Good morning. Thank you for standing by and welcome to the Madison Square Garden Entertainment Corp, Fiscal 2025 First Quarter Earnings Conference Call. I would now like to turn the call over to Ari Danes, Senior Vice President, Investor Relations and Treasury. Please go ahead. Thank you. Good morning and welcome to MSG Entertainment's fiscal 2025 first quarter earnings conference call. On today's call Mike Grau, our EVP and Chief Financial Officer will provide an update on the company's operations and review our financial results for the period. 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 investor 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 four and five 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 Mike.

Thank you, Ari and good morning, everyone. With our new fiscal year underway, we expect our portfolio of assets and brands to continue benefiting from demand for shared experiences. In our bookings business, the Garden recently saw a record number of concerts for our fiscal first quarter. Last month, we welcomed back the Knicks and Rangers to the world's most famous arena for the start of their '24/'25 regular seasons. While later today, the Christmas Spectacular will kick off its 91st holiday season. Lastly, in our marketing partnership business, we recently announced a number of notable agreements, while we also remain encouraged by the level of corporate demand for our premium hospitality offerings. Let's now review some first-quarter operational highlights. During the quarter, our venues hosted nearly 800,000 guests at over 120 events. But as you saw in this morning's earnings release, our bookings business saw lower concert-related revenues year-over-year. This reflected lower per concert revenues, primarily due to a mix shift at the Garden from promoted events to rentals, which all else being equal generates similar AOI, but lower revenues on a per event basis. It also reflected fewer concerts at our theaters. These decreases were partially offset by growth in the number of concerts at the arena, including an increase in the number of acts headlining the arena for the first time, which is one of our strategies to increase utilization. The increase in the number of concerts at the Garden is also noteworthy since the prior year quarter included residencies from Phish and Dave Chappelle, as well as two additional Billy Joel concerts. From the demand side, consumers continue to demonstrate their desire for in-person shared experiences, with the majority of concerts across our venues once again sold out during our first quarter. In terms of in-venue spending, combined food beverage and merchandise per caps at concerts were down modestly year-over-year. This mainly reflected the impact of higher per cap shows in the prior year quarter like Phish and Dave Chappelle's residencies at the arena. I would also note that per cap spending for the quarter was up compared to the fiscal 2024 full-year average. Looking ahead, we have seen some slowing in our concert bookings pacing in recent weeks. That said, we are experiencing positive momentum across family shows, special events, and marquee sports and continue to expect to grow our total number of bookings events this fiscal year. In terms of family shows, next week Annie will begin to combine 64 performances at the Chicago Theater and the Theater at MSG. We also have a number of upcoming high-profile special events, including the return of the Tony Awards to Radio City in June. And in our sports bookings business, next week we will welcome the UFC back to the Garden for what we expect to be one of the top grossing events in the Arena's history. And next month, Tennis returns to the Garden for the first time since 2018. With regard to the Knicks and Rangers, the cash component of the Arena license fees will be $44 million for this fiscal year and these fees will continue to grow at 3% each year through fiscal 2055. And while still early, we are seeing positive momentum across our share of food beverage and merchandise at Knicks and Rangers home games. Turning to the Christmas Spectacular, we are kicking off the 91st holiday season later today, and this year's production will include new immersive elements as we continue to invest in improving the guest experience. Advanced ticket sales continue to outpace where we were at the same time last year. This reflects increases across individual and group sales, aided by the ongoing return of tourism to New York. In light of the demand we've seen so far, we have added two performances to this year's holiday season run, bringing the total number of shows currently on sale to 199. This compares to 193 performances last year. We're also continuing to monitor ticket sales and may add performances to this year's run if demand warrants. Based on how we're pacing, we anticipate welcoming over one million guests to the Christmas Spectacular again this holiday season and expect to deliver another year of record revenues for the production. Turning to our marketing partnerships business. We recently announced a number of new deals including Lenovo and its subsidiary Motorola as well as the Department of Culture and Tourism Abu Dhabi. We also recently signed an expanded renewal with Verizon. All of these deals are multiyear in nature and encompass a wide variety of our assets and brands. In terms of premium hospitality, we continue to see strong new sales and renewal activity for our suites. That includes our event level club space, which was introduced last year and was recently expanded ahead of the 2024-2025 season. And we recently completed the renovation of a number of event and Lexus level suites and are already seeing the benefit of incremental revenue from these refreshed spaces. As you've just heard, we are seeing a number of puts and takes in our business so far this fiscal year. That includes some slowing in concert bookings pacing on one hand and strength in the Christmas Spectacular special events and marquee sports on the other hand. In addition, as we look ahead to the balance of the fiscal year, we now expect to incur additional expenses related to our recent decision to end our agreement with Oak View Group's Crown Properties Collection and bring sponsorship sales back in-house. As a result, we now anticipate delivering a mid to high single-digit percentage increase in adjusted operating income for fiscal 2025. Let's now review our first quarter financial results. For the fiscal '25 first quarter we reported revenues of $138.7 million as compared to $142.2 million in the prior year quarter. This reflected a decrease in revenues in our entertainment offerings and food beverage and merchandise categories, partially offset by growth in our arena license fees and other leasing category. As I touched on earlier, the decrease in revenues from entertainment offerings, primarily reflected lower per concert revenues, mainly due to a shift in the mix of events at the Garden from promoted concerts to rentals and a decrease in the number of concerts at the company's theaters. This decrease was partially offset by an increase in the number of concerts at the Garden during the quarter. The decrease in food beverage and merchandise revenues, primarily reflected the impact of lower per concert food and beverage revenues at our venues and to a lesser extent, fewer concerts at our theaters. This decrease was again partially offset by an increase in the number of concerts at the Garden during the quarter. First quarter adjusted operating income of $1.9 million increased by $2.1 million as compared to the prior year quarter. The increase in adjusted operating income primarily reflects a decrease in direct operating and SG&A expenses, partially offset by the decrease in revenues. Turning to our balance sheet. As of September 30th, we had $37 million of unrestricted cash, while our debt balance was $677 million. This reflected $622 million outstanding under our term loan and $55 million drawn on our revolving credit facility during the quarter. Our capital allocation priorities are unchanged. We remain focused on opportunistically returning capital and debt paydown. Since the end of the quarter we have already paid down the full $55 million revolver balance and we continue to expect to generate substantial free cash flow as we progress through fiscal 2025. This is underscored by our current expectations for a mid to high single-digit percentage increase in AOI, ongoing net interest payments, which totaled $51 million for the trailing 12-month period, our current status as a modest cash income taxpayer, and capital expenditures, which include both maintenance CapEx as well as some incremental spend related to the Christmas Spectacular and suite renovations at the Garden. In summary, we continue to be confident in the strength of our portfolio of live entertainment offerings and believe we are well positioned to deliver long-term value for our shareholders.

