Q2 2023 MGM Resorts International Earnings Call

Joining the call from the company today are Bill Horn Buckle, Chief Executive Officer, and President Corrie Sanders, Chief Operating Officer, Jonathan Health yard, Chief Financial Officer, and Treasurer, Schubert, Wang President and Chief operating officer of MGM, China, and Andrew Chapman Director of Investor Relations.

Participants are currently in a listen only mode.

And after the company's prepared remarks, there will be a question and answer session.

In fairness to all participants please limit yourself to one question and one follow up on today's call.

Please also note that does that.

Merkel courted.

I would now like to turn the call over to Andrew Chapman.

Yeah.

Good afternoon, and welcome to the in gym resorts International second quarter of 2023 earnings call.

This call is being broadcast live on the Internet and investors Dot in German resorts Dotcom. We've also furnished our press release, some form 8-K to the S E C.

On this call will make forward looking statements under the safe Harbor provisions of the federal Securities laws.

Actual results may differ materially from those contemplated any statements.

Additional information concerning factors that could cause the actual results to differ from these forward looking statements is contained in today's press release and in our Parroted filings with the SEC.

Is 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 a gaffe financial measures in our press release, an investor presentation, which are available on our website. Finally this presentation is being recorded and we'll now turn it over to build worn buckle.

Thank you Andrew and thank you all for joining US this afternoon I'm.

I'm happy to share that M. Jeffries urge posted an all time record for consolidated net revenues in the second quarter.

We achieved strong earnings across her domestic portfolio with near record second quarter adjusted property EBITDA results at M. G M. China in the first quarter of positive EBITDA Abed M. G M.

A high level, we're seeing strong demand trends in Las Vegas casino dropping handle up year over year, alongside increasing hotel revenues with our fourth quarter Hotel revenue is forecast it to be the highest of all time.

And our regional operations, we achieved year over year top line growth on the same store basis, taking into consideration the sale of the goldstrike tuna come with profit margins in the range of prior quarters were continuing to evaluate our business and evolve our products to ensure that we're maximizing profit while maintaining great customer service levels.

Our second quarter results are continued testament to our 75000 plus employees and their commitment to offering world class service and memories for our guests simply stated our employees are the best in the business and I want to thank them for helping us deliver another outstanding quoted in Las Vegas, and a regional locations and ultimately in the cow.

Well, we're certainly pleased with the results we've achieved in the first half of this year, we frankly or even more excited about what's to come in the back half starting with the historic Longterm agreement with Marietta International that we announced last month as part of this agreement will we've created a new a M. G. M collection with Mary up envoy, allowing it's more than 180 million members to be.

Grooms and earn and redeem Marietta convoy points at 17 M. G. M resorts domestic properties. This agreement will enhance our profitability by driving lower customer acquisition costs, and with a better mix and higher Ray D R's and on property spent.

By 2025, our expectation is that the marry a customer base, we're up to any meaningful segment of our hotel mix at premium rates Johnson will expand further on this business case and his section I'd like to personally thank Tony Cup of water and his team for their partnership and collaboration throughout this effort and we can't wait to get started in the fall.

Looking into the third quarter, we have great programming, including Black Cat at Mandalay Bay Magic at the Convention Center and beyond say at Allegiant bookings are strengthening for the remainder of the year and as we get closer to the Formula One in November . We've also got a great a fall home schedule for the Raiders, which will have fans flocking into Vegas in Green Bay Pittsburgh.

Kansas City in New England, among other cities that all travel well.

For Formula one while still early we are already have twice the occupancy on the books and it four times the average rate compared to last year and with more than 70 per cent of our ticket inventory already committed.

A portion of these tickets will go to our gaming customers and early front money and credit data suggested formula one is shaping up to be an all time record casino event for the company.

Our patient at the second quarter of 2024 is also setting up quite well excuse me the first quarter highlighted by the Superbowl and the Legion Stadium in February we're already seeing stronger rates in a typical superbowl weekend with exceptional early business from sponsors and media. There's led to three to four times higher room rates on the books.

Looking longer term, we're excited by the possibilities walk in the age to Las Vegas literally in our front yard at the current Tropicana site the.

He's proposing a 30000 seat stadium, representing an additional 2.4 million sheets every year during the regular season that should drive over 400000, new tourists during the focus on midweek business.

The Raiders and the Stanley Cup champion Golden Knights have shown that Las Vegas is the go to destination for away fans thinking of funding entertaining getaway to see their favorite teams play and when do you think the age will be no different.

The age stadium, Allegiant and T mobile represent 100000 seats holding three professional sports teams that are directly adjacent to one or more of our properties with a possibility for multiple events on the same day, it's clear that Las Vegas has become the world's Premier sports and entertainment destination.

Turning to Macau, we posted another outstanding quarter performance and adjusted property EBITDAR, surpassing the second quarter of 2019 margins, where in the high Twenty's a great story that we feel confident can be sustained for the long term.

Our outsize performance in Macau as a result of exceptional execution by the team at M. G M. China, who has done an incredible job positioning our properties to Maine share in the mid teens in the market and it seems significant increase in hotel supply during the quarter. Just a few weeks ago, we reconfigured an enhanced pitch seven at M. G M. A cow and the Lotus room at M. G M coach.

And expect to complete the deployment optimization in Q3 of our tables in the cow, we're focused on four P priority.

