Madison Square Garden Entertainment Corp.

Good morning. Thank you for standing by and welcome to the Madison Square Garden Entertainment Corp Fiscal 2025 Second Quarter Earnings Conference Call. At this time, all participants were in a listen-only mode. After the speaker's remarks, there will be a question and answer session. I would now like to turn the call over to Ari Daines, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Thank you. Good morning and welcome to MSG Entertainment's fiscal 2025 second quarter earnings conference call. On today's call, Lee Weinberg, our interim chief financial officer and senior vice president, business and financial operations, will provide an update on the company's operations. I 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 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 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 5 and 6 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 Lisa.

Thank you Ari and good morning everyone. As we move into the second half of our fiscal year, we are seeing strong demand from our offerings as consumers continue to demonstrate their desire for shared in person experiences. This was evident in the company's fiscal second quarter results with revenues of $407 million and adjusted operating income of $164 million. This was led by the Christmas Spectacular, which in its 91st holiday season achieved record-setting results across a number of metrics. During the quarter, we also welcome back the Knicks and Rangers to the Garden for the start of their 24-25 regular seasons, and we are seeing positive momentum in our economic arrangements with the teams. On the bookings front, while we are facing a tough year-over-year comparison at the Garden, which had a record number of concerts last year, we continue to fill our calendar and expect to grow the overall number of bookings events at our venues in fiscal 25. So, coming off of our seasonally busiest quarter, we remain on track to deliver mid to high single digit AOI growth this year. In addition, the strength of our business has enabled us to opportunistically return capital to shareholders. During the quarter, we resumed our buyback program with the repurchase of $25 million of our Class A common stock. Let's now review second quarter operational highlights. Across our portfolio of venues, we hosted nearly 2.7 million guests at more than 440 live entertainment and sporting events during the quarter. As I mentioned earlier, these results were led by the success of the Christmas Spectacular. For the show's 91st holiday season, the production included new immersive elements which were well received by our guests. And while we initially went on sale with 197 performances, we added shows throughout the run due to strong demand, ending, at 200 total performances. This compares to 193 shows last season. Across eight weeks of performances, we sold approximately 1.1 million tickets, leading to the show's strongest sell-through rate in 25 years. These results were driven by robust demand for individual tickets as our business continues to benefit from the ongoing recovery of New York City tourism. At the same time, average ticket yields across both individual and group sales grew year over year as we continue to thoughtfully manage, market, and price our ticket inventory. In addition, per-cap spending on food, beverage, and merchandise reached record levels for the show. Putting it all together, average per show revenue increased by a low double-digit percentage as compared to fiscal 24 and resulted in over $170 million in total revenue for the Christmas Spectacular this season, a new record for the production and a testament to the show's enduring appeal. Turning to bookings. During the fiscal second quarter, we saw a decrease year over year in the number of events across our venues. This was primarily driven by a lower number of concerts at both our theaters and the garden, which includes the absence of three Billy Joel performances that took place in the prior year quarter. That said, consumers continue to show their enthusiasm for our in-person events, with the majority of concerts selling out during the quarter. In terms of in-venue spending, combined food, beverage, and merchandise per caps at concerts were up year over year. Outside of concerts, we had a busy schedule of family shows and sporting events during the quarter. At the Chicago Theater and the Theater at MSG, we welcomed the musical Annie for an extended holiday run. And at the Garden, we hosted UFC, which was the second highest grossing event in the arena's history, as well as a sold out professional tennis event, which made its first appearance at the Garden since 2018. We continue to expect strong growth in our special events category this fiscal year and are looking forward to a number of high profile events in the coming months. This includes Saturday Night Live's 50th anniversary special set to take place at Radio City Music Hall next week, as well as the Tony Awards in June. During the quarter, the Knicks and Rangers began their 24-25 regular seasons at the Garden, and so far, we are seeing positive momentum across our various revenue and profit-sharing arrangements with the teams. I would also note that as a result of this year's schedules, the Knicks and Rangers played a combined three more home games during the fiscal second quarter as compared to the prior year quarter. This timing impact will reverse over the balance of the fiscal year. Turning to marketing partnerships and premium hospitality. Fiscal 25 has been highlighted by a number of sponsorship announcements, including new multi-year deals with Lenovo and its subsidiary Motorola, as well as with the Department of Culture and Tourism Abu Dhabi, and a multi-year renewal with Verizon. In terms of premium hospitality, we continue to see strong new sales and renewal activity for Suites at the Garden. That includes our expanded event-level club space, as well as a number of event and Lexus-level suites that were recently renovated. In summary, our fiscal second quarter reflects the robust demand we continue to see in our business. We remain confident in our outlook for solid AOI growth this fiscal year and our ability to generate long-term value for our shareholders. With that, I will now turn the call back over to Ari.