Q1 2024 Madison Square Garden Entertainment Corp Earnings Call

Speaker 1: Yeah.

Speaker 2: Good morning. Thank you for standing by and welcome to the Medicine Square Garden Entertainment Corp, fiscal 2024 First Quarter Earnings Conference call. At this time, all participants are in listening mode. After the speakers remarks, there will be a question and answer session. I would now like to turn the call over to REDANES, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Good morning, Thank you for standing by and welcome to the Madison Square Garden Entertainment Corp. Fiscal 2024 first quarter earnings Conference call. At this time all participants are in listen only mode. After the Speakers' remarks, there will be a question and answer session I would now like to turn the call over to Ari Danes.

Senior Vice President Investor Relations and Treasury. Please go ahead.

Speaker 3: Thank you. Good morning and welcome to MSG Entertainment's fiscal 2024 First Quarter Earnings Contest.

Thank you good morning, and welcome to MSG Entertainments fiscal 2024 first quarter earnings conference call on today's call, Dave Burns, our EVP and Chief Financial Officer will provide an update on the company's operations and review our financial results for the quarter. After our prepared remarks, we will open up the call for.

Speaker 3: On today's call, Dave Burns, our EVP and Chief Financial Officer, will provide an update on the company's operations and review our financial results for the quarter. After our prepared remarks, we will open up the call for questions.

Questions.

Speaker 3: If you do not have a copy of today's earnings release, it is available in the Investor section of our corporate website.

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 forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

Speaker 3: Today's discussion may contain four looking statements within the meaning of the private security litigation reform act of 1995.

Speaker 3: 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 state.

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.

Speaker 3: Please refer to the company's filings with the SEC for a discussion of risks and uncertain.

Please refer to the company's filings with the SEC for a discussion of risks and uncertainties.

Speaker 3: The company disclaims any obligation to update any forward looking statements that may be discussed during this call.

The company disclaims any obligation to update any forward looking statements that may be discussed during this call.

Speaker 4: 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 ALI, a non- GAAP financial measure. And with that, I'll now just call over to Dave. Thank you, Ari, and good morning, everyone. We're now several-

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 non-GAAP financial measure and with that I'll now turn the call over to Dave.

Thank you Ari and good morning, everyone.

We are now several months into our first full year as a standalone company.

Speaker 4: And based on a number of positive signs across our business, we are increasingly confident in our ability to deliver robust revenue and AOLI growth for fiscal 24.

And based on a number of positive signs across our business. We are increasingly confident in our ability to deliver robust revenue and AOI growth for fiscal 'twenty four.

On the bookings front, our calendar continues to fill up and the garden the theater at MSG and the Beacon Theatre are all now pacing to exceed our concert goals for the year.

Speaker 4: At the same time, advanced ticket sales for the Christmas spectacular remain strong, and we've added more shows to the upcoming holiday season run.

At the same time advance ticket sales for the Christmas spectacular remains strong and we've added more shows to the upcoming holiday season run.

Speaker 4: And our premium hospitality business is tracking ahead of our expectations for the year. An example of strong ongoing corporate demand for our live entertainment office.

And our premium hospitality business is tracking ahead of our expectations for the year. An example of strong ongoing corporate demand for our live entertainment offerings.

Speaker 4: We have also made meaningful progress on our commitment to return capital to sharehold.

We have also made meaningful progress on our commitment to return capital to shareholders.

Speaker 4: During the quarter, we repurchased 3.5 million of our Class A shares.

During the quarter, we repurchased $3 5 million of our class a shares.

Speaker 4: This brings our total share repurchases since the completion of our spin-off last April to approximately 10% of class A shares outstanding.

This brings our total share repurchases since the completion of our spinoff last April to approximately 10% of class a shares outstanding.

Speaker 4: I'd also note that in September , queer entertainment sold the remainder of its retained interest in MSG entertainment and no longer owns any of our...

I'd also note that in September premiere Entertainment sold the remainder of its retained interest and MSG Entertainment and no longer owns any of our class a shares.

Speaker 4: With the continued strength we see across our unique portfolio of assets and brands coupled with our folks on operational X

With the continued strength, we see across our unique portfolio of assets and brands.

With our focus on operational excellence, we remain confident in our ability to generate long term growth and shareholder value.

Speaker 4: We remain confident in our ability to generate long-term growth and shareholder value.

Speaker 4: Now let's review our operational highlights from our fiscal first quarter.

Now, let's review our operational highlights from our fiscal first quarter.

Speaker 4: During the quarter, we hosted 130 events and welcomed more than 800,000 guests across an array of live entertainment events.

During the quarter, we hosted 130 events and welcomed more than 800000 guests across an array of live entertainment events.

Speaker 4: On a year of a year basis, our bookings results for our first quarter reflected a difficult comparison with the prior year period, which benefited from over 30 concerts that were rescheduled to the quarter from earlier dates that were postponed due to the pen.

On a year over year basis, our bookings results for our first quarter reflected a difficult comparison with the prior year period, which benefited from over 30 concerts that were rescheduled to the quarter from earlier dates that were postponed due to the pandemic.

Speaker 4: excluding those rescheduled shows. The number of concerts at our venues increased by a mid-teens percentage EuroB-

Excluding those rescheduled shows the number of concerts at our venues increased by a mid teens percentage year over year.

Speaker 4: I'd also note that the garden hosted Harry Styles, historic 15-night residency in the prior year period.

I'd also note that the garden hosted Harry styles Historic 15 night residency in the prior year period.

Speaker 4: Despite those headwinds, the Garden was just two concert shy of last year's record number of concerts for a fiscal first quarter at the venue. A testament to the sustained demand for live events.

Despite those headwinds the garden was just two concert shy of last year's record number of concerts for our fiscal first quarter at the venue.

Testament to the sustained demand for live events.

Speaker 4: We given our current bookings momentum. We now expect the Garden to set another record for a number of concerts at the arena on a full year basis.

