Q4 2019 Earnings Call

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Good afternoon, and welcome to the MGM Resorts International fourth-quarter and full-year 2019 earnings conference call with joining a call from the company today are Jim Morin chairman and chief executive officer. Corey Sanders Treasurer and Chief Financial Officer bill hornbuckle president and Chief Operating Officer Grant Bowie CEO and executive director of MGM China Holdings. Limited participants are in a listen-only mode after the companies. Remember 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.

No.

Like to turn the call over to Aaron Fisher, please go ahead good afternoon and welcome to the MGM Resorts International fourth-quarter and full-year 2019 earnings call. This call is being broadcast live on the internet at investors mgmresorts.com. And we've also finished our press release on form 8-k to the SEC on this call. We will make forward-looking statements under the Palm 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 materially different from these forward-looking statements is contained in today's press release and then that 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 will also discuss non-gaap Financial measures in 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. How long did you mourn? Well, thank you Veron and good afternoon everyone.

before

Where we begin discussing our fourth-quarter and full-year 2019 results. I want to spend a moment talking about the announcement we made this afternoon.

As you may have seen I've been informed the board that I will step down from the company prior to the expiration of my contract. The board will promptly conduct a comprehensive search The Right leader who take MGM Resorts into the future and I will do whatever I can to support the board during this time.

This was not a decision that I made lightly. However, I know the company is well-positioned. Our balance sheet is strong. We have an efficient on a model and a powerful strategic plan.

Our growth areas of sports betting Japan and entertainment have never looked better. Our bench of management. Talent is deep. The company is strong and growing.

Mai 22 years with MGM Resorts have accomplished a lot and I'm proud of the company that has become.

Leading MGM Resorts says CEO for the past twelve years has been the most rewarding and fulfilling experience in my professional career.

And I want to thank our talented employees for all of their support and dedication.

Together we transformed MGM Resorts into a global entertainment company with a worldwide footprint while creating significant value for our shareholders money.

Looking ahead until a successor is named. I will continue to lead the company as always. I will remain focused on executing our strategy off and I'm fully committed to supporting a seamless transition. I'm confident that the board will find the right person who will continue to execute on our plan and drive value for shareholders.

That I'd like to turn our discussion over to our results.

MGM has a lot.

To be excited about this past year.

We began 2019 with two major plans. The first was a day dedicated more focus on our asset-light strategy, which allows us to unlock the value of a real assets and recycle Capital into higher-growth higher-return opportunities.

We made great progress as we monetized the underlying real estate of Bellagio and will soon monetize the real estate of MGM Grand Las Vegas at Benchmark setting suck balls.

We also sell the Circus Circus Las Vegas, which was not core to our long-term strategy.

We continue to work toward reducing our Steak & M G P which currently has a market value of around seven billion?

We announced transactions as well as the anticipated cash Redemption of 1.4 billion of our MGP operating partnership units are expected to yield eight point two billion of net cash proceeds to MGM.

These proceeds in conjunction with our free cash flow will allow us to achieve domestic net financial leverage, excluding MGP of approximately one thousand times by your end while still returning significant Capital to shareholders that such. I'm pleased to report that we paid down 3.1 big fan of our debt in the fourth quarter further as a testament to our continued confidence in our overall business and strategy as well as the value potential of MGM Resorts. We announced today a 15% increase in our quarterly dividend.

We also announced the authors.

Have a new three billion dollars a share repurchase program which we intend to put to use tomorrow with at one point two five billion modified Dutch auction tender Thursday. We believe that this is an opportune time to repurchase shares despite the volatility in some segments of our business.

While the coronavirus which I will discuss shortly with clearly have a near-term impact to MGM China. We remain confident that it will not have a long-term impact on our business. We're pleased with the Outlook of our domestic businesses with strong underlying Trends in Las Vegas, including continued growth in revpar serve food and beverage and domestic gaming spend.

MGM has the benefit of having a good broad-based snapshot of our customer base here in Las Vegas.

we have

Yes from all income groups coming from all over the world and we're especially happy with the performance of our mid-market properties which produce strong margin Improvement off this to us speaks to the strong underpinnings of the Las Vegas Market as well as the success of our MGM twenty-twenty plan.

We are investing in Japan and in our online and sports betting business and while these businesses are contributing losses to our p&l today. We expect both to create money value in the years to come and we do not believe either of these initiatives are reflected in our current stock price.

Secondly, we implemented our MGM twenty-twenty plan, which a year later is successfully realizing material savings and labor sourcing and revenue enhancement opportunities.

Weaver

Find or operating model to create greater efficiencies and faster decision-making throughout the organization. We've also completed implementing numerous labor and yielding initiatives, which will drive more upside this year.

We're proud of the progress. We made during 2019 as we look forward to steps to evolve our organization. We've Advanced our transition to off unless acid intensive business model.

We made meaningful strides to optimize our portfolio strengthen our balance sheet and enhance our free cash flow.

In 2019. We also returned over 1.3 billion dollars to shareholders in the form of dividends and BuyBacks.

