MGM Resorts International

Good afternoon and welcome to the MGM Resorts International fourth quarter and full year 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 Sarah Rogers, SVP of Corporate Finance. 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 note, this conference is being recorded. Now, I would like to turn the call over to Sarah.

Good afternoon and welcome to the MGM Resorts International fourth quarter and full year 2021 earnings call. 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 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 this 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, Sarah, and thank you all for joining us today. We had a very strong end to a great year, producing our highest consolidated adjusted EBITDA quarter ever in the history of the company. Our Las Vegas strip resorts delivered yet another all-time quarterly EBITDA record, and our regionals delivered a fourth-quarter EBITDA record. Our strip and regional margins also remained very strong in the fourth quarter. These results are testament to a very talented team across the country, our sharpened focus on operational efficiency, and the proven resiliency of demand for the services and experiences that we provide at MGM Resorts despite the overhang of COVID. Our employees remain the cornerstone of our organization, and I am so appreciative of their dedication to our company and our guests. We could not have achieved these phenomenal results without our world-class team members. We know it has not been the easiest of journeys over the last couple of years, but I cannot say thank you enough and how grateful I am for everyone in the MGM family. Simply thank you. Our strong employee base and our leadership team also propelled us forward to advance our strategic plan and long-term vision to simply be the world's premier gaming and entertainment company. As a reminder, our strategic plan consists of the following four priorities. Investing in our people and planet, providing unique experiences for our guests by leveraging data-driven customer insights and digital capabilities, delivering operational excellence at every level, and allocating our capital responsibly to yield the highest return for our shareholders. I briefly touched on the great results we delivered in the fourth quarter, and Jonathan will go into more detail in his remarks. For now, I'd like to spend some time highlighting the significant milestones we achieved in 21 to transform our company. First, we took steps to complete our goal of monetizing our real estate assets, meaningfully bolstering our domestic cash position. We have simplified our structure, bringing the operations of City Center fully under our control, selling MGP to Vici, a transaction that is expected to close in the coming months. We are also making strategic changes in our Las Vegas portfolio with the announced acquisition of the operations of the Cosmopolitan of Las Vegas and the sale of the operations of the Mirage. We believe these transactions will enhance and diversify our offerings and one of the most desirable and competitive destinations in the world. BetMGM, our joint venture with Intane, has established a strong brand and leadership position with the U.S. sports betting and iGaming space, finishing 2021 as the number one operator in iGaming and the number two player in overall sports in iGaming. I am incredibly pleased with BetMGM's excellent execution to date. We have substantial progress in Japan, where the city of Osaka chose us as their partner to build and operate a new world-class integrated resort, Doing so will allow us to continue to diversify geographically into what we believe will be one of the world's largest gaming markets in the world. We also returned meaningful cash to our shareholders. And finally, we bolstered our executive team last year with the addition of Jonathan and Tilak Mandati, who recently joined us from Disney. They both have already been vital to the execution of our long-term goals. We are pleased with all that we've accomplished in 2021, and we're even more excited about how this sets us up for strong momentum into 2022. Starting with BetMGM, we remain confident in the team's ability to sustain and advance its leadership position in both new and existing states. As evidenced by this confidence, both owners anticipate collectively investing another $450 million in BetMGM this year. You heard from Adam and Gary on their recent call, and we'll hear more from the BetMGM team during their investor day in May. In terms of new expansion opportunities, we're working with our partners Oryx and the city of Osaka to submit an area development plan to the central government by April. We remain hopeful and confident in being awarded a license later this year to build an integrated resort in Japan. Stateside, we're encouraged by the continued progress being made in the commercial gaming license opportunity in New York, which could be awarded as early as this year. We believe MGM is extremely well positioned given our existing operations in Empire City. And finally, as we think about organic growth in our business, we see an opportunity to deepen loyalty and garner incremental revenue share by maximizing the full potential of our network of premium resort properties and entertainment venues across the US. We are addressing this opportunity through a fully coordinated company-wide effort, which leverages our strategic investments in advanced analytics, data, and technology. Our