The operator welcomes participants to the MGM Resorts International Second Quarter 2024 Earnings Conference Call, which includes several company executives. The call will be recorded and broadcasted live on the internet. The company will make forward-looking statements and discuss non-GAAP financial measures. Jonathan Halkyard will now begin the presentation.

The speaker begins by congratulating and thanking the employees for their excellent performance in the quarter. They then discuss the company's second quarter results, highlighting growth in Las Vegas due to higher rates and occupancy and a strong relationship with Marriott. The company plans to continue investing in luxury properties in Las Vegas and has completed the integration of the Cosmopolitan into their rewards program. In the regional markets, revenues remained stable and MGM Detroit has fully recovered from previous challenges.

In the third paragraph, the company discusses their margins, growth in Macau, and efforts to strengthen their balance sheet. They also mention their free cash flow algorithm and plans to generate recurring free cash flow, invest in their properties, expand in new markets, and repurchase their own shares.

The company's strategic use of excess cash for share repurchases has resulted in a significant decrease in their share count, leading to a projected mid-teens free cash flow per share compound annual growth rate by 2028. The management team also acknowledges and thanks their employees for their dedication to providing excellent guest service, and highlights the strong performance of their properties in Las Vegas, MGM China, and their regional markets. The integration of Marriott has been successful and is expected to bring further benefits, particularly in the group segment, while Detroit has rebounded after challenges in the previous year.

The company has a favorable supply dynamic with the closure of two major hotels, leading to lower labor contract increases and organic same-store growth. The recent integration of the Cosmopolitan is expected to further optimize their database. However, there may be some potential headwinds in the fourth quarter due to softness in Formula One race. Overall, business in Las Vegas is strong, while business in other regions remains stable with steady cash flow generation. The company's performance in Macau is outstanding, thanks to their strong leadership team and understanding of their customer base.

The speaker discusses the success of MGM Macau and their plans to continue investing in the property. They also mention the recent announcements from Entain and the progress of BetMGM's product enhancements. The speaker notes that 2024 will be an investment year for BetMGM to regain lost market share in sports and continue growth in iGaming. They also mention that BetMGM was profitable in the second quarter of 2024, driven by their iGaming business.

MGM has made significant progress with Angstrom and will be launching new products during the football season, including a single account, single wallet feature. They are confident in the success of BetMGM and are focused on long-term growth. Additionally, MGM has been working on developing its own proprietary iGaming and sports betting platforms to capture market share in both established and emerging markets. This strategy is based on four pillars, including owning their tech ecosystem and acquiring Tipico's US sports betting platform.

The company's second pillar of strategy is to develop unique iGaming content through the acquisition of Push Gaming. They also plan to target organic growth in regulated markets with the BetMGM brand and offer live casino content through a strategic partnership with Playtech. The company expects significant long-term returns from these initiatives and will continue to invest in their sports platform and new BetMGM markets.

The speaker is excited about the progress of their business, particularly the Live Dealer aspect in Nevada. They have made significant investments in their Las Vegas properties, including the Bellagio, and are exploring ways to connect them with other nearby properties. They also have plans to create a unique and experiential component at the Bellagio in the near future. The speaker also mentions the stability and free cash flow of their regional properties and their success in Macau. They are looking forward to the upcoming football season and the potential for omnichannel integration with BetMGM.

Bill is excited about the digital strategy that Gary has laid out, and the progress being made in Japan. He also mentions expansion plans in the UAE and New York, as well as the positive relationship with the local community in Yonkers. Bill also mentions a potential venture in Thailand through MGM China Holdings, and praises the company's strong balance sheet and pipeline of value creators. The call then moves on to a question from an analyst about the Marriott strategic partnership in Las Vegas.

The speaker asks for clarification on the contribution from Marriott connectivity and whether the timeline for reaching the targeted EBITDA has changed. They also question the impact of Formula One softness on year-over-year comparisons and whether it will be offset by the benefits of Marriott connectivity. Jonathan Halkyard clarifies that the 410,000 booked room nights are for the year-to-date and that 60% have already stayed. He also explains that the incremental benefit comes from the rate premium and increased spend by Marriott customers.

Shaun Kelley asked a question about the Las Vegas market and then followed up with a question about the company's digital operations.

The speaker asks about the performance of Las Vegas and the focus on driving gaming customers. The company responds that the core gaming customer is still performing well, with some changes in revenue due to shifts in convention mix. They also discuss their focus on maximizing the right customer during weekends. The speaker then asks about the company's digital ventures and if they are self-funding. The company responds that they are largely self-funding with some reinvestment, but there may be a need to further invest in new market launches.

The speaker discusses the profitability of their portfolio and mentions that their core businesses are profitable. They also mention making modest investments for market launches and compare it to the scale of their investment in BetMGM in the US. The next question is about EBITDA growth in 2024 and the speaker discusses the differences between the third and fourth quarters, with the fourth quarter depending on the performance of the F1 event. The speaker feels confident about the third and fourth quarter, but acknowledges the importance of the F1 event in driving their performance.