Since the end of the year, we have continued to buy back shares and as of earlier this afternoon, we had only four million dollars left remaining on our current 2 billion dollar authorization.

As we look into calendar year twenty-twenty we expect certain headwinds which we believe are unpredictable within a reasonable range of accuracy.

We're currently navigating an extremely fluid environment with the coronavirus which we are taking very seriously.

The safety of our employees and guests is our top priority and we continue to work closely with the local authorities to ensure that we're doing what's right for the well-being of everyone there.

As such our Macau casinos and gaming areas are currently closed. So we are maintaining some non Gaming facilities to support our hotel guests.

During this time with our casinos closed. We are actively managing our costs in are encouraging approximately 1.5 million dollars of operating expenses birth day across both properties the majority of which is payroll.

Well, the current situation creates volatility in our business near-term.

We are confident that the does not reflect the medium to long-term earnings potential of these assets or the marketplace. In fact, well short-lived we had been seeing signs have been improving Marketplace during the first couple of weeks in January with our business is averaging just under one just under two point five million dollars worth property even a day.

In addition the Far East Market here in Las Vegas had a difficult year in 2019. And as such we are cautiously not expecting a material recovery in the near-term and so given the current environment. We have decided to remove our 2020 Financial targets.

But with that being said organic growth in our us business, excluding Far East baccarat has been tracking in line with our expectations. We see the strength in our underlying domestic business continuing from the fourth quarter into this year. We also remain deeply committed to substantial growth of Faith cash flow per share this year driven by a Healthy ebitda Growth moderating capex is our properties are an excellent shape and a reduction in our share count.

so moving on to a

results

afro year 2019 Consolidated net revenues increased 10% in Consolidated adjusted ebitda was 6% or fourth quarter Consolidated net revenues grew 4% off and we generated Consolidated adjusted ebitda of 682 million.

Our fourth-quarter results were solid but below our expectations mostly do the persistent weakness in Far East baccarat volumes and hold off in Las Vegas as well as a couple other one-time items.

We've also accelerated our investments in sports. And in Japan are Las Vegas strip hold adjusted property ebitda for the year was 1.67 billion and 392 million in the fourth quarter.

Excluding Circus Circus and the 24 million dollar insurance proceeds. We received in the prior-year quarter are hold of Justin strip even increased 4% year-over-year. Our fourth-quarter results continued to be driven by strong demand across all of our segments with Ferrari Spa crap being the only key off set off.

Strip net revenues were up 4% in the quarter nine gaming revenues and read par both up a robust 6% Our convention business was exceptionally strong and we finished 2019 with an all-time record convention mix for the fourth quarter and the year at over 21%

Our Casino revenues decreased 4% with table games wind down 18% driven by that far east Baccarat.

Our nanbaka right table games and Slot win were actually up in the quarter.

Our first and fourth quarters have historically treaded higher in fairies play and as we mentioned on our last call we knew we were up against a tough comparison quarter as the prior Year's quarters Casino volumes were very strong.

And while our forest business in the fourth quarter was roughly in line with the second and third quarters. It was still lower than we had expected driven by a handful of premium package customers to provide some context.

Ferrari

Has historically contributed anywhere from five to seven per-cent of our strippy Bedard and now it's down to 2% which creates a low base for 20/20 in other words Forest baccarat contribute a little over $35 million to our 2019 adjusted ebitda R and that was down over a hundred million year-over-year.

Our fourth quarter strip. Ebitda margins would have been up about one point five points year-over-year. If you were to adjust for Circus Circus and the insurance proceeds received in the prior-year as well as the clock right impact.

Regionally, we operate some of the Premier assets across the United States with leading positions in most of our markets Regional operations for Thursday net revenues and adjusted ebitda 15 and 14% respectively due to the inclusion of Northfield Park and Empire City.

2019 MGM National Harbor and Borgata each generated over $200 in 2019 adjusted property ebitda r

and our Mississippi operations grew even darker by 13%

MGM Springfield has admittedly performed below our expectations and we've recently made some changes there to better position the property.

MGM China's net revenues grew 6% in the quarter despite the 8% market-wide decline adjusted property. Ebitda was up 6% to $185 million driven by MGM kothai which grew ebitda by almost 40% year-over-year 275 million.

VIP hold normalized ebit are was up 11% to 177 million.

Despite the short term in uncertainty in the marketplace. We remain well-positioned there as MGM China strong liquidity position and strong balance sheet. So it's as well. And of course Grant will be on the line to answer your questions during the Q&A.

Moving on to MGM 20/20. I'm proud to say we continue to make excellent progress on the plan achieving all of our targeted savings and revenue enhancement some of which continue to be on an accelerated basis.

As of year-end 2019 many of our initially identified labor and sourcing initiatives have been implemented and we will continue to drive further upside the chef in the fourth quarter. We achieved approximately $55 million in incremental ebitda bringing our total to north of $130 million for the year in 2019. Clearly. We're ahead of plan.

We did.