And given our current bookings momentum, we now expect the garden to set another record for number of concerts at the arena on a full year basis.

Speaker 4: In addition to benefiting from the continued growth of the New York market, our success at increasing the gardens utilization this year also reflects our efforts to grow the number of multi-night events at our venue.

In addition to benefiting from the continued growth of the New York market. Our success at increasing the garden's utilization. This year also reflects our efforts to grow the number of multi night events at our venues.

Speaker 4: We are also seeing an increase in the number of first time acts playing the guard.

We are also seeing an increase in the number of first time <unk> play in the garden.

Speaker 4: As you know, we have four venues in New York, ranging in seating capacity from 2,800 to 21,000.

As you know we have four venues in New York ranging in seating capacity from 2000, 821000, which enables us to shepherd artist through the various stages in their careers.

Speaker 4: enables us to shepherd artists through the various stages in their career.

This fiscal year, there are a number of acts, including Olivia Rodrigo Tyler Childers, and Niall Horan, who were previously performed that either the beacon or radio city that will soon headline the garden for the first time in their careers.

Speaker 4: I'd also note that a number of these first time acts are playing multiple nights at the garden with strong ticket demand for their entire...

I'd also note that a number of these first time acts are planning multiple nights at the garden with strong ticket demand for their entire run.

Speaker 4: I would also add that the strong supply of concerts to our venues continues to be met by robust demand from consumers for shared in-person experience.

I would also add that the strong supply of concerts to our venues continues to be met by robust demand from consumers for shared in person experiences.

Speaker 4: For example, across all our venues, the majority of concerts were once again sold out during the quarter. While recent concert on sales continue to be...

For example across all of our venues. The majority of concerts were once again sold out during the quarter. While recent concert on sales continued to be strong.

Speaker 4: In addition to concerts, we continue to anticipate a strong year for family shows of Bookings category whose recovery has lagged coming out of the pandemic.

In addition to concerts, we continue to anticipate a strong year for family shows our bookings category, whose recovery has lagged coming out of the pandemic.

Speaker 4: This includes next month's return of Cirque du Soleil's Holiday Show, which last took place in 2021 with a short and run due to the pandemic.

This includes next month's return of surface delays holiday show.

Last took place in 2021 with a shortened run due to the pandemic.

Speaker 4: We will be hosting 66 shows across the Theater at MSG and the Chicago Theater, and have been pleased with advanced ticket sales to date in both March.

We will be hosting 66 shows across the theater at MSG and the Chicago Theater and have been pleased with advanced ticket sales to date in both markets.

Speaker 4: In our marquee sports business, we will see the return of the UFC to the garden this weekend for what's projected to be one of the top grossing events in the arena's history.

And our marquee sports business, we will see the return of the UFC to the garden. This weekend for what's projected to be one of the top grossing events in the arenas history. While next week College basketball will make his return to the garden.

Speaker 4: Well, next week, college basketball will make its return to the guard.

Speaker 4: Putting it all together, based on what we're seeing in our bookings calendar, we're on track for a low double digit percentage increase in the number of events held at our venue's distance of...

Putting it all together based on what we're seeing in our bookings calendar. We're on track for a low double digit percentage increase in the number of events held at our venues this fiscal year.

Speaker 4: Last month we also welcomed the back, the NYX and Rangers to the Garden for the start of their 2324

Last month, we also welcomed back the Knicks and Rangers to the garden for the start of their 'twenty three 'twenty four seasons.

Speaker 4: As a reminder, under our agreements with MSG sports, we will receive $43 million in license fees this fiscal year. And these fees will continue to grow at 3% each and every year through fiscal 55.

As a reminder, under our agreements with MSG sports, we will receive $43 million in license fees. This fiscal year and these fees will continue to grow at 3% each and every year through fiscal 55.

Speaker 4: And while it is only a few weeks into the regular season, we are already seeing positive overall momentum across our revenue and profit-sharing arrangements with MSG Sports.

And while it is only a few weeks into the regular season, we are already seeing positive overall momentum across our revenue and profit sharing arrangements with MSG sports.

Speaker 4: Turning to the Christmas spectacular, which takes off its 90th season.

Turning to the Christmas spectacular, which kicks off its 90 of season next week.

Speaker 4: Take it's sales continue to pace well ahead of where we were at the same time last

Ticket sales continue to pace well ahead of where we were at the same time last year. This reflects healthy demand from both individuals and groups driven in part by the continued recovery of tourism to New York.

Speaker 4: This reflects healthy demand from both individuals and groups driven in part by the continued recovery of tourism to New York.

Speaker 4: With cell through on a per show basis currently on track to surpass our initial expectation.

With sell through on a per share basis currently on track to surpass our initial expectations. We're pleased to report that we now anticipate paid attendance, reaching approximately 1 million guests this year, bringing us back to pre pandemic levels.

Speaker 4: Please to report that we now anticipate paid attendance reaching approximately one million guests this year bringing us back to pre-pendemic level.

Speaker 4: In light of the current level of demand, we have made the decision to add two performances to this year's holiday season run, bringing the total number of shows to 187. This compares to 181 performances last.

In light of the current level of demand we have made the decision to add two performances to this year's holiday season run, bringing the total number of shows to 187.

This compares to 181 performance as last year.

Speaker 4: Furthermore, we're actively monitoring ticket sales and depending on how demand continues to unfold, we may add more shows towards the end of this year.

Furthermore, we are actively monitoring ticket sales and depending on how demand continues to unfold. We may add more shows towards the end of this year as Ron.

Speaker 4: This year will mark the second year of the Christmas Spectacular's partnership with presenting sponsor.

This year will mark the second year of the Christmas spectacular partnership with presenting sponsor QVC.

Speaker 4: This partnership is a great example of how we have leveraged our company's unique brands to expand our marketing partnership business.

This partnership is a great example of how we have leveraged our company has unique brands to expand our marketing partnership business as well as reach new audiences.

