Earnings call transcript: Seaport Entertainment Q1 2025 sees revenue dip

Seaport Entertainment Group reported a decline in revenue for Q1 2025, with total consolidated revenues reaching $16.1 million, a 12% decrease year-over-year. Despite the revenue drop, the company showed improvement in its net loss figures, reporting a net loss of $31.9 million, a 28% improvement from the previous year. The company’s stock saw a slight decrease in premarket trading, down 1.66%, reflecting investor concerns over the revenue decline. According to InvestingPro data, the stock has declined over 31% year-to-date, with current analysis suggesting slight overvaluation at these levels.

Key Takeaways

• Revenue fell by 12% year-over-year to $16.1 million.
• Net loss improved by 28% compared to the previous year.
• Stock price decreased by 1.66% in premarket trading.
• The company is focusing on transforming Seaport into a year-round destination.
• Seaport aims to achieve breakeven by 2026 and profitability by 2027.

Company Performance

Seaport Entertainment Group’s performance in the first quarter of 2025 was marked by a significant drop in revenue, which fell by 12% compared to the same period last year. However, the company managed to improve its net loss by 28%, signaling progress in its cost management strategies. The entertainment segment saw an 18% increase in revenue, indicating strong demand in that area, while hospitality revenues fell by 16%. InvestingPro analysis reveals concerning gross profit margins of -61% over the last twelve months, though the company maintains strong liquidity with a current ratio of 5.04, indicating robust short-term financial health. For deeper insights into Seaport’s financial health and detailed analysis, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Total consolidated revenues: $16.1 million (12% YoY decrease)
• Net loss: $31.9 million (28% YoY improvement)
• Net loss per share: $2.51 (69% improvement)
• Cash and cash equivalents: $132 million
• Long-term debt: $102.4 million

Outlook & Guidance

Seaport Entertainment Group has set ambitious goals for the coming years, aiming to achieve breakeven by 2026 and profitability by 2027. The company plans to stabilize its asset base by 2028, with a focus on improving cash burn and operational efficiency. The development of new event spaces and the transformation of Pier 17 into a year-round destination are central to these plans. Trading at a Price/Book ratio of 0.46, the stock presents an interesting valuation metric for investors considering the company’s turnaround potential. InvestingPro subscribers have access to 8 additional key insights about Seaport’s valuation and growth prospects.

Executive Commentary

Anton Nicodemus, CEO of Seaport Entertainment, emphasized the company’s strategic focus on reducing cash burn and achieving financial stability. "Our main priority is to address the factors contributing to the company’s cash burn by implementing strategies to achieve breakeven in 2026, profitability in 2027," Nicodemus stated. He also highlighted efforts to transform Seaport into a vibrant, year-round neighborhood, underscoring the importance of events as a growth component.

Risks and Challenges

• Declining revenue in the hospitality segment may affect overall financial performance.
• The company’s ability to transform Seaport into a year-round destination remains uncertain.
• Macroeconomic pressures could impact consumer spending on entertainment and hospitality.
• High competition in the entertainment sector may challenge growth and profitability.
• Managing long-term debt while investing in new projects could strain financial resources.

Seaport Entertainment’s Q1 2025 results highlight the company’s ongoing challenges in revenue generation, but also its commitment to improving financial performance and positioning itself as a premier entertainment destination.

Full transcript - Seaport Entertainment Group Inc (SEG) Q1 2025:

Conference Operator: Greetings and welcome to the Seaport Entertainment Group First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Partridge, CFO. Thank you.

You may begin.

Matt Partridge, CFO, Seaport Entertainment Group: Thank you, operator, and good morning, everyone. Thank you for joining us today for our earnings conference call. With me today is our Chairman, President and CEO, Anton Nicodemus. As outlined in our earnings announcement press release from a few weeks ago and in a similar format to our year end twenty twenty four earnings conference call in March, we solicited questions ahead of today’s call, and we’ve incorporated many of those questions and answers into our prepared remarks. If you have additional questions after today’s call, please contact irseaportentertainment dot com, and we’ll respond to any additional questions accordingly.

Before we begin, I’d like to remind everyone that many of our comments today are considered forward looking statements under federal securities law. The company’s actual future results may differ significantly from matters discussed in these forward looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company’s Form 10 ks, Form 10 Q and other SEC filings. You can find our SEC reports, earnings release and most recent investor presentation on our website at seaportentertainment dot com. With that, I’ll now turn the call over to Anton.

