Q4 2022 MGM Resorts International Earnings Call
[music].
Good afternoon, and welcome to the M. G M resorts International fourth quarter and full year 2022 earnings conference call.
The call from the company today are Bill Horn Buckle, Chief Executive Officer, and President Corrie Sanders, Chief Operating Officer, Jonathan <unk>, Chief Financial Officer, and Treasurer, Hubert Wang President and Chief operating officer of M. G M, China, and Andrew Chapman Director of 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 note this conference is being recorded.
Now I would like to turn the call over to Andrew Chapman. Please go ahead.
Good afternoon, welcome to the in gym resorts International fourth quarter and full year 2022 earnings call.
This call is being broadcast live on the Internet and investors that in gym resorts Dotcom. We've also furnished our press release form a case of the S E C.
On this call will make forward looking statements under the safe Harbor provisions of the Federal Securities Laws Act.
Actual results may differ materially from those contemplated at Disney statements.
No information concerning factors that could cause actual results to differ from these forward looking statements is contained in today's press release and or appear to filings with the S. A C.
Except as required by law, we don't take no obligation to update these statements as a result of new information or otherwise.
During the call will also discuss non-GAAP financial measures and talking about our performance.
You can find the reconciliation financial measures in our press release, an investor presentation, which are available on our website.
Finally, this presentation is being recorded Oh, well now turn it over to Bill Horn buckle. Thank.
Thank you Andrew and thank you all for joining us today I'm proud to announce Saddam Jeremy sorts International drove record Fourthquarter adjusted property EBITDAR for Las Vegas and regional resorts.
What's more our four year Las Vegas strip adjusted property EBITDAR increased by more than 80% year over year.
These outstanding results are evidence of our focus on optimizing growth in our business and operations as well is there a strategic vision of becoming the world's Premier Gaming Entertainment company. These.
These outcomes are also a testament to our employees. It woke up go above and beyond every day to take care of our guests and create an amazing great experiences, which drive loyalty among our customers.
Ploys are true heroes of the story and we need to be celebrated I couldn't be proud of them for delivering these financial results alongside the steady improving guest and record employee satisfaction scores we are enjoying as.
As we look forward, we expect many of the drivers of our 20 twenty-two performance to continue into 20 twenty-three importantly, we're well positioned on whether trained in a variety of environments give any inherent longterm benefits of mgm's diverse portfolio. In fact, we have the most diverse offerings in the gaming space and as such.
Well, well balanced organisation that benefits from both scale and a host a premier brand offerings.
Distinction there distinct pieces of our business that creates this diversification our number one or number of nine Las Vegas strip any eight regional domestic properties in the U S. The kid at all market segments and produce consistently strong profitability two R. Two integrated resorts in Macau, the pre pandemic generated EBITDAR, but where.
700 men and I've, just now beginning to see very real return to profitability. Three are digital strategy with 50 per cent ownership of bad M. G. M. One of the leading U S digital sports betting and gaming operators that M. G M. As a leader and what is financially. The most important segment the nation I gaming and he's making overall progress towards.
With the profitability.
And our ownership of Leo Vegas, which were using to grow our digital business internationally and extend both M. G M as brands and content reach <unk>.
Well as funding and continued share repurchases in fact as you know we have just announced that our board approved another 2 billion repurchase program.
Looking ahead, we see multiple opportunities for growth momentum and our business coupling these opportunities with a relentless focus on free class cashflow per share our operating model or margin control and disciplined expense management, which we believe gives us a great confidence that our best days are ahead of US let me well.
Walk through the business case for twenty-three starting with a U S properties first we are encouraged by the early success or the cosmopolitan Las Vegas, as we migrate to business at the M. G M resorts infrastructure.
Annualized basis, we have double digit growth in revenue and EBITDAR compared to the reported 12 month period. Prior to the acquisition. We are already beginning to produce cross property play with hundreds of high end players from the Cosmopolitan database attending M. Jeremy sorts customer events and driving millions and win at our other sister properties. This is a trend.
We saw continued for the lunar new year celebration at a properties Las Vegas, and we expect to expand to the mass market as we integrate M. G M rewards into the cosmopolitan system.
Next we have a strong event calendar in Las Vegas C asked as 115000 attendees last month up from 45020 twenty-two Con Expo in Carnac next month is setting up to be the best ever in March Madness, Sweet 16, the elite eight games are coming to Las Vegas together. The counter in March is positioned to have attempt.
The best Hotel revenue month, we believe in our history.
Additionally, formerly one is expected to bring one day and an economic diet and the city, which we believe we're the best position to take advantage of Las Vegas also has a Legion stadium, which is brought 40 events in over one and a half million visitors to Las Vegas in 2022 and is expected to bring even more visitors even higher quality events in 2023.
Driving significant spend particularly at our south and properties another.
Another tale when is the ongoing growth and visitation, the obesity and expects domestic flight gross capacity to reach 120 per cent of 2019 in the first quarter of 2000 twenty-three and internationally recovered further with 80 per cent of 2019 available seats, Harry Reid Airport hosted a record 52.6 million passengers and two.
822 outside.
Outside of our domestic business, we also see tremendous opportunities for growth starting with China fully stated Macau is back as you as you well know COVID-19 restrictions impacted our Macau operations in 20, twenty-two, causing an operational loss. It negatively impacted are overall results, but we are experiencing a rebound in 2023 years.
