Q1 2020 Earnings Call

[music].

Joining the call when the company today, our Bill Hornbuckle acting Chief Executive Officer, President, Corey Sanders, Treasurer, and Chief Financial Officer, Grant Bowie, CEO and executive director of MGM, China Holdings, when it's Ted and Aaron Fischer Chief strategy Officer.

It's been Sirona 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 conference over to Aaron Fisher. Please go ahead [noise].

Good afternoon, and welcome to the MGM resorts International first quarter 2020 earnings call.

This call is being broadcast live on the Internet at investors taught MGM resorts Dot Com and we've also finished a press release on form 8-K to the FCC.

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 materially differ from these forward looking statements is contained in todays press release in our filings with the FCC.

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'll also discuss non-GAAP financial measures in talking about outperformance.

You can find a reconciliation of GAAP financial measures in a press release and Investor presentation, which are available on our website.

Finally, this presentation is being recorded.

I'll now turn it over to Bill Hornbuckle.

Thank you earn and good afternoon, everyone.

This is my first earnings call is acting CEO of MGM resorts, but as most of you know I've been with the company for over 22 years in the industry for over 40, I've seen many difficult periods in that time, including the original MGM fire 911, the global financial crisis, One October but.

But the cobot 19 pandemic is truly unprecedented.

I'm proud of the discipline and focus that as defined our response to the crisis and I'm confident we're taking the necessary actions petition MGM resorts for sustainable recovery.

We usually start these calls with results, but since many of you have already seen our first quarter numbers, we disclose last week I'd like to address the impacts of cobot 19 on our business our employees and our communities and then I'll walk you through the quarter and our longer term outlook before I do we'd like to acknowledge the stewardship of our board of directors and the partnership of our chairman.

Paul sell them, a province equity partners I'm grateful for their council as we manage through the current environment Paul's background provides valuable expertise on capital allocations, we work together to enhance the company's overall return on investment.

Cobot 19 pandemic represents a tremendous challenge to the global economy to society as a whole and of course to a company like ours, which exist to offer guess world class Entertainment and hospitality experiences.

On an individual level suffering imposed by cobot 19 has been enormous our hearts go to all of those should loss family members friends and colleagues. We have also lost 11 of our own at MGM.

We're all extremely grateful for the medical personnel and first respond is responders, who are serving on the front line of this pandemic and also like to recognize the Mtwom employees are reporting to work every day and are essential to keeping our properties safe and secure.

As you all know in mid March we closed all of our U.S. properties at that time, we began to take decisive measures to protect our business by maximizing liquidity and minimizing our cash outflows in the past few weeks, we've cut our dividend reduced or deferred nonessential spending amended our credit agreement and raised 750 million and new.

Bonds, most difficult step however, with the furlough nearly 63000 employees. This was painful and it's a hard decision to make but we are actively preparing for the day when can welcome them back.

As a result of these actions and our real estate transactions MGM has 4.6 billion of cash on its balance sheet, excluding MGM, China and MGP, an estimate the master cash outflow of approximately 270 million per month, while we are closed.

During this international Health crisis, we have focused on the safety of our employees and guests and in strengthening the committees and which we operate this has been and continues to be our top priority.

As such we have committed to continue providing health benefits to our impacted employees and while difficult. This experience is again confirmed the strength of our values and our culture. The company our employees and our partners collectively have raised 12.8 million for the employee emergency grant funds to provide relief for employees an immediate fair.

Families in need we've also given over 1 million in food and products to local communities provided logistics for 250000 coded 19 test in Nevada and donated over 1 million units of ERP MGM. China has also made significant efforts to supporting the region due the crisis, including donating 20 million mop or approximately two and.

Manny West dollars to the who day province, running other means of support PE or otherwise so its local community.

Although cobot 19 presents unique challenges, we are extremely well positioned culturally financially and operationally to handle this crisis because of the strength and the actions. We are now taking where point posed poised excuse me to regain momentum as soon as the danger to public health lifts and we can begin store restored.

Normal operations.

Im going to briefly walk you through some of the key strategic questions that will play a major role and our performance going forward right. Now we are intensely focused on but a few how and when do we reopened and what does it mean together safely.

While we have always put health and safety at the forefront of all that we do they are new imperatives consumer confidence is key to economic recovery and thoughtful reopening strategies are vital to building public trust. This is a responsibility that we take extremely seriously.

So let me briefly outline our thinking about the question of how we reopened we're working through our safety plan right now and expect to make this public in the next two weeks, we know there a number of key areas that are essential to protect the public and build confidence in our ability to put people back to work and safely welcome guests.

We are collaborating with public health officials expert in epidemiology, and bio safety and both state and federal governments to come up with a set of protocols that will help deliver a secure environment. These will include measures like physical distancing stringent sanitation and funding as protocols the provisions of pp crowd management and more.

We're also developing digital innovations for touchless interactions across the guest experience to improve protection.

