MGM Resorts International Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Capital Discipline: Withdrew application for commercial license in Yonkers, New York due to tightening financial numbers. Sold Northfield Park for $546 million in cash, representing a significant premium to MGM's current share price.
• Las Vegas: Adjusted to ensure rationalized premium value experience, sold over 300,000 room nights in a 5-day sale. Luxury properties had record 3Q slot win, 4Q expected to stabilize with group and convention return.
• Regional and Macau: Regional operations drove solid results; MGM China continued positive momentum despite typhoon, Macau saw growth during Golden Week and October with strong market share.
• Digital and International: BetMGM European venture reached new revenue high, MGM Digital has $1 billion revenue opportunity. Japan construction progress with yen-denominated credit facility, Dubai expected to open in 2H 2028.

Segment Performance

• Las Vegas: Reported $601 million in EBITDAR, down $130 million year-over-year. Net revenue declined 7%. Expenses managed down, including FTEs. Fourth quarter expected to see improving room rates and strong group demand.
• Regional Operations: Had another steady quarter with modest net revenue growth. EBITDAR down $4 million related to decreased business interruption proceeds. Borgata posted all-time high table games drop and slot win.
• MGM China: Achieved record third quarter EBITDAR despite typhoon impact in September, ended the quarter with a record market share of 15.5% and paid $85 million dividend to MGM Resorts in September. October performance in Macau showed year-over-year growth across segments with 11% visitation increase and 20% total win.
• BetMGM North American Venture: Reported outstanding results, expects to begin distributing cash back to MGM Resorts in the fourth quarter with at least $100 million received from $630 million total investment.
• MGM Digital: Reported 23% revenue growth during the quarter, but segment EBITDA was a loss of $23 million. Full-year EBITDA losses could approach $100 million due to increased investment in Brazil.
• Japan: Construction continues with progress, recently raised a yen-denominated Term Loan A equivalent to USD 300 million to support funding commitment to MGM Osaka.
• Dubai: Expected opening in the second half of 2028.

Guidance

• Las Vegas: 4Q expected to stabilize with improving room rates and strong group demand; 2026 group and convention channel seen as driver of growth.
• BetMGM: Expect at least $100 million in 4Q from $630 million investment, with cash distributions quarterly.
• MGM Digital: Full-year EBITDA losses could approach $100 million despite 23% revenue growth.
• Japan: Confident in high-teens return at opening, construction progress ongoing with funding support.

Risks

• Las Vegas: Impact of airline bankruptcies (e.g., Spirit Airlines) affecting visitation, consumer value concerns, market competition.
• Macau: Typhoon disruption, market competition affecting performance.
• Digital: Increased investment in Brazil impacting EBITDA results.
• Japan: Construction and funding risks for the upcoming opening.

Question and Answer

Q: John DeCree asked about MGM's decision to exit New York and return hurdles for investment.

A: Bill Hornbuckle explained the large tax hurdle and tightening numbers led to exiting; Jonathan Halkyard noted high return thresholds and excitement for Japan project.

Q: Shaun Kelley asked about balancing value today and digital growth.

A: Jonathan Halkyard stated digital investments are cash generative, focused on growing existing businesses.

Q: Brandt Montour asked about Macau strategy and domestic pricing.

A: Kenny Feng discussed focusing on customer understanding and effective projects; Jonathan Halkyard noted pricing adjustments were in response to customer feedback.

Q: Daniel Politzer asked about M&A appetite and thresholds.

A: William Hornbuckle emphasized diversification, Jonathan Halkyard mentioned high bar for regional M&A in terms of scale and brand fit.

Q: Steven Wieczynski asked about strip leisure recovery and regional portfolio.

A: Corey Sanders noted luxury booking patterns similar to past, Jonathan Halkyard stated regional portfolio has market-leading properties.

Q: Stephen Grambling asked about unlocking stock value.

A: William Hornbuckle mentioned digital and BetMGM as key levers, Jonathan Halkyard highlighted cash flow from dividends and improved Las Vegas cost structure.

Q: Barry Jonas asked about 2026 group outlook and regional promotions.

A: Corey Sanders discussed better mix and strong first half, William Hornbuckle noted aggressive high-end VIP efforts in regional markets.

Q: Chad Beynon asked about MGM Grand disruption and ARIA capital projects.

A: William Hornbuckle discussed MGM Grand disruption impact and ARIA renovation timing starting in November 2026.