Experience slight delays in the fourth quarter and rolling out certain technology related initiatives, which is now occurred by the end of the year and we remain confident that we will be our two hundred million dollar adjusted ebitda uplift goal by year-end inquiry, of course is here to provide more detail than that during Q&A looking out further. We expect the healthy Trends in Las Vegas outside of forests baccarat to continue into twenty-twenty.

We expect strength in the first quarter driven by our Convention & Entertainment calendar.

Last year visitation grew 1% to near historic high levels and McCarron's passenger counts reached an all-time record of fifty one point five million consumer confidence remains high and while Leisure booking windows are naturally short. We continue see strength in that segment, especially bolstering a legacy properties and we have a lot to look forward to the city is continuing as Evolution as a sports town with the NFL draft in the second quarter and we are pleased to be hosting the NFL red carpet event on the Bellagio Fountains.

Vegas will also debut the Raiders at the 65,000 seat Allegiant Stadium, which is in Mandalay Bay backyard and will serve as a positive Catalyst out for South Strip properties and boxing. We also have the heavyweight fight Fury vs. Wilder rematch just next weekend.

Our convention business is shaping up. Well, especially with the return of conag in the first quarter.

Park MGM is also hitting its try with all of its elements up and running anchored by the wonderful unique food and beverage offerings and a strong entertainment roster juice at Park theater.

As I mentioned earlier, sorry Spock remains soft Market wide and we're not assuming in material recovery in the near-term at are luxury properties in that segment namely at Bellagio MGM Grand at and Aria.

well, they

Had ones in 2019 said a very low base for two q and Beyond the first quarter remains a challenge in that Far East Soccer of business.

And finally while we are currently closed in McHale, we continue to believe in the long-term success of MGM China.

Before I turn it over to Q&A. I think it's important to quickly reiterate our strategic goals for MGM Resorts.

MGM Resorts is advancing its strategy of becoming an asset-light operator of market-leading properties across the United States as a result. We will be better positioned to recycle capital from the more mature markets to high-growth. Hi returning opportunities such as Sports in Japan.

By executing our strategy we will continue to leverage our brand and operating expertise as well as our investment in technology to enhance the guest experience.

Main diligent about maintaining efficiencies in a streamlined business with re-ignited focus and discipline on costs.

Continue to grow MGM China's market share in Macau as we remain confident in our long-term prospects there.

Continue to reduce our ownership stake in MGP in the most efficient manner and ultimately D consolidate.

We will remain committed in our free cash flow per share growth and very deliberate and thoughtful in our approach to Capital allocation to maintain a fortified balance sheet with our targeted domestic net financial leverage, excluding MGP of approximately 1 times by year end 2028 on Capital to shareholders, especially as we continue to evaluate paths to maximize the value of our 50% stake in city centre the real estate of MGM Springfield, and our ownership stake in MGP.

finally

We are in the prime position to capitalize on our two key long-term growth opportunities Japan and sports which we believe will create meaningful long-term value for MGM Resorts. We made a substantial investment in time and effort in Japan and we believe the MJ Menorah LED Consortium Remains the front-runner to win the license in Osaka this summer.

We've made significant progress with our sports betting business which will support long-term growth for online and bricks-and-mortar business.

Looking ahead or path is clear, and we remain focused on monetizing. Our remaining owned real estate assets executing in our MGM twenty-twenty plan and transforming the way we operate to position MGM Resorts for future growth and long-term value-creation with that. I'll now turn it over for Q&A. Thank you. We will now begin the question-and-answer session to ask a question. You may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two you please ask you limit yourself to one question and one follow-up. If you need further questions, you may re-enter the question Queue at this time. We will pause momentarily to assemble our roster.

And the first question will come from joh Graf with JPMorgan, please go ahead. Hello everybody. Hi Jim. I have a two buckets of questions about one relates to to your new gym. And then the second question relates to your comments on Las Vegas on on the first bucket of related questions on on you Jim. Will you be staying on the board of of MGM or MGP after a successor is Anointed and my second question related to that? Is she my perception is that your sort of the the point person or the face person for in Japan, I guess who who is carrying the torch in addition to you in Japan for Osaka off and then my third related question is do you anticipate any or should we anticipate any other executive or property Personnel changes either now or in the medium-term as a result of

I'll take those three first. I think it's important to kind of reset why I'm doing this and why I'm doing it now with um,

I really feel after twelve years, especially after the last couple of years. We've really changed the dynamic of this company. We've created an incredible team of leaders portfolio property president's property presidents had heads of centers of excellence and I think companies honestly never been a better position than it is right now and when I thought through you know how I could best serve MGM going forward. I thought it was pretty clear that a leader should help lead a company into the next decade or two. And so I wanted to make sure the board had the time which it will use promptly to do a robust search and find my successor and I'll help in any way I can in that regard.

I do that with the car.

