MGM Resorts International

Good afternoon and welcome to the MGM Resorts International Third Quarter 2020 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President, Corey Sanders, Chief Financial Officer and Treasurer, Hubert Wong, President and COO of MGM China, and Jim Freeman, SVP of Kappa Markets and Strategy. Participants are in a listen-only mode. After the company's remarks, there will be a question and answer session. In fairness to all participants, please limit yourself to one question and one follow-up. Please also note this conference is being recorded. Now, I would like to turn the call over to Jim Freeman. Please go ahead.

This call is being broadcast live on the Internet at investors.mgmresorts.com. We've also furnished our press release on Form 8K to the SEC. On this call, we will make forward-looking statements under the safe harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we will also use non-GAAP financial measures in talking about our performance You can find the reconciliation to gap financial measures in our press release and investor presentation, which are available on our website. Finally, the presentation is being recorded, and I'll turn it over to Bill Hornbuckle.

Thank you, Jim, and thank you all for joining us today. I hope you and your families continue to be safe and well. Over the course of the last several months, we have learned how to respond to the challenges posed by the virus, and I continue to be impressed by the resilience and the commitment of our team. We continue to believe the fundamentals of our business are strong and we're well positioned for the future. We saw sequential improvements in all of our markets in the third quarter and our regional properties have led the pace of recovery with several properties generating record operating performance. While we saw promising signs of confidence in recovery in the third quarter, we continue to stay focused on the broader environment. Our strategies are centered around several key priorities. First, the health and safety of our guests and employees remains our top priority. We know the success of our health and safety protocols is essential to building confidence among leisure and business travelers, and we talk about our new convene with confidence health and safety plans for meetings and conventions, entertainment, and sporting events, about which we are very optimistic. We remain laser focused on leveraging our operating model to effectively manage costs. Our efforts are evidenced by our declining cash burn rate, reduced corporate expense, and improving in our regional operating margins. We believe that many of these efforts are sustainable, and as we've stated in our last quarterly call, we identified $450 million of annualized costs when business returns to the 2019 levels, and we continue to believe this is achievable. Our liquidity position is strong, which we further bolstered earlier this month through an opportunistic debt offering. And lastly, sports betting and iGaming continue to gain momentum as states accelerate legalization and sports volumes ramp up. Ben MGM has gained significant market share and has already become a top three player in each of our markets where data is publicly available. We remain focused on executing on the online opportunities while also increasing our long-term presence in Asia. Let's go into the quarter's results. With the September 30th reopening of Park MGM and Nomad in Las Vegas, all of our domestic and international properties are now open. Our third quarter Las Vegas strip revenues were $481 million which grew 331 million sequentially from the second quarter. Our Las Vegas Strip property EBITDA was 15 million compared to 104 million loss in the second quarter. On a hold adjusted basis, our Strip EBITDA grew 134 million sequentially from Q2 to 21 million in Q3. In addition, the company extended benefits to our furloughed employees through September 30th and also negotiated certain union health benefit contributions collectively resulting in a $29 million one-time expense in the third quarter, of which $21 million was attributed to our Las Vegas strip properties, not including city center. Our third quarter hotel occupancy was 44%. While we continue to leverage our casino database as well as our transient and leisure segments to help offset the lack of group business, midweek occupancies remain challenged at 38%. Our results were bolstered, however, by stronger demand on the weekends were 60%, mostly by design, as we continue to maintain occupancy caps for appropriate social distancing and the quality of the overall guest experience. While much has been beyond our control, we are focused on what is within our control. As we have reopened properties, we have aggressively monitored our costs and managed variable labor to closely match demand. We have also continued to focus on creating a safe environment for all of our employees and guests. On September 29th, Governor Sisolak expanded Nevada's mass gathering limitations from 50 people to 250 people, opening the door to restarting meetings and live entertainment. Under the guidelines, we're able to host meetings with up to 1,000 people, so long as they are consistently separated into subgroups of no more than 250 people. Just last week, the governor also announced that we're working with the operators on a plan to increase this further to 50% capacity, hopefully by January 1st. We have proactively developed a comprehensive health and safety plan for meetings and events and entertainment and sporting events called Convene with Confidence. We believe these efforts will help rebuild confidence in safely bringing meetings, conventions, and live entertainment back to Las Vegas. Our Convene with Confidence program is built upon our seven-point safety plan. It is a comprehensive layered approach based on guidelines from health experts and addresses the entire guest experience from Ticketing and Planning to Rival and Food and Beverage Services. We are particularly proud of the new COVID-19 testing protocol, which we will be offering as an optional amenity to our meetings and events clients. MGM has partnered with biometric security identity company, Clear, to leverage in new health pass technology, including a real-time health questionnaire and COVID-related test results and temperature checks. This process was utilized in National Hockey League's successful return to play at the Stanley Club Playoffs in Toronto and Edmonton. As part of this protocol, MGM is partnering with QHealth to deploy their rapid portable molecular point of care COVID-19 test that deliver results in approximately 20 minutes and allows event organizers to create perimeters for their events and exhibitions. We recently conducted the first pilot at the MGM Grand Detroit with the Detroit Pistons, and they said our testing regime played, quote, a critical role and their ability to safely execute their workout program. We've also received encouraging feedback from meeting planners and existing group customers about our convened with confidence program. And in fact, we currently have a group in house using the testing protocols and we'll be able to share more of these details in the near future. Looking beyond the third quarter, we believe the market will continue to stabilize although seasonal challenges remain near term. Weekend booking demands remain solid in October but driving mid-week demand continues to be a challenge without the convention business. We also expect to see, as we do every year, seasonally lower leisure travel in between the holiday periods in November and December. As we enter the winter months, we are developing slow-period plans for the weekdays to minimize EBITDA losses. We are encouraged by the Governor's announcement on mass gathering limits and with our convene with confidence plan as the initial steps to bringing back larger meetings and conventions hopefully starting early next year. We also recently announced the return of seven of our live shows and the reopening of entertainment venues in Las Vegas. We are very optimistic that meetings and events at scale will eventually fully return. That being said, we continue to believe that the material recovery in Las Vegas is dependent on the return of larger scale conventions and entertainment platforms along obviously with significant air travel. Moving on to the U.S. regional performance, which continued to exceed our expectations and gain market share. Our regional revenues sequentially grew by $468 million from the second quarter to $557 million in the third quarter. Our regional property EBITDA was $146 million in the third quarter compared to an EBITDA loss of $112 million in the second quarter. Properties that were open for the entirety of the third quarter had a 15% revenue decline from the prior year period but delivered an adjusted property EBITDA growth of 7% with margins improving 