager to see Billie Eilish may have preferred to attend in March, but they are willing to wait until October or February. The typical customer attends 2.5 shows each year, so they are patient about these special moments. Currently, our industry is working together closely, including agents, artists, venues, managers, and promoters. We're all addressing how to manage scheduling. The only real challenge concerning availability stems from sports events, as we need to understand what will happen in their arenas this fall and when their seasons will start. Typically, the NFL, NBA, and NHL announce their schedules, which allows us to plan for Q4 and the following quarters. As soon as we have their exact schedules, we can finalize our own dates. Our industry has a solid model where, if you had a planned date, you will have a chance to reschedule it, and new tours that were supposed to happen in 2021 are likely to be shifted to later in 2021 or into 2022. We believe that we will have a very strong second half of 2021 and a solid 2022. Working collaboratively, we anticipate no issues in rescheduling dates into 2021; we are just waiting for some scheduling conflicts to be resolved.

And on the accrued liability AP part of that question, I mean, think about, yes, it's obviously built into cash burn. It's also part of when you think about what we're deferring, when we talk about deferring part of our cash, the $1 billion. There will be liabilities that will be sitting there that are accrued that just won't be paid for a while.

First, curious how COVID's impacting your commercial agreements with the artists and venues. In the process of rescheduling all of these shows, have you been able to renegotiate the contract terms with the artists on guarantees? And as you look to incremental 2021 tours, do the terms of the artist deals look different because of COVID? Are there less guarantees? And then also, what about third-party venues? And then I have a follow-up.

Thanks, Brandon. As I referred to, as an industry, it's been a unique time where we are all in this together. And I would say that the artists, the agents, the managers have been incredibly supportive. The reality is that in '20 and '21, the promoter can't take all the risk on the business as we historically have. We need to share some of that, especially refunds on the guarantees. So I would say to you that we don't want to out loud get into how and what the deals are. I would say to you though that we absolutely are getting great latitude from the artists and agents to look at a traditional business of high guarantees and all of our risk, to help share that risk into '20 and '21, to get the shows back on the road and help us absorb the show, but not take all of the refund sales, sponsorship, food and beverage unknowns for the next 6 to 12 months. They're helping share some of that risk which will provide us great opportunity to get back, scale fast, but not have to worry about losing money on the show.

Great. And you've obviously spent a lot of time looking at your costs searching for near-term savings, but is there an opportunity to reassess your overall cost structure as we come out of the pandemic?

Yes, I think any CEO, any business operator, it's the great gift of this reality we're in. We're all looking at our business and wondering, now that we have been able to stop, catch our breath and look at our business, are we running the most efficient way we can? How do we restructure our business, our cost basis on a global basis to be more efficient? We have gone into furloughs and cost reductions, as you know. We absolutely plan on coming out of this a leaner machine, much more efficient on how we go to market. And then probably as other companies have learned, there are some areas we're going to have to spend and acquire a better skill set at, to help us diversify our core business in terms of virtual concerts and other things that we've dabbled in, but maybe we got to spend a bit more time in that area. So bottom line is we look at this as a great opportunity on a global basis for us to restructure our cost basis, come out a leaner organization while still as aggressive as ever in terms of our global growth strategy.

Great. I have one more technical question for Kathy. You mentioned that you anticipate your debt covenants to remain fine throughout the year. However, if I do the calculations and consider limited or no revenue in Q4, it seems to me that if we use AOI as a stand-in for bank EBITDA, you would still breach the covenant in Q4. Can you clarify what we might be overlooking, perhaps it's the 20% add-back you mentioned earlier?

Yes. I think the two main things, Brandon, would be, yes, you're assuming no material concert activity. But as Joe said, still expecting some ticket sale activity this year and related sponsorship for that. So based on those things, we obviously will not break our covenants based on projections. But I think the other big thing is that 20% because you can take 20% of that bank EBITDA as an add-back for the COVID impacts. And so you can do that for your AOI in the same way and get pretty close.

I have a couple of questions. First, I would like to ask about OCESA. I heard the comments regarding it, but could you provide more details about what is happening there? Are you still interested in the asset, or are you working on determining a new purchase price because their performance has not met expectations in this environment? Please add some clarification on that.

Yes. We have had a long-standing and positive relationship with OCESA, supporting them in their tour business development. We have discussed this with them recently. It has taken some time to obtain the necessary government approvals in Mexico. As you might expect, my position has been that we remain optimistic about both their business and ours in the long term. We want to collaborate with OCESA and finalize the deal, but we are uncertain about the current situation in Mexico. I do not want to incur any losses from Mexico while they manage their business downturn over the next six to eight months. Ideally, we aim to complete the deal but prefer to postpone the cash payment until we have clarity on how and when we will emerge from this crisis. That is our intention.

