Q3 2024 MGM Resorts International Earnings Call
The End
'twenty 'twenty four 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 periodic 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 you can find the reconciliation to GAAP financial measures in our press release and Investor presentation, which are available on our website. Finally this presentation is being recorded.
Jonathan: Now I'll turn it over to Jonathan.
Thanks, Andrew Good afternoon, and thanks, everyone for joining us today I'm happy to report that MGM resorts posted record third quarter consolidated net revenues and record third quarter revenue and adjusted property EBITDAR at MGM, China. Additionally, we saw record <unk> in Las Vegas and record occupancy.
<unk> at our regional resorts.
Outstanding results are a testament to our MGM resorts colleagues worldwide, who are committed to providing outstanding service to our guests every day.
Through our dedication hard work and commitment to operational excellence all of US on the senior leadership team are proud of what we continue to achieve together.
<unk> and relatively flat maintenance capital all augmented by opportunistic repurchasing of our shares bill over to you. Thanks, Jonathan and good afternoon, everyone.
I'm happy to say that MGM is in a great position today due to the strategic choices. We've made over the past decade. These choices have transformed MGM resorts, giving us a strong financial foundation and unmatched growth opportunities.
Our globally recognized brands prime locations development opportunities and evolving digital platforms enable us to reach more customers in more markets than any other company in our sector. We operate in a large scale with 18 global casino properties over 75000 employees worldwide and a total addressable market exceeding 100.
Third 50 billion, including both our physical resorts and online markets as.
As we continue to expand internationally to drive long term value to our shareholders. We remain bullish on our leading position in Las Vegas in the short term burst Vegas.
Jonathan: Biggest has consistently grown over the past 30 years plus with the strips gross gaming revenues, reaching all time records and about half of those years, even in the face of various macro economic conditions.
As Jonathan noted as we saw record ADR in the third quarter, which is testament to the strength of this market.
We're reinforcing our goal of being the industry leader in groups and meetings and have invested as you know over $100 million and then now complete Mandalay Bay Convention Center, which saw record catering and banquet results in 2024.
Mgm's Omnichannel advantage is now more than meaningful opportunity with the launch in the third quarter of single App single wallet here in Nevada.
Seven days, a week I'm always mindful of their efforts and always grateful for their loyalty to MGM resorts and our guests with that operator, we will now take questions.
Thank you we will now begin the question and answer session.
In all fairness, please limit yourself to one question and one follow up.
Today's first question comes from Joe Greff with J P. Morgan. Please go ahead.
Good afternoon everybody.
Joe Greff: Look to start with Las Vegas.
Speaker Change: <unk> numbers here.
Speaker Change: A little bit soft on the table game volume side.
Can you tell me, what's going on or are we just kind of seeing broad normalization in that segment and E.
As we kind of think about the go forward in Las Vegas are we kind of thinking that that trend continues and we're sort of looking at this $700 million, we're a little bit less kind of run rate quarterly EBITDA.
With margins that are in the more towards the low <unk> versus the mid <unk>.
What you guys reported here in the <unk> the insurance proceeds benefit.
Jonathan: Thanks, Joe It's Jonathan.
Jonathan: I'll address that one.
First of all in terms of our margin expectation, we continue to believe that our Las Vegas operations can produce margins in the mid thirties on an EBITDAR basis.
As it relates to your first question. The first part of your question.
It's clear our table game drop was was down year over year pretty significantly and this was due almost entirely to our high end box business and.
I mean this is the way this business is and the timing of the trips.
From these largest customers is not not of course, our choice and.
Thank you. The next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead.
Hey, everybody. Good afternoon, I'm Bill I just wanted to ask you about something you mentioned about the $80 million Baccarat swing. It clearly is as we look at the fourth quarter.
<unk> had tremendous kind of luck.
Presumably with high end customers in the <unk> last year hold percentage comparison, one of the toughest that I can recall and in a very long time.
Could you guys, maybe try and put.
Jonathan: Some parameters around that whether it's from a well I guess EBITA perspective, we could all do that but the G. G. R perspective, but to kind of give us a sense for how we should be thinking about just that that headwind alone is as we think about the fourth quarter.
Speaker Change: Sure Carloads Jonathan.
Yeah, I mean, we look finally on that quarter.
Jonathan: One of our 2000.
23, if memory serves we did one eight.
860, or $70 million or so of EBITDAR.
Jonathan: You know I think the simple math is that probably benefited us by about $70 million during the quarter during the entire quarter.