Thank you, Mike. And with that, operator, can we now open up the call for questions?

Thank you. We will now begin the question-and-answer session. Your first question comes from the line of Peter Henderson from Bank of America. Your line is open.

Yes, good morning and thank you for taking the question. So, Mike you mentioned that you've seen some slowing in the concert bookings in recent weeks. Maybe you could discuss the causes in your mind for that slowing? And just also provide updated thoughts on concert bookings for the Garden as well as for the theaters for the next quarter as well as for the remainder of the year? And then finally, just where you stand on concert bookings now relative to this point last year for fiscal 2Q, 3Q, and 4Q? Thanks.

Sure Peter, good morning and thanks for the questions. So, you're right bookings have certainly slowed a little bit since we last spoke in August. Maybe I'll talk about it at the arena level and then at the theater level. At the arena, we have a tough year-over-year comp given the 11 extra Billy Joel shows in the prior year and that's something we thought we would overcome. And right now maybe a little less bullish in that regard. What we're seeing is a couple of things. One is we have seen a little bit of a spike in cancellations. Each of these cancellations has a little story around it. Sometimes it's artist's health like Aerosmith and Steven Tyler. Other instances like Black Keys and Jennifer Lopez, we had shows that were selling very well. In fact in most instances sold out. But elsewhere the tour was selling poorly and so they canceled the entire tour. We are seeing a little bit more in cancellations than we've seen historically. But I think the biggest driver is just what we're seeing is like a shortage of supply, especially, in the spring or what would amount to our fiscal third quarter. We took a look in the New York DMA at the announced show – announced arena level shows this year for that quarter versus the actual shows the prior year and it's down 50% plus in the New York DMA. This is not something unique to the Garden. And given the booking windows I think those numbers are fairly well developed. There is just a scarcity of supply in the spring for arena level shows. Some of that I do think is timing because when we take a look at our bookings right now for fiscal 2026 for the back half of calendar 2025 or our first two quarters of fiscal 2026 we're actually ahead of where we were at this time last year. It's admittedly on a relatively small sample but I think it's an interesting data point. There's an element of timing to this but we are seeing a shortage of supply there which is driving some of the pullback. In terms of theaters versus the same time last year, our 2Q bookings are down very modestly essentially flat. Third quarter we're seeing the same softness that we're seeing at the arena and then the fourth quarter we're actually modestly up. Unlike at the arena the shorter booking windows at the theater so these numbers will continue to develop and I think there's more opportunity for us to be adding there. And again if we look at the theater level what we're looking at for the back half of calendar 2025 we're up modestly again on small numbers versus where we were at this time last year. So there is some timing to this and there is some scarcity of supply. So our expectations for fiscal 2025 have come down a little bit since we last spoke in August more so at the arena still a very robust bookings business, still premier venues and still a lot of artist demand to play our businesses. I do think this is more temporary in nature.