Makes sense. If I could, a couple more. I go through the 10-K, there is a liability that gets mentioned, this redeemable noncontrolling interest puts. In the K, you guys flagged it, at least at the time you expected it might be $238 million sort of obligation. I was wondering if you could just comment on whether that's still a good estimate or are there ways to maybe defer those payments in this environment.

Yes. Sure. So Drew, some of that we paid in Q1 for some of those puts. And the majority of anything that's still out there that hasn't been paid, we're working to defer out of the year, and that's part of the $1 billion deferral program. So I think you can kind of take all of that together.

But I would add to it. The spirit of it, it's been great. As you can imagine, if you're a partner in a festival, and the festival got canceled, and you happen to have a put up in your deal, we're talking to them about let's delay the put for the year because the event didn't happen and we didn't retain the cash. So we've been very cooperative with our partners. And some of them may need the cash for other reasons, but generally, the partnerships have been very accommodating if their event got moved.

Okay. And then just sorry, one last one... Would you help me understand what that number is and that risk of collecting?

Yes. Mainly, this will be related to artist advances. The best way to understand this is that it offsets the deferred revenue. From our free cash, we are subtracting our event-related deferred revenue. The add-back indicates that we won't need to pay the artist part of that money because we've already advanced it to them. This effectively helps clarify what deferred revenue may be going out aside from our profit.

It's clear that your data suggests there's a lot of pent-up demand to return to concerts. I'm just wondering if you can provide granular detail as to your reopening strategies, particularly spend engagement, artist engagement, and how you can feasibly control capacity in the social business as well.

Thank you. One thing I always emphasize is that our global diversity is our greatest strength, which has always been the case. In challenging times, we've found new markets of opportunity. Unlike sports leagues where the venues are fixed, our business has a wide range of show sizes. Last year, we held 15,000 club and theater shows across 40 countries. Looking ahead to the next six months, we plan to start slow and small, focusing on the basics and testing in specific regions. Whether it's in Arkansas or any safe state, we’re exploring fan-less concerts with broadcast options. We're also considering reduced capacity shows since we can still make the numbers work. Many great artists who can fill arenas are now interested in performing at smaller venues. We're noticing a lot of artists eager to return when it's safe. You'll see us operating in various countries, including Finland and parts of Asia, where some markets are further along in their reopening. During the summer, we will test different formats, including fan-less concerts, which are crucial for our sponsorship business. It's essential to keep presenting various events to retain the sponsors who have supported us this year. We're also committed to continuing drive-in concerts and testing fan-less concerts that offer solid broadcast possibilities and reduced capacity festival concerts in safe environments, whether outdoors, in theaters, or large stadiums. We have plans in place tailored to each market's situation and reopening status. We intend to proceed thoughtfully and not rush into anything that might lead to a resurgence of the virus. We’re focused on long-term safety for the business, and we recognize that both we and AEG can endure this situation as it unfolds. There are a lot of promising opportunities for testing this summer. If we can avoid triggering any new hotspots, we'll see various markets around the world, particularly in Europe, ready to reopen to larger capacities in September. Therefore, we anticipate more experimental shows in the fall, especially in theaters and larger venues, aiming to fully roll out ticket sales in the third and fourth quarters of 2021 while testing throughout the summer. Regarding venues, we’re engaging with federal and local authorities and collaborating closely with sports leagues to establish best practices for ensuring safety. Interestingly, our data shows that fans aren't necessarily demanding instant testing or thermometers, although that would be ideal. Instead, 85% of fans prioritize knowing that our venues will be sanitized and have enhanced cleaning measures. That's the key factor in making them feel secure attending events. We are working with local governments to develop our venue preparation plans and protocols to ensure fans feel safe. This includes ensuring proper sanitization, providing hand sanitizers, masks, maintaining physical distancing, and offering cashless concessions. We believe we are well-prepared globally to ready our venues, and we will move forward market by market testing various ideas as they become viable. That's our plan for the summer: to keep the business moving.

Understood. And if I can follow up on that on the pricing side. It does seem like we are moving into a contact-less world going forward. So I'm just wondering, in your latest presentation, you outlined $100 million AOI opportunity. Do you think the current environment allows you to pull that forward in some sort of capacity?

This is Joe. Yes, we definitely believe that our presence is becoming increasingly important. The overall opportunity is expanding significantly because of our technological leadership and the wide range of applications we can implement. As Michael mentioned, this includes not just contactless entry but also cashless payments and other possibilities that show significant potential. The exact timing is still to be determined given our current pause, but there's no doubt that the opportunity is greater than ever.

No. Be safe, and we'll talk to you soon. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.