MGM Resorts International

Good afternoon and welcome to the MGM Resorts International third quarter 2021 earnings conference call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President, Corey Sanders, Chief Operating Officer, Jonathan Halkyard, Chief Financial Officer, Hubert Wang, President and Chief Operating Officer of MGM China, and Kathy Park, Executive Director, Investor Relations. 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 conference over to Kathy. Please go ahead.

Thank you, Chad. This call is being broadcast live on the Internet at investors.mgmresorts.com, and we have also furnished our press release on Form 8K to the SEC. On this call, we'll 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 discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation to GAAP financial measures in our press release and investor presentation, which are available on our website. Finally, this presentation is being recorded. I will now turn it over to Bill Hornbuckle.

Thank you, Kathy, and thank you all for joining us today. Well, we delivered another quarter of strong domestic results with our Las Vegas Strip and regional segments reaching all-time adjusted property EBITDA records in the third quarter. I remain in awe of what our talented teams have accomplished this year given the ongoing COVID pandemic. We are emerging from it a stronger company with a sharpened focus on operational efficiencies and providing the best experiences for our guests as we carry out the vision of to become the world's premier gaming entertainment company. I continue to express my sincere pride and gratitude of the tremendous effort of our employees who are the foundation upon which we built our strategic plan and long-term vision. As a reminder, our strategic plan consists of the following four key elements, investing in our people and planet, providing unique experiences for guests by leveraging data-driven consumer insights and digital capabilities, delivering operational excellence at every level, and allocating our capital responsibly to yield the high returns to our shareholders. On last earnings call, we discussed the meaningful steps our company had taken to simplify our story and monetize our real estate. We have reached a number of milestones in this regard. In August, we announced a transaction with Vici and MGP to redeem the majority of our operating partnership units and deconsolidate MGP within our financial reporting structure. In September, we acquired the other 50% interest in City Center, monetizing its underlying real estate, and are now proud owners of 100% of its operations. In October, we monetized MGM Springfield's underlying real estate as well, and these transactions grant us the financial flexibility to take front-footed actions to invest in our core business and to maximize growth and pursue opportunities that align to our long-term vision. For example, this quarter, we announced an agreement to acquire the operations of the Cosmopolitan of Las Vegas, a high-quality resort with enviable product offerings, strong brand awareness, and complimentary customer base, making it an ideal addition to our Las Vegas Strip portfolio. We also believe that the synergies we have identified are highly achievable. We are incredibly excited to welcome the Cosmopolitan team to the MGM Resorts family, pending the transaction closing next year. Now I've mentioned in the past that we are happy with the amount of exposure we currently have in Las Vegas. As such, we are currently in the early stages of a process to sell the operations of the Mirage. Doing so will allow us to maintain our existing Las Vegas exposure while focusing on the complimentary and diverse nature of our offerings in our hometown. I spent the early part of my career at Mirage, have been part of that team's opening of the property in 1989. It's a storied property with great brand recognition and a strong customer and loyal following. The campus also sits on approximately 77 acres that provides attractive development opportunities to capture large amounts of foot traffic. Mirage has served us well over the years and we are certain it will remain a success with a new operator in the future. Importantly, I want to thank our valued team members at the Mirage. They're an integral part of what makes that property so special and I know they will remain strong ambassadors of the brand during this transition. We also remain keen on diversifying our business and further expanding our operations globally. To that end, in September, we announced that our MGM Oryx Consortium had achieved a milestone in Japan, having been selected as Osaka's partner to build and operate a world-class integrated resort. We are now working with Oryx and the city to submit an area development plan to the central government in the coming months and are hopeful and confident that we will be awarded a license next year. Outside of Japan, we will continue to study key U.S. regional markets of significance. This includes the commercial gaming license in New York, for which we believe MGM is well positioned given our existing operations at Empire City. Moving on to BetMGM, our sports betting and iGaming venture continues to build on its success every quarter. In the third quarter, BetMGM launched in three new states, Arizona, South Dakota, and Wyoming. And within a short nine-day period, BetMGM is now live in 16 markets and is well on its way to 20 by the end of the first quarter of 2022. In the three months ending August, BetMGM commanded 23% share nationwide in both U.S. sports and betting and iGaming. And in the