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Good morning. Thank you for standing by, and welcome to the Madison Square Garden Entertainment Corp. Fiscal 2026 First Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Ari Danes, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Thank you. Good morning, and welcome to MSG Entertainment's Fiscal 2026 First 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 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 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 4 and 5 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. We are several months into fiscal 2026, and I'm pleased to say we are off to a strong start. We continue to see broad-based strength across our business, most notably for bookings and this season of the Christmas Spectacular, both of which I will discuss in more detail shortly. And in light of the demand we're seeing, we are increasingly confident in our ability to drive solid growth in revenue and adjusted operating income this fiscal year. That confidence in both the near- and longer-term outlook for the business was behind our decision to repurchase approximately $25 million of our Class A common stock this past quarter as we continue to deliver on one of our core capital allocation priorities. Now let's review some first quarter operational highlights. During the quarter, our venues welcomed over 900,000 guests across 140 events. That includes a new record for the number of concerts in any quarter at The Garden as we hosted a number of sold-out multi-night runs and welcomed new headlining acts to the arena this past quarter. From a consumer demand standpoint, the majority of concerts across our portfolio of venues were again sold out during the first quarter. In addition, food and beverage per cap at concerts at The Garden were up, while per cap at our theaters were down as compared to the prior year quarter, which we primarily attribute to the mix of events. Looking ahead, we are booking events at a steady pace and remain on track to grow the total number of events at our venues in fiscal '26. This reflects our expectations for growth in concerts this year, including at The Garden. On the family show front, Cirque du Soleil's Twas the Night Before will begin its holiday season run at the Chicago Theater and the Theater at Madison Square Garden next month. And in terms of marquee sports, next week, we welcome UFC Back to the Garden, which will be followed next month by the return of the Garden Cup, marking the second consecutive year of tennis at the Arena. With regards to the Knicks and Rangers, the teams recently began their '25, '26 seasons at The Garden. This fiscal year, the cash component of the Arena license fees will be $45 million and will continue to grow at 3% each year through fiscal 2055. And while still early, we are seeing positive momentum across our share of food, beverage and merchandise sales at Knicks and Rangers home games. Turning to the Christmas Spectacular. The 92nd holiday season kicks off later today with 215 shows planned for this year's run. This compares to 200 performances last year. We continue to embrace new technologies, and this year's production will utilize Sphere Immersive Sound, the cutting-edge audio system we recently installed at Radio City. The introduction of this technology is the next evolution in the venue's nearly 100-year legacy and will elevate the audio experience for artists and guests alike. Guests will experience the Christmas Spectacular with a new clarity and purity of sound that fully envelops the audience, and the system rolls out in January for all future events. In terms of advanced ticket sales, we continue to pace ahead of where we were at the same time last year. And based on the demand we are seeing, we anticipate once again welcoming over 1 million guests to the Christmas Spectacular this holiday season. We also continue to expect higher per show revenue, which combined with the increased number of shows, puts us on track to deliver another year of record revenues for the production. Turning to our marketing partnerships business. As you know, around this time last year, we made the decision to bring our sponsorship sales effort back in-house. With our internal sales teams now largely in place, we believe we are well positioned to capitalize on upcoming opportunities in fiscal '26 and beyond. And in terms of premium hospitality, we continue to see strong new sales and renewal activity for our suites. We also recently completed the renovation of several Lexus level suites and are seeing the benefit of incremental revenue from these enhanced spaces. Now let's turn to take a look at our financial results. For the fiscal '26 first quarter, we reported revenues of $158.3 million, an increase of 14% versus the prior year quarter. This reflected an increase in revenues from entertainment offerings and to a lesser extent, higher food, beverage and merchandise revenues. The increase in revenues from entertainment offerings primarily reflected growth in the number of concerts at the company's theaters and at The Garden as well as higher per concert revenues. In addition, revenues from other live entertainment and sporting events increased year-over-year, primarily due to an increase in the number of events at The Garden. The increase in food, beverage and merchandise revenues mainly reflected higher F&B sales at concerts due to higher per concert revenues as well as the impact of more concerts at our venues. F&B sales at other live entertainment and sporting events also increased year-over-year. First quarter adjusted operating income of $7.1 million increased $5.2 million as compared to the prior year quarter. This primarily reflects the increase in revenues, partially offset by higher SG&A and direct operating expenses. I would also note that the first quarter operating loss results include a noncash impairment charge of $13.8 million related to the company's operating lease at 2 Penn Plaza. Turning to our balance sheet. As of September 30, we had $30 million of unrestricted cash, while our debt balance was $622 million. This reflected $602 million outstanding under our term loan and $20 million drawn on our revolving credit facility. Since the end of the quarter, we have paid down the full $20 million revolver balance, and we continue to expect to generate substantial free cash flow as we progress through the year. This reflects the following expectations for fiscal 2026: solid growth in adjusted operating income; ongoing net interest payments related to our national properties debt, which totaled $45 million in fiscal '25; our status as a full cash taxpayer; and capital expenditures, which will include incremental spend related to certain suite renovations at The Garden as well as enhancements at the Beacon Theatre and Radio City Music Hall, where we recently installed Sphere Immersive Sound. As I mentioned earlier, during the quarter, we repurchased approximately 623,000 shares of our Class A common stock for $25 million. Following these repurchases, 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, we're seeing positive momentum across our business. We are increasingly confident in the company's trajectory this fiscal year, and we believe we are well positioned to drive long-term value for our shareholders. I will now turn the call back over to Ari.

