Q3 2020 MGM Resorts International Earnings Call
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Joining the call and the company today are Bill Hornbuckle, Chief Executive Officer, and President Corey Sanders, Chief Financial Officer, and Treasurer, Hubert Wall, President and C., Oh, MGM, China, and Jim Cramer VP of capital markets and strategy.
Turning to listen only mode.
Sure the company's remarks, there will be a question and answer session.
All participants please limit yourself to one question and one follow up.
Please also note this conference is being recorded.
Now I would like to turn the call over to John Freeman. Please go ahead.
This call is being broadcast live on the Internet at investors that MGM resorts Dot com.
Also furnished our press release on form 8-K to the FCC.
This call we will make forward looking statements under the safe Harbor provisions of the federal Securities laws.
Actual results may differ materially from those contemplated in these statements.
Additional information concerning factors that could cause actual results to differ from these forward looking statements is contained in today's press release, and our periodic 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 will also use 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.
To lead the presentation is being recorded and I'll turn it over to Bill Hornbuckle. Thank you Jim and thank you all for joining US today I Hope you and your families continue to be safe and well.
Over the course of the last several months, we've learned how to respond to the challenges posed by the virus and I continue to be impressed by the resilience and the commitment of our team.
We have developed a set of health and safety protocols that have proven effective our strong operating capabilities have helped us effectively adapt to an uncertain environment and even admit this uncertainty where charting a plan for growth.
Respond to adopt and plan to grow which becomes a philosophy that now covered and everything that we do.
We head into the end of the fiscal year with a hopeful but cautious view of the future. We continue to believe the fundamentals of our business are strong and we're well positioned for the future. We saw sequential improvements in all of our markets in the third quarter and our regional properties have led the pace of recovery with several properties generating record operating performance.
Well, we saw promising signs of confidence to recover in the third quarter. We continue to stay focused on the broader environment.
Our strategies are centered around several key priorities first the health and safety of our guests and employees remains our top priority. We know the success of our health and safety protocols is essential to building confidence among leisure and business travelers and we talk about our new convened with confidence health and safety plants your meetings and conventions and.
Entertainment and sporting events about which we're very optimistic.
We remain laser focused on leveraging our operating model to effectively manage costs.
If it's our EBITDA inspired declining cash burn rate reduce corporate expense and improving in our regional operating margins.
We believe that many of these efforts are sustainable and are as we've stated in our last quarterly call. We identified 450 million of annualized cost.
When business returned to 2019 levels and we continue to believe this is achievable our liquidity position is strong which we further bolstered early this month to an opportunistic debt offering and lastly, sports betting and gaming continued to gain momentum as states accelerate legalization and sports volumes ramp up that MGM has gained significant more.
I could share and has already become a top three player in each of our markets well data where data is publicly available we remain focused on executing on the online opportunities. While also increasing our long term presence in Asia. That's.
Let's go one of the quarters results.
With the September Thirtyth reopening of park, MGM and Nomad Las Vegas, all of our domestic and international properties are now open our third quarter Las Vegas strip revenues were 481 million, which grew 331 million sequentially from the second quarter, our Las Vegas strip property EBITDA was 15 million compared to 100 and for me.
Net loss in the second quarter on a hold adjusted basis, our strip EBITDA grew 134 million sequentially from Q2 to 21 million in Q3.
We are proactively developed a comprehensive health and safety plan for meetings and events and entertainment and sporting events called convene with confidence. We believe these efforts will help rebuild confidence in safely, bringing meetings conventions and live entertainment backed to Las Vegas.
Our convene with confidence program is built upon our seven point safety plan is a comprehensive layered approach based on guidelines from health experts and addresses the entire guest experience from ticketing and planning to rival in food and beverage services.
We approach we are particularly proud of the new COVID-19 testing protocol, which we will be offering as an option eliminate or meetings and events clients. MGM has partnered with biometric security identity company clear to leverage in New health plan passed technology, including a real time health questionnaire and koby related test results and the temperature checks.
This process was utilized and National Hockey League success return to play at the Stanley Club playoffs in Toronto and Edmonton.
As part of this protocol MGM is partnering with Q health to deploy their rapid portable molecular point of care COVID-19 test that deliver results in approximately 20 minutes and allows event organizers to grade parameters for their events and exhibitions.
We recently conducted the first pilot at the MGM Grand Detroit with its straight Pistons and they set our testing regime played quote a critical role and their ability to safely execute their workout program.
We've also received encouraging feedback from meeting planners and existing group customers about our convened with confidence program and in fact, we currently have a group in house using the testing protocols and we will be able to share more of these details in the near future.
Looking beyond the third quarter, we believe the market will continue to stabilize through although seasonal challenges remain near term weekend booking demand remained solid in October, but driving midweek demand continues to be a challenge without the convention business. We also expect to see as we do every year seasonally lower leisure travel in between the holiday.
Periods in November and December as we enter the winter months, we're developing slow period plants for the week days to minutes to minimize EBITDA our losses.