Guests to returning in force just that they didn't Las Vegas and restrictions were lifted here in fact quarters. His date, we're excited to report that M. G. M. China's combined properties are the highest earning businesses within our company is.
As part of the concession renewal process, we committed to bring Nongaming entertainment events to Macau.
Vince was strong drivers to visitation to our property during the lunar new year and at the end of January .
[noise] see these early results as validation and our confidence in Macau market's recovery and a longterm viability upon which we have read tendering commitments were built.
And you need to M. G M. China, we have secure 200 additional tables as part of our new gaming conception, which combined with a premier mass positioning should allow us to drive market share in the low to mid teens in fact during the months of January our market share it with 16%, which compares to high single digit market shares pre pandemic.
MC.
It's an outstanding performance or shipping by the M. G M. China's team strategic focus delivering full gaming for renovation a complaint hotel product mix short targeted customers various marketing efforts and producing strong nongaming events shows and promotions plus our team's improvement in service levels and operational efficiencies. These collective efforts position us for it.
[noise] longterm growth story in Macau. We've also reason to be optimistic about the growth prospects of our business well until the remainder of this decade, especially in light of the two new gaming license do we hope to receive in the near future.
We expect to submit our RFA in New York in the first half of this year and we hope for response in the near future.
One advantage we have over the competition in this market is our ability to add tables, George distinct casino floor, and thus incremental tax revenue for the state almost it almost instantly once approved for a licence we expect to spend about two bed in New York inclusive of the license fee.
We will find a tuneup program and planning, but right now we're expecting extensive property improvements, especially as a significant entertainment offering new food and beverage opportunities covered parking an overall increase in the casino floor space.
As you May recall, we also submitted R. R. P in Japan for an integrated resort license to operate in Osaka, approximately 10 months ago.
Unfortunately, I'm still waiting for the response from the government Ah, but we are being patient and believe we will here. So soon Jeremy searches presented a compelling offer with our partner oryx to develop an integrated resort, which will develop international tourism and gross to that region. We're extremely excited for the opportunity in a market in which we may be.
The sole operator for some time in the future.
Each of the projects I, just mentioned are expected to generate returns well above our current free cash flow yield. These are all future capital investment decisions, we weighed upon that same standard.
In closing 20 twenty-two was a phenomenal year for M. G M resorts and we're confident we will see progress into 20 twenty-three and beyond with that I'll turn this over the Johns more color on the fourth quarter and the year.
Thanks, very much bell before I dig into the financial results. Let me also thank my colleagues here at M. G M resorts for an outstanding quarter and a truly amazing year.
I will now share with you some of the exceptional financial results that we achieved.
Las Vegas strip same storm revenues and so that's excluding the cosmopolitan and the Mirage grew 11% and adjusted property EBITDAR grew 6% in the fourth quarter compared with last year.
Fourthquarter occupancy of 91% was up 500 basis points your over a year and a D. R was $260 in the fourth quarter, which grew 30 per cent over last year.
Several volume metrics for Us set records as well as our Las Vegas slot handles set it's seventh consecutive quarterly record in the fourth quarter.
Demand in Las Vegas remains strong across all segments, driven by our exceptional entertainment offerings another customer demand drivers.
[noise] strength continued into January or occupancy was 90% and rooms book during the month or on record pace with rates up double digits to last year.
In the regions fourth quarter revenues grew 10% and adjusted property EBITDAR grew three per cent year over year.
Well EBITDAR was down 1% versus the third quarter, the sequential decline as in line with normal seasonality for the fourth quarter Importantly, labor expenses as a percentage of revenues was flat sequentially and our current head count remains approximately 20% below 2019 levels all while we achieve.
[noise] historic highs.
And N P S and other indicia of customer satisfaction.
And the fourth quarter corporate expense, excluding stock compensation was 113 million, which includes $5 million related to M. G M. China Global development costs of 6 million and transaction costs of 2 million going forward, we expect corporate expense for the full year 20 twenty-three to be approximately 380 to 400.
A decrease of approximately $30 million to $50 million from 2022.
Included in M. G. M's corporate expense. This year is $44 million for M. G M, China, and approximately $37 million and anticipated development expense related to Japan, and New York.
We intend to invest approximately $800 million in domestic capex in 2023, and this compares to the 727 million in Capex invested in 2022.
Maintenance capital will be approximately $600 million of this spend this year.
And this year. It includes rumor models and obliged Yo spot tower Borgata water club and the completion of our New York, New York room renovation since 2019, we've reduced the average age of our room since renovation by roughly three and a half years and our roommate will continue to decrease over the coming years as we refresh.
Our room offerings.
The remaining Capex in 2023 is growth capital projects that include the Mandalay Bay Convention Center remodel a new pedestrian bridge connecting the cosmopolitan Fedora and investments in technology to drive better customer experience. He's an engagement finally on the development front, we expect to contribute 70 million 75.
Tibet M. G M in 2023, and the only material investment New York. This year will be the 500 million dollar license fee, depending upon the timing of the license awards.
I'll conclude with just a few comments on our strategy for capital allocation.
First and foremost will maintain a strong balance sheet by sustaining adequate liquidity for our enterprise.
And as you can see in the presentation that we posted today, we concluded 20 twenty-two with $5.3 billion of domestic cash against domestic debt of 4.5 billion. Our resources. This year were bolstered by the disposition of the Mirage in December for 850 million and net cash proceeds after tax.