Speaker 4: In addition, our recently announced arrangement with Oakview Group presents new opportunities to continue to expand our sponsorship business going forward.

In addition, our recently announced arrangement with Oak view group presents new opportunities to continue to expand our sponsorship business going forward.

Speaker 4: I'd also add that as part of our arrangement with OBG, our sponsorship business has transitioned to a more variable commission-based cost structure, which we find attractive. I'd also add that as part of our arrangement with OBG, our sponsorship business has transitioned to a more variable commission-based cost structure, which we find attractive.

I'd also add that as part of our arrangement with OBG. Our sponsorship business has transitioned to a more variable commission based cost structure, which we find attractive.

Turning to premium hospitality.

Speaker 4: Robust Renewal and New Sales Activity has us poised for growth in this area of our business.

Robust renewal and new sales activity has us poised for growth in this area of our business.

Speaker 4: In October , we opened our 2 new suite products at the garden. The 1st, which is an event level suite has already been licensed in a multi year agreement. And the 2nd, which is an event level club space. As a majority of seats already under contract, and we are making good progress on the remainder.

In October we opened our two new suite products at the garden.

<unk>, which is an event level suite has already been licensed in a multi year agreement and the second which is an event level club space as the majority of seats already under contract and we are making good progress on the remainder.

Turning to our financial results.

Speaker 4: As you know, our company completed its spin-off from Sphere Entertainment in April of this-

As you know our company completed its spin off from sphere Entertainment in April of this year.

Speaker 4: Our fiscal 24 first quarter therefore marks the first complete quarter of results on a standalone base

Our fiscal 'twenty four first quarter. Therefore marks the first complete quarter of results on a standalone basis.

Speaker 4: However, I'd note that first quarter results are not fully comparable on a year-over-year basis.

However, I would note that first quarter results are not fully comparable on a year over year basis.

Speaker 4: Results for the prior year quarter are based on carve-out accounting and do not reflect all of the SG&A expenses we would have incurred had we been a stand-alone public

<unk> for the prior year quarter are based on carve out accounting and do not reflect all of the SG&A expenses. We would have incurred had we been a standalone public company.

Speaker 4: For the fiscal 2024 first quarter, we reported revenues of $142.2 million, a decrease of $4.2 million as compared to the prior year quarter.

For the fiscal 2020 for first quarter, we reported revenues of $142 $2 million.

A decrease of $4 2 million as compared to the prior year quarter.

Speaker 4: The decrease in revenues was primarily driven by lower event-related revenues, which reflects the difficult comparison with the prior year quarter that I mentioned earlier.

The decrease in revenues was primarily driven by lower event related revenues, which reflects the difficult comparison with the prior year quarter that I mentioned earlier.

Speaker 4: First quarter, adjusted operating income decreased by 12.2 million dollars to a loss of approximately 700,000 dollars.

First quarter adjusted operating income decreased by $12 2 million to a loss of approximately $700000.

Speaker 4: This decrease primarily reflects the year-over-year increase in SG&A expenses, as well as the impact-

This decrease primarily reflects the year over year increase in SG&A expenses as well as the impact of lower revenues as I mentioned earlier first quarter SG&A expenses are not fully comparable on a year over year basis.

Speaker 4: As I mentioned earlier, first quarter SGNA expenses are not fully comparable on a Eurovigure basis.

Moving onto our fiscal 'twenty four outlook.

Speaker 4: As you know, last quarter we provided guidance for fiscal 24, which included revenues of between $900 and $930 million and adjusted operating income of between 160 and 170 million.

As you know last quarter, we provided guidance for fiscal 'twenty, four which included revenues of between 909 hundred $30 million and adjusted operating income of between 160 and $170 million.

Speaker 4: With the level of visibility we have into our bookings calendar at this point in the year, along with the positive operating momentum we have seen across our business, we remain confident in our ability to achieve our revenue and A.O.I. guidance ranges for fiscal 24.

With the level of visibility we have into our bookings calendar at this point in the year along with a positive operating momentum we have seen across our business. We remain confident in our ability to achieve our revenue and AOI guidance ranges for fiscal 'twenty four.

Speaker 4: We are also updating our operating income guidance to between $85 and $95 million primarily based on the impact of restructuring charts.

We are also updating our operating income guidance to between 85 and $95 million, primarily based on the impact of restructuring charges.

Speaker 4: In terms of our balance sheet, as of September 30th, we had approximately $37 million of unrestricted cash, and our debt balance was approximately $730.

In terms of our balance sheet as of September 30, we had approximately $37 million of unrestricted cash and our debt balance was approximately $732 million.

Speaker 4: During the quarter, we amended our existing revolving credit facility to increase its capacity from 100 million to 150

During the quarter, we amended our existing revolving credit facility to increase its capacity from $100 million to $150 million and subsequently drew down approximately $73 million on that facility, including $50 million to fund our recent share repurchase.

Speaker 4: and subsequently drew down approximately $73 million on that facility, including 50 million to fund our recent share report.

Speaker 4: As we enter our seasonally strongest quarter, our capital allocation priorities are on...

As we enter our seasonally strongest quarter, our capital allocation priorities are unchanged, we remain focused on opportunistically, returning capital and debt Paydown.

Speaker 4: we remain focused on opportunistically returning capital and debt paid out.

Speaker 4: Since the end of the quarter, we have already paid down $35 million of our outstanding revolver balance.

Since the end of the quarter, we have already paid down $35 million of our outstanding revolver balance.

Speaker 4: And as I mentioned earlier, since our spin-off, we have repurchased approximately 10% of our class A share.

And as I mentioned earlier since our spinoff, we have repurchased approximately 10% of our class a shares.

Speaker 4: That includes the $65 million delayed draw term loan repayment by Sphere Energy.

That includes the $65 million delayed draw term loan repayment by sphere entertainment at our $50 million share repurchase during the quarter. Following our initial $25 million share repurchase in June.