Anton Nicodemus, Chairman, President and CEO, Seaport Entertainment Group: Thanks, Matt, and good morning, everyone. Before I get into our first quarter performance, I’d like to highlight the priorities and strategies we’ve outlined during our last call because I think they provide a nice foundation for today’s prepared remarks and a framework for our execution in 2025 and beyond. Our main priority is to address the factors contributing to the company’s cash burn by implementing strategies to achieve breakeven in 2026, profitability in 2027 and a stabilization of the current asset base by 2028. To achieve these milestones, we’ve emphasized a handful of more specific initiatives that include evolving the TIM building experience to meet guest needs while improving financial performance by working closely with our partners at John George to leverage what is working well and addressing or fine tuning what isn’t programming and leasing the existing vacancy throughout the Seaport neighborhood to drive improved cash flows, frequency of visitation and customers’ length of stay monetizing limited or non cash flowing assets such as 250 Water Street through outright sales or strategic partnerships optimizing the utilization of the Las Vegas Ballpark through unique relationships and special events, and improving our organizational infrastructure to allow us to operate more efficiently.

With these priorities as a backdrop, I’m pleased to report we had a productive start to 2025 as we continue to identify and implement best practices and execute on our strategic initiatives designed to improve the performance of our operational assets, build leasing and programming momentum at the Seaport and work through transitional items to stabilize our overall infrastructure. Starting with our Hospitality segment. During the first quarter, we made a strategic decision to reduce operating hours as many of our restaurants in The Seaport, including closing certain outlets. This decision had a negative impact on first quarter hospitality revenues, but allowed for better overall segment profitability during what is our seasonally slowest quarter of the year. Same store hospitality revenues were down 12 year over year during the first quarter.

And overall hospitality revenues declined 16%, driven by 33% reduction at the Tin Building, where performance was impacted by the closure of certain concepts for the entirety of the quarter. The performance of the Tin Building was partially offset by 5% revenue growth from our managed restaurants, including meaningful growth at Longcloth. These results do include the effects of our consolidated hospitality operations, which now include the Tin Building and our unconsolidated venues such as the Lawn Club. Even with the revenue declines, we made progress with the financial performance of the TIN Building, improving first quarter asset level EBITDA by 7% compared to the first quarter of twenty twenty four. As we head into the busiest part of the year, we are working closely with our partners at John George to optimize the operations at the Tin Building while delivering incredible food and beverage experiences that our customers have come to expect from the acclaimed and renowned John George brand.

Beyond the Tin Building, a big focus for our team during the quarter was preparing for the opening of Catano, NYC at Pier 17, the flagship U. S. Location for the Tulum based Grupo Catano. We soft opened Gatano in New York City in March and recently held a spectacular grand opening event on May 1. The volume of positive press surrounding the event sets the stage for Gatano to be one of the most sought after dinner and dancing destinations in NYC, helping draw new customers to the Seaport and providing guests more late night experiences in the Seaport neighborhood.

Turning to our Entertainment segment, coinciding with our Guatana NYC opening party was the rooftop at Pier Seventeen’s First concerts of the year with back to back sellouts by DJ Elderbrook. Our team has done a fantastic job putting together our twenty twenty five concert schedule, which features a stellar lineup of fan favorites such as Amal and the Sniffers, Riley Green, The Kooks, Jack’s Mannequin, The Fray, Rilo Kiley, and recent Grammy award winning artist Sierra Farrell, just to name a few. We are also still on pace to move forward with our rooftop winter structure for more concerts, live shows and events, with construction completion expected by the November. As we have previously discussed, this enclosure should help us combat seasonality by activating one of our most popular assets year round. And it also strategically ties into the announcements we made yesterday in our earnings release, which is our intention to develop 17,500 square feet of purpose built meeting and event space in Pier 17.

This event space will be located on the Fourth Floor Of Pier 17 directly below the rooftop at Pier 17 Stage. It will have direct connectivity to the rooftop allowing for year round use of these two premier facilities with sweeping panoramic views of the Brooklyn Bridge, East River and Manhattan, and Brooklyn skylines independently or combined for larger, one of a kind experiences. As it is currently designed, the Fourth Floor Pier 17 event space will include a nearly 8,000 square foot main room and will be able to hold up to approximately 800 people. Combined with the rooftops and winter structure approximately 3,000 person capacity, Pier 17 will offer one of the largest, most unique event spaces in New York City. Events are an important and growing component of our company.