And create greater overall confidence and the hospitality environment and their overall experience will continue to be driven by data by science and by public health guidelines as we evaluate and evolve our operating practices and guest interactions.

This brings us to the second question, when we would be able to reopen our domestic properties.

Ultimately the precise reopening dates depend on decisions by elected officials insulting with public health authorities and Mgms case that means the governors in Nevada, New Jersey, Maryland, Michigan, Massachusetts, Mississippi.

Be Ohio, and New York.

Through the various public health conditions in these states were preparing to open properties in phases.

Given the stabilization of cases in Asia, and recent comments by the Macaos Chief Executive we anticipate this market may show meaningful recovery early this summer in the us certain states such as Mississippi will likely opened sooner than than more heavily impacted states and we anticipate that regional drive markets. Obviously, we were down faster than fly and destinations.

Once Las Vegas casinos are allowed to open will have made decisions about prop property openings based on consumer demand and the economics of individual properties will also balances needs of our employees, our local regulators and other key stakeholders.

In all cases, we will open in a way that protects the health and safety of our guests and our employees and again I must stress that is our.

Highest priority.

Now, let's spend a few minutes looking back over our Q1 results.

Our net income was 807 million versus 31 million in the prior period due to 1.5 billion pre tax gain related to the MGM Grand at Mandalay Bay transactions as we flipped previously announced our first two months or even stronger than our internal projections Las Vegas strip adjusted property EBITDA was up 27% and our region.

Operations adjusted property EBITDA was up 26% bolt on a same store basis.

These strong results were driven by robust organic growth and phase one of MGM 2020, working and its full force.

As expected performance deteriorate dramatically in March we were required to close all of our domestic properties. As a result, our Q1 consolidated adjusted EBITDA was down 61% to 295 million Las Vegas down 34, and our regional down 28, and MGM, China recording an EBITDA loss of 22 million.

Looking ahead, our strategic planning is being driven by three overriding goals.

To simplify our operating model maintain a commitment to strict capital discipline and bring an intense focus on executing our current initiatives such as MGM 2020, Let me touch on a few of these areas.

We are significantly reducing our operating expenses by cutting expenses across all properties and corporate departments. This is crucial to achieving long term recovery, we moved quickly to reduce operating costs through furloughs and freezing positions as well as eliminating non essential expenditures. We also initiated program to allow senior executives and directors to receive.

2020 compensation in the form of restricted stock units and while operating efficiently and effectively with an eye towards improving margins has been a core philosophy. We are taking more aggressive actions to further adjust our operating model and response to the current environment. We believe this is a very opportunistic mystic moment in time to operate and to take a look at all things.

We've been doing historically.

We're carefully also managing our cash to protect the Companys financial position, we have deferred a reduced our expected 2020 domestic capital expenditures by at least 50% or approximately 200 million, we've announced that the board reduced our dividend to one cents per share annually, resulting in quarterly savings of approximately 73 million and importantly.

We will continue to meet our rental obligations to MGP and Blackstone.

We also have strengthened our liquidity position. In addition to the 4.6 billion of cash on our domestic balance sheet today kind of adjusted for the bond offering MGP has also agreed to redeem 1.4 billion of our LP units in cash should we elect to have them redeemed we have additionally, liquid liquidity levers, including our remaining stake in EMG.

Our 50% stake in city center, and the ROFO assets MGM, China. We also have a 50 per 6% stake and MGM, China, although to be clear, we want to continue to and we continue to believe in the future Macau and look forward to continue invest in our presence there we have no debt maturing prior to 2022.

And just yesterday closed on our credit agreement and denim, providing additional flexibility on our financial covenants.

MGM, China is also well positioned with over 800 million of liquidity and earlier. This month. It further amended its credit agreement to provide for additional financial Covenant relief as well MGP is also down drawn down on its revolver for additional liquidity.

We're also continuing to advance our long term strategic initiatives, we will drive progress on MGM 2020 by continuing to reduce expenses and preserve capital projects that allow for higher margins and returns once our business fully recovers, we will continue to execute on our real estate strategy over time, and we'll continue to invest in growth opportunities such as Japan.

Dan Macau sports betting and online gaming and in particular I want to emphasize we remain fully committed to our partnership with works.

To develop a world class integrated resort resort in Osaka.

We spend but a moment on Macau I.

I was recently elected to be chairman of MGM, China, alongside Pansy Ho is co chair.

I am personally just as excited today about Macau as I was 20 years ago when I first visited.

We believe the market rebound rapidly with the visa scheme and other restrictions once other restrictions or loosened mgms. China's our properties are currently in current cash operating expenses of approximately 1.5 main per day, which is an excessive amounts being earned obviously by those properties, where while we are currently focused on managing the current situation and driving efficient.

These when our current footprint, we will continue to invest in our properties and expand our offerings, especially our non gaming.

With more suites and more room product.

I look forward to working with the new Chief Executive in Macau, and his administration and to support the strategies for further development in Macau.