We are encouraged by the governors announcement on mass gathering limits with our and with our convene with confidence plan as had initial steps of bringing back larger meetings conventions hopefully starting early next year.
We also recently announced the return of seven of our live shows and the reopening of entertainment venues in Las Vegas, we are very optimistic that meetings and events at scale will eventually fully return.
That being said, we continue to believe that the material recovery in Las Vegas is dependent on the return of larger scale conventions and entertainment platforms, along obviously with significant air travel moving.
Moving onto the U.S. regional performance, which continued to exceed our expectations and gain market share.
Our regional revenues sequentially grew by $468 million from the second quarter to $557 million in the third quarter, our regional property EBITDA was $146 million in the third quarter compared to an EBITDA loss of $112 million in the second quarter properties.
Properties that were open for the entirety of the third quarter had a 15% revenue decline from the prior year period, but delivered adjusted property EBITDA growth of 7% with margins improving 768 basis points.
Our drive to regionals that were opened for all of the majority of the greater quarter exhibit particular strength with margin improvements ranging anywhere from 600 to 1500 basis points.
In fact, MGM Northfield Park National Harbor, and Goldstrike, each achieved all tied all time record EBITDA ours in the quarter and MGM Springfield delivered a record third quarter EBITDAR.
We expect the rate of recovery will continue to be gradual driven by premium mass market, which both our macao properties or ideally positioned to capture.
We continue to believe and long term success of Macau, and we'll continue to invest in strengthening our market position. There currently construction of the additional suites in the South tower of MGM Cotai is underway and will be ready in mid 2021. We've also begun remodeling, our MGM Macau villas and the gaming space on level 35 and at both.
Properties, we're also adding food and beverage options focused on the gaming floors and longer term. We also have the ability and the desire to build another hotel tower at MGM Cotai, along with meaningful entertainment assets to diversify our offerings.
In an unprecedented in uncertain operating environment liquidity remains of utmost importance.
Our liquidity position remains strong.
As of September Thirtyth, MGM had over $7.8 billion of consolidated liquidity, which included 1.4 billion at MGM, China 1.9 billion of them GP and $4.5 billion at our domestic operations.
Earlier this month MGM resorts up Opportunistically raised an additional $750 million of eight year senior notes at four and three quarters percent.
Further solidifying our already strong liquid position.
Adjusting for this issuance, we had 5.2 billion of liquidity at our domestic operations, excluding MGM, China and MGP and we still also have the right to cause MGP to redeem $700 million of LP units for cash.
Before we go to questions I'd like to spend a few moments discussing our position in the rapidly evolving us online sports betting and gaming market.
Over the past few months, we continue to gain significant momentum towards solidifying, but MGM as a leader in the space and we're very pleased with the results.
At MGM is now live in eight states soon to be nine as of Sunday with our launch in Tennessee, which we announced earlier this morning, and we expect to be in 11 states by the end of this year.
We currently have market access in 20 states and are actively working to secure more ideally positioning, but MGM to be front and center of the action from day, one which is critical as states continue to go lives.
From a market positioning standpoint, we believe that MGM is now a top three player in all of the markets that is then in September, but MGM estimated sports betting and gaming market share was collectively around 18% in the states in which it operates we have demeritt demonstrated strong operating performance and Igaming with.
23% market share in New Jersey, and a growing position in West Virginia, and importantly, we also grew share in online betting as well and currently estimate our online sports betting market share to be around 9%.
This is exciting considering we have doubled our market share since January finally, retail sports have regained momentum since our property Reopenings in Michigan in Mississippi, which are especially driving great results.
Our partnership with Yahoo. Sports is also starting to pick up steam earlier. This month, we launched a streamline bedding experience on Yahoo sports whereby its 50 million average monthly users, including its DFS users can directly link now to bet emblems platforms from their Yahoo. App Register a sign on and make a bet. We have more features planned in this niche.
We're at in the near future we remain excited about this relationship.
We know that an omnichannel customer who plays in the retail casinos I gaming a sports betting is a higher value customer in a single channel customers as such we continue to believe that bet Mgms key competitive advantage is its exclusive access to mpns physical destinations, it's broad based expansion of offerings and M life loyalty program, which.
Just to be leveraged as efficient and effective against customer acquisition tools as possible.
Through a combination of strategic branding direct marketing on the ground brand ambassadors and hosts as well as the integration of M life with the bat MGM App, we have been aggressively working to introduce new customers to bet MGM. While we are still in the early innings. We are excited to see the early proof of concept in our ability to acquire higher quality customers at lower.
Costs.
On the flip side, an equally exciting to US is our strong belief that MGM will naturally drive expansion and mgms customer base as well ultimately fueling growth in our brick and mortar business. In fact, we are already starting to see cross marketing opportunities in the near term and Louis will only get better over time as bed MGM continues to expand its player base.
Given the better than expected progress, but MGM is now on track to deliver net revenues between 150 and $160 million in 2020, which is an increase from our original $130 million expectation.
