Venu Holding Corporation

Good afternoon and welcome to Venue Holding Corporation's first quarter 2025 financial results and business update. Earlier today, Venue Trading under the ticker symbol VENU issued a press release summarizing the company's first quarter 2025 performance. Following the filing of its quarterly report on Form 10Q for the period ending March 31, 2025. This conference call is being recorded and will be available online along with the earnings press release at Venue live in accordance with the company's retention policies. All participants on today's call are in listen-only mode. Following our prepared remarks, we will open the line for a Q&A session. At this time, I'd like to send a call over to Heather Atkinson, Chief Financial Officer of Venue Holding Corporation. Heather, please go ahead.

Thank you all for joining Venue Holding Corporation's first quarter 2025 earnings call and business update. On the call today, we have our senior leadership team, myself, founder, chairman, and CEO, J.W. Roth and President Will Hutchins. Following the Safe Harbor Statement, J.W. will provide a review and share highlights from across the business. Then Will is going to provide an operational update on Venue. I will provide a summary of the quarterly financial results. After that, as our operator mentioned, we will open 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 may cause our actual results to differ materially from the use indicated, including risks described in the company's quarterly report on Form 10Q for the quarter ended March 31, 2025, and our other filings with the SEC, all of which can be reviewed on the company's website at .venue.live, spelled -N-U, dot -V-E, or on the SEC's website at sec.gov. Any forward-looking statements made on this conference call speak only as of today's date, Thursday, May 15, 2025, and Venue does not intend to update any of these forward-looking statements to reflect events or circumstances that would occur after today's date, except as may be required by federal securities laws. With that, I'd like to turn the call over to our founder, chairman, and CEO, J.W. Roth. J.W.?

Heather, thank you, and good afternoon, everyone. We appreciate you joining us today. Okay, I'm going to dig into some prepared remarks, and then we'll move into our question and answer session. This first quarter was incredible. Venue was founded on the simple idea to build world-class live music and hospitality destinations that focus on the fan, and our disruptive model designed around artistic fan focus, experience-driven ambiance is absolutely working. We have witnessed fans and shareholders eager to join in on the Venue movement. To better explain the impact of the next few reports, let me take a quick moment and explain how we do what we do. We work with municipalities to identify the economic impact our venues would have on their community, because we have seen we are a tide that rises all boats. We then work with the municipality to create public-private partnerships that lead to one of our -the-art venues being built in their city. Now, how do we finance what we do? 40% of our financing comes from the municipality partner in each market in the form of real estate, tax incentives, and cash. 40% of the financing comes from the presale of fractional ownerships each venue. Venues unique Lux Fire Suite offers fractional ownership in venue-owned Sunset amphitheaters. Owning a fire suite is like owning a condo within a condo building, except in this case, the condo building is the amphitheater and the condo is the fire suite. Then, 20% of the financing comes from the sale leaseback of the real estate that was contributed by the municipality. In fact, this sale leaseback typically generates a development profit. So, how does venue turn profit? Number one, we turn profits in the sale of fractional ownership in our venues. We develop raw property contributed by municipalities into -the-art venues with fractional ownership. Those ownership go directly onto our balance sheet. These fractional ownership along with the sale leaseback result in a development profit of which we expect our first one to happen this year. Number two, profits from operations. These come as a result of our co-promotion agreements and vendor agreements that are associated with our amphitheaters. Additionally, through the internal operations from our non-amphitheater entities. Q1 posted our biggest quarter yet with over $38 million in fractional ownership sales across our venues. Well on our way toward our quarter of a billion dollar goal in 2025. These fractional ownerships are the backbone of the powerhouse that we are building. And remember, these all go directly onto our balance sheet. As for our P&L, we will not look back at our losses this quarter and apologize. The bulk of these costs were non-cash and non-recurring development expenses. In fact, they are driving, these costs are driving the most powerful development engine in music. We will turn, which will turn us profitable later this year with our first development profit and operationally profitable in 2026. As part of that engine, we launched an official partnership with Ryan to rapidly accelerate our national expansion. This relationship and partnership is three years long and is contracted to deliver two new public-private partnerships per quarter. And remember, on average, we can expect to add between $100 and $300 million to our balance sheet with each delivered development agreement. Along the same note, a significant part of this first quarter's staggering balance sheet increase was the property acquisition. This week, we close on another 20-acre property for a ,500-seat multi-seasonal outdoor music venue in El Paso, Texas. The Sunset Amphitheater in El Paso includes a $31.5 million performance-based incentive package from the city of El Paso, Texas. Earlier in the quarter, we also went under contract to acquire a property in the high-growth suburb of Centennial, just outside of Denver, Colorado, where we plan to build an iconic -the-art indoor music hall, private event space, and restaurant. Let me pause here and talk a little bit about the development timelines, which we include, which will include all of our announced projects. Starting with this year, we will have nine open and operating entities that include three concert halls and event spaces, one amphitheater, and five restaurants and bars. In 2026, we are expected to have a total of 16 open and operating entities, including seven concert halls and event spaces, four fully functioning amphitheaters, five restaurants and bars. As we have discussed, our expansion engine is in full gear, and we're thrilled to officially unveil our upcoming locations in the months ahead. Circling back quickly to the fractional ownership, these fractional ownership, as previously mentioned, are also known as Lux Fire Sweeps. Until February of this year, the only way you could participate in this offering was to pay cash upfront. Our team saw an opportunity to introduce structured financing. Now buyers can access structured payment plans and finance their purchases over time. Since launching, we have seen more than 32% of our buyers choose to finance over traditional payments. Further, Lux Fire Sweeps continue to be venues most sought after ownership opportunities. Because of this, we have launched a partnership, we're one of the nation's fastest growing net lease companies, Sands Investment Group, to offer innovative triple net real estate opportunities. Through this approach, qualified investors can now participate in venues income producing long-term assets under a triple net lease structure, offering a projected 11 to 12% cap rate. Finally, we have made strategic additions to our team in the first quarter, like bringing on Connect Partnership Group to serve as our official sponsorship sales partner, accelerating our corporate sales and partnership strategy across our brand portfolio. Additionally, we have added financial leader and strategic growth advisor, Mr. Thomas M. Fink, to our board of directors. Mr. Fink has over 35 years of experience in financial services, including Invesco, Babson Capital, Mass Mutual, and Behring. Our venue executive leadership team also grew with the announcement and addition of executive vice president of operations, Vic Sutter. Vic has spent the last 20 years in luxury hospitality brands across the United States, the last decade with Live Nation. He is responsible for driving our operational excellence, hospitality, and innovation, and premium guest experiences across all of our premium brands. With that said, I'd like to turn the conference over to President Will Hodson. Will please go ahead.

