Venu Holding Corporation

Welcome to Venue Holding Corporation's third quarter 2024 earnings call and update. This afternoon, the company, also known as Venue, issued a press release that provided an overview of its third quarter 2024 results, which followed the filing of its quarterly report on form 10Q for the period pending September 30, 2024. Today's conference call is being recorded and will be available online along with our earnings press release covering our financial results at Venue.live in accordance with Venue's retention policies. All participants on this call will be in a listen-only mode. The call will be followed by a question and answer session. At this time, I would now like to turn the conference over to Heather Atkinson, the company's chief financial officer. Heather, please go ahead.

Thank you, Sarah, and thank you all for joining Venue's September 30, 2024 third quarter earnings call and update. On the call today, we have our founder, chairman, and CEO, JW Roth, as well as our president, Will Hobson. Following the Safe Harbor Statement, JW will provide an overview of our business, and Will is going to provide an update on the current expansion plans for Venue. And finally, I'll provide a summary of the quarterly financial results. Following that, we'll open up the call for questions. We'd like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Venue cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated, including risks described in the company's quarterly report on form PIM-Q for the quarter ended September 30, 2024, and other filings with SEC, all of which can be reviewed on the company's website at venue.live, spelled -V-E, or on the SEC's website at sec.gov. Any forward-looking statements made on this conference call speak only to the federal security laws. And then you do not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except that may be required by federal securities laws. With that, I'd like to turn over the call to our founder, chairman, and CEO, J.W. Ross.

Heather, thank you, and good afternoon, everyone. We appreciate you joining us today. For those of you that may be learning about Venue for the first time, let me take a few minutes and tell you our story and what we have accomplished over the past few years. Venue is a leading developer of luxury entertainment venues dedicated to transforming how fans experience live music and hospitality. From -the-art amphitheaters and intimate music halls, our spaces are thoughtfully designed to put fan experience front and center with unparalleled entertainment and exceptional service.

We are

known for our disruptive approach to live entertainment. We have created unique, elevated amenities like luxury fire pit suites and premium custom-built owners' clubs. Our luxury outdoor amphitheaters range from 8,000 to 20,000 seats, and our entertainment campuses feature legendary restaurants, premium-sized,

mid-sized event centers, and live

music halls. Our goal is to create unforgettable experience for all of our fans. In our third quarter, Venue brought luxury entertainment to life. We successfully executed our business plan and most notably opened our gates to 8,000 capacity $70 million development known as the Ford Amphitheater here in Colorado Springs. The amphitheater adopted the name Ford Amphitheater after Colorado Ford dealers purchased the primary naming rights for 10 years for $13 million, which was one of the largest amphitheater sponsorships in history. The amphitheater is booked and operated in partnership with AEG Presents Rocky Mountains. We started hosting acts about a third of the way through our typical season, starting in August with a sold-out three-day grand opening weekend by Grammy Award winner Ryan Tedder and his globally recognized band, One Republic.

We ended

the season in September having hosted 17 incredible shows featuring internationally renowned performers like the Steve Miller Band, Robert Plant, Alison Krauss, and Walker Hayes.

