MGM Resorts International

Good afternoon, and welcome to the MGM Resorts International third 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 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 MGM Resorts International third quarter 2023 earnings call. This call is being broadcast live on the internet at investors.mjimresource.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 pair of 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 when 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 Hornbuckle.

Thanks, Andrew, and thank you all for joining us today. In the third quarter, we had fantastic results as evidenced by our record consolidated net revenues. And despite the disruption across our portfolio, we achieved record same-store ADRs in Las Vegas, as well as a record third-quarter regional net revenues on a same-store basis. To say the least, we're off to a strong start prior to the cybersecurity issue. And to briefly summarize, on September 12th, we disclosed that we identified a cybersecurity issue affecting certain of our U.S. systems. As a precautionary measure, we proactively shut down certain systems to mitigate risk to customer information and which resulted in disruption at some of our properties. Over the following weeks, we systematically restored and enhanced these systems, and we're fully operational by the end of the month of September. Following the issues, we have seen incredible resiliency in our business to start the fourth quarter. Going forward, we do not anticipate any further operational disruptions from the incident and expected that insurance will cover the losses incurred. We expect to receive insurance reimbursements in the upcoming quarters, And Jonathan will provide more detailed information on the quarterly financial impacts in his remarks. I want to express my deep appreciation once again to our employees for the response during a challenging few weeks. They showed resilience and professionalism, but more importantly, a commitment to our culture of taking care of our guests and each other. We've been humbled by the feedback from many of our guests who took the time to call out the exceptional service they received. We're coming out of this stronger as a team and as a culture. with a focus on the culture of yes from both our guests and employees. One last thing on the employees. We continue to negotiate in good faith with the unions in both Las Vegas and Detroit with the goal of reaching agreement on new record contracts that work for everyone. In Las Vegas, as you know, Caesars Entertainment came to a new tentative collective bargaining agreement this morning, and we are literally in session as we speak, and I believe we will come to a deal today. We know from listening to our employees that they are looking for a pay increase that combats inflation, as well as reduced workloads, among other concerns. This deal, when announced, will do just that and will result in the largest pay increase in the history of our negotiations with the Culinary Union. As we shift our remarks to the fourth quarter, we anticipate the arrival of Las Vegas' inaugural Formula One race next week. We are well prepared to welcome our guests for what promises to be an exciting and enduring tentpole event. We sold out our Bellagio Fountain Club and grandstand seats. Cash roommates are several multiples ahead of the same week and prior years, and the casino front money deposits indicate Formula One will be an all-time record casino event. As we look into 2024, we see strength in future bookings, rate, and group pace into the first half of the year, and we're encouraged by a number of tailwinds, including the launch of Marriott's direct bookings in the first quarter, a fully renovated Mandalay Bay Convention Center, which will return 100,000 primary midweek room nights lost in 2023, international Baccarat play further coming back, opportunities to enhance our omnichannel marketing offerings to vet MGM and MGM Rewards customers, improving cross-play between regionals and Las Vegas, exceptional high Super Bowl demand, as well as a strong event calendar for the balance of the year, including the return of Formula One in the fall of 24, and plus the recent completion of the Bridge Connecting the Cosmopolitan, the City Center, and Bellagio. We've been diligently also working on deploying capital in meaningful ways at our existing resorts with numerous hotel, restaurant, and entertainment refreshes. Beyond these domestic operating tailwinds, we are underway in Japan. We believe we're well-positioned to be awarded a commercial gaming license in New York, and BetMGM is now on a positive path. More of those in just a moment. Turning to our regional operations, Top line trends were solid. In fact, as mentioned previously, we had a record third quarter same-store regional net revenues despite the disruption. Margins were expected in the low 30s. In the Macau market, it is clearly evident that business is booming. In fact, it was a third quarter net revenue adjusted property EBITDA record and surpassed 2019 in adjusted property EBITDA, mass GGR, and visitation. Then to kick off the fourth quarter, We had an amazing golden week that led to market share for October of over 15% and an all-time record adjusted property EBITDA for the month. Results have been outstanding because of the ingenuity and execution of the team at the MGM China. Looking forward, we are still laser focused on three key priorities, making opportunistic changes to our casino floor and existing room products to maximize yield, taking care of our mass and premium mass customers, and driving international tourism. At MGM Cotai, we will start remodeling of our platinum area for completion early next year. And at the MGM Macau, we have begun planning for a villa upgrade and the addition of six new villas. BetMGM in the U.S. is now live in 28 markets. The team is making great progress with the integration of Angstrom into our sports products, adding a myriad of betting options not offered before, and single account, single wallet has launched in all the states but Nevada. The BetMGM team will provide a comprehensive business update next month on their progress. Specific to our international digital efforts, in September, MGM Resorts in Leo Vegas launched a multimedia marketing supporting the BetMGM brand in the UK with Chris Rock leading the campaign. The UK market is ideal for an initial launch due to its size and the brand recognition of MGM with UK customers. Initial KPIs are very encouraging, with the first-time deposits much higher than expected. We will leverage our recent acquisition of Push Gaming to bring innovative games to the UK and ultimately to Ben MGM. We will also look for Push to extend into further international markets through existing B2B relationships. On the development front, we signed our implementation agreement with the City of Osaka in September, and this is effectively our green light to begin the project. The total project cost of 1.27 trillion yen, of which MGM's expected equity contribution is of approximately 300 billion yen, which at current spot is roughly $2 billion, costs have inflated through the course of the process. We have kept the budget unchanged by reducing minor scope around certain areas that will not impact the project returns and by locking in very attractive foreign exchange rates. We look forward to breaking ground in Osaka for what will be Japan's first ever integrated resort. In New York, we have submitted our second round RFA questions to the Gaming Commission and we're prepared to submit our application within 30 days of the date at which the Gaming Commission answers those questions. We believe our existing facility, brand recognition, and strong ties with the Ankers community make us a great contender for one of those three available licenses. In Dubai, our partner Walsall is under construction on a luxury development including 1,400 hotel rooms with the MGM Grand, Bellagio, and Aria brands. We currently have a hospitality management deal requiring no capital from us. That said, we do see a significant opportunity if gaming were to be legalized, first in the UAE and ultimately in Dubai. We believe we have the best gaming hospitality brands in the world with the best location in Dubai, and our existing project could include a world-class gaming component if approved. And finally, we expect the launch of our strategic relationship with Marriott to begin in early 2024 when we will begin to start taking reservations. We have launched the official landing page and will soon announce the exciting loyalty benefits we plan to offer to both MGM Rewards and Marriott Envoy members and its 180 million members. Excuse me. In closing, the stability of our domestic business and the focus on margins will be supplemented by MGM's approaching profitability as well as by outsized earnings opportunities in Macau as the business continues to ramp further. We also have long-term drivers with our developments in Japan and New York and our international digital strategy with Leo Vegas. When you connect each of these prospects for cash flow generation together, add to it a fortress balance sheet with more cash than debt when excluding MGM China, and then considering the fact that we've reduced our current share count by approximately 31% in less than three years, And our board recently approved an additional $2 billion share buyback authorization. We are confident that the company is tremendously positioned to grow its free cash flow going forward. With that, and before I lose my voice completely, I'll turn this over to Jonathan for more details on the quarter.