So you know, we're where of course, you know fighting the good fight to attract customers back to our properties, including those customers and then.
The other thing I would mention though.
Is that as we look forward, we've we've talked about November a bit but as we look forward in December we are seeing some.
Very healthy group environment, and I'm pretty healthy pricing for the hotel.
Sales in our system here in Las Vegas, as well. So there are some some offsets to that but it was about a $70 million number last year.
Jonathan: I would say.
Jonathan: It will be helpful.
Formula one despite the slow start on rooms, and some of that is not catch up bubble. When it comes to gaming we're looking at an equal if not better theoretical entry into that event now if you know anything can happen.
Jonathan: Protection.
Got it thanks, and then just turning to Macau, you've lost a little bit of share in the quarter.
I think that was the second quarter in a row.
Is there how should we think about maybe the impact of the you know the Londoner, which I think is kind of in the stages of reopening and along those lines.
Obviously, there are some stimulus that's been introduced the market when can we maybe look for that to be measurable or to see if there is any impact there.
Can any of that Hubert you want to handle that one please.
Hubert: Oh, okay.
These these are Kenny I think Lyndon they're opened in September.
Hubert: They're underway.
As you look I don't know like Ed geographically Cotai MGM Cotai is like on a go full five times smaller compared to Las Vegas strip.
MGM Cotai is always trying to become a destination.
All of these are like our region.
Why do we believe more new paradox.
Jonathan: And you are more products in the market I'm, just MGM cotai, we all benefit.
Is it beyond just a commentary on it at the beginning like Oh.
Standing performance like Golden week for their approved but.
But Linda neuro opened like all of us benefited.
Jonathan: Yeah.
I think that this few words I think that.
We're looking at a longer term market share to stabilize around mid teen level. So this is what we have communicated to the street in the past I think that where we're confident that we can deliver this number.
I think that in the next year, particularly in the second half of next year when we have below the.
Projects completed.
Two to create incremental revenue I think that will be in good shape.
Uh huh.
Maybe somehow upside surprise was these are our product coming online second half next year.
And then just any any comment on the stimulus and when we might be able to see that in the market and that's all for me. Thank you.
Jonathan: Okay.
The China economy, like we all know like them, but we still believe the stimulus measures.
They are still unfolding and I guess my colleagues are very special segment of the over the overall regional economy like particularly for MGM like we are very focused on premium mass and.
I can affirm the visitation and also from the D are you can see all resilient they are.
So we we want to see.
More matters like a stimulus matters.
In Italy, like we will all will benefit in a long long.
Speaker Change: Thanks, so much.
Speaker Change: Yeah.
Speaker Change: Thank you. The next question comes from Brent Mine Tour with Barclays. Please go ahead.
Speaker Change: Great. Good afternoon, Thanks for taking my question.
First question is on Las Vegas, I'm, just curious when you look at the third quarter by month.
Speaker Change: If if you saw any sort of different trends throughout the month July August September.
Assuming the weather maybe had an impact on two of those months, but then also thinking about that question, but again, taking out that you know that that business that you called out and leaving just the backdrop is it just focusing on.
The database and the more stable side did you see any sort of changes throughout the quarter and then how does that same trend go into the October.
They all started and Jonathan can fill in any detail or Corey that I Miss but July was.
Speaker Change: You've seen this I know, there's some numbers was pretty bad for the entire community, including US we had eight days in a row of 120 degree heat.
Compounded with <unk> 15 was relatively close for three days due to a truck roll over with a battery in it that they didn't seem to know how to didn't know what to do with it. So July was impacted substantively and then the quarter got better August was better we had some substantive convention business and and then September as well.
<unk> came in well ultimately some of the core things that we'd hoped for ADR Ark slots of note all produced leaning into our casino database to make that happen. So don't cause had been again the other thing I would add so I did have two last weekend days the UFC fight the year before.
Actually in June whereby odd.
Speaker Change: It was in July last year. It was in June this year at the end of June. So we didn't get the July 4th benefit there and Theres, a pretty big International Soccer game at the end of July that we also missed that.
Speaker Change: And then as we got into August September and even what we're seeing in october's, it's it feels fairly normal.
Speaker Change: Very similar to what business has been and I think we're pleased with what we see.
Speaker Change: Yes.
October our occupancy here in Las Vegas, there'll be it will be 97%.
You know revenues are steady and are still seeing the nice growth in.
Speaker Change: In slot handle and a regional property is actually having a pretty strong October.
Okay. That's all really helpful. Thanks for that and then just a follow up on Las Vegas again, just looking out a little further.
