The MGM Resorts International First Quarter 2024 Earnings Conference Call is about to begin, with various executives from the company joining the call. The call will include a question-and-answer session and will be recorded. Andrew Chapman, the Director of Investor Relations, welcomes participants and reminds them of the Safe Harbor provisions and the use of non-GAAP financial measures. He then introduces Jonathan Halkyard, the Chief Financial Officer, to begin the call.

In the second paragraph of the article, Jonathan Halkyard discusses the company's approach to their quarterly earnings calls and provides a recap of their results for the quarter. He mentions that the company achieved record net revenues, net income, and adjusted EBITDAR, with strong performance in Las Vegas and a quick recovery in the regions after poor weather in January. He also notes the success of MGM China, which achieved its first-ever $300 million quarter in adjusted property EBITDAR and a market share of 17%.

MGM China and MGM Resorts have seen strong operating performance over the past 15 months, leading to the termination of a subordinated loan agreement and the resumption of dividend payments. The company also recently completed a successful refinancing of senior notes, reducing interest expenses. In addition, their joint venture in Japan closed on a record-breaking project financing for an integrated resort. MGM has also bought back over $500 million in shares and reduced their outstanding float by 37%. The company's resort operations generate significant and recurring cash flow, with a projected $1 billion in free cash flow domestically in 2023.

The company expects to see benefits soon from its digital business, with BetMGM and LeoVegas generating significant free cash flow in the next couple of years. This will fund future growth and opportunities, including international and digital expansion and brick-and-mortar development. The company also has a pipeline of limited license development projects in New York, Japan, and potentially the United Arab Emirates, which will drive free cash flow growth over the next decade. Any excess cash will be returned to shareholders through share buybacks. The company anticipates a mid-teens compound annual growth rate of free cash flow per outstanding share through 2028. In the first quarter, the company reported record results, driven by its diversity in Las Vegas, regional properties, Macau, and its digital business. The company is also excited about its performance in China.

The company's EBITDAR has increased significantly, particularly in Las Vegas where they make 75-80% of their Adjusted Property EBITDAR. The luxury campus and focus on the epicenter of activity has been successful and Marriott is off to a great start with 140,000 room nights already booked. The Group business has also exceeded expectations. The team's efforts have resulted in high net promoter scores and strong margins. The company has also secured a large credit facility in Japan and has hedged 60% of the project against a highly inflated yen. They will continue to leverage their balance sheet and buy back company shares where they see value. Las Vegas has had another strong quarter, driven by the high-end market.

In the first quarter, ADR increased by 7% and is expected to remain stable in the second quarter and for the rest of the year. The opening of connectivity between the Cosmopolitan and other MGM properties is creating a luxury campus. The closure of the Tropicana and the upcoming A's stadium will bring more entertainment options to the area, with over 1 million seats accessible each month. Convention business is also returning, with a 6.5% increase forecasted for 2023 and a 29% increase in year-to-date production. Despite wage impacts, margins have been maintained and the 5.5-year deal with a 5% CAGR will begin to cycle on June 1.

In this paragraph, the speaker discusses the current state of the gaming industry, specifically in Las Vegas and Macau. They mention that percentages will start to decrease in June, Tropicana has closed and the Mirage's future is uncertain. They also mention that the quarter started slow due to bad weather and strikes, but has improved each month. They are pleased with their market share and margin, and are excited about the growth in Macau, including new Villas and a new show. They also mention recent visa reforms and increased visitation.

The speaker is pleased with the progress of their team in Macau, where they are building a world-class museum to fulfill their promise to the city. Despite challenges in North America, they are focused on improving their digital presence with BetMGM and are seeing success in other markets like Sweden and the UK. They have also recently launched BetMGM in the Netherlands through a partnership with LeoVegas. The speaker is confident in their team and the future of their digital offerings.

The company's digital strategy remains the same, with plans to become self-sustaining and expand into new markets. They are also excited about the potential of live dealer games and the progress of their development pipeline. However, they are disappointed with the process in New York and will remain patient and focused. They are also considering opportunities in the UAE.

The company is closely monitoring the markets in Texas and Thailand as part of their diversification strategy. The quarter showed growth in Macau, Las Vegas, regional markets, and the digital business. The early experience with Marriott bookings is positive, with over 130,000 rooms booked and 50,000 actualized. It is too early to determine the impact on out-of-room spend and whether it is helping more on the high end or serving as a buffer on the low end.

The company is seeing a higher premium than expected for their deal, with $150 more than the displaced rooms. About $100 is due to higher rates and $50 from on-property spending. The leisure customers being displaced are from various businesses, including regional properties. Bellagio is leading in bookings, with Borgata also seeing an increase. MGM has been the biggest beneficiary of group bookings, with 80% of referrals being unknown to the company. There were news reports about potential divestment of regional assets, but no update has been given.

The speaker is asked about the strategic thinking behind pruning the company's domestic portfolio. They respond by saying they can't comment on specific reports, but they always consider market positioning, scale, and interactions with other properties in their portfolio. They also mention that properties with potential for growth are prioritized. The next question is about the company's digital business, and the speaker is asked to clarify the loss cadence and investment plans for 2024.