Activating our incremental 200 tables, making optimistic changes tour casino, Florida maximize yields.

Taken care of our premium mass customers and driving international customers to our property through our global branch Office network.

We're committed to helping shape the future of Macau is a global tourism destination throw a concession commitments with investments being beginning the sheer. Thank you make a capital will cover a wide range of opportunities, including investments in art and culture Entertainment and the expansion of our international customer base I'd like to thank the Mccarthy our government for their continued support.

Turning now to bed M. G. M. S. The team announced last week, we are on track for a second half 20 twenty-three profitability and we're pleased with a meaningful progress we've made towards single accounts single wallet. In fact this week, we expect to be live with this feature in 14 markets, which cover more than 50% of our database.

Apartments announced acquisition of Angstrom is also a positive step towards improving by them James product and refining our pricing tools, both of which we expect to drive customer satisfaction and ultimately margins what are the meaningful benefits Saddam Jimmy Stewart Springs have been M. G. M is 37000 rooms in Las Vegas.

The important new customers nightly all of our resort guests are exposed to bet M. G M marketing throughout their stay and on average bet M. G. M requires 30000 customers monthly who've originated or had any prior relationship with M. G M resorts with half of those coming from Nevada.

Excuse me as a rule out single accounts single wallet across the country that M. G. M will be able to truly activate are unparalleled footprint in Las Vegas is part of our Omnichannel strategy, We expect acquisition engaged with metrics to grow as players get to enjoy as seamless experience using the bed M. G M app across state borders.

We're also focused on growing at international digital business through Leo Vegas [noise].

And last corner and that's an acquisition of push gaming gaming content studio.

That acquisition is scheduled to close later this fall we developed our digital presence internationally through improved content technology and distribution.

Now lastly on the development front.

[noise] excuse me in New York, We hope to receive a license in the first half of 2024 and Japan next step is entering into implementation agreement with the Central government, which we also expect in the fall.

In closing our agreement with Mary ongoing investments into our operations and a fantastic sports entertainment backdrop in Las Vegas position as well to create operating leverage by growing our EBITDAR against our fixed rent escalators.

The stability of our domestic business will be supplemented by outsize earnings opportunities and a cow is that business ramps in the beginning of profitability and bad M. G. M. We also have longer tail opportunities whether developments in Japan in New York and with our international digital strategy with Leo Vegas, when you connect each of these opportunities for cash flow general.

Asian, together add to it the strength of our balance sheet and with more cash than that that excluding M. G. M. China, Alright, then consider the fact that we reduced our share cowboy approximately 30% since the beginning of 2021. We believe the company is tremendously positioned for growth is reaccelerate are free cashflow yield with that I'll turn.

The Soviet Jonathan for more detail on the quarter, Jonathan Thanks, very much bill and I too want to start my remarks, but thinking our employees for all their hard work and delivering another robust quarter of results Bill set our employees are the best in the business and I couldn't agree more.

In the second quarter, we achieve strong earnings across our domestic portfolio and near second quarter. All time record adjusted property EBITDAR results at M. G M China.

Before I get into the results, let me begin with the financial benefits. We believe the Marriott agreement brings to M. G M.

Las Vegas M. G M resorts fills roughly 12 million room nights a year based.

Based on data from the cosmopolitan as well as Mary Yacht. We believe we can replace approximately 5% to 7% of our lowest yielding rooms with Mary at direct bookings, representing 600 to 800000 rooms per year.

Upgrading these lower yielding room nights with Mary yacht brings a lower customer acquisition cost hire a D R and a higher yielding customer with more on property spend.

Based on our research and our prior experience with a cosmopolitan, we expect to increase profit per room by approximately $100 per night, driving 60 to 75 million in annual profit once stabilized.

This estimate doesn't include any further upside from our regional operations group or occupancy left all in all we're excited about this agreement with Mary out and look forward to kicking things off in October .

Now turning to our results.

[vocalized-noise] arkansas's related businesses generated all time record revenues of 3.9 billion up 21% from last year and adjusted EBITDAR of 1.1 billion during the quarter net cash from operating activities with 577 million less capital expenditures free cash flow was <unk>.

323 million is important to note that 166 million in cash flow from operating activities and 14 million in Capex related M. G. M. China were included in the quarter.

You're in Las Vegas revenues of 2.1 billion were steady compared to prior year and adjusted property EBITDAR was down 6% to $777 million a good number for Las Vegas on the same store basis, excluding the Mirage in the cosmopolitan revenues were level and adjusted property EBITDAR decreased eight per.

Sent margins of 36 per cent were well above 2019 levels.

Second quarter occupancy was 96 per cent, an 80 yard was $234 an increase of 4% year over year looking forward, our pace, which reflects on the books rooms is up year over year for every month beginning in 2000 twenty-three remaining in 2023 and.

In terms of where we are seeing strength in Las Vegas, it's clear that it's coming from the luxury segment, which for this purpose, we define as our properties, which have a higher a D. R than the strip average of $185 and that's our business.

Segment represents approximately 65 per cent of our rooms and over 80% of our EBITDAR in the second quarter.

In the regions revenues of $926 million, we're down 3% compared to prior year and adjusted property EBITDAR was down 14% to $294 million of course this quarter. We did not have the results of the goldstrike. So same-store revenues, excluding the goldstrike grew 2% with adjusted.