In summary, we remain confident in the long term outlook of our business with a strong started the year, which was encouraging and points in excess of a number of initiatives such as MGM 2020 that we had recently implemented in Las Vegas, our margins were back over 30%, we have leading assets and most of our markets, which will further support a healthy recovery.

To our business, we will continue to simplify the way, we operate and refocus resources into area.

Areas to create the most value for our shareholders.

On a more personal note to wrap up as someone with four decades of experience in this industry I'm honored for the opportunity to lead a great company like MGM resorts.

The efforts of outlined today speak to mind tend to being clear and focused a being disciplined in all things and into striving to be transparent in my leadership of this organization hopefully that will become the hallmarks of what I want to stand for and what this company stands for going forward.

While there is no proven playbook for the current challenges we face I have faith in our deep operating experience, our expertise and safely managing public gatherings. The strength of our long term plan and our tenure in this business and more than that I have a tremendous amount of confidence that the men and women of MGM resorts and our partners around the world realize this choice.

Balance as they have on so many occasions before I look forward to the day soon we will say once again, let's entertained the world. Thank you and and with that I'll open up for questions.

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 speakerphone, please pick up transcept parsing the key.

Withdraw your question. Please press Star then too.

As a reminder, in all fairness, please limit yourself to one question and one follow up.

And our first question today will come from Joe Greff with JP Morgan. Please go ahead.

Good afternoon everybody.

Good afternoon, Bill I was going to start off mill with you and ask on specifically you look what you might be doing.

Differently.

Hey, Jim did in his tenure.

I believe that pretty eloquently so.

I will not take that as one of my two questions.

So starting with questionable line and.

No you talked about it it's premature to talk about the timing of when you can reopen.

Your domestic properties.

And so just maybe can you talk about how you think about how you will start to Steve.

Properties, particularly on off speakers shipment before moving on CNBC. You said, you will start with properties netted out on a higher price.

Excuse alber, nor would it be those properties have traditionally hosted a large percentage of international distributors, if the Las Vegas strip opens up for the summer.

How many properties by the end of this year realistically ultimately de anticipate to be open by the end as this year, how many by the middle of next year.

How much of your views will be in reaction to airline capacity coming back and how much of it is depended on.

[music].

Thank you Joe I appreciate backing off the first question and focused on a short and simple one.

So I go through this maybe in three buckets, and obviously Corey can and will chime in here.

Macau speaks for itself in grants on the phone to extent at the end of this you want to ask some additional questions, but we are hopeful that early this summer given all the indicators and things we see in China that that market will begin to open up our Guangdong province of note, which is critical to us.

Is feeling better although it goes back and forth as you know, but the order of magnitude of caseload, they're significantly down and we feel better about what's happening and we think there's some opportunity there in early summer the regional properties, obviously like I said in my prepared comments are going to be.

As all of these places R&D predicated on what the government says our covenants are saying as at least the baseline mandate and our regulators.

We do see Mississippi first obviously, we see places like Empire potentially off till later in the year time to be determined.

So the good news about our regionals is there drive markets with the exception of ball, which does have some fly capacity given the 800 keys, there and the programs that we Ron.

To your question Las Vegas, we have a view and don't know exactly when the Governor's been speaking almost daily now on one to open he like most governors is looking at a three phase process trying to open up small businesses things like golf courses et cetera, I understand what happens in those communities with the community in that respect.

Then go to the next pocket in some areas were in that next bucket, Nevada of note and in some areas potential like Maryland, we may be in the third bucket of activity.

But in there it's believed that gaming will open universally meaning all of gaming and southern Nevada, we'll have a chance to open the same time when it's deemed safe again, we just don't know, we're probably looking at two or three offerings. Initially obviously something the values that we tend to lean into New York, New York, because it's one of our simpler places.

To run it's 2000 rooms, we probably looking at the library with the other end I wanting to ensure I'm sure the competitive set down the streets going to open because they only have one in the context of went in sans. So I want to be in the high in business and then from there were talking about what other properties should open if any at that.

Point in time, and you know we'll go slow.

We'll be responsive and responsible well look to the economics of some of it most of these properties needs to be between 30, and 50% to generate any kind of cash that is meaningful a meeting not going backwards from being closed.

And so we're going to see on the market response, you didn't mention the airlines we were in a conversation last week with South West, It's president and remaining of it's it's leadership team, there's still bullish on Las Vegas. The interesting thing I think is the point to point carriers will come first obviously the hub guys the United.

See Americans that dealt us in the world have other challenges with hubs that may restrict some activity here, but southwest feels relatively bullish they won't start here first but I think over time, you'll see them focus on this market because as always in these circumstances Las Vegas presents a great deal of value.

I think you hit all the keep going still I mean, obviously safety as a key thing we want to avoid any spikes in numbers and things like that so what you cautiously in in general a lot of it will be demand driven just as a reminder, about 50% of their traffic coming into Las Vegas is from automobiles, yeah, and we do things there will be.

Some pent up demand.

The opportunity comes about will definitely open up properties to maximize our cash flow.

Grand anything to add on <unk>.