Next week, we expect to close on the sale of the goldstrike in tunica, which will be $350 million and net proceeds after tax.
Next we'll prioritize capital investment to deliver the highest return for our shareholders or acquisition of a cosmopolitan Las Vegas expanded our reach into the high end of the Las Vegas market, our acquisition of Leo Vegas jump started our international gaming strategy, our new President of interactive Gary Fritz and his team are evaluating or none.
<unk> of opportunities in this area and our shareholders should expect that will be deploying more capital to grow the M. G. M brand internationally, a night gaming and and digital content development.
And finally, we're going to return capital to shareholders. During 20 twenty-two we repurchased 76 million shares for 2.8 billion since the beginning of 2021 through yesterday, we repurchased $124 million for a total of 4.7 billion in I've reduced our share count to 375.
A million shares and we're not done as Bill mentioned, our board of directors yesterday approved an additional $2 billion share repurchase program.
And evaluating our share repurchase strategy I consider a number of factors, including the liquidity profile the company as well as the development and M&A opportunities that are before us, but I also consider the free cash flow yield available in our own shares so as I conclude consider the following <unk>.
Justin property EBITDAR from Las Vegas last year was approximately 3.1 billion and from our regional operations was 1.3 billion.
From that we had adjusted domestic corporate expense of 400 million in cash rent of 1.7 billion on an annualized basis.
Consolidated cash interest was 574 million, but that includes 205 million related to M. G M, China and cash taxes, and domestic capex totaled about $750 million.
But our company also has significant reservoirs of value that did not contribute cash earnings in 2022. This includes excess cash of over 2.5 billion or ownership position in M. G M, China, which yesterday had an approximate value of 2.6 billion and of course, our stake in bed M. G. M. So a lot of numbers, but when taking all of this and.
[noise] do account I see a double digit yield opportunity in our shares which is why I see share repurchases as a responsible and accretive use of our capital built back to Ya.
Thanks, Johnson I hope the comments that contain the excitement that we all have towards our business this year and ultimately beyond and all my time with the company I've never been more excited about our present and future as I am right now I think we're stronger more agile more focused and more determined than ever to win and with that we're happy to take your questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then 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 Joe graph from J P. Morgan. Please go ahead.
Joe Perhaps your line is made it on your end. Your line is open. Please proceed.
Joe you there.
Our next question then will be from Sean Kelly from Bank of America. Please go ahead.
Hi, everyone. Good afternoon, and thank you for all the the detail and color. So.
A lot of different places, we could start but I'm gonna start with a high level strategic one you know Jonathan you ended on and walking through a really robust liquidity position on you know there's still a lot of cash on the balance sheet. That's you know either collecting interest setup, but you know at a better yielded before but not a not a huge yield. So the question we get all the time you know remain.
<unk> kind of that that ownership interest in you know a big mistake and made me one of those areas that you discussed that M. G. M being you know the big one and obviously, we know there's a partner there, but if you could give us your latest thoughts around the strategic value there and how you fold that in with your comments around you know maybe a more organic are standalone international online expansion. Thanks.
Thanks, John for the question and and to step in and kind of give the first part of it cause I think it's time to be definitive and give a little direction. The simple answer on entertain US know we've moved on while we remain highly focused on bad M. G M business through our partnership with insane and making sure that that business continues to.
Grow we see great potentially obeys expansion could <unk> capabilities said before we liked their technology platform and their leadership team. We're also interested in the content studio business. We think there's a real play there we've seen that proven effective with brand when we combined great product in our branch at M. G M and over time we.
He liked to live dealer business and the expansion of other global markets and frankly indirectly under our own per view.
So for now the answer is no not within chain, we're gonna go down our own direction and we began to allocate capital. We thank Gerry Fritz has got the right motive the right drive in the right person to help us lead US forward, we value the relationship with them chain, we value bet M. G M Ah, but as it comes to rest of the World We're gonna move.
Forward with a different proposition and Sean just a couple of comments the broad strokes around capital allocations, we look forward.
You know, we do have a a maturity and Ah March 1.25 billion at six per cent. So a president.
Plan is to is too of.
Of course, redeem those bonds and that'll capture about $75 million, a free cash flow for the business.
We were we were active share repurchases you know just in the past three quarters, we spent ah almost $2 billion at a price of about 33 to $34. So will continue to be repurchasers, a bar shares, but will moderate that dependent depending upon market conditions, and then and then.
Courts funding, what Bill described which is R. R interactive ambitions, which will be predominantly through M&A, but we're reserving a significant amount of capital for those activities as well.
Sanction at all I I don't want to agree with my time here, but just the the the follow up to stay on the same team then Jonathan.
[noise] directly hit it you know kind of M&A or or can you just give us some parameters around or are we thinking more bolt on options or you know are there still platform level investments that could be made to you know to drive up and and extend that opportunity to be meaningful to the to the day's business.
It it's a combination thereof, when you talk studio business or even live dealer that technology aspect of that is on.
On our scale relatively <unk> when you talk about stepping up to other market places, whether it's South America overtime or rest of Europe , you know well, we'll have to take a different view on that as it as these opportunities unfold, but for now it's it's more Bolton and relatively small.
Thank you very much.
And for the next question will move back to the line of Joe graph from J P. Morgan. Please go ahead.
