Q3 2021 MGM Resorts International Earnings Call

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Good afternoon, and welcome to the M. G M resorts International third quarter 2021 earnings conference call joining the call from the company today are feel Hornbuckle, Chief Executive Officer, and President Corrie Sanders, Chief operating officer, Jonathan how cured Chief Financial Officer Cube.

Bert Wang President and Chief operating officer of M. G M, China, and Kathy Park Executive Director Investor Relations.

Participants are in a listen only mode. After the company's remarks, there will be a question and answer session and fairness to all participants please limit yourself to one question and one follow up please.

Please also note this conference is being recorded.

Now I would like to turn the conference over to Cathy. Please go ahead.

Thank you Cat. This call is being broadcast live on the Internet at investors got M. G. M resort Dot com and we have also furnished our press release on form 8-K to the SEC On this call will make forward looking statements under the safe Harbor provisions of the Federal Securities lives actual results may differ materially from those contemplated indeed.

[noise] statement additional information concerning factors that could cause actual results to differ from these forward looking statements is contained in today's press release.

And in our periodic filings with the SEC.

As required by law, we undertake no obligation to update these statements as a result of new information or otherwise during the call. We will also discuss non-GAAP financial measures and talking about our performance you can find the reconciliation to get financial measures in our press release and Investor presentation, which are available on our website. Finally this.

Presentation is being recorded I will now turn it over to Bill Horn buckle.

Thank you Kathy and thank you all for joining us today well.

Well, we delivered another quarter of strong domestic results with our Las Vegas strip and regional segments, reaching all time adjusted property EBITDAR Records in the third quarter.

I remain at all or what are talented teams have accomplished this year given the ongoing COVID-19 pandemic, we are emerging from it a stronger company with a sharp and focused on operational efficiencies and providing the best experiences for our guests as we carry out the vision to become the world's Premier Gaming Entertainment company.

I continue to express my sincere pride and gratitude of the tremendous effort of our employees, who are the foundation upon which we built our strategic plan and longterm vision as.

As a reminder, our strategic plan consists of the following four key elements investing in our people and planet providing unique experiences for guests by leveraging data driven consumer insights in digital capabilities delivering operational excellence at every level and allocating our cop capital responsibly to yield the high returns to assure hold.

There's.

Oh I left earnings call, we discuss the meaningful steps or company get taken to simplify her story and monetize a real estate.

We have reached a number of milestones in this regard in August we announced it transaction with V Chi and M. G. P to redeem the majority of our operating partnership units and Deconsolidate M. G P within our financial reporting structure.

In September we acquire the other 50 per cent interest in Citycenter monetizing its underlying real estate and are now proud owners of 100 per cent of its operations.

In October we monetize the M. G M Springfield's underlying real estate as well and these transactions grownups, the financial flexibility to take foothold upfront footed actions to invest in our core business and to maximize growth and pursue opportunities to the line to our long term vision.

For example, this quarter, we announced an agreement to acquire the operations of the Cosmopolitan of Las Vegas, a high quality resort.

With enviable product offerings strong brand awareness and complimentary customer base, making it an ideal addition to Ah Las Vegas strip portfolio. We also believe that Dissynergies. We have identified are highly achievable. We have incredibly excited to welcome the cosmopolitan team to the M. Jeremy sorts family pending that transaction closing next year.

Now I've mentioned in the past that we're happy with the amount of exposure. We currently have in Las Vegas.

As such we are currently in the early stages of a process to sell the operations of the Mirage.

Doing so will allow us to maintain our existing Las Vegas exposure, while focusing on the complimentary and diverse nature of our offerings in our hometown.

I spent the early part of my career at Mirage have been take a part of that teams opening the property in 1989, it's histoid property with great brand recognition and a strong customer and loyal following the campus also sits on approximately 77 acres that provides attractive development opportunities to capture large amounts of foot traffic.

Mirage has served us well over the years and we certainly we are certain it will remain a success with a new operator in the future importantly, I want to thank our valued team members at the Mirage, they're an integral part of what makes that property. So special and I know they will remain strong ambassadors of the brand during this transition.

We're also remain keen on diversifying our business and further expanding our operations globally to that end in September we announced that R. M. G. M. Orcs consortium had achieved a milestone in Japan, having been selected as a soccer's partner to build and operate a world class integrated resort. We are now working with orcs in the city to submit an area <unk>.

Element plan to the central government in the coming months and are hopeful and confident that will be awarded a license next year.

Outside of Japan, We will continue to study Q U S regional markets of significance. This includes the commercial gaming license in New York for which we believe M. G M as well positioned given our existing operations at Empire City.

Moving on to bed M G M or sports betting and I gaming venture continues to build on its success every quarter and the third quarter, but M. G. M launched in three new States, Arizona, South Dakota, and Wyoming, and when they're short nine day period that M. G. M is not alive and 16 markets and is well on its way to 20 by the end of the first quarter.

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And the three months ending August but M. G M commanded twenty-three per cent sure nationwide and both U S sports and bedding and I gaming and in the month of August we believe but M. G. M was competing for first place driven by I gaming and which bet M. G. M remains the clear leader with a 32% market share.

When the middle of the N F L season, and the market remains competitive. However, the team has performed exceptionally well focusing on Roy positive marketing spend and we were encouraged to see early signs of a more rational environment as the season progresses, but M. G. M continues moment continued momentum through this year has been extraordinary and we expect full year.

