Good morning, and welcome to MSG Entertainment's fiscal 2023 third quarter earnings conference call. On today’s call, Dave Byrnes, our EVP and Chief Financial Officer, will provide an overview of the business and strategy going forward, as well as financial highlights for the most recent quarter. After our prepared remarks, we will 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 now turn the call over to Dave.

Thank you, Ari, and good morning everyone. With the successful completion of our spin-off, last month marked the start of an exciting new chapter for MSG Entertainment. As a pure-play live entertainment company, we are poised to continue benefiting from strong consumer and corporate demand for shared experiences as we leverage the strength of our world-class assets and brands. Our venue portfolio is led by Madison Square Garden, the number 1 grossing venue of its size globally. Over its 143-year history, the Garden has been the setting for exceptional performances and one-of-a-kind moments, which have helped to define sports, entertainment, and culture. It is also home to two of the most recognized sports franchises in the world, the New York Knicks and Rangers. We also own or operate the Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre, and the Chicago Theatre. Storied showplaces with rich histories and regularly ranked among the top grossing venues of their size in the world. Our venues are on track to host nearly 900 events and more than 5 million guests this fiscal year, which is our first full year of events since the onset of the pandemic. The majority of concerts at our venues, including in our third quarter, continue to sell out, and per cap spending this year is pacing well ahead of last year's results. We also anticipate a solid increase in events in our bookings business for our fourth quarter and while still early, we are currently projecting a double-digit percentage increase in events for fiscal 2024. In addition to our renowned venues, we also feature our wholly-owned production, the Christmas Spectacular Starring the Radio City Rockettes, which several months ago completed its remarkable 89th year. After two seasons impacted by the pandemic, we were pleased to see this year's production return for a complete run. We sold over 930,000 tickets across 181 shows, a testament to the show's enduring appeal. Average per show revenue was up 30% year-over-year and up over 10% compared to our last year before the pandemic. We also saw solid increases in food, beverage, and merchandise per caps, while ticket yields for the show were at record levels. All of which led to the Christmas Spectacular generating over $130 million of revenue for our company this year. Aside from industry-leading venues and owned content, we also have valuable long-term arena license agreements in place with MSG Sports, which make the Garden the exclusive home of the Knicks and Rangers through fiscal 2055. As part of these agreements, we received substantial recurring and growing arena license fees. For fiscal 2023, these fees are expected to be approximately $42 million and will continue to grow 3% each and every year. Through these agreements, we also benefit from additional revenue and profit sharing from sponsorship, signage, suites, food, beverage, and merchandise sales related to the Knicks and Rangers. In addition, over 25% of our revenue base is related to our sponsorship and premium hospitality businesses, both of which are on track to deliver results this fiscal year that exceed pre-pandemic levels. Our marketing partnerships business has a proven track record of delivering compelling value for our partners whether it's through our highly sought-after brands, our significant exposure in the largest media market in the country, or cross-selling opportunities with MSG Sports. Through our innovative offerings, we have built a roster of valuable multi-year marquee and signature-level partnerships, which represent the majority of our sponsorship revenue. In addition, we offer a wide range of premium hospitality products from suites and private spaces with first-class amenities to premier seating options, which allow us to cater to a variety of corporate customers. Our premium hospitality business also benefits from our substantial presence in New York City, home to the greatest number of Fortune 500 companies, along with our relationship with MSG Sports, providing our clients with access to Knicks and Rangers games in addition to the concerts and other marquee sporting events held at the Garden. And it's evident our customers see tremendous value in our offerings with the majority of suite licenses under multi-year agreements with annual escalators. As we look ahead, we believe our company, with its unique portfolio of live entertainment assets and brands, is poised for continued growth. On the bookings front, we are focused on driving growth in per event revenues and profitability while also increasing the utilization of our venues. We will continue to look for ways to forge more direct relationships with customers and improve the guest experience, which we believe will help grow per event revenues. We will also look to increase the number of events at our venues in a variety of ways, including pursuing more multi-night shows, as well as exploring new event types such as high-profile residencies that help build our base of events. Increasing the number of events, as well as introducing unique and attractive event types will also better position our marketing partnership and premium hospitality businesses for ongoing growth. We also plan to target under-penetrated or emerging sponsorship categories like we successfully did with sports betting last year, as well as explore ways to enhance and expand our hospitality offerings. With the Christmas Spectacular, we believe we have the opportunity to drive higher sell-through, as well as increase the number of shows over time, in both cases, as demand and tourism make a more complete return post-pandemic. We are also focused on building the Rockettes brand, including via social media where their following is rapidly growing, which demonstrates the brand's continued ability to reach new audiences, particularly a younger demographic, and we believe this will create a number of incremental revenue opportunities going forward such as sponsorship. I'd now like to turn to our financial results and then close with a discussion of our capital allocation priorities. Since the spin-off was completed on April 20, today's reported results for both the fiscal 2023 and 2022 third quarter are presented based on accounting requirements for the preparation of carve-out financial statements. For the quarter, we reported revenues of $201 million and AOI of 38 million, which represent increases of 4% and 13% respectively, both as compared to the prior year quarter. Excluding the impact of the elimination of our advertising sales representation agreement with MSG Networks, revenues would have increased 9% year-over-year. As you know, we published an investor presentation in February, which provided fiscal 2023 financial guidance for our company as if we had been a standalone independent entity from the start of the current fiscal year. With only one quarter remaining in fiscal 2023, we are reiterating our expected AOI range of $145 million to $155 million for the year, while refining our projected revenue range to $835 million to $845 million. Moving on to our balance sheet and capital allocation priorities. At the time of our spin-off, we had approximately $113 million of unrestricted cash and our debt balance was approximately 673 million. On a go-forward basis, we expect to generate significant free cash flow, which is underscored by the following expectations: Approximately $145 million to $155 million in fiscal 2023 AOI and growing over time; annual net cash interest expense of approximately $40 million to $45 million based on current market rates; minimal cash taxes through fiscal 2026; and capital expenditures that are primarily maintenance-related. In terms of capital allocation priorities, we are focused on paying down some of our debt balance and also plan to opportunistically return capital to our shareholders. In conjunction with our spin-off, our Board of Directors authorized a $250 million share repurchase program, which will be one option available to us in the future. In summary, we are excited as we embark on this new chapter for our business with a portfolio of renowned venues and brands that are poised for growth, and bolstered by the continued positive momentum of the live entertainment industry, we are confident that we are well-positioned to drive long-term shareholder value.