Speaker 4: $50 million share repurchased during the quarter, following our initial $25 million share repurchased in

Speaker 4: continue to have $110 million remaining under our current by-back author.

We continue to have $110 million remaining under our current buyback authorization.

Speaker 4: So in summary, our business continues to benefit from strong demand and we're confident that we are on path to delivering our revenue and AI guidance for fiscal 24.

So in summary, our business continues to benefit from strong demand and we're confident that we are on path to delivering our revenue and our guidance for fiscal 'twenty four.

Speaker 4: We remain focused on executing against our key strategic priorities and believe we are well positioned to generate long-term value for our shareholders. With that.

We remain focused on executing against our key strategic priorities and believe we are well positioned to generate long term value for our shareholders.

With that I will now turn the call back over to Ari.

Speaker 3: Thank you, Dave. Operator, can we open up the call for questions?

Thank you Dave operator can we open up the call for questions. Please.

Speaker 2: At this time, I would like to remind everyone in order to ask a question. Press star then the number one on your telephone keypad. We'll pause for just a moment.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment.

Speaker 2: And your first question comes from the line of Peter Sopino from Walter Starr.

And your first question comes from the line of Peter <unk> from Wolfe.

Sir your line is open.

Speaker 5: Hi, good morning to if I may. First last quarter you mentioned that you had visibility into about 70% of the targeted events across your portfolio and 90% of the garden. So could you update us on how much visibility you have into bookings for 24 now that you're...

Hi, good morning.

Two if I may 1st last quarter, you mentioned that you had.

Ability into about 70% of the targeted events across your portfolio and 90% at the garden. So could you update us on how much visibility you have into bookings for 24 now that you are.

Speaker 5: in the fifth month of the year. And then the other question is about 2024 supply. Now that you have more visibility into it, could you provide any additional color on what double digit event growth looks like across your venues or by event type residencies and concerts and corporate events, et cetera? Thank you.

Most of the year and then the other question is about 2024 supply now that you have more visibility into it can you provide any additional color on what double digit event cross looks like across your venues.

But at that time residencies in concert to corporate events et cetera. Thank you.

Speaker 4: Sure, thanks Peter. As you mentioned on our August call, we mentioned that we have visibility into over 70% of our concert bookings goals for the year. We have made significant strides since then. We now have visibility into over 90% of our goal.

Sure. Thanks Peter.

As you mentioned on our August call. We we mentioned that we have visibility into over 70% of our concert bookings goal for the year.

We have made significant strides since then we now have visibility into over 90% of our goal.

Speaker 4: At the garden, we're on track to exceed our concert expectations for the year. And we expect another record year for concerts at the garden. At the theaters, we're now 90% of the way to our concert goal for the year. And we're pasting ahead of our expectations at the theater at MSG and at the Beacon Theater.

Yes.

At the garden, we're on track to exceed our concert expectations for the year.

And we expect another record year for concerts at the garden at the theaters were now 90% of the way to our concert goal for the year and we're pacing ahead of our expectations at the theater at MSG and at the Beacon Theatre.

Speaker 4: As far as other areas of our bookings business, we will be hosting the 56th Cirque du Soleil holiday shows at the Theater at MSG and in Chicago next month.

As far as other areas.

Our bookings business, we will be hosting the 56 surface Solvay holiday shows.

MSG and in Chicago next month.

Speaker 4: And we're pleased with how advanced ticket sales are shaping up on the search shows.

And we're pleased with how advanced ticket sales are shaping up on on the search shows.

Speaker 4: Cirque did not run a holiday show at our venues last year.

Surf did not run a holiday show at our venues at our venues last year.

Speaker 4: In terms of special events, the book, the bulk of our special events business takes place in fiscal fourth quarter. We still have some work to do in this area, but we expect that portion of our business to grow this year also. So we feel really good about our bookings calendar for the remainder of fiscal 24.

In terms of special events.

Look the bulk of our special events business takes place in fiscal fourth quarter.

We still have some work to do in this area, but we expect that portion of our business to grow. This year also so we feel really good about our bookings calendar for the remainder of fiscal 'twenty four.

Speaker 4: As far as your second question, which was, the makeup of our anticipated double digit event growth.

As far as your second question, which was.

The makeup of our anticipated.

We'll digit even growth.

Speaker 4: I'd say bookings of vent growth, you know, for this fiscal year is expected to be driven primarily by concerts and family shows. To a lesser extent.

Sure.

I'd say bookings event growth for this fiscal year is expected to be driven primarily by concerts and family shows.

To a lesser extent special events.

Speaker 4: And we anticipate growth at the garden as well as across our theaters. I mentioned we're on track for a record year of concert at the arena and to exceed our goals at the theater here at the garden in the beacon. Family shows, I just mentioned CERC. That'll now CERC will be a significant driver of growth in the family show category. So we anticipate fairly broad-based bookings growth in this fiscal year.

And we anticipate growth.

The garden as well as across our theaters.

I mentioned, we're on track for a record year concerts at the arena and to execute our goals.

The theater here at the garden the Beacon.

Family shows I just mentioned search.

Circle be a significant driver of growth in the family show category.

We anticipate fairly broad based bookings growth in this fiscal year.

Thanks very much.

Our next.

Speaker 2: Your next question comes from a line of Stephen Lezick from Goldman Sachs. Your line...

Your next question comes from the line of Stephen Stephen <unk> from Goldman Sachs. Your line.

Speaker 6: A great thank you very much. Maybe first on the Christmas spectacular, you mentioned advance sales, we're trending strong. Could you maybe talk a little bit more about what you're seeing on the advance ticket sales side, particularly in the group market, which I think you called out last quarter, is expected to come back stronger this year. And then more broadly, I'm curious what you would need to see out of demand over the next few weeks, to maybe add more shows above the 187 you have flated today. Thank you.

Hey, great. Thank you very much maybe first on the Christmas spectacular you mentioned advanced sales were trending strong could you maybe talk a little bit more about what youre seeing on the advance ticket sales side, particularly in the group market, which I think you called out last quarter is expected to come back stronger. This year and then more broadly I am curious, what you would need to see out of demand.