Property EBITDAR decreasing seven per cent, we continue to see stable trends in our regional operations, while EBITDAR was down year over year on the same store basis. Most of that decline is attributable to two properties. The borgata in M. G M Grand Detroit, both of which lead they're highly competitive markets.

Regional adjusted EBITDA margins were 32 per cent in the quarter as you were will recall in the third quarter of 2022.

We brought back our normal service, an amenity levels to a regional properties, which has led to consistent margins in the 32 to 33 per cent range sense.

Turning to Macau are adjusted E property EBITDAR of 209 million was an increase of 21% versus the second quarter of 2019 with a 28% margin gross.

Gross gaming revenues exceeded second quarter 2019 levels led by our main floor win which was 37 per cent higher than 2019 the flow through created from net revenues two adjusted property EBITDAR was over 100 per cent when compared to 2019.

We made progress in improving M. G M. China's credit profile with the July announcement of the amendment, an extension of our two revolving credit facilities with a new maturity date in 2026, and this was an important step in securing and extending our access to liquidity.

And the first half of 2023 bad M. G. M generated net revenues associated with the operations of 944 million, which is an improvement of 55% compared to the first half last year, but M. G M as well on track to achieve our forecast of $1.8 billion to $2 billion in net revenues from operations for the year.

Our 50 per cent of bad M. G M's operating losses in the second quarter, where 22 million as you recall <unk> or sorry M. G. M reports that M. G. M. One month in arrears. So our second court reporting reflects March through May and that explains the variance Tibet mgm's positive EBITDA in the calendar.

Quarter.

Let me close on capital allocation and valuation.

As we just lap the one year mark at the Cosmopolitan and with the Mirage in goldstrike transactions behind us. It's a good time to reflect on the impact of these portfolio moves on our financial picture.

We committed a net $460 million of capital to our domestic opt goes with the acquisition of the cosmopolitan and the subsequent dispositions of the Mirage in the goldstrike.

On a trailing 12 month basis, the incremental adjusted property EBITDAR generated from the cosmopolitan less the amount lost with the dispositions was $258 million backing out the change to cash rent with these transaction results in a net increase of $188 million.

$460 million of capital.

This implies a creation multiple of 2.4 times or said another way a return on investment of 41% for a property the cosmopolitan of Las Vegas that is now the youngest in our Las Vegas portfolio with the attending low capex requirement.

We take capital allocation seriously here and we're proud of these moves and the execution cosmopolitan, which made it all possible.

This year three today, we also returned capital to shareholders by purchasing over 28 million shares.

For $1.2 billion, we're currently trading at 30% higher than our average weighted cost of shares since the program resumed in early 2021 get our valuation still remains very attractive and our earnings presentation posted this afternoon I revisit our adjusted EBITDA multiple at current trading levels.

Using consensus valuation estimates for our share of bad M. G M and the current market value of M. G M. China were trading at five times trailing adjusted EBITDA Bill back to Ya. Thanks, Jonathan.

Hopefully you've heard the business case come through loud and clear and Jim Resorts offers consistent earnings through our Las Vegas, and regional properties with near term growth and diversification through bad M. G M shift to profitability and Mgm's, China's rapid inflection as well as long term growth opportunities international digital into our expansion efforts in New York.

<unk> in Japan, plus fortify balance sheet allows us the ability to make optimistic investments and acquisitions as well as returned capital to shareholders who share repurchases.

Johnson mentioned, we believe our shares will still be placed an attractive level and as we stand today I'm certainly encouraged by our ability to grocery cashless significantly and believe as the sum of the parts evaluation. We included in the deck suggest our poor business is trading at multiples wall below our competitors, providing for future growth and diet.

To our shareholders with that operator, we'll take questions.

We will now begin the question and answer session.

To ask a question you May press star one on your Touchtone phone.

If you're using a speaker phone please pick up your handset before pressing the keys and to withdraw question. Please press Star then too.

Again as a reminder, please limit yourself to one question and one follow up.

And our first question today will come from Joe Graf with J P. Morgan. Please go ahead.

Afternoon, Ville afternoon, Jonathan at Yahoo.

You did a fairly thorough job talking about your your current operations and and and the trend line in Las Vegas Regional Macau.

As well as that Mgn's up I have a couple of sort of big picture questions or one day picture question in them sort of one thought on New York, but.

My first question is if you can just give us an update.

On any digital or any.

<unk> and digital how much of a strategic priority is that for you.

Both in international market than in North America and.

And then maybe for each how big is too big as their thighs constraint and then my my follow up question relates to.

The the three downstate licenses here in New York.

York, where I'm at.

Yes.

Could the two existing facilities get licenses, if there's a contention or uncertainty Ah Iran.

The third license and.

What's your expectation in terms of communication regarding the next steps in New York I think Bill you may have been in New York fairly recently, so I'm I'm sure. Your current that's all for me. Thanks.

Thanks, Joe Let me take those as it relates to digital we're focused on working alongside our partners with a collective golden maximize the growth and profitability of M. G M and Leo Vegas, I think we're making good progress on both those fronts.

And that's really all we're gonna say I think on the second one.

It has been interesting.

I'm hopeful in the next month or so that we're going to hear something from the commission and ultimately get the process Rolling as you know we've submitted questions. I think we spent like 80 485 questions about the actual bill in the process. The moment they begin to return those questions to us the 90 day starts.

