• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

MGM 4Q 2014 CONFERENCE CALL NOTES - mgm

CONF CALL

  • US cash flow highest in 6 years
  • Wholly-owned