2021 that rubber nose associated with bin M. G M will be in excess of $800 million.

Finally, we think about opportunities organic growth in our core business, we have a great network of premier properties across the U S. That we believe we can better leverage to drive customer choice increase loyalty and maximize the wallet chair overtime. For example, we recently launched a new tailgating experience at Mandalay for events at the Legion Stadium.

We've hosted Bruno Mars, and Lady Gaga concert a park M. G M and completed a room remodeled it belongs yours main tower as well as the pyramid at Luxor with additional remodels ongoing it already of sweets and villas. We also continue to focus on targeting strategies that drawing a competitive advantage to acquire and dry sustainable growth from high valued.

And our business over the years will invest in customer centric products and services to execute these strategies, which we we will be enabled by advanced marketing practices and enhanced physical and digital experiences.

Before I turn it over to Jonathan to discuss our third quarter results I'd like to make some high level comments on our current trends in our future outlook.

I must say, it's simply great to be in Las Vegas, right now with kicked off the quarter exceptionally strong anchored by a great fourth of July holiday better than Prepandemic casino spend levels and pent up demands for the city's Widescale entertainment relaunched the two large crowds in the town, especially on the weekends.

Well the Delta very impacted our group business during the quarter, we have been able to offset with a laser and casino customers with cases on the downswing. We have built quickly we built momentum into October and the level of demand in the marketplace, especially on the weekends has simply been incredible October will be another all time record.

Months.

Groups are still coming to town, we have a healthy amount of group room nights on the books for the rest of the year and we look ahead and as we look ahead, we feel good about our group business coming together anchored by the back half of this year and what's already on the books for twenty-three and 2024.

With a relaunch of large scale entertainment in July of these offerings are driving visitation to Las Vegas allegiance Stadium brings fans to the strip for events and we've had some of the best weekends around these events. The Raiders estimate that roughly 60 per cent of tickets are sold the out of state fans and when the majority of the 50 to 60000 people walking to and from a lead to stadium.

Over the Hacienda bridge between a mental E Bay in Luxor, we are seeing significant broadbased uplifted both properties on event days and even more so on Raiders' games.

We're also driving our own destiny with a fantastic line of events across their venues, which had been met with great enthusiasm whether it was the Mcgregor fight T mobile, which by the way produced our second highest single day for table games went in the company's history or the debut of our New America's got talent show at Luxor. This week, we continue to demonstrate that the city and then.

Jim resorts, it's a leading destination for exceptional entertainment.

Turning to a regional properties as I mentioned earlier original operations delivered another all time record EBITDAR and margin quarter, driven by continued strength in R. R rated gaming spend levels as we yield to a higher networth customers with the easing of statewide restrictions, we had begun to strategically reintroduce entertainment and F&B at all.

The original properties and I'm gratified that our customers can once again enjoy the quality experience for which M. G. M is known on the cost side. Our team continues to focus on productivity across labor player reinvestment and other streamlining initiatives and this gives us great confidence in our ability to sustain strong margins as we head into <unk>.

2022.

I'll conclude with some final thoughts on the cow the market continues to operate well below prepandemic levels is varying forms of travel restrictions have limited visitation to the region.

The obvious catalyst in the couch recovery is sustained resumption of frictionless travel between Macau, Hong Kong and mainland, China, which heavily relies on the higher vaccination rates that will take some time when the market does rebound more meaningfully we believe M. G M. John as well positioned given its strength in premium mass.

Macau remains an important part of our business, we have high conviction in the future success of this region will continue to work with the government and were highly confident and ultimately getting a license renewed ongoing discussions with the government give us a greater confidence in our belief that the process will be both judicious and fair we look forward to further <unk>.

During the long term development of my couch gaming industry and to supporting the government's tourism and diversification goals for the region.

With that I'll turn it over to Jonathan discuss the details before some final comments and questions Jonathan.

Thanks, very much bill.

Certainly join Bill and gratitude to our entire team for outstanding results this quarter.

What a difference in performance and momentum as we move through the course of the year and now with only 60 days until the start of 20 twenty-two I could not be more excited about our prospects for the year ahead, and it's all due to the ROIC efforts of our thousands of colleagues here at M. G M resorts.

Now, let's talk about our third quarter results in some detail.

Arkansas's dated third quarter net revenues were $2.7 billion and 19% sequential improvement over our second quarter results.

Our net income attributable to MGM resorts was $1.4 billion driven by a 1.6 billion dollar net gain from the consolidation of City Center.

Our third quarter adjusted EBITDAR improve sequentially, two 765 million led once again by our domestic operations.

12 of our 18 domestic properties achieved either all time or third quarter EBITDAR Records and 15 achieved either all time or third quarter margin Records. This performance was driven by strong leisure transient and domestic casino demand.

We have demonstrated our ability to improve and expand our operations, while maintaining cost discipline all against the backdrop of ramping nongaming revenues and a stabilizing workforce compliment.

Or Las Vegas strip net revenues were 1.4 billion, just 8% below the third quarter of 2019.

Adjusted property EBITDAR for the strip with $535 million, 21% above the third quarter of 2019 hold had a 20 million dollar positive impact on our EBITDAR. This quarter. So hold adjusted Street strip EBITDAR was approximately $514 million.