Over the next few weeks.

We add more shows about 187, you have slated today. Thank you.

Speaker 7: Sure, Steven. Today's the overall ticket tickets sold for the Christmas spectacular are pasting up high teens as compared to the same time last year. Again, with six additional shows on sale this year versus the prior year. This is really being driven by healthy demand from both individuals and groups.

Sure Steven.

To date, the overall ticket tickets sold for the Christmas spectacular are pacing up high teens as compared to the same time last year again with six additional shows on sale this year versus the prior year.

This is really being driven by healthy demand from both individuals and groups.

Speaker 7: The group ticket sales are currently pacing well above the overall high team percentage average.

The group ticket sales are currently pacing well above the overall.

High teen percentage average.

Speaker 7: And you've heard us say this before, the increasing in group sales is particularly encouraging as this category has seen a lagging recovery coming out of the pandemic. As far as individuals.

And you've heard US say this before the increasing and group sales is particularly encouraging as this category.

<unk> has seen a lagging recovery coming out of the pandemic.

As far as individual ticket sales.

Speaker 7: We continue to see growth from both domestic and international tourists, as tourism continues to make a more complete return post-pandemic. We're also seeing growth in individual sales among local residents. So, you know, and it's just across the board. Given the demand we're seeing, we're now expecting approximately one million guests for this year's show. That'll bring us back to pre-pandemic levels of attendance.

We continue to see growth from both domestic and international tourists.

Tourism continues to make a more complete return post pandemic.

We're also seeing growth in individual sales among local residents.

It's just across the board.

Given the demand we're seeing.

We're now expecting approximately 1 million guests for this year's show that will bring us back to pre pandemic levels of attendance.

Speaker 7: All of this reflects a sell-through rate of over 90% compared to a mid 80s sell-through rate last year. And to your point, we're actively monitoring ticket sales, depending on how demand continues to unfold. We may add more shows towards the end of the run. So we feel really good ahead of the show's opening next week.

All of this reflects the sell through rate of over over 90% compared to a mid 80% sell through rate last year.

<unk>.

And to your point, we're actively monitoring ticket sales depending on how demand continues to unfold. We may add more shows towards the end of the run.

So we feel really good.

Ahead of the show's opening next week.

Speaker 6: Great, thanks for that. And then maybe just on consumer demand more broadly, there's been a fair amount of concern. It's given the macro volatility we've seen over the last month or so. Could you talk a little bit more about some of the real time indicators across your business, how they're tracking in November , and particularly on the ticket sales, or maybe even the per cap side over the last few weeks?

Great. Thanks for that and then maybe just one consumer demand more broadly there's been a fair amount of concern just given the macro volatility we've seen over the last month or so could you talk a little bit more about some of the real time indicators across your business, how they're tracking in November and particularly on the ticket sales or maybe even the per cap side.

Over the last few weeks.

Speaker 7: Sure. We continue to see strong consumer demand for live entertainment at our venues. On the tickets, sales fronch for our bookings business.

Sure.

We continue to see strong consumer demand.

For live entertainment at our venues.

On the ticket sales front for our bookings business.

Speaker 7: In terms of the second half of fiscal 24, we're currently on sale with more concerts at our venues than we were at this time last year, for the second half of fiscal 23.

In terms of the second half of fiscal 'twenty four we're currently on sale with more concerts at our venues than we were at this time last year for the second half of fiscal 'twenty three.

Speaker 7: And of those on sales, a majority of those tickets are already sold.

And of those on sales a majority of those tickets already sold.

Speaker 7: and fell through on those shows is currently up a high single digit percentage as compared to the second half of fiscal 23 at the same time last year. It includes a number of sold out multi-night at the arena, Radio City, and the beacon theater. in terms of

And sell through on those on those shows is currently up high.

High single digit percentage as compared to the second half of fiscal 'twenty three at the same time last year.

It includes a number of sold out multi night runs at the Arena Radio City and the Beacon Theatre.

In terms of per cap spending.

Speaker 7: This, the year of a year comparison in the first quarter is a little noisy because of the Harry styles 15 night run at the garden last year, which did see significant spending from fans on merchandise. While merchandise per caps for this quarter were down year of a year, F&B per cap spending was up meaningfully.

This.

The year over year comparison in the first quarter is a little noisy because of the Harry styles 15 night run at the garden last year, which which did see significant spending from fans on merchandise. So while merchandize per caps for this quarter were down year over year F&B per cap spending was up meaningfully.

Speaker 7: And with that, if you look at the first quarter relative to last year's fourth quarter, as well as all of this will 23, combined food, beverage, and merchandise per caps were up.

And with that if you look at.

The first the first quarter relative to last year's fourth quarter as well as all of fiscal 'twenty, three combined food beverage and merchandise per caps were up.

Speaker 7: So we continue to see strong invenue spending from our guests.

So we continue to see strong in bending in venue spending.

Our guests.

Great. Thank you.

Youre welcome.

Speaker 2: Your next question comes from a line of Brandon Ross from Light Shed Partners. Your line is open.

Your next question comes from the line of Brandon Ross from Light shed partners. Your line is open.

Okay. Thanks.

Speaker 8: As we look at your guidance for the year, clearly increased venue utilization is a big part of it. And as we look out to the coming years beyond 2024, I was wondering if this can continue to be such a big driver for the business.

I guess.

As we look at your guidance for the year clearly increased venue utilization is a big part of it and as we look out to the coming years beyond 2024 was wondering if this can continue to be such a big driver for the business I guess overall, what your true.

Speaker 8: I guess overall what's your true capacity utilization from the venues, especially for the garden, including load in and load out and some of the things that take days away. And then how much of a lever are rental rates to potentially increase the utilization or on the other side to take advantage of the busy times to maximize your profits? Profits.

Capacity utilization for venues, especially for the garden, including loading and load out.

