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.

Thanks, Bill. Before I get into the financial results, I too would like to commend the selfless efforts of all of our employees during our recent cybersecurity issue. I personally witnessed so many people on our teams go above and beyond to support their colleagues and take care of our customers. As you likely saw in the 8K, we highlighted an estimated adjusted property EBITDA impact from the cybersecurity event of approximately $100 million in September. Most of this impact was from a loss in revenue from room cancellations in Las Vegas and our service recovery efforts. We expect the Q4 impact to be limited, with some hotel bookings lost in the first part of October and a brief disruption to the direct mail cadence in our calendar, which affects the regionals more meaningfully than Las Vegas. We remain confident that the losses will be covered by our cyber insurance. Now turning to the results for the quarter. Our consolidated businesses generated net revenues of $4 billion, up 16% from last year, net income of $161 million, and adjusted EBITDA of $1.1 billion with significant contribution from MGM China. During the quarter, net cash from operating activities was $694 million and free cash flow was $484 million. It's important to note that $197 million in cash flow from operating activities and $8 million in capital expenditures related to MGM China were included in the quarter. In Las Vegas, Net revenues of $2.1 billion were down 195 million, or 8%, compared to the prior year. Adjusted property EBITDA was down 16% to $714 million. Same-store net revenues, which excludes Mirage from last year, were down 2%, and same-store adjusted property EBITDA was down 11%. Las Vegas adjusted property EBITDA margins were 34%, and we estimate about 200 basis points of margin impact in Las Vegas was related to the cybersecurity issue. At the start of the third quarter, trends were solid in Las Vegas. July and August combined net revenues on a same-store basis were essentially flat versus 2022. Occupancy for the first two months was up 100 basis points year-over-year and then fell to 88% in September, down six percentage points year-over-year. That being said, we drove a sharp recovery in October with occupancy back up to 95% in Las Vegas. Importantly, while we're still working to negotiate a new collective bargaining agreement with the culinary union, we have been accruing for an increase since June 1st. We will not provide the full details of that accrual at this time, given that we're still in active negotiations, and we'll look to technology and process improvements to help offset the incremental labor costs we expect. Turning to the regions, in September, the cybersecurity event also affected the regional properties. Prior to this incident, July and August had a strong start to the third quarter, with a 2% increase in same-store net revenues versus last year. Full third quarter revenues of $925 million, though, were down 5% compared to the prior year, and adjusted property EBITDA was down 9% to $293 million. Same-store revenues, which exclude gold strike, were up 1%, and same-store adjusted property EBITDA was down just 2% or $6 million, even with the impact of the cyber incident. In Macau, our adjusted property EBITDA of $226 million was a 23% increase compared to the third quarter of 2019. We achieved 28% margins, helped somewhat by a benefit of $18 million from hold in the quarter. Casino revenues exceeded third quarter 2019 levels, primarily driven by our main floor win. And discounts and incentives as a percentage of gross win were 600 basis points lower compared to 2019, mainly due to the shift from VIP to MAS. FedMGM is well on pace to achieve its forecast of 1.8 to 2.0 billion in net revenues from operations for the year. Our 50% share of BetMGM's operating income in the third quarter was $13 million, marking our first quarter of profitability at BetMGM. We now anticipate fourth quarter corporate expense to be roughly $115 million, bringing full-year corporate expense less share-based compensation to approximately $450 million. This upward adjustment relates to incentive fees in Japan related to the signing of the implementation agreement, IT and cybersecurity issue related expenses, as well as costs related to the integration of the Cosmopolitan. On the development front in Japan, we expect to commit approximately $2 billion over the next five years. Our New York expansion, if approved, will be an all-in project estimated also at $2 billion, of which $1.5 billion will be invested on improvements and $500 million expected for the license fee. We plan to fully fund these projects through free cash flow generated by our operations. I'll conclude with an overview of our free cash flow per share growth algorithm, and it's pretty straightforward. First, we're committed to growing EBITDA by improving our core operational performance, deploying growth capital and high return projects, and by focusing on margins. We create operating leverage by growing our EBITDA more than our fixed 2% rent escalators. Second, We'll continue to buy back our shares, as evidenced by the new $2 billion share repurchase program authorized by our board. In addition to returning cash to our shareholders, these repurchases turbocharge our free cash flow per share growth. And there is more free cash flow growth on the horizon as we're making significant progress with BetMGM, and we have those two exciting growth projects in the pipeline. With that, Bill, back to you.