Grant.

Oh, I think bill I, just read you're right again.

Yeah Bill Thank you.

I guess the challenges is that it's about opening up as you've seen the critical point for US is it we expected to volumes of traffic will be significantly restricted when we see that is actually somewhat of a positive because <unk>. The premium market will come back. So that's that's obviously, where we have that strength and that's where we're looking to I think everybody.

He also heard that.

Hong Kong as extended their.

Teeny requirements for June 7th.

<unk> that within that time that they might be some adjustments with China and we're writing out just to get that information So where we're very positive. We're very comfortable that we are trying to manage as best we can my supporting me from our discussions with their customers demand that the opportunity for them to travel as the army think they're looking for.

Right that was my question Hugh Grant you answered. Thank you very much. Thanks.

Thank you.

Yeah. The next question comes from Carlos Santana really was tortured. Please go ahead.

Oh, thank you.

<unk>.

So.

You guys have spent.

Several several quarters here is actually kind of putting together.

Yeah framework of how to run the business for.

Whatnot you know one one of the question I had was as you know sit from that that perspective.

Holiday.

Helps your expense rationale and thinking along those lines how much does that help you in an environment like this where you're almost starting from a a very low baseline from.

The ability to bring those expenses back on.

Are kind of.

<unk> anyway.

I guess I'll kick it off and Cory.

Look I think it's been immensely valuable you know it if you recall, we actually started in 2016 with whatever color Cory P.G.P.G.P., Obviously 2020, I became chief operating officer last March or something along that lines and so our ability to understand <unk>.

We had most every level whether it was corporate centres of excellence or the various properties regions.

Hi, we were operating what the things we're doing why we were doing I mean, what was really bringing value we have a very clear lens on and so now as we think about relaunching.

In a post cobin environment and the ramp it's going to take we have another lens into that in terms of how we're gonna structure. The organization I and we have some work to do there, but we believe when it's all said and done and where we turned back to a normal state we're going to be a much more efficient organization.

Focused on those things that are priority those things that were truly matter to driving the day to day customer experience in our business in all the places that we serve.

What I would have Carlo is M.G.M. 2020, really is less than a year old and as we stood up the Ah seal ease and and centralized components how that we've a ball sense. Then there's closing is allowed us to really rethink that and we think there's opportunities to become even more efficient. The other thing that M.G.M. 2020 give us the discipline on.

Is on our variable labor EM in staffing to business volume. So we've become very disciplined which is helping out tremendously in a time like this.

Right.

I could just one follow up.

No. It earlier, obviously, that's at $1.4 billion, that's kind of available there clearly.

<unk>.

<unk> so.

Paradigm size or yeah.

<unk>.

Liquidity.

Eat decision to kind of pull the string on not on that 1.4 million more dependent on how to.

Six nine months down the road or which would be advantageous in the event that you started valuation about soccer or fairly reflects what.

Do it myself included thinking that's worth.

Carla Court I'll I'll I'll take that look I I think the based on the agreement we have with M.G.P., we really do have a long dated option. We as you mentioned I think we feel really good about our liquidity position and it does give us, especially you know well we did last week. It gives us the ability to not be in any big rush.

Well tranzact when we believe it's the right time to try in fact into right point and <unk> whatever it's the most efficient manner in it for us so.

And just as a reminder, you know M.G.P.S. a pretty important stock for us our <unk>, we have over $5 billion a value in M.G.P.

Understood Funky guys.

<unk>.

The next question comes from Stephen Grambling with Goldman back.

[noise], so <unk> I think in the opening remarks, you mentioned still being committed to Japan can you just provide an update on the milestones investors should be watching how the investment timing in size may have a ball and any color unexpected returns.

Sure what she Japan like most places in the World is being impacted by Cove at 19. It I think literally as early as today you may see a bay stick additional restrictions for up to another 30 days is what has been rumored to be discussed I think the impact to that is it will slow down although we are.

Definitively sure the R.P. process as it currently sits in Osaka and we are ready for this by the way we have an R.P. said mission that is do end of July our team is worked hard on this as you know where the loan standing applicant there and we would submit but I think what may happen is that the whole process gets push closer to the end of the year.

Which I think is appropriate and find by us in terms of its scale you see in terms of other opportunities in the in Japan. Yokohama is expressed sincere interest is now working its way through its own process in time to tell whether others actually join.

You know, we still see Asia as a huge build and there's a huge upside for the company and frankly for the industry. We're very bullish on <unk> in the long run and were absolutely bullish on Japan in the long run you're still zone 10 billion dollar investment and you know the <unk> the returns on that to be determined once we get through.

All the regs, but there significant and they would be significant to the company and its overall portfolio and how we balance our earnings as we look at everything that we have and so we remained bullish I think it will get delayed and we're ready if it does not easily I guess my my final point.

Yeah.

Great. Thanks to my follow up is related to Joe's earlier question you'd mentioned occupancy needing to be around I think it was 30 to 50 per cent degenerate meaningful cash flow given the model has typically been run with very high occupancy is on the strip what are the biggest bottlenecks that you can tackle to help alleviate crowds increase distance.