Our strip margins, where 39% in the third quarter, a 943 basis point improvement over the third quarter of 2019, and a slight decline on a sequential basis over the second quarter of 2021.

This was driven by a combination of effective casino marketing efforts and continued costs discipline across the business availability of labor also improved sequentially each month in the third quarter and our payroll per FTE remained in line with the third quarter of 2019.

We continued to attract strong casino demand and drive healthy performance in the third quarter secure a few data points.

Third quarter strip Casino room nights were 27% greater than in the third quarter of 2019.

Casino revenues per casino room night was up 10% above the third quarter of 2019 and not surprisingly our slot handle was an all time quarterly record all of this translated into third quarter casino revenues, increasing to 20, 26% above the third quarter of 2019.

Contributing 31% of our total strip revenues in the third quarter and that compares to our casino revenue mix of 22% back in 2019.

Our strip hotel occupancy was 82% of the third quarter, improving from 77% in the second quarter and for the first time since reopening the third quarters room rates ran higher than prepandemic levels with a D or 10% above that of the third quarter of 2019 or 5% when we ask.

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We finished a strong October with occupancy of 92% the highest since reopening and we expect November and December to be strong, but also to follow seasonal slowdowns as we typically do every year heading into the holidays.

As we ramp staffing in our Nongaming revenues increasingly become larger contributors to our overall business I expect margins to come in a bit in our Las Vegas operations, our customers demand and are willing to pay for the breadth of offerings. We provide here at MGM resorts and while healthy margins are an important feature of our business.

Model and financial Health, we are focused on growing our absolute EBITDAR dollars a go well supported by future upside from the recovery and group events and international visitation, we expect our margins to spell stabilized well above prepandemic levels, resulting from our efficiency and cost saving efforts.

Finally, it's important to note that we close the citycenter transactions towards the end of a <unk> of the quarter and as a result, we started consolidating citycenter within our Las Vegas strip results beginning on September 27th.

Our third quarter strip numbers include four days of ARIA and <unk> results led by Anton Nicodemus and his team the Citycenter joint venture reported quarter to date ended September 26, adjusted EBITDA of approximately $120 million with 40% margins.

Head Citycenter been consolidated for the full quarter or Las Vegas strip EBITDAR would've been approximately 22% higher than what we reported in the third quarter.

Its magnitude and growth potential make citycenter, a difference maker for us financially.

Our third quarter regional net revenues were 925 million just 1% below that of the third quarter. In 2019, we delivered adjusted property EBITDAR of $348 million, which was 29% above 2019 levels and 9% above what we achieved in the second quarter of 2020.

One.

A regional casino business further strengthened in the third quarter with our slots and table games volumes, improving sequentially by 6% and 11% respectively from the second quarter of this year.

We measure rated players spend levels through theoretical win or Theo per day net of promotions are net Theo per day for a rated customers reached record levels in the third quarter led by our younger demographic despite fewer trips as compared with their visitation pre COVID-19. Unlike the younger crowd.

<unk> visitation and spend from our 26 from our 65 plus demographic has not yet fully recovered, but we're encouraged with the resiliency in the segments demand, especially through the Delta variant outbreak.

Our third quarter regional margins are 38%, where another all time record growing 886 basis points over the third quarter of 2019.

While our strong EBITDAR margin has benefited from elevated casino spend and importantly, also validates a great work that our teams are put into maximizing the effectiveness of our operating model and rethinking how we run our business disciplined customer reinvestment is a key component of this where we track marketing efficiency across all of our properties against.

Specific goals with the return of more Nongaming amenities will continue to exercise prudence in our marketing reinvestment strategies, taking a test and learn approach to ensure intended returns on any increases in reinvestment. We're also right sizing labor in the near term, which has had a near term favorable impact on our margins.

But it's also cause capacity constraints in certain segments of our operations overall I believe our regional margins will stabilize well above 2019 levels.

Moving on to bed M. G. M R, 50% share of bad Mgm's losses in the third quarter amounted to 49 million, which is reported as a part of the unconsolidated affiliates line of our adjusted EBITDAR calculation.

Net revenues associated with bad M. G. M operations were $227 million in the quarter exhibiting a 17% sequential growth from the second quarter led by the continued strength and I'd gaming. This was partially offset by heavier customer acquisition and reactivation spend from bad Mgm's successful.

Arizona launch and the return of football, resulting in September 1st time deposits growing to over five times five times that of September 2020.

We know that in Omnichannel customer is worth more than a single channel customer where.

We're particularly excited about the mutually beneficial advantages of our Omnichannel strategy with better M. G M and we remain its top partner for driving new players in the third quarter, 16% a bit mgm's new players were attributed to M. G M. Meaning they were active with M. G. M. In the last 12 months this percentage of that.

Remained in a relatively stable range well bet M. G. M has significantly broaden its reached illustrating our ability to continually optimize the conversion of M life members Tibet M. G M.

The better M. G. M team previously disclosed during their April Investor day that M. G. M sourced players have much lower customer acquisition costs and over five times, the marketing R. O Y when compared to non MGM sourced players. What's also encouraging is that in new Jersey are most mature market based upon preliminary.

Larry data, we've found that M. G M sourced omni customers are spending more on property borgata than they did when they were exclusively land based and.