Thanks, Jonathan. And just some open comments before we talk our questions. You know, I'm reminded about the resiliency of this market and our company and our employees. Candidly, this quarter, we went to hell and back with what we all went through with cyber attack. And I'm proud of what we've accomplished to put ourselves back on track. But more importantly, I think as an indicator of this market, fundamentals have changed. We've gone from, you know, a month ago in distress to getting ready for the biggest event on one of the second worst weekends this city has ever seen in its ongoing history of occupancy to the biggest event we've ever seen with Formula One. And so fundamentally, this marketplace has changed. Macau continues to do exceptionally well. Very proud of that team. You've seen the market share that it has gained, and it will keep. And given that we ultimately have about 3% of the sweet product, I think we're kicking on all cylinders there and doing the right things. And we're going to look to correct that. If I think about the future, I think about development in Japan in the long haul, hopefully New York in the midterm. And next year, I think about the ability to unleash 180 million Bonvoy members in Marriott. I get very excited. And then ultimately, the balance sheet. I think we've been very good fiduciaries. I think the company, Jonathan of Note, has done a great job managing it. We find ourselves in a great position to think about the future and things to do and invest in. And with that, operator, I will open this up for questions. So thank you.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. As a reminder, in all fairness, please limit yourself to one question and one follow-up. And our first question is from Joe Greff with JP Morgan. Please go ahead.

Good afternoon, everybody. Congratulations on the results. This is a question for Corey, but for anybody who wants to take it. I kind of think, you know, the Mandalay Bay Convention Center coming back is underappreciated as a driver for growth for next year. Can you talk about the group mix for next year and where you think you'll end up for the group mix for this year in Las Vegas?

Yeah, Joe. This is Corey. We also think it is a big deal. The convention space will be fully renovated by the second quarter of next year. We expect to pick up about 100,000 extra rooms there next year with still opportunities to increase it. And the beauty of that is that's at a high single-digit ADR increase compared to where we are today. So I think all in all, strategically, as that building goes, it fills the South Strip, which fills Excalibur and Luxor, which is to the benefit of us as a company.

Great. And then I think I might know how you're going to answer this one, Bill, regarding F1. Last night, the Red Rock guys thought that Petrobras certain casino operator internal expectations for F1 had, you know, come down more recently. Can you talk about, you know, what you're expecting for F1, if any internal expectations, at least directionally, have been ratcheted down? And I know Caesars in the past has said they thought in isolation F1 would be an incremental 5% of quarterly EBITDA, if you kind of want to take a stab at maybe where you think the contribution is. could end up being for F1 for you guys in Las Vegas. And that's all for me.

Thanks, Joe. I appreciate the question because if someone wasn't going to ask it, I was going to answer it anyways. We've sold over 10,000 tickets to F1. We've sold out a really cool experience with the Bellagio Fountain Club. I think something extremely unique anywhere in the whole sport, but particularly given its location. Our average rate is over $900 for the company. Um, you know, we're going to do over 60 million in incremental hotel revenue for the weekend. Uh, and it is 50% above 50% above any other event we've had in terms of theoretical win. Now, you know, we all know what could happen theoretical knock on wood, but there's been nothing quite like it. And to have it placed in the weekend that it is, is we think going to be an incredible opportunity for the company and ultimately for the city longterm. It has not been without its challenges. Um, Believe me, I'm a local. I get the traffic. I understand it. I understand where our employees are going through. But I think long term, it's going to be a big winner. We will figure it all out. There's been a great deal of money invested not only by the properties, but ultimately by Liberty and F1. And I think it's going to be an exciting week that we'll look back on and say, yeah, we're going to learn some things, but ultimately something to be cherished for a long time here.

You know, what I would add is this is truly a luxury event, and our properties are completely geared up for that. They're in the right location. We have the right database to make this a premium event for our company.

Thank you, guys.

The next question is from Carlos Santorelli with Deutsche Bank. Please go ahead.

Hey, guys. I appreciate you taking my question. Bill, you talked a lot about kind of the outlook for next year and obviously a lot of favorable drivers. As you look at the business today and kind of looking at the non-event times, how do those, and I get it in the quarter, obviously a lot of disruption from the cyber stuff and whatnot, but how do those periods look relative to, say, last year?