Not asking for guidance or anything, but just your feelings are.
And looking at the 25 for the business that you do have visibility in.
Speaker Change: Group and convention, what the pace that you're seeing so far is for the full year, and then any sort of quarters, where theres calendar.
Speaker Change: Movements or changes or things that we should keep in mind for modeling purposes.
Yeah, I think that as we look broadly in 2025, we do see overall cash rates in Las Vegas growth.
And a couple of key calendar items I'm sure you're aware of this we had with the Super Bowl last February that will.
Impact us year over year, probably to the tune of $60 million to $70 million.
In the month of February.
The only other thing that I would call out as we look to 'twenty five generally as we will be actually already started modestly a a renovation of the MGM Grand Hotel standard rooms. So this is 4000 standard rooms.
It's a fantastic property it it it's time to do that.
And that will have an impact in our results. Although we'll of course do our best to migrate that demand through our other properties here in the city, but those are probably the only two big 2025 items I would call out.
Really helpful. Thanks, everyone.
Speaker Change: Right.
Thank you. The next question comes from John Decree with C. B R. E. Please go ahead.
Hi, Thank you for taking my questions.
Maybe one just kind of capital management to build off of the.
Comments about some of the growth Capex Youre doing.
For some of the larger stuff is.
Speaker Change: The passengers at Park MGM was was quite large a full renovation, but is there an opportunity to utilize your REIT partners.
Do anything of more substance or given how well Vegas, it's been growing monetize some of your capital improvements et cetera kind of consideration and the financing strategy at all.
Speaker Change: Yeah, John I think you muffled on the what partners, we didn't catch that.
John: Oh sure Yuri partners.
Expansion plans up large or a big renovation of the rooms at MGM Grand is.
Its financing for Mam or monetizing some of your growth Capex.
John: A consideration in our financial strategy.
John: Yeah.
It's a very good question I'm glad we asked for the clarification.
Beachy and and Blackstone are great partners of ours we.
We do look at that as a financing option.
John: No.
Not to speak for them, but I think they would stand ready to.
To help us in that regard if we felt as though that made sense in terms of cost of capital.
John: We would probably.
Not go that way to finance a renovation of the property, but to the extent, we contemplated an expansion of one of our businesses in Las Vegas or the regional markets that would absolutely be something we would look at.
John: Yeah.
Jonathan: Thanks, that's helpful. Jonathan.
Maybe one of the Marriott partnership.
In prior quarters, you've given us some color about some of the metrics that you've seen in kpis and how wells that how well that's going and so as you look into 'twenty five if anything has changed as you get further along in the partnership where you've kind of seen kind of continued expansion or utilization of that and so just love to get your kind of updated thoughts on on how that partnership.
Jonathan: Gone and kind of what you're seeing.
Speaker Change: I'll kick it off.
So as of last week, we did 2500 room nights, a day, which is an all time record.
We're probably pacing, 20% above our own expectations for the year.
<unk> business continues to come in and it's interesting groups I think I mentioned this last call, but it's not huge groups that we knew because of the business that we're in already but it's mid tier two to 300 room groups Midwest stuff, we had not focused on and I think theyre going to be a really good opportunity for us to bring in that we might not otherwise have seen and gotten too.
And then you know the utilization, it's 70% cash 30%.
Redemption, and we like that particularly because of the additional spend that these folks bring in so.
I think very pleased with where we are I think the upside in particulars, but W. In what we're doing at the Don now that property had very little brand recognition and what's there.
Speaker Change: Werent able to sell it on the Marriott on channel. So now with the change of that name and I. We believe that will be in place by the beginning of the year, we think theres some upside on the eight years and the occupancy at that property.
Thanks for that that's helpful. Bill Jonathan Thank you very much for all the questions.
Speaker Change: Sure.
Thank you. The next question comes from Barry Jonas with choice. Please go ahead.
Barry Jonas: Hey, guys I just wanted to make sure on F. One are you still looking at that sort of $30 million ish year over year, EBITDA headwind or has anything changed at all since our Q2 earnings call.
I think we're still looking at the same number that the thing that we can't replicate as when it was first announced last year. It sold out relatively quickly and particularly our hotels and so the leverage on on that kind of a yieldco tightened front timeframe, we were selling rooms at bellagio for $2000 a night and so it's really the big three that will carry that burden the other.
Thing is the the construction of the Fountain club out in front, but some of you have may be seen or experienced it's incredible that being said last year. It was capitalized this year it needs to be Expensed and so you put the combination of those two things together unless we get really lucky in the casino and all things can happen.