Is that we have such a great team in place to my left. I look at Bill hornbuckle and summer right Corey Sanders out of his on a plane flying back here. We have such great talent off that I depend upon and Trust to continue to run this company going forward and I don't want to get out ahead of the board's process. They've developed a compact go higher a search firm and they're going to go out and find the best possible candidate internally externally or otherwise and until that time. I will remain in all my posts chairman of MGM Resorts MGP MGM China, but that's not my immediate focus at this point in time as it relates to Japan. It's very likely in May. I will be leading a group of people including bill off.

to my left

To speak to the people of Osaka as the chairman and CEO of MGM Resorts about why MGM and oryx is the preferred partner Wi-Fi MGM and oryx would be the operator that would put Osaka in safe hands why MGM Resorts and oryx are the most responsible most compliant most dynamic company and I am absolutely sure I'm going to be involved in the Japan project.

In fact, I'll probably be even more involved in the Japan project as time goes by and as it relates to the team here, we have a seasoned suspected team that I intend to work with. I know the company values and will continue to be here as we seamlessly transition the company into the Next Generation. So I I hope I answered all three of those.

That was great.

Thank you and then switching over to just just performance in Las Vegas looking back at the Ford obviously Bellagio the Grand and Mandalay Bay, you know, those are the ones I guess in that order wage back or exposure. Was there anything else at those three properties or at the higher price point segments that's causing their performance to be markedly different than everything else on the Las Vegas Port Folio. Is there anything related to MGM twenty-twenty transition or distraction that could have an impact on operating expenses that perhaps we didn't anticipate this is Corey to the contrary. They had a really good strong fourth-quarter last year from that far east segment in all of the ibadah shortfalls from those properties are mainly from Far East in particular MGM actually had a a record fourth-quarter a t r a number. So we're tracking down.

20/20 results at all

Reduce those properties are probably getting a little bit more benefit the shortfall from that far as business was the main factor.

Great, that's all for me. Thank you guys. Thank you. Next question will be from Steven Grambling with Goldman Sachs.

Thanks to Quick follow-up to just want to make sure I heard correctly to the last set of questions on your decision gym, I guess first just to confirm so you'll are you going to be staying on the board of MGP? And then secondarily you mentioned finding the right successor or the best successor and clearly the business has changed significantly in the past two years and really over the past ten years. So how does that inform how the board thinks about the right background of a successor versus maybe ten years ago. Thanks.

Sure.

Billing I join the same month. I think Bill in 1998. Cory was already here. We had a whopping 1 and 1/2 properties. We had the Grand and Happy New York. I think we had about four thousand five thousand employees and a total and obviously a gaming Centric organization and we have been through the collective energy of so many men and women that have been here or still here created this Global entertainment company that is far more diverse than ever before. I think that in answer to the first question. I cannot get ahead. It will not get ahead of the board search committee met and process. I serve at the pleasure of the board. I've said that I will stay on in whatever capacity I am the chairman of all those companies you suck.

and as I am

The CEO but it's hard to say what will happen after that. But I do know is that the companies are better position now than they have ever met before not only MGM Resorts but MGP in terms of the characteristics of a new CEO again that will process that the board and the search committee a lot of management here. We'll have some involvement in but I think you're on the right track in the sense that we are very Diversified Global entertainment company that expects to be able to evolve into a Global Experience digital Entertainment Sports company and be able to leverage what we've learned about running these large Resorts wage.

And what we're learning.

About the digital experience which we believe is vastly under if not at all valued in the current Securities of MGM. And so we're devoting a tremendous amount of effort and time to our sports and entertainment initiatives. It's certainly dragging down our p&l right now, but we are playing seeds which we believe will yield tremendous growth in the future. I'm sure the board and the board members and the search committee will be looking at what else is going to look like five years from now when they're evaluating the kind of leader that MGM Resorts should have and that really is why this is so rewarding at time for me that we've taken the company to where we are today.

Our strategic plan as well known to us internally where the right men and women in place are real estate strategy is well-defined and obviously has been more successful than anyone imagined. We've set the blueprint on how to continue to go down that path and now it's time for the board to off work with board members a search committee and stakeholders to find the right person that will take the company to ever Greater Heights than even we are today.

So there's a that that's a good segue to a follow-up question just on sports betting and as we look at the initial results of not only sports betting but I gaming and New Jersey. Can you talk about your initial earnings in terms of the JV how it frames the expectations for that longer-term and you mentioned some Investments or spending ahead of growth. Now, are you at a point where that should start to moderate or you still an investment load? Thanks Steven. Hi. This is Bill hornbuckle. Let me grab that one. Obviously, you can tell we're still very bullish. We feel a little underappreciated giving a happened in the marketplace and some of the statistics are compelling and growing we did over a hundred million last year and net Gaming revenue are active player growth is up over 126% since June interestingly. We've taken a unique position because of our asset based here in Las Vegas in the experience. We can offer during Superbowl by way of example eight of the month.