We've not got any specific indication, but we do believe it will happen shortly and are hopeful to that so you know that remains on track I think for some time in 2004 getting licensed in pushing on from there would be our goal and our hope.

But nothing definitive there either.

Okay.

And our next question will come from Sean Kelly with Bank of America. Please go ahead.

Hi, good afternoon, everyone. Thanks for taking my question. So I just want to dig into sort of the the Las Vegas out look a little bit, but probably a little bit more thorough margin or cost land. So I think you know.

Across the corner and certainly across lots of other leisure oriented businesses. We're starting to see you know the top line just normalize a little a little bit and it's pretty understandable. After you know such a good year last year. Just you know could you help us think a little bit about what kind of revenue growth M. G. M needs in the back half are kind of moving forward you know.

To get a bit of cost slaver, either hold margin or get a bit of costs leverage.

From a bit of a more normal lives level I think in the back half you know X Formula. One you know things are going to start to look a little bit more normal. So just help us think about what you're experiencing on the inflation front. What would you need you know would you could you lever a two or 3% growth rate would you need a little bit more than that just given the existing inflationary environment. How do you kind of think about the there's puts and takes.

Ah kick it off and turn it over to my colleagues look obviously formula one is a unique opportunity and it sounds like one that's gonna repeat itself for us often and you know the economics around that are substantial that being said, we we looked at our forecast for the second half of the year and particularly on top line driven by rooms and driven by.

Luxury feel really good about it both individually by property and particularly as you go up the luxury spectrum and then ultimately overall I think the big thing that's going to impact us is going to be ultimately wage you all know the culinary and the company or the olive Las Vegas companies are now out in negotiating prop.

Yes, which is going well and we have decades of history with them on doing this this town hasn't seen strikes since the eighties and so I think it will come to a reasonable resolved there are issues there around housekeeping of note in their core consist of contingency contingency of people that we're gonna need to address.

But labor I think is the biggest thing.

Thing that sits out there, but again the top line has been holding up exceptionally well support I'm sure Yeah, I'll, Jonathan Channel Oh, I had a couple of comments you know year on year, we're experiencing some increases in in in Las Vegas, and the regional markets in our F. T E K.

Counts not severe low single digit increases and that's because of the dynamics. We described during our prepared remarks, mostly around full staffing in the regions around.

Actually a fairly dramatic increase in non gaming revenues in our regional properties, but as you look sequentially as we go forward into the third fourth quarter first quarter of next year.

You know I I I think we'll just need a you know a few percentage points of growth in order to in order to maintain margins in and around these current levels and interestingly in Las Vegas, the fourth quarter has become a seasonal higher quarter for us with a course F. One the events schedule around.

The Raiders and and other things that were doing so that that tends to help margins as well <unk>. Thank you Governor John Ryan and Sean I would just for reaffirmation on margins.

You know we've not landed I think what we said we would land I think that's pretty history, we'd say that and we intend to stay there and so we'll continue to adjust the business accordingly, but we understand the importance of the margins and what we are and what we need and want to be and I think we're just about there.

That's super helpful color. Thank you as my follow up a small one but but jonathan thanks for the sort of extra detail on the myriad agreement you know just sort of one specific one on that but you know the $60 million to $75 million in annual property online is that is a number like that net or gross meeting is that.

After the incremental costs to marry out for that showed that just be pair savings to M. G M or do we have to net out whatever the costs are the fees to marry at you know as a as a part of that.

Now we see that his nap of net benefit to the company and and also doesn't include benefits and the regional markets.

And an occupancy recognizes when we already operate at very high Occupancies, but that's in that number.

Really encouraging thank you everyone.

And our next question will come from David Cats with Jeffries. Please go ahead.

Hi afternoon, everyone. Thanks for taking my question I wanted to talk about the regional business.

<unk>.

We've we've seen you know a number of regional operators reports, so far and there's been you know just some pressure right on on the top and the bottom can you just give us your your current state of the state of the regional business is this kind of a momentary pressure.

Sure is it economically driven you know what is your outlook for for that business competitively et cetera.

Yeah, David It's it's Corie I think the businesses fairly stable as we look across all of our lines of business. The the one area, we're seeing a little bit of a declining is that our table games out a few of the properties that Jonathan mentioned earlier about the decline in our business.

The nongaming amenities are holding up extremely well I wouldn't have been very strong. This summer on the labor front I think we're pretty well dialed in there were still down significantly from our peak empties and have a good understanding of our cost.

So that business maintaining I see is is most likely happening in the future quarters.

Got it all addicts. Please.

I was just going to add a couple of comments, which is that you know hours is a unique regional portfolio and that not only are virtually all of the properties have commanding market positions, but now with the conclusion of the of the room renovation at the water club as well as the boat <unk> you know.

These are properties, which are as a group going to be extremely strong free cash flow generators for the enterprise over the you know over the next several years with a lot of the major capex behind us so that they play a very important part for the portfolio because of that.

In Mgm's loyalty program can you update us on you know what's going on there and what benefits you may be seeing or any ways to measure.

Sure most of our our investments and the loyalty program have been around technology enabled meant for our M. G. M rewards members. So that they can make their reservations online they can check in through mobile check in et cetera, and also <unk>.

Producing benefits to the program whereby they can redeem them, they're MGM reward points.