Can you hear me Okay now.
Hi, Joe [laughter], Alright, alright that was weird.
Nice speaking with you in Las Vegas can you talk about how you're thinking about.
S T E counting payroll expenses and held little trend this year.
Maybe you could break it up between both sort of on a on a theme FTE basis, as well as just Legion and and what.
What kind of revenue growth you need to offset wage expense growth in Las Vegas.
Another way and I'll put it in a kick at the Cory well. If you go back and you look at F Ts, particularly in Las Vegas against 2019 were down anywhere from 12% to 15% depending on the property, obviously wage inflation since 19 has crept and just so we're all on the same page looking forward, we have substantive Ah labor.
Negotiations later this year with about 28000 of our colleagues, which you know we're going to have to contend with and work our way through and so quit maybe the second part of the same things from the standpoint of ink Ah levels of empties from a fixed cost perspective, there will be no increases it will all be on variable. So if there's an additional caring and.
Bank puts business it would it would match that revenue.
Component of it but I think we're pretty comfortable that we could service or properties service our gas at the levels were at today, and then Ah Jonathan you might take the revenue.
Yeah, I think on the on the revenue growth side, if we're running now what occupancies that are.
Basically full on the weekends, there's a bit of room during the weekdays, so really will need to come through pricing as opposed to occupancy game largely in Las Vegas.
And I think you know if that's in the low single digits, we should be able to cover any increases in payroll adequately I mean overall I think we think our margins are going to sustain it.
Really that's gotta be answered Sir.
And then they'll you were dealing with another earnings call and released today as well so as to make sure I understood. Your comment you're prepared comments you talked about.
Nick how being back that in the month of January let the company and profitability or or something along those lines can you just explain that or.
Give a little bit I can put it all on it.
Yeah, I can pull a color around it and then we have Hubert on the line and they've got to have worked hard. It is for three years. So I'll, let him talk a little bit about the business, but look the rebound was interesting. They come January 8th fairly incident, I think we peak during Chinese new year's making a little over 5 million a day I mentioned in my prepared comments 16 per cent share.
And for US for all the reasons I mentioned are are masterpiece volumes were 100 per cent over a 19 levels. Now you know we're talking about a whopping 30 days here, but for the company, particularly from where we have come from we activate it 150 200, new tables, we have we're very excited.
What's happened in the first 30 days and so you may be any other color would be helpful.
Sure. Thanks, Bill next year for the question fall.
Since the beginning of the year I think the market has been drawing back.
And that has succeeded the expectation of many a participant.
Hers.
Well.
In January on the gaming side will have would have seemed very healthy about the market average recovery in both math and Iraqi ipsec months.
And for the month of January <unk>, Bill has passion a market share, we 16%, which is a record high class.
Paul Bailey masks Zsa was on par with 2019 level for the month of January at Yahoo.
<unk> and you get five G last year's Chinese new year that will actually.
We are also encouraged to see that <unk> <unk> 515, 2019 level as wall.
It is also very encouraging to see that January run right.
<unk> into the first week of February so far.
So all in all we are very confident in a solid and.
Recovery.
This year and be huh.
Excellent. Thank you very much.
The next question will be from David Cats from Jeffries. Please go ahead.
Hi, This is Cassandra Davis behalf.
Want to expand on like house, Martin and longer term.
As we think about the shift and the I T make some junk catchy to Iraq I believe your competitors have alpha call al It's increased labor costs, and some labor shortage and uhm increase utility. So how should we think about the margins and the cow longer term.
Well again I'll kick his two year, but finally initial comment is that I believe everyone knows this the junk at business I mean, when it was all said and done it was a 20 per cent margin business and so while there was a great deal of volume in that business and we all was accretive to us and obviously a vehicle for capital into the market. It didn't help the marching.
I can assure you. So you don't know if you want to talk about more generally what you think will happen there, but I I do like where we're positioned for V. I P. Mass V. I P. Remembering our branch environment in system is is broader than almost anybody else's in the market. We've been doing it for 30 years into Las Vegas, and we have not taken that network and put it to work directly to the benefit of.
Account.
You were.
Yeah.
<unk> I think I would expect in in 2000, this year and beyond probably well.
At the heart and off the 20th.
The highest <unk>.
Twenties.
And in terms of chocolate to direct.
I'll certainly there are some <unk> in that space, but.
Too early.
Have you any concrete numbers.
<unk> so.
In January and Chinese and your email address.
I think that we're still very confidence in the rolls off with Iraq business in particular, given you a wide network general resource.
Global reach all our customers.
Alright, Thank you and for the follow up if I may shift here. The thing is there are a lot of theory Polish our favorite all commentaries the 80 or has he substantially higher again. Please how bad novels do you think that is sustainable and you know looking.
Beyond 123, especially if we're thinking about recession, how resilient do you think that adr's should be.
Yeah. This is Corey yeah, I think it's sustainable S. S. We look at the bank calendars on weekends and are forward looking pacing and what we're booking rates at now we have pretty good visibility further out on the mid week, we see are not only our convention business.
Getting better, but the whole city's convention business getting better so the pricing that we're seeing today, we should be able to sustain given where where the economy is today.
Okay. Thank you so much for taking my questions.
The next question is from Carlos Santa Rally from Deutsche Bank. Please go ahead.