We ended

the season welcoming over 96,000 fans from over 5,500 zip codes from all 50 states and was recently nominated for Polestar Magazine's 2024 New Concert Venue of the Year, which recognizes venues that have made significant impacts in the live entertainment industry through exceptional design, operation, and audience experience. We believe 2025 is going to roar, and we are actively booking an exciting lineup with six shows already announced for the upcoming season. We are also set to unveil our highly anticipated $35 million dining and entertainment collection here in Colorado Springs in the spring of 2025. We're strategically developing the building to sit alongside the very eastern perimeter of the Ford Amphitheater. We designed this to be able to be used year around and with many different experience options, restaurants, bars, owners clubs, and a vibrant social and private event space, all with floor to ceiling windows to showcase the unparalleled views of the Rocky Mountains. Outside of the Ford Amphitheater, we have 11 markets operating and or in various stages of development. Colorado Springs, Colorado, and Gainesville, Georgia are operating, and we are in the construction phase in Broken Arrow, Oklahoma, the Tulsa Market, Oklahoma City, Oklahoma, El Paso, Texas, and our largest in our collection so far announced in McKinney, Texas, the Dallas Fort Worth Market. Further, there are five additional markets in the pre-construction stage, setting the stage for continued growth. We believe that these initial markets are projected to add over $2 billion in real estate assets to our balance sheet and will bring our seating capacity and inventory to an anticipated 150,000 seats. When they are fully developed, the complexes in the collection will host up to 60 shows a year, which calculates gross saleable seating at approximately 10 million tickets per year. With an expected average gross sale price of $150, venue's annual gross receipts could be in excess of $1.5 billion per year. In the past few months, we also made notable announcements. In the spring and early summer, we proudly announced two new public-private partnerships, one in McKinney, Texas, and the other in El Paso, Texas. These collaborations join our existing partnerships in Broken Arrow, Oklahoma, making three significant private partnerships for venues. These strategic alliances play a vital role in our site selection and expansion efforts, and we are honored to work alongside these great communities. This October, we announced Kaiser Permanente's exclusive partnership at Ford Amphitheater in Carter Springs, and we held an official ground for a key ceremony in Broken Arrow, Oklahoma. Of course, in August, venue opened the Ford Amphitheater in Colorado Springs. In November, we rebranded our mid-size music hall here in Colorado Springs after a new naming rights sponsorship was announced with Phil Long Ford dealerships, one of Colorado's largest auto dealerships. Also in November, as mentioned previously, our Ford Amphitheater was nominated for Polestar's 2024 New Concert Venue of the Year. In December, we announced our strategic partnership with Dallas Cowboy three-time Super Bowl champion and founder of eight elite live larger, Troy Aikman. Our partnership with Troy Aikman makes Eight Beer the powerhouse partner for all of our Texas and Oklahoma venues, along with making Troy the namesake of our membership-based owners clubs in both Texas and Oklahoma. We are branding these exclusive suites the Aikman Club. Finally, I am honored to have accepted a seat on AIDS Advisory Board of Directors. In addition to these exciting developments, we are very fortunate that just a few weeks ago in December, we announced the additional of, we had, we announced two additional employees. The first, our new president, Will Hodgson, who we will hear from shortly, and our powerhouse chief marketing officer, Kerry Lieblitz. And finally, in December, we believe in giving back to the communities that support us. So we announced our official nonprofit organization, Venue Arts and Culture Foundation, dedicated to nurturing talent, creating shared experiences, and unite, that will unite communities together, and championing our initiatives. Now with that, I will turn it over to Will Hodgson, our president. Please go ahead, Will.

Thanks, JW, and it's certainly a pleasure to talk to everybody today on the call. I've lived and breathed this industry for 25 years, and just coming off of close to a decade of running the House of Blues Entertainment brand, and just really excited to dig in and help develop and execute Venue's disruptive vision. I mean, we have a robust roadmap for Venue's growth as we move into 2025. Not only are there significant opportunities to improve profitability from our existing revenue streams through more strategic F&B tactics, streamlined premium upgrades, innovative marketing, and better cost controls through system integration and data analytics, we also plan to add several outlets JW just spoke of, but none bigger than the Broken Arrow Amplificator coming in the fall of 2025. As always, we will continue to evaluate the guests and artists' experiences at our venues, always striving to improve our already -in-class reputation. With that, I'd like to turn it back over to our chief financial officer, Heather Atkinson. Heather, please go ahead.

Thank you, Will. I appreciate everyone being on the call. I'm going to dive right into some of our performance highlights from the queue and on our press release. As you might have seen already, our total assets rose to 166.6 million as of September 30th, 2024, an increase of 100% compared to the same period from 83.2 million of December 31, 2023. Property and equipment totaled 125.8 million as of September 30th, 2024, an increase of 118% compared to 57.7 million as of December 31, 2023. Over the limited 2024 season of 17 shows at the Ford Amplificator for the three months ended September 30th, 2024, this location generated gross receipts of $12.7 million, which is an inclusive of ticket sales, concessions, ticketing fees, parking, premium upgrades, as well as other receipts. The Ford Amplificator sold over 83,000 tickets at an average of $152 per ticket in its first 17 shows. Total revenues for the company were 13.6 million for the nine months ended September 30th, 2024, an increase of 56% compared to 8.7 million for the nine months ended September 30th, 2023. For the three months ended September 24th, total revenues were 5.5 million or an increase of 39% as compared to 3.9 million for the three months ended September 30th, 2023. Our restaurant operations business generated 2.7 million or 50% of our total revenue for the three months ended September 30th, 2024, and 8.1 million or 60% for the nine months ended September 30th, 2024. Our event operations defined as our small to mid-sized live entertainment venues generated 3.7 million or 28% of our total revenue during the nine months ended September 30th, 2024, or 1.1 million or 21% of our total revenue during the three months ended September 30th, 2024. Our amphitheater operations generated net profit, which is defined as profits after our split with our operating partner AEG, which included receipts from our naming rights agreements, which are outside of our AEG partnership agreement of $1.6 million or 30% of our total revenue for the three months ending September 30th, 2024, or 12% of our total revenue. And we did not recognize any amphitheater operation that profits prior to the opening of Ford Amphitheater in August 24th. With that said, I'd like to now turn the call back over to JW.