We continue to believe that this is the largest growth opportunity U.S. gaming and we think we have what it takes to be a long term winter. We're excited very excited about our progress, but we now have more work to do and we remain focused on executing.
Again before I turn it to Q in AG.
A few closing thoughts on over the past week, we've been watching covisint relative trends change across the globe reminding us all that we are not out of the woods yet we'll.
We'll have yet to see any incremental impact to our domestic business. We know we must remain diligent and disciplined as ever.
Have a great confidence in our comprehensive health and safety protocols, which cover all aspects of the guest experience to which we have strictly consistently adhered. These protocols and our commitment to health and safety have allowed us to operate successfully in the last crucial months. We believe they will also successfully guide us through the future.
While we recognize as near term headwinds we remain confident in the long term. This optimism is driven by our proven ability to react to adapt and ultimately to grow despite.
Despite our challenges MGM resorts is a strong company. Thanks to an early and unwavering commitment to the MGM 2020 plan and a new operating model.
An extremely strong balance sheet a.
A high quality of our destinations and path to recover we are seeing led by our regional operations and of course, our people who have simply been amazing through all of this and who continue to deliver safe welcoming and entertainment experience will for all of our guests.
Looking forward to the future we continue to make progress on all of our growth opportunities developing bet MGM as a leader in the U.S. sports betting igaming, expanding our footprint in Macau and ultimately developing a world class integrated resort in a soccer with our power partners in Orix.
With that operator, I'll be happy to turn it over to questions.
Thank you.
Well now begin the question and answer session to ask a question you may have Chris Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the key.
Withdraw your question. Please press Star then two.
Again as a reminder, in all fairness, please limit yourself to one question and one follow up at.
At this time, we will pause momentarily to assemble our roster.
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And the first question today will be from Joe Greff with JP Morgan. Please go ahead.
Good afternoon everybody.
My questions relate to your Las Vegas strip properties.
Well of course can you talk about strip EBITDAR by month in the quarter I'm Presuming September exceeded August and August exceeded that of July really trying to get to sort of how to think about a monthly run rate of EBITDA EBITDAR exiting the quarter and I know october's not over but I'm presuming.
Sober EBITDAR exceed September and then they get it on the task because those for low cost go away, but if you can provide some color.
Helpful. Thanks.
John kicking the Korea in a minute, but look sequentially. Yes. There has been improvement we've seen that we mentioned on the my comments about couple of onetime charges principally around union benefits that were given the 15 main EBITDA meaningful to the quarter the context of performance.
October is doing as expected and then some.
But there's a long way to go for the balance of the quarter.
And Joe just to give you some color sequentially without giving actual numbers because we won't we usually won't provide monthly results.
I would say the trends in all of our divisions seem to be about the same and getting a little better each month in the occupied rooms in September as you saw probably from the statistics from LBC BA have increased in the city.
Okay.
Thanks.
Right.
Maybe bill can you just provide maybe some additional details or some specificity specificity on me now and maybe you kind of referenced sort of the seasonal low in November December, but how you're managing.
The strip during different.
Sure man periods and Harry managing this with labor Opex, whether you are partially closing.
One of your properties like what's going on at that Encore in class, two and others and.
Maybe sort of discuss in this context, and maybe how much EBITDA Delta there is.
On at some of the properties at the weakest demand in terms of staying open versus being partially or entirely closed.
Well, let me, let me start at 40000 feet and kind of work my way down in the general notion of being open versus close for the quarter provide the company net benefit about a half a billion dollars. So collectively we are very happy that were open for the company for the communities, particularly Las Vegas, and our employees and for our stakeholders has been very bad.
Inefficient.
We always go through and we'll do it for sure now.
Recognizing we've got about 29000 employees back we will go through a a exercise we're doing it now as we speak about what do we keep open and what do we close.
There are certain amenities are certain towers or certain brands potentially that will face closure for.
Mid November timeframe give or take.
Through the holiday season, we will see how it goes.
And.
As we look at the top of the funnel and we think about what's happened within the last week and we think about whats happening collectively sequentially, we continue to improve.
It it bodes well with the with the understanding that over the next couple of weeks and obviously recognizing we're in an unprecedented election season.
So don't know exactly what thats going to bring for the next couple of weeks in terms of bookings and we're keeping a really close eye on it as we go forward.
Joe what I would add I mean, even pre cove and during a slow periods, we would adjust our staffing closed down towers closedown rooms, we've actually now becoming expert at it as a result, the co bid in having to manage midweek Spurs weekends. So we're pretty confident that we could be very nimble on adjusted.
I mean.
Based on volumes in Fourq, and what's happening in the market and as Bill mentioned, I think theres opportunities to reduce towers, and and reduce our hotel rooms in the slower periods.
Thank you guys.
The next question will be from Thomas Allen with Morgan Stanley. Please go ahead.
Thanks.
So you put up really strong margin gains and your regional property that I'm guessing, it's a mix of kind of operating efficiencies and then.