And maximize that cash when we talk about different parts of due to the property or the segments in business. Thanks, Oh, Yeah. There's there's inquiry I'll help me with this there there's a couple of different aspects to it obviously, you know getting air back and getting large group gatherings are critical to the ultimate and final recovery.

We do believe because of driving traffic, which particularly spikes in the summer.

That regionally, we will see a substantial amount of drive in I mean, there's obviously pent up demand you saw what happened in the beaches to California, when they open for a weekend I think they're going to close again, which is not what we want to do to be clear, but I think you'll see leisure demand I think you'll see drive traffic and it will push what happened from.

<unk> Casino has always been active our offer set that remains out there people are still booking into the balance of this year and into next already they're anxious they have pent up demand as well here and in the cow the want to come back and so irrespective of large scale events I think championship fight hosted with 15000.

People. The casino segment is anxious to come back group, obviously will be the last.

I would tell you this on group as a way to think about it.

We have lost <unk>, a little less than half of our group business or because of the pandemic.

Half of that has already rebooked over the next 12 months.

And so if you think about it in macro were down about 25%, but the really encouraging thing there is a large group formats and particularly for our company Tech businesses come back and so there's not a change of mindset around how people will come and gather into the future from you know the Microsoft or the world.

Who wants to come back to this market and do it in a meaningful way. So <unk>. We're encouraged by that longer term and then ultimately you know obviously, we have a partnership with eight A.G., we do a lot with live nation.

You know getting back major events is really going to get down to the protocols that requires two hosting event of that scale and time you know I think that's simply it's going to probably be the last two cure anti he'll <unk>, maybe the environment inside and the costs and.

I think in general we're going to be falling on water pro cause like many of our competitors are we'll have the supplies. The gear, we'll need the distancing we'll need we're sizing that up right now on what that would mean is <unk> <unk>, how we open in all the jurisdictions, we should have an fairly good idea.

Yeah that by the next time, we talk.

The other area I think where we're gonna probably see some decent play, especially in Las Vegas out of property like biological or any of our high end as the high end casino customer as Bill mentioned, we have been in contact with them and they were the last to leave when when closed down.

I have a feeling some of them will be back the day, we open so that's positive, but I I think the key for us to get our our our margins backup.

B.S. at group business returns and what's strange is we still have quite a few rooms on the bucks for the back half of the air.

And as Bill mention booking for next year is <unk> is spending.

Strong and in particular in comparing it to where we were at the same time last year looking at 2910, 18, which is more more apples to apples.

Which was our best year by the way in convention room nights, we have more rooms on the books now for 2021 than we do we get for 2019 at the same time in 28.

Great. Thanks, so much.

The next question comes from common Alan with Morgan Stanley. Please go ahead.

<unk> respecting or comments you are still working through the <unk>.

I'm just trying to figure out you know when when you do reopened is properties and they're going to be clear.

Measures like having a you know get for space between apartments in.

I can you just give us a rough done sort of like what kind of.

Percentage of positions you can get back online versus that's great.

30%, 50%, 70% <unk> any rough sensitive.

They get resolved you know we're <unk>, we're still working on those numbers will be able to give you. Some good ideas I I can tell you. The regionals that we'll have more of an impact the force in Las Vegas were built 10 15 years ago and this is our chance to probably right size them with the proper distancing in in positioning the regionals will take.

A little bit more effort and we'll be able to talk more about it in the next quarter and Tommy Park, M.G.M. and that Ari <unk> actually was putting down, particularly two of those places new casino carpet now is a good time to do it and so we're we're reconfiguring those floors.

Case in mind for distancing and so you know the environment will feel a little different when people walk in from day one in the only other thing I would add is some of these jurisdictions might have limits to number of people in the building and if that would be the case are for format would be adjusted for that.

Oh, well. Thank you and then look this maybe a long shot but you're in a lot better looking for the d. position and some of your pet peers.

Have you given any thought about going on they often.

[noise] <unk> the Bill yes, we we've given to of course, you always given thought to look we're going to stay very focus we don't know how long. This is going to take we like the projects that ultimately if we come out of this we've defined sports betting hopefully an extension of a licensing continuation in the cow in Japan very.

On principle, you you never say never but that's not going to be our focus and again not knowing how long all of this takes and what it does do our to our balance sheet look with with right now it's strong strong [laughter], we're up in operating and be strong and it's ever been and I think in the history of the company in many many decades anyways and so we we we are fortunate in that.

Respect, but again, we just don't know.

Oh, thank you.

Yeah.

The next question will be from Sean telling with Central America. Just go ahead.

Hi, good afternoon.

Just wanted to <unk> unique position on some of these larger scale group of answering.

Out of time in your engineer prior roles and plenty thing or sports relationships and whatnot and just kind of any insights maybe there I mean, obviously, you've said that they groupies sure didn't get any more maybe convention.