Heather, thank you. And again, thanks for everybody being here. At Venue, we are built for music fans. We're built by music fans. And we're redefining the live music experience from every angle.

And

we're proud to be doing all that we are doing. Okay, with that, I'm going to open it up to Q&A.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from the line of Stephen Hemmedes with PR, Winston & Company. Your line is open.

Good afternoon, all. And congratulations on the progress to date. Thanks for taking my question. As you look ahead to the next five years, how will the insights gained from ongoing and completed construction projects inform your approach to future build out? In terms of growth, how do you see the scale of your amphitheater network evolving and the milestones and metrics that you will use to track the progress, if you have any? Finally, as you expand, is the company targeting other new U.S. markets beyond the ones mentioned in the prepared remarks? And how do you see the broader macroeconomic environment impacting the company segment of the entertainment industry in the years to come? Thanks.

So first, thanks for joining. I appreciate the question. Let me sort of start with how we have viewed amphitheater here in Carr Springs, the Ford Amphitheater. And what it has sort of taught us as we've gone along. Number one is we have honed in on our public-private partnerships. The whole key to our business and the foundation of our business is developing these public-private partnerships. Bob Mudd has done an excellent job. Ryan & Company has done an excellent job in developing these relationships, expanding these relationships, and prospecting new relationships in new communities. We have a very strong list of communities that we are working with. And over the course of the next several years, we will continue to build these amphitheaters under these public-private partnerships. As sort of the idea of learnings go, and it's interesting, you know, you learn sort of three different things. The first is the value of premium seating. We never knew going into the Ford, what sort of, or we didn't know what to anticipate. I apologize. There's big construction going on right next to us, and it keeps knocking my phone out of here. Kristen, would you do me a favor and call the construction company and have them stop this a second? Again, I apologize for the construction noise. What I meant by premium seating is our premium seating has been more than we could have ever imagined. We went into our season in the 2024 season thinking that our premium seating would represent about 50% and that we would earn about 20% on that premium seating. It turned out that premium seating was 100% and that our turnover in premium seating was about 50%. So to answer the question, I would say that I'm going to have to go back and relearn the question, but to answer the question, I would say that's where we're at with

our learning. Next question.

Thank you. Your next question comes from the line of Martin Keltberg with Morgan Stanley. Your line is open.

JW and team, great quarter way to come out of the gates hot. Congratulations. I was just wondering for the new markets that are happening in Oklahoma and Texas, will AEG continue to be your partner there? And will they go along to each venue along with you? Or will you secure a new partner in each one of those locations?

Marty, thanks for the question and thanks for joining us today. That's a good question. Here in Colorado, AEG has been our operating partner and they've done a terrific job. I don't think we could be more happy than we are with that partnership. As we move forward into new markets, every market has strengths and weaknesses as it relates to operating partners, operating partners being AEG and or Live Nation or whoever it might be in that particular market. We have made the decision, at least for right now, to operate Tulsa and McKinney and possibly El Paso as an open room. So we'll see what that, we'll see how that shakes out. But what that means is that it will be open to Live Nation to book into those, to those amphitheaters as well as AEG. Actual operations will either come through an operating partner agreement or it will come through an ASM style agreement. Does that make sense?

Makes perfect sense. Thank you so much, D.W. Merry Christmas to everyone.

Merry Christmas. Happy

Onika.

Your next question comes from the line of Steve Emerson with Emerson Investment Group. Your line is open.

Oh, thank you, J.W. This is a great kickoff. Just going ahead, and please excuse me if I missed your opening comments, but the two billion of facilities, what proportion of that is signed and what proportion are there preliminary letters of intent and are just in the pipeline that you're working on?