The speaker discusses the marketing plans for BetMGM and the potential for growth in the digital market. They mention the challenges faced in the first quarter but remain optimistic about the future, particularly in terms of expanding into more states and focusing on iGaming. They also mention the potential for growth in South America and other established markets.

MGM's CEO, Jonathan Halkyard, discusses the company's progress and plans for the future. He mentions that the company's success will not happen overnight, but they are excited about their positioning and upcoming additions to stabilize and improve their business. Halkyard also mentions that they are confident in their ability to grow EBITDAR in Las Vegas this year. In regards to MGM China, the company's Hong Kong filing will provide similar information for modeling purposes as it has in the past.

The speaker asks about the release of a report later in the evening and is told it will be available in 30 minutes. The next question is about potential acquisitions in the digital sector, to which the speaker responds that there are some planned tuck-ins, particularly in sports and live dealer businesses. The speaker also mentions that BetMGM's partner has a new CEO who is transparent and has taken their CEO to India to meet with the design development team.

In this paragraph, the speaker discusses a recent town hall where a representative from BetMGM spoke about the importance of the company. They are excited about this development and believe it is a positive step forward. They also mention a roadmap for product development, which will require investment from Entain. The speaker believes that things have changed for the better. In a separate question, they address the slot volume trends in Las Vegas and attribute the decrease to a strategic decision to focus on higher-end customers. They also mention the competitive environment in MGM China.

In the first quarter, the company's market share was high in January but lower over the entire quarter, likely due to hold and VIP play. The exit market share for March was 15.8% and is expected to remain stable in April. The company also repurchased $500 million in stock and plans to continue with programmatic repurchases for the rest of the year.

The speaker discusses the future equity investments in Japan and the expected impact on share repurchase activity. They also mention the exceptional performance in March and the expected growth in domestic operations, with plans for additional investment in Las Vegas. The target for mid-teen free cash flow is projected to continue through 2028.

The company expects a high growth rate in their China operations, and have chosen the 2028 timeframe to capture their investments in the New York market but not in Japan. This is similar to their internal planning and is a reasonable timeframe to use when discussing their compound annual growth rate of free cash flow per share. They may consider investing additional capital in BetMGM if there are opportunities in large markets such as California, Texas, or Georgia, or if there is a potential acquisition that would benefit BetMGM. However, their current plan for BetMGM is expected to hold for the year.

John DeCree asks Bill about the opportunities the company is watching, such as Thailand, UAE, Texas, and Japan. Bill believes that UAE is the most likely to come to fruition, while Thailand and Texas are still uncertain. He also mentions the company's focus on their omnichannel strategy, particularly BetMGM.

The speaker is discussing the potential for crossover play and the impact of events like the Super Bowl on BetMGM's business. They mention the importance of single account, single wallet set up and connectivity between MGM Rewards and BetMGM's loyalty system for future traction. The speaker also notes that there were 1 million signups for MGM Rewards during the quarter, with 600,000 coming from BetMGM. The speaker also mentions that they expect EBITDAR in Vegas to grow this year, but does not provide a specific quarterly breakdown.

The speaker discusses the potential growth in EBITDAR in Las Vegas over the next three quarters, with the third quarter expected to have the most growth due to easier comps. They also mention additional capital investment in Vegas, which will be discussed in more detail next quarter. The speaker also mentions the challenge of outbound travel from China due to restrictions on flying over Russia.

The speaker discusses their recent visit to China and meeting with President Xi about people-to-people exchange. They mention positive results in China, particularly with high-end customers returning, but still only at 55% of pre-COVID levels. They also mention a group coming for the Masters and seeing positive results in Macau with a target EBITDAR margin of high-20s to 30%. They then address the benefits of their smart tables in Macau and the potential for market share impact and use in other markets.

Hubert Wang and Kenneth Feng discuss the benefits of smart tables, including game security, operating efficiency, data tracking for precision marketing, real-time rewards, and the ability to develop new games. They also mention that their company has a deep understanding of their customers, particularly in the premium mass market, which has contributed to their success and recovery after COVID-19.

The speaker discusses the company's efforts to innovate and improve their products and services in response to changing customer expectations. They have recently launched successful initiatives and encourage others to visit and see for themselves. The speaker also mentions the possibility of future mergers and acquisitions, but currently there are no imminent plans. The company's focus is on expanding into new markets and their digital business, while also considering potential share buybacks. The previous acquisition of the Cosmopolitan has been beneficial for the company. The Q&A session ends.

In closing, William Hornbuckle thanks everyone for joining the conference call and apologizes for any technical difficulties. He highlights the company's well-balanced portfolio in Las Vegas, regional areas, Macau, and digital, and expresses excitement for their presence in the entertainment industry. He mentions their position in the digital space and plans for expansion in New York, UAE, Thailand, and Texas. He also mentions the company's commitment to returning cash to shareholders. The call is then concluded by the operator.

This summary was generated with AI and may contain some inaccuracies.