Come back but.

What are your thoughts specifically on some of the S. and like thing So let's call it sports and some of the key entertainment pieces here just 40 hearing what are some of those vendors you know the line nations the world, saying at the moment, you just give us a little bit more color. There because this is important so many people yeah. I mean, obviously this is coming from our perspective, so I don't want speak for live nation.

G., but but I I would say this as it relates to first entertainment here, we have a mindset that we will open some of our smaller showrooms and I'll get a simple example, a carrot top or something that's small an intimate with a one person show can be open in relatively simplistically, we can provide the proper protections et cetera.

Obviously that begins to scale a little bit differently. When you get to Circ and then when you get to the big events on the conventions side, it's not easy, but remember we're fortunate we have three and a half million square feet of space in Las Vegas, and so our ability to stretch things out more than most if not all is unique and so we can hope.

<unk> and yeah, it will be a bit of a space pig, but at least we'll be able to host the event and so we can set up as we have with various meeting planners and already organizations different protocols to how to do that until we get all the health and safety protocols, we're not going to be definitive, but we do have that unique capacity as it relates to.

Sports and obviously you know for US and you remember how we were talking about this before this started with the Raiders, what we've seen with hockey long-term Las Vegas will recover long-term the Raiders stadium is in our backyard, but we may see a few games. This year without people no. Simple example, we we're creating a large pre game.

Environment outside of Mandalay, and locks or which can be pretty specially walk over to the bridge go to the gave me to be able to come back Tailgate Party, we put that on hold because it's our general view that if it were fortunate enough to see real fans it won't be 65000.

And so we'll probably see stuff like that spring, we have been an ongoing dialogue with leagues and other sporting activities around televised only events think boxing M.M.A.M.B.A.N.H.L. et cetera, and we can host some of that and we we are working diligently with those to do that but I think the idea that we're gonna get 15.

Thousand people in T. mobile for a concert anytime this year is probably a stretch.

That's helpful and then as my follow up and this is all that technical so my apologies, but just I think covenant waiver. They came through yesterday on some of the I.D.M.G.P. shares or plan as collateral Ah for the credit facility and so it was just wondering if you can elaborate on moving and what kind of restrictions.

That that means for either the L.P. unit repurchase or specifically, maybe the ability to settle down M.G.P. shares in the future.

Yeah, <unk> <unk>, Yeah, we did agree to pledge R.O.P. units as collateral under our revolver correct credit facility. We did not agreed to any restrictions on in our ability to monetize the units, though so for cash. So we're not limited in our ability to pursue for example, the cash redemption of up to 1.4 billion.

Or future other sales.

There is any amendment it does provide that if we sell units under a certain level falling below 30 per cent than incremental proceeds would have to be used to reduce the commitments as long as we're in this waiver period.

<unk>.

The next question will come from Harry Curtis with Internet. Please go ahead.

Hi, Bill wanted to good question about cat back.

First and.

Now that you've been in in the.

You know chair for such a long period.

Thanks are you yeah.

As you look at cat back not in the next six or 12 12 months, but.

How do you feel or maybe prioritized of context projects globally and and their potential returns.

Once your core business settles down, whereas what are the best opportunities and maybe maybe maybe grandson chime in on this as well.

Maybe a general overview and then Korean grant can clearly clean up.

Look I, you've seen that we reduced our Catholics I think I mentioned at my pre opening remarks in half this year.

There are things that are going to be essential to maintain the stores in that condition that we think they ought to be simple things like room, Remodels blasio and others on that it'll be just going to be go ongoing maintenance costs.

So we're gonna Wanna do we will become more disciplined on some of the projects, we will become more focused on what's to be accomplished and why.

With a real mindset for margin around it.

In terms of just a day to day cap back stuff domestically with maybe the exception of New York I think our primary focus is going to be Asia, and so you know to the extent, we can work our way through a license in <unk> in a renewal which were very hopeful for and think frankly, all this activity around cobin 19 grant and the team have done it.

Magnificent job, putting us in good steed, there with the government.

But you know no time to tell that we'd be a large priority and then ultimately for us it's still all about Asia, and it's Japan, Japan represents without a doubt the chance to move the knee llama, we're talking about something that would generate you know you, but in the 25% range to boost our company and put Asia at roughly a 50.

Percent, but percentage in terms of our totally bizarre.

We're focused on that <unk> Sybil point everything our main focus, especially on growth will be increasing our return on investment.

<unk> as Bill mention outside New York Digital technology components, Yeah have become big and I think as we open up in this environment, you'll start seeing benefits from that and we still think there's a feature there <unk> I don't know if you want to talk a little bit about Asia.

I think the critical to assure discrete report on what was said previously we've got the south sweets coming on and that's really well more accommodation for us is really important.

In terms of the existing capital allocation we have.

Critically reviewed all lies autumns, we're actually pulling back on ones because what we also want to be prepared is we want to have some money left and the Kitty we don't want to spend cycle spending time, where actually taking money, we what about like kind of and then identified when we reopen that might be some adjustments, we need to Mike might be some food and beverage thing. So so.

