Madison Square Garden Entertainment Corp.

Good morning. My name is Teresa and I will be your conference operator today. At this time, I would like to welcome everyone to the Madison Square Garden Entertainment Corp. The School 2021 Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I would now like to turn the call over to Ari Daines, Investor Relations. Please go ahead, sir.

Ari Daines Thank you. Good morning and welcome to MSG Entertainment's fiscal 2021 second quarter earnings conference call. Our President, Andy Lustgarten, will begin today's call with an update on the company's operations. This will be followed by a review of our financial results with Mark Fitzpatrick, our EVP and Chief Financial Officer. 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 statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments, and events may differ materially from those in the forward-looking statements as a result of various factors. These include financial community perceptions of the company and its business, operations, financial condition, and the industry in which it operates. as well as the factors described in the company's filings with the Securities and Exchange Commission, including the sections entitled risk factors and management discussion and analysis of financial condition and results of operations contained therein. The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On pages five and six 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 will now turn the call over to Andy.

Thank you, Ari, and good morning, everyone. Let me start by saying that we are thrilled with Governor Cuomo's announcement on Wednesday that arenas in New York can reopen with limited capacity. This comes on the heels of the governor's reopening New York City restaurants for indoor dining at reduced capacity starting today. We believe this is the beginning of our path back to normal operations, and we look forward to returning to what we do best. We've been preparing for this moment, working with state and local health officials to develop a comprehensive plan with rigorous safety protocols for our reopening. In addition, thanks to the NBA and NHL, we've learned best practices as a number of teams have been playing with limited in-arena fan attendance this season. We think the time is right to welcome back fans, and we've been encouraged by the tremendous demand for live events we've seen recently. From the success of the Buffalo Bills playoff games to the crowds at the Super Bowl this past weekend, it's clear that people are eager to gather again. And we expect to see the same enthusiasm once we're able to reopen our doors to fans, which we intend to do on February 23rd with the Knicks and February 26th with the Rangers for roughly 2,000 people per game. These types of events will be taking place not only at the Garden, but also in arenas across New York. And we believe this push forward Coupled with the ongoing vaccine rollout will pave the way for our other assets and brands to participate in a broader reopening. With this week's news, we've taken the next step and started talking to artists and managers to gauge their interest in playing the garden to reduce capacity crowds. While the economics may prove to be more challenging for concerts, if there's one thing we know, It's that there's an intense desire by the entire industry for the return of live music. Nowhere is this more apparent than the impressive booking schedule we've lined up for the second half of calendar 2021, which has the potential to be one of our busiest ever if we are able to fully reopen. And although it's still early, we are also seeing artists hold dates during the first half of calendar 2022. Demand from fans is also strong. as evidenced by our rescheduled shows, where 73% of ticket holders have chosen to hold onto their tickets instead of requesting a refund. We've also continued to see strong engagement with our Rockettes and Christmas Spectacular brands, which we believe bodes well for the production's continued success. Traditional broadcast media still reaches the widest audience for the Rockettes, and their featured performance at Macy's Thanksgiving Day Parade and the Rockefeller Center Christmas Tree Lighting were seen by more than 29 million viewers. We also partnered with NBC to televise a Christmas Spectacular special, which became one of the season's most watched holiday shows with nearly 9 million viewers over its two airings, and led to a noticeable bump in ticket sales around those airings. social media platforms have become another key tool we're using to stay connected with our existing audience as we also engage the next generation of fans this fall we relaunched the rocket's presence on tick tock and during the holiday season shared a video highlighting fun facts about the rocket that generated more than 5 million views significantly exceeding our average This enthusiasm from a younger demographic has only reinforced our strong belief in the enduring popularity of the Christmas Spectacular and the Rockettes. Turning to Tao Group. Tao entered the quarter with a number of its venues, including in New York, Las Vegas, and Chicago, opened at reduced capacities. However, as a result of government mandates, select restrictions were reinstated in late fall. For example, in Las Vegas, nightclub capacity was reduced from 50% to 25%. And while venues in New York City were again closed, as I noted earlier, that changed today with indoor dining now reopened at 25% capacity. In this fluid environment, we are pleased with the TAO Group's creativity and flexibility, which will help ensure they're able to reopen their venues quickly as restrictions are lifted. We truly believe that this is a significant moment for the company, and until we can fully reopen, we are confident that the steps we have taken over the past several months to cut costs, raise additional capital, and strengthen our balance sheet have provided us with sufficient liquidity to weather this period. While protecting our core businesses, of course, our top priority, we are also making important progress on the construction of MSG Sphere in the States. a venue that we believe will create significant long-term value for our shareholders. We recently announced that we have assumed the role of construction manager for MSP Sphere. ACOM has transitioned from its role as general contractor to a new service agreement that facilitates their ongoing support through the project's completion. This new structure enables us to continue benefiting from ACOM's experience. while also giving us greater transparency and control over the construction process. Jane McGivern, who joined us in 2018, has been named President of Development and Construction and will continue to lead our construction efforts. As many of you will recall, she has spearheaded a number of large development projects, including her work on Wembley Stadium and leading the development of the O2 Arena. Jane has taken significant steps to build out our internal construction team, which played an important part, enabling us to assume the construction manager role. Our internal team now has direct responsibility for strategic planning and the construction timeline, and also currently oversees 30 AECOM employees who continue to support key areas, including specialist roles such as health and safety. On the construction front, we remain focused on several of MSG SPHERE's critical path elements, including structural steel work, and we anticipate starting to build the steel frame for the venue's roof in the coming months. In closing, we are excited to see the start of live entertainment return to New York. We have already been hosting Knicks and Rangers games at the Garden without fans. And we're now thrilled that later this month, those teams will play in front of crowds at the arena for the first time since last March. With this reopening, we believe that we've started down a path that aided by vaccinations and better health and safety protocols will lead to the return of normal operations. And when that day comes, our premier collection of assets and brands places us in a prime position to capitalize on the significant pent-up demand for live entertainment. I'd like to thank our employees, partners, fans, and shareholders for their continued support. With that, I will now turn the call over to Mark.