Look, and you know how this works, Carl, a little better than most. You know, we have a short window in terms of FIT and But we do know events. And so when I think about the Super Bowl, I think about Formula One coming back. I think about the fact that we have an NFL team in town that's going to guarantee us at least eight games, et cetera. It is fundamentally a foundation for business going forward that we haven't had. And back to Corey's prior question around convention, it continues to grow. We continue to get back to the market mix that we were about 18%, 19%. of our base and convention, which is obviously the premium rate. And so we're excited by all that. We through COVID learned a lot. I think you know this, but generally our casino market share is up, our market mix about 10%. And so, you know, we can lean into that. We continue to lean into that heavily. And I do believe Marriott at scale will make a difference. And so while early to tell, you know, the pressures that are on us, whether they be wage or for insurance or other premiums are real, But I feel every bit of confidence that we can overcome that, particularly here in Las Vegas, and push forward with the kind of results I hope you all expect.

Thank you, Bill. That's super helpful. And then just if I could, a follow-up. Obviously, Las Vegas table hold, which we saw in the Nevada filings throughout the quarter, was very high for the industry on the Baccarat side. You guys held well. So kind of a two-part question. Any thoughts? help quantifying the EBITDA impact in the period from the higher hold? And the second part is, is there something that's changed outside of game math, which was a long time ago, that's kind of driving what seems to be consistently higher holds for you guys going forward? And is there any thought in kind of reevaluating where those theoretical numbers should be?

Well, I'll take the second one first and turn it over to either Jonathan or Corey on the broader one, although... I don't want to give because we won or because we lost. But having said that, we have more domestic Baccarat business than we've ever had. There are three now prop bets basically in every Baccarat game that people are taking advantage of because they're fun and exciting. But no surprise out there, they're to the house advantage. A couple of the bets are 10% bets on behalf of the house. And so a little shift in play, definite shift in market in terms of international versus domestic. I think some of that balances itself out. And the other thing we've seen is there's a quantum of very, very high-end customers who really swing this number more than I've seen historically versus a balance of customers all the way through mid-tier and all the way up to the very high end. And so I think you're seeing some of that volatility as well, obviously this quarter in our favor.

And as it relates, Carlo, to the financial impact of these swings, we've at least domestically tried to get out of the business of giving the puts and takes related to hold. We did, as you noted in my prepared remarks around Macau, but in the domestic business, we're not going to get into that detail.

Understood.

Thank you, guys. The next question is from Sean Kelly with Bank of America. Please go ahead.

Hi. Good afternoon, everybody. Thank you for taking my questions. I just want to dig into the domestic margins a little bit more if it was possible. Obviously, a lot going on between hold, which we just talked about, the impact on cyber and everything else. But I think if we try and adjust for some of these, including the union accrual, looks to us like the margin performance was very good. If we kind of stripped this out both in regional and in Vegas, when we just look at it versus what happened last quarter. And I was kind of wondering, does that directionally fit with what you're seeing? And were there any either operating expense improvements or things you were able to kind of do or isolate that helped offset some of the just broad inflationary pressure that we hear about out there across the business?

Hey, Sean, it's Jonathan. We agree. We think both in the Las Vegas market and in the regional markets, when adjusting for the impact of the cyber incident, whether you look at it year over year or sequentially from the second quarter to the third quarter, that our margins were flat to up in those comparisons. The impact in Las Vegas on margins was about 200 basis points. There was some impact from the accrual in the third quarter that I mentioned related to anticipated increases in labor costs. So when correcting the For those, I thought the margin performance year-over-year and sequentially was pretty good. The regions, the margin impact from the cybersecurity incident was less severe, less than 100 basis points for a number of reasons. But even with that modest adjustment, you can see that our margins in the low 30s compared pretty well, both sequentially and year-over-year, despite some continued labor cost increases in the regions and actually some more labor content in that business.

Great. Thanks for that. And then as my follow-up, just quickly, if I could, we've heard more and more about just promotional levels, you know, picking up a bit in Macau. And I was wondering if yourselves or, I don't know, if Hubert's on the line or somebody could comment a little bit more on the Just what you're seeing over there, it seems like, based on the share number you disclosed for October and what you talked about, Bill, in the prepared remarks, you guys are doing really well there. But just if you talk about that competitive climate a little bit and maybe the margin structure around the really highest end part of premium mass, that'd be helpful.

Hubert, since we have you up, why don't we kick it to you? Sure. Thank you, Bill.