10 bets in America

With r or MGM Resorts. We are in four states quickly to be an eight by year-end. We have access into sixteen and we have a view on six more that we hope the government Affairs to open up led by Massachusetts candidly our adventure with r or went off to a slow start in New Jersey. It's to Mega companies trying to put themselves together we've effectively done that. We now have a hundred and fifty men and women working in New Jersey every day to push this forward and I think we're in a much better place than we were a year ago. I think you know, this Michigan is just passed. We hope to dominate and frankly we should there we've got a huge retail presence. It accepts online Gaming and casino off as well, which we think it would be neat opportunity. We have done in the executor to deal with Buffalo Wild Wings and I think about Michigan alone of the 1685 stores. They have twenty-seven of birth.

in Michigan

We've got Yahoo! Sports behind us. It's now just unwinding and and launching they got sixty million Sports viewers and seven million American fantasy alone in in Las Vegas. Literally next week. We launched bed MGM. We haven't even launched a platform here yet. And so Kia has a presence in an overview around that MGM and both both on an app and as well as a branding exercise throughout all of our Sports books takes play over the next three months and so we're extremely aggressive look order of magnitude while heavy it's not heavy Capital this whole thing costs. Both Partners a hundred million. It will be a lot. It's about two million a state. If we invest over the next couple of years Thirty million each that's probably realistic but we had hoped by 2023 pushing into twenty twenty-five to go in the prophet and the more you've all looked at the analysts your own projections if it's a table

billion dollar market, which

Just short in some people's examples and we own 15% of it. It's a billion five you can do the margins on that. It's a real business and it's a real business before we could take advantage of what brings us here in Las Vegas. And what's we've seen in Mississippi and to some degree now at Borgata so extremely bullish on the whole thing.

Thanks so much. I'll jump back to make you the next question is from Felicia Hendrix with Barclays, please go ahead.

Hi, thanks so much. I was wondering if we could just return to the comments Jim you had on the Strip ebitda. Margin. You said it would have been up one point five percentage points year-over-year if it wasn't a circus the baccarat situation and the insurance proceeds, but I'm just wondering if you could help us understand how much baccarat affected the flow through on the margins in the quarter. Just the Mist on the ebitda margin side was considerable even hold adjusted. So I'm trying to understand that better, especially given the expectation for baccarat to stay week and along those lines. I was just wondering if there was anything you guys are doing on the car side to mitigate the lower back or at the man that you're expecting. I'll take part of it. Maybe it will all three of us have a different off one one good indicator is take a look at the mid-market properties and there you'll see where the flow through Works margin Improvement a couple of real wage.

strong quarters there and the margins on Far East in general

So high that it has an outsized impact on margin and that's what happened in the nutshell at MGM re and off the the the underpinnings of those three properties outside of that segment, which is significant in the fourth quarter for them were all positive. We typically do our most of our business in in that field in December literally last couple of weeks of December. So we had projected we knew we had to talk comp year-over-year, but we had a very poor December at those properties which had the impact on the margin and and so I mean, I think that's one answer to it or do you have that would Felicia about of that ebitda Miss? I would say wholly-owned no.

Two million of it was a hold adjusted area also had a pretty big piece. The rest is volume and we had a pretty strong quarter of the year before from a volume perspective as we identify the last quarter when you look at that business, it's Jim is mentioned. It's really the premium Far East customer. The margins on that is pretty significant. So now the base goes down to a pretty low birth as we mentioned earlier about 2% of ibadah. So we shouldn't have that headwind of trying to offset that hundred million dollars of profit at a high fairly. Let's say sixty 65% margin and so the comparison becomes much easier on on the cost side Bill. Do you want to cover things we're doing there?

Like overall, I think mostly through 2020. You've all heard of the labor savings rough over a hundred million. We remained there the luxury properties of leaned into that heavily. We've got several initiatives ongoing with purchasing and many of the supplies that we've secured and so we are you know, all of that is clicking in to play. It just got buried in this party story and and we're looking our International offices are international Staffing to make sure that they're that matches the volumes. Yeah, I guess the bottom line on that is we lost a hundred million in profit last year. We only make thirty five million. That's where we're going up against this year, you know thirty-five million in profit last year and what we were trying to help you with is dead. And if you if you just getting back to your question, um, just out Circus Circus, obviously. Yeah, and that one time or of the insurance proceeds where you've gotten the year ago.

And the baccarat impact which is what bill and Curry.

Talking about that hold and drop our margins would have been up a hundred fifty basis points. And the final thing I would add on the non-game. We looked at our non-gaming margin Improvement across all properties in Las Vegas and we're up over one and 1.2% So we're seeing the margin flow through in all the other areas. So that's that's what gives us some confidence.

Okay, and it sounds like you've now like rebassed so you're so the tough cops are kind of behind and so when we think about our modeling going forward we have that lower base. Yeah, there's going to be a long wait in the first quarter, right we talked about that but that's it. I mean that's not to the extent that we saw in the fourth quarter. Yeah, not to the extent of fourth-quarter, but then that's you know, it's it's it's Thursday it is where it is. Now it it will come back. We we've been in this business a while, but we're just not predicting any recovery in the Far East busy this year. Just we just can't we it's can't guess what that's going to be. Yeah that that's fair and Grant wake up Grant have a question on a rant. I know it was Jim mentioned this a bit in his prepared remarks, but it was just kind of a quick sentence. Can you just talk to us a bit about what you were seeing, you know pre Corona and you know, I believe yep.

