MGM Resorts International

Good afternoon, everyone, and welcome to the MGM Resorts International Second Quarter 2024 Earnings Conference Call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President, Corey Sanders, Chief Operating Officer, Jonathan Halkier, Chief Financial Officer and Treasurer, Gary Fritz, President of MGM Interactive, Kenneth Tsang, Executive Director and President of MGM China Holdings, Hubert Lang, COO 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 conference 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 second 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 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 four looking statements is contained in today's press release and in our periodic filings with the SEC. Except as recorded 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 to GAAP financial measures in our press release and investor presentation, which are available on our website. Finally, this presentation is being recorded. I'll turn it over to Jonathan Hall here.

Thanks, Andrew, and good afternoon, everyone. Before I get into our quarterly results, I would like to congratulate and thank all of our employees for another great quarter across all of our businesses. Their high level of execution is clearly evident in our results, and I couldn't be more proud of the team for our performance this quarter. Turning to our second quarter results, In Las Vegas, we achieved both top and bottom line growth year over year against a strong comparison. Net revenues grew 3%, driven by both higher rate and occupancy. Our strategic relationship with Marriott contributed to our performance this quarter, now with over 410,000 rooms room nights booked. The future for hotel bookings in Las Vegas is bright. Looking ahead at our pace, room rates on the books in Las Vegas are up year over year for every month in the third quarter, and group rooms on the books are pacing up mid-single digits for the rest of 2024 and 2025. Our success in the quarter was underpinned by our luxury resorts, which are responsible for the vast majority of our top-line growth in Las Vegas. We invest meaningfully in our stripped luxury offerings, as this is where we see the most opportunity for profitable growth. In fact, 75% of our 2024 domestic property capital budget will be focused on these properties. This includes room remodels, which are underway now at the MGM Grand, and suite updates across our Las Vegas portfolio. On the technology side, we've now completed the integration of the Cosmopolitan of Las Vegas into our MGM Rewards program, which will now allow our MGM Rewards members to enjoy full benefits of the Cosmopolitan and vice versa. In the regions, net revenues remain stable, driven by relatively flat year-over-year handle with our market share holding steady across each of our markets. We also have seen a full recovery at MGM Detroit, which we all know had faced headwinds since midway through last year. Margins were within our targeted range of the low 30s as we remain vigilant on improving our variable labor effectiveness and executing on revenue initiatives such as our expanded air charter program, just one of many examples. In Macau, MGM China net revenues grew 37% year over year, achieving a market share of 16%. Adjusted property EBITDA reached $294 million for the quarter, marking a 40% increase with margins at 29%. During the quarter, we strengthened MGM China's balance sheet by extending our maturity profile with the issuance of a new $500 million 7 and 8 notes due 2031. The proceeds of this offering were used to pay down outstanding borrowings under the revolving credit facility. I'll conclude my remarks with some thoughts on the free cash flow algorithm we introduced last quarter. An algorithm that enables us to achieve a mid-teens free cash flow per share compound annual growth rate through 2028. Simply put, we expect to grow our EBITDA at a faster pace than our rent escalators, interest payments, maintenance capital, and taxes while investing for growth and reducing our share count. First, we'll generate recurring free cash flow from our resort operations by optimizing the operating model to achieve incremental revenue growth and realize cost savings. We'll grow our market share in Las Vegas through reinvestment into our properties with a focus on luxury. We'll maintain our market-leading positions in the regional markets, including an expansion in New York, and generating a growing dividend from MGM China. Next, we anticipate generating free cash flow from our digital businesses in the coming years as BetMGM reaches an inflection point and Leo Vegas delivers on its numerous market entries. We'll also be investing for long-term growth in Japan and other markets where our development expertise and brand awareness provide a distinct advantage. Finally, we'll repurchase our own shares. Through our strategy of using excess cash for share repurchases, our share count has decreased to around 300 million shares from close to 500 million, an approximately 40% reduction in our float in just three years. Taken together, the increase in free cash flow and reduction in share count would result in a mid-teens free cash for share compound annual growth rate by 2028, even without a contribution from MGM Japan. Bill, over to you.