And with the successes of the Lawn Club events business, our investment in the Fourth Floor Pier 17 event space, rooftop winter structure and our talented events team, we are looking forward to establishing Pier 17 and The Seaport more broadly as one of New York City’s premier entertainment and event destinations. Shifting to the Las Vegas Aviators, which is the other primary business contributing to our Entertainment segment, I’m excited to highlight that the baseball team reached the midpoint of the 2025 season in first place atop the AAA Minor League standings. This is a testament to the quality of the players and our management team who support the Aviators execute on an unparalleled game day experience day in and day out. From a ticket sale and pacing standpoint, our ticket team has done a great job leveraging technology and analytics to put more ticket sales on our books earlier in the year without materially sacrificing price, helping to potentially limit sales volatility in the summer months where game to game ticket sales can be more heavily influenced by the weather and competing last minute events. As for growth opportunities of special events at the Las Vegas Ballpark, the Ballpark hosted the Las Vegas College Baseball Classic in February, games between the A’s and Diamondbacks as part of the big league weekend in March, and we have the West Coast Conference Baseball Tournament later this month, all of which had and should have a terrific turnout.

We continue to work to add special events and other opportunities in the fourth quarter following the conclusion of the twenty twenty five Aviator season. For our last remaining segment, our real estate ownership and landlord operations, I want to touch on the progress we are making with programming and leasing at Seaport. We are working on a number of opportunities that span various structures, including traditional leases, management agreements, license agreements and Seaport occupied offerings with exciting partners to occupy space in Pier 17 or The Cobblestones. These opportunities include a combination of retail, food and beverage and experiential offerings with national partners and hyper local concepts to ensure we’re giving people a variety of reasons to visit the Seaport. Our announcement a few months ago about Meow Wolf and the grand opening of Catano, New York City are important steps in the right direction to bring life to our vision of making the Seaport a true entertainment destination.

Beyond those two announcements, we recently began a refurbishment project to bring green space to the North Side of Pier 17 with a new river front bar. We are obviously excited about our opportunity with the Pier 17 event space, and we look forward to providing more details related to the New York City Wine and Food Festival that we will be hosting in October. Finally, I know one of the more frequent requests we have received was to provide an update on 250 Water Street. We launched the marketing process through our brokerage ALL at the March, and interest in the project has been tremendous. We’ve had over 130 potential buyers or partners express interest.

We feel good about how things have progressed to date. And as we previously mentioned, this process will be comprehensive in order to drive the best long term value for the company, our shareholders and our other stakeholders. In summary, we have made good progress to start the year with our various priorities and initiatives. While we have a lot of work to do to stabilize our assets and maximize value, the commitment of our team, partners and other relationships have been tremendous. Our collective focus remains to deliver on our unique opportunity to position Seaport Entertainment Group as a premier hospitality and entertainment company while positively influencing the communities we operate in.

I’ll now turn it back over to Matt.

Matt Partridge, CFO, Seaport Entertainment Group: Thanks, Anton. As mentioned during our last earnings call in March, some of our year over year comparisons are impacted by new businesses, closed businesses, separation related expenses and other operating changes. In certain instances, these changes make the comparisons more nuanced or require us to modify prior financial reporting practices to account for the change in circumstances. First quarter twenty twenty five reported financials had two changes that we want to highlight. First, we’ve reevaluated our segment reporting based on economic characteristics and the types of revenue streams.

As a result, we’ve renamed our sponsorships, events and entertainment segment entertainment, and certain event and sponsorship revenues and expenses have been reclassified throughout our various reporting segments for Q1 twenty twenty five and Q1 twenty twenty four. Second, as Anton mentioned, our financial results for the first quarter of twenty twenty five now consolidate the 10 Building, whereas for 2024, the financial results of the 10 Building are reflected in the equity and earnings or losses from unconsolidated ventures line item of our consolidated statement of operations. The consolidation is driven by our internalization of the food and beverage operations team that occurred on 01/01/2025. In an effort to provide investors with more comparable information, our year over year comparisons for various components of our statement of operations will be pro form a to consolidate the 10 building for Q1 twenty twenty four. Total consolidated revenues during the first quarter were $16,100,000 a 12% year over year decrease when compared to pro form a Q1 twenty twenty four.

As a reminder, the financial results of our unconsolidated ventures such as the Lawn Club and our investment in Jean Georges restaurants are reflected in the equity and earnings or losses from unconsolidated ventures line item in our consolidated statement of operations. For our hospitality segment, Q1 twenty twenty five consolidated revenue compared to pro form a Q1 twenty twenty four decreased 28%, largely due to the strategic decision to close certain restaurants for specific meal periods or days of the week, or in some instances for the entirety of the quarter. Total hospitality revenue and same store hospitality revenue for Q1 twenty twenty five, which include unconsolidated ventures, decreased 1612% respectively compared to Q1 twenty twenty four. Total hospitality operating EBITDA, including unconsolidated ventures grew 12% versus Q1 twenty twenty four. The improvement was primarily a result of better performance of the Lawn Club and improved overall expense management in the Tin Building, which offset the impact of lower overall hospitality revenues.