Not marketing as much can you just talk about the color around the future operating costs can.
Controls is obviously very helpful. But you did talk about marketing reinvestment spend of beds as like how how much you think you can reset at a lower long term. Thank you.
Yes, Thomas this quarter, Yes look I think in general in the region also in particular.
There's not a lot of competition for the consumer dollar right now, but we have a really learned in and streamlined our marketing component and so I think as we look going forward the cost structure and adjusting our cost structure. There is some permanent components to that including marketing dollars.
The top I guess the bigger concern is the topline can be sustainable arm and as of now and what we're seeing it continues to be but I think these because these properties are well positioned to have margin growth over the prior years.
Helpful. Thank you and then you touched on the prepared remarks about.
Hopefully in Nevada will allow conventions to reach 50% capacity on January Onest do you have a sense of demand will be there.
If that's allowed.
Tom look I mean, obviously, we've seen and the very large scale things because of preplanning, we've seen subsets of cancellations. It's not a surprise anybody ended the first quarter, what's relevant and important is that we hold onto the back half of the year.
And so the fact that we can demonstrate growth. The fact that we can demonstrate that we can execute and do this safely will be very comforting the back half of our year is holding extremely well.
Weve lost you know, we have ups and downs, but we are we are where we should be where we want to be where we have always been which is relevant. So I think fundamentally people arent, leaving the market. They want to come obviously, it's predicated on what the governor ultimately allows us to do what the conditions allow us to do.
But we feel good about that I think the second quarter will be the swing as we know people stake stay and overcome Marco will depend on where we are in the in the health Arena.
Arena, if you will in the cure and they're thinking about it.
But overall.
Overall, the year is looking I think the years looking as we thought it was a quarter ago I don't think a whole lot has changed from what we had anticipated to happen. So as we think about 21 and 22, it's holding together, particularly obviously as you focus on 22.
Helpful color. Thank you.
The next question will be from Carlos has been really with Deutsche Bank. Please go ahead.
Hey, guys. Thanks My question Bert.
Just addressed a lot of that Corey as well, but all the Perkins out your group and convention business.
During the last few months and you guys are what is going on with respect to groups looking for bookmobile 22, 23 and beyond.
When we start to think about kind of.
The goal of that.
Corporate and business travel is getting back on the road.
Quickly are you guys able to kind of ramp up pricing on kind of the group.
Site with a layoff as long as we have been through right now.
So I would tell you September which was last time and we are going to read on October and a couple of days year was an exceptional booking month for the future.
We it's they're going to it's the best booking months, we've had in seven and so I think the Tel is.
Is that people are still booking into the future they're excited to do so.
Sequentially over the last couple of months were up a couple of hundred percent in terms of confirmed contracts and so I think thats all affirmative.
20, I think the essence of it is in 20 anytime 21 second half and beyond when people are confident that they can meet they will come and fundamentally not much has changed I think we have to get through this current environment and then ultimately in the interim we have to prove what we do have we can do safely which to date, we've managed to do so.
And so.
Beyond 22, we feel strong 21 will be the year of let's see how this plays itself up what I would add Carlo what we're seeing especially in some of these bigger groups are booking multi years, they're trying to take space.
They are going out to 25 and 26.
Rates are going to be there again, they are better than what's in the rooms right now.
There I won't say they've completely reset, but he will eat depending on demand in the periods are booking its I would say somewhere to what it used to be in the past in these multi year contracts will have rent escalators.
Great. Thanks, that's good to hear won't just one follow up in terms of.
Some of the cost strategies you guys are.
Put in place.
To the extent you could quantify what was the.
Ray I was cost extracted from the business coming out of September relative to where you went into the Threeq you just in terms of out of expenses you've removed from the system. During this period and Thats, maybe Las Vegas regionals or on a on a combined basis, if you could speak to that so.
So what I can tell you Carlo is awesome.
As we were about $20 million a day be pre cobot. When we closed down we went to $3 million a day were about $10 million a day right now on knowing what is still left to come back including entertainment in convention understanding our business better.
Really understanding what amenities, we will need going forward ones, we won't need.
Reducing loss leaders.
We have a pretty good idea of the number that we put in our presentation of the $85 million is pretty well defined and won't come back into the system and maybe another way to quantify this occupancy there down collectively about 50%.
And our payroll is down equally 48, and so if you think about it and you think about overhead and stuff. We have to have infinite foundationally going forward I think we've done a really good job controlling those controllable cost to the point of we've built back half our business with less than half, our particularly our most expensive cost our payroll costs.
And so the marketing dollars are part of those numbers we've identified.
Great. Thank you guys, that's great color I appreciate it.
The next question is from John Decree with Union Gaming. Please go ahead.
Hi, everyone. Thank you for taking the questions had a I guess a bigger picture question, maybe thinking a little further ahead.
So you've got quite a stockpile of cash and it's real.
