MGM Resorts International

Good afternoon, and welcome to the MGM Resorts International first quarter 2024 earnings conference call. Joining the call for the company today are Bill Hornbuckle, Chief Executive Officer and President, Corey Sanders, Chief Operating Officer, Jonathan Hulkyard, Chief Financial Officer and Treasurer, Kenneth Fang, Executive Director and President of MGM China Holdings, Hubert Wong, DOO and President of MGM China Holdings, 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, we do ask that you please limit yourselves to one question and one follow-up. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Andrew Chapman.

Good afternoon and welcome to the MGM Resorts International first quarter 2024 earnings call. This call is being broadcast live on the internet at investors.mgmresorts.com. We've also furnished our press release on Form 8K to the SEC. On this call, we'll 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 to today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these segments 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 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 Jonathan Altman.

Thanks, Andrew, and good afternoon. And thank you, everyone, for joining our call. We've decided to change our approach to these calls in the new year to give you a more focused recap of our results with additional color and commentary around our plans for the future. With that in mind, I'll start the call with a discussion of the quarter and our growth algorithm and then pass it over to Bill for his comments. As you saw from our press release, we delivered another record quarter across our company's consolidated businesses, generating record net revenues of $4.4 billion, up 13% from last year, net income of $217 million, and adjusted EBITDA of over $1.2 billion. During the quarter, cash provided by operating activities was $549 million, and free cash flow was $377 million. This includes MGM China's $215 million in cash flow from operating activities and $15 million in capital expenditures. In Las Vegas, we achieved 4% net revenue growth supported by strong ADRs, which were up 7% year over year. Our luxury resort offerings on the Strip served as a distinct competitive advantage, driving top line growth up 5% during the quarter. Looking ahead to the rest of the year, rate is pacing ahead of prior year for each of the remaining three quarters, and group rooms on the books are up year over year. In the regions, it's no surprise that our businesses were broadly impacted by poor winter weather in January. That said, we experienced a quick recovery in February and acceleration into March. This also will be the last quarter where we need to adjust for same-store results as Gold Strike closed in February of last year. In Macau, we lapped what was really the start of the recovery last year and achieved another record with net revenues up 71% year over year. MGM China earned its first ever $300 million quarter in adjusted property EBITDA, along with market share of 17%, surpassing the previous records set in the fourth quarter. Given the strength in MGM China's operating performance over the past 15 months, MGM China and MGM Resorts both agreed there's no longer a need for MGM to support its liquidity. And in March, the subordinated loan agreement was terminated. Further, their revolving credit facility has been nearly paid down and dividend payments have been resumed with approximately $94 million to be paid to MGM Resorts in the second quarter, all very encouraging. Aligned with our ongoing commitment to fortify our balance sheet and bolster liquidity, We recently completed the closing on the offering of $750 million of senior notes due 2032 at 6.5%. These proceeds were used to repay our 6.75% 2025 notes. Sarah Rogers and her team did an exceptional job, and the refinancing not only extends our liquidity profile, but reduces our interest expense annually. Finally, in Japan, along with our partner Oryx, our venture closed on the Japanese yen 530 billion yen project financing for MGM's Osaka Integrated Resort. This was the largest project financing ever in Japan and one of the most significant integrated resort financings globally. With this important milestone achieved, we'll continue to develop this soon-to-be iconic resort. We also bought back over $500 million of shares in the quarter, And as of yesterday, we've reduced our outstanding float to 313 million shares, 37% fewer than the start of 2021. I'll close with a summary of our financial growth algorithm. Our resort operations generate both significant and recurring cash flow. In 2023, cash provided by operating activities was 2.7 billion, and free cash flow was 1.8 billion. of which MGM China accounted for $830 million of net cash from operating activities and $45 million of capital expenditures. This implies around $1 billion of free cash flow domestically. We expect to see benefits soon from our digital business, with BetMGM beginning to generate significant free cash flow in the next couple of years and Leo Vegas beginning to generate returns from its investment period. This free cash flow generation will fund future growth and opportunities where I expect minimum mid-teens returns. This includes international digital expansion as well as brick and mortar development. In the longer term, we have an enviable pipeline of limited license development projects in New York, Japan, and potentially the United Arab Emirates, which will drive free cash flow growth over the next decade while also diversifying our geographic reach and earning sources. Any excess cash generated beyond these projects within the constraints of our financial policy will be returned to shareholders through share buybacks. Collectively, we see this algorithm as driving the compound annual growth rate of free cash flow per outstanding share to be the mid-teens through 2028, all while investing in the Japan Integrated Resort. Bill, over to you.