Steve,

thanks for the question. And first, Steve, thanks for taking the time to be on the call. You're a very, very good investor and I appreciate you, appreciate your question. So we are, we are in the process, actually in the development process at several different stages with several different municipalities. So as I said earlier, we are in, we're either open or opening 11 new venues, and we're somewhere in that process with all 11 venues. At the end of the day, we really don't know the exact number per development until the fire pit suites are circled and we have a good idea of what the end result will be. So as each municipality comes on, they could be worth between 150 million and in the case of McKinney, well over 300 million. So I've got to be a little careful to talk about the specific municipalities because we have confidentiality agreements with them. But I can tell you that we have a good line of sight to over $2 billion in net tangible assets in the municipalities that we currently have prospected. So where we're at in each one of those, I've got to be careful talking about. But I can tell you that we have good line of sight to that number.

Okay. It would be very useful if you slice and dice that by category, not by city. Like how many are signed versus how many are under construction and how many are letters of intent? Just let's say for the future, if not today.

Okay.

So as we've reported, Colorado Springs is open and operating.

Gainesville

is open and operating.

Broken

Arrow is under construction. We are under construction and under development in McKinney. We'll be closing on that land here in about two weeks. But the development agreement is signed and dirt is moving. In El Paso, we are not under construction yet, but we are signed there. We have LOIs going back and forth in three additional markets. And then we have development agreements in process and or prospecting in process in an additional three markets. If that

answers your question. Okay. What proportion of that have signed agreements with the city? And finish development obviously under construction count. So once you ask the site, that's a huge step.

Yes. No question about that. So El Paso signed, McKinney signed, Broken Arrow signed, Colorado Springs completed, Gainesville signed and completed. Oklahoma City is in process right now. Not signed, but in process. And then we have there are a total of three and then three more. So six altogether that are not signed, but they are in process. That's about all I can say about that.

Excellent. And how long are your agreements with AEG and Live

Nation? So typically Steve, these operating agreements are 10 with two fives. We will be operating Broken Arrow most likely as an open room, as we will be in McKinney and in El Paso. With that said, we will most likely have agreements very similar to what we have in Colorado Springs with AEG, but limited. So in other words, we might have, I'll give you an example. In McKinney, we'll most likely have two or three agreements with two or three operators that would all be participating in booking and promotion into that room. And the reason that is is because a market like McKinney is just tough for one promoter to do it all, especially in an amphitheater that size. So most likely there'll be multiple partners in that particular amphitheater. But to answer your question, a typical arrangement is 10 with two fives.

Got it. And how much of the board agreement was included in your quarter? Okay, so Steve, that's wise. Ask that question

one more time.

Okay, let me be more clear. Yeah. You show in the quarter an operating profit, which is great. Yeah. I wonder how much of those revenues each year or, and in this period, is the board payment, the board signed payment?

Yeah. So let me break that down into sort of three buckets. So the first bucket, if I understand correctly, you're asking how much of the revenue is associated with the board. It would be less than a third. So on a typical season, like for example, the season that we're building out right now.

No, I'm

not being

clear enough. Okay. Just the scale of the naming rights, how much in revenue did you show in the quarter? And I'm what are you going to show per year going ahead?

Okay. So for

the quarter,

we showed $1.3 million, I believe, in this quarter. Heather, correct me if I'm wrong or is part of that coming in the October quarter?

I mean, I'm sorry. So I think what you're asking, we recognized, we were able to recognize August and September. So two months worth of the naming rights sponsorship.

Okay. Okay. So Steve, about, I'm going to say 50% or so of the naming rights were recognized. So far, the rest of it will be recognized in the fourth quarter. But on a go-forward basis, Ford will be recognized for the tune of about $1.3 million annually. And then in addition to that will be the other four sponsorships, which would be the, which would be Kaiser and then obviously the Academy, Air Academy Bank, and then Coke and Budweiser.

Got it. Thank you. And looking forward to your future

calls. Well, I appreciate it, Steve. I mean, just to go back and talk a little bit about this, you know, we're in the development stage and we're working hard on our P&L. And we believe that over the next six quarters, you will see it continue to do what it did this quarter. And you'll see those operating profits continue to be what they are. But you will also see the, go back to the previous question, as it relates to our balance sheet, you will see the acceleration of assets coming onto our balance sheet based on the public-private partnerships that we are currently developing.

There are no further questions at this time. This will conclude today's conference call. Thank you so much for your participation. You may now.