So rather than spending and then have it come back and do it again, when we're pulling back <unk> said as well.

Because for all of US is all about the concession renewal and we have significant playing what we've discussed earlier about opportunities develop but we also need to be mindful want the expectations Chief executive R. and he is he does have different views and what were excited about is.

Yeah, we are putting aside from.

We will be in a position to to obviously responses to the diversification strategies that he's putting forward.

And and then Harry it's not a huge capital dollars in respect to some of the other things we're talking about but sports betting I gaming is a real opportunity I was just reading. This morning, Morgan Stanley's piece, you know they think the markets eight and a half 10 billion <unk> whatever it is it's becoming real in New Jersey.

Month alone if we paste that we did the last couple of weeks and I gaming. It's 100 million dollar business Force, Pennsylvania is around the corner Michigan's around the corner, alright, and Colorado's around the corner and given what's happening in states because of the stress of code that we think that'll open sooner than later and well not extensive capital.

It was it does run in the hundreds of made a couple of hundred million potentially one before we quote turned the corner and really make something of this but you know it is without a doubt I think one of the things it's not been unlocked in our value and evaluation, but it can and it will be overtime.

I appreciate that and maybe one more for grant.

And this is this is just very broad leading question, but can you do enough to satisfy.

The the chief executive.

I'll leave it that that that.

Yeah.

I think plenty old concessionaires that are in the cow I've taken while position and and <unk>, we will do what's necessary fills my very classes like this with the company. We're very competent were very positive.

I think the simple thing is I keep saying is we just have to keep doing the things we're doing better we need to do the right thing by the people. We did do everything while I think during this difficult time, I think that solves and all the concession has demonstrated not true commitment to mechanics, the people of mechanic and the future of Mccann and I think.

That's just how are we need to waste Ficus. One died of time, it's not a single died decision. It's all about a cumulative f. it and that's what we're good at a building confidence rebuilding respect and then hopefully for us the the rewards for flight.

[noise], Thanks, Thanks, Grant and and Bill.

Nicer.

Next question comes from Felicia Hendrix with Barclays go ahead.

Yeah.

Hi, Thanks, so much so yeah, yeah. They said.

Buyers that aspect out there yeah, I think it's fancy copy that ended Amy <unk> I knew you know Blackstone, yeah, acknowledging that you might not make that kind of decision now would you be open selling for their assets.

It's not immediately on the horizon <unk>, you would always be open to selling assets I suspect, but it's not something that we've got in our strategic plan. You know we have obviously the row phone Springfield, which is an opportunity we're looking to acquire over time. The other side. The city centre not go you know that way.

But you know I given what we are today, we've got a lot in front of a <unk> I think we're in a really good position and I don't think we could get the value that we got for Blasio or M.G.M. today, yeah. So we're supposed to won't build that business back up and if there's an opportune time, we'll we'll we'll look at for that.

Okay. Thanks, and just grant you it talks about the quarantine in Guangdong and just you know kind of watching that is as we all are just.

<unk> for that picture you know how are you thinking it out Hong Kong any 30 to travel ceilings down there and how important is that to your thoughts about what country and the cow.

Well I think it's pretty clear that that that Hong Kong, the cow and in Guangdong right at Bay area and rolling extra completely.

We already know that the you quarantining requirements in Hong Kong will not be lifted it so the seven to choose at the earliest.

Hong Kong is always an important feed of market, even many of our customers coming in from China come by a Hong Kong as you know, but but on the other side of it there is a possibility and we obviously sitting yeah hyping that's happening in the chief executive even acknowledged that he is in <unk> dialogue with with <unk> to see if they cannot be some relaxation or some.

Progressive by putting up all the you high <unk>.

So.

We we know there's a Hong Kong date for review, we're still positive and.

Somewhat expectant that that we might see some opportunities coming up in in my for.

China and it'll be multi step the first will be the removal of the return to trying to quarantining.

And then and the ultimate objective that we see coming out in the next weeks and months is is the replacing of the audio system and that's really the critical point for us once the obvious comes back so I'm Felicia I'm, sorry, I don't have to specific Tommy's those are the steps.

As I said earlier talking to their customers that positive they're confident all of us I just sitting here why didn't you to make sure that it's safe to travel yeah confident that we can take care of them I think we'd be very good at communicating that so it's it's we're ready to guy when I frankly after all this time with very anxious to get started that you can imagine.

Yeah, Okay. Thank you.

The next question will come from John Decree with you gave me. Please go ahead.

Hi, everyone. Thanks for taking my question it all the detail so far.

Just one for me maybe for Cory last slide in your deck talked about the cares act and some of the possible benefits there related payroll tax.

Carry back I was wondering if you could give us some insight as to what that might well that quantum might be if you've kind of size that opposite.

Meaningful for you might be a little too early some of those.

Bob Kerrey backs, but just wanted to get your initial thoughts on what that means for your company.

