Madison Square Garden Entertainment Corp.

Good morning. Thank you for standing by and welcome to the Madison Square Garden Entertainment Corp Fiscal 2022 3rd Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the call over to Ari James, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to MSG Entertainment's Fiscal 2022 Third Quarter Earnings Conference Call. David Burns, our EVP and Chief Financial Officer, will begin today's call with a discussion of the company's entertainment and TAO Group segments. This will be followed by an update from Andrea Greenberg, President and CEO of MSG Networks. David will then conclude with a review of 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 Investors 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's 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'll now turn the call over to David.

Thank you, Ari, and good morning, everyone. I am pleased to join you today and would like to begin by discussing the positive momentum we are generating across our entertainment and Tau Group hospitality segments. Our core live entertainment business is once again thriving and delivering results that are at or above pre-pandemic levels in many important areas. The outlook for this business is bright. With our unique portfolio of live offerings, we expect to continue benefiting from the pent-up demand from artists to tour, and from their fans to gather. This desire for shared experiences also plays to Tao Group's strength, which has seen its business come roaring back since capacity restrictions were lifted last year in its key markets. In addition, Tao's acquisition of Hakkasan last year cemented its place as a global leader in premium dining and hospitality, one that is well-positioned for expansion moving forward. At the same time, we continue to make meaningful progress on our company's next chapter, MSG Sphere, which we believe will deliver an entirely new medium for immersive experiences. Our first MSG Sphere venue remains on track to open in Las Vegas in the second half of calendar 2023. We plan to top off the building's steel exosphere later this month, a key milestone in our construction process. This 366-foot-tall spherical steel structure surrounds our venue and will ultimately be covered with approximately 580,000 square feet of fully programmable LED panels, forming the largest LED screen on Earth. It will be an impactful display for partners to showcase their brands, create unique activations, and promote content. As we make our way towards the opening of the venue, we've been energized by the interest we're seeing from potential partners. This includes discussions with leading filmmakers about the creation of original immersive attractions, with global artists for concert residencies at the venue, with promoters of marquee events, and with potential corporate partners who see substantial value in the platform's capabilities inside and out. In fact, we recently formed an exciting multi-year partnership for MSG Sphere with Formula One, starting with next year's inaugural Las Vegas Grand Prix. F1's entry into Las Vegas reinforces the market's position as the destination for major sports and entertainment events. And MSG Sphere's prime position along the circuit presents a high-profile opportunity for both our company and F1. we will be able to showcase the venue to a global audience of entertainment and sports fans, both in person and watching broadcasts of the events around the world. And this integrated partnership will give F1 significant access to the venue and our grounds for thousands of race fans, as well as takeovers of our exterior LED display for race-related content, activations, and advertising. There are also potential hospitality opportunities beyond MSG Sphere to include TAO Group. We are pleased that MSG Sphere will be such a prominent part of this global event and believe this type of corporate partnership is just the start for us. We look forward to sharing more on our overall progress in the months ahead and remain confident that we are positioning our company to drive long-term growth and value creation for our shareholders. With that, I'd now like to go through operational highlights from our third quarter, starting with the entertainment segment. Our venues were again filled this past quarter with a wide variety of live events, including concerts, marquee sporting events, and New York Knicks and Rangers home games. In aggregate, we hosted nearly 170 events and welcomed nearly 1.3 million guests to our venues during the quarter. These results would have been even stronger had it not been for the Omicron variant, which resulted in the postponement or cancellation of about 30 events originally scheduled in the quarter and also caused a dip in attendance in January. Still, the impact of the variant on attendance was short-lived, and by February, the percentage of ticket buyers attending our events had essentially returned to pre-Omicron levels, demonstrating the resilient demand for live entertainment. We were also pleased with the strong level of spending by our guests inside our venues as food, beverage, and merchandise per caps again exceeded pre-pandemic levels by a strong double-digit percentage this past quarter. Looking ahead, we expect to maintain our positive bookings momentum in our fiscal fourth quarter with the overall event count anticipated to exceed results for our third quarter, albeit with a greater skew towards our theaters given the Knicks and Rangers have now completed their regular seasons at the Garden. We're also looking forward to the return of the Boston Calling Music Festival in a few weeks, and I'm pleased to share that ticket sales have been performing well as we head into this final stretch before Memorial Day weekend. In addition to benefiting from strong consumer demand, we've also been pleased with the activity we're seeing in marketing partnerships as companies look to reconnect with consumers. With the launch of Mobile Sports Betting in New York earlier this year, we were thrilled to play an important role in helping our first gaming partners, BetMGM and Caesar Sportsbook, hit the ground running and capture meaningful market share. During this past quarter, we took another significant step forward by entering into a multi-year agreement with DraftKings in a deal that leverages assets across our entire portfolio and through our representation agreement, the assets and brands of MSG Sports. We have spoken before about how meaningful the opportunity in sports betting would be for us, and I'm proud to say, with these three partnerships in place, that our sponsorship revenue is now firmly exceeding pre-pandemic levels on a go-forward basis. Increased corporate demand has also extended into premium hospitality, where our suites business has also returned to pre-pandemic levels. And as more employees return to the office and corporate entertaining makes a more complete comeback, we believe there will be a renewed drive towards best-in-class premium offerings, which plays to our strengths. Moving now to TAL Group, which has also benefited from the return of live experiences, particularly in key markets such as Las Vegas and New York. Although Omicron had a temporary impact on operations and demand at the start of the fiscal third quarter, Tao's business started to pick up again in February, and in March, Tao posted its highest monthly revenue total since capacity restrictions were lifted in key markets last summer, which we believe sets the stage for a strong fourth quarter. Similar to our entertainment business, Tao continues to benefit from robust guest spending with average check sizes continuing to track meaningfully above pre-pandemic levels. And since the acquisition of Hakkasan last year, Tao continues its strategic expansion, recently launching LAVO in Los Angeles and celebrating the grand reopening of a completely renovated Tao Beach in Las Vegas. Tao also has a robust pipeline of new venue openings over the next 12 months, which we expect to be a key growth engine for the business. So as we look back on the quarter for our entertainment and Tao Group segments, we're proud of the resiliency our business has shown and we're excited about the road ahead, particularly as we prepare to open MSG Sphere in Las Vegas next year. With that, I will now turn the call over to Andrea.