MGM Resorts International Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Condolences and Milestones: On behalf of MGM, condolences to the family of Alexis Herman, longtime Board Director. MGM Rewards program crossed 50 million members, up over 50% since 2020.
• Business Performance: Strong financial results with BetMGM turnaround. Las Vegas luxury offerings driving key results, regional operations steady, MGM China maintaining mid-teens market share.
• BetMGM Progress: Net revenue from operations up 34%, EBITDA $22 million, up from prior year. iGaming net revenues grew 27% and online sports net revenues from operations grew 68%.
• MGM Digital and Japan: MGM Digital making progress with Brazil launch and Japan project on track with high conviction return.
• Share Repurchases: Repurchased nearly 15 million shares for $494 million in Q1 and 8 million shares for $215 million in Q2 to date, with Board approval for $2 billion more.

Segment Performance

• Las Vegas: Performance was solid. Segment adjusted EBITDA was down $17 million, including $37 million in business interruption proceeds. Marriott partnership helped achieve record first quarter occupancy and slot win up 7%.
• Regional Operations: EBITDA decline mostly attributed to challenging weather at the start of the quarter, but ended strong with record March slot win and RevPAR in the regional hotel portfolio hitting monthly records.
• Macau: Margins held in at 28% due to strong OpEx control. MGM China increased dividend payout to 50% of distributable profits and closed a new larger revolving credit facility providing about $3 billion of liquidity.
• BetMGM: Reported positive $22 million of EBITDA, up $154 million from last year. On track for $2.4 billion to $2.5 billion in net revenues from operations this year and positive EBITDA.
• MGM Digital: Revenues impacted by regulations in the Netherlands and tough comps in Sweden, but saw recovery starting in April. Segment adjusted EBITDA decline anticipated due to strategic growth headcount and Brazil launch costs.
• Japan: Equity commitment increased to JPY428 billion, remaining JPY392 billion to invest for 43.5% ownership stake. High conviction in high-teens percentage return on the project and on track to open in 2030.

Guidance

• BetMGM: On track for $2.4 billion to $2.5 billion in net revenues from operations and positive EBITDA in 2025.
• Japan: High conviction in high-teens percentage return on the project, on track to open in 2030.
• Share Repurchases: Intention to continue repurchasing shares as long as attractive opportunities exist.

Risks

• Tariffs and Regulations: Potential impact on costs and operations, but currently seen as limited impact on development pipeline.
• Market Volatility: Impact on international inbound business, but Marriott partnership and other initiatives helping mitigate.

Question and Answer

Q: About Las Vegas, unpack April comment in terms of major KPIs, which are growing stronger or weaker?

A: April in Las Vegas is shaping up to be a record April. Hotel occupancy and rate are strong, group performance and event performance good, slot volumes positive.

Q: Regarding international inbound, specifically higher end, how to make up for soft Canadian business?

A: Higher end business not impacted. Leisure type Canadian business down, but made up in Marriott blocks and casino blocks.

Q: About business interruption insurance, is it in revenue and EBITDAR, color on further proceeds?

A: It's an EBITDAR, not recorded as revenue. Collected over $100 million, still in active discussions with carriers, majority of expected proceeds received but lumpy going forward.

Q: Regarding Japan, variability left in project from this point forward given size?

A: Some variability in costs due to input costs, but project fully designed, scope not expected to change. Hedged over half of equity commitment in forward yen markets.

Q: About Bonvoy partnership, exceeded expectations, any expansion?

A: Exceeded expectations. Considering potential international expansion, recent inclusion of group customers in Las Vegas helps turbocharge Marriott deal.

Q: About Japan budget and New York strategy?

A: Japan equity commitment $428 billion, remaining $392 billion to invest. Planning to submit RFP in New York end of June, no significant changes to plan.

Q: About MGM Digital marketing phase in Brazil, cadence of investment?

A: Marketing deployment over next six months, initial start slower than anticipated but core marketing dig to occur then.

Q: About share repurchases going forward as CapEx ramps up?

A: Pace of share repurchases may come down slightly to reserve capital for Japan and New York investments, not averse to letting leverage tick up.

Q: About Macau and Chinese consumer, impact of tariffs?

A: No material impacts seen so far, business resilient with strong pre-holiday week in Golden Week.

Q: About tariffs impact on domestic development pipeline?

A: Limited impact on development pipeline, managed cost of sales and operational considerations.

Q: About Dubai hotel and gaming opportunities, relation with IAC?

A: Building an environment to accommodate gaming, project due to complete Q3 2027. IAC has active Board members, conversation with prince, ball in their court.

Q: About Vegas non-gaming KPIs, sensitivity to food and beverage prices?

A: No change in trend in non-gaming spend. When Super Bowl impact is excluded, revenue for occupied rooms up about 3%.