Yeah, I'll I'll go through each one and I I'm not sure I could qualify them all because not knowing where our numbers are gonna be that that would be dependent on that but obviously the refunding of the federal income tax five your carry back that will play a on our 2020 return which will file in 21.

That that will be a pretty good number from based on what are our projections are we have to quantify that yet but will hopefully over the next few months, we'll be able to on the interest expense deduction limitation for income tax benefits. We also expect to see a little bit benefit of that in 21, but more than 22.

Since we'll be carrying back most of our loss.

On there's actually two payroll provisions one is actually on the payment a furlough in health benefits will receive a 50 per cent deduction on that component. Those regulations are getting written right now we had a pretty significant payment that we will receive that crap.

Right now we're receiving it and then finally, there's the <unk> tax of the employer portion or any of those payments would be deferred to 21 in 22. So we haven't quantified the amount she had over the next few months, we'll we'll try to put some numbers around that and get that out there.

That's helpful. I appreciate the collar Corey thank you.

And we'll take the last question please.

Sure that question will be from David Cats from Jeffrey. Please go ahead.

Blast.

My question.

[laughter].

Seriously I appreciate it and all of the detail.

You know there there's a bit of dissonance that I was hoping to talk more about because you have talked about.

You know the efforts to size the business appropriately that were ongoing no pre crisis that.

You know or or are still ongoing and the change.

Same time, you know [noise] reopening laid bare some incremental costs.

You know as well have you know how to <unk> to sort of Lady those side by side and ultimately that's supposed to thrust of my question is you know which one.

<unk> bigger does it come out to be you know not positive at the end of the data is not what your ultimately.

To solve for.

Let me kick it off and then <unk> can can clearly cleaned it out.

Yes. The answer is of course it wants to be net positive there are going to be given the protocols that we've talked about whether they're cleaning or otherwise.

Some additional costs, but but I would I would offset it with a simple idea in a in a notion you know the protocol the clean a room in this environment is going to be extensive and therefore, you could argue that the efficiency around the room credits, we'll have to be altered I would argue the other side of that which would simply say if I'm a guest in July.

No I want to know that my room as pristine when I go in and during my stay unless they want and need clean towels, I'm, probably not going to let it guestroom attendant or any other service personal in my room.

So I think you'll see a varying degree of offsets things like restaurants, even though we are talking about opening blasio potentially first it won't be full service all restaurants, they will be some there'll be pick up picking go if you will for pickup opportunities for food and beverage and so we're going to take the current state in mind and.

Do we get through all of the health protocols, it's a bit difficult and that's why I said two weeks in my prepared comments on but we will be by then to then poured inquiry and his team or working diligently around some of the costs. We definitely think they offset kind of the moves we're talking about in terms of structure, but Corey maybe you could <unk>, what I would say David is.

We do have a decent understanding of what those costs are going to be the do we think will end up on the better side of that.

And by the way, we open the properties and ramp them, we won't be able to manage a component that it more in particular, we should you know we think we should be able to offset most these costs at fairly low occupancy. So you know as we open properties and determine that that will be the demand for the town will be a big.

Component of that.

[noise], yeah dive at a time and just to clarify something so obviously, we don't give me disclosures into this outbreak even points, but naturally we we recognize it occupancy and utilization right's going to be low as we wrap up so what we're having to do through the cost cutting is lower our break even point.

Got it.

Very much for sure and.

Okay, maybe if I could just offer up a couple of closing thoughts and I'm appreciate everyone's time today.

First and foremost for me and the company getting these properties up in operating doing it in a safe manner. Both for employees in our gas is priority one I think again, where ideally positioned to do that we on the understanding environment well, we understand the organization well and candidly we feel the response.

Billy particularly here in southern Nevada, our industry to this state.

Is the most important industry in any state in the country more than autos aren't in Michigan more than tech is to California, and we're the largest taxpayer largest employer in the state. So I can assure you we are keenly focused and wanting to reopen but we will only do it safely we are going to be a better more efficient organ.

<unk> moving forward you have our commitment on that in mind, we know how to do this and we will do this and we'll make this as effective as it can be obviously as we roll out there are going to be things that we've never experienced before so we'll have some ups and downs, but I can assure you collectively we'll end up with a more efficient organization when we fully come out of the other.

Side of this thing despite all of it we're not gonna lose track of our long term strategic initiatives. We are keenly focus, particularly on sports and gaming and this time frame there was real money, particularly you know I gaming today in sports will begin to unfold this fall and hopefully sooner and our real estate strategies and creating yet again.

They fortress balance sheet or critical the notion of asset light moving forward is critical and ultimately my goal my desire might push and I know, it's shared by our board is to be ever present, and larger and more meaningfully involved in Asia, both in the cow and and hopefully in Japan.

We're fortunate enough to win a license there. So I. Thank you for your time, everyone be safe and be well and I look forward to talking to you again next trip thinking.

And thank you Sir conference has concluded thank you pretending to this presentation you mean.

[noise].