Some of the things that take days away and then how much of a lever our rental rates to potentially increase the utilization or on the other side to take advantage of the busy times to maximize profits.

Sure Brandon.

Speaker 7: To put the opportunity at the garden in context, we hosted over 130 bookings events at the arena in fiscal 23.

So put the opportunity at the garden in context.

We hosted over 130 bookings events at the arena in fiscal 'twenty three plus.

Speaker 7: plus an additional 96 nix and rangers games. So a total of roughly 230 events.

Plus an additional 96 Knicks and Rangers games.

So a total of roughly 230 events.

Speaker 7: If you look at that on a base of 365 days a year, and see your point taking in, you know, load in and load out days, the venue had an effective utilization of, you know, roughly 70%. So there remains utilization upside at the garden.

If you look at that on a base of 365 days, a year and to your point, taking in load in and load out days.

The venue had an effective utilization of <unk>.

Roughly 70%.

So there remains utilization upside at the garden.

Speaker 7: And given the outsized impact of incremental revenue at the events at the garden on our revenue and ALI, increasing utilization at the arena would have a noticeable impact on our results.

And given the the outsized impact of incremental revenue at the garden.

Events at the garden on our revenue and NOI, increasing utilization at the arena would have a noticeable impact on our results.

Speaker 7: First, we expect to benefit in future years from continued industry growth as an increasing number of artists and acts continue to go on tour. And we'll also continue to leverage our industry relationships to identify new events, potential residencies, multi-night runs and additional marquee sporting events. And we'll continue to be creative in the ways we look to maximize utilization at the garden. And we'll continue to be creative in the ways we look to maximize utilization at the garden.

First we expect to benefit in future years from continued industry growth.

An increasing number of artist and acts continue to go on tour and we will also continue to leverage our industry relationships to identify new events.

Central residencies multi night runs an additional of <unk>.

Marquee sporting events, and we will continue to be creative in the ways, we look to maximize utilization at the garden.

Speaker 7: We have a track record of successfully driving a vent growth at our venues. And you've heard us say this step before. Since 2015, fiscal 2015, we've driven mid-single digit annual growth in the number of concerts at the Garden and across our other venues.

We have a track record of successfully driving event growth at our venues.

You've heard US say this stat before since 2015 fiscal 2015, we've driven mid single digit annual growth in the number of concerts at the garden and across our other venues.

Speaker 7: And this year, we've mentioned we're currently projecting a low double digit percentage increase in events and our bookings business for fiscal twenty four, including growth and events at the garden.

And this year. We've mentioned, we're currently projecting a low double digit percentage increase in events and our bookings business.

For fiscal 'twenty, four including growth in events at the garden.

Speaker 7: In terms of, you mentioned rental pricing. And if you're asking whether we consider lowering the rent to help increase utilization, that's not really something we're currently contemplating. The gardens of premier product and our premier rates reflect that.

In terms of you mentioned rental pricing.

If you're asking whether we consider lowering the rents to help increase utilization that's not really something we're currently contemplating.

The gardens, a premier product that are our premier rates reflect that.

Speaker 7: We believe it's warranted for what we were able to deliver here. Are you the unique location of the garden? The heart of Manhattan and our ability to maximize ticket sales for artists, including across multi-night runs and residencies as we continue to mention.

We believe it is warranted for what we are able to deliver here.

A unique location of the garden and the heart of Manhattan, and our ability to maximize ticket sales for artists, including across multi night runs in resident fees as we continue to dimension.

Speaker 7: We certainly don't think our rental rate disadvantages us in continuing to drive utilization.

We certainly don't think our rental rate disadvantages us in continuing to drive utilization.

Speaker 7: So with the garden being our largest venue and the most economically significant, we do see increasing utilization as an important opportunity and we're confident that we have the ability to continue to grow this business.

So with the garden being our largest venue and the most economically significance. We do see increasing utilization is an important opportunity and we're confident that we have the ability to continue to grow.

This business.

Thank you.

Youre welcome.

Speaker 2: Your next question comes from Alina Ben Swimburn from Morgan Stanley . Your line is open.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Your line is open.

Speaker 3: Thanks, good morning. Two questions, Dave. One about kind of efficiency opportunities in the business and at the company and another one to ask about through the economics of the traditional kind of rental model. You guys run versus the residencies that you're also doing. So you had some restructuring.

Yeah.

Thanks, Good morning.

Two questions, Dave what about kind of efficiency opportunities in the business and at the company and another I wanted to ask about sort of the economics of the traditional kind of rental model you guys run versus the resident sees that Youre also doing so.

So you had some restructuring this quarter I don't think investors think about your stock is sort of having kind of efficiency elements to it it's more of a top line story. So I'm curious if you could talk a little bit about how the company is thinking about opportunities to drive more efficiency on the cost side and any color you might want to add around the restructuring in the quarter.

Speaker 3: Investors think about your stock as sort of having a kind of efficiency element to it. It's more of a top line story.

Speaker 9: I'm curious if you could talk a little bit about how the company is thinking about opportunities to drive or efficiency on the costs side in any color you might want to add around the restructuring in the quarter that took place. And then you talked a bunch about Harry Styles. You guys have a number of residencies, but most of the business is a rental model. I was just wondering if you guys have a, if there's a better, if one is better than the other from a, either returns point of view or profitability point of view as we think about tracking your business over time.

That took place and then.

You talked a bunch about Harry styles, you guys have a number of resident sees but I think most of the business as a rental model I was just wondering if you guys have if theres a better if one is better than the other from either returns point of view or profitability point of view as we think about tracking your business over time. Thanks, so much.

Speaker 10: Sure, thanks Ben.

Sure. Thanks Ben.

Speaker 7: The first part of your question focused on efficiencies and and restructurings. We obviously had a charge that hit the quarter and you know it's not really much to say about that other than that we're you know we're always looking for ways to improve our cost structure and improve our efficiency moving forward. We feel the actions that we took during the quarter are exactly that and we'll help us to continue to drive efficiency in the future.

