MGM Resorts International

Good afternoon, and welcome to the MGM Resorts International First Quarter 2023 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 and Treasurer, Hubert Wang, President and Chief Operating Officer of MGM China, and Andrew Chapman, Director of 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 note, this conference is being recorded. Now, I would like to turn the call over to Andrew Chapman. Please go ahead.

Good afternoon and welcome to the M. Jim Zorth International first quarter 2023 earnings call. This call is being broadcast live on the internet at investors.mgemsource.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 parity 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 the GAAP financial measures in our press release and investor presentations, which are available on our website. Finally, this presentation is being recorded. I will now turn it over to Phil Hornbuckle.

Thank you, Andrew, and good afternoon, and thank all of you for joining us today. I'd like to start by highlighting the recent news that the Japanese central government officially certified our area development plan in Osaka, which is a recognition of our perseverance and the great partnership that we have forged after more than a dozen years. This is one of the final steps that paves the way for us to begin our development process in Osaka to create what will likely be the first integrated resort in Japan. I'd like to thank the government of Japan, the city of Osaka, our local partner Oryx, and Ed Bowers and the development team and the many MGM employees who helped make this a reality. It's truly an honor and we look forward to getting started on this major development to increase our global reach and fulfill our strategy to increase our geographic diversification. Turning to results, MGM Resorts posted just an outstanding quarter of financial performance to start 2023, driven by another record Las Vegas quarter and significant recovery at our MGM China. MGM China is experiencing a rapid recovery following the lift of public health policy restrictions. Our first quarter outperformance in Macau is a direct result of the meticulous preparation and well-executed plan put together by our team at MGM China who ensured that we were ready to capture market share and drive results upon reopening. A point to a few KPIs that reflect our impressive start to the year in Macau. In the first quarter, our MGM China properties generated adjusted property EBITDA of $169 million or 88% of our first quarter 2019 adjusted property EBITDA. Our market share was 15% during the quarter, and we are confident in our ability to sustain shares as we put in place key structural advantages, including one, we gained an additional 200 tables as part of the concession renewal process. This represents a 33% increase in the tables for MGM in a market with fixed table allocations. Currently, our half of our incremental tables are fully in use, and the remaining will be added as demand returns, and we complete further refurbishments on the casino floors. We also enhanced our property and remodels on the casino floors with both MGM Macau and MGM Cotai to focus on mass and premium mass, along with adding 57 high-end villa suites at our Cotai property. In addition, we also have the advantage of our global sales international branch marketing network, We are actively leveraging our customer database to bring global customers to our properties. While we recognize that additional hotel supply will enter the market, these drivers, along with a deep customer understanding from our property leadership, I believe will allow MGM China to maintain a share in the teens. I'd also like to thank the Macau SAR government for their partnership, and we look forward to working alongside them as we support Macau's positioning as a world center for tourism and leisure. Moving stateside, we have once again achieved exceptional results in Las Vegas with a record-breaking first quarter. This marks our seventh consecutive quarter of record EBITDA, and we owe it all to the hard work and dedication of our thousands of employees. This quarter's strip performance was fueled by a fantastic calendar of sports events, including for the first time hosting Sweet Sixteen and March Madness, and other entertainment and convention events at our properties and throughout the city. The quality and consistency of entertainment and sports programming at MGM Resorts and throughout Las Vegas has been a catalyst for the permanent transformation and strength and demand of our offerings. This is no better example than Formula One, which as you know will come to Las Vegas for the first time this November. Additionally, we are laser focused on continuing to invest in our properties with a handful of capital and projects on the strip. At Bellagio, we are completing a three-year remodel of all rooms and suites with our spa tower. This is in addition to enhancing our high-end gaming offering with a newly remodeled club purveyor for high-end table games customers, and our Baccarat Lounge just reopened after a full renovation. We have begun construction of a pedestrian bridge to connect the Cosmopop in Las Vegas with Bellagio and Vidara. We are undergoing a full upgrade of our Mandalay Bay Convention Center, along with numerous restaurants, bars, entertainment outlets, and significant room remodels at New York, New York, MGM, and the Water Club at Borgata. By the way, we'll soon carry the MGM flag alongside Borgata's brand. These initiatives will be drivers of our customer loyalty and spend and ultimately future free cash flow. Onto our regional portfolio, it showed consistent year-over-year top-line growth with stable profitability. I'd like to specifically recognize the Beau Rivage team and congratulate them for exiting well on a beautiful roomy model which is completed in 2022 and is seeing a very strong customer response turning now to bet mgm in the first quarter we expanded our footprint by launching in ohio and massachusetts bringing our total active markets to 26. based on results thus far but mgm remains on track to hit fiscal 23 revenue guidance of 1.8 to 2 billion dollars but mgm is also continuing to make progress towards profitability later this year all while continuing to expand and improve its product offering with our joint venture partner, Entain. As we look at this business, we're encouraged by the improving economics that will translate into long-term profitability. As a reminder, as states mature and we focus on growing our NGR, optimizing retention, bonusing, and focusing on most profitable players, overall CPAs will decrease and the conversion from GGR to NGR will increase, ultimately driving profitability. Internationally, we announced today that the first major investment by our subsidiary, Leo Vegas, with Leo Vegas entering into an agreement to acquire the majority of a game developer, Push Gaming. Push is a proprietary content provider that will allow Leo Vegas to grow its library of games as they extend their digital gaming presence to new markets. Push offers several industry-leading games to over 200 operators globally. On a development front, we're working through the RFA process in New York, We plan to submit our official application in the summer and hope to receive a response by the first half of next year. We continue to expect total spend in New York to be approximately $2 billion, inclusive of the licensing fee. And should we win a license in New York, our plan is for extensive property improvements, such as a new 5,000-seat theater, new food and beverage outlets, covered parking, and an increase overall to the casino floor space. We will share more specifics as part of our submission process continues. Now back to Japan. As we progress, we see great opportunity. Osaka has approximately 30 million people within a three-hour transit time of our site in Yumeshima. Our site in Osaka is also expected to drive international tourism in Japan, given its proximity to other major Asian countries. And I will remind all that Osaka is closer to many northern Chinese cities than any other gaming market. Considering that, we will likely be our first integrated resource offering For some time in Japan, we believe this project will generate a minimum to high teens' free cash flow yield. Putting it all together, MGM Resorts offers steady earnings power through our existing operations and world-class brands, plus significant growth opportunity through our digital business, through recovery in Macau, and our development opportunities. Our balance sheet boasts impressive strengths, with $4.5 billion of cash, including MGM China, as shown in the presentation. Now to Jonathan for more detail on the quarter.