And clearly the benefit goes both ways in the third quarter, 42% of our new M life sign ups have come from bet M. G M, which plays a crucial role in our database expansion our database, which currently stands at over 37 million members.

Finally in Macau third quarter Marketwide gross gaming revenues sequentially declined 26% from the second quarter and was 27% of the third quarter 2019.

MGM China's third quarter results were also sequentially lower from the second quarter with net revenues of $289 million and adjusted property EBITDAR of $7 million hold adjusted EBITDAR was a 2 million dollar loss.

While the latest hurdle surrounding the local outbreaks in Macau negatively impacted travel in September and most of October. The situation is now largely been contained and with quarantine free travel having resumed on October 19th the markets seen daily visitation rebound from less than a thousand in the first 18 days to over.

26000 for the remainder of the month.

Our third quarter corporate expense, excluding sure based compensation was $105 million, which included approximately $18 million a transaction costs for both M. G M and M. G. P. We expect that our net corporate expense will run at a similar level in the fourth quarter heavily driven by our ramping Japan efforts as well as our.

It's an I T and digital in the near term, we also expect to incur incremental costs related to a recently announce transactions.

We believe repurchasing our shares as an attractive use of capital in the third quarter, we repurchased 17.2 million shares for eight.

Four $687 million and we purchased an additional 1.8 million chairs for $80 million in the fourth quarter through today, that's $1.1 billion of share repurchases year to date or approximately 5% of our market cap and that is this year since March.

Over the past few months, we announced some significant deals that simplify our corporate structure further bolster our liquidity position and advance our vision to be the world's Premier Gaming Entertainment company.

We closed the city centre transactions in the third quarter in October we closed the MGM Springfield transaction for cash proceeds a $400 million or transaction with Beachy is on track to close in the first half of next year subject to regulatory approvals at which point, we will bring an additional 4.4 billion.

And proceeds in September we acknowledged in agreement to acquire the operations of the Cosmopolitan of Las Vegas for 1.625 billion.

This represents a multiple of approximately eight times adjusted EBITDA inclusive of expected operational synergies and revenue growth.

Growth opportunities that we have identified the transaction is expected to close in the first half of next year subject to regulatory approvals.

As of September 30th or liquidity position, excluding MGM, China in M. G. P was $6.4 billion or $9.6 billion when adjusted for the Springfield V G and the cosmopolitan transactions. So our approach to capital allocation is critical and R. A P.

Roach to capital allocation will be as follows first will maintain a strong balance sheet with adequate liquidity second will return cash to our shareholders and finally, when assessing potential growth opportunities will invest where we have clear advantages and will exercise discipline and measuring prosper.

<unk> returns for our shareholders with that I'll turn it back to bill for his closing remarks, thanks, Jonathan and apologize from the time of the comments, but as you can all tell we have a lot going on I'm proud to say I think we've accomplished.

Pardon me. This the operators appears that we've lost audio for Mister Horne buckles location.

Please be patient will restore audio thank you.

Got it.

Thank you operator don't know what happened there.

I I apologize for the length of this but as you can tell from Jonathan's comments, we've been extremely busy.

We've accomplished obviously a great deal in the past year and I'm very proud of our entire team and I'm enthusiastic and optimistic about our path forward, we've taken actions to simplify our corporate structure and monetize a real estate, we're maximizing our profits in our core domestic business and are reinvesting in the company for a long term success.

S. As it relates to Macau, we're confident and eventual recovery in the region and we believe we are well positioned with respect to license renewals and we're excited by the diversification of both but M. G M and Japan that it brings toward ultimate business and as you can tell the liquidity position is very very strong and we remain focused and disciplined and the allocation.

A R capital to drive long term shareholder value again, I'd like to close how I started by thinking all of our employees once again for their commitment and dedication to this company I believe we have literally the best team in the business and I'm excited about what we will further accomplish in the future together with that we will take your questions.

Thank you we will now begin the question and answer session to ask a question you May press starving one on your Touchtone phone, if you're using a speaker phone. Please pick up your handset before pressing the keys to 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 will come from joke rough with J P. Morgan. Please go ahead.

Good afternoon, everybody. Thank you for taking my question.

Jonathan Bill.

To talk a little bit about the capital allocation approach that you referenced on a call, particularly that second stole about returning cash to shareholders.

I was hoping maybe you could talk about it and instead of a different way and think about returning.

Cash to shareholders, maybe kind of near term medium term and long term.

Yeah I've seen in the near term you have more cash coming in and you get another five or $600 million from a Mirage. That's just even more to play with no longer term you have Japan, but that's not going to be a huge source on any given.

Year, and then a medium term you have whatever external growth opportunities that that maybe you want to kind of talk about how are we thinking about that but then what do you think about that general overlay. How do you think about sort of the timing of capital return and and the capital return that you mentioned, Jonathan that that the share repurchases in October.

Is is that passed or is that still ongoing.

Thanks, Joe offer a few thoughts first of all you know the the real estate Monetizations that we have undertaken recently and I would include the M. G. P transaction in that category broadly.

It really is the.

Completion of a strategy that the company began four or five years ago and I think when originally conceived the idea was that.

That we would be monetize met real estate and returning the cash to shareholders and so I think to to address the question directly that that the completion of that strategy freeing up that cash will likely entail some accelerated.