Yeah, Sean, I think for the most part, the – Marketing programs, promotion programs in the market remain pretty rational. We haven't seen irrational behavior among all the operators. And in terms of our own reinvestment, it stays pretty stable quarter after quarter, even at the premium mass level. So that's what I see in general. There are a lot of concerts and events that draw a lot of people into the town, and I think that from that perspective, it's incremental to the GGR, not only to the market, but also to us as well. So I leave it at that.

Thank you very much. The next question is from David Katz with Jefferies. Please go ahead.

Hi, afternoon. Thanks for taking my question. I wanted to just talk about updated thoughts on leverage on a least adjusted basis and how you think about that in the context of returning capital. We just have many discussions with management teams about where they'd like to be, whether it's three to four, four plus, some cases lower than that. And I would just love your perspective.

Sure. It's Jonathan, and I appreciate the question. It's something we think about a great deal. Right now, on a lease-adjusted basis, suggesting the lease payments by a multiple of eight times, our leverage is about three and a half times. It's a full turn below what we've talked about as our leverage cap. So a full turn on EBITDA for us is over $4 billion. We have zero net debt right now. We've been aggressive repurchasers of shares. I will say that at these levels of trading in our shares and the value that we think is in there, we would certainly consider taking on some additional financial leverage in order to enable further share repurchases. Now, we have to be mindful, of course, of some of the investments that we have coming up in 2024. including in Japan, potentially in New York, depending upon timing. But we feel very comfortable with the leverage levels that we are at and going to that higher level. And one more reason is just because of, we think, the increased diversification of our cash flows and the resiliency of the revenues that we've seen here.

Understood. And if I can, just as my follow-up, you know, we also have a number of discussions with management teams around how they're thinking about dividends among your peers and, you know, how they should be sized and their importance and relevance, and I'd love your thoughts there, too.

Yeah, we've made, and our board has made the determination that at least for the time being, and I think probably into 2024, that that returning cash to our shareholders through share repurchases is going to be the predominant method of doing that. And that's the best way for us to do it right now as opposed to the dividends. So I don't expect to see our dividend policy changing in the next, certainly in the next 12 months. But the board will ultimately.

Gotcha. Thank you very much.

The next question is from Dan Pulitzer with Wells Fargo. Please go ahead.

Hey, good afternoon, everyone, and thanks for taking my questions. First, just following the cybersecurity incident in the quarter, any updated way to think about investments in your IT infrastructure or OPEX related to this as we think about next year? And then just as a follow-up along with that cost structure, I mean, other than the labor uptick, are there any other costs that we should be thinking about that you guys plan to offset for next year, whether it's property insurance, or anything else that we should be aware of. Thanks.

Dan, let me kick it off. Obviously, we've done a whole lot to lockdown systems now, but we're going to look at architecture and how we're designed and how we go forward. And so we're probably looking at sometime into next year a $30 or $40 million capitalization in terms of IT hardware and cap that goes into it. You know, in terms of OpEx, while there are things to do, I don't know that they're overly meaningful. A lot of that will get captured by CapEx, but, you know, is that 20? 10 to 20 range in terms of operating. The capital, you know, we'll find in the general fund, we generally go around 800 million a year to keep this place fresh, and we've got a couple of big remodels next year. So it's not expected to change that greatly. Obviously, the wage increase that is being talked about now with the culinary industry Ultimately, I think you all know we're in strike in Detroit, which is a similar program and similar request, I might add, in terms of percentage will be in play. Insurance will be in play. Those are probably the two biggest things in terms of a percentage. But even the insurance, cyber and otherwise, well, it has continued to go up. And this is a staggering thing for you to understand. Since 19, Las Vegas insurance has gone up twofold. And since 19, it's gone up fourfold in our regional casinos. So, you know, it's something we watch closely. But the overall number and the scale of what we're talking about is still pretty de minimis, and we think we can overcome it, particularly here in Las Vegas.

Got it. That's helpful. And then just turning bigger picture and longer term, I guess as you think about Dubai, I mean, do you see a realistic path to getting gaming legalized there? And then along with that, if there's any way to, you obviously have the rendering in the back of the deck, but any way to think about timing, CapEx, ownership structure, or path to full ownership, just high level would be helpful.