Thanks, David. Operator, can we now open up the call for questions?

[Operator Instructions] Your first question comes from the line of Stephen Laszczyk of Goldman Sachs.

Maybe starting first with the Christmas Spectacular. Just with the show kicking off today, would love to get your latest thoughts and views on how sell-through and pricing are trending heading into this holiday season? It seems like there's no shortage of debate around the consumer at the moment. Would just be curious what you're seeing in terms of demand out there and if there's any pockets worth calling out on either the positive or negative side? And then I have a follow-up.

Sure, Stephen. Thanks for the question. A few things to note about the Christmas Spectacular. First of all, this year's production is seeing very strong demand, and we're pleased to say that we expect to again host over 1 million guests at the show this holiday season. I want to also note that the Rockettes are celebrating their 100th year anniversary this calendar year, which is helping us to drive increased interest in the show for both our guests and our partners. Advanced ticket revenues are currently pacing up double digits as compared to this time last year, which reflects both higher individual and group ticket sales, and that is being driven by both higher volume and average ticket yield. So the progress in advanced tickets puts us almost halfway to our ticket revenue goal for this year already. In terms of show count, we've added 4 more shows since our last earnings call, which includes 2 shows that were added just early this week due to the demand we've been seeing. And we now have 215 planned performances as compared to 200 last year, and that translates into a high single-digit percent increase in show count. And finally, Stephen, I would say the Christmas Spectacular is a premium entertainment product in the market and is still well priced, still -- I mean, priced well below average ticket prices for comparable entertainment options. And we are always strategically managing and pricing our ticketing inventory to maximize revenue for every show. So with all that said, we remain confident in our ability to deliver very strong growth with Christmas Spectacular this year.

That's great. That's all helpful. And just a quick follow-up on the show count point, adding 4 shows to 215 this year. Just would be curious, given the calendar this year, is there any opportunity to take that higher from this level? What would you need to see to maybe slot in a few more?

Yes. I mean we certainly are always open to looking. We'll see how sales go, but we are certainly always looking for that. And the way the demand is going, that's something we would consider for sure.

Your next question comes from the line of Peter Henderson of Bank of America.

Can you just provide updated thoughts on concert bookings for The Garden and the other properties? And also where you stand on bookings now relative to this point last year for fiscal 2Q, 3Q and 4Q?

Sure. Thanks, Peter. As I had mentioned earlier, we had a robust fiscal first quarter here at The Garden, setting a new record for the number of concerts in any quarter at the venue. looking ahead, we are booking events at a steady pace and remain on track to increase the number of booking events across all our venues in fiscal '26. In terms of concerts, we are pacing up on a full year basis versus fiscal '25 at both The Garden and our theaters. And in fact, we have already booked more concerts at The Garden for fiscal '26 than the actual number of concerts held at the venue all of last year. And across our venue portfolio, we are now nearly 85% to our concert booking goal for the year. So as we look to the rest of the year at The Garden, we currently expect to be down in the December quarter at The Garden in terms of number of concerts. However, we view that as just timing of where concerts are landing during the fiscal year. And I would say we are pacing up for both fiscal third and fourth quarters. At the theaters, we currently expect to be up in number of concerts in the December quarter. And for the third and fourth quarters, we are currently pacing behind. But with that said, typically, the lead time for our theaters for bookings is 3 to 6 months. So we still believe we have time there. So I would say, overall, we feel really good about our start and remain confident in our path to growing the number of events at the venues this year.