Return of that capital to shareholders as we've been doing this year.

That's I think a different matter from the long term the longer term plan for return of capital to shareholders, which will be driven really out of free cash flow of the business, whereas whereas in the shorter term, it's really driven more by these these asset transactions, we have undertaken and then just finally.

As it relates to October.

We've been we've been disciplined and regular repurchases of our shares but we certainly.

We moderate depending upon where we where we see the share price to a certain extent so.

So we remain active because we believe that the share prices the share price right now is still attractively values the company.

But we do we.

We do moderate or purchases from time to time.

And it just made me additional color.

Look through Covid through obviously, the great recession.

We've got some deferred maintenance so there's a couple projects, we're gonna do here regarding rooms, and catching up not a massive amount of capital in relative terms, but real money.

We're just getting started in the digital World you understand what we've done to date and as we continue to think about expanding that business with partners through partners or with others.

That will take some capital clearly, it's the space and a place we've indicated many times and we want to be progressive in N b.

Dominant in in a both domestic and potentially a global basis, and so I think that will take some cash Japan you write this down the road, there's probably not until 24 and beyond and.

In New York, hopefully they'll start earlier I'm, hoping in twenty-three, we've given an opportunity to deploy some cash there and start to grow that business. We said as a unique opportunity sitting at 97 acres 15 miles in downtown Manhattan, We can't help but think we could do more there and so those are some of the immediate things that I think lie ahead.

And then obviously won't you know, we'll wait and see.

Great. Thank you.

And the next question will be from David Cats from Jeffries. Please go ahead.

I think everyone. Thanks for taking my questions.

I wanted to again go back to some of the capital allocation and pick <unk>.

Number three on the list Johnathon, which I think was external investments in a disciplined way.

Where you feel like you have a clear advantage.

Given all of.

Prospective events.

Around your.

Your partner, but I am G M.

I just wanted to see if there are any updated thoughts or perspectives that you can share with respect your the outstanding shares, but MGM and or.

<unk>.

Yeah I'll, David Thank you for the question.

I'm very intentional about the order of those priorities because I do believe that returning cash to shareholders.

Is that the case to beat when it comes to making growth capital investments.

And because it's it's the shareholders money and so that's that's a purposeful hurdle that we set for ourselves.

Regarding the second part of the question I'll just.

I'll defer to bill. Thanks, So David look obviously, there remains a great deal enthusiasm in the market. We all saw obviously, we were an insider to a certain degree to the experience that.

Draftkings and entertain just went through.

Time to tell where that all goes if it goes anywhere we enjoy our partnership I think we're doing well by it with they've been good partners as it relates to the day to day business activity.

We'd like to do more domestically and whether we ultimately do more internationally or not with or without them. I think time will tell as well, but for now we're gonna wait and see and see what happens to that marketplace for awhile.

Perfect and as my follow up just one detail.

With respect to the fourth quarter.

I suppose, particularly in Las Vegas, It sounds like October has gotten off to a very strong start but any helpful thoughts around what what any new normal for the fourth quarter could be we would normally think it might be a little bit softer than three Q with some holidays, but just the puts and takes.

And review would be really helpful.

Oh, Oh I'll add a couple David it's Jonathan one is certainly that we are now consolidated in the operations of of Citycenter and as I as I pointed out in my prepared remarks. That's a material addition to our consolidated earnings for the quarters. So that's an important one and I think the other thing.

<unk> I I would add is that you know midweek op occupancy in Las Vegas has has really found solid footing and where we have had some near term.

Cancellations in group business. It has been filled in many cases more than filled with transient and gaming demand.

Now all that is against what is normally is just a softening of overall business levels as we get into late November into December I don't think this year will be any different but we feel very good right now.

With the start of the fourth quarter and and we do have some of those catalysts that I imagined David It's corie, what I would also add traditionally pre Thanksgiving too.

Right about the week before Christmas is traditionally slow.

Similar to last year, we're seeing some pretty good picked up during the Thanksgiving period. So.

This is unlike any other third and fourth quarter and so it's hard to say, whether what the new normal would be but we're pretty optimistic about the pickup orcein, especially midweek weekends are every weekend from now until the end of the years is strong with strong ADR pick up we've got a member we got the Raiders programming every other.

Sure you got for example, this weekend you've got Rollingstone to the Legion.

50000 sooner.

So programming just looks great.

[noise] okay.

Thank you very much.

And the next question will be from Thomas Allen with Morgan Stanley. Please go ahead.

Thanks on patterns yeah.

Couldn't help but notice that you took out the billion dollar revenue Guy from next year, because you've already gracing $800 million this year.

Update is taking her out next year.

At this point no, but we'll we'll I'm sure introduce a revised estimate for 2022 during our fourth quarter call [noise].

Okay.

Hello up on Fathom Jam just.

Some news reports out that you're one of the winning.

Operators in New York can you just help us think about how you're going to operate in that market with such a high tax rate.

Well look I can assure you we went to 62% crowd [laughter] and it's probably going to end up at 50 time to tell but I think that's what we're all contemplating can be nine or 10 operatives give or take.

Going into it I'm happy we have a property in there. So the Omnichannel thing, we talked about the relevant and real we all understand because we're in new Jersey, It's one of the more expensive media markets in the world, but I will tell you. It is the largest market we will launch into date with M. Life database, obviously, we haven't launched from Southern California, California. So.