goal is to identify and efficiently acquire high-value gaming and non-gaming customers by optimizing our target marketing, improving on-property service, and improving new experiences for those guests throughout their visit. We view our loyalty program as an integral part of this effort to acquire, to engage, and to retain high-value customers. On February 1st, we announced the enhancement and the rebranding of our customer loyalty program from MLIFE to MGM Rewards. Not only does the name better align with our business, But the updated program allows us to address key opportunities, including targeting high-value non-gaming customers in addition to high-volume gaming customers, incentivizing cross-property patronage and tier progression with more motivating benefits, and further activating BetMGM's customers in our properties. In 2021, approximately 42% of our new database enrollments came from BetMGM. We envision that this rapidly growing group of omnichannel customers will be able to traverse seamlessly between our online and offline offerings over time, experiencing MGM Rewards benefits proportionate to their tier status. MGM Rewards is the first of several steps in our organic growth journey to attract and retain more high-value gaming, digital gaming, and non-gaming customers. Over the next several years, we'll be investing over $2 billion into our properties, creating customer-centric experiences and services, in addition to the needed technology platform and advanced analytics to better engage and service our guests and drive market share in our principal markets. Before I turn it over to Jonathan to discuss our fourth quarter and full year results, I'd like to make some high-level comments on our current trends and the future outlook. As you all know, the emergence of Omicron variant in November led to rapid rise in COVID cases. Fortunately, this didn't put a damper on the year-end and plans we had and had a great December. However, January, which typically relies more heavily on group business, in Las Vegas saw significant headwinds, driven by groups mostly looking to postpone until later in the year. Cancellations, while elevated, were mostly concentrated in a very short term, with limited impact beyond March. CES in January was the most visible event this year, with attendance down approximately 70%. Despite the tougher January, we're happy to see COVID cases again on the downswing across the broader U.S. Cancellations are declining and group lead volumes are normalizing. Board hotel bookings have been stable over the past few weeks and are once again starting to outpace 2019 levels. I expect that given positive COVID trends in Nevada, we'll start to see meaningful loosening of COVID restrictions in the very, very near future, consistent with what we have seen in other states. Furthermore, our weekends have remained very strong. In fact, this past weekend, the city had the East-West Shrine Bowl, the NHL All-Star Game at T-Mobile Arena, the NFL Pro Bowl Allegiant Stadium, Garth Brooks at Dolby Live at Park MGM, and a pay-per-view fight in the Michelob Ultra Arena at Mandalay. Our strip hotels ran 91% on Friday and 98% on Saturday. This upcoming weekend, we expect a very strong Super Bowl turnout And as we look further out, for the first time ever, the Grammys are coming to Las Vegas in April, and we're hosting this iconic event at the MGM Grand. Las Vegas is also serving as the host of the NFL Draft in a couple of months' time. These types of wins continue to demonstrate that this city, with MGM Resorts at its epicenter, remains a resilient and leading destination for exceptional entertainment, and now most notably, sports. Turning to our regional properties, we delivered an all-time record EBITDA our year in 2021 with most of our properties leading in GGR share with their respective markets. Our regional success continues to be driven by our premium offerings as well as strength and our rated gaming spend levels combined with our efforts to yield to our higher worth customers. We are reopening non-gaming amenities at a measured pace as demand and resources allow, and our teams remain focused on labor productivity, giving us confidence in our ability to sustain margins above 2019 levels longer term. I will conclude with some comments on Macau. Despite the continued shoppiness in the operating environment driven by various travel restrictions and structural shifts in the high end, MGM China reached an all-time record 14% in market share. The official launch of the Emerald Suites and MGM Kotai during the quarter enhanced their hospitality offering and is helping us also grow share. We believe MGM China remains well positioned for the market's eventual rebound, given its strengths in premium mass. Importantly, recent constructive developments around the concession renewals reaffirm our confidence in the government's judicious and fair approach to the process. Macau is an important part of our future, and we will continue to work with the government to ultimately get our license renewed. We look forward to further promoting the long-term development of Macau's gaming industry and supporting the government's tourism, and diversification goals for the region. As many of you know, this is Kathy Park's last earning call with us. I cannot thank Kathy enough for all that she has done for the company and wish her all of their very best, although I will note today it's 69 degrees in Las Vegas and it's not so in Boston. Jonathan, with that, it's yours.