Yeah, I mean, look, we think so. Obviously, we've got boots on the ground. I think you all understand our former CEO is now chair of the Gaming Commission there, which is very real. And so, you know, they've taken the swag out of it. You all know what Wynn is doing. We like Dubai for all the obvious reasons. You know, there's 20 odd million visitors. They've got 140,000 hotel rooms. That sounds familiar. The current structure we have is hospitality management only. To the extent we actually get into casino, it's obviously we're not a management company for casino. We will look to invest equity or we will lease the casino. We just don't know. It depends on what a partner and potentially our existing partner wants to do. but know that we literally have somebody on the ground today in discussion. And so it's very front and center with us. It's something we'd like to participate in. We think it could be very meaningful for the company and, frankly, the industry. And so we're there at scale.

Understood. Appreciate all the commentary. Thanks.

The next question is from Robin Farley with UBS. Please go ahead.

Great. Thank you. I had a question about if I'm understanding the slides correctly. You talked about the decline in Vegas and you said 80 million was due to the cyber issue. And I guess total EBITDA was down 91 million. And maybe would have been more without some hold. I know it's, you won't quantify, but if we, so if we're thinking about that other 10 million, is that what, is there anything else you would call out? Because it looks like, I guess, same store EBITDA would have been down a little bit even without the cyber issue. So just anything else you'd call out there?

Thanks. Not in particular, only just differences. year over year that occur. You know, sometimes it's in gaming results. Sometimes it's in other cost elements. But other than the things that we called out, nothing in particular that we would.

Programming. And I think, you know, obviously 2022, particularly third quarter, was an all-time quarter. And so, you know, just as an equal comparative, you've got to keep that in perspective.

Okay, great. Helpful. Thank you. And then just as a follow-up, looking at the level of repurchase, I know, I think at times during the third quarter you talked about sort of potentially looking at different international iGaming opportunities. And should we conclude, given the amount of repurchase, if you continue with this rate, you will have kind of used up maybe, I think you even call it excess liquidity or something in your slides, that that will be down to just a couple hundred million by the end of the year if you kind of maintain the same rate of repurchase that we saw here. Should we think about that as a sign that you're less interested in making an acquisition in iGaming internationally?

Well, look, if you're referencing Intane, which I think you are, our position has not changed. If we think about iGaming and the platform, obviously we've gotten aggressive in UK and we're excited by what that opportunity brings. Obviously, it's a highly developed market. But we've taken some share. We've got a meaningful brand. And it's good to see our Leo Vegas team go up against, I think, some of the best and see how they can do. We look to take that to other places. We're looking at Brazil closely. We're looking at other European countries closely. Obviously, with the advent or the purchase of Push Gaming, we're in the content business now, both for ourselves, hopefully for BetMGM, and for other customers that they had when we acquired them. And so we'll continue to look to expand internationally. Gary Fritz is leading that effort, mostly through our Leo Vegas enterprise. And, you know, we'll see where it all goes.

And I thought that you might last week and team said something about how they expect to invest more in the joint venture next year, even though you guys have talked about being EBITDA positive. And you didn't necessarily call that out, but would we assume that you would invest equally? In other words, that you would maintain that 50%? If they're talking about investing more, you're thinking about doing the same thing for BetMGM? And then that's it. Thanks.

Okay. Thanks, Robin. And look, I'd love them to invest more than us, but that's not the way it's going to work. So yeah, we'll invest side by side. We believe in that business. We recognize, particularly as it relates to sports, that our product over the last 18 months wasn't where it needed to be. And you've seen us do a great deal of work around single account, single wallet. And Tain bought Angstrom, which we think will be a very, not will be, is, and becoming a very good push for us with Parlay product for odds, the quantum of odds that we set, the amount that we can put out there. And so we're excited by that acquisition and what that's brought to the business. Ultimately, we will get in Tain in Nevada, we believe, in the first quarter. which will then make single wallet available and therefore omni-channel throughout our network, principally here with our decisive advantage of Las Vegas. As a single wallet account, we think that will be meaningful. And we will then see, once product is understood more clearly, how much to invest. But when you talk about a quantum of dollars and you think about the overall scheme of what's been accomplished, it won't be large. It's not like where we've been. But if somebody said you need to invest another $50 million today, to make sure your long-term value is there. You know, I'm shooting for end of 25 as a goal. Where are we going to be? Has this thing really begun to do the kinds of things I think we all think and expect and hope it to do? And so we'll continue to invest accordingly and appropriately and purposefully with these guys. Because we believe, look, we're still number three. We're still number one, although I noted DraftKings this month. But year in and year out, we've been number one in iGaming and so on. We've got a very big position we want to protect, and we'll continue to do so.