You know, there's some market share gains and stuff like that. So, can you just tell us, you know before everything kind of close down what you were seeing?

Sure. Thank Phylicia and I was like actually this is probably one of them the greatest tragedy we were seeing some really positive that Jim said he was off a 2.5 for the period immediately into Chinese New Year. And with the Mansion online. We was way way out of we will actually not confirming any mention mention that because you just had a big list size. We were really in a very good place all of the things we were looking at doing was really coming together, but I guess that's what I'm saying businesses about it about how you handle the adversity and now we just we set ourselves and we just want to move forward but but by and large the ending was moving in that direction, we're still tracking positively on dying, uh share guys particularly in the premium into the market.

Okay. Thank you very much.

Go ahead.

Hello, everyone. And first gym, I just have to say thank you for all of the service that you've you've given to your to your company and they'll still be there for service for all our questions. But you know, it's it's been a a a great run. Thank you. Thank you, very let's see. The first question I had is dead related to

the weaker Asia bakra. I'm just trying to understand why it was such a surprise is it was it due to competitive pressures there was there was some some thinking I'm going into the end of the fourth quarter that Jesus visit might have might have pushed pushed business to Las Vegas. What are your what are your hosts telling you about the source of the of the volume weakness and did some of it come back in the early part of January. So I am very this is Bill. Let me take a first crack at that. Look as alluded to last year. We had an amazing event in the fourth quarter with Tiger Woods vs Mickelson that netted out subjective amount of ebitda. So competitive was difficult put that into the mix. The second thing is is, you know all year our ability to get liquidity in and out of MacArthur's

Next question comes from Harry Curtis with instanet, please go.

In China has been hampered.

We continue to look at ways to do that. Righteously. We have been disproportionately hurt. I would suggest to you that our marketing invite is such we relied heavily on junkets and large-scale customers, you know, our market share was well in the mid forties for a considerable number of years based on we probably have more than three million customers and up than most and I know we had more million dollars in customers and up in most and and those are the individuals most impacted by these some of these liquidity issues, you know, the interesting part of year going into Chinese New Year. Well, it wasn't last year in clearly anything like 2018. We still had a reasonable show up. We had a great event. We had a decent concert the weekends following with about 6,000 folks in it and it wasn't a horrific event by any stretch given the circumstance and what had happened globally. So we remain optimistic that if we can log

Through obviously and we will get through WhatsApp.

Happening Now in China and in Macau and we understand what the what can be accomplished with liquidity and getting those customers back to Las Vegas. The appetites them are desire to go after him and the network we've created is there and we'll continue to succeed.

So as a follow-up, do you think that Beijing is put in a road blocks in place that is impacted customer volumes.

Well, I I mean as you know in McHale, they've become very stringent on utilizing the casinos and junket operatives for accessing liquidity in and out of this Market or any other market now, I don't want to I won't be determine where that directive came from or if it was her own directive, but that is fact and so I'll leave it at that. Okay. I just had one other quick one for Grant. You know, you've you've got a pretty good crystal ball Grant and just I wanted to see if y'all had a and an opinion on what what do you think the markers will be that Beijing wants to see before they begin allowing customers back in to log back into my account.

How are you?

Take the critical point is is it's going to be the spread of the infection that the solid and complete focus is is about a vat containing and eliminating this Outbreak The McAuliffe has taken very effective in the decisive action and indicators we're giving is that the the the single measure of of whether the when the first with the casinos will be reopened and that's hopefully the ability for us to be put on board is going to be about the containment of the of the virus. I think it's as simple as that.

So it's not a question of it. Just peeking it needs to be eradicated.

Well, I'm not a virologist. I I think it's just a question when they the experts are comfortable that that the the cycle of the the virus spread has been contained in. In fact, they are have it under control. It may also mean that that the IVF program is not opened up as a single single step it may it may happen originally month. We just City working with the government that make sure that we take care of ourselves and take care of everyone else and that we're ready. You know, I'm a cow isn't a very fortunate position because of that decisive action from the government job with heads to infection, but we haven't had any since the action taken by the chief executive and that we're now up to eight nearly ten days without any further any further infection. So that's the critical Thursday. We need to make sure that my car was safe and then we obviously continue to work and support the initiatives in China's and make sure we can contain this within China.

Right, well fingers crossed and thanks everyone. Thank you.

Question will be from Shawn Kelly with Bank of America, please go ahead. Thank you for taking my question. Maybe just one big picture strategic one and then maybe a follow-up on them the whole baccarat. Peace. But on the Strategic question Jim in some of the prepared remarks, you know, you did mention some of the future as you laid out some of the strategy. I think you laid out some of the the future roadmap here for the stake in MGP. Could you help us like or maybe elaborate a little bit of that? I believe you talked about both kind of a potential further reduction and steak and then ultimately changes in life, you know in governance or your consolidation there. But but can you give us a little bit more in either timing or you know, the the company's willingness to maybe change some of it, you know, maybe unilaterally change or the dual-class stock or some of the mechanisms that could trigger a deconsolidation because we do get a lot of questions and we're sort of in process through all the the big sort of, you know, asset-light movement here and and Thursday.

