Q3 2023 MGM Resorts International Earnings Call
Okay.
Good afternoon, and welcome to the MGM Resorts International third quarter 2023 earnings Conference call.
Joining the call from the company today are Bill Hornbuckle, Chief Executive Officer, and President Corey Sanders, Chief operating officer.
Jonathan help yard Chief financial Officer and Treasurer.
Hubert Wong President and Chief operating officer of MGM, China, and Andrew Chapman Director of Investor Relations.
Participants are in listen only mode. After the company's remarks, there will be a question and answer session.
In fairness to all participants please limit yourself to one question and one follow up.
Please note this conference is being recorded.
Now I would like to turn the call over to Andrew Chapman. Please go ahead.
Good afternoon, and welcome to the MGM resorts International third quarter 2023 earnings call. This call is being broadcast live on the Internet at investors that MGM resorts Dot Com. We have also furnished our press release on form 8-K to the SEC on this call. We will make forward looking statements under the safe Harbor provisions of the federal Securities laws.
Actual results may differ materially from those contemplated in these statements.
Additional information concerning factors that could cause actual results to differ from these forward looking statements is contained in today's press release and in our parents filings with the SEC, except as required by law. We undertake no obligation to update these statements as a result of new information or otherwise during the call. We will also discuss non-GAAP financial measures when talking about our performance.
Can find the reconciliation of GAAP financial measures in our press release and Investor presentation, which are available on our website. Finally this presentation is being recorded I would now I'll turn it over to Bill Hornbuckle, Thanks, Andrew and thank you all for joining US today in the third quarter, we had a fantastic result, as evidenced by our record consolidated net revenues and despite the.
And across our portfolio, we achieved record same store 80 ours in Las Vegas, as well as a record third quarter regional net revenues on a same store basis. Just stayed at least we're off to a strong start prior to the cyber security issue and to briefly summarize on September 12th we disclosed that we identified a cyber security issue affecting certain of our U.
<unk> systems.
As a precautionary measure we proactively shut down certain systems to mitigate risks the customer information, which resulted in disruption at some of our properties over the following weeks, we systematically be stored enhance these systems and we're fully operational by the end of the month of September.
Following the issues, we've seen incredible resiliency in our business to start the fourth quarter going forward, we do not anticipate any further operational disruptions from the incident as expected that insurance will cover the losses incurred we expect to receive insurance reimbursements in the upcoming quarters and Jonathan will provide more detailed information on the quarterly financial impacts.
In his remarks.
I want to express my deep appreciation once again to our employees for their response during a challenging few weeks they showed resilience and professionalism, but more importantly, our commitment to our culture of taking care of our guests and each other we've.
We've been humbled by the feedback from many of our guests who took the time to call out the exceptional service. They received were coming out of this stronger as a team as a culture with a focus on the culture of yes from both our guests and employees well.
One last thing on the employees, we continue to negotiate in good faith with the unions in both Las Vegas, and Detroit with the goal of reaching agreement on new record contracts that work for everyone in Las Vegas as you know Caesars Entertainment came to a new tentative collective bargain agreement. This morning, and we are literally insertion as we speak and I believe we will come to a deal.
Today, we know from listening to our employees that they are looking for a pay increase to combat inflation as well as reduce workloads. Among other concerns. This deal when announced will do just that and will result in the largest pay increase in the history of our negotiations with the culinary Union.
As we shift our remarks to the fourth quarter, we anticipate the arrival of Las Vegas inaugural Formula. One race next week, we are well prepared to welcome our guests for that what promises to be an exciting and enduring tentpole event, we sold out our Bellagio Fountain club and grandstand seats cash roommates are several multiples of the same.
Same week in prior years, and the casino front money deposits indicate formula one will be an all time record casino event.
As we look into 'twenty 'twenty four we see strength in future bookings rate in group pace into the first half of the year and we are encouraged by a number of <unk>, including the launch of Marriott's direct bookings in the first quarter.
If fully renovated Mandalay Bay Convention Center, which will return 100000 primary midweek room nights lost in 2020 three.
The National Baccarat play further coming back opportunities to enhance our omnichannel marketing offerings to better M. G. M M. Jim rewards customers improving cross play between regionals in Las Vegas.
Exceptional high superbowl demands as well as a strong event calendar for the balance of the year, including the return of Formula one in the fall of 'twenty, four and plus the recent completion of the bridge connecting the Cosmopolitan City Center and Bellagio.
We've been diligently also working on deploying capital in meaningful ways of existing resorts with numerous hotel restaurant and entertainment refreshes.
Beyond these domestic operating tell wins, we are underway in Japan, we believe we're well positioned to be awarded a commercial gaming license in New York and Beth M. G. M is now on a positive path are more of those in just a moment.
Yeah.
Turning to our regional operations top line trends were solid in fact as mentioned previously we had a record third quarter same store regional net revenues. Despite the disruption margins were expected in the low thirties in.