Thanks, JW. Hey, all. Thanks so much for joining us. As JW mentioned, we have a lot going on at Venue. Our team is spending time focused on the core of our business across our hospitality brands, clubs, and amphitheater operations. Q1 top line sales were modestly lower year over year, driven by a day part shift at Notes Eatery and a slightly softer performance at Bourbon Brothers and Phil Long Event Center here in Colorado Springs. We are in a product and service development phase, though, implementing several new strategies to enhance our programming, add additional ancillary revenue streams, and improve fan and guest retention. Booking more diverse genres in our clubs, investigating robust customer engagement partnerships, implementing new seating configurations, and creating new revenue streams are all meant to monetize the guest journey, encourage longer dwell times, and provide higher growth potential for artists. We are also preparing to open the Sunset Hospitality Collection here at Ford Amphitheater this fall in Colorado Springs, anchored by our very exciting new fine dining experience, raw seafood and chop house. Look for new menu items and mixology offerings at our Bourbon Brothers Smokehouse and Tavern Outlets as well, along with new private event packages. As we move through 2025, venue is positioned for major, major growth. We are not only expanding, given what you just heard from JW, we are also hard at work unlocking more value from our current operations, smarter food and beverage strategies, refined premium offerings, and targeted and enhanced analytics to help boost profitability and efficiency across the board. And most importantly, we're keeping our focus where it belongs, delivering unforgettable experiences for both guests and artists while raising the bar at every turn. With that, I'll 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 today. I'm going to dive right into some performance highlights from our 10Q and our earnings release, and a few highlights from balance sheet. Our total assets increased 19% for the quarter for ,464,672 to ,882,187 as of March 31, 2025, up from ,417,515 as of December 31, 2024. Along that same vein, our property and equipment increased 33%, ,906,195 as of March 31, 2025, up from ,215,936 as of December 31, 2024. As JW mentioned before, our Lux Fire Suite and Aichmann Club sales reached $38.7 million for the three months ended March 31, 2025. A big push of that was since launching in late February, Venue's Lux Fire Suite fractional ownership model, which offers suite access at Sunset McKinney and Sunset Broken Arrow, where investors can put 25% down and offers 20-year financing, it generated $12.5 million in sales. Through March 31, 2025, out of that $38.7 million total offering. So huge increases in our balance sheet, so that really strengthened our balance sheet for the first quarter. So we're super excited about what that's going to offer and how it's really going to continue to increase our balance sheet through the rest of 2025. So Venue is really poised to continue to strengthen our balance sheet, with that I'd like to turn it over back to JW for our Q&A session. JW?

Heather, thank you. We couldn't be more excited about where we're going and all that we're doing here at Venue. We are building, literally, we are building a machine that will change and disrupt music. So again, I appreciate Heather and Will participating here. Now we'll open it up for questions.

Operator? Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We'll pause just a moment to assemble the queue. And we'll take our first question from Martin Gilbert. I'm sorry, I apologize. Yes, Martin Gilbert at Morgan Stanley.