Hey, Hey, guys. Thank you just just looking at some of the disclosure in Las Vegas, and trying to decipher what what is kind of the the delta between gaming revenue in your neck Casino revenue has widened in the last few quarters I I'm, assuming that is kind of all mixed related with with Cosmo coming.
Online and.
Is that is that kind of a range that delta that pretty much will hold from moving forward.
Yeah, Carlos High Bill I think the answer to the question is yes, we got we needed to through Covid, because obviously the group's segment of note went away very active with a casino marketing marketing database personalization and other things we might do in that sector and we've sustained it and so it it's help that Ah <unk>.
<unk>, obviously now convention business is gonna come back and forth, what 18, 19% of our mix this year.
But but I think it is sustainable is the way to think about the business.
Great and then and then Corey just on that on the topic of Convention next I I I you made a comment earlier I believe that.
The bookings that were done were done with double digits. If you look at kind of the entirety of the group business on the books or the targeted group business on the books from a pricing perspective, how does that look year over year or relative to 2019. However, you guys kind of want to think about it.
Yeah, I think well <unk> many of those contracts were in place over 2019, 2020, I think they have priced escalators and there's probably an area of opportunity for us in the future as we look at future Convention bulking, but just as a reminder, it's 18% of our business the new businesses.
Getting booked based on where rates are today.
Okay.
Do you believe like when when you think about it overall just that.
Taking the pricing aside thinking about the visibility that it provides you do.
Do you believe as you look through 2023, all things equal economically and and and from a macro perspective that there there should be pricing power year over year on the same store basis.
Yeah, I I think there should be some pricing power based on the amounts way up on the book and the foundation, we have in our bookings and remember cause one thing we have strategically decided to do is push more business out of weekends and back into mid week.
And so that has an overall play in a D. R. Obviously, it brings down the convention ATR, but it raises the overall companies ADR because it gives us more opportunity weekends. So what we see Franklin continued to see real upside, particularly in the luxury segment Cross Cosmo M. G. M. Mandalay you know ARIA allows you.
Great. Thanks, guys.
The next question is from Stephen Grambling from Morgan Stanley . Please go ahead.
Hey, Thanks for taking the question, maybe trying to Japan that was another one that you you referenced still out there you're waiting on some approval, but still looking for home insurance above it sounds like you're free cash flow <unk>.
Wondering if you could just elaborate on any of your your updated expectations for that market and anything that either evolved from the terms of the transaction or even the timing of one construction could start and whatnot.
Out of the ground.
Yeah.
Stealing every little careful because some of this is N D eight with the government et cetera, but but having said that.
You know we had hoped to hear in October obviously, we sit here now in February not having heard the process, let our lives today with M. L. I T. The government agency that is going through and consistently asking us questions about the project about the contract with the government of Osaka et cetera time to tell whether we get through that.
Efficiently over the next 30 days, we we'd like to think and believe we might but you know we've we've been taking that for awhile now as it relates to macro look I'm excited to think that we may be the only player and so instead of a market of 19 million people were talking about a mark a much larger market.
You know having taken the journey many times from Tokyo, It's only two and a half hours away by high speed train et cetera. So we see upside you know inflation has not hit Japan like it's at other places and particularly for us as an hour into the partnership the value of the yen has gotten tremendously in our favor, but we're still.
Looking at a 10 billion dollar project looking at a return on that project. We think can bring 15 per cent plus and cashflow and then maybe then some but you know it has to mature.
And overall timing you know the goal was.
Now we're gonna be charged for that if we don't here soon to get this thing open before the decade close in 2029.
But since you know there's a there's a branch to getting there.
That's all phone will be a follow up on that M. G. M. Just to make sure I understand you.
I guess are you anticipating.
Far out any additional capital.
Put in for that JV Dion this year.
Giving more targets profitability understandable disappointment.
No no none none substantively if that M. G M gets into the M&A business for some particular product may be but but generally no. It's 50, <unk> well the collectively but call. It are 35 or 45 million. We've identified you know which gives US every reason to believe it should hit its target this year.
Starting to make profitability in the second half of the year. You know, we all have to be rational players. There is grill slap their a six additional states. She had to go that where they had been identified but now there's no large scale capital that business should begin to mend and take care of itself.
Thanks, so much.
The next question is from Chad Beynon from Macquarie. Please go ahead.
Afternoon. Thanks for taking my question Bill Jonathan and another one on on Vegas, just giving your a diverse portfolio with with luxury and core can you just kind of help us think about broadly you know how these segments compared to <unk> against each other in twenty-two Bill I think you said you know obviously a lot of the the group events in in the city Wads and twenty-three.
<unk> just those compression I should help probably a little bit more in luxury but just trying to see you know I know you're not breaking it out but kind of where the you know which way the way of his is moving luxury EMCORE. Thanks, Yeah, I I think what your best.
And and 2022.
The majority of the growth here in Las Vegas was driven by the <unk> are you a cosmopolitan and the M. G M Grand.
Mandalay Bay had a fantastic year as they they of course capitalized on the return of the group business Ah to Las Vegas, I mean in in the fourth quarter. Adjusted an example, our group room nights were up about 50% versus the bird versus the fourth quarter of 2021. So.
It certainly has skewed to the to the luxury properties, but I will tell you from a portfolio strategy perspective, you know all of these properties here in Las Vegas are really important role players we've invested some capital and the Luxor in the last year. We've just we're doing the.