In the Macao market. It is clearly evident in the business is booming in fact, it was the third quarter net revenue adjusted property EBITDA record and surpassed 2019, and adjusted property EBITDAR mask G. G R and visitation than to kick off the fourth quarter, we had an amazing Golden week that led to market led to market share.
For October of over 15% and an all time record adjusted property EBITDAR for the month.
Results have been outstanding because of the Integra and Genuity and execution of the team at the MGM China looking forward. We are still laser focused on three key priorities, making opportunistic changes to our casino floor and existing room products to maximize yield taking.
Taking care of our mass and premium mass customers and driving international tourism at MGM Cotai, we will start remodeling of our platinum area for completion early next year and at the MGM Macau, we have begun planning for a bill to upgrade and the addition of six new villas.
But MGM in the U S is now live in 28 markets. The team is making great progress with the integration of angstrom anywhere sports products, adding a myriad of betting options not offer before and single account single wall. It is launched in all the states, but Nevada the bet MGM team of by the comprehensive business update next month on their progress.
Specific to our international digital efforts in September MGM resorts, and Leo Vegas launched a multimedia marketing supporting the bet MGM brand in the U K with Chris Rock, leading the campaign U K market is ideal for an initial launch due to its size and the brand recognition of M. G M with U K customers initial kpis are very incur.
<unk> was the first time deposit is much higher than expected, we will leverage our recent acquisition of push gaming to bring innovative games to the U K and ultimately Tibet M. G M.
We will also look for pushed you extended the further international markets through existing <unk> relationships.
On the development front, we signed our implementation agreement with the city Moussaka in September and this is effectively our green light to begin the project. The total project cost of 1.27 trillion yen, which mgm's expected equity contribution is approximately 300 billion yen, which at current spot is roughly $2 billion.
Our cost of insulated through the course of the progress process. We have kept the budget unchanged by reducing minor scope around certain areas that will not impact the project returns and by locking in very attractive foreign exchange rates.
We look forward to breaking ground in Osaka for will be Japan's first ever integrated resort.
In New York, we have submitted our second round RFA questions. So the gaming Commission and we're prepared to submit our application within 30 days of the date in which the gaming Commission answers those questions.
We believe our existing facility brand recognition and strong ties with Yonkers community, making us a great contender for one of those three available licenses.
In Dubai, our partner Wausau is under construction and a luxury development, including 1400 hotel rooms, with the MGM Grand Bellagio and ARIA brands. We currently have a hospitality management deal requiring no capital from us.
That said, we do significantly we.
We do see opportunity, if gaming where to be linear legalized first in the UAE and ultimately in Dubai. We believe they have the best gaming hospitality brands in the world with the best location in Dubai and our existing project could include a world class gaming component if approved.
And finally, we expect to launch of our strategic relationship with Marriott to begin in early 'twenty 'twenty four when we will begin to start taking reservations. We have launched the official a landing page and we will soon announce the exciting loyalty benefits we plan to offer to both M. Jim rewards and Marianne envoy members and its 180 million members.
Excuse me in closing the stability of our domestic business and the focus on margins will be supplemented by both mgm's approaching profitability as well as by outsized earnings opportunities in Macau as the business continues to ramp further we also have long term drivers where their developments in Japan, and New York and our international digital strategy.
With Leo Vegas.
When you connect each of these prospects for cash flow generation together add to it a fortress balance sheet with more cash than debt when excluding MGM, China and then considering the fact that we've reduced our current share count by approximately 31% less than three years and our board recently approved an additional $2 billion share buyback authorization.
We are confident that the company is tremendously positioned to grow its free cash flow going forward with that and before I lose my voice completely.
I'll turn this over to Jonathan for more details on the quarter.
Thanks, Bill before I get into the financial results I too would like to commend the selfless efforts of all of our employees. During our recent cyber security issue I personally witnessed so many people on our teams go above and beyond to support their colleagues and take care of our customers.
As you likely saw on the 8-K, we highlighted an estimated adjusted property EBITDAR impact from the cyber security event of approximately $100 million in September most of this impact was from a loss in revenue from room cancellations in Las Vegas, and our service recovery efforts, we expect our Q4.
The impact to be limited with some hotel bookings lost in the first part of October and a brief disruption to the direct mail cadence.
In our calendar, which affects the regionals more meaningfully than Las Vegas.
We remain confident that the losses will be covered by our cyber insurance now turning to the results for the quarter.
Our consolidated businesses generated net revenues of 4 billion up 16% from last year net income of 161 million and adjusted EBITDAR of 1.1 billion with significant contribution from MGM China.
During the quarter net cash from operating activities was 694 million and free cash flow was 484 million. It's important to note that $197 million in free cash in cash flow from operating activities and $8 million in capital expenditures related to MGM, China and were included in.