The nice liquidity reserve to have right now I think hopefully sooner than later will will be through the pandemic wanted to kind of get your thoughts on on the other side of this where you feel comfortable with net leverage and how you would think about deploying some of that cash if hopefully.
You don't need to tap into it.
Thank you John for going forward appreciate it.
So look at it.
Obviously, when a great position.
God forbid we have to use more of it than we have historically that we're going to stay and go in the right direction, which were fairly confident across the system, we're going to be able to do that.
But if we don't obviously, we've got the liquidity in each of our markets, including Macau to sustain and so we're excited by that.
Getting ourselves back to norm our understanding by this time next year, what looks 22 23.
We will begin to think about growth in real terms will begin to think about.
Openly what we need to do here in Las Vegas to continue to own the marketplace. The extent that we do and some of our assets here, we will continue to invest into sports betting we're sincere about that opportunity. We've demonstrated clearly that we are a key player in all of the markets that we're in.
Kind of interesting to me that.
We are third or better in all of those markets, but in fourth place in all of those markets or is it individually someone different so there's like no fourth place clear winner. So continuing invest to that business is critical to us because we we think over the long haul there's an amazing convergence customers and activity that is going to be beneficial obviously, we have our eyes.
In Japan that's.
Thats a key price we think it's meaningful.
It will take I don't know exactly but between the B and five and 2 billion of real liquidity over a two or three years of a build cycle in the middle of this up 20 345 times like that.
We've got to get there that that opportunity has been delayed but we believe in earnest. We're in a great position, we want to continue to pursue that and then look we'll be opportunistic we're not overly focused on M&A, particularly here in Las Vegas, We think we own enough of Las Vegas to be opened in.
About it.
But there will be other opportunities that the market presents to us it will have to ticket sincere look at but.
But for now we just love the safety and security of the liquidity.
Thanks Bill.
And obviously at some point shareholder return.
We'll come back into play and obviously, we start paying a dividend and other things and we'll play that out as time comes but for now we like the position we're in.
It'd be good problem to have.
With 5 billion almost of cash on the balance sheet I think you touched on on my second question about M&A and Las Vegas, So I'll shift gears.
A little bit and ask if you could provide any kind of color about the.
The occupancy mix that you're seeing.
If there is any differences of the customer mix in midweek and hotel and really getting at kind of relative to historical levels.
Database utilization OTA utilization, where you are but if you could share any color on.
Hitting different levels and if it's kind of trending differently over the last couple of months.
Hi.
I think it's a little bit more of same the operative word is more it's leading heavy into casino, obviously, our convention business has gone to nil.
Theres more transient.
Interesting drive traffic is up in September 8%.
So but last year by the way when I say, it's up 8% above last year, So drive market as southern Cal remained strong obviously translate casino marketing as a percentage of our mix is in the Thirtys I has traditionally it's much lower than that.
And so the Rep force coming out of that segment are very good.
So the outperforms that's to our benefit.
And its.
It's without other major events to drive things I think that market next year through the first quarter is going to probably sustain and then hopefully we grow back into a more normalized basis with conventions and whatnot.
Thanks, Bill I appreciate all the color.
And the next question is from Felicia Hendrix with Barclays. Please go ahead.
Hi, Thanks for taking my question and you guys talked a little bit before adaptive seasonal adjustments you might be making in Vegas, but in addition to that I'm. Just wondering if you could talk a bit about what you're doing to better current preserve price integrity at that property and perhaps improve some of their customer mix you're seeing.
Okay.
I think youve instituted certain regulations around parking in anything else, you're getting to improve the customer experience at the property and maybe it's as simple as just lowering the occupancy, but just wondering what else you're doing.
Yes, Felicia, it's Cory I'll take that.
From the beginning as we reopened we were very focused on not only in the safety, but the customer experience. So we have as we've talked about in the past constrained our occupancy on the weekends Bill.
Bill mentioned, 60% occupancy level there on the weekends, we're very disciplined on our pricing.
Yielding it probably somewhere told times and having price.
Integrity.
On the weekdays I think it's very somewhere to any slow periods that the count as always experienced.
MGM does have minimums.
The least amount we will charge for our rooms.
And it's a matter of everyone's going after the same customer on midway get at the 30% occupancy.
And then Felicia, we put in universal protocols around parking admittance into various things in the building.
Recognizing some of the challenges we've had over the last couple of months and I think we're in a much better spot I don't want to knock on wood here, but the last several weeks I think things have changed that dynamic feels different which is important to all of us.
And so I think the community we've done more than our fair share, but we think the communities risen to help make this a better safer environment.
That's great to hear thanks, and Dan and Hubert if we could not do you and you know we got some details about Macau earlier in the prepared remarks.
Just wondering if you have any sense if there these different chairman and approval process is getting any easier.
What's your view on the VIP market in liquidity. Thanks.
Certainly.
So in terms of.
These are.
Location process, it's still up.
A manual process that people have to go to the police.
Police Bureau to apply for it after they get the online.
For months.
But we have seen the.
The application time shorten a little bit.
