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MGM 4Q 2013 CONFERENCE CALL NOTES

Still a lot of post Q1 uncertainty

CONF CALL NOTES

  • Signficant operating leverage in the recovering economy
  • 2013 was a 'new era'
  • US wholly owned EBITDA:  best EBITDA in 5 years
  • Arena will be completed in 1H 2016, could be used for additional convention space
  • Hotel Delano remodel will be completed in Sept 2014
  • 80,000 players visited a MGM property in 2013
  • Completed deep piling on MGM Cotai; have been working on basement substructure; will increase scope/complexity on entertainment options; increased project cost from $2.6BN to $2.9BN; will open in early 2016
  • PG County:  will open in 2016
  • Will seek opportunities in S Korea and Japan
  • Very strong LV convention business in 1Q
  • Strip flow-through 70% (above 50-60% target) - if you adjust certain items, it is within that 50-60 range.
  • Strip REVPAR: +1%, slightly better than guidance; booked more in the quarter for the quarter 
  • 1Q convention mix:  22% (peak levels for any 1Q), almost fully occupied at convention space
  • 1Q:  expect REVPAR +10% YoY
  • 2014 convention mix: 15.5%-16% (approaching peak levels)
  • Aria:  $6MM higher hold benefited EBITDA; F&B increased 11% (higher banquet/buffet revenue)
  • Sold 11 units at Mandarin Oriental ($22MM revenues); 18 units closed in January
  • $1.2BN available liquidity RC; $1.45 BN at MGM China RC
  • 4Q $127MM domestic capex 
  • FY 2013 domestic capex: $324MM - in-line with guidance
  • 4Q other capex:  $4MM MGM Macau, $51MM MGM CHINA 
  • FY 2013 other capex:  $35MM MGM Macau; $204MM MGM Cotai
  • 2014 domestic capex:  $350MM ($75MM LV arena, $170MM PG MD) 
  • 2014 other capex:  $70MM (MGM MACAU) $500MM (MGM cotai)
  • MGM CHINA:  mass volume +12% YoY;  slot handle increased 16% YoY; continued remodel/refurbishments; 
  • CNY was very successful in Macau and Las Vegas
  • Great CES show; very strong month of conventions in January, another strong month in February, successful Super Bowl and March is looking good
  • Continue to focus on FCF

Q & A

  • Quality of convention mix is improving in 2014 - higher banquet/catering/restaurant spending
  • Are more comfortable for 2014 LV REVPAR than they did before; strong in the year, for the year business
  • 2014:  50-60% flow through target 
  • Domestic hold was down a touch in 4Q except for Aria
  • Casino license renewal process for 5 yrs?  Misunderstanding of the issue.  Gov't always had the power to review after 5 yrs.  Govt is comfortable with system in place.
  • Most of 2014 REVPAR growth will come from rate
  • 2015 REVPAR will be better than 2014
  • 2015/2016/2017 convention pace is higher than previous 5 years
  • Airlift also higher; McCarran passengers increased 2%
  • Westjet increased 18 flights to Las Vegas
  • Confident Group business in 2014 will be better than in 2013
  • Lower provisions in 4Q?  Yes.  Some reversals.  Does not expect changes in 2014.
  • Luxury properties had pretty good strength; core properties continue to be challenged by consumer spend.  Correlation between ADR and spend is there.
  • Mandalay Bay/Luxor will have renovations
  • Monte Carlo/NYNY will be positively impacted by Arena and Linq projects
  • MGM China dividend policy:  up to 35% of profits
  • MD/MA:  will own a substantial portion; will use corporate facility for construction spending; try to keep balance sheet relatively neutral
  • Asset sales?  Recently sold some land on outskirts of Strip.  May consider further sales.
  • Borgata license:  dialogue continuing. In 1H 2014, will be back in front of NJ DGE commission.  
  • Vacation accrual reversal:  $4MM
  • LV Strip slot business:  up when the market is actually down
  • Overall slot business down due to the regional properties