In the quarter.
In Las Vegas, net revenues of $2 1 billion were down $195 million or 8% compared to the prior year adjusted property EBITDAR was down 16% to $714 million same store net revenues, which excludes Mirage from last year were down 2%.
And same store adjusted property EBITDAR was down 11%.
Las Vegas adjusted property EBITDAR margins were 34% and we estimate about 200 basis points of margin impact in Las Vegas was related to the cyber security issue.
At the start of the third quarter trends were solid in Las Vegas July and August combined net revenues on a same store basis were essentially flat versus 2022 occupancy for the first two months was up 100 basis points year over year, and then fell to 88% in September down six percentage points year over year.
That being said.
We drove a sharp recovery in October with occupancy back up to 95% in Las Vegas.
Importantly, while we're still working to negotiate a new collective bargaining agreement with the cooling Air Union, we had been accruing for an increase since June 1st we will not provide the full details of that are cool at this time given that we're still in active negotiations and we will look to technology and process improvements to help offset the incremental.
Labor costs, we expect.
Turning to the regions in September the cyber security event also affected the regional properties. Prior to this incident in July and August had a strong start to the third quarter with a 2% increase in same store net revenues versus last year.
Third quarter revenues of $925 million, though were down 5% compared to the prior year and adjusted property EBITDAR was down 9% to $293 million same.
Same store revenues, which exclude goldstrike, we're up 1% and same store adjusted property EBITDAR was down just 2% or $6 million, even with the impact of the cyber incident.
In Macao, our adjusted property EBITDAR of 226 million with a 23% increase compared to the third quarter of 2019.
We achieved 28% margins helps them what by a benefit of $18 million from hold in the quarter Casino revenues exceeded third quarter 2019 levels, primarily driven by our main for win and discounts and incentives as a percentage of gross win where 600 basis points lower compared to 2019.
Mainly due to the shift from VIP to mass.
Beth M G M as well on pace to achieve its forecast of one eight to 2.2 0.0 billion in net revenues from operations for the year, our 50% share of bad Mgm's operating income in the third quarter was $13 million, marking our first quarter of profitability at bet MGM.
We now anticipate fourth quarter corporate expense to be roughly 115 million, bringing full year corporate expense less share based compensation to approximately $450 million. This upward adjustment relates to incentive fees in Japan related to the signing of the implementation agreement I T and cyber security issue related to <unk>.
Spencers as well as costs related to the integration of the cosmopolitan.
On the development front in Japan, we expect to commit approximately $2 billion over the next five years, our New York expansion. If approved will be an all in project estimated also with $2 billion of which $1 5 billion will be invested on improvements and $500 million expected for the license fee.
We plan to fully fund these projects through free cash flow generated by our operations.
I'll conclude with an overview of our free cash flow per share growth algorithm and it's pretty straightforward first we're committed to growing EBITDAR by improving our core operational performance deploying growth capital in high return projects and by focusing on margins, we create operating leverage by growing our EBITDAR more.
In our fixed 2% rent escalators second we will continue to buyback our shares as evidenced by the new $2 billion share repurchase program authorized by our board. In addition to returning share cash to our shareholders. These.
These repurchases turbocharge, our free cash flow per share growth.
And there is more free cash flow growth on the horizon, as we're making significant progress with Beth M. G M <unk>.
And we have those two exciting growth projects in the pipeline would that bill back to you. Thanks, Jonathan and just some opening comments before we talk a questions.
I'm reminded about the resiliency of this market and our company and our employees candidly. This quarter. We were went to Hell and back with what we all went through with cyber attack and I'm proud of what we've accomplished put ourselves back on track.
But more importantly, I think is an indicator of this market fundamentals have changed we've gone from you know a month ago in distress to getting ready for the biggest event on one of the second worst weekends. This city has ever seen and it is ongoing history of occupancy to the biggest event, we've ever seen with formula one and so.
Fundamentally this marketplace has changed Macau continues to do exceptionally well very proud of that team you've seen the market share that it has gained in it we'll keep and given that we ultimately have about 3% of the suite product.
I think we're kicking on all cylinders, there and doing the right things and we're going to look to correct that if I think about the future I think about development in Japan in the long haul hopefully New York in the midterm and next year I think about the ability to unleash 180 million Bond boy members and Marriott I get very excited and then ultimately the balance sheet I think we've been very.
Good Fiduciaries I think the company Johnson of known who has done a great job managing it.
Find yourselves in a great position to think about the future and things to do and invest in and with that operator I will open this up for questions. So thank you.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
As a reminder, in all fairness, please limit yourself to one question and one follow up.
And our first question is from Joe Greff with J P. Morgan. Please go ahead.
Good afternoon, everybody congratulations on the results.
Maybe this is a question for Corey, but for anybody who wants to take it I kind of think yes, the Mandalay Bay Convention Center coming back is underappreciated.