Rooms in New York, New York.
Right now and those businesses, we expect are going to be very solid cash flow generators over the next several years, but no question the growth is coming from the luxury segment.
Thanks, and then can you just talk a little bit more about the omnichannel the opportunities with.
With with with driving your players from bad M. G M back to Las Vegas, given you know, it's probably one of the more important years of of your players wanting to to come out and and see some of the events kind of where that stands now and and how that should progress in twenty-three next.
So I think simple answer is more than that.
When I say that in the context, it's now becoming thousands of players that have obviously touched both brands. It's interesting that the combination of the two the players spend about 40 per cent more that that's kind of intuitive, but 40 per cent more is interesting and the other thing that plays to the events, whether it's sports or other.
Otherwise sporting events is at 85% of players or 149 years old and so that network and that combination is bringing us a younger player bring as people who are up to date have the propensity to spend more when combined with both brick and mortar and digital activity and we're now reaching thousands of them coming in we have set up fairly elaborate Sierra.
M system has boasted that M. G M and ultimately a hosting program here that captures them and so there's one to one dialogue about certain VIP players and what their needs wants and desires are and so we've treated that network like we would treat any of our branch offices. If you will when the phone rings and they have somebody of substance.
We're set up to take care of them. So excited by it we need over time to automate it more so that there's two connectivity between bad M. G M and it's it's loyalty system and ultimately M. G M reward system, but for now focused on the high end between the spend the youth and the numbers.
All pretty exciting.
Thank you very much appreciate it.
The next question is from Robyn Farley from you B S. Please go ahead.
Great. Thanks.
Ask a little bit about you should have the breakdown of things store uhm kidney revenue in Vegas thing town about 10 per cent and I think it was kind of hoping to three as well I Wonder if you could give us some sort of Colorado and what's happening with.
Gaming consumer in last two quarters is that Kenneth.
Your trip you over here because you know there are more options in the world or is it lower spend per transport kind of what what do you think is driving trying to add a last few corners. Thanks.
No. We've seen we've seen the same store handle and drop and when growing if modest soon Las Vegas, Although there's no question. The majority of the growth that we've seen in this in this quarter on the same sort basis has been on the hotel side.
So you know the the the.
The the gaming customer is healthy here in Las Vegas. The it is driven mostly by our higher value gaming customers, but it's it's very healthy on the same store basis.
With the decline.
<unk>, you're saying, it's coming from the higher end gaming player.
<unk> or <unk>, they're they're holding up it's the it's the sort of broader market.
<unk> with the same store to claim.
No word what I'm talking about the our slot handle and table game drop and.
And and slot when in table game when increasing.
Okay I was looking at your side showing.
Your revenues down 10 per cent of the same store basis and thank you for.
Cause I know there were some properties and then properties out, but I was just using that number from your side.
Yeah. Some of that will be on that will be on a net basis. After accounting for the cost of hotel rooms that are comped against those players.
And so that is having an impact on what.
What we're describing is that gaming revenue, but in terms of the the way I consider the health of the gaming customer is to look at the volume metrics and the and the gross gaming revenue.
Which are growing on the same store basis does that makes sense Robyn.
That's that's kind of when I think about what the behavior of these customers actually is it's.
It's on the gross basis.
Okay. Okay now I just have to try to clarify that that's helpful. Thank you also I was just curious.
Trying to hear liquidity in cash position and and what you have going why suspend the dividend and I realized it was a small kitchen and only remaining at this point that I'm. Just curious you know why why is to spend that when you you know liquidity is certainly not the issue [laughter].
Yeah. It's it's not it was really an administrative issue. It was it was burdensome it was complex and that measure it against the the size of the of the dividend itself, which was the minimum S and just how much capital we've returned and we can expect that.
[noise] returned it through the form of <unk> share repurchases now we just felt that it was a practice that we did not need to continue.
That doesn't mean that we wouldn't reconsider it or are bored and want to reconsider it at some point and in so doing would make it a more substantial bibendum than a than a day minimum dividend, but it was mostly an administrative solve.
Okay, great. Thanks very much.
Thanks.
The next question is from John decree from C. B R. E. Please go ahead.
Hi, Thanks for taking my questions maybe.
Maybe just Jonathan a quick follow up on on Robin's question regarding casino revenues. So just to clarify with a higher a D. R. Now essentially the dollar amount that you need Connecticut Casino revenue is is what's causing that kind of accounting declined.
Yeah that that is the major issue that that's the major dynamic which is causing this this topic that we're talking about.
Okay Gotcha.
It's not just a D R. But also the the size of the casino segment generally.
Okay understood. Thank you for that additional clarity maybe just for a follow up question.
Bigger picture you know I think he was pretty clear as to where you target growth investments digital international but you know the last 24 months or so you've you've moved a lot of chairs and and upgraded the asset base in Las Vegas, and Opportunistically I think divested goldstrike curious if.
You could give us some comments on how you feel about the the domestic portfolio today, both regionally and and in Las Vegas, and if there's you know potential opportunities you consider more on the M&A side and and you know we kind of know plans in in New York and if other big markets, where to open but on the M&A front, either buy or sell.
Anything that you'd think about doing it might make sense.
Well, let me, let me kick it off.
Hey, I think particularly after the moves that we made we we truly enjoy the portfolio we have.