Thank you.

Your next question comes from the line of David Karnovsky from JPMorgan. Your line is open.

Hi. Good morning. Doug Warwaha for David. First with the Christmas Spectacular, can you dig in a bit more on ticket sale trends and how you're thinking about the opportunity to potentially add more shows? And then I guess a little bit different from the last question separate to concerts artists Knicks and Rangers, how does the booking pipeline look for content like family shows or other sporting events?

Sure, Doug. Thanks for the questions. So I will take them in that order. In terms of the Christmas show sales back in August we talked about the fact that we were up 16% year-over-year. And when I say year-over-year I mean the tickets sold at this point versus the same point last year. But at that point in time we were only like 10% of the way to our goal. We're now pushing up against halfway to our goal and we continue to be up 15% year-over-year. We've sustained that and I think it has a little more weight given that we again are halfway to our goal. We're right about there. And again the variance is about half rate half volume. So really very robust sales very encouraging signs. We've sustained the momentum that we were seeing in August. So that gives us reason to believe that we have upside here compared to our initial expectations. We have added two shows on sale since initially going on sale and we'll continue to monitor the demand. And if demand warrants and if the economics make sense we do have opportunity to add a couple more shows in that regard. The current expectation as we mentioned in our prepared comments is over one million guests similar sell-through on more shows. And I would say over the longer term, we continue to see a lot of opportunity with the Christmas show across ticket yields where we're priced below comparable entertainment options if you think of a Broadway show as a comparable entertainment option. And even on sell-through and overall volume, we're still not yet at pre-COVID highs. We think there's long-term runway with the Christmas show as well. In response to your second question when we talk about bookings other than concerts we tend to talk about it internally in three categories: family shows, special events and then marquee sports which is all sports other than Knicks and Rangers. In terms of family shows, we mentioned that we have the 64 Annie shows starting very shortly for the holiday season. We have a Riverdance 30th anniversary of five-show run coming to Radio City. So a pretty busy schedule in terms of family shows. Special events is a good story. This was an area that was a little bit weaker last year than we expected. It tends to be a little more heavily weighted to the fourth quarter, but we're already seeing very encouraging signs in 2025. We mentioned a couple of multi-night events coming to Radio City including the Tony Awards. We're already seeing in the first quarter some corporate events and things of that nature. I think there's real upside here again versus our initial expectations. And then in terms of marquee sports, the primary asset or property we have there is college basketball. We continue to leverage a really good relationship with St. John's. And we have some pretty good high-profile matchups coming to the Garden Gonzaga and UConn, North Carolina, UCLA, Kentucky Ohio State really premium programs. UFC 309 coming to the Garden next week and Tennis coming to the Garden for the first time since 2018. So really a pretty good topshelf lineup in marquee sports there too. So overall, I'd say we have pretty strong momentum in all of those kind of non-concert booking categories.

Great. Thank you.

Your next question comes from the line of Stephen Laszczyk from Goldman Sachs. Your line is open.

Hey, great. Thank you for taking my questions. Maybe just a follow-up on the new AOI guidance for Mike. Could you maybe talk a little bit about how you're thinking about the swing factors still at play that would either take you to the high end or low end of that guidance range for mid to high singles for the year? And then maybe as a part of that it sounds like there's some added costs related to the shift away from Oak View. Curious if there's any way you could quantify that for us the impact this year and then anything recurring on the expense side? Thank you.

In evaluating our outlook, we consider both the upsides and the downsides. The challenges we are facing include the pacing of concert bookings and the additional overhead associated with bringing sponsorship sales in-house. On the positive side, we anticipate benefits from the Radio City Christmas show, special events, and marquee sports, as well as some one-time operating expense increases we experienced in the first quarter. Overall, this reflects some deviations from our initial expectations. The factors that could influence whether we end up at the high or low end of our outlook relate to the extent of these challenges and opportunities. Specifically, the pacing of concert bookings is a factor we are accounting for at the low end of our range, and the Christmas show has potential upside that we are factoring into the high end. There is certainly upside there as well as for sponsorship revenues, and we will continue to monitor the pipeline for further monetization opportunities. Regarding bringing sponsorship sales in-house, there will be additional overhead, but we will not provide specific details on that today.