Points for Nongaming as well as other amenities and earned the points on Nongaming amenities. All of these are seeing steady progress as we go through quarter to quarter.

And you know it it's an increasingly important part of the business the capital investment required and it is fairly modest Ah it's more around operational.

[noise] standards, and just increasing the awareness of R. M. G M rewards customers of benefits uhm associated with the program.

Just a few other points Jonathan we just have changed our platforms, which will allow us to do game application, which we think from a loyalty perspective will help and increased wallet chair.

And then we just announce that <unk>, the cosmopolitan and Blas Vegas in February will shift car loyalty program. So we're looking forward to the opportunity is there also.

Maybe less comment.

Casino segmentation is up almost 10 points as a percentage of our mixed generally the <unk>.

Program and all of its attribute submit a key driver in that.

And so we've seen a good deal of pick up throughout the course of the last year, even if I take out that M. G M, which as I said in my prepared comments, a huge driver of new sign ups, if you'd take that up I want it and I'll be off on the number here, but the way of like 12 is 13 per cent growth in that program and so and ultimately awareness obviously.

Going from M life to MGM rewards.

The awareness of the program and what it means across the portfolio has been beneficial.

Thank you everyone.

And our next question will come from very Jonas with tourists Securities. Please go ahead.

Hey, good afternoon I appreciate the commentary on margin you've previously talked about 406 hundred basis points margin improvement on 2019 for the domestic properties.

I believe you've been exceeding of that just curious if that's still the right range that 200 basis point range or or if you think it's a little tighter now.

No I I'm, so comfortable with that range and I appreciate the the observation. We we look at it very closely where we we get very specific in terms of where that margin improvement is coming from but then again you know 2019 as well.

A long time ago. So we're we're focusing on the business as it as it is now, but we're still comfortable with that as a benchmark.

Okay I understood and then just as a follow up you know you've given a lot of great color on the Merit deal. Maybe just can you talk a little bit more about any integrations with that M. G M and how you can see upside there.

Oh, ultimately, it's our ability to market to their customers and then their customers.

Having the opportunity did you then M G M and it's in it's context, we have.

A program that I think that's gonna motivate banville white points for those folks ultimately it sits independent with better M. G. M. Today, but I think it will be a key driver and when you have 180 million people aware of a product. We think is pretty significant and interesting and they can get rewarded inbound boy points and ultimately do things both inside that organization and also.

Me back within our own so it's a pretty straightforward deal where there's a fee for acquisitions for us and then they open up the benefits programming to all of their members and our members to each other.

Perfect. Thank you so much.

And our next question will come from Carlo Center Rally with Deutsche Bank. Please go ahead.

Hey, Hey, guys I was just hoping maybe if we could kind of look at the same store results in Las Vegas, and and maybe you guys can kind of help me better understand some of the ins and outs, but I thought if you look at you know the the margins on the same store portfolio down 350 basis points.

But still kind of within a range of of what you guys talked about relative to 2019 for starters. What was that there was no reference to hold or anything. So I wanted to ask if that was normal and secondly, I wanted to ask what the union contracts upcoming is there any kind of of booking of potential.

<unk> incremental labor increases that took place in the quarter and might take place in the third quarter as well given the contract and ended at the end of the <unk>.

In terms of the margin performance year on year, Yeah, and it was it was fairly consistent with what we experienced in the second quarter in terms of margin performance in Las Vegas, but as we look on your on your a lot of the difference is coming from labor you know as we came out of this.

I'm into the second quarter in 2022, we weren't yet fully staffed and so were copping against a lighter later labour load in the second quarter of 2022, and then it was a mixed bag of of a number of small items. None of which are you know I think are worth going into hold was not as significant.

Factor and that those all contributed to it but like you noted at the and the premise of your question, where we're kind of in that margin zone that we anticipate getting too and have been out for a couple of quarters.

Okay. Thanks, and then just getting back to to the accounting for bad M. G M and and obviously the EBITDA loss in the quarter given that the different calendar accounting.

Clearly June was a positive month based on that July and August tend to be.

Seasonally soft per months I would say with it within the sports calendar et cetera is it possible that that kind of three Q, which is generally a weaker quarter in general from <unk> perspective could actually be breakeven to slightly positive prior to obviously what would be expected to be a stronger for Q.

I I mean, I prefer not to parse the quarters I think you're you're you know you're directionally correct in terms of the relative strength of the different quarters. You think the second quarter calendar result was was terrific and we you know we stand by that second half.

Uhm profitability comment.

Comment.

Okay, and sorry, just just so I'm clear that that's obviously you you guys are thinking aggregate second half as reported positive, but not necessarily each quarter positive is that the right way to interpret that.

Yes, yes.

Yeah, you've got football, obviously kicking up in the third quarter. So the answer's, yes, Yep alright. Thank you guys.

And our next question will come from Stephen Grambling with Morgan Stanley . Please go ahead.

Hey, Thanks, maybe one more on that M. G. M. I know I know you didn't disclose or better magenta and disclose the EBITDA exactly but from what what we can tell it looks like the the margin there may be a little bit lower than one of your closest peers, but I know, there's some puts and takes to try to compare these things anything that you can call out to.

To help investors as they try to compare benchmark.