As a database Ah way to think about this and will be there day, one which is also critical so I think we'll get off to a great start.

Time will tell with sports how much money is to be made again for us. It's an omnichannel play it's a brand play and we're gonna have a huge presence there and hopefully someday, we get the online I casino, but that's something for well down the road.

Thank you.

And the next question will be from Dan Polzer with Wells Fargo. Please go ahead.

Hey, good afternoon, everyone and thanks for taking my questions Uhm. So first one bet M. G M and just in terms of the value there and we also use the same level of evaluations sports betting I Amy operators.

Now that you're competing arguably for the for the top spot here in terms of overall sure do you think you're getting full value for it in your stock and not how do you think about some of the letters that you might call to maybe unlock that full value well.

Well he be surprised to hear the answers no if I look at Draftkings and others as a multiple you know obviously, it's complicated inside a huge company and a huge story and you know we have a JV that's not in the context of basic structure, it's not pure in in terms of value creation. So we understand all of that.

I think as you look forward, though that we've had all enough exposure and experience to understand a couple of things that M. G. M is here to stay it'll be a dominant player in this space. We can argue everyday all day, one two or three what's really relevant to us are two things, we dominate ni gaming principally based on the heels of of legacy of who.

And what we are I think the bed MGM folks put up a great gaming product. We've seen are branded products work exceptionally well, we have huge database to lean into it and ultimately we're going to have a huge reward mechanism with the omnichannel idea of coming to Las Vegas for some of our regional properties to enjoy themselves with a great retail footprint I mean, not only are we in the <unk>.

<unk> that are obvious but next year.

In Arizona at the Cardinals Stadium, we're going to have a presence where literally opening as we speak in that stadium, a betting shop and so we're going to be in other places and we have an opportunity finally, with Illinois, freeing up to get into Illinois come hopefully March or April of next year and so no. Obviously, we think.

There could be more value accretive to it it is complicated.

But we know we have a serious but we know we have a serious play and will continue to invest.

And hopefully wisely I'd like to think we've been a little bit more prudent judicious than others.

But it's you know it's not for the ill of heart as we now and I still think we'll see more consolidation overtime, which I think ultimately be accretive to the players that remain.

Got it. Thanks, So just from my follow up in terms of bad MGM for the revenue guidance I think you said 809, and the and the deck.

Which would imply something like a sequential decrease versus three Q.

Is there is there anything to read into there in terms of seasonality or maybe increased promotions from competitors that my my pressure your gaming revenues.

No. It's 800, plus by the way notices little plus sign in that deck. So.

So we didn't go backwards to the contrary you know football got off to a rough start in September, but all that being said no. It's it's motivated and growing in the right direction I think you've heard Jonathan year over year five times more in terms of first time deposits in September we like to trajectory of the business, Arizona is off to a massive start.

For us and obviously, we got some other states you have to come here. So no I you know, we don't want to give a real number because we are truly stunning it because we want to hold ourselves accountable to it. So we will buy the fourth quarter, though.

Understood. Thanks, so much for all the help.

The next question is from Sean Kelly from Bank of America. Please go ahead.

Hey, good afternoon, everyone.

Maybe wanted to touch on a couple of other areas. We've covered all underground on that MTN, maybe it was wondering a accused specifically would be.

Jonathan was your comment on the margin outlook in Las Vegas.

If you could give a little bit more color on sort of expect that can maybe trend sequential you're into twenty-two just giving as you sort of reran cost.

That'd be really helpful. And then I follow up would be.

If you could just talk a little bit about a little bit more about the the the hail at the Mirage, how specifically do you identify that property is maybe the right one out of the portfolio to look for options for.

Sure all all dressed the first and maybe.

Past the second one on to Bill.

As it relates to Ah Las Vegas margins the margins about 39% this quarter.

They do benefit from the higher intensity of gaming revenue that we that we have as we introduce more nongaming revenue and and offerings to the system and that's going on literally during the month of November with the number of our entertainment offerings opening here and we certainly we.

Eight more groups and so more catering and banquet revenue.

We will be making a trade in a very profitable trade overtime of customers as as lower worth gaming customers are.

Our yielded four in favor of group customers as we go into 2022 now that's that's a good trade for US you know the group customer will generate revenue per occupied room, 80% higher than than a leisure customer will or or a lower rated gaming customer.

But they'll do so at at a slightly lower margin and that's the effect that I was trying to describe in the remarks. So you know we are back in 2019 had margins in the high twenties.

And of course now we're in the high thirties.

I expect that with a proper mix of business that will be well above those margins back in 2019 meeting our our profit improvement goal of $450 million across the enterprise.

But believe me we have also we've learned a lot about ways to do our business differently over the past nine months and we don't intend on backtracking there to carry that are better better margin performance, even against Ah Ah more normalised mix of business.

And then on the Mirage, if you think about our portfolio, particularly here in Las Vegas.

Look there is no better place in the context of history of Las Vegas, There are no better bones.

The center of the strip it.

It was built to last and it has.

77 acres many much of its really undeveloped in the context of what could be there, but as we looked at capital allocation and we looked at the notion of diversification, we have enough of Las Vegas.