Great. Thank you.

Your next question comes from the line of Brandon Ross from LightShed Partners. Your line is open.

Hey, thanks. Just a follow-up on Stephen's last question about Oak View. Can you just give us any color on why you parted ways with them and how to think about sponsors to sell specifically going forward in the wake of that? Thank you.

Sure, Brandon. Listen, we historically have always managed this function in-house. About a year ago, we did make a decision to outsource this to Crown Properties Collection. And one year into the experiment, we've made a decision that we think actually the initial structure was the better one, and that's what's going to benefit us more for the long-term. And so we're going to be bringing it back in-house, there's really no more specifics to speak about in that regard. As far as the outlook for sponsorship sales, we are seeing some decent traction right now. We had new deals announced with Motorola, Lenovo, Department of Culture and Tourism, Abu Dhabi. We had an early renewal with Verizon, an early and expanded renewal with Verizon. So we think we have some good starts there. We have a strong roster of core partners. We think our brands and our assets are pretty unique, certainly want to capitalize on the Knicks and the Rangers and their deep playoff runs last year. So we do feel like this is a destination site for those people who want to spend sponsorship and signage money in this area. We'll continue to monitor our pipeline closely. I think a reasonable outlook for 2025 would be for modest year-over-year growth. And I think over the longer term, as we bring this back in-house, our expectation is that we can accelerate on that.

Thank you.

Your next question comes from the line of Peter Supino from Wolfe Research. Your line is open.

Hi. Good morning. Wondered about the size of the market for the Garden over the long run. I think a lot of us agree that with streaming, music and social media, it seems like more artists are becoming arena performers faster than ever. Do you see artists moving up out of your theater portfolio faster than years ago? And more broadly, would you comment on the long-term outlook for the supply growth at the Garden as a key driver of long-term growth at that facility? Thanks.

Sure, Peter. Thanks for the question. Listen, this is a strategy that we're actually pretty fond of internally. We think it makes a lot of sense. We leverage the fact that we do have portfolios at various levels. We have the Beacon with the 3,000 seat capacity, Radio City at 6,000 and then the Arena up to 21,000. So we think that positions us kind of uniquely to take artists earlier in their career trajectories and kind of shepherd them or walk them up the ladder, if you will to the point where they're ready to play the arena. And we've had a lot of success with that. More so probably current recently, a lot of the acts that played in the first quarter were first-time artists performing at the arena. Some of the success stories will be Olivia Rodrigo, not a first quarter story, but she played Radio City a couple of years ago and sold-out arena shows in April that were very successful. Noah Kahan and Lake Street Drive also kind of graduated to the arena, if you will, in the first quarter from Radio City. And then we sometimes see an artist like a Sabrina Carpenter, who goes straight to the Arena side show. So I agree with you. I think there isn't a real good pipeline here. I think that's the premise of this strategy is having the venues at the different size points and creating that longer-term pipeline. And I do think that promises to create a little more supply as we move forward. I'd say with these first-timer acts, maybe a little more variability, but that is tempered a little bit. I think our bookings team is just top-shelf and have a really good feel for who is ready to play the arena or not. And it's just a really smart way to build pipeline. And I do think that is a source of long-term growth in terms of supply.

Your next question comes from the line of Cameron Mansson-Perrone from Morgan Stanley. Your line is open.

Good morning. Thanks for taking the question. Mike, you called out lower per caps. I was wondering if you could elaborate on that. I'm guessing given the demand for Christmas Spectacular that that's not indicative of broader consumer health, but curious if you could provide some more color on those trends? Thanks.