Thank you, Dave. Operator, can we open up the call for questions, please?

And we have our first question from Brandon Ross at LightShed Partners. Your line is open.

Good morning. Thanks guys for taking the question. Not to state the obvious here, but I think the biggest overhang on your stock the past few weeks has been Sphere's capital needs and the fact that they could potentially sell some of the retained stake to finance that business. If it comes for sale, would you be willing to mitigate the impact by buying some yourself? Especially, I asked that in conjunction with the free cash flow generation that you just spoke to and the buyback authorization. Thanks.

Sure. Thanks, Brandon. The short answer to your question is, yes. We're well aware that our stock has been volatile recently after initially performing well right after the spin. And as I mentioned earlier, opportunistically returning capital to shareholders is one of our priorities. That's why we put a $250 million share repurchase authorization in place at the time of the spin. So, if an opportunity to efficiently repurchase a sizable amount of our stock presented itself, of course, we would seriously look at it. Another thing to keep in mind is the delayed draw term loan facility we have in place with Sphere Entertainment Co. It's a relatively short-term $65 million facility. And if Sphere Co. decides to draw on the facility in the future, it has the ability to repay the loan using the retained MSGE shares it holds. So, this is actually – it's a novel feature of this loan, and should Sphere Co. decide to pay using the retained shares, it would be another way for us to also efficiently repurchase a significant amount of our stock.

Great. In the prepared remarks you spoke to double-digit event growth for 2024. Since you're giving out a little bit of 2024 guidance, I was wondering if you could maybe give us a larger window across the growth drivers in 2024 across the business. Anything you're willing to give, Christmas Spectacular, sponsorship, suites, anything? Thanks.