Yeah like I I think we've said this on a prior call in and I think the Great News is we finally got single wallet in motion I think the opportunity with Angstrom will drive more product more parlay more frequency and recency around best in game and otherwise and those are big margin businesses and so if you look at you know I think.

Gross we're a little over 9%.

I know there's a goal the breakthrough 10, once we get angstrom fully deployed which will probably come in a couple of phases through football and then post football and so I think if you looked at the business is that's the biggest delta between the two is the product offering and more importantly that type of products that potentially someone like a fan to a drafting will offer.

Versus the velocity of things that we offer which simply going to have more high margin bets available for customers as we deploy angstrom.

And it's Stephen Ah, Jonathan if you look at our second quarter. Some of the K P is that we called out in the earnings presentation. I mean is leading indicators. We're very excited about them for the profitability of of the business you know lower customer acquisition cough hire more margin on online sports betting increase play by our loyal no.

Customers and then you know.

All of our pre 2023 markets now contribution positive I mean, all those things bode very well.

For for improving profitability in the future.

That's super helpful and one follow up just on.

Kind of bad M. G M. But also the the regional properties. It looks like the properties that were in the states with legalized gaming had a little bit weaker crush gaming revenue than those without any color on how to assess cannibalization from gaming our pet MGM specifically.

But I I think in macro it's beginning to be a slight factor, but I think if you look at it in aggregate obviously, what's happened in a place like Michigan, where it's gone you know almost 100 per cent more than brick and mortar it's meaningful to the business of meaningful collectively uhm, we continue to hold our market share.

I don't know quite recently, what it is 48 or whatever it is 40 46 per cent.

So you know <unk>.

<unk>, we think it's to our betterment and we're excited by it longterm and again I think once we get more this omnichannel and play we can begin to motivate back into the property level with tournaments and other activity cases will drive people back into brick and mortar.

It makes sense and ultimately free cash flow margin accretive.

Yes.

Clearly.

Thank you.

And our next question will come from Dan Pulitzer with Wells Fargo. Please go ahead.

Hey, good afternoon, everyone I guess a high level. One on Vegas is you you you know you've done a good job kind of laying out the near term and medium term outlook, but I guess since we look past the superbowl onto 2024 can you maybe highlight some of the key event that you have on the calendar or you know I guess, where you are in terms of the group and convention pacing, where you are versus where do you typically.

<unk>, Yeah, just any colors, we kind of look further out into the demand picture would be great. Thanks.

<unk>, Yeah. So 2024 from a convention booking perspective looks really positive for our company will be up about six per cent in room Knights just as a reminder, Mandalay Bay has been under remodel so that didn't that's impacted the number of convention room Night's sleep had and the second and third quarter here. So we have been.

A little bit down on the convention side, which put some pressure on the legacy properties in the <unk> in the mid week, but as we look at 24 <unk> in the pace that were seen in the N word those rooms are being bumped it should make up the difference that we saw in the last few quarters.

And then you know if you think just more macro in terms of events event activity. The great News is we're still the net beneficiaries were carriers like to bring their aircraft I think we're sitting at 115 or 116% of inventory seats over where we were pre pandemic. So that that's been great News convention is quite mentioned will pick pace.

We have yet to see the full returned of international business to Las Vegas, particularly from Asia, I think that'll take some pace. We're excited by what we think Mary out can do from it if not a displacement, but probably a little bit of both you know a higher valued customer against an occupancy creep up because we've seen what's happened to cosmopolitan, if we stretch out across the port.

<unk>, we think that's meaningful.

We have several bids in for several M. C. Two eight tournaments the college football Championship game. The final four frozen fear, it's not frozen whenever they call. Their final four for hockey I think it's called frozen theory.

And so and the programming Legion and the opportunity. It provides is proven to be highly successful for whether it's a beyonce that's coming in later this month or others, you know selling out in Las Vegas is almost a given given the nature of the activity inside a three hour bennetts a three day event.

So we keep getting more than our fair share of Ah looks at all of those things as a community and we as individual properties, obviously with T mobile and our portfolio et cetera. So.

Overall pretty excited by all of it and then then you have the spear with you to which you know at 20000 people night has to help the entire city and you know I think boxing is definitely coming back. We just hosted a fight last week and that was spectacular for us. So.

Got it thanks for all of the caller and then just pivoting to the digital in bed MGM. Obviously, if we we look through your slides and we see the data share is kind of kind of edge downward submit uhm. So maybe you can you talk about the the priorities at the at the J V level as it relates to growth and market share versus profitability, which obviously inflect inherent in the <unk>.

Calendar to kill.

It's two things you kind of touched on both of them you know a drive to profitability you know, we see cohorts maturing in 24 to 36 months, particularly in sports hopefully a little sooner night gaming when that hopefully they are maturing a little sooner night gaming we've seen R. C. P. A has come down from 400 down below 300, <unk> and so.

<unk> you know, there's an active maturity there in the context of how we're marketing and to whom and one more disciplined about all of that and candidly. It's back what I said earlier, our product is not where we want it to be I think the moves that were now, making though within 10 or a partner with the <unk>, we're gonna make with extra <unk> onboarded partner forbidden EM.

G M will get to a place where it will be back in that game in a meaningful way hopefully it will begin to gain some sure back on the casino site, it's simply <unk>.

Sports Bettors about 30 per cent of a migrate over to the casino. If you take that out of the equation. If you leave that in the equation. It's part of the reason I gave me to come down a couple of points, but we continue to dominate we're not naive that they're not coming after us in that in that forum, but we continue to innovate we've got new.