As a driver for growth for next year can you talk about the.
The group.
Next for next year, and where you think you'll end up for the group mix for this year in Las Vegas.
Yes.
This is Cory we also think it is a big deal the convention space will be fully renovated by the second quarter of <unk>.
Next year, we expect to pick up about 100000 extra rooms. There next year was still opportunities to increase it and the beauty of that is that at a high single digit ADR increase compared to where we are today. So I think all in all strategically.
As that building goes it fills the south strip, which fills Excalibur Luxor, which is to the benefit of us as a company.
Great and then.
I think I might know how are you going to answer this one bill regarding F. One last night, the Red rock is thought that Oh.
Operator internal expectations for F. One had come down more recently can you talk about what you're expecting for F. One if any internal expectations at least directionally had been been ratcheted down in.
I know Caesars in the past they said they thought.
And one would be an incremental 5%.
Of of quarterly EBITDAR, if you'd kind of want to take a stab maybe where you think the contribution could.
It ended up being for <unk>, one for you guys in Las Vegas, and that's all for me.
Thanks, Joe I appreciate the question because if someone does it wasn't going to ask if that was going to answer it anyway [laughter].
We sold over 10000 tickets staff, one we've sold out a really cool experience with the Bellagio Fountain club I think something extremely unique anywhere in the whole sport, but particularly given its location our average rate is over $900 for the company.
You know, we're going to do over 60 million incremental hotel revenue for the weekend.
And it is 50% above 50% above any other event. We've had in terms of theoretical win now you know we all know what can happen theoretical knock on wood, but there's been nothing quite like it and to have it placed in the weekend that it is is we think going to be an incredible opportunity for the company and ultimately for the city long term it has not been.
Out its challenges believe.
Believe me I'm, a local I get the traffic I understand it I understand that where our employees are going through.
But I think long term, it's going to be a big winner, we will figure it all out there's been a great deal of money invested not only by the properties, but ultimately by Liberty in F. One and I think it's gonna be exciting weeks. It will look back on and say yeah, we're going to learn some things, but ultimately something to be cherished long time here.
You know what I would add is this is truly a luxury.
Event, and our properties aren't completely geared up for that on their location. We have the REIT database to make this a premium and then for our company.
Thank you guys.
The next question is from Carlo Santarelli with Deutsche Bank. Please go ahead.
Hey, guys I appreciate you taking my question.
Bill you talked a lot about kind of the outlook for next year, and obviously a lot of our favorable drivers as you look at the business today and kind of looking at the non event times, how did those and I get it in the in the quarter, obviously, a lot of disruption from the cyber stuff in and whatnot, but how do those periods look relative.
To say last year.
Okay, and you know how this works Carla better than most you know we have a short window in terms of F. T. But we do know events and so you know when you think about the Super Bowl I think about Formula one coming back I think about the fact that we have an NFL team in town and that's gonna guarantee is at least eight games.
Et cetera. It is fundamentally a foundation for business going forward that we haven't had in back to Corey is further prior.
Prior question around convention. It continues to grow we continue to get back to the.
Market makes it we were about 18, 19% of our of our base and convention, which is obviously the premium rate and so we're excited by all of that we through Covid learned a lot I think you know this but generally our casino market share is up a market mix about 10% and so we can lean into that we continue to lean into that heavily and I do believe me.
At scale, we will make a difference and so.
Well early to tell you know the pressures that are honest, whether they'd be wage or for insurance or other premiums are real but I I I feel every bit of confidence that we can overcome that particularly here in Las Vegas and push forward with the kind of results I Hope you all expect.
Thank you that's Super helpful. And then just if I could a follow up.
Obviously, Las Vegas table hold which we saw in the in the Nevada filings throughout the quarter was very high.
And the industry on the Baccarat side, you guys held well so kind of a two part question any any help quantifying the EBITDA impact in the period from the higher hold and in the second part is is there something that's changed outside of game math, which was a long time ago, the kind of dry.
<unk> what seems to be consistently higher holds for you guys going forward and is there any thought and kind of reevaluating where those.
Theoretical numbers should be.
Well I'll take the second one first and turn it over either Jonathan or Cory on the broader one although.
I I don't want to give because we wanted because we lost but having said that.
We have more domestic baccarat business than we've ever had there are three now prop bets basically in every baccarat game that people are taking advantage of it because they're fun and exciting, but you know no surprise out there they're to the house advantage coupled the bets are 10% that's something out of the house and so a little shift in play definite shift in market.
In terms of international versus domestic I think some of that balances itself out and the other thing. We've seen is as a quantum of very very high end customers, who are you know really swing this number more than I've seen historically.
Versus a balance of customers all the way through mid tier and all the way up to the very high end and so I think youre seeing some of that volatility as well obviously this quarter in our favor.
And as it relates carload to the financial impact of the swings we've at least domestically he tried to get out of the business of.