month of August, we believe BetMGM was competing for first place, driven by iGaming, in which BetMGM remains the clear leader with a 32% market share. We're in the middle of the NFL season, and the market remains competitive. However, the team has performed exceptionally well, focusing on ROI, positive marketing spend, and we are encouraged to see early signs of a more rational environment as the season progresses. BetMGM's continued momentum through this year has been extraordinary, and we expect full-year 2021 net revenues associated with BetMGM will be in excess of $800 million. Finally, we think about opportunities for organic growth in our core business. We have a great network of premier properties across the U.S. that we believe we can better leverage to drive customer choice, increase loyalty, and maximize wallet share over time. For example, we recently launched a new tailgating experience at Mandalay for events at Allegiant Stadium. We've hosted Bruno Mars and Lady Gaga's concert at Park MGM and completed our room remodels at Bellagio's main tower as well as the Pyramid at Luxor. with additional remodels ongoing at ARIA suites and villas. We also continue to focus on targeting strategies that draw on our competitive advantage to acquire and drive sustainable growth from high-value customers in our business. Over the years, we'll invest in customer-centric products and services to execute these strategies, which will be enabled by advanced marketing practices and enhanced physical and digital experiences. Before I turn it over to Jonathan to discuss our third quarter results, I'd like to make some high-level comments on our current trends and our future outlook. I must say it's simply great to be in Las Vegas right now. We've kicked off the quarter exceptionally strong, anchored by a great 4th of July holiday, better than pre-pandemic casino spend levels, and pent-up demands for the city's wide-scale entertainment relaunched the two large crowds in the town, especially on the weekends. While the Delta variant impacted our group business during the quarter, We have been able to offset with, uh, leisure and casino customers, uh, with cases on the downswing. We have built quickly rebuilt momentum into October and the level of demand in the marketplace, especially on the weekends has simply been incredible. October will be another all time record month. Groups are still coming to town. We have a healthy amount of group room nights on the books to the rest of the year. And we look ahead. And as we look ahead, we feel good about our group business coming together. anchored by the back half of this year and what's already on the books for 23 and 2024. With the relaunch of large-scale entertainment in July, these offerings are driving visitation to Las Vegas. Allegiant Stadium brings fans to the Strip for events, and we've had some of the best weekends around these events. The Raiders estimate that roughly 60% of tickets are sold to out-of-state fans, and when the majority of the 50,000 to 60,000 people walking to and from Allegiant Stadium over the Hacienda Bridge between Mandalay Bay and Luxor, we are seeing significant broad-based uplift at both properties on event days and even more so on Raiders games. We're also driving our own destiny with a fantastic line of events across our venues, which have been met with great enthusiasm, whether it was the McGregor fight at T-Mobile, which, by the way, produced our second highest single day for table games win in the company's history, or the debut of our new America's Got Talent show at Luxor this week, We continue to demonstrate that this city and MGM Resorts is a leading destination for exceptional entertainment. Turning to our regional properties, as I mentioned earlier, our regional operations delivered another all-time record EBITDA and margin quarter, driven by continued strength in our rated gaming spend levels as we yield to our higher net worth customers. With the easing of statewide restrictions, we have begun to strategically reintroduce entertainment and F&B at all of our regional properties. and I'm gratified that our customers can once again enjoy the quality experience for which MGM is known. On the cost side, our team continues to focus on productivity across labor, player reinvestment, and other streamlining initiatives, and this gives us great confidence in our ability to sustain strong margins as we head into 2022. I'll conclude with some final thoughts on Macau. The market continues to operate well below pre-pandemic levels as varying forms of travel restrictions have limited visitation to the region. The obvious catalyst to Macau's recovery is the sustained resumption of frictionless travel between Macau, Hong Kong, and mainland China, which heavily relies on the higher vaccination rates that will take some time. When the market does rebound more meaningfully, we believe MGM China is well positioned given its strength in premium mass. Macau remains an important part of our business, and we have high conviction in the future success of this region. We will continue to work with the government, and we are highly confident in ultimately getting our license renewed. Ongoing discussions with the government give us a greater confidence in our belief that the process will be both judicious and fair. We look forward to further promoting the long-term development of Macau's gaming industry and to supporting the government's tourism and diversification goals for the region. With that, I'll turn it over to Jonathan to discuss the details before some final comments and questions. Jonathan?