Sure. We did talk about it, but I'll repeat just for the benefit of the question. We did see lower per caps in the first quarter, but it's really a function of the mix of artists playing the venue as compared to the prior year period. There are certain artists, which either based on the nature of the act or sometimes the nature of the show, the length of the show and whether or not they have an intermission that generate very high per caps. And we had a couple of those artists in the first quarter last year that I think we cited Phish and Dave Chappelle in our prepared comments that had just notably higher average per caps. We're up against a tough comp in that regard and that's why food and beverage per caps, food and beverage and merch per caps, I should say, were down year-over-year, but they were actually up versus full year 2024. So I wouldn't read a lot into the decline in the per caps. I think that's kind of a unique dynamic driven by again the mix of shows that we saw in the prior year quarter versus this year quarter. If I look at the month of October alone, already, the food and beverage merch per cap spending at contrast was up as compared to October last year. I think we noted in our comments that early returns suggest the per caps at the Knicks and Rangers games have nice positive momentum. So I would not read anything into that as far as consumer demand goes. The other factors I would say and these are the kinds of things we talk about when we're talking about consumer demand is sell-through with the majority of our first quarter contrasts sold out, our overall sell-through for first quarter contrast was right about 90% flat even maybe slightly up versus the prior year. And the arena is even higher than that. So certainly no weakness in consumer demand in that regard. And then the other point that you cited in your question is with the Radio City Christmas show, where we're seeing a really increased appetite for ticket sales revenue, both in terms of volume and ticket yield up mid-teens percentage added two shows. So really from our perspective, consumer demand for the shared in-person live experiences remains very strong.

That’s helpful.

Operator, we'll take one last caller.

Your final question comes from the line of David Joyce from Seaport Research. Your line is open.

Thank you. Three questions actually. One is a bigger picture one on what you're seeing for the general health of the consumer across your various markets and properties. Second question, back to food and beverage and merch. I was wondering why the revenue was down, but the OpEx was still flat year-over-year. And then the final question is, given that you're heading into your strongest cash flow quarter of the year and we haven't had capital returns since a number of unusual opportunities last year related to the Sphere, what are your plans for capital returns going forward? Thank you.

Sure, David. Thank you for the question. In terms of the health of the consumer, I would just revert back to the prior question when we talked about the consumer demand and the strength we're seeing in sell-through, the temporary decline in per caps already reversing in October and the health in per caps of Knicks and Rangers and then the strong demand we're seeing at Radio City Christmas Show. So we don't have really concerns about the health of the consumer or the levels of consumer demand. In terms of your question about food and beverage margins, you're right, revenues were down year-over-year, because some of the factors we cited in response to the previous question kind of the lower concert per caps at the arena due to the tough comp. And despite this the food and beverage direct OpEx was flat. So we definitely saw some margin compression there year-over-year. I think if we get into the direct OpEx, the COGS is down essentially consistent with revenue. So we're still seeing the same margin on the actual product. Where we're seeing margin compression is on higher labor costs and that's driven by a new collective bargaining agreement which was signed late in fiscal '24 and did drive higher labor costs year-over-year. It's not a surprise to us and that's factored into all of our expectations for the year. We do have some levers here that we can pull to enhance F&B margins and the F&B team is certainly very adept at that. We're constantly monitoring competitive pricing at other venues in the area and that's our main data point in terms of setting our pricing. We are implementing some dynamic pricing. That's something we talk about a lot in terms of the Christmas show, but we're now starting to implement some of that in terms of food and beverage and really changing pricing on select items on an event-by-event basis based on demand and the nature of the event. And I think we have opportunities to expand that to additional food categories. And then the last point I would cite on that would be the use of technology. I'm referring here to if you're in the arena, you see more and more of these self-service concession terminals. And that has kind of a twofold benefit. On the margin side, it does yield reduced labor costs. And then on the volume side, it does yield increased throughput with shorter lines. So it has really two benefits. And I think you'll start to see more and more of those in the garden as time goes on. And then in your response to your last question, nothing new to report in terms of our capital allocation priorities. We continue to have two priorities, debt paydown and then return of capital to shareholders. In terms of debt paydown, I mentioned that we did repay the $55 million revolver already this quarter. So the revolver is back down to 0. We'll continue to make quarterly repayments on our term loan which is about $4 million per. Other than that, the business should naturally deleverage, based on our expectations of AOI growth. So I think we're well positioned in terms of debt paydown. And then as you mentioned, we ended the quarter with $37 million of unrestricted cash, but we are entering our seasonally busiest stretch and this is where we would expect cash to start to build. And so, once our cash balance has built to a more appropriate level is when we'll start to have those decisions and that's when we will evaluate returning capital to shareholders. The only other thing I would say in terms of other uses of capital, nothing new to flag. No big CapEx initiatives right now. We have invested CapEx, I think pretty wisely in certain discrete projects around additions to the Christmas Spectacular to enhance the guest experience and some of the investments we've made around the event level club we introduced last year and renovating event and Lexus level suites, which have very quick payback periods, very high ROIs. So smart investments, but nothing new on that front.

And that concludes our question-and-answer session. I will now turn the call back over to Ari Danes for closing remarks.

Thank you all for joining us. We look forward to speaking with you on our next earnings call in February. Have a good day.

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