Your next question comes from the line of David Karnovsky of JPMorgan.

On a prior call, you had noted some work to book major residency acts for '27 or fiscal '27. So I wanted to check in on where things stand with that. And then as a follow-on, just given the recent share repurchase activity, maybe you can update on how you're thinking about capital returns or allocations from here.

Sure, David. Thanks for the question. As far as the residency, we are definitely making progress to finalize a residency for next year. And we expect that we'll have more to share in the coming months. As we mentioned on our last call, and I will reiterate here, this residency would include a substantial number of dates at the arena and would create the potential for concert growth at The Garden in fiscal '27, which would be following what we expect is going to be a strong performance here in fiscal '26. So we look forward to sharing more details when we can and as soon as that's appropriate on that front. Talking about the capital returns, as you've heard us discuss before, we have 3 key priorities in terms of our capital allocation and the first being that we like to ensure that we have a strong balance sheet. At the quarter end, we had net debt of approximately $592 million, which translates into net debt leverage of approximately 2.6x. As I mentioned earlier, we also -- at the end of the quarter, we repaid back $20 million we drew on our revolver during the quarter. So we should be able to continue to naturally delever the business as we grow. I would say our second priority is to ensure that we do have the appropriate flexibility to pursue compelling opportunities if and when they arise. In terms of capital projects, there aren't any major ones to flag at the moment as we look out for the rest of the fiscal year, but we'll always be on the lookout for that. And our third priority remains to opportunistically return capital to our shareholders. As we had said, we repurchased $25 million of stock during the fiscal quarter, and we have $45 million remaining under our current buyback authorization. So going forward, we will continue to explore ways to opportunistically return capital to our shareholders.

Your next question comes from the line of Peter Supino of Wolfe Research.

Jack Stid did here on for Peter. My question is, with Christmas Spectacular show count now at all-time highs, what's the next meaningful growth driver for that business? And longer term, is it feasible for the show to expand to future mini Sphere venues?

So thanks, Jack. And we definitely see a runway of growth across a number of areas related to Christmas Spectacular. As you mentioned, the show count going from 200 to 215, which is still below our highest level in years past. We also are continuing to get smarter about optimizing the calendar. So we think there's some more room to grow beyond that. Secondly, we continue to see opportunities to improve the show -- the per show revenues. As I mentioned earlier, the Christmas Spectacular is a premium product and it is still priced well below other comparable entertainment options in the area, and we continue to strategically manage and price our ticketing inventory. So we expect to see continued yield upside from here. We also see opportunities to drive revenue growth in areas such as F&B, merch and sponsorship as the Rockettes brand continue to grow. For example, we recently named Sephora as our first-ever official beauty retailer of the Rockettes and Christmas Spectacular and also welcomed Dove as an official partner of the Rockettes and the Christmas Spectacular. And I would say, lastly, we remain focused on operating the show more efficiently, including levering technology, which will allow for margin expansion. As far as what you had mentioned about the Sphere and other productions, I would say, at this time, we have no plans to develop new productions, but we'll always consider opportunities that make sense for the business. And we truly believe we have a unique franchise in the Christmas Spectacular, and we are focused on growing it over the long term for sure.

Your next question comes from the line of Cameron Mansson-Perrone of Morgan Stanley.

Just one for me. Wondering if you could elaborate on transitioning that and sponsorship business back in-house. I think you mentioned that, that was done, but I wanted to confirm that. And just any color around how it's gone so far, how we should think about the kind of related cost and opportunity going forward from that change?

Sure. Thanks, Cameron. Yes, you heard correctly. As I mentioned, our internal sales team is now largely in place, and we believe we are well positioned to capitalize on opportunities in this fiscal and beyond to drive growth. So I would say, first of all, we have several premium sponsorship assets available, which include our naming rights at the theater at MSG, some notable presenting partnerships across the venues as well as a good inventory of outdoor signings. So we believe we have shown significant progress in this area of our business. For example, as I noted, in the prior question, we recently named Sephora as the first-ever official beauty retailer of the Rockettes and Christmas Spectacular, which is a great example of a new category for our sponsorship business, which is leveraging our unique assets. And we similarly recently welcomed Dove as an official partner of the Rockettes and Christmas Spectacular. So one other thing I'd mentioned, we also have a number of renewals coming up and are very optimistic about those. So I would say, overall, we're seeing positive momentum in this area of our business.