768 basis points. Our drive-to regionals that were open for all of the majority of the greater quarter exhibit particular strength with margin improvements ranging anywhere from 600 to 1500 basis points. In fact, MGM Northfield Park, National Harbor, and Gold Strike each achieved all-time record EBITDARs in the quarter and MGM Springfield delivered a record third quarter EBITDAR. Our integrated regional destinations such as Bowe continue to ramp throughout the quarter despite impacting by two storms and the property also currently is closed due to the impact of Hurricane Zeta and our thoughts go out to the team and members and our customers in the region. MGM Grand Detroit and Borgata are performing well and operating under tight restrictions. and all in all, we saw an incredible result delivered by our best in class regional teams. We believe we are still benefiting from the lack of broader local entertainment alternatives available to consumers and our ability to capture an outside share of wallet. This combined with our focus on cost has driven margin improvements at our regional properties. We are encouraged to see the demand carry into October and we will maintain our intense operational focus as capacity limitations eventually ease and the broader business economy reopens over time. Turning to Macau, while the 14-day quarantine measures between Macau and mainland China have been lifted and the issuance of tourism visas has resumed, logistical hurdles and testing requirements have continued to impact the Macau market. As a result, third quarter market YGGR was down 93% year over year. MGM China's third quarter revenues and the adjusted property EBITDA were $47 million, and negative 96 million respectively, which improved sequentially from the second quarter. Market-wide daily visitation has been very steadily improving into October's golden week. And since the second week of the month, we are seeing improved volumes across all segments sequentially week on week. Month to date, we are encouraged that our properties have crossed property EBITDA break-even levels led by the recovery in the premium segments. We expect the rate of recovery will continue to be gradual We continue to believe in long-term success of Macau and will continue to invest in strengthening our market position there. Currently, construction of the additional suites in the south tower of MGM Cotai is underway and will be ready in mid-2021. We've also begun remodeling our MGM Macau Villas and the gaming space on Level 35. and at both properties we're also adding food and beverage options focused on the gaming floors and longer term we also have the ability and the desire to build another hotel tower at MGM Cotai along with meaningful entertainment assets to diversify our offerings. In an unprecedented and uncertain operating environment, liquidity remains of utmost importance. Our liquidity position remains strong. As of September 30th, MGM had over $7.8 billion of consolidated liquidity, which included $1.4 billion at MGM China, $1.9 billion at MGP, and $4.5 billion at our domestic operations. Earlier this month, MGM Resorts opportunistically raised an additional $750 million of eight-year senior notes at 4.75%, further solidifying our already strong liquid position. Adjusting for this issuance, we had $5.2 billion of liquidity at our domestic operations, excluding MGM China and MGP. And we still also have the right to cause MGP to redeem $700 million of OP units for cash. Before we go to questions, I'd like to spend a few moments discussing our position in the rapidly evolving U.S. online sports betting and iGaming market. Over the past few months, we continue to gain significant momentum towards solidifying BetMGM as a leader in the space and we are very pleased with the results. BetMGM is now live in eight states, soon to be nine as of Sunday with our launch in Tennessee, which we announced earlier this morning and we expect to be in 11 states by the end of this year. We currently have market access in 20 states and are actively working to secure more, ideally positioning BetMGM to be front and center of the action from day one, which is critical if states continue to go live. From a market positioning standpoint, we believe BetMGM is now a top three player in all of the markets that it is in. In September, BetMGM estimated sports betting and iGaming market share was collectively around 18% in the stage in which it operates. We have demonstrated strong operating performance in iGaming with 23% market share in New Jersey and a growing position in West Virginia. and importantly, we also grew share in online betting as well and currently estimate our online sports betting market share to be around 9%. This is exciting considering we have doubled our market share since January. Finally, retail sports have regained momentum since our property reopenings in Michigan and Mississippi, which are especially driving great results. Our partnership with Yahoo Sports is also starting to pick up steam. Earlier this month, we launched a streamlined betting experience on Yahoo Sports. where by its 50 million average monthly users including its DFS users can directly link now to BetMGM's platforms from their Yahoo app, register or sign on and make a bet. We have more features planned in the near future and remain excited about this relationship. We know that an omni-channel customer who plays in the retail casinos, iGaming and sports betting is a higher value customer than a single channel customer. As such, we continue to believe that BetMGM's key competitive advantage is its exclusive access to MGM's physical destinations, its broad-based experiential offerings, and MLIFE loyalty program, which is to be leveraged as efficient and effective against customer acquisition tools as possible. Through a combination of strategic branding, direct marketing, on-the-ground brand ambassadors and hosts, as well as the integration of MLIFE with the BetMGM app, we have been aggressively working to introduce new customers to BetMGM. While we are still in the early innings, we are excited to see the early proof of concept in our ability to acquire higher quality customers at lower costs. On the flip side, and equally exciting to us, is our strong belief that BetMGM will naturally drive expansion in MGM's customer base as well, ultimately fueling growth in our brick and mortar business. In fact, we are already starting to see cross-marketing opportunities in the near term and believe this will only get better over time as BetMGM continues to expand its player base. Given the better-than-expected progress, BetMGM is now on track to deliver net revenues between $150 and $160 million in 2020, which is an increase from our original $130 million expectation. We continue to believe that this is the largest growth opportunity in U.S. gaming, and we think we have what it takes to be a long-term winner. We're very excited about our progress, but we know we have more work to do, and we remain focused on executing. Again, before I turn it to Q&A, A few closing thoughts. Over the past week, we've been watching COVID relative trends change across the globe, reminding us all that we're not out of the woods yet. While we have yet to see any incremental impact to our domestic business, we know we must remain diligent and disciplined as ever. I have a great confidence in our comprehensive health and safety protocols, which cover all aspects of the guest experience to which we have strictly and consistently adhered. These protocols and our commitment to health and safety have allowed us to operate successfully in the last crucial months, and we believe they will also successfully guide us to the future. While we recognize these near-term headwinds, we remain confident in the long term. This optimism is driven by our proven ability to react, to adapt, and ultimately to grow. Despite our challenges, MGM Resorts is a strong company, thanks to an early and unwavering commitment to the MGM 2020 plan and a new operating model, an extremely strong balance sheet, A high quality of our destinations and path to recover we are seeing led by our regional operations and of course our people who have simply been amazing through all of this and who continue to deliver safe, welcoming and entertaining experience for all of our guests. Looking forward to the future, we continue to make progress on all of our growth opportunities, developing BetMGM as a leader in the U.S. sports betting and iGaming, expanding our footprint in Macau and ultimately developing a world-class integrated resort in Osaka, with our partners in Oryx. With that, operator, I'll be happy to turn it over to questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Again, as a reminder, in all fairness, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. And the first question today will be from Joe Greff with J.P. Morgan. Please go ahead.