Sure, Brandon. I'll start by saying that the demand for shared experiences across our industry and especially here in New York remains really strong. We haven't seen any signs of slowdown. And given our unique portfolio of venues and content, we're well-positioned to be a primary beneficiary. You heard me mention earlier that the majority of our concerts at our venues, including the third quarter, continue to sell out, and recent on-sales have remained strong. We anticipate solid increases in events in our venues in the fourth quarter, really driven by our concert slate and most notably here at the Garden. And as you mentioned for fiscal 2024, while we do expect to have more to share on our year-end earnings call in August, the very early signs are promising. We're currently ahead of where we were at the same time last year in concert bookings. Across our entire bookings business, we're currently expecting a double-digit percentage increase in events year-over-year in fiscal 2024. And while in very early stages, the Christmas Spectacular ticket sales are up over 70% compared to the same time last year. This is being driven by higher group sales, which is particularly encouraging from a category where we've seen lagging recovery coming out of the pandemic. But again, it is very early in the Christmas Spectacular sales cycle. From a corporate demand standpoint, we've built momentum we're seeing this year in suites and sponsorships will carry over into 2024. And as you know, we have various profit and revenue streams related to the Knicks and Rangers, and we see tailwinds to growth next year based on how both teams performed this season. So, it's really across virtually every area of our business we see opportunities to drive continued growth next year.

Thanks so much.

And your next question comes from the line of Ben Swinburne from Morgan Stanley. Your line is open.

Good morning, Dave. I just wanted to clarify the double-digit events. I think you said it's across your entire booking business, but just to be specific, is that the whole portfolio? Does that include Knicks and Ranger games? Does that include Christmas Spectacular? And I had a follow-up.

Just bookings, not the Spectacular. All bookings except the Spectacular.

Okay. Yes. So, I was just curious; I think long-term, one of the biggest opportunities for the business is to just drive up utilization of your venues, particularly the Garden. Do you have a sense that you could share with us, sort of the historical growth you've seen? You talked about over 900 events or 900 events in the first full year post-pandemic, but what's been the sort of CAGR if you look back over the last decade? And we know artists want to tour more; there's more demand, but I'm just trying to get a sense for what might be a sustainable growth rate longer-term on the volume side? I would love your thoughts there. Thank you.

Okay. Thanks Ben. Look, we have a terrific long-term track record of increasing the number of concerts at our venues. If you look back, since the Garden transformation, the first fiscal year after the Garden transformation would have been 2015. We've driven mid-single-digit annual growth in the number of concerts at the Garden and across our other venues. As we think about growing the bookings business going forward, increasing venue utilization continues to be a significant opportunity for us. So, like for example, while the Garden is home to the Knicks and the Rangers, Radio City is our only other venue that has an anchor tenant, which is the Christmas Spectacular. The Garden is projected to host nearly 230 events this fiscal year, including Knicks and Rangers, and excluding the spectacular, our four theaters are on track for over 480 events. So, our venues generally have a large slate of available dates to continue to work from. And in addition to benefiting just from our continued expected growth in our market, we're focused on utilization in a few different ways; more unique recurring events, for example, such as residencies and multi-night runs, which we've had some success with recently. Exploring new third-party events and additional event categories could be shows or expos or theatrical opportunities. And getting creative in the ways we look to maximize utilization, particularly at the Garden, we could host multiple event types per day, of course, while also weighing, which events make the most strategic and financial sense for us always. So, we see increasing our venue utilization as a significant growth opportunity for the business.

Great. Thank you so much.

You're welcome.

And your next question comes from the line of David Joyce from Seaport. Your line is open.

Thank you. Dave, another question on the event volumes and capacity utilization. One item you didn't mention, which was a strategy employed in the past was looking to develop another owned property, such as, you know, the New York Spectacular, which would, you know, smooth out the seasonality of the business, you know, because you would fill in some underutilized parts of the year. What might management’s strategy be along those lines?

Sure, David. At this time, we have no plans to develop any new productions. As you know, we have a very unique franchise in the Christmas Spectacular. And we're focused on continuing to grow it organically. This includes driving higher sell-through and ticket yield, as well as I mentioned, just mentioned slowly increasing the number of shows over time as both demand and tourism make a more complete return post-pandemic. We're also focused on increasing revenue from marketing partnerships, as well as ancillary items like merchandise; we see an opportunity to create an expanded merchandise offering online and outside of the core Christmas Spectacular season. We're also focused on building the Rockettes brand more broadly. Whether that's through social media or other initiatives and partnerships, which we think will lead to incremental revenue opportunities, including sponsorship.