David Katz asks about MGM's digital strategy and how it relates to the BetMGM brand and other brands owned by the company. He wonders if there is a possibility of convergence and if this is necessary for maximizing stock value. William Hornbuckle declines to comment on the relationship with Entain.

The company is optimistic about the upcoming fall season and its potential to regain market share. They have made strategic investments in markets such as the Netherlands, UK, and South America, and are excited about the potential for Live Dealer games to drive long-term growth. However, they are not able to provide specific details on the cost structure and potential flow-through at this time. The new product deliveries at BetMGM are expected to have a positive impact on gross gaming margins.

The speaker discusses the impact of supply coming out of the Las Vegas strip on their properties. They mention that Tropicana is a pure leisure play with a value proposition and that there is some group activity at Mirage but not extensive. They also mention other facilities such as Luxor, Excalibur, and New York, New York.

The speaker discusses how the company's MGM portfolio and mid-market offerings position them well for the leisure room market. They also mention that they have a database of customers from a previous acquisition that they can leverage. They then move on to discuss MGM China's performance in the second quarter, noting that while the market slowed down slightly, they were still able to achieve high margins due to their focus on innovative and customer-centric investments. They also mention that their visitation and revenue share remained consistent.

During the call, Hubert Wang discusses the disciplined approach towards reinvestment and the increase in the mass component of the revenue mix, which has helped with the margin increment. When it comes to Las Vegas, the room revenues have been growing at a high single and low double-digit percentage, while the other components such as F&B, entertainment, and group have been growing at a slower pace. This is due to the return of the convention marketplace and the prevalence of leisure over transient guests. The focus has always been on extracting as much as possible from guests, and while there has been some softness in entertainment and F&B, room rates are expected to continue driving revenue.

Corey Sanders adds that although the food and beverage side may seem misleading, they are actually feeding more mouse in convention halls and restaurants. The entertainment challenge is the high supply in the market, with the Spirit having 18,000 seats and three shows a day. The company is focused on booking the right acts and tracking customers. Daniel Politzer asks about the excess cash balance and potential for share repurchases. Jonathan Halkyard mentions the attractive value of their shares and the potential for additional share repurchases with the growing free cash flow.

The speaker believes that the company's aggressive purchasing strategy will continue, and they may consider additional financial leverage to fund it. However, their lease coverage is growing and their net debt is low, so they do not have to do so at this time. They expect a better performance at non-luxury properties this year, especially with the Raiders game bringing in more visitors to the south end of the strip. The speaker emphasizes that the potential loss from F1 is relatively small in the context of the company's overall earnings.

The speaker discusses the current state of ticket and room sales, noting that they are soft due to a lack of demand. They also mention that the luxury properties saw a significant boost in rates during the F1 event last year. When asked about the performance of regional and unrated play, the speaker mentions that the middle to high end of the database is still strong, but there has been some softening in the lower end and unrated play. The conversation then shifts to the company's development pipeline in UAE, where there have been recent updates on the licensing process. The speaker notes that while there is not much information they can share, they are still enthusiastic about the potential opportunity. They also mention the discussion of online gaming in the guidelines.

Robin Farley asked a question about the different types of consumers in Las Vegas and the potential impact on MGM's performance in Q3 and Q4.

The speaker disagrees with the idea that there is a decline in gaming revenues and points to record drops in table games as evidence of strength in the market. They also mention that the shift in mix from casino customers to group room nights may have contributed to a decrease in slot handle. They do not see any macro factors that could disrupt the growth in gaming, despite potential challenges like increased interest rates and higher hotel rates.

The company is comfortable with the current margins in their Las Vegas operations, which have been in the mid-30s. They have managed to offset increases in labor costs through efficient management and expect these costs to decrease in the future. The company is not planning any major projects in the next 12 to 18 months, but may defer some core renovations due to the current situation with room capacity.

In the paragraph, Jonathan, the speaker, notes that the company expects to take market share in Vegas due to their continued investment in their properties. This could potentially be by taking advantage of other properties, such as Mirage and Trop, shutting down or by further growth beyond those assets being out of service.

William Hornbuckle discusses the potential for growth in the high-end retail and nightlife scene at their properties, particularly in the Bellagio, Cosmopolitan, and ARIA. He also mentions the focus on personalization and data to keep customers within their properties. Corey Sanders adds that their investments are aimed at the luxury market to regain market share. Steven Wieczynski asks about the possibility of pivoting away from digital investments if they do not yield desired results, to which Hornbuckle responds that he understands the point.

The speaker discusses the progress made in cross-selling between the company's assets and the potential for future opportunities to drive this further. They mention investing in connecting their properties in Las Vegas to capture in-market share of customers' spending.

The acquisition of the Cosmopolitan and sale of the Mirage has allowed the company to combine their casino and convention marketing efforts. They are strategically positioned in the Las Vegas Strip for future growth and have already seen success in gaining market share. The company is closely monitoring their investments in BetMGM and will make adjustments if necessary.

The speaker expresses understanding and concern for the company's performance in the next six to seven months, particularly in regards to BetMGM. They also mention breaking records and facing challenges in the current environment, but are optimistic about the company's future, especially with digital advancements. The call concludes with thanks to the participants.

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