MGM Resorts International Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Las Vegas: ADR and slot handle are strong fundamentals. 7 of 10 properties had revenues up. Focus on driving organic growth through ongoing cost review and strategic customer pricing initiatives. Gearing up for year two of F1.
• Regional Properties: Stable results supported by a rational promotional environment and stable economic backdrop. Expect to remain reliable sources of free cash flow.
• Macau: Robust mass market volumes drove record growth. Exceptional golden week performance with volumes up 20% compared to 2019. Investing in capital improvements like renovation of Macau's villas and new show MGM 2049.
• Digital: BetMGM launched single account, single wallet feature in Nevada for football, leading to doubling of first-time depositors. Integrated Angstrom to enhance parlay product offerings. Entered strategic venture with Grupo Globo in Brazil.
• International: Entered strategic venture with Grupo Globo in Brazil. Making progress in Osaka, advancing New York zoning requirements, and monitoring opportunities in UAE and Thailand.
• Partnerships: Strong partnership with Marriott, pacing 20% above expectations with 2,500 room nights a day, 70% cash and 30% redemption utilization.
• Development: Making progress in Osaka, advancing New York project, and monitoring UAE opportunities. Poro Island project in Dubai has started construction.

Segment Performance

• Las Vegas: Revenues were up 1% while adjusted property EBITDAR was up 2%. ADR was at a record, occupancy increased by 250 basis points, and slot handle grew by 4%. Benefited from $37 million in business interruption proceeds related to a cybersecurity incident a year ago. 7 of 10 properties had revenues up for the quarter.
• Regional Properties: Grew revenues by 3% while adjusted property EBITDAR increased by 2%, driven by strong slot handle and growth in rated days. Benefited from $15 million in business interruption insurance proceeds. FTE count was flat even down 1% year-on-year.
• Macau: MGM China achieved a record-breaking third quarter with net revenues increasing 14% year-over-year and adjusted property EBITDAR rising 5% resulting in a 26% margin. Market share for the quarter was 15%. Announced a special dividend, bringing total dividends to MGM Resorts to approximately $200 million in 2024.
• Digital: BetMGM achieved profitability again in Q3, record iGaming results, and a 70% increase in first-time depositors while stabilizing market share. Launched single account, single wallet feature in Nevada for football, and further integrated Angstrom, seeing a 200 basis point increase in the percent of bets from parlays.

Guidance

• Build upon strong foundation with organic growth from resort operation. Expect organic growth from New York commercial gaming license. Expand digital footprint globally. Fixed rate interest with no near-term maturities and relatively flat maintenance capital. Plan to repurchase shares opportunistically.
• Confident in Las Vegas' ability to continue delivering organic growth. Regional properties expected to remain reliable sources of free cash flow. Macau confident in sustaining market share in the mid-teens. Digital business focused on enhancing customer experience and continuing growth.
• International market plans include launching Brazil venture in January 2025 pending licensing approval.

Risks

• Table games business timing issues, such as high-end customer visits not falling in the expected quarter. Operational expenses having unusual items in both Las Vegas and regions, like collections expense in Las Vegas and unusual expenses in regions.
• Market competition risks in digital business and international market expansion. Licensing approval risks for international ventures.

Question and Answer

• Q: Joe Greff asked about Las Vegas table game composition and segment margins. A: William Hornbuckle and Jonathan Halkyard responded that top six or seven players accounted for a great deal of the miss in table games, gross profit on balance of database and programming was up 12%, and fundamentals like ADR, slot handle are still strong.
• Q: Shaun Kelley inquired about BetMGM's strategy and investment. A: Jonathan Halkyard said BetMGM's relationship with Entain continues to strengthen, they like the product and direction, and it's a good position currently.
• Q: Carlo Santarelli asked about operating expenses and next year's outlook. A: Jonathan Halkyard stated there were unusual items in Las Vegas and regions, and no major items to call out for next year's operating expenses.
• Q: David Katz asked about BetMGM ownership and stock repurchase. A: Jonathan Halkyard said relationship with Entain is strengthening, they like the product and direction, and that's their current position.
• Q: Stephen Grambling asked about operating expenses and next year's margin. A: Jonathan Halkyard explained unusual items in Las Vegas and regions, and no specific items to call out for next year's operating expenses.
• Q: Dan Politzer asked about BetMGM progress and Macau market share. A: William Hornbuckle and Kenneth Feng/Hubert Wang responded on BetMGM progress and Macau market share stabilization and future projects.
• Q: Brandt Montour asked about Las Vegas month trends and October. A: William Hornbuckle and Jonathan Halkyard discussed July's weather impact and October's occupancy and revenue trends.
• Q: John Decree asked about capital management and Marriott partnership. A: Jonathan Halkyard and William Hornbuckle responded on financing options and positive Marriott partnership metrics.
• Q: Barry Jonas asked about F1 EBITDA and international development. A: Jonathan Halkyard responded on F1 EBITDA and ongoing international development monitoring.
• Q: Steven Wieczynski asked about Vegas EBITDA growth and Macau margin. A: William Hornbuckle and Kenneth Feng/Hubert Wang responded on Vegas growth plans and Macau margin improvement through projects.
• Q: Chad Beynon asked about Vegas casino guest mix and M&A. A: Corey Sanders and Jonathan Halkyard responded on casino guest mix stability and restrictive M&A criteria.