Well, it's Martin Gilbert, but it's close. JW, Will, Heather, really good quarter. Amazing news out there. I'm really interested in the Ryan and Company partnership. And I know that you guys have stated you're looking at 250,000 seats in five years, your projection. Is that going to out significantly?

Marty, first, thanks for joining. I appreciate your question. I just appreciate the support that you and folks at Morgan Stanley give us. Yeah, the relationship with Ryan is its fuel on our fire. I mean, it

is

dramatically accelerating our expansion. Think about this. We add between $100 and $300 million to our balance sheet with every development agreement. And they're committed to bringing us two of them a quarter. That's eight a year. They've just been great partners. So at the end of the day, Ryan will add fuel to this fire. And at the end of the day, they're going to add about 200% what our original projections were in terms of adding amphitheaters and music halls. Wow. Wow. That's huge. It is. It is. And I got to tell you, Mayor Mossau has been not only an advocate from the very beginning. Remember, the reason that we're in McKinney is because of Mayor Mossau and Ryan. The reason we're in El Paso is because of Ryan and Mayor Mossau. So it's not like they're an sort of proof tempo in which we're going to roll this out. So again, Marty, I'm so grateful for you and thankful for your participation today. And buckle up. Here we go.

Thank you and your team, JW. Really appreciate it.

We'll move next to John Lutz at IHIT Industries.

Hey, JW. Good to be on the call. Sorry if I have a little wind in the background. I'm on the golf course.

All right.

There you go. I've been to several concerts at the Ford Amphitheater and loved it last summer. I'm just wondering what kind of new exciting things you might have in the offing for Ford and maybe some of the other things. Well, John, first, I hope you're hitting them straight today. But to answer your question, we are excited about a lot of things. I'm going to start with the expansion plan. Our expansion plan as it rolls out is allowing us to add, again, two or so new development agreements per quarter. That's the first thing that we're excited about. The second piece of our excitement focuses on the sale of our fire pit suites. As you can see, we have accelerated that. We believe we can cross a quarter of a billion dollars this year in sales. The new financing metrics and the new financing programs that are falling into place with both banks and ultimately the SBA will be fuel to that fire. Then when we cap it all off, it all comes down to the fan experience in our venues, adding Vic to the mix here and adding to the ambiance and experience that we have at our venues and our shows. Those are all things that you can expect to watch us grow. Thank you.

We'll move next to Wes Gotsman at Raymond James.

Hey, JW. How's it going? Wes Gotsman here.

Wes, it's good to have you on.

Absolutely. Good to be here. Thank you. My question for you, so a significant differentiator for venue is, of course, the fire pit suites which you've been talking about, which have also had strong momentum over the past few months. On the last call, we heard about the launch of the fire suite financing. Can you talk more about that, how it works and how it's been performing so far?

Yeah, good question. Fire pit suites drive the development of our business. It's what pushes forward the financing as we move into these new markets. We have been working diligently to expand not only how investors and how fans can purchase fire pit suites, but how they're marketed. The first piece of your question is answered with the financing model that we have in place. It's increased sales about 32% across the board. We expect that to increase over the next quarter or so. Additionally, we're expanding beyond the markets where we're building and into markets where investors can participate in owning fire pit suites. In other words, a triple net investor typically buys, like let's say a Walgreens. He lives in Green Bay, Wisconsin, and now buy a triple net product of ours in the form of a fire pit suite in one of our markets and never attend a show. Kick that fire pit suite back to us, let us manage that fire pit suite, and produce a triple net return for him that averages in that 11 to 12% cap rate.

Fantastic. Thank you. You bet.

We'll go next to Pete DeRuda at Broadcasting Esper.

AJW, I saw you recently announced a partnership with Sands Investment Group to launch the NNN real estate opportunities at Venue. How does this fit into the broader development strategy at Venue?

I appreciate your time. Pete, thanks for calling in. Again, I appreciate your support of all that you do here. I look at it as a way to expand the market of condo or let's say fire pit suite owners. Right now, when we started this business, the bulk of fire pit suite owners were owners in the market. As we continued to grow and build our venues, we realized that there were investors across the US that wanted to own these fire pit suites like they would own a triple net real estate investment outside of the markets where they live. We did a bunch of research, and at the end of the day, Sands bubbled to the top as one of the best triple net platforms in the country. We started a conversation with them, and at the end of the day, resulted in us signing a deal with Sands to promote our fire pit suites on their platforms. Over the next couple of weeks, you'll see them start to launch these on their platforms. I believe with all my heart that this will become a major way we sell fire pit suites across the US, and it will be a big accelerator as we expand our markets. That's

awesome.

Appreciate it.

Congrats. With no further questions in the queue, that concludes our conference call for today. Thank you so much for your participation. You may now disconnect.