Good afternoon, everybody. My questions relate to your Las Vegas strip properties, Bill or Corey. Can you talk about strip EBITDA by month and a quarter? I'm presuming September exceeded August and August exceeded that of July. Really trying to get to sort of how to think about a monthly run rate of EBITDA exiting the quarter. I know October is not over, but I'm presuming October EBITDA exceeds September. I guess it almost has to because those for low costs go away. But if you can provide some color, that would be helpful. Thanks.

I'll kick you to Corey here in a minute. But look, sequentially, yes, there's been improvement. We've seen that. We mentioned on my comments about a couple of one-time charges principally around union benefits that were given the $15 million EBITDA meaningful to the quarter in the context of performance. October is doing as expected and then some, but there's a long way to go for the balance of the quarter.

And Joe, just to give you some color sequentially without giving actual numbers because we usually won't provide monthly results. You know, I would say the trends in all of our divisions seem to be about the same and getting a little better each month. And the occupied rooms in September, as you saw probably from the statistics from LBCVA, have increased in the city. Okay, Ed.

All right. Maybe, Bill, can you just provide maybe some additional details or some specificity on maybe now, and maybe you kind of referenced sort of the seasonal lulls in November and December, but how you're managing the strip during different demand periods, and how are you managing this with labor op-ex, whether you're partially closing some of your properties, like what's going on at Encore and Palazzo and others, and Maybe sort of discuss in this context, maybe how much EBITDA Delta there is at, say, some of the properties with the weakest demand in terms of staying open versus being partially or entirely closed.