In terms of Las Vegas, obviously, we owned 40 odd per cent of this market place and we loved the properties that we have here, we loved the positioning and and what's happened at the South end of the strip, particularly via Allegiant has been productive when it comes to Ah Regionals, obviously, we're in a different regional game and most of our markets a whether it's Detroit.
Atlantic City, or Mississippi, we lead in a big fashion, where market leaders. There we tend to want to do that and try to tie off the product offering integrated resorts to integrated resort, we just think there's.
An opportunity to get the right kind of customers to transition to Las Vegas, and otherwise I would never say never on any M&A acquisition, there's always I suspect an asset here or there that might be of interest, but I don't think we have any immediate designs or plans on anything substantive sitting here today I think you know our growth will come to this.
Development opportunities, we've defined through the digital opportunities that we have defined to date and are going to seek and you know we're always got an eye and an ear open but I you know there's nothing specific that in order to actually tell you if there was [laughter].
Fair enough fair enough just engaging the strategy I appreciate it bill thank you.
Yeah.
And the next question is from Barry Jonas from Truest. Please go ahead.
I God given the strong strip outlook for 23 is the high end of that 400 600 basis point margin expansion. The right place to think about how to your could shakeout or could you still go higher and then just with that could you remind me what the starting point is here is it the reported pre Covid 20.
19 number or based on sort of a pro forma portfolio. Thanks.
Yeah, when we when we we use that that four to 600 basis points sustainable margin improvement, we're referencing the 20th 19 year. So we're not trying to adjust it for acquisitions or dispositions, just because we're getting pretty far back in the past at that point.
We're very comfortable that for.
<unk> across all of our domestic properties that we can be within that range or possibly exceed it an exceeding it will be driven mostly by our the pricing environment.
But but we're comfortable with that and that compares 2019.
Great Great and it just just to follow up you know I think I gaming, we're hearing that the industry is taking more of a push.
I'm I'm curious, how you think about the impact that I gaming's, having on land based gaming not sure if you're able to quantify what you've seen more recently and say, Michigan, but you can you help us understand from the puts and takes with what would seem to be some cannibalization threat. Thank you.
Yeah, I'll take that obviously in Michigan to your point as the Best example, where we have your market, leading brick and mortar and we have obviously it market leading digital the digital business now is out surpassed the brick and mortar by about 25 per cent ish.
You know they are both doing well over 300 million G. G. R did you lose approaching almost 400 million then G. G. R. It's interesting market. When you look at because it's gone through smoking and Nonsmoking COVID-19 lasted longer there in terms of its policies in anywhere else I will pay there was some concern early in the middle part of last year the last three months.
In Detroit now that we've come off of most of those COVID-19 restrictions, we've made allocations for smoking and some smoking opportunities for customers, who still want to do that our numbers of not only stabilized, but it continued to grow in Detroit. So I you know.
Well, it's obvious that there's a subsidy amount of play going on them digital.
This chance to connect that with brick and mortar and ultimately rewarding recognizing simple things like bonuses or jackpots that I leave that I'm, playing at home I can come pick up in a brick and mortar where I left off as a player and have it can take you can take this experience is things that were highly focused on it so.
You know, we think it's been a great opportunity. We think it can continue to be one and we are we've seen nothing Michigan and we have the best laboratory and that Michigan gives us confidence that going forward. We can replicate some of that in any of these other states I think will be in great shape.
Perfect, Thanks, and great quarter.
Thank you.
The next question is Steve <unk> from Stifel. Please go ahead.
Yeah. Good afternoon, so actually when I ask about your your regional assets.
And obviously, there's there's a fear out there in the investment world that at some point you know somebody's consumers could you could start to slow down and and we've we've <unk>. We've heard from you know a lot of your peers. So far that there really hasn't been any softness as of yet and I. Just you know understand have you guys seen the same fundamentals they're meeting no real weakening and then also margins were impacted by the include.
Of of Nongaming amenities in the corner and just wondering how much more of that potential margin headwind you know could those present going forward.
So I may I may take the top of that inquiry you can speak to the Martins.
You know, we we have several different kinds of regional properties himself, Maryland. This year had an all time record and then some it was fantastic we always dreamed of that property, making over 300 men and it did and I mean, I know I'm not I'm getting dirty looks from some of my folks, but and it did [laughter] you know Atlantic City, given all of the competitive.
Set in the reawakening of part rock and what happened with.
Oceans, you know, it's a highly competitive market and we're holding our own and that property continues to do the same kind of EBITDAR. It's done traditionally no matter, where the marketplace has been it's kind of interesting Detroit as I. Just mentioned continues to do well yeah. We saw little softening with Empire as it came out of Covid Springfield is enhanced and <unk>.
Moving.
Look obviously it will be the place that I think any major reception activity shows, but I will say to date, particularly up into and through no January we haven't seen it so according to forget and <unk> on the on the other regional properties, mainly in the third quarter, we increased on many of our Nongaming amenities.
And I think we're up to the level, where we're comfortable with what we have for our guests.
So from an additional margin impact on that I don't think there's much there and then just on the business you know December had a little bit of softness as Bill mentioned, but what we're seeing in January and February . So far is all of our regional markets are performing <unk>.
Gotcha, good to hear and then the second question real quick and it's more of a follow up here, but you know going back to Macau. It sounds like Bill I think you said or Hubert said that she would do it about 5 million a day during Chinese new year and.