Okay, thank you very much. Thanks.

The next question is from Barry Jonas with Truist Securities.

Please go ahead. Mr. Jonas, perhaps your phone is on mute. There we go. Hi, we can hear you now. Hey.

Hey, I appreciate the commentary on F1, but curious if you can provide any additional color or metrics on how Super Bowl is shaping up. Thanks.

Yeah, I'll kick it off. But, Corey, it's interesting where we've seen a great deal of international single visitation on F1. Super Bowl, maybe not to your surprise, is about corporate America. And so it has shown up in multiples in terms of multiple groups taking, Corey, if you take, you know, just a great deal of inventory.

Yeah, you know, if you look at the large, the groups that have booked for programs per F1, we're actually about double where in Super Bowl. So we're seeing some really strong demand there. It's driving ADR. We're pretty optimistic about what Super Bowl will bring for us from a casino and a leisure side.

Great, great. And just as a follow-up, you know, as you look across your markets or other parts, maybe parts of the database, are you seeing any noticeable impacts from the macro environment we're in? Thanks.

No, we're not really seeing any. We continue to book at the elevated ADRs. The regional trips and rated days, customer values seem to be where they've been in the past.

Barry, I think the discussion will ultimately come down to the regionals, not necessarily top line, but bottom line and margin. And, you know, just keeping those things going strong. You know, obviously we'll wait and see what happens in Detroit here, but we'll come out of that like we always do. And then, you know, it'll be about regional margins, I think, in bottom line more than top line. At least, you know, anything we can suggest that.

Great. All right. Appreciate it. Thanks.

The next question is from John Decree with CBRE. Please go ahead.

Hi, everyone. Thank you for taking my questions. Maybe one more to shift back to Macau, if you were still with us. The trends in recovery in Macau are still trucking along nicely for the market as a whole. There's obviously a lot of discussion about macroeconomic issues in China, so there seems to be a decoupling. Curious to get your thoughts. uh, on that. And then more specifically, you know, the next leg of the recovery as we march forward, obviously airlift back to Macau and Hong Kong is still, uh, a place of recovery, but, you know, curious your views on, on the differences in Macau and, and China consumer more broadly, and then how you see the next leg of the recovery playing out.

Go ahead. Yeah.

Uh, thanks John for your question. I think that, uh, well, First of all, I think Macau, I believe that the recovery is going to continue. The government issued their forecast for next year during their budget session, and they're looking at a GGR number for next year, around $27 billion for the entire year. And this is quite consistent with our belief, our own expectation and the market consensus as well. Now, I think Yes, in China, there is some softness in its overall macroeconomic situation. The GDP growth is around 4% to 5%, which is at the top if you look at the long-term window period. But I believe that Macau is not the average of the fraction of the average GDP growth or spending pattern in China. We, as a town, cater to about 30 million visitations a year. A unique visitation is probably less than half of that. It's still a very small number in the grand scheme of population in China. So we cater to really the, I would say, the economic elites in China, the middle class and upper middle class. And there's a recent report, if you can refer to it also, talk about even in China, the consumption between high-income group and the base mass is very different. You see continued growth on luxury goods purchase at the high-income group, while the mass, you have seen a decline. So I think that Macau is positioned to cater to the group with high spending. And this is, I think, what every concessionaire, along with the government, is trying to do to capture that group and their visitation into the markets. So I hope that answers your question, John.

Yeah, Hubert, that's great. I appreciate that commentary. Very helpful. Maybe one for Bill or Jonathan back on the U.S. as a follow-up. A couple different questions on OPEX inflation and property insurance being a big one that a lot of folks have talked about. Bill, you've just commented on that. But maybe looking ahead, excluding labor, which we've talked about, does your visibility in OpEx, does it feel like the inflationary impacts have been born already? Or what do you expect going forward? I guess kind of your outlook for cost inflation over the next couple of months from where you have visibility.