And so and we look at the marketplace right now I'm, obviously, we're buying and selling at the same time. So we understand the marketplace. We all heard Tom read yesterday. We agree we think there is an opportune time and how we think this might be into selling acid in Las Vegas, and so it became for us the obvious one as we think about our portfolio, we think about things going.

Forward and capital allocation.

And so.

Just credit to what's been done there, it's an amazing property and I'm excited for somebody to come in and make it their marquee property I think between the village that are there the access to the real estate. It's general location I think the right owner could do a lot, but it just felt pretty far down in the spectrum of how much a capital with allocate to it in any given period.

[noise] time in the near future and so we just took a strategic decision to sell it.

Thank you very much.

The next question will be from Chad painting for Macquarie. Please go ahead.

Good afternoon, and thanks for taking my question.

Wanted to go back on bet MGM, just from Ah a product or tech standpoint, we've seen a lot of new features and you know just.

Different products that have rolled out is there anything from the same day parlay live dealer social features that you currently aren't offering that others are to kind of help with retention and I guess, if not is there anything kind of on the on the comm that'll help you keep your customer base as others are pretty aggressive with marketing thanks slot.

Fair question, Chad I mean, all of the above.

We have just launched with evolution some product out of New Jersey, and we are doing the same in Michigan with life dealer. We think it's an integral part of the business and something that people are leaning more and more into will be there Ah same with same day parlay, we've got a bunch of product work and revisions we didn't Wanna do it in the middle of football season that 10.

[laughter] as we tried to do some a couple of things last year got us in a little bit of trouble.

And so we'll continue to evolve the great part about the relationship with entertain is there were literally 3500 people in hydrophyte.

Who are focused on a lot of their businesses, but primarily ours and so Adam and the whole team Mat and company.

Have about eight or nine things shared wallet Ah all kinds of things that will change that dynamic and to continue to develop that product is a priority because it will be part of the race over the next couple of years in terms of getting in sustaining and retaining customers.

Okay. Thanks, and then separately regarding some comments you made before about you know the hub-and-spoke approach owning and operating some premier assets around the country outside of Las Vegas that you can feed into Vegas does the acquisition of Citycenter in Cosmo and the disposition of Mirage change how are you thinking about that.

Given that your properties will just skew more luxury pro forma.

No not really I I I think I understand the nature of the question as we skew up the spectrum will a regional property be able to feed that I would still suggest with Excalibur locks throw in New York, New York to a certain degree park into a certain degree MGM of note you know I remember, we got 40000 rooms in Las Vegas to fill.

And what is clear in differentiating between us and seizures as our casino marketing share is 10 base 100 basis points behind there in terms of market mix and so no I think there's room an opportunity for both simultaneous.

Next Bill I appreciate it.

And the next question will be from John Galligan from CLSA. Please go ahead.

Yeah. Thank you for taking the call two questions. One can you talk a little bit about whether you've seen a recovery in Macau posted Golden week with a couple of cases now coming down and.

And secondly, also on Macau can you talk a little bit about where we are with the concession process now that the public consultation period.

Has ended what happens next and where do you see this going <unk>.

<unk> I know you're awake. So thank you want to handle the first part of this.

Sure. Thank you for your question.

Your travel restrictions.

In October of 19, and then live off of that we saw that isn't it start to ramp up and right now the.

Tamil requirement is.

She passed within 48 hours and so we have seen the key indicators on business started going back to.

Alright part of September.

Even stronger going back to July depending on which side you're looking at what time the appointment of pocket indicated open. That's all speaking I think that's why.

It's on the rise and we also anticipate that a new.

November probably will get back to a higher level to July Marvel.

<unk> remains calm and China, and and <unk>, There's no theorists Albright saw regarding confession.

<unk> <unk> and.

In order to know for that question.

Yeah, and John I think just put a capstone on hubert's comment we've gone from losing money to making a little bit of money again, so we shifted back into the black and as long as we don't hit yet. Another instance will hopefully stay there and grow from that obviously, we submitted on the 29th like all the other concessionaires and many other people in the community by the way.

The answers to the nine corps questions that were asked we had an opportunity to brief that with the government they'll know continue that public consultation process I suspect that it'll go on for another 30 days or so that's obviously up to their discretion went to quote.

And that and form some of their own opinions, whether this all gets done in time for June we don't know yet.

Because there are some steps that they still have to publicly go through with Legco.

But I I feel good about what was said I feel good that we had an opportunity to air some of our concerns and that they were heard and listened to and so I think it's it's relatively given the environment and given what's at stake been progressive we've been there like everyone else 20 years, they've been fair to us to date as we have.

To them and I think we've been good to the community and vice versa.

And so hopefully we continue on whether this gets done by June I, just don't know there's some complications around several of the issues is you know and so time to tell.

And thank you. The next question will be from Stephen Grambling from Goldman Sachs. Please go ahead.

Hi, Thanks.

My first question is just really a follow up on a bet M. G M and I may have missed this but what what is the current split of the $227 million in revenues between Igaming in sports betting and then as you noted omnichannel customers tend to be more valuable how do you strategically align incentives between managers of your physical assets a notice that MGM to ensure you maximize the total value.

Well look for competitive reasons, I'm not going to give out the outright split, but just say it it leans how heavy igaming, which I think longer term speaks to the success of the model that we're pursuing we have and one of the reasons that the gaming is doing so well, it's both the product and ultimately the team there in CRM has done an amazing job.