Well, let me start at 40,000 feet and kind of work my way down. The general notion of being open versus closed for the quarter provided the company a net benefit of about a half a billion dollars. So collectively, we are very happy that we're open. for the company, for the communities, particularly Las Vegas and our employees, and for our stakeholders. It's been very beneficial. We always go through, and we'll do it for sure now, recognizing we've got about 29,000 more employees back. We will go through an exercise. We're doing it now as we speak about what do we keep open and what do we close. There are certain amenities, there are certain towers, there are certain brands potentially that will face closure for, you know, Thank you for joining us. So we don't know exactly what that's going to bring for the next couple of weeks in terms of bookings. We're keeping a really close eye on it as we go forward.

Yeah, Joe, what I would add, I mean, even pre-COVID during slow periods, we would adjust our staffing, close down towers, close down rooms. We've actually now become an expert at it as a result of COVID and having to manage midweeks versus weekends. So we're pretty confident that we could be very nimble on adjusting based on volumes and what's happening in the market. And as Bill mentioned, I think there's opportunities to reduce towers and reduce hotel rooms in these slower periods. Thank you, guys.

The next question will be from Thomas Allen with Morgan Stanley. Please go ahead.

Thanks. So you put up really strong margin gains in your regional properties, and I'm guessing it's a mix of kind of operating efficiencies and then not marketing as much. Can you just talk about, you know, the color around the future operating cost controls is obviously very helpful, but can you just talk about marketing reinvestment spend a bit? It's just like how much you think you can reset at lower long term. Thank you.

Thomas, this is Corey. Yeah, look, I think in general, in the regionals in particular, there's not a lot of competition for the consumer dollar right now. But we have really learned and streamlined our marketing component. And so I think as we look going forward, the cost structure and adjusting our cost structure, there's some permanent components to that, including marketing dollars. I guess the bigger concern is the top line going to be sustainable. And as of now and what we're seeing, it continues to be, but I think these properties are well positioned to have margin growth over the prior years.

Helpful. Thank you. And then you touched on the prepared remarks about hopefully Nevada will allow conventions to reach 50% capacity on January 1st. Do you have the sense that demand will be there if that's allowed?

Tom, look, I mean, obviously we've seen, and the very large scale things because of pre-planning, we've seen substantive cancellations. It's not going to surprise anybody into the first quarter. What's relevant and important is that we hold on to the back half of the year. And so the fact that we can demonstrate growth, the fact that we can demonstrate that we can execute and do this safely will be very comforting. The back half of our year is holding extremely well. We have ups and downs, but we are where we should be, where we want to be, where we have always been, which is relevant. So I think fundamentally, people aren't leaving the market. They want to come. Obviously, it's predicated on what the governor ultimately allows us to do, what the conditions allow us to do. But we feel good about that. I think the second quarter will be the swing. People stay and or come or go. will depend on where we are in the health arena, if you will, and the cure and the thinking about it. But, you know, overall, the year is looking, I think the year is looking as we thought it would a quarter ago. I don't think a whole lot has changed from what we anticipated to happen. So as we think about 21 and 22, it's holding together, particularly, obviously, as you focus on 22. Thank you.

The next question will be from Carlos Santorelli with Deutsche Bank. Please go ahead.

Hey, guys. Thank you for taking my question. Gary, you just addressed a lot of it, and Corey as well, but as it pertains to kind of the out-year group and convention business, during this last few months, I mean, have you guys or what has the experience been with respect to, you know, groups looking to book maybe in 22, 23, and beyond? And when we start to think about kind of The Days of Vaccine and Corporates and Business Travelers Getting Back on the Road. How quickly are you guys able to kind of ramp up pricing on kind of the group and convention side with a layoff kind of as long as we've been through right now?

So I would tell you September, which was the last time, and we're going to read on October in a couple days here, was an exceptional booking month for the future. It's going to... It's the best booking months we've had in seven. And so I think the tell is, is that people are still booking into the future. They're excited to do so. Sequentially over the last couple of months, we're up a couple hundred percent in terms of confirmed contracts. And so I think that's all affirmative. I think the essence of it is, anytime 21, second half and beyond, when people are confident that they can meet, they will come. And fundamentally, not much has changed. I think we have to get through this current environment and then ultimately in the interim we have to prove what we do have we can do safely, which to date we've managed to do so. And so beyond 22 we feel strong. 21 will be the year of let's see how this plays itself out.

What I would add, Carlo, what we're seeing especially in some of these bigger groups, they're booking multi-years. They're trying to take space. They're going out to 25 and 26. You know, rates are going to be, you know, they're better than what's in the rooms right now. I won't say they've completely reset, but depending on demand and the periods they're booking it, I would say similar to what it used to be in the past. And these multi-year contracts will have rent escalators.

Great. Thank you, guys. That's good to hear. And then just one follow-up in terms of some of the cost strategies you guys have put in place. To the extent you can quantify, what was the exit rate of cost extracted from the business coming out of September relative to kind of where you went into the 3Q, just in terms of expenses you've removed from the system during this period? And that's maybe Las Vegas regionals or on a combined basis, if you could speak to that.