The first part of your question focused on efficiencies and restructurings.

We obviously had a charge that hit the quarter and is not really much to say about that other than that.

We're always looking for ways to improve our cost structure.

And improve our efficiency moving forward, we feel the actions that we took during the quarter our R. R exactly.

Exactly that will help us to continue to drive efficiency in the future.

Speaker 7: You asked the question about residencies and the efficiencies that they bring. There are certainly elements of that for our business. We've talked about the benefit of residencies and multi-night runs to artists as well. You know, they're very able to not have to load in and load out as much venue to venue and travel. It's appealing for them. And it's certainly a benefit us in terms of our offerings.

You asked the question about resident fees and the efficiencies that they bring.

There are certainly elements of that for our business, we've talked about the benefit of of residencies and multi night runs to artists as well.

They are variable to not have to load and unload out as much venue to venue in travel.

It's appealing for them.

It's certainly a benefit to us in terms of of our offerings.

Speaker 7: We've had some success recently in residences and in the upcoming book and calendar, we have a number of continued multi-night runs scheduled in the rest of the year. So I think there's efficiencies on both sides, go from an artist standpoint and for us as a business to continuing to lean in and drive that business, including helping us drive utilization, as I just mentioned.

We've had some some success recently in residencies and in the upcoming booked in this calendar.

We have a number of continued multi night runs scheduled in the rest of the year. So.

I think there is efficiencies on both sides, both from an artist standpoint, and for us as a business to continuing to lean in and drive that business, including helping us drive utilization as I just mentioned.

Okay.

Thank you very much.

Youre welcome.

Speaker 2: You are next question comes from a line of David Karnowski from JP Morgan. Your line is open.

Your next question comes from the line of David Karnofsky from Jpmorgan. Your line is open.

Speaker 11: Hey, thank you. On the Penn Station renovation, I wanted to see if there was any update you could provide there and just giving there have been some press reports about offers for the hood theater. Is it possible to frame the materiality of that venue, in terms of its revenue and EBITDA?

Hey, Thank you.

On the Penn station renovation I wanted to see if there was any update you can provide there and just given there has been some press reports about offers for the Hulu theater.

Is it possible to frame the materiality of that venue in terms of revenue and EBITDA.

Speaker 11: And then a separate question on capital allocation. If you noted priority paid down debt, is there a target leverage range in the mine and the buybacks? How do you think about that? What governs when you would be in the market to repurchase your share?

And then a separate question on capital allocation.

The priority to pay down debt is there a target leverage range, you had in mind and with buybacks.

How do you think about that what governs when you would be.

In the market to repurchase shares.

Speaker 7: Thanks David. As far as a potential sale that theater with nothing to add on today's call, you know, we've said before we are certainly committed to improving Penn station and the surrounding area. We'll continue to work closely with all of the stakeholders involved in that. We will we always say that we'll consider options that make strategic and financial sense we'll continue to do that, but nothing further to add on a potential sale. I'm sitting here today and then.

Sure. Thanks, David.

As far as a potential sale of the theater, we have nothing to add on today's call.

We've said before we are certainly committed to improving Penn station and the surrounding area.

We will continue to work closely with all of the stakeholders involved in that.

We always say that we will consider options that make strategic and financial sense, we'll continue to do that but nothing further to add on a potential sale sitting.

Sitting here today and then.

Speaker 7: Your second part of that, you know, that as it relates to the A.O.I of our business, this significant majority of the company's economic.

Your second part of that.

As it relates to the <unk> of our business. The significant majority of the Companys economics are driven first and foremost by the garden and the.

Speaker 7: are driven first and foremost by the garden and the Christmas spectacular production. And then the theaters and agar get followed. So the theater at MSG obviously is one of our four theaters in the portfolio. It's one of three here in New York with different capacities.

The Christmas spectacular production.

And then the theaters in aggregate follow so the theater at MSG.

Obviously as one of our four theaters and the portfolio is one of three here in New York with with different capacities.

Speaker 7: If needed, we believe we have the ability to shift some events from the theater at MSG to other theaters here in New York.

If needed.

We believe we have the ability to shift some events from from the theater at MSG to other theaters.

Here in New York.

Your question on leverage.

I would say.

First our capital allocation priorities remain focused on returning capital to shareholders and debt Paydown.

As we mentioned since the spin we've repurchased approximately 10% of our class a shares roughly $140 million.

We have $110 million remaining under our current authorization.

We will continue to evaluate returning capital to shareholders as we move forward.

Speaker 7: As far as debt pay down, our balance as of September 30th was approximately 732 million. Since the end of the quarter, we've paid down 35 million of the revolver. And we also expect the fully paid down revolver by the end of the December quarter.

As far as debt pay down.

Our balance as of September 30 was approximately $732 million.

Since the end of the quarter, we paid down $35 million on our revolver and we also expect a fully paid down our revolver by the end of the December quarter.

Speaker 12: From there, we expect to make our mandatory principal payments and while we're not setting up a public leverage target, we expect our business to naturally deliver as AOI increases over time. So with that, we believe we're well positioned to advance both of our capital allocation priorities. Thank you.

From there, we expect to make our mandatory principal payments and while we're not setting up a public leverage target.

We expect our business to naturally delever.

AOI increases over time.

So with that we believe we are well positioned to advance both of our capital allocation priorities.

Thank you.

Youre welcome.

And your next one operator.

Okay.

Go ahead, we have time for one last caller.

Speaker 2: Certainly your final question for today comes from the line up Peter Henderson from Bank of America. Your line is open.

Certainly your final question for today comes from the line of Peter Henderson from Bank of America. Your line is open.

Speaker 5: Hi, good morning and thank you for taking the question. I'm just wondering, are there any pandemic related rescheduled shows in your fiscal second quarter, through your fiscal fourth quarter for 24? Yes.

Hi, good morning, and thank you for taking the question.