Entertainment revenue increased 18% versus Q1 twenty twenty four, as our entertainment segment benefited from increased Seaport Winter activation revenue, higher aviator ticket sales, and increased sponsorship revenue for the Rooftop Of Pier 17 concert venue. Q1 twenty twenty five Entertainment operating EBITDA decreased 2% versus Q1 twenty twenty four, largely due to elevated programming expenses related to the Seaport’s winter activations on the Rooftop Of Pier 17. Given our intentions to activate the Rooftop Of Pier 17 with the rooftop winter structure, we have the potential to eliminate costs incurred in Q4 twenty twenty four and Q1 twenty twenty five related to the winter activations. Rental revenue for the quarter increased 3% year over year compared to pro form a Q1 twenty twenty four due to the benefit of contractual rent increases and increased percentage rent. Other revenue for Q1 twenty twenty five, which now represents sponsorship revenue related to landlord related assets, was largely flat year over year.

Q1 twenty twenty five landlord segment operating EBITDA increased 13% versus Q1 twenty twenty four, primarily due to better expense management and reductions in predecessor company expense allocations. Overall, total operating EBITDA for the company in the first quarter of twenty twenty five, which reflects the financial performance of each of our segments before the effects of corporate G and A and other corporate expenses, includes the results of unconsolidated ventures increased 10% compared to Q1 twenty twenty four. General and administrative expenses during the quarter were just under $10,000,000 resulting in a quarterly year over year reduction of 41%. This reduction was largely due to non repeating separation expenses incurred in Q1 twenty twenty four. However, as we mentioned last quarter, there continues to be a number of one time transition items, including costs associated with the onboarding of the food and beverage operations team at the beginning of this year.

Overall, was $1,000,000 of one time expenses related to that transition that were incurred in Q1 twenty twenty five. As we look ahead to the second quarter, G and A should improve sequentially from the first quarter, and second quarter corporate G and A should represent a good baseline for comparison as we look to make longer term sustainable improvements. Similar to last quarter, interest income or expense was positive during Q1 twenty twenty five and improved year over year due to growth in interest income earned on cash deposits. The positive effects of capitalized interest to the P and L related to our 250 Water Street loan and a lower outstanding 250 Water Street loan balance when compared to 2024 because of the loan pay down that occurred around the time of our separation from Howard Hughes. As I previously mentioned, Q1 twenty twenty five equity and earnings or losses from unconsolidated ventures will no longer include the effects of the 10 building.

When compared to pro form a Q1 twenty twenty four, equity and earnings or losses from unconsolidated ventures improved 120% as a result of improved performance of the Lawn Club, which continues to see strong demand for private events and better year over year performance by Jean George restaurants. First quarter net loss attributed to common stockholders was $31,900,000 representing a year over year improvement of $12,200,000 or 28% versus the comparable period in 2024. And first quarter net loss attributable to common stockholders per share was $2.51 an improvement of $5.47 per share or 69% compared to the first quarter of twenty twenty four. Non GAAP adjusted net loss attributable to common stockholders for the first quarter was $22,800,000 representing an improvement of $11,900,000 or more than 34% versus the comparable period in 2024. Q1 ’20 ’20 ’5 non GAAP adjusted net loss attributable to common stockholders per share was $1.79 an improvement of $4.48 per share or 71% compared to the first quarter of twenty twenty four.

Capital expenditures in Q1 twenty twenty five totaled $16,500,000 and were predominantly related to the substantial completion of Chachano, New York City build out and initial landlord work and tenant allowance payments for Meow Wolf. And finally, long term debt outstanding as of March 31 totaled $102,400,000 unchanged from year end 2024 and net debt to gross assets at quarter end was negative 4%. Our negative net debt position continues to benefit from our healthy cash and cash equivalents balances, which totaled $132,000,000 as of March 31. With that, I want to thank everyone for their continued interest and support, and I’ll now turn the call back over to Anton for his closing remarks.

Anton Nicodemus, Chairman, President and CEO, Seaport Entertainment Group: Thanks, Matt. As you can see, we are making progress with our priorities and strategies, including laying the foundation to transform the Seaport from a seasonal destination into a year round vibrant neighborhood. Combined with our portfolio management and our organizational initiatives, we believe we are on the path to improving our cash burn and achieving our long term goals. I want to thank our team, our partners and our shareholders for their dedication and support, We look forward to updating everyone on our progress in the coming months. Thank you everyone.

This concludes the conference call. Have a great day.

Conference Operator: This concludes today’s teleconference. You may now disconnect your lines. Thank you for your participation.

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