Games going on the floor go back to the question, we just had around.

It was it hurting brick and mortar they'd have jackpots that extend from digital over to brick and mortar and vice versa, and so we're continuing to figure out ways to type of products together to promote both ends of the spectrum.

Got it really helpful. Thanks for all the caller.

And our next question will come from branch <unk> with Barclays. Please go ahead.

[noise] good evening everybody. Thanks for the question I was wondering if in the regionals.

If you wanted to if you were able to give us a little more color and what happened in at the Borgata and in Detroit This quarter and if it's fair to assume that if you adjusted for that you would've ended up comfortably in that 32% to 33% margin range that you talked about Jonathan.

Sure Yeah. It at the Borgata as a matter of a couple of pretty significant table game events moving from June and two July and M. G M to Detroit It was some issues around hold for the for the <unk>.

Property in the quarter.

But.

Again going forward, we're comfortable being in that range forgot it was the big tracker margin.

Okay, Great. That's helpful and then and then over in Macau.

As you look at the market's recovery and and <unk>, where you guys think the recovery is coming from here and you know looking at your own capacity in your own sort of expertise yep.

Can you tell us what gives you confidence that you'll be able to hold the market share gains that you've gotten and how you you sort of think that can trend from here.

Well I'll just kick it off and turn it over to you, but who obviously ellipses every day like we are uniquely positioned in the way, we've historically shape for decades, our marketing organization around knowing our own customers and delivering them to our properties and obviously now with the demise of junk. It's we've seen that network go to work.

And frankly, we're expanding on that network, where we've opened a couple more offices and so that's been meaningful and helpful. And then I think [laughter]. It is interesting to us the moves that we made on the casino floor itself and the Reconfigurations and the velocity and the way we offer up games and the proximity to each other others have now begun to replica.

Kate and so that's.

<unk> and it it may or may not take its course, but here. We are a July was yet a record month here. We are seven months into this and we continue to hold chair, where I think you've seen almost 10000 hotel rooms open up in the marketplace and so look cause there's always tomorrow, we're not overly cocky about it but.

But we do think we've done a good job deploying the 200 tables, we got there's about 150 and play with 50 more to go and I think that'll help our share stories, we get to the second half of the year.

You read anything to add.

Yeah, I think you'll be all other than the cable in full optimization you talked about I think that we're also looking at <unk> expansion, obviously I think that these <unk> that's gonna be very important for our customer acquisition. Another thing is that we're gonna <unk>.

Average all network that and can result has internationally to push the overseas market I think that would have already made a lot of progress and we're going to open more offices and double R head count.

Tell us a marketing people in these areas other than that I think capital projects I mean hasn't roommate.

<unk> <unk> <unk>.

Improve our customers experience, particularly with the premium modified so we are looking at for example, <unk> renovation end up coming.

<unk> and the quarters and there are also a lot of gaming.

Gaming programs, some product that we're gonna either renovate abuse.

Under the <unk> confession commitment.

So there are a lot of things that we are doing focusing on to <unk> market share.

Just to give you some color on the recovery I think I'll July .

Results are very strong robust.

It's showing continuous improvement a lot of fronts and a lot of <unk> visa visa can quarter.

Whether it's a debit or Massachusetts recover right.

Epithet recover right. So we're off the web looking at higher numbers that'd be a second quarter. So I'm very optimistic on the balance of your in terms of recovery from the financial results.

Thank you.

Great. Thanks, everyone for the color.

And our next question will come from Robin Farley with UBS. Please go ahead.

Great. Thanks, I just wanted to follow up on them Marianne agreement. It seems like a great distribution agreement they describe it as a franchise agreement.

<unk> would suggest that you're paying I hear of rooms revenue from you know you mentioned you expect them to fill maybe 5% to 7% of the <unk> are you paying a share of room revenues from the other you know 90 plus percent of rooms any agreement. Thanks.

Robin the whole agreement is basically a hybrid given the nature of Las Vegas, given our Occupancies and so yes, we're paying fees on some rooms not all.

And so I looked at you long understand the nature of the story here and what we've been able to do well. There was high was more just a loyalty program. This goes a little deeper and longer which were excited by but it is rewarded on performance. So the more room nights, they drive and the more room nights they bring us the better they do an ultimate I think the better we will do but it's a hybrid deal it would.

B and the general context of how you think about a franchise agreement.

So so not a share of revenues on the room set you know you're already failure yourself is that the way to think about it.

Yeah, we're not gonna go into the details of the agreement, we actually and I feel like we've been pretty transparent in terms of what we think they'll deliver what they think they'll deliver in terms of rooms, and the incremental value associated with those rooms on a net basis.

So, but that's as far as we're gonna go in terms of describing the the the transaction.

Okay. Thank you thanks for the color.

Thanks.

Our next question will come from John decree with a C. B R. E. Please go ahead.

Good afternoon, everyone and thanks for taking my questions.

In your in your prepared remarks, you mentioned about the <unk> in the backyard for you guys. So you know.

Maybe.

A little bit further looking but are there.

Potential reinvestment opportunities on south ends up the strip for your properties that might make our life since now that that maybe didn't previously there you know things that you're starting to consider and that you might be able to do with that with that potential anchor down there in your backyard.