We think that number holds.
Speaker Change: Got it got it and then just a follow up I wanted to see if there's any update on some of those other international development opportunities Youre looking at whether that's UAE or Thailand. Thanks.
In Thailand, I've made my third trip will continue to monitor it.
We've said, we're going to do that in concert with MGM, China Holdings, Pansy and I just made a trip there.
It's working its way through the legislature and ultimately hopefully through their parliament. We hope by early next year something will be announced we like what we here to date in terms of tax we liked the investment ratios that we here obviously, it's a great place to build a relatively cheaply as compared to other markets.
Speaker Change: Doing business there is extremely low so from an operating margin perspective, we love the opportunity it could bring.
But I think we're still a long way away from getting to the finish line.
We continue to monitor closely.
There's obviously a couple of other opportunities that will probably come forward, we love our position in Portugal, Ireland that has started in earnest in construction is now starting to come out of the ground or pouring foundation concrete as we speak.
Barry Jonas: And so that's a late 'twenty seven project and so we will see ultimately once the decrease come out.
By Emirate, who wants to do one.
But we are keenly focused on it and we would love we love our Dubai project I would particularly love obviously, if it had gaming.
Speaker Change: Great. Thank you.
Thank you. The next question comes from Steve I Shinskie with Stifel. Please go ahead.
Speaker Change: Hey, guys. Good afternoon. So you know bill I look I fully understand you guys don't give.
Formal guidance, but.
If we think about next year can you maybe help us think or help us think from a high level. How you guys are thinking about your your major markets.
Speaker Change: Trying to understand if you think you'll be able to grow.
EBITDA, both in Vegas, and your regional assets given some of the you know the headwinds and whatnot that you've already called out.
Look we are suggesting in 2025, particularly in those two markets that we can improve it will be massive but I think one of the ways, we're going to do that and get our margins back on track is we've started on a I hate to use the word program.
Speaker Change: But we have started on an initiative that we're trying to get $200 million out of the bottom and we were thinking forgetting the obvious places to go get revenue, we think Theres a few more to get revenue off of the top and so we think that will be accretive to margin more than anything else. We think the markets continue to grow at a couple of percentage points you heard Jonathan Yeah. We do have some headwinds we've got the Super Bowl.
Speaker Change: We've got some of those things that we mentioned, but you know is the bar that all of this has been set at the level that we're at.
We think we have some some room to grow and go particularly in the long run here.
Speaker Change: Okay got you. Thanks for that Bill and then second question would be if we go back to Macau real quick.
If we look at the third quarter the margin in Macao.
And just a little bit probably a little lower than what we were.
Kind of looking for you know is there anything there you would call out in terms of pressuring the margin in the third quarter and then maybe also a little bit more color on the the current promotional environment, that's happening right now over there.
Speaker Change: Let me handle the front end of this and then Kenny endured.
Speaker Change: In.
Speaker Change: Look I mentioned the show earlier for a reason that's coming with expense, it's a major show.
And it's something we're all pretty excited by as well as the expenses surrounded by launching a museum, it's an amazing museum wants anybody and everybody sees it.
Speaker Change: And so while we're excited by those and hopefully delivering on the promise we made to the government they do come with some expense.
I've been led to believe and do that the promotional environment is actually lessened in the context of expense with some of the programming that was going on earlier in the year, So Kenny and Hubert you want to talk about that in terms of cost and how you think about it for 25.
Speaker Change: Yeah. Okay. Thanks to all of this is a county like in the third quarter, we had a one time cost.
Pedro and there's some costs that relate to entertainment spend to happen fulfill all the concession commitments.
Speaker Change: But we still aim a margin operating margin off of mid to high twenties.
But you can't do not know we are managing overhead dynamic business in designated revenue growth seasonality hold lack of factor even scheduling the all affect margins.
Speaker Change: But we are very very disciplined on theming promotions and the incentives.
We expect them to be continued to be steady.
I think we still focus on we focus on incremental EBITDA dollars.
Speaker Change: That's a current our position.
Hey, Berke any further.
As I mentioned previously I think that the some.
Some of the projects that we're working on currently.
Speaker Change: Such as.
Expansion of our high end gaming area at MGM Macau.
Speaker Change: Uh huh.
Speaker Change: Renovation of developed product.
Jim Macau and also the conversion of the suite.
Jim Cotai.
Speaker Change: Think that they'll.
Speaker Change: Put us in a.