Gotta being the puts and takes related to hold we did as you noted in my prepared remarks around Macau.
But in the domestic business, we are not going to get into that detail.
Understood. Thank you guys.
The next question is from Shaun Kelley with Bank of America. Please go ahead.
Hi, good afternoon, everybody. Thank you for taking my questions.
I just wanted to dig into the sort of the domestic margins a little bit more if that was possible obviously a lot going on between our hold which we just talked about.
The the the impact on cyber.
Cyber and everything else, but I think if we try and adjust for some of these including the union accrual it looks to us like the margin performance was very good if we kind of strip that out both in regional and in Vegas. When we just look at it versus what happened last quarter and I was kind of wondering you know does that directionally fit with what you're seeing and where there any.
Operating expense improvements or things you were able to you know kind of do or isolate that helped offset some of that just broad inflationary pressure that we hear about out there across the business.
As Sean as Jonathan we agree we think both in the Las Vegas market and in the regional markets.
When adjusting for the impact of the cyber incident, whether you look at it year over year or sequentially from the second quarter to the third quarter that our margins were flat to up.
And those comparisons the impact in Las Vegas on margins was about 200 basis points. There was some impact from the accrual in the third quarter that I mentioned related to anticipated increases in labor costs.
So when correcting.
For those the margin I thought the margin performance year over year and sequentially was pretty good the regions the margin impact from the cyber security incident was.
Less severe as less than 100 basis points for a number of reasons, but even.
Even with that a modest adjustment you can see that our margins in the low thirties, compared pretty well both sequentially and year over year. Despite.
Some continued.
Labor cost increases in the regions and actually some more labor content in that business.
Great. Thanks.
And as.
If if yourselves or I don't know if he.
Hubert on the line or somebody can comment a little bit more on what youre seeing over there. It seems like based on the share number you disclose for October are and what you talked about bill in the prepared remarks, you guys are doing really well there, but just could you talk about that competitive climate, a little bit and maybe the margin structure around the really highest N part of premium mass that'd be helpful.
Your marriage since we have you up why don't we kick it to you.
Sure. Thank you Bill.
Yeah.
So I think for the most part the <unk>.
King <unk> promotional programs in the market.
<unk> remained quite irrational, we haven't seen irrational behavior among all the operators.
And.
In terms of our own investment.
Stayed pretty stable quarter after quarter.
The premium mass level.
So that'll all that's what I see in general there are a lot of our call.
<unk> advanced by draw a lot of people into the town and I think that from that perspective, it's incremental.
Not only to the market, but also for us overall.
Why is that.
Thank you very much.
The next question is from David Katz with Jefferies. Please go ahead.
Hi afternoon. Thanks for taking my question I wanted to just talk about.
Updated thoughts on leverage.
On a lease adjusted basis, and how you think about that in the context of.
You know returning capital.
We just have many discussions with management teams about where they'd like to be whether it's three to four for class a or.
In most cases, lower some cases lower than that and I would just love your perspective.
Sure, It's Jonathan and I. Appreciate the question, it's something we think about a great deal right.
Right now on a lease adjusted basis, suggesting the lease payments by a multiple of eight times, our leverage is about three and a half times its a full turn.
B B.
Below what we've talked.
<unk> talked about is our leverage cap.
So a a full turn on EBITDAR for US is over $4 billion, we have zero net debt right now.
We've been aggressive repurchases of shares I will I will say that at these levels.
Of trading in our shares and the value that we think is in there we would certainly consider taking on some additional.
Financial leverage in order to enable further share repurchases and we have to be mindful of course of some of the investments that we have coming up in 'twenty four including in Japan, potentially in New York, depending upon timing, but Ah.
We feel very comfortable with with the leverage levels that we at we were at in going to that higher level and one more reason is just because of we think the increased diversification of our cash flows and the resiliency of the revenues that we've that we've seen here.
Understood and if I can just as my follow up you know we also have a number of discussions with management teams about how they're thinking about dividends among your peers.
You know, how they should be size and their importance and relevance and I would love your thoughts there.
Yeah, we've made and our board has made the determination that at least for the.
At the time being and I think probably into 2024 that that returning cash to our shareholders through share repurchases are going to be the.
Predominant method of doing that.
And that that's the that's the best way for us to do it right now as opposed to the dividends. So I don't expect to see our dividend policy changing in the next certainly in the next 12 months, but the board would ultimately.
Got you. Thank you very much.
The next question is from Dan poll at her with Wells Fargo. Please go ahead.
Hey, good afternoon, everyone and thanks for taking my questions first.
First just just following the cyber security incident in the quarter any any updated way to think about investments in your it infrastructure or opex related to this as we think about next year.
And then just as a follow up along with that cost structure I mean other than the labor you know the labor uptake are there any other costs that we should be thinking about that you guys plan to offset for next year, whether it's property insurance or anything anything else that we should be aware of thanks.