A matter of fact I the reports of the job that I want to catch up at M. G M to in the context of reaching out to customers understanding game type cycle's, what what what they like to do how they like to do how to personalize it for them identifying them and then we have hosting groups. Both at M. G M and M. G. M. [noise] that are tied together we have for example on site here we have a V.

This president marketing, whose principal and only job is to market too and make sure of programs are attached to bet M. G M and those customers, whether it's sign up when somebody registered at ARIA down to making sure their best customers are taken care of making sure. They get tickets for what they may Wanna have earned her done and so you know.

Whereas linked up as one can be at this point in time I think we have some work to do on the backend loyalty to make a completely seamless but now through tear credits they have exposure to anything and everything they want and you can get.

And so I.

Again, we lean heavily and die gaming I feel really good about it and will continue to develop product and and you know it's it's.

It's a combination of branded product homemade product and licenses with some of the biggest brands.

And generally speaking doing very well.

Great and then maybe one other follow up for Jonathan regarding simplification and capital allocation can you remind us after all is said and done with Cosmo in M. G. P.

Whereas Lee suggested net debt to EBITDAR kind of enterprise wide and as we look at the U S vs. China and how do you think about the right leverage on the business as we think about those capital allocation priorities. Thanks [noise].

Yeah. Thank you for the question you know, we'll we'll be updating that next year as we get closer to the closure of the M. G. P transaction and clearly to kind of provide a baton.

Baton metric right now would would be to provide guidance into 2022 consolidated EBITDA and we're not gonna do that yet regarding the question around leverage for the business I do think on a lead suggested basis. This business can comfortably sustain four to five times.

Leverage and that's adjusting our lease expense.

At eight times, the rent, which is the convention and observers of the company.

I think given the company's diversification, both geographically as well as by business segment.

We can sustain that that level of leverage but as we get into next year and closer closer closer closer to the closure of these transactions will will update where those measures are.

Sounds good thanks, so much thanks.

The next question will be from Robin Farley from UBS. Please go ahead.

Great. Thanks, I I wanted to go back to that M. T M for a moment during the quarter.

I think he mentioned publicly the potential to buy out your your joint venture partner and I guess.

How should we think about whether that would be a better outcome.

For you than having the joint venture with them.

Mmm.

Positive or would you.

Essentially is their tech help if you were to buy out the other half of the joint venture and level.

Thanks, Robert So look obviously, a great deal of commentary speculation in Editorialize Asian back and forth over the last 45 days.

We would not do eventually without technology.

This is a technology based enterprise at the end of the day and so that becomes a key point of what to do and how we think about our future given the environment that was being described there was potentially an opportunity to walk away with technology.

And so you know that would've been interesting we were prepared to do it if in fact, the other parties could get to the finish line or decided to get to the finish line. You know there wasn't a all of the details worked out but you know.

Time to tell whether that ultimately gets too.

What's that going anywhere at the time to tell whether we ultimately end up in a different place.

For now, though again I would go back to where we were we were contempt and happy with our business. How it's progressing we wouldn't do it without a technology platform to be sure.

And right now I'm not anxious to do it I mean, I I I I like where we are to developing business I liked the fact that in team chairs and half of this development cost you know, it's a it's a progressive and aggressive environment as we know and so I still like where we are but I'm not you know.

We did comment earlier that we Wanna be bigger we Wanna be global we want to be a lot of things.

And time will tell how we ultimately project into that space.

Okay, Great. That's helpful. Thanks, and if I can ask a follow up on the margin topic that marching your operations.

Think that you might have said last quarter that that you thought you would keep about half of the margin improvement you know kind of when things stabilize so I I may not be remembering that right. So does that I don't think I heard you say that today and so I'm wondering if you're thinking higher than that are lower than that or you know when you think about that stable.

<unk>. Thanks, Yeah, that's a that's a fair estimate it's it's it's really it's difficult to anticipate right now just given the way in which the business mix ultimately levels out, but that's not a bad estimate.

[noise] can that's kind of similar to what you thought was yeah, yeah, our view of the way that our margins.

<unk> has really not changed in the past quarter.

Okay, great. Thank you very much.

Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Bill Horn buckle for any closing remarks.

Thank you offer and thank you all again I know on the East Coast. It's late.

Obviously, we've had a stellar quarter again I couldn't be prouder of the team things.

Things are motivated and moving at M. G at M. G M.

We've got a lot up in the air obviously, the announcement of Mirage, which we have told that team about a half hour before this call will try to continue to be as transparent of that process as we can going forward.

But we're excited by our future I'm, believing Macau will stabilize I believe we're in good position there.

We have one in Osaka, and it's hard to imagine in Osaka does not become one of the three designated locations, but again, we will see what happens come middle of next year.

And I'm really.

Really pleased with the operating environment. We've created Covid has taught us a lot we have figured out how to do things with less and do them productively. There are still a couple of short places we need to fill some staff in an open up the operations, but overall I'm excited by where we are and frankly excited by our future and obviously.

We've got a great deal of liquidity and the potential to put that to work for our shareholders Unlikeliest company hasn't had in a very very long time, and so I think for all of US it's pretty exciting news. So again. Thank you for your time.

And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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