And it's across the country in some regions only so lobbying channels I think that Theres no dramatic changes.
Manual process will not see us, but we see a little bit regional region.
Region by region as improvements in terms of timing.
In terms of.
Could it be in the market, we really haven't seen a lot of changes or material impacts to our business at this time, so we'll keep on monitoring.
Thank you.
The next question is from Shaun Kelley with Bank of America. Please go ahead.
Hi, good afternoon, everyone.
Hubert maybe one more question for you just.
Just on Macau I think you mentioned in his prepared remarks, it was mentioned that.
You'd seen some improvement from the second week of October on I was just curious.
We kind of compare things to the declines are the year over year declines we saw during Golden week on did you exit the month of October better than that or just kind of give it could you give us a sense of how the month progressed and what kind of improvement you are seeing kind of right at this moment.
Certainly I think the Golden week was pretty readily.
Relatively speaking pretty strong coming out now.
The Mount ants in September 1st week of the nation.
Nationwide Ivy, yes, reactivation, so a second week of.
Post Golden week.
During that week actually the volume drop down.
I'm happy to say that in the past couple weeks, we have seen some.
Rick roles in cross all segments and that has generated enough jobs allows us to be slightly above breakeven.
Great. Thank you and then as my follow up maybe to switch gears to the kind of higher level strategic question there.
Was obviously, a very large investment in several board members appointed by IC during the third quarter on I was just wondering.
If you could talk about any contribution to date made so far as it relates to maybe the core operating strategy the company.
Specifically, if they had any role in the kind of new appointment on the COO side for better MGM.
Sure. So Shaun look they've been nothing but participate of inactive.
Mr. Diller enjoy live in both board members came out and spent three days with this undertaking an understanding as much as they could the totality of the business.
Obviously, we're leaning heavy at this point with spend in Tibet MGM. So there is a keen focus on that and they have been very active helping us understand that and with that they've been helpful. With us we're trying to understand how to raise the bar in our loyalty program and the digitization of it and what to do and to drive share of wallet.
They have a lot of exposure and experience there and so overall message is very excited theyve joined very active and very excited by that it's been nothing but collaborative and supportive.
As far as Ryan Spoon, now we had source Tim.
We were.
ESPN and bet MGM have had ongoing conversation for better part of nine months. When I've owned was frenzy defined a media partner, we had met Ryan like Tim a lot. He thinks clearly about the business is extremely strategic.
It is a product guy by nature and so the actual offering in the App, we think he'll bring a lot to all of that and help us think about how now to do a media deal, it's simply not an advertising buy and how to get a true partnership with somebody that's going to be lasting and something different than some of the things that have happened to date. So we're really excited he joined us.
We did have Joey Levin of note talk to him because we wanted to get his perspective that gives you kind of an indication of kind of engagement. These guys are actively doing with us and we're excited by it. So appreciate the question.
Thank you very much the color.
And the next question will come from David Katz with Jefferies. Please go ahead.
Hi afternoon, everyone.
Thanks for taking my question I'm.
Looking through a couple of the pages of the deck as I'm listening to talking about specifically about the digital business.
Our gaming and.
And sports betting and Im just trying to hone in on.
What the two or three critical reasons for success ultimately should prove to be.
Whether that's the market access obviously is what it is but if you could talk more about your technological advantage.
Make reference to a single App and is that sort of a unified app that will be across all states.
Rather than different apps in different stages as some have and if you could color and just a little bit more on the relationships with the sports leagues and exactly how that works.
That would be helpful.
Well first I have several sorry, I'll do my best site, that's my one and one follow up.
[laughter] okay.
So look in the collective obviously, you know we have a JV with GBC.
And the Great news about that has been a they own the technology outright and therefore better MGM is their contribution owns its own technology and so thats a decisive advantage in the context of focus what we can do with it how it presents itself and yes. We aim to have one app, we have one now everywhere, but here in Nevada because of regulatory environment.
And we look and hope to change that and there's motions a foot to do that and ultimately and most importantly hope to have one wallet, because thats really where you load up whether it's here applet any other of our casinos you load up into your account to the extent you can transfer that money back home. It continued to play and therefore, we can have 365 engagement is Easter.
Central to the relationship and the longer run so the technology platform is essential having one look in one universe for the customer that's both brick and mortar in terms of M life experiences bedding experience and ultimately digital experiences both in AI gaming and in sports betting is critical and we do something fairly unique.
And our little place studio social gaming, we have a back up and.
And loyalty engine that ties customers to loyalty here and get some benefits to the extent that they spend time on that device. We want to do the exact same thing for this and so.
It's been interesting in the last couple of months last month of note, 28% of the customers who signed up with that MGM came from in life and then the inverse happened 25% of the new customers for M life were bet MGM customers and so you can instantly see and we're just getting going where there is a convergence.
But we also identified in New Jersey, a 167000 customers in New Jersey Metro, meaning our market demo that havent been touched yet by us that are now bet MGM customers.