So what I can tell you, Carlo, is as we were about $20 million a day pre-COVID, when we closed down, we went to $3 million a day. We're about $10 million a day right now. Knowing what is still left to come back, including entertainment and convention, understanding our business better, really understanding what amenities we will need going forward, ones we won't need. Reducing Lost Leaders. We have a pretty good idea of the number that we put in our presentation of the $85 million is pretty well defined and won't come back into the system.

And maybe another way to quantify it is, you know, occupancies are down collectively about 50% and our payroll is down equally 48. And so if you think about it, you think about overhead and stuff we have to have foundationally going forward. I think we've done a really good job controlling those controllable costs to the point of we've built back half our business with less than half our, particularly our most expensive cost, our payroll cost.

And the marketing dollars are part of those numbers we've identified. Great. Thank you, guys. That's great color. I appreciate it.

The next question is from John Decree with Union Gaming.

Please go ahead. Hi, everyone. Thank you for taking the questions. had a I guess a bigger picture question maybe thinking a little further ahead so you've got quite a stockpile of cash and it's it's a really nice liquidity reserve to have right now I think you know hopefully sooner than later we'll be through the pandemic wanted to kind of get your thoughts on on the other side of this where you feel comfortable with net leverage and How you would think about deploying some of that cash if hopefully you don't need to tap into it?

Thank you, John, for going forward. Appreciate it. So look, obviously we're in a great position. God forbid we have to use more of it than we have historically that we're going to stay and go in the right direction, which we're fairly confident across the system we're going to be able to do that. But if we don't, obviously we've got the liquidity in each of our markets, including Macau, to sustain, and so we're excited by that. Getting ourselves back to norm, understanding by this time next year what looks 22-23, we'll begin to think about growth in real terms. We'll begin to think about ultimately what we need to do here in Las Vegas to continue to own the marketplace to the extent that we do and some of our assets here. We'll continue to invest into sports betting. We are sincere about that opportunity. We've demonstrated clearly that we are a key player in all of the markets that we're in. It's kind of interesting to me that we are third or better in all of those markets, but in fourth place in all of those markets, there is individually somewhat different. So there's like no fourth place clear winner. And so continuing to invest to that business is critical to us because we think over the long haul, there's a An amazing convergence of customers and activity that's going to be beneficial. Obviously, we have our eyes on Japan. That's a key prize. We think it's meaningful. It will take, I don't know exactly, but between $1.5 billion and $2 billion of real liquidity over two or three years of a build cycle in the middle of this 23-4-5 time like that. We've got to get there. That opportunity has been delayed, but we believe in earnest We're in a great position. We want to continue to pursue that. And look, we'll be opportunistic. We're not overly focused on M&A, particularly here in Las Vegas. We think we own enough of Las Vegas to be open about it. But there will be other opportunities that the market presents to us that we'll have to take a sincere look at. But for now, we just love the safety and security of the liquidity.

Thanks, Bill.

And obviously, at some point, shareholder return will come back into play. Obviously, we've stopped paying a dividend and other things. We'll play that out as time comes, but for now, we like the position we're in.

It'd be a good problem to have with $5 billion almost of cash on the balance sheet. I think you touched on my second question about M&A and Las Vegas, so I'll shift gears a little bit and ask if you could provide any kind of color about the occupancy mix that you're seeing If there's any differences with the customer in midweek and hotel and really getting at kind of relative to historical levels, database utilization, OTA utilization, I mean, where are you, and if you could share any color on hitting different levels and if it's kind of trending differently over the last couple of months.

I think it's a little bit more of the same. The operative word is more. It's leading heavy in the casino. Obviously, our convention business has gone to nil. There's more transient, you know, interesting drive traffic is up in September 8%. So above last year, by the way, when I say it's up 8%, above last year. So drive market out of Southern Cal remains strong. Obviously, transit casino marketing as a percentage of our mix is in the 30s. Traditionally, it's much lower than that. And so, you know, the rev pours coming out of that segment are very good. and so they outperform, so that's to our benefit. And, you know, without other major events to drive things, I think that market mix here through the first quarter is going to probably sustain and then hopefully we grow back into a more normalized basis with conventions and whatnot.

Thanks, Bill. I appreciate all the color.

And the next question is from Alicia Hendricks with Barclays. Please go ahead.

Hi, thanks for taking my question. You guys talked a little bit before about the seasonal adjustments you might be making in Vegas. But in addition to that, I'm just wondering if you could talk a bit about what you're doing to better preserve price integrity at the properties and perhaps improve some of the customer mix you're seeing. I think you've instituted certain regulations around Parking, and anything else you're doing to improve the customer experience at the properties. And maybe it's as simple as just lowering the occupancy, but I'm just wondering what else you're doing.

Yeah, Felicia, it's Corey. I'll take that. From the beginning as we reopened, we were very focused on not only the safety but the customer experience. So we have, as we've talked about in the past, constrained our occupancy on the weekends. Bill mentioned a 60% occupancy level there. On the weekends, we're very disciplined on our pricing, yielding it probably similar total times and having price integrity. On the weekdays, I think it's very similar to any slow periods that the town has always experienced. MGM does have minimums of the least amount we will charge for our rooms. and it's a matter of everyone's going after the same customer on midweek at the 30% occupancy.