I'm just wondering are there any pandemic related reschedule shows in your fiscal second quarter through your fiscal fourth quarter for 24.

Sure Peter Thanks.

Speaker 7: As we mentioned, the prior year first quarter included 30 concerts rescheduled.

Yes, as we mentioned the prior year first quarter included 30 concerts rescheduled.

Speaker 7: to the period last year from earlier dates due to the pandemic. And the majority of those rescheduled concerts were at the garden in Radio City, which are our largest revenue generating venues.

To the period last year from from earlier days due to the pandemic.

And the majority of those rescheduled concerts were at the Garden and radio city, which are our largest revenue generating venues.

The year over year decline.

Speaker 7: was also heightened by seasonality of our business with fiscal first quarter being our seasonally quietest in terms of bookings each year. And when we look in the fiscal second quarter, we had nine pandemic related schedule shows in the year ago period also. All nine of those were at our smaller venues to be computer and the Chicago theater. So much smaller economic impact on our business.

Was also heightened by seasonality of our business with fiscal first quarter being our seasonally quietest in terms of bookings each year and when we look into the fiscal second quarter. We had nine pandemic related schedule shows in the year ago period also.

All nine of those were at our at our smaller venues the Beacon theater and the Chicago Theatre.

So much smaller economic impact on our business.

Speaker 7: And we had no rescheduled shows in the third or fourth quarters last year. So the vast majority of the tough year-over-year comp from the pandemic-related rescheduling is behind us. And we're confident we're on track to deliver strong results on a full year base.

And we had no rescheduled shows in the third or fourth quarters last year.

The vast majority of the tough year over year comp from the pandemic related rescheduling is behind us.

We're confident we're on track to deliver strong results on a full year basis.

Okay. That's very helpful. And then just following up I was wondering if you could provide an update on your sponsorship outlook for the fiscal year and just sort of related to that if you can give us a little more color on the <unk> partnership and how that will help to drive results.

Speaker 5: very helpful. And then just following up, I was wondering if you could provide an update on your sponsorship outlook for the fiscal year and just sort of related to that if you can give us a little more color on the OVG partnership and how that will help to drive.

Speaker 7: Sure, Peter. First on sponsorship, we're in a good place in terms of our core marquee and state and trip partners. Coming out of the pandemic.

Sure Peter.

First on sponsorship you know we're in we're in a good place in terms of.

Our core marquee and signature partners.

Coming out of the pandemic.

Speaker 7: We renewed a number of key partners of Verizon Spectrum.

We renewed a number of keep key partners Verizon spectrum.

Speaker 7: Anisor Bush, Lexus, we have one signature partner up for renewal this fiscal year, and can't get into the specifics of it, but that deal is essentially done.

Bush Lexis.

One signature partner up for renewal this fiscal year and can't get into the specifics of it but that deal is essentially done.

Speaker 7: So you've heard us say our marketing signature partners represent the majority of our sponsorship revenue. With that, we have significant visibility into this business for the remainder of this fiscal year. In terms of new sales, we still have some work to do and we'll keep you posted as we make progress.

You've heard us say, our marquee and signature partners represent the majority of our sponsorship revenue.

With that we have significant visibility into this business for the remainder of this fiscal year.

In terms of new sales, we still have some work to do and we'll keep you posted as we make progress.

Speaker 7: And you mentioned we're also, you know, we recently announced our new sponsorship arrangement with Oakview Group and we're working through that transition now. Overall, we, you know, we continue to have some work to do this this year, but we remain bullish about the sponsorship part of our business over time.

And you mentioned, where also we recently announced our new sponsorship arrangement with opening group and we're working through that transition now overall, we continue to have.

Some work to do this fiscal year, but we remain bullish about about the sponsorship part of our business over time.

Speaker 7: And then as far as Oakview Group, you know, while we've had success in growing our sponsorship business, last year's results exceeded pre-pandemic levels. In thinking about how to best position our sponsorship business for ongoing growth, we began discussing this new arrangement in place with Oakview. Um,

And then as far as <unk> group.

While we've had success in growing our sponsorship business.

Last year's results exceeded pre pandemic levels.

And thinking about how to best position, our sponsorship business for ongoing growth. We began discussing this this new arrangement in place with OPO.

Speaker 7: It's under under a new entity known as Crown Properties Collection. It's a group plan to represent most of the import assets and brands in sports and live entertainment. And Crown Properties will lead global partnership and sponsorship sales for us, including our venues and our live entertainment properties.

It's under under a new entity known as Crown property is collection.

<unk> <unk> group plans to represent most of all of the important assets and brands and sports and live entertainment.

And Crown properties will lead global partnership and sponsor shell sponsorship sales for us incur.

Including our venues.

Our live entertainment properties.

Speaker 7: We will continue to provide expertise and advisory services to Crown, as well as retain partnership activation and fulfillment. Again, we believe there will be a top line economic benefit over time from working with a leader such as OBG. I'd also add that part of this arrangement, our sponsorship business will now transition to more of a variable commission based cost structure, which we find attractive.

We will continue to provide expertise and advisory services to crown.

As well as retain.

Partnership activation and fulfillment.

So again, we believe there there'll be a topline economic benefit over time from working with a leader such as LPG.

And I would also add that part of this arrangement our sponsorship business will now transition to more of a variable commission based cost structure, which we find attractive.

Speaker 2: And we have reached the end of our question and answer session. Mr. R.E.D., I turn the call back over to you for some final closing remarks.

And we have reached the end of our question and answer session. Mr. Ari Danes I turn the call back over to you for some final closing remarks.

Speaker 3: Thank you all for joining us. We look forward to speaking with you on our next earnings call. Have a great day.

Thank you all for joining us and we look forward to speaking with you on our next earnings call have a great day.

Speaker 2: This concludes today's conference call. Thank you for your participation. You may now just...

This concludes today's conference call. Thank you for your participation you may now disconnect.

Okay.

Okay.

Yeah.

Yes.

Thanks.

Okay.