All right. Separate question. There was an article yesterday regarding potential negotiations or talks to sell the theater, Madison Square Garden for a billion dollars to a developer. Do you have any comments on that, please?

All I'll say on this is, as invested members of our community, we're deeply committed to improving Penn Station and the surrounding area. And we continue to collaborate closely with a wide range of stakeholders to advance the shared goal. With regard to the theater, we would always consider options that make strategic and financial sense to our company, but we have nothing more to share on this today.

Okay. Thanks. And if I can, just one final one. In thinking about, kind of back to the capacity utilization and the flow and supply of artists, what are you seeing in terms of artists that are developing through the social media and other digital platforms as they migrate up the, you know, the food chain and venues? Is that something that it is helping your business or might it drive us the strategy to be involved in more – in smaller venues again? Thanks.

Sure. Thanks, David. First, we're always working with growing or developing talent, whether they start via digital or other traditional channels. And a benefit of our venue portfolio is that it ranges in capacity from a little under 3,000 at the Beacon, approximately 6,000 at Radio City and up to 21,000 at the arena. So, this enables us to shepherd artists through their various growth stages in their careers and work with them along those lines. In the past few years, we've hosted several viral social media acts. Olivia Rodrigo, for example, played at Radio City last fiscal year. Charlie Puth is playing there next month, after having played the Beacon last fall. And beyond this, we've seen a host of new acts playing our venues regardless of their original start. So, we feel really good about supply as our venues continue to attract a wide range of genres, repeat acts, new acts, multi-night shows, etc.

Great. Thank you very much, Dave.

You're welcome.

Thanks, David. Operator, we will take one last caller, please.

And your final question comes from the line of Devin Brisco from Wolfe Research. Your line is open.

Thanks for the question. I was wondering if you could help us bridge your AOI guidance to free cash flow. What is free cash flow conversion of these one-off MSG assets looked like historically? And how are you thinking about maintenance CapEx and future renovations?

Sure, Devin. I mentioned it earlier, but I'll repeat it. We expect our company to generate substantial free cash flow right from the start. We provided some parameters earlier to help with modeling approximately $145 million to $155 million in fiscal 2023 AOI and growing. Annual net cash interest expense of approximately $40 million to $45 million, based on current market rates. We also expect to be a minimal cash taxpayer through fiscal 2026. And CapEx in the near to intermediate term will be primarily maintenance-related. And just to add some color on that, if you look at the carve-out financials in the Form 10, Fiscal 2022 CapEx was approximately $16 million, and fiscal 2023 year to date through March is about $12. So, tracking similar to last year, if that's helpful. And just some other, like as we look forward, we don't have plans to renovate any of our venues significantly. We have no current plans to acquire any additional venues. And as I mentioned earlier, one of our priorities is to pay down some of the debt that we took on during the pandemic. And while we're not setting a public leverage target at this time, between growth in our business and robust free cash flow, we do expect to de-lever rapidly. Returning capital to shareholders is another of our priorities. We have the $250 million share repurchase in place and we'll take all variables into account in terms of our capital allocation decisions, including how the stock is performing, and we'll continue to act in the best interest of the company and its shareholders.

Thank you. And how will the strategy for MSG change now that the separation is complete, if at all, what flexibility do you have now that you didn't have before?

Sure. I'd say that the strategy for this business is really no different than it was before. We're primarily focused on driving organic growth across our operations. Driving growth in per event revenues and profitability, increasing utilization at the venues, expanding our corporate partnerships businesses, maximizing revenue and profit for the Christmas Spectacular, and yes, we will also continue to look for ways to operate more efficiently, with more effective marketing initiatives to how we operate the Christmas Spectacular for example. One thing that has changed as a result of the spin though is, we now have the flexibility as a standalone company to pursue a capital allocation strategy that's appropriate for the business. So, this again includes a focus on debt pay down, opportunistically returning capital, which you've obviously heard us say several times today. So, we're excited for this new chapter for MSG Entertainment and we're confident that we're well-positioned to drive long-term shareholder value.

Thank you.

And we have reached the end of our question-and-answer session. Mr. Ari Danes, I'll turn the call back over to you for some final closing comments.

Thank you all for joining us. We look forward to speaking with you on our year-end call in August. Have a great day.

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