And then Felicia, we've put in universal protocols around parking, admittance into various things in the building, recognizing some of the challenges we've had over the last couple of months and I think we're in a much better spot. I don't want to knock on wood here, but the last several weeks I think things have changed. The dynamic feels different, which is important to all of us. and so I think the community, we've done more than our fair share, but we think the community has risen to help make this a better, safer environment.

That's great to hear, thanks. And Hubert, if we could move on to you. We got some details about Macau earlier in the prepared remarks. Just wondering if you have any sense if the visa procurement and approval process is getting any easier and what's your view on the VIP market and liquidity? Thanks.

Certainly. So in terms of visa application process, it's still a manual process that people have to go to the police bureau to apply for it after they get the online appointment. But we have seen the application time shortened a little bit. and it's not across the country, in some regions only. So in general, I think that there's no dramatic changes, still a manual process, no kiosks, but we see a little bit region by region enhancement improvement in terms of timing. In terms of liquidity in the market, we really haven't seen a lot of changes or material impact to our business at this time. So we'll keep on monitoring.

Thank you.

The next question is from Sean Kelly with Bank of America. Please go ahead.

Hi. Good afternoon, everyone. Hubert, maybe one more question for you. Just on Macau, I think, you know, in some of those prepared remarks, it was mentioned that you'd seen some improvement from the second week of October on. And I was just curious, If we compare things to the year-over-year declines we saw during Golden Week, did you exit the month of October better than that, or could you give us a sense of how the month progressed and what kind of improvement you're seeing right at this moment?

Certainly. I think the Golden Week was, relatively speaking, pretty strong, coming out of the The month ends in September, the first week of nationwide IVS reactivation. So the second week of post-Golden Week, during that week, naturally the volume dropped down. But I'm happy to say that in the past couple weeks, we have seen some regrowth in cross-O segments, and that has generated enough and GGR to allow us to be slightly above break-even.

Great, thank you. And then as my follow-up, maybe to switch gears to the kind of higher-level strategic question, there was obviously a very large investment in several board members appointed by IAC during the third quarter. I was just wondering if you could talk about any contributions that they've made so far as it relates to maybe the core operating strategy of the company and specifically if they had any role in the kind of new appointment on the COO side for BetMGM.

Sure. So, Sean, look, they've been nothing but participative and active. Mr. Diller and Joey Levin, both board members, came out and spent three days with us undertaking and understanding as much as they could the totality of the business. Obviously, we're leaning heavy at this point with spend into BetMGM, so there's a keen focus on that and they've been Very active, helping us understand that. And with that, they've been helpful with us. We're trying to understand how to raise the bar on our loyalty program and the digitization of it and what to do and to, you know, drive, share a wallet. They have a lot of exposure and experience there. And so, you know, overall message is very excited. They've joined very active and very excited by that. It's been nothing but collaborative and supportive. As far as Ryan Spoon, we had sourced him. ESPN and BetMGM have had an ongoing conversation for the better part of nine months when everyone was frenzied to find a media partner. We had met Ryan, liked him a lot. He thinks clearly about the business. He's extremely strategic. He's a product guy by nature, and so the actual offering and the app, we think he'll bring a lot to all of that, and he'll help us think about Thank you very much for the callers.

and the next question will come from David Katz with Jeff Reitz. Please go ahead.

Hi, afternoon everyone. And thanks for taking my question. I'm, you know, looking through a couple of the pages of the deck as I'm listening to you talking about specifically about the digital business, you know, iGaming and sports betting. And I'm just trying to hone in on, you know, what the two or three, you know, critical reasons are Thank you for joining us. That would be helpful. I'll do my best. That's my one and one follow-up.

Okay. So, look, in the collective, obviously, you know, we have a JV with GBC. And the great news about that has been they own the technology outright, and therefore, BetMGM is their contribution, owns its own technology. And so that's a decisive advantage in the context of focus, what we can do with it, how it presents itself. and yes, we aim to have one app. We have one now everywhere but here in Nevada because of regulatory environment and we look and hope to change that and there's motions afoot to do that and ultimately and most importantly hope to have one wallet because that's really where you load up whether it's here or any other of our casinos, you load up into your account, the extent you can transfer that money back home and continue to play and therefore we can have 365 engagement is essential to the relationship in the longer run. So the technology platform is essential. Having one look and one universe for the customer that's both brick and mortar in terms of MLife experiences, betting experiences, and ultimately digital experiences both in iGaming and in sports betting is critical. We do something fairly unique in our little play studio, Social Gaming. We have a back-end loyalty engine that ties customers to loyalty here and gets them benefits to the extent that they spend time on that device. We want to do the exact same thing for this. And so, you know, it's been interesting in the last couple of months, last month of note, 28% of the customers who signed up with BetMGM came from MLife, and then the inverse happened. 25% of the new customers for MLife were BetMGM customers. And so you can instantly see, and we're just getting going, where there's a convergence of it. We also identified in New Jersey, 167,000 customers in the New Jersey metro meaning our market demo that haven't been touched yet by us that are now BetMGM customers. So we can go out, we know 167,000 new people and we can go out ultimately offer up our Borgata offering. And so we think it's meaningful. We think it's going to be the differentiator over time because we can tie digital into brick and mortar like nobody else. And so we think it's a big differentiator over time. The second part of the question, the sports leagues, have been helpful. Candidly, we got a little over our skis in terms of time, meaning we jumped in with both feet. We are trying to develop everything from play games to get people acclimated and get them going in a league like Major League Baseball to where we have had active engagement in different contests and things and sponsorships with PGA of note. You probably saw just with the CJ Cup what happened last week at Shadow Creek or two weeks ago now. and so we continue to nurture those. We think the exposure for the BetMGM platform is unique and you probably haven't turned on a TV recently, Monday Night Football, World Series, it's extensive and so we're leveraging on those deals to be able to get exposure to that brand in that way.

