MGM Resorts International

Good afternoon and welcome to the MGM Resorts International Third Quarter 2022 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President, Corey Sanders, Chief Operating Officer, Jonathan Hulkyard, Chief Financial Officer and Treasurer, Hubert Wang, President and Chief Operating Officer of MGM China, and Andrew Chapman, Director of Investor Relations. Participants are in listen-only mode. After the company's remarks, there will be a question and answer session. To ask a question, you may press star then one on a touchstone phone. To withdraw your question, please press star then two. 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 Andrew Chapman.

Andrew Chapman Good afternoon and welcome to the MGM Resorts International third quarter 2022 earnings call. This call is being broadcast live on the internet at investors.mgmresource.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 discuss non-GAAP financial measures and talking about our performance. You can find the reconciliation of 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 Wernbuckle.

Thank you, Andrew, and thank you all for joining us this afternoon. I'm pleased to report another phenomenal quarter of financial results driven by our domestic business, with the Las Vegas Strip setting a new record for revenues and adjusted property EBITDA. These results come on the heels of a record-setting second quarter in Las Vegas and our regions. Also, the Cosmopolitan of Las Vegas had one of its best quarters in its first four-quarter of operation under MGM Resorts' leadership and continues to outperform our initial expectations. We continue to see further opportunity with the Cosmopolitan as we look to integrate a reward system and improve physical connection to our sister properties. Net-net 2022 is shaping up to be a record year for many of the resorts, and we believe a fundamental change in people's perception of travel and the value that it brings to their lives in Las Vegas and MGM Resorts is benefiting this emerging theme. I want to thank our employees again for the tremendous efforts they put forward to achieve these outstanding results. We know that our guests are experiencing greater satisfaction in their stays as measured by internal net promoter scores, which continue to exceed our projections as well as our TripAdvisor rankings, which have improved significantly across our portfolio in the last year. Put all together, and MGM continues to make great progress towards our long-term vision, which is to be the world's premier gaming and entertainment company. We've achieved this vision by remaining laser focused on that strategic plan. Let me hit some of the highlights of the quarter, and then Jonathan will dig into the results in more detail. First off, I'm pleased to share that we've completed our acquisition of Leo Vegas in September. This important acquisition represents the first step of an aggressive expansion in international and online gaming for MGM. I'd like to again welcome Gustav Hagman and the team. We also recently announced the addition of Gary Fritz as our president of Interactive Games. They will lead our broader digital strategy, both here in the U.S. and internationally, of which Leo Vegas is a significant part. Staying with digital for a moment, we remain bullish on BetMGM, which continues to build on success every quarter. In the third quarter, BetMGM launched in Kansas, representing its 24th market to date and the eighth new market we have added since November of last year. Looking forward, we'll add Massachusetts, Ohio, and Maryland to our online sports betting portfolio. BetMGM remains the clear leader in iGaming with a 29% market share, and BetMGM commands 22% share in active markets when combining U.S. sports, betting, and iGaming. As we hit the halfway point of the NFL season, we're encouraged by the preliminary metrics. Reinvestment has remained within our expectations, and market appear to be acting more rationally. As BetMGM shared in May at its investor day, Our strategy is to focus on profitability by allocating spend to geographies with the highest ROI and targeting bonusing. We believe this is being executed exceptionally well. Our investment in Bedroom GM and Leo Vegas will allow us to continue to drive our omni-channel strategy, a key competitive advantage that over time allows us to generate incremental earnings between our brick-and-mortar and our online channels. Early results of this strategy have been positive with a strong acquisition story as well as the creation of brand stickiness. Of the players that play in both channels, we've seen a younger customer. In fact, almost 90% of the BenMGM Omnichannel customers who visit Vegas are younger than 50, and over 50% are under the age of 35. Overall, customers who play online at our properties have increased engagement and are a lower cost per acquisition, which reflects the operating leverage we can and will drive into the future. Now I'd like to talk about the integrated resorts development opportunities we have. New York State appointed the majority of the gaming facility location board members in October, and we anticipate the state to issue the casino's RFA by early January. We are developing a compelling proposal, and we look forward to submitting it in the coming months. Beyond the United States, MGM and our development partner, Oryx, along with the city of Osaka, submitted our area development plan to the government of Japan in April, and we are optimistic that we will receive certification in the near future. I recently visited our development site, And we in the Oryx team couldn't be more excited by the opportunity to bring a fully integrated resort to Japan. Turning to Macau, we officially submitted our application for a new concession in September, and we remain committed to supporting Macau's continued development as a world-class tourism and leisure destination. We aim to support the Macau government in achieving its diversification goals and will continue to invest in innovative projects and programs that help the region flourish. The Macau government is in the process of reviewing each of the concessionaires' proposals, and we expect a decision to be made by year-end. Let me close by making some high-level comments on the current state of business and our future outlook. Business is exceptionally strong right now in Las Vegas at MGM Resorts, and we see the market remaining exceptionally hot. In particular, we are seeing outsized strength in our luxury resorts, where pricing remains robust. In fact, October was our highest month ever in terms of hotel revenue. As we look at the convention segment, which has the longest lead time and gives us visibility into the future, our convention room mix is pacing in our goal of 19% with increased ADRs year over year. Our outlook continues to be positive, and we're flexing our operations to take full advantage of the demand we're experiencing in the marketplace. Programming also remains an exceptional story, which further solidifies Las Vegas as the nation's top sports destination. We will host the men's NCAA West Regional for Sweet 16 in Elite 8 rounds at T-Mobile in March. And Formula One, as you know, has selected the weekend of November 16th next year to host the first ever Las Vegas race on the Strip. That weekend happens to be one of the slowest historic weekends of the year for us ahead of Thanksgiving. We'll open our hotel calendar tomorrow for those dates and expect an exceptional demand based on our studies of other host cities. We believe the prime positioning of our properties will allow us to fully capture the benefits of this exciting race. So right now, we have reasons to be optimistic as we look ahead. That said, we're not blind to the overall macroeconomic conditions, and we remain keenly aware of the impact of inflation and the concerns of a potential recession. We continue to stay alert and are actively monitoring our business and indications of a slowdown. Our operations teams have become incredibly nimble over the last few years, and are prepared to quickly adjust our business to the changing demand trends if they occur. In the meantime, we'll continue to look for opportunities to drive organic growth in our core business through select key capital investments in our properties and through our MGM Rewards program. MGM Rewards continues to deliver on our promise to provide more compelling benefits to all of our members. In fact, since we launched the new program, we've seen a greater portion of our direct bookings from MGM Rewards members and an increased tier progression, particularly for our Gold Plus players. With that, I'll turn this over to Jonathan to discuss more details of the quarter. Jonathan.