Better position competitively in this market when these projects coming to completion and fruition in the second half of next second half of next year. We expect the margin to continue to improve yeah. I just wanted to add a little bit like in particularly on the <unk> side and again.
And I'm here on the call is a 17 year old property.
Speaker Change: Thanks.
Speaker Change: Third quarter, all we meet all of these year, we started out a few very very meaningful projects.
Speaker Change: That all.
Many like an event center and also or gaming floor Refreshment program and then couple title F&B outlets.
Gulf of development, she really to make sure all of these paradox to reflect the latest trend offer the customers.
Speaker Change: We are all of these projects, we are expecting to be done by the middle of next year.
So once all of these projects finished.
We all believe we are going to have a continued to lead all mccullough.
Speaker Change: Market.
Cotai side, although not projects or.
Notably our Rubicon suite conversion project, we are expecting to finish it by the end of next year, we are going to convert about 160 standard rooms into about 60 suites. So he can give us a more competitive advantage like I E on the cotai side as well.
Speaker Change: Okay, great. Thanks, guys appreciate it.
Speaker Change: Okay.
Speaker Change: Thank you today's last question comes from Chad Beynon with Macquarie. Please go ahead.
Good afternoon, and thanks for taking my question wanted to ask about Vegas demand you guys noted that the Marriott benefit, but I guess, what I'm trying to get out is what you're seeing in the mix of casino guests. At this point are you seeing any deterioration in terms of what that core group.
<unk> is doing in terms of visitation and then more importantly for 25, when when you're hoping for growth.
Speaker Change: Casino guest piece of the inventory should we expect that that goes down and they'll be replaced with more group and kind of marry yacht business travelers. Thanks.
Chad This is Cory I think what we're seeing with the casino guests is pretty consistent what we've been saying throughout the past few years, it's pretty solid.
We are hitting the database in a decent way using our cross regional functionality and a great way. We don't have that mix is where I think where we like it right now.
I wouldn't envision that change.
Changing that much next year.
As we look at Marriott is it's really a transient play and hopefully moving out some package business and that will be our strategy for next year also.
Speaker Change: Great. Thank you and then just overall on the bricks and mortar side of things. The retail side has anything changed in terms of M&A opportunities as you kind of look at other markets, where the hub and spoke could make sense or kind of long term gaming it.
It seems like there's a number of assets and kind of big cities that could potentially fit the portfolio. Thank you.
Speaker Change: Thanks, Chad Jonathan our our criteria are fairly restrictive in terms of the.
The additional assets that we would acquire we really like our position in Las Vegas with the disposition of the Mirage in the acquisition of the Cosmopolitan as it relates to regional markets. You know it would have to be a market. We're not currently in you would have to be a property of significant scale to really make a difference for the.
<unk> enterprise and have a quality level that's.
You know that is coherent with our brand positioning so it leaves a pretty small list, but but we.
We think we are good operators of regional properties.
Speaker Change: And so we remain open to those possibilities, it's just a pretty narrow set.
Thank you very much I appreciate it.
Thank you. This concludes our question and answer session I would like to turn the conference back over to Bill Hornbuckle for closing remarks. Thank.
Thank you operator, I just a couple of thoughts before we leave and again I appreciate everyones time this evening.
Las Vegas, and regional trends as we've hopefully indicated a solid they've been solid throughout the years and we anticipate that to continue I think in the presentation, you'll see a couple of graphs that are meant to demonstrate that.
Speaker Change: Macau continues to perform well we're proud of what we've been able to do in the whole re ratcheting of the market share and we're obviously continuing to contribute dividends and this year. We hope we have pulled out 200 million and expect that to continue.
Our digital business, we feel is on a path to positive earnings in both the U S and internationally and we think Theres significant Tam opportunity between the both of those when it's all said and done and we think that manifest itself late 'twenty five 'twenty six and beyond.
I think our development pipeline is unmatched with properties in Japan, New York and the potential of UAE in Thailand, I think those are going to be incredible opportunities over time for the company and again the fundamentals of the question about Las Vegas, you know Matt met.
Met its match in 23, while 23 was an incredible year the grass at the fundamental signs of the business remains strong.
Speaker Change: Whether it's a D our slot handle excel.
Et cetera, we feel really really good about it.
And then Macau, we continue to break records. Despite our size. So overall, we are exceptionally well diversified and we're very optimistic about both our near long near mid and long term and.
And we hope you are as well so we thank you for your time and have a great evening.
The conference has now concluded. Thank you for your participation you may now disconnect your lines.
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