Yeah. It's Jonathan. Thanks, Jonathan. Setting labor cost aside for a moment, and even insurance, which is, in a way, it's more pronounced in a couple of our regional properties than it is in our Las Vegas businesses. We expect inflation in some of our core inputs to be low single digits. But at the same time, Corey and his team have dozens of initiatives against our cost structure so that we can minimize the impact on that overall and maintain margins in our Las Vegas businesses in the range that they've been for the past several quarters. So, you know, the thing is in Las Vegas, we have quite a few levers that we can use to offset the impacts of that. So again, setting the labor aside, we're confident that we can hold the line on those other costs.

helpful. Thank you, Jonathan. Thanks, everyone.

The next question is from Chad Baynon with Macquarie. Please go ahead.

Afternoon. Thanks for taking my question. I know a few calls ago, we spent a lot of time on the Marriott strategic partnership. And Bill, you talked about that as a catalyst for 24 when that launches. Can you just give us an update since it was slightly delayed just in terms of how we're thinking about The overall impact kind of replacing those lower yielding rooms to marry out direct customers. If we should start to see that real benefit in 24, or does it just appear that the city is, you know, busy enough right now where maybe we're not getting that full benefit and this will be more of a 25 and beyond positive for you guys? Thanks.

No, I think it's 24. I think the booking cycle for Las Vegas, even with this group, because we've seen it obviously mirrored at Cosmopolitan, is pretty much in line with everything else. They go a little earlier because they want to make sure they can use their points, etc. But there's a clear window in the next couple of months. So once we launch it, we think it ramps fairly quickly. And I think by the third and fourth quarter of next year, this time next year, we ought to be have a real good feel for what it's going to provide. You know, the group activity that will be part of it's a little different discussion and will take more time given the obvious nature and cycle of that business. You know, and remember, I think the first year we're looking for 50 to 75 million in incremental. And there's nothing to believe, even despite the delay, candidly, there's nothing to believe we won't recognize or realize that.

Okay, great. Another one with respect to 24 in terms of lunar new year i believe lunar new year and super bowl are coinciding um over the same periods have you have have you seen any indication just in terms of bookings from some of that international bach play does that come in a little bit closer to that event and given that you know super bowl is around the same time um you know should we expect a lower uh positive from that thanks

Well, yeah, they do line up, so we can't change that. It's one of the few years that they do. So what I think you'll see, we've seen increasing international box play as the year has gone on, and I think we'll see it hopefully and believe it will continue into 2024. I think we're going to see a lot of folks at a football game who don't necessarily know football very well, but are invited guests and want to see a spectacle. And so, yeah, there's some overlap to it, but we feel pretty positive. It's just, frankly, too early to tell. Most of those customers, you know, other than a holiday period, which I guess this is, but they react fairly quickly at the last minute and say, I'm coming. And so, you know, we'll know about 60 days, 45 days out really more what the activity cases look like.

And for that holiday, it does expand for a little bit over a week. So we will separate the party from the Super Bowl to make sure that we maximize both opportunities.

Thanks. Hopefully there's a compounding effect. Appreciate it.

And the last question today is from Jordan Bender with JNP Securities. Please go ahead.

Great. Thanks for taking my question. We've talked about in past calls just on the A's relocation. And if there is a CapEx requirement, maybe it's part of that. But does it make sense to maybe potentially expand the asset base on the south end of the strip just given your liquidity position?

So, update. I literally was with their team and their owner yesterday. They're excited to be coming. The vote is, I think, on the 16th for the owners, and obviously they have to get through that. They won their court case this week, which was important. There was a petition here in Nevada to slow them down. And they actually showed me the design, which was spectacular, I might add. So we're all excited by that. Look, I think you'll see it's particularly – I've mentioned this briefly – rethink about the MGM of note. You know, it's our legacy brand. It's on the corner of Trop and Las Vegas Boulevard. It's 30 years old and it needs some attention, particularly at the front end intersection. And so I think you'll see us invest there. I think you'll see us invest in the way people move around that corner and make it in concert and synergistic with the design I saw yesterday. We've already connected our architect with theirs to kind of talk about all of that. And to the extent we really see this thing going up in the air, and I think we will, you know, I think over time, if Las Vegas continues to do the kinds of things it's been doing, we'd be foolish not to.

Understood. Thank you.

Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Bill Hornbuckle for any closing remarks.

Thanks, Operator. I made my comments earlier. Again, I just want to A call out to our staff here for getting us through this cyber attack. Appreciate everyone's patience with us. I appreciate your trust in us. And ultimately, anyone coming next week, let's go racing because I want to have some fun for once.

I'm tired of this.

Thank you all.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.