Let me kick it off as it relates to the obviously, we've done a whole lot to lockdown systems.
Now.
But you know we're going to look at architecture and how were designed in how we go forward and so we're probably looking at sometime into next year with 30 or $40 million capitalization in terms of I T hardware and.
And cap that goes into it.
Terms of Opex, while there are things to do I don't know that they're overly meaningful in a lot of them.
Get captured by Capex, but.
Is it 'twenty.
10 to 20 range in.
In terms of operating capital.
We'll find in the General fund, which we generally go around 800 million a year to keep this place fresh and we've got a couple of big remote Remodels next year. So that is not expected to change that greatly.
Obviously, the wage increase that is being talked about now with the culinary ultimately I think you all know we're in striking Detroit, which has a similar program in similar request I might add in terms of the percentage will be in play insurance will be in playing a those are probably the two biggest things in terms of a percentage, but even the <unk>.
Churn cyber and otherwise.
Well that has continued to go up and it is staggering thing for you to understand since 19 regional insurance Las Vegas insurance has gone up two fold and since 19, it's gone up fourfold since.
In our regional casinos.
So it's something we watch closely but the overall number and the scale of what we're talking about is still pretty de Minimis and we think we can overcome it.
Particularly here in Las Vegas.
Got it that's that's helpful. And then just turning to bigger picture and longer term I guess as you think about Dubai I mean, do you see a realistic path to getting game legalized there and then along with that if there's any way to you know obviously you have the rendering in the back of the deck, but any way to think about timing capex ownership structure or.
The full ownership just high level would be helpful.
Yeah.
Look we think so obviously, we've got boots on the ground I think you all understand our former CEO is now chair of the Gaming Commission, there, which is very real.
And so they've taken a swag at it you'll know it when is doing well.
We like Dubai for all the obvious reasons Theres 20 odd million visitors, they've got 140000 hotel rooms, it sounds familiar.
The current structure, we have is hospitality management only to.
But know that we literally have somebody on the ground today in discussion and so it's very front and center with US that's something we'd like to participate in we think it could be very meaningful for the company and frankly the industry.
And so we're there at scale.
Understood I appreciate all the commentary thanks.
The next question is from Robin Farley with UBS. Please go ahead.
Great. Thank you I had a question about if I'm if I'm understanding this correctly.
You talked about.
Decline in Vegas, and you said $80 million due to the cyber issue and I guess total EBITA was down $91 million and maybe would have been more without some hold I know, it's you won't quantify it but if we so if we're thinking about that other $10 million.
Is that.
Is there anything else you would call out because it looks like I guess same store EBITDA would have been down a little bit even without that.
Cyber so cyber issue, so just anything else you'd call out there. Thanks.
Not in particular only just differences.
Year over year that occur sometimes it's in gaming results, sometimes it's another cost elements, but other than the things that we called out nothing in particular that we would programming.
And I think you know, obviously 2022 particularly third quarter was an all time quarter.
And so you know just as an equal comparison, you've got to keep that in perspective.
Oh, okay.
Thank you and then just as a follow up looking at the level of repurchase I know I think at times during the third quarter, you talked about sort of potentially looking at different international I gaming opportunities and.
Should we conclude given that.
The amount of repurchase if you continue at this rate you'll have kind of used up maybe I think you can call it excess liquidity or something in your slides.
That will be down to just a couple of hundred million by the end of the year. If you kind of maintain the same rate of repurchase that we saw here should we think about that as a sign that it did.
You're less interested in in making an acquisition.
Gaming internationally.
Well look if youre referencing.
Referencing in chain, which I think you are our position has not changed.
If we think about I gaming and the platform, obviously, we've gotten aggressive in U K and we're excited about what that opportunity brings obviously, it's a highly developed market, but we've taken some share we've got a meaningful brand and its good to see our legal Vegas team go up against I think some of the best and see how they can do.
We look to take that to other places.
We're looking at Brazil closely we're looking at other European countries closely.
We obviously with the advent or the purchase of push gaming where in the content business now both for ourselves hopefully for bet MGM and for other customers that they had when we acquired them.
So we'll continue to look to expand internationally, Gary Frits is leading that effort, mostly through our legal Vegas enterprise and you know, we'll see where it all goes.
And then I thought that you might.
Last week and team it said something about how they expect to invest more in the joint venture net here, even though you guys have talked about being EBITDA positive.
You didn't necessarily called out but would we assume that you would invest equally another words that you would maintain that 50% if they're talking about investing more.
We're thinking about doing the same thing for pet and Jim.
Thanks.
Okay. Thanks, Robin look I'd love them to invest more than us, but that's not the way it's kind of weird. So yeah, we will invest side purpose do side by side.