So we can go out we know 167000, new people and we can go out ultimately offer up our borgata offering and so we think it's meaningful we think it's going to be the differentiator overtime, because we can tie digital in the brick and mortar like nobody else and so we think it's a big differentiator over time.
The second part of the question the sports leagues.
Have been helpful. Candidly, we got a little over our skis in terms of time.
Meaning we jumped in with both feet.
We are trying to develop everything from.
Play games, where to get people acclimate and get them going in a league like Major League baseball.
Two where we have have had active engagement indifferent.
In different contest and things and sponsorships with PJ of note.
You probably saw just with the CJ Cup what happened last week at Shadow Creek or two weeks ago.
And so we continue to nurture those we think the exposure for the bed MDM platform is unique and Youve you probably haven't turned on a TV recently Monday night football World series its extensive.
And so we're leveraging on those deals to be able to get exposure to that brand in that way.
I appreciate that if I can seriously sneak in just one follow up which is.
In this environment, we're seeing a fair amount of spinning and separating et cetera.
Are you comfortable that the digital business can operate with its own mind and its own cap structure its own resources within the auspices of no.
MGM, which is obviously, a large and vast enterprise.
We've done everything we can not to screw it up and have to touch.
I'm, sorry, I know the nature of the question I get it and we've hired a guy Im Adam Green Black once the enterprise and it comes out of GBC in months at well people like Ryan who have now joined the enterprise.
We haven't done a brilliant CMO and CFO.
And so we like what they're doing we have literally got not other away, obviously regulatory and government affairs the stuff that we can provide.
Access to M life and properties in retail business is stuff that we know and we provide but we are trying not to manage that business, we want to let them manage it and to grow it and so yes, we're going to provide capital because its capital intense but we are trying to get out of its way.
I appreciate it congrats on the quarter and thanks very much. Thank you.
Our next question is from Stephen Grambling with Goldman Sachs. Please go ahead.
Hey, good afternoon, good evening.
Bill given you operate a sizeable retail sports book, how does that inform you of the potential margin structure for that MGM longer term and with multiple peer is willing to invest seemingly at a loss what are the guardrails that you're thinking about deciding to defend or even grow your market position.
So.
Just in case, the first question again, I didnt quite and I didn't hear clearly.
But there is how you're thinking about that.
MGM margins and how does the retail margins on sports bet, the sportsbook informed or kick view, but it's kind of interesting I just looked at September numbers here for Nevada at 55% of the business is online.
Already and so it is changing the nature of even how we do retail sports betting they're no longer duration sports books, you probably traditionally have known they are more or less every place. We can go we've done this in our regional properties were starting to do it in Vegas.
They are more lounge, and so it will help overhead.
If people are digital it'll keep people lot of lines that will get embedding more and ultimately once in player comes in play we think it will really engaged at exposure and experience.
But they are unique they are great places to come enjoy game. They are at scale. There's other benefits, obviously people can enjoy in and around them and so we're uniquely positioned in that regard and so we're pretty excited by it.
To the extent, we talk about overall investment.
I think the one differentiator between us, particularly in Draftkings is we're not doing a national AD campaign, you will see a lot youve seem to think we do with Jamie Jamie King.
Fox King, which in case of a different approach.
Personal friend of mine, but I think we've done there is resonating, but it's only in market. So it's in those nine.
Nine actually pushing through a couple of new markets were about on lots 11 markets.
And so while none of this is inexpensive and obviously, it's not cash flow positive for now there are criterias and there is a color around what we're prepared to invest to gain new access and new customers.
And we think in the long run it will be it will pay off.
That's helpful color and as a follow up you mentioned that that MGM and life have seen some convergence how do you think about the impact of Igaming on your brick and mortar business longer term.
Well at topline I don't worry about it if thats the essence of the question. It's been the age old question, we'll tribal casinos purchasing hosts will region et cetera, et cetera, and I think the industry has manifested away always to benefit from it.
So we're not concerned with that I think weve about for unfair to say, but with limited exposure, we had to a growing igaming share in new Jersey pre co bid.
We didnt see that was taken from it and now in fairness, it's only been two or three months and then we went into Covance like I can't tell you. Obviously, we will watch, but we are all in on I gaming and it and we don't view it from the lens.
As others made it hurts my brick and mortar business, we think if done productively and promoted correctly. It can help your brick and mortar business.
Yes that was more the impetus for the question was how are there ways to actually make it help the underlying brick and mortar business and does that mean that you would be more likely to support legislation in new markets going forward.
Absolutely supportive we are not going to let our brick and mortar business get in the way of this business, we want to be smart about it will.
We have spent a great deal of time energy and money and get Good example, Massachusetts.
And so we have a final affording there we think we've by the jobs, we provided the capital resource we put it into a state like Massachusetts, we want a preemptive leg up they have a huge stick over us from a licensing strategy you know they have something to hold over us if we screwed up and so that aside we're very active and we're very encouraged.
Surged by what hopefully all this brings.