John Thanks for the question I think the answers, yes to a degree I mean, we're gonna keep you know.

Velocity of capital we spend in Las Vegas.

We're sitting here, particularly on that corner when we on all three properties in measure having said that you know, it's a billion and a half dollar stadium, it's gonna deliver hundreds of thousands of new folks M. G. M is 30 years old and need some love anyways, we're not crazy about the way. It all connects right now so we'd like to work on connectivity on that corner.

We'd like to work on particularly the front end of M. G. M. We think the frankly for that you get away from the elevators. The worst the property gets not the better and we'd like to thank our front door could be enhanced and I know it can and this will be a catalyst that dialogue, where we go and how much time to tell but yeah. We do think there's an opportunity there.

Thanks, <unk>, maybe one more also circling back to you that the prepared remarks.

If you could provide a little bit of of colors, obviously been strength on the stress that at the luxury properties that you gave us some color on but you know smaller piece of the business, perhaps in all luxury properties. If you could give us a little color as to what you're seeing there in terms of just differential from from luxury properties, if you'd call. It <unk>.

<unk> and what opportunities are there is it is it economic is it still just that mid week occupancy that that needs to come back as convention role in in citywide fill ups or you know kind of how are you thinking about those those other properties that could you know maybe see some opportunities.

John tick it off and turn it to court because he knows more intimately, but I would say this park is enjoying its best you're ever by far.

And so it sits in the epicentre with T mobile of activity, we you know and we see bleed over from Luxor. When conventions are there, obviously will see bleed over Luxor Excalibur when sports kick when sports when football kicks back up New York, New York is enjoying a decent year. So it's a little bit of a mixed bag, but jenny.

<unk>, Yeah, I I think in general that there's plenty of demand to fill the properties as it just comes to the rate unmade weeks and in particular when you look at Luxor next kalberer, they've been impacted by Mandalay as construction going on over there. So they haven't had the flow over from those convention room nights when there are.

<unk>, we have pricing even at those pricing power even at those properties.

But this summer has been a little bit low on the convention business not just for us, but from what we've heard from some of our competitors, but we're still happy with the occupancy we're seeing in there.

Great. Thanks, so much guys.

And our next question will come from Chad <unk> with Mcquary. Please go ahead.

Afternoon. Thanks for taking my questions first wanted to ask about your share repurchases $50 million in the quarter that was the highest in four quarters I'm. Just wondering how you were thinking about the pace of repurchases as we get through the back half of the year and then beyond thanks.

Yeah. Thanks. Thanks for the question. It. This is an important part of our capital allocation program. It has been now for over two years. We you know we tried to be a consistent but also opportunistic depending upon where we see the the shares and as compared to our own estimate of valley.

You have the company and and you know and this this quarter was aggressive although not terribly more so than the first quarter. This will continue to be a part of our capital allocation.

Approach and the pace will be dictated by by the market as well as some of the other opportunities that we have before us, but we do have close to $2 billion still with excess cash on the balance sheet and one of the best we think it art.

[noise] valuation right now one of the best homes for that capital is repurchasing our own chairs.

Great. Thanks, and then wanted to go back to Macau tissue bird nice to hear about the quarter and the July was trying to get in the right direction. We've seen that the state Council recently published 20 point measure to to potentially expand consumption in China I think we've all been waiting for a resumption of that.

Farther out traveler or visit or you know non guangdong to come back to the market. So two part question on that first off do you think this could be the catalyst that gets them going in and you know what would be and then secondly, do you need that customer to come back or giving your results that you're showing right now you know.

You're pretty happy with the current customers that you have in your property <unk>.

Yeah, I think that's a great question I think the stimulation package that the government needs to <unk> in China, I think it's gonna be another push for the <unk> and the particular at the net too low and a mass.

This market frankly, I think that it's <unk> by the the premium <unk> segments, but I think the longer term recovery overall won't be a bath the spectral much <unk> that just that particular with all the non gaming.

Programs that the older Concessionaires implementing I think that the demand will come from a lot of that come from data lower to Mishandle the math math.

So I think that again bodes well for everybody I think the market for <unk> actually.

Talk about recovery, but for us I think.

We are already moving beyond recovery without talking about role. So we are.

Focusing on all segments of course premium mask given the the the the profit <unk> et cetera, I think we focus on that but a lot of <unk> lot of pro.

Programs will be supported by every segment off the off the mask. So I think that's all as well for us as well in the coming months and quarters for the business World.

Thank you very much appreciate it.

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

Thank you I figured I'd just quickly before you all go like I I think you've heard we continue to have a really strong topline story in Las Vegas. It's led by event activity. It's led by luxury which we you know against Johnson's comment 80 per cent of our earnings are coming from a luxury segment and sector you've heard us talk about Mary I think about what we just did we've just partnered with.

The world's largest hospitality organization end up with 180 members 180 million members directly tied to our programs and ultimately to our properties you know better M. G. M is now an inflection point you've heard us talk about margin retention and margin stabilization going forward I think we're at the numbers we shouldn't <unk>.

Want to be both in Las Vegas, and regional and will continue to work towards that end you heard about our balance sheet being in great shape and the value that it presents to shareholders, particularly given the trading multiple there were at remains very opportunistic in our view, but it sits there loud and clear so for that I. Thank you for all your support and.

In your ear and have a great evening.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.