I appreciate that. If I can seriously sneak in just one follow-up which is in this environment we're seeing a fair amount of spinning and separating, et cetera. Are you comfortable that the digital business can operate with its own mind and its own cap structure and its own resource set within the auspices of MGM, which is obviously a large and vast enterprise?

We've done everything we can not to screw it up, not to touch it. No, I'm serious. I know the nature of the question. I get it. and we've hired a guy named Adam Greenblatt runs the enterprise and he comes out of GBC and runs it well. People like Ryan who have now joined the enterprise. We have a brilliant CMO and CFO and so we like what they're doing. We have literally gotten out of their way. Obviously, regulatory and government affairs is stuff that we can provide. Access to MLife and properties and retail business is stuff that we know and we provide but we are trying not to manage that business. We want to let them manage it and to grow it. And so, yeah, we're going to provide capital because it's capital intense, but we are trying to get out of its way.

I appreciate that. Congrats on the quarter and thanks very much. Thank you.

Our next question is from Steven Grambling with Goldman Sachs. Please go ahead.

Hey, good afternoon, good evening. Steven, the first question again, I didn't hear it clearly. How are you thinking about it? from BetMGM Margins and how does the retail margins on Sportsbook inform that? It's kind of interesting. I just looked at September numbers here for Nevada. 55% of the business is online already. And so it is changing the nature of even how we do retail sports betting. They're no longer the race in Sportsbook you probably traditionally have known. They're more every place we can go. We've done this in our regional properties. We're starting to do it in Vegas. They're more lounge. And so It will help overhead. If people are digital, it'll keep people out of lines. It'll get them betting more. And ultimately, once in-player comes in play, we think it'll really engage that exposure and experience. But they are unique. They're great places to come enjoy a game. They're at scale. There's other benefits, obviously, people can enjoy in and around them. And so we're uniquely positioned in that regard. And so we're pretty excited by it. To the extent we talk about overall investment, I think the one differentiator between us, particularly in DraftKings, is we're not doing a national ad campaign. You will see a lot. You've seen the thing we did with Jamie King. Fox King. Jamie King's a personal friend of mine. But the thing we've done there is resonating, but it's only in market. So it's in those nine, or actually we're pushing to a couple new markets that we're about to launch, the 11 markets. And so... Well, none of this is inexpensive, and obviously it's not cash flow positive for now. There are criterias, and there is a collar around what we're prepared to invest to gain new access and new customers. And we think in the long run, it'll pay off. That's helpful, Keller. And as a follow-up, you mentioned that MGM and MLife have seen some convergence.

How do you think about the impact of iGaming on your brick-and-mortar business longer term?

Well, top line, I don't worry about it if that's the essence of the question. It's been the age-old question, will tribal casinos, hurt casinos, will regional, et cetera, et cetera. And I think the industry has manifested a way always to benefit from it. So we're not concerned with that. I think we've – well, unfair to say, but with what limited exposure we had to a growing iGaming share in New Jersey pre-COVID – We didn't see that it was taking from it. Now, in fairness, it's only been two or three months, and then we ran into COVID, so I can't tell you. Obviously, we will watch, but we are all in on iGaming, and we don't view it from the lens, as others may, that it hurts my brick-and-mortar business. We think if done productively and promoted correctly, it can help your brick-and-mortar business. Yeah, that was more the impetus of the question, was how are there ways to actually make it help The underlying brick and mortar business, and does that mean that you would be more likely to support legislation in new markets going forward? Absolutely supportive. We are not going to let our brick and mortar business get in the way of this business. We want to be smart about it. We've spent a great deal of time, energy, and money, and I'll give a good example, Massachusetts. And so we have a footing there. We think by the jobs we provided, the capital resource we put into a state like Massachusetts, We want a preemptive leg up. They have a huge stick over us from a licensing, you know, they have something to hold over us if we screw it up. And so that aside, we're very active and we're very encouraged by what hopefully all this brings.

And Steven, this is Corey. I do think it is a customer acquisition tool as we've seen in New Jersey. There are unique players online that did not visit a facility. and it's also an extension to their overall gaming experience whether they want to do it analog or digital.