This will be helpful for investors.

and

Certainly, the stock has done. Well, since we developed the Opry a few years ago, our economic ownership in MGP will be about 55% after the one point four billion dollar unit Redemption. And remember that's down from our original 73% stake and Monday. We are absolutely committed to ultimately owning far less of em on a going forward basis and we are committed to D consolidate MGP. We've always said that continues to have the right path for with the right management team and it will acquire quality assets outside of MGM.

the next

And it will access the capital markets to do so and and that is a path to confer the reduce our stake in MGP.

Sure. Well first off we are at the largest stakeholder of MGP its biggest supporters.

The unit redemptions for cash provide another path for us to reduce our steak and will continue to look to monetize a portion of our Equity stake. As long as it is done in a manner that maximizes the benefits to both companies because

I have to repeat it's important to note that MGM is still an important stakeholder there, you know that we have an agreement with MGP to redeem the one point four billion of cash at our election.

When that's exercised in full, it's still leaves us with Zone around five billion dollars worth of units.

Those units have varying tax base. He's and but a sizable subset of the remaining units have a higher basis and not be sold in taxable transactions with manageable tax leakage. We're not going to get into the details of it specifically, but I can say with great certainty that it is our goal to continue to help MGP thrive.

Help it grow.

A diverse quality portfolio of assets make sure it does so with a strong balance sheet help it find part number as it has recently had found with Blackstone that can show for future growth opportunities for MGP and inject more Capital into MGP and find a way forward that MGP very deliberately becomes that independent corporate govern number one type of company that MGM Resorts is we're proud of where we stand with is s at MGM Resorts. We take corporate governance seriously independents.

We take our commitment to shareholders seriously and we have nothing but the clear direction for MGP to do. So in this delay of fashion, and I think that we've proven that point of finding transactions that makes sense for MGP finding partners that could provide significant incremental value to MGP making sure that MGP stakeholders all of the stakeholders are treated fairly often ensuring that MGP has a strong balance sheet to provide a platform to grow in the future and it is our goal to make sure the the GP the company that we believe to be the premium by far Best in Class triple net and it's space will continue to be able to thrive.

Because it does have the best assets in that industry and because it has the best tenant of any of the triple Nets a tenant in MGM Resorts. That is the only getting stronger every single day from its own balance sheet perspective. And so I think history in this case off is a really good Guide to the Future and we've made progress. We're mid head of our plan. We're deliberate on this and we're going to continue to move forward off so that MGP a continue to grow grow independently and be the best possible triple-net it could be

Thank you for that. And then maybe as the as the follow-up, you know, we talked plenty about the the baccarat business but I think throughout some of the commentary you guys also called out some some specific investment in in sports and entertainment probably specific on the sports side, as some things are getting up and running. Could you perhaps either help us kind of call out or quantify either forgot what level of run rate were those numbers in the fourth quarter that we saw and probably much more importantly for folks what you know, what kind of investment level are we looking at as we move forward to to kind of 2020 or maybe in a 2021 and and is that running through any of the divisional level piano or is this all just stuff that that were either seeing in corporate or or somehow kind of Ellensburg, you know? Yeah Sean, it's Corey. It's probably a little bit north of ten million for the quarter. Most of it's running through management and other all of its running through management and another either dead.

through the unconsolidated

Joint venture with r or or Investments were making with regards to our sponsorships and team team efforts there.

Great Cory any thoughts on on sort of next year budget of that kind of similar ten million type number. Is that a good quarterly run rate? I think Bill gave a number on what we thought the investment banking or investment would be in sports next year and I think that's a good number. Thank you very much.

The next question will be from Thomas Allen of Morgan Stanley.

Congrats to your mom what has been a long and successful career at MGM and no you're not going anywhere soon, but just want to say thank you for your help over the years. Thank you. Thank you very much. So, look, there are a lot of moving Parts in Vegas. So I just want to see if you could kind of level set expectations a little bit. At least for the first quarter given you do have some visibility into wage, you know, the first two months or the first month and half of the of the quarter. So first quarter consensus for Vegas even is about 440 million bucks last year did for a million bucks. Can you just kind of give us a sense of of expectations?

Well, I'll give you.

so

You know some macros around what we see if that helps and we we've been doing quite a bit of analysis on this what we see first is strong population growth, which is obviously significant for the local Resorts out here, but also we same time highs and Convention and meeting business.

We see the prospect for strong macaron business.

We see events this year. We did not have last year. It's if anyone saw Nashville last year a hundred thousand in terms of the NFL. Imagine what Las Vegas can do.

of course contact with this quarter

And the Raiders everything leading up to the Raiders?

think of

about the Las Vegas Convention Center expansion

We're really excited excited about the sphere. I can't wait to to go to that.

I think it's important to know that our our slot went last year was actually up 4% for the year are non Bak table games.

