Madison Square Garden Entertainment Corp.

Good morning. Thank you for standing by and welcome to the Madison Square Garden Entertainment Corp Fiscal 2026 Second 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. 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 2026 second quarter earnings conference call. On today's call, David Collins, our EVP and chief financial officer, will provide an update on the company's operations and review 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 a 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, non-GAAP financial measure. And with that, I'll now turn the call over to David.

Thank you, Ari, and good morning, everyone. For the company's fiscal second quarter, we reported revenues of $460 million and adjusted operating income of $190 million, both representing double digit percentage increases year over year. These results were led by another record setting year for the Christmas Spectacular in its 92nd holiday season run. This quarter's results also reflected growth across virtually every other aspect of our business. That included bookings, sponsorship, and suites, as well as the various revenue streams related to the Knicks and Rangers. So with a successful first half of the year behind us, we're confident that we are well on our way to delivering robust growth in revenue and adjusted operating income this fiscal year. Let's now review some second quarter operational highlights. During the quarter, our venues welcomed approximately 2.9 million guests at over 475 events. which was led by this year's Christmas Spectacular production. Across its entire holiday season run, which ended in January, we had 215 paid performances of the Christmas Spectacular, an increase compared to the 200 shows we ran last year. In light of the demand we saw, we added several shows to this year's run, and across eight and a half weeks of performances, we sold over 1.2 million tickets. This reflected growth in both individual and group tickets and was the production's highest attendance in 25 years. We also saw a year-over-year increase in average ticket yields as we remain focused on strategically managing marketing and pricing our ticketing inventory. In addition, the enthusiasm from guests for this holiday tradition helped drive record level per caps on food, beverage, and merchandise. As a result of these positive factors per show revenue increased by a mid single digit percentage. As compared to fiscal 25, and the Christmas spectacular generated approximately 195Million dollars in total revenue this season. The 2025 season also marked the introduction at Radio City Music Hall of new groundbreaking audio technology called sphere immersive sound. This system is now in use for all concerts at the venue. following its debut last week with the New York Philharmonic. Turning to bookings, during the fiscal second quarter, we saw an increase in the number of events year over year across our venues. This was primarily driven by growth in concerts at the company's theaters, family shows, and marquee sporting events. However, the number of concerts at the Garden was down as compared to the prior year quarter due to the timing of events within the fiscal year. On the family show front, Cirque du Soleil's Twas the Night Before completed a 63-show run across the Chicago Theater and the Theater at Madison Square Garden in December, helping to drive improved financial results in this category on a year-over-year basis. In marquee sports, we welcomed back UFC, WWE, and professional tennis to the Garden during the quarter, while our robust schedule of college sports also got underway. From a demand standpoint, the majority of concerts across our portfolio of venues were again sold out during the second quarter. In terms of in-venue spending, merchandise per caps at concerts were up in the quarter, while food and beverage per caps were down, both of which we primarily attribute to the mix of events. Looking ahead, we have continued to add a wide array of events to our calendar. That includes concerts across our venues, marquee sporting events at the Garden, and special events like the Tony Awards, which will return to Radio City in June. We also recently announced a 30-night Harry Styles residency at the Garden. This run will begin in August, setting us up for continued momentum in the first half of the next fiscal year. With regards to the Knicks and Rangers, the teams began their 25-26 seasons at the Garden in October. So far, we have seen higher per-game revenues across our various revenue and profit-sharing arrangements with the teams as compared to the prior year. Turning to our marketing partnerships business, fiscal 2026 has been highlighted by a number of sponsorship announcements so far. For example, we recently reached a multi-year renewal with Anheuser-Busch as well as an expanded multi-year partnership with Infosys. That includes making Infosys the official naming rights partner of the theater at Madison Square Garden, which is now called the Infosys Theater at Madison Square Garden. These marketing partnerships demonstrate the headway we are making with our sponsorship sales effort back in-house. In terms of premium hospitality, we continue to see strong new sales and renewal activity for suites at the garden, including for a number of Lexus-level suites that were recently renovated. Our progress in these businesses puts us on track for growth across both marketing partnerships and premium hospitality in fiscal 26. Now let's turn to our financial results. For the fiscal 26 second quarter, we reported revenues of $459.9 million, an increase of 13% versus the prior year quarter. This reflected increases in revenues from entertainment offerings, arena license fees and other leasing revenues, as well as food, beverage, and merchandise revenues. The increase in revenues from entertainment offerings primarily reflected growth in the Christmas Spectacular production, mainly due to higher ticket-related revenues. This reflected 14 additional performances and higher per-show revenues, both as compared to the prior year quarter. In addition, revenues from other live entertainment and sporting events increased year over year due to higher per-event revenues and, to a lesser extent, an increase in the number of events held at the Garden. Revenues subject to sharing of economics with MSG Sports pursuant to the arena license agreements, and revenues from venue-related sponsorship, signage, and suite licenses fees also grew year over year. I would also note that as a result of this year's schedule, the Knicks and Rangers played a combined four 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. These increases were slightly offset by a decrease in revenues from concerts due to a decrease in the number of concerts at the Garden, which was mostly offset by higher per-concert revenues and an increase in the number of concerts at the company's theaters. The increase in food, beverage, and merchandise revenues mainly reflected higher F&B sales at Knicks and Ranger games, the Christmas Spectacular production, and other live entertainment and sporting events. These increases were partially offset by lower F&B sales at concerts primarily due to a decrease in the number of concerts at the Garden. Second quarter adjusted operating income of $190.4 million increased 16% as compared to the prior year quarter. This primarily reflects the increase in revenues partially offset by higher direct operating SG&A expenses. Turning to our balance sheet, as of December 31st, we had $157 million of unrestricted cash up from $30 million as of September 30th, reflecting our strong cash flow generation during our seasonally busiest time of the year. In addition, our debt balances at quarter end was $594 million. This reflects the pay down of the full $20 million revolver balance during the quarter. As a reminder, we have repurchased approximately 623,000 shares of our Class A common stock for $25 million fiscal year to date. We have approximately $45 million remaining under our current buyback authorization, and going forward, we will continue to explore ways to opportunistically return capital to shareholders. So in summary, with the continued momentum in our business, we are confident we are on a clear path to delivering a robust fiscal 26 and believe we remain well positioned to drive long-term value for our shareholders. I will now turn the call back over to Ari.