That's all great, Tyler. Thanks so much. Best of luck.

Thanks. The next question is from Robin Farley with UBS. Please go ahead.

Great. Thank you. Last quarter, you had given us some insight into the fact that all of your properties in Vegas were cash flow positive except I think at that point, and Mandalay. Now that you've got all your properties open, can you kind of give us a sense of how things stand with, you know, are they all positive cash flow at this point, you know, including or not including Mandalay?

Yeah, Robin. In general, they are flowing positive other than Park, which just opened at the end of the month. But I think in general, when you look at the third quarter in particular, The operating properties, the properties that were open, if you take the EBITDA number, add back the one-time charges and the hold and back out even what was burning, the number probably would have been around $70 million, somewhere around there for the whole quarter on operating properties only. Obviously, as we open more properties, it's going to potentially take some EBITDA from the existing properties. But in general, we like what we saw in the third quarter. We were able to get, when you take back out those one-time benefits, we were even able to get Mandalay Bay positive.

Okay, and actually that's why I was just going to clarify, because it sounded like before that you thought you might not be positive there until convention business came back, but you're saying you actually already are positive.

Yeah, they've been a very attractive property in the summer because of the pool. and so we saw some pretty positive at-lease occupancy in REVPARM numbers there.

And then a separate topic just on the timing of the 700 million in MGP units that can be put for redemption. Can you give us any sense of your timing of when you might do that or kind of what would be the trigger for that?

Look, we have until February of 22 to execute on it. And so obviously we're going to. We're not going to let that go by the wayside. You just saw what we did in the bond market. We thought it was opportunistic. So it's not about liquidity. It'll be about timing and what else to be done with the money and what else is going on with MGP at the time and what it's trying to structure into. But there is no definitive time collectively right now other than recognizing, again, we have until February of 22 and between now and then we'll clearly do something.

We feel we're in a really good position there, and when we do it, we need to make sure it benefits both parties.

Thank you. I wonder if I could ask one more that I guess I'm surprised hasn't come up in the Q&A. I know in your comments you kind of indicated that you weren't that interested in owning more Vegas assets, but if there are some significant assets in Vegas that are going to change hands, that are going to come up for sale, how do you think about... The impact on MGM if somebody else ends up owning those assets and like the type of buyer that that might be and what would be sort of good for MGM or less good for MGM?

Look, I'm not going to obviously comment directly on M&A. I assume you're referring to the Sands. Look, they're good operatives. They're very good operatives and collectively we all work well within the city, particularly of late to help convention business and infrastructure, traffic, etc., Whether that trades or not, I guess the good news is if they get anywhere near the $6 billion they're talking about, it speaks good for Las Vegas fundamentally in the long run. So I think we're excited by that. They're good competitors when it comes to the convention business. So if somebody else comes in who is not as strong, it bodes to our benefit. And I'll hold on my earlier comment. We have enough of Las Vegas right now, so we're going to kind of wait and see and watch.

Okay, great. Thank you very much.

Ladies and gentlemen, we have time for one more question. And that question will be from Barry Jonas with Truist Securities. Please go ahead.

Hi, thanks for taking my question. Just on Macau, any updates on the concession renewal process? And how do you think the current environment could play into that?

Me, I presume Barry is talking about the COVID environment, correct?

Correct.

Yeah. There's a great deal of pressure of late from LegCo, legislative body, to have the chief executive come out and begin the process because it is going to be a public process. He speaks in November. I think, Hubert, you might know the date. I do not. To date, they seem to be saying they're on track, which, as you know, is by June of 22. They've got to give six months' notice, so 21 will be very active unless they delay it a year. Given what's happened with COVID, I guess they could, but as of today, they seem to be on track. I don't know, Hubert, if you have any more color there.

Bill, you covered pretty well. I think that so far we haven't got more further information from the government other than what you have already talked about. Great. And then just real quick, I noticed Caesars added back some parking fees in Vegas. Curious how you're thinking about parking and I guess resort fees here.

Well, you know, resort fees are part of the overall experience and critical to our revenue stream. So we think we like them, full stop. Parking is tenuous. You know, we're not in any big hurry to jump back in it with both feet. We think it's a deterrent right now given pricing. And so we're going to continue to moderate it. You know, there is, going back to the other comment about safety and security and garages, that's part and part of a discussion. And do you charge to help protect that? We're thinking about ways to potentially do something that's meaningful without hurting our business, our retail business, whether it's rooms, shows, to the extent they exist in food and beverage. So we're watching what they have done very closely and, frankly, have performed no final decisions.

Great. Thank you so much.

I think that was it, Operator, if I'm not mistaken.

Yes. I'd like to turn it back to Mr. Hornbuckle. Thank you.

And thank you all. Have a great day. Please be safe. And we look forward to talking to you all next quarter. I know Jim, Corey, and myself are available in the interim if you need us. Thank you.

And thank you, sir. The conference has now concluded. Thank you for attending today's presentation.

You may now disconnect.