We believe in that business, we recognize particularly as it relates to sports and our product over the last 18 months wasn't where it needed to be and you've seen us do a great deal of work around single account single wallet.
And <unk> bought angstrom, which we think will be a very it not will be is and becoming a very good push for us with parlayed product for ards the quantum of odds that we set the amount that we can put out there.
So we're excited by that acquisition and what that has brought to the business ultimately, we will get and pained in Nevada, We believe in the first quarter, which will then make single wallet available and therefore omnichannel throughout our network principally here with our decisive advantage of Las Vegas as a single wallet account, we think that will be meaningful and we will then see.
She wants product is understood.
We're clearly how much to invest but when you talk about the quantum of dollars and you think about the overall scheme of what's been accomplished it won't be large it's not like what we have been but if somebody said you need to invest another $50 million to make sure. Your long term value is there.
I'm shooting for end of 'twenty five as a goal where are we going to be as this thing really begun to do the kinds of things I think we all think and expect and hope it to do.
So we will continue to invest accordingly, and appropriately in purpose Sue with these guys.
Because we believe like we.
We're still number three we're still number one although I noticed draft kings this months, but year end and year out we've been number one in our gaming and so we've got a very big position, we want to protect and we will continue to do so.
Okay. Thank you very much thanks.
The next question is from Barry Jonas with Truest Securities. Please go ahead.
Mr. Jonas perhaps your phone is on mute.
Cool.
Hi, Josh.
Yeah.
Okay.
I, Hey, I appreciate the commentary on F. One, but curious if you can provide any additional color.
Our metrics somehow Super Bowl is shaping up thanks.
Yeah, I'll kick it off with Corey.
It's interesting where we've seen a great deal of international single visitation on F. One.
Super Bowl, maybe not to your surprises about corporate America, and so it is showing up.
In multiples in terms of multiple groups, taking Corey if you think it's just a great deal of inventory yeah.
If you look at the large the groups that are booked for programs and perhaps one were actually about double of where in Super Bowl. So we're seeing some really strong demand there. It's driving ADR were pretty optimistic about what's Super Bowl will bring for us from a casino and leisure side.
Okay.
Great Great and then just as a follow up you know as you look across your markets or other parts maybe parts of the database are you seeing any noticeable impact from the macro environment. We're in.
No we are not really seen any at worst we continue to book at the elevated a D ours, the regional trips and am rated days customer values seem to be where they've been in the past.
Barry I think the discussion will ultimately come down to the regional it's not necessarily top line, but bottom line and margin.
And just keeping those things going strong.
You know, obviously, we'll wait and see what happens in Detroit here, but.
But we'll come out of that like we always do and then it'll be about regional margins I think in bottom line more than top line.
At least you know is there anything we can see to suggest that.
Great all right appreciate it thanks.
The next question is from John decree with C. B R. E. Please go ahead.
Hi, everyone. Thank you for taking my questions.
Maybe one more to shift back to Macau, if you were still with us.
The trends in recovery in Macau are still are still trucking along nicely for the market as a whole there's not a lot of discussion about macroeconomic issues in China. So there seems to be a a decoupling.
Curious to get your thoughts on that.
And then more specifically the next leg of the recovery as we March forward obviously.
Airlift back to Macau, and Hong Kong is still a place of recovery, but curious your views on on the differences in Macau and China consumer more broadly and then how you see the next leg of the recovery playing out.
Go ahead.
Yeah.
Thanks, John for your question I think that well first of all I think Macau I believe that.
The recovery is going to continue the government issued their forecast for next year.
Session.
Looking at a.
<unk> for next year around $27 billion for the entire year and this is quite consistent with all.
Our belief and expectation in the market consensus of wall now I think yes in China. There there is some softness in it.
All macro economic situation, but you do see roll around 45%, which is at the trough.
That's a long term window period.
I believe that my call.
<unk> is not the average of a reflection of the average GDP growth all spending.
Pattern in China.
As a tau cater to about.
So it didn't give you visit patients a year are unique visitation, probably less than half of that.
It's still a very small number.
The Oh.
In the Grand scheme of our population in China. So we cater to the really the I'll say the economic Dizzy.
In China.
The middle class and upper Middle class and there is a recent report if you can refer to you also talked about neither in China. The consumption of the team high income group and the.
Base mass is very different.
<unk> continued growth.
Luxury goods approaches at the high income group, while the math you have see you have seen a decline so I think that my colleague positioned to cater to the.
The group with high spending.
This is.
Well every concession there along with the government is trying to do to capture that are cool and their their visitation into the market.
So I think I hope that answers your question.
Yeah, that's great I appreciate that commentary very helpful.
One for bill or Jonathan back on the U S as a follow up.
Different questions on Opex inflation in.
Property insurance being a big one that a lot of folks talk about bill you've just commented on that but maybe looking ahead.
Excluding labor, which we've talked about does it.
Visibility in Opex does it feel like the you know the inflationary.