Your next question comes from the line of Joe Stauff of Susquehanna.

First question is with the new mayor, I was just trying to properly calibrate any new risks of higher taxes for MSG.

Okay. Sure. Thanks, Joe. I would say at this point, we are not going to speculate about hypotheticals regarding a new administration. But what I would say a few things, though. As it relates to city income taxes, I would note that any change would require action by the New York State legislature and the governor as well. Similarly, I would say that any repeal of The Garden property tax exemption would also require action by both houses of the New York State legislature and the governor. So as I said, we're not going to speculate on hypotheticals, but I just wanted to point that out.

Got you. So structurally, it does require the state. It's not something that can be done specifically from the city.

Correct.

And then maybe just a follow-up. I know you had answered in various ways, maybe questions on the consumer. But just wondering if you see any slowdown really in the buckets where maybe you would, which would be concessions and sales of merchandise. Just wondering if you see any pattern where -- whether it be recently or a trend where maybe that's softened up a bit.

Sure, Joe. We keep a close eye on the macro environment. And I have to say that we continue to see strong consumer demand. A few factors to point out that support our view. As I had mentioned earlier, we are seeing very strong demand for the Christmas Spectacular holiday season this year. And our advanced ticket revenues are pacing up double digits compared to this time last year. I would say in terms of our bookings, the majority of our concerts at our venues were again sold out this past quarter and a number of upcoming acts across our venues have added additional shows in the coming quarters due to strong demand. And when we look at the next 2 quarters, the sell-through rate for concerts is currently pacing in line of where it was this time last year. So as I mentioned, we keep a close eye on it, but we continue to see strong demand from consumers.

Thanks, Joe. Operator, we have time for one last question.

Your last question comes from the line of David Joyce of Seaport Research Partners.

A couple of questions, please. First, do you have any updates on the redevelopment and renovation of Penn Station? And secondly, if you could please comment on the bookings growth by event type, family versus sporting events versus concerts?

Sure, David. Thanks for the questions. As far as the redevelopment plans for Penn Station, let me just say that the U.S. Department of Transportation and Amtrak's announced in August a project schedule that includes select being a master developer by May of 2026 and beginning construction by the end of 2027. And that's the time line they reiterated last week. So from our perspective, as invested members of our community, we remain committed to improving Penn Station and the surrounding area. And as we've said before, we and our guests are already seeing benefits of some of the recent improvements, which have taken place in the surrounding area in The Garden. And as this redevelopment of the area continues, we are committed to collaborating very closely with all the stakeholders. And I would say that's all we'd probably say at this time. From your question on the bookings growth, we continue to expect growth driven primarily by concerts, family shows and sports properties in our business. And as we've discussed, our concert category, we returned to concert growth at The Garden as well as continued increases across our theaters. And as I also mentioned earlier, we have already booked more concerts at The Garden for fiscal '26 than the actual number of concerts held at the venue last year. So feeling good about that. Looking at the rest of the bookings business in terms of our family show category, I would say, while we're not currently expecting growth in the number of events, we expect to see improved financial results, which is helped by the return of Cirque du Soleil for the holiday season at both the theater at MSG and the Chicago Theater next month. And in terms of marquee sports, while we expect to see modest event growth this year, we are expecting another robust year of college basketball and boxing. And I would point out, that includes St. John's, who is ranked #5 in preseason college basketball rankings, and we have 13 games planned with St. John's at the arena versus 9 last year. And lastly, I would just say in terms of special events, we are expecting a modest increase in the number of events in fiscal 6 (sic) [ '26 ], but I would point out that we do face a tough comparison in this category in terms of financial results because of the absence of SNL's 50th anniversary special, which took place last year. But I would say, overall, we continue to expect growth across a number of our bookings category, and we feel good about our calendar for fiscal '26.

That concludes our Q&A session. I will now turn the conference back over to Ari for closing remarks.

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