Steven this quarter I do think it is a customer acquisition tool as we've seen in New Jersey. There are unique players online that he did not visit the facility.
And it's also an extension to their overall gaming experience, whether they want to do it analog or digital.
That's all great color. Thanks, so much best of luck.
Thanks.
The next question is from Robin Farley with you BS. Please go ahead.
Thank you last quarter, you had given us some insight into the fact that.
Properties in Vegas were cash flow positive, except I think at that point.
Mandalay now that Youve got all your properties.
You kind of give us.
Things stand with are they all positive cash flow at this point, including or not.
Yes Robin.
In in general they are flowing positive other than park, which just opened at the end of the month.
And but.
I think in general when you look at the third quarter in particular on the operating properties. The properties that were opening and if you take the EBITDA number add back the onetime charges in the whole than in Backout, even what was burning the number probably would've been around $70 million somewhere around there for the whole.
Quarter on operating properties, only obviously as we open more properties thats going to potentially take some EBITDA from the existing properties, but in general we like what we saw in the third quarter and we were able to get when you take back out those onetime benefits, we were even able to get Mandalay Bay positive.
Okay and actually that's I was just kind of clarify because it sounded like before that you thought you might not be positive there until convention business came back but you are saying you are actually already our Pos we yes. They they have been very attractive property in the summer because of the pool and so we saw some pretty positive at least.
Occupancy in.
Revpar numbers there.
Right and then.
Separate topic, just on the timing of the.
700 million in MGP units.
It can be tough for redemption is there can.
Can you give us any sense of you know your pure timing of when you might do that or kind of what would be the trigger for that.
Well.
Liquid there is we have until February of 2002 to execute on it.
And so obviously, we're going to let that go by the Wayside you just saw what we did in the bond market. We thought it was opportunistic so it's not about liquidity to be about timing and what else can be done with the money and what else is going on with MGP at the time and what it's trying to structure into but there is no definitive time collectively right now other than recognizing.
Again, we havent till February of 2002 and between now and then we will clearly do something we feel we're in a really good position there and when we do that we need to make sure it benefits both parties.
Hi, Thank you I wonder if I could ask one more that I I guess I'm surprised it hasn't come up in the Q name I know in your comments you kind of indicated that you weren't that interested in owning more vegas assets.
Yes, there are some significant after tax savings that are going to change hands are going to come up for sale.
Do you think about.
The impact on MGM, if somebody else and stuff.
Hi, good type of buyer that that might be and what would be sort of good for MGM or less good for.
Look I am not going to obviously comment directly on M&A I I assume you're referring to the sands.
Hi, there good operatives they are very good operatives and they collectively we all work well within the city, particularly of late to help convention business and it infrastructure traffic et cetera.
Whether that trades or not I guess the good news is if they get anywhere near the 6 billion, they're talking about it speaks good for Las Vegas fundamentally in the long run. So I think we're excited by that.
They're good competitors when it comes to the convention business you know so.
So if somebody else comes in who is not as strong as it bodes to our benefit and.
And I'll hold my earlier comment we have enough of Las Vegas right now so we're going to kind of wait and see and watch.
Okay, great. Thank you very much.
Ladies and gentlemen, we have time for one more question and that question will be from Barry Jonas with two securities. Please go ahead.
Hi, Thanks for taking my question just on Macau any updates on the concession renewal process.
How do you think the current environment play into that.
Oh yeah.
Me I presume berries during about the Covance environment correct.
Correct Yeah.
There's great deal of pressure of late from ledge go legislative body to have the.
The chief executive come out and begin the process because it is going to be a public process.
Speaks in November I think Hubert you might know the date I do not.
To date, they seem to be saying they are on track, which as you know is by June of 22, they've got to give six months' notice. So 21 will be very active unless they delayed a year.
Given what's happened with coated.
I guess, they could but as of today they seem to be on track.
You bet, if you have any more color there.
Bill you covered pretty well I think that so far we haven't got more fully formation southern Alabama other than what you have already talked about.
Great and then just real quick I noticed Caesars added back some parking fees in Vegas curious, how you're thinking about parking and I guess.
Here.
Well you know resort fees are part of the overall experience and critical to our revenue stream. So we think we think we like them.
Full stop up parking is tenuous, we're not in any big hurry to jump back into with both feet.
We think its a determent right now given pricing.
And so we're going to continue to moderate it.
There is going back to dealer comment about safety and security and garage is thats part one part of a discussion do you charge to help protect that and there's things that we are thinking about ways to potentially do something that's meaningful without hurting our business, our retail business, whether its rooms shows to extent that exist in food and beverage. So we're we're.
We're watching what they have done very closely and frankly of him form no final decisions.
Great. Thank you so much.
I think that within operator.
Not mistaken, yes, yes, I would like to turn it back to Mr. hornbuckle. Thank you.
Thank you and thank you all have a great day, please be safe and we look forward to talking to you. All next quarter I know, Jim Corey and myself are available in the interim to feed us. Thank you.
Thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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