Impacts have had been born already or what do you expect going forward.
Just kind of your outlook for cost inflation.
Over the next couple of months from where you have visibility.
Yeah, setting, it's Jonathan Thanks, Jonathan setting a labor cost aside for a moment and even insurance switches.
In a way it's more pronounced in a couple of our regional properties than it is in our Las Vegas business says, we expect inflation in our some of our or inputs to be low single digits and but at the same time Cory and his team have dozens of initiatives against Ah.
Our cost structure, so that we can.
That we can minimize the impact on that overall and maintain margins.
In our Las Vegas business is in the range that they've been for the past several quarters.
So you know the thing is in Las Vegas, we have quite a few levers that we can use to offset the impacts of that so again setting the labor aside we're confident that we can hold the line on those other costs.
Helpful. Thank you Jonathan Thanks, Paul.
The next question is from Chad Beynon with Macquarie. Please go ahead.
I know a few calls ago, we spent a lot of time on the Marriott a strategic partnership and Bill you talked about that as a as a catalyst for for 'twenty for when that launches.
Can you just give us an update since it was slightly delayed just in terms of how we're thinking about the overall impact kind of replacing those lower yielding rooms to Mario direct customers. If we should start to see that real benefit in 'twenty four or does it just appear that the city is you know the busy enough right now where maybe we're not getting that full.
Benefits and this will be more of a 25 and beyond.
Positive for you guys. Thanks.
No I think it's 24, because I think the booking cycle for Las Vegas, even with this group because we've seen it obviously mirrored at the cosmopolitan is pretty much in line with everything else. They go a little earlier, because they want to make sure. They can use their points et cetera.
But there's a clear window in the next couple of months or once we launch it.
We think it ramps up fairly quickly.
And I think by the third and fourth quarter of next year. At this time next year, we ought to be a real good feel for what it's going to provide you know the group activity that'll be part of it is a little different discussion and we will take more time, given the August nature and cycle of that business.
Remember I think the first year, we're looking for 50 to 75 million in incremental.
And there's nothing to believe even despite the delay candidly theres nothing to believe we won't recognize or realize that.
Okay, great. Another one with respect to 'twenty four in terms of.
[laughter] lunar new year, I believe lunar new year and Super Bowl are coinciding.
For the same periods.
Have you have have you seen any indication just in terms of bookings from some of that international Bock play does that come in a little bit closer to that event and given that you know Super Bowl was around the same time.
Should we expect a lower positive from that thanks.
Well, yeah. They they do lineup so it can't change that.
But it's one of the few years that they do.
So.
What I think you'll see we've seen increasing international box play as the year has gone on and I think we'll see it hopefully and believe it will continue into 2020 four.
We're going to see a lot of folks at a football game, who don't necessarily know football very well where are invited guests who want to see a spectacle.
And so yeah. There is some overlap to it but we feel pretty positive. It's just frankly too early to tell.
Most of those customers are.
Other than the holiday period, which I guess this is but they react fairly quickly at the last minute and say I'm coming in.
And so you know, we'll know about 60 days 45 days out really more what the activity case, it looked like and for that holiday. It does expand for a little bit over a week. So we will separate the party from the Super Bowl to make sure that we maximize both opportunities.
Thanks, hopefully, there's a compounding effect I appreciate it.
Okay.
And the last question today is from Jordan Bender with JMP Securities. Please go ahead.
Great. Thanks for taking my question, we've talked about in past calls just on a relocation.
And if there is the capex requirement, maybe it's part of that but does it make sense to maybe potentially expand the asset base on the south end of the strip can you given your liquidity position.
So update I literally was with their team and their owner yesterday, they're excited to becoming a devoted so I think on the 16th for the owners and obviously they have to get through that they won their court case. This week, which was important to them. There was a petition here in Nevada to slow them down.
So and they actually show me the design, which was spectacular I might add so we're all excited by that look I think you'll see us, particularly I've mentioned this briefly rethink about the MGM are of note.
It's our legacy brand, it's on the corner of drop in Las Vegas Boulevard, It's 30 years old and it needs some attention, particularly at the front end that intersection and so I think you'll see us invest there I think you'll see us invest in the way people move around that corner and make it.
In concert and synergistic with the design I saw yesterday, we've already connected our architect with their kind of talk about all of that and to the extent, we really see this thing going up in the air and I think we will you know I think over time, if Las Vegas continues to do the kinds of things, it's been doing we'd be foolish not to.
Understood. Thank you.
Yeah.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Bill Hornbuckle for any closing remarks.
Thanks, Operator, I made my comments earlier again, I just want to call out to our staff here for getting us through the cyber attack.
I appreciate everyone's patience with us I appreciate.
Your trust in Us and ultimately anyone coming next week, let's go racing because I want to have some fun for lunch.
[laughter]. Thank you all.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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