MGM Resorts International

Good afternoon and welcome to the MGM Resorts International third quarter 2026 earnings conference call. Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer and President, Ayesha Molino, Chief Operating Officer, Jonathan Halkyard, Chief Financial Officer, Gary Fritz, Chief Commercial Officer and President of MGM Digital, Kenneth Vang, Chief Executive Officer of MGM China Holdings, and Howard Wang, Vice President, 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 Howard Wang.

Thanks, Rocco. Welcome to the MGM Resorts International third quarter 2026 earnings call. This call is being broadcast live on the internet at investors.mgmresorts.com and we have also furnished our press release on Form 8-K 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 as contained in today's press release and in our periodic 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 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 Bill Hornbuckle.

Thank you, Howard. Given the active news cycle surrounding MGM Resorts, I want to start today's call by clarifying the information around People, Inc. As you're aware, MGM received an offer in June from our largest shareholder, People Incorporated. People and the MGM Resorts Special Committee came to terms on price, but in the end, People was unable to assemble a syndicate that met their objective and they withdrew their offer. Earlier today, we announced an amendment to the existing voting agreement with PEOPLE, which restricts them from purchasing additional shares once their ownership reaches 29.9% and confirms that they will vote with the Board in connection with a change of control transaction. We believe this amended agreement aligns our largest shareholder not only with our long-term strategic plan, but also with our ongoing commitment to maximizing value for all of our shareholders. The discussion between MGM and PEOPLE ends there. Management continues to be focused on the business. It's clear and consistent. And today, you'll hear that MGM Resorts has a focused operational approach, solid fundamentals, and a compelling pipeline. We operate an unrivaled portfolio of offerings in Las Vegas and sports and entertainment capital of the world with globally recognized brands, an experienced leadership team, and well-capitalized resorts. Not to mention, we have a solid balance sheet and remain the only integrated resort operator with a global brick and mortar and digital footprint and a meaningful development pipeline highlighted by MGM Osaka, which we believe is the greatest integrated resort opportunity anywhere on the globe. Our multi-year momentum is best captured when you take a step back and look at the trailing 12 months Las Vegas Strip EBITDA, which is nearly 70% higher than we reported for the full year of 2019. We've come a long, long way. Ultimately, our success is driven by our Frontline Execution, and the team's rather diverse business segments drove steady performance of consolidated revenues in the third quarter, a notable achievement concerning the macro environment. This was evidenced by our best third quarter Gold Plus and all-guest NPF scores. During the third quarter, our Las Vegas operations exhibited year-over-year growth in casino revenues of 8% driven by a record 3Q slot win. High-end play continues to lead the way, driven by special programming like our second annual $5 million slot tournament. Our group and convention channel also continues to be a bright spot. We actualized over 500,000 room nights in the third quarter, exceeding our internal expectations for convention room night revenue, and remain on pace for this channel to represent 20% of total room night mix for the full year. The macro headwinds we faced during the third quarter affected our leisure and transient customers across the board, and it was especially notable at the end of September when amplified by short booking windows and a slower event calendar. Jet fuel prices hit a record high in September, and while domestic airfares have risen an average of 12% since March 26, we saw airline pricing to Las Vegas up about 45% in 3Q versus last summer. Gas prices also remain high impacting customer wallets and consequently our 3Q performance achieved flat occupancy but at lower room rates. As we look ahead, October is starting off the fourth quarter on the right foot with solid group and convention activity and a busy citywide event calendar highlighted by three NFL games and strong table games play. In the final two months of the year, not only are we hosting our very own Players Edge Men's Championship, but the city will play host to the NFR Rodeo, the Las Vegas Bowl and another exciting weekend of F1. 2027 gets off to a fast start with the NCAA College Football Playoff National Championships and the NCAA Women's Basketball Sweet 16 all during the first quarter. Our regional operations continue their steady same-store performance driven by the best third quarter casino revenues and an all-time best quarterly slot win. The main tower renovations at Borgato are underway and we continue making targeted capital investments where we see opportunities for meaningful returns across our regional portfolio. At MGM China, we achieved record quarterly revenues. Our market share in September was 19.2% and ended the quarter with a record 3Q market share of 17.1. These trends have continued into the fourth quarter with strong October performance thus far. While the market remains competitive, we are focused on our operations and the execution is paying off. For example, our newly renovated Kotai Supreme Club has resulted in longer playing times and higher playing levels with our high-end customers and our Kotai high-limit slot area, which opened in July, is attracting more rated players and driving higher slot volumes. At our BetMGM North America venture, Adam and Gary Deutsch reported strong third quarter results a few weeks ago. Third quarter net revenue from operations increased by 7%, while adjusted EBITDA increased by 112, implying a greater than 100% flow through from the top line. We continue to prioritize resources towards our iGaming business, where we see the most compelling growth opportunities. are broader focus on premium players, prudent promotional spending, and markets where we have a strategic advantage are resulting in greater profitability and cash flows to MGM in the form of both branding licenses and distributions. It is worth highlighting that during the quarter, the Ninth Circuit unanimously ruled that prediction market sports event contracts are not federally regulated swaps. They are sports bets. the judge's opinion that it is disingenuous to deny that the contracts are sports bets under a reasonable person's understanding and that everyone knows a sports bet when they see it. We couldn't agree more and are hopeful that the Supreme Court review the case sooner rather than later.