Good I'm not sure. If this was your bill or Hubert but did I hear you say that even after Chinese new year, which look I know, it's only let's call it seven days or so, but you're still somewhere in that in that ballpark.
Maybe it was me I said, five Mandarin Chinese W, but no, but but we are at a great pace and a great place.
And so no but that that's extreme having said that it's still very profitable and this last it's been five days or six days or whatever it's been but it's been good.
And so but now I mean Chinese new year's is that one you know it's a unique environment that happens once you [laughter]. Okay. Yeah, I was just making sure I was not going to tell you that it's not five yeah, they'll do five minute daytimes 365, [laughter] that's already done thanks, guys appreciate huh.
Thank you and our next question will be from Dan <unk> from Wells Fargo. Please go ahead.
Can you hear me.
Yeah Yeah.
Right. So first question just on on Macau. It's a two part question. The 16 per cent share you guys called out to what extent do you think that's sustainable and if you could maybe par set out how much that step up has been driven from you know growth in mass or premium after a diet <unk> versus pre COVID-19 and then that corner today comment.
About the MGM, China properties, the highest earning business in the company I mean should I, if I kind of go back and piece together, some maps that I interpret that better pacing well over 109 of even though for the first order.
Mmm no [laughter] no <unk> for the month for the month North Dakota for the month.
So.
You you can think about it and if we put them together it would be the highest EBITDA property, we had for the month and our system.
When you think about it okay.
And so you know you you can kick in here, obviously, you're living this every day on the continuity of going forward.
Yeah.
That comes off the market share of question you asked.
It's too early but I have to give you a <unk>.
Can answer or whether it's sustainable and off of the off the saints that and.
Ahead of us because as you know we have additional table. It's almost 200 additional tables and would have on <unk>. All these tables yeah. We're in the process of doing that along with some casino, Florida configuration. So would plan to <unk> all of the table.
By the end of first quarter.
And I think that that's number one number two is that indeed <unk> commitments I think I'm looking last month. We also have a lot of I think Bernie <unk> projects and I think that these offerings saddle drive additional traffic I mean, just to give you some cough.
On the Nongaming Seinfeld, Chinese new year, and the <unk> album occupancy approached 100% and <unk> restaurant Commerce actually exceeded 2019, Chinese new year level and a lot of that was because of all the <unk> events and concerts that to a lot of incremental visitors to us.
And we're also seeing a longer say <unk> hotel customers I think that as we <unk> well that'll help without market sharper off down the road off the thing at that level.
Got it and then just for my fault for.
John on the pace of buybacks, obviously, you have the 2 billion authorization I mean, it sounds like friends are very stable, if not outright encouraging to what extent would you feel more comfortable giving you know kind of a quarterly pace a buyback and then also.
I think it was last quarter or maybe a couple of quarters ago, you mentioned kind of a decelerating pace a buyback so given the outlook in Vegas.
Is there kind of run right, we can think about here.
You know I.
I I I don't want to give a quarterly pace I do think Ah you can look at our pace over the over the preceding four quarters I think we actually did a bit more in the fourth quarter than we did in the third quarter.
And so all I would say is that we we have a healthy authorization from our board I Hope I was able to can communicate during the prepared remarks value B C and the shares.
And despite all of the opportunities we have before us liquidity position. The company has is going to allow us to continue to be inactive share repurchase or beyond that there and I just don't want to give any more specific outlook.
Got it thank you.
And our final question will be from Jordan Bender from J M. P. Securities. Please go ahead.
Great. Thanks for taking my question can you just talk about the contribution from far East play during the quarter in Las Vegas, and then what are your booking look like from far East play for this point or for this year at this point.
You're referring to the fourth quarter or or changed in here.
Fourth quarter, and then it gets quarter to data as well.
I can I know the Chinese new year number fairly well Cornell you're not here for the fourth quarter last year Chinese maybe we had about 35 maintenance <unk>.
This year that number which just under 100.
And so you know the the opportunity and with that opportunity provided us. This year was three actually what it was last year and so while not back at the 19 levels are 18 levels, it was meaningful and and the the the parties play during the fourth quarter. It was up about at least a third.
Third over the fourth quarter of 2021, and and constituted pretty much all of the growth in our international play during the fourth quarter, so very encouraging.
And.
Right. Thank you.
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.
Thank you operator, and I just wanted to thank everyone for joining us, saying Oh. It gets laid back on the East Coast. Just a couple thoughts obviously, we should continue to show organic growth here in Las Vegas, particularly at our premium products are luxury brands.
If you think about Arya and <unk> last year that made over a billion two in cash flow and we see hopefully that sustaining you think about now I'm, a cow and the returning and I think our 200 extra tables will make a difference throughout the course of this year.
You think about our development pipeline, you think about bold brick and mortar digital I would say without any disparaging comments to our competitors that we should think about the balance of regional location domestic location Las Vegas International Digital we are the most well balanced and prepared for growth we have known that that.
We have <expletive>, we're sitting out about 5.3 billion of cash liquidity and since Jonathan I have joined the senior roles. The company's bought back over 25 per cent of the chairs.
And all of it on the back of an amazing team that we've put together here that's got extensive experience over many decades and many different jurisdictions and so you know to say that I'm excited by our future would be an understatement. Thank you all for your attention and most importantly, your support so 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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