We're actually flattish.

and

we're going to have a lot more impact on twenty-twenty in the first quarter than we did in the fourth quarter. And so as that's ramping up you should model in the fact that we're hitting our stride their conventions are important to the whole city. They're important to us. It'll be important to Mandalay Bay, which is returning back to its really that's full recovery. It's it's kind of business as usual at Mandalay. We had very low attrition levels there and 2019 West we've had a few years and that's starting to really build momentum and there'll be a lot more groups and Las Vegas starting in the first quarter. We had last year not just because of the city wides, but with win and Caesars expanding their spaces that's good news for the town. It's bringing more people to town.

We're actually seeing some of that.

And finally that Leisure demand that we talked about I know those are short booking windows, but they are lustered of of of of Life real-time demand and there have been very positive. And of course the entertainment calendars is terrific. So, you know, we all getting invites to to cash load numbers and guidance and we've talked why that that we think this is a better approach toward communicating with investors. We have a pretty well a very broad view of what's Happening Here in Las Vegas and we like what we see in all of these metrics save for that far east baccarat business, but the domestic box business the domestic table business slop business the non-gaming business dead.

combined with

Some real good Trends in the rooms here in town, which of course creates nice flow through for everybody and will be Amplified at least for us this year because of really hitting our stride on our twenty-twenty initiatives, which is ramping up fairly rapidly gives you a sense why we feel that that's significant pace of cash flows here in the first quarter that are superior to what we saw in the fourth quarter and Thomas just looking at the first quarter. The other thing that I think of we didn't cover Park is beginning to ramp and we like the ramp that we're seeing there, you know, so between Park, you know last year, we hardly had any 2020 benefit wage and then you take the, you know, our benefit you you we should expect to see from q1 and in a strong convention quarter, I think

Even though we will not be giving guidance.

You feel pretty good about the first quarter.

I think I think it's far. You guys spend a long time trying to get people to shift that Focus away from that part growth and he put up 6% of our growth this quarter and had really strong reporter at the past few quarters wage. I assume that you continue to be strong that's not impacted by the Far East play and coronavirus, you know isn't having an impact on on kind of the the the the the quote is is that is that a fair comment and just talk about convention mix for 20 22 would be helpful. Thank you.

Yeah, I mean, you know, we're going to stand by what we're talking about. We see these strong macro-trends. It was a great rep park quarters, no doubt about it. And I think what we've laid up here is gives you the setup for nice growth, but beyond that we're not going to get too into it minimal impact on Corona. Yeah.

The last question, please. And that question will come from Carlo santarelli with Deutsche Bank, please go ahead. Hey guys and congratulations on your career. Just if I could offer you guys look at the Las Vegas landscape today and and think about the position that the company is in from a balance sheet perspective acknowledging that the buyback that you're doing in the near-term here as well as the incremental 1.75 billion that will remain outstanding all coupled with kind of your your One X domestic wage. I believe that's an ebitda number of Leverage correct after rent. How does m&a kind of play into that, you know given the fact that there could potentially be some assets on the Strip that might you know Fitness club with the portfolio. Yeah. We're we're really not focused on em, and we like what we own we we approached our birth.

folio in a way that

You know particularly pruning it as we have over the last several years. We like these assets. I don't Envision us, you know being very focused on a going forward. I do believe that what we are looking at. Where can we deploy capital in high Roi ways. You think it's Japan? We think that's Sports, you know, if we can help motivate some change in Yonkers and provide more of a gaming experience there that certainly wage was part of the Strategic basis that we acquired that asset. But that really is our Focus right now is working toward reducing our assets off recycling that Capital getting that balance sheet. Absolutely. Well, it's it's the best it's been since I've been at the company right now and getting better and birth.

getting ourselves, so

Opposition for whatever the world will bring in the future and Recycling and returning that Capital to the shareholders 15% increase in the dividend today should send a message as well as the return on Capital and form of share repurchase and it really is our Focus delivering on the Strategic plan of wage 2020 making sure that this operating model which is a young model. We have men and women that are only recently been putting these strong leadership positions making sure that they have the ability to thrive finishing the execution of this real estate strategy and really devoting and I'm going to spend an awful lot of my time on sports and entertainment and on Japan which I believe I could help the company best Focus off.

those areas to create

Value for the future. So with that I want to thank everyone first for calling in and just highlight a couple of points before we end.

We are focused on the impacts of the coronavirus and I think Grant said it. Well, we're absolutely prioritizing the safety of our customers and are employed but we feel that that situation will be managed in the company is well-positioned given our diversification as a global company and our balance sheet thousand.

We've made a lot of meaningful progress with our real estate transactions resulting in the eight point two billion dollars of net cash proceeds and we're using that dramatically reduce leverage to invest in places. I just mentioned in Japan and in sports.

We're firmly on track to continue to announce additional real estate transactions this year. Our domestic business is very solid.

And we are very focused on these cost reductions which we know will further support growth Andy Bedard and free cash flow per share.

I want to thank you all for your support. I want to make it very clear. I'm not leaving MGM anytime soon. And so I know for sure that I'll be on the next call you and I look forward to talking with you all between now and then and with that have a very nice day. Thank you. Thank you, sir. Conference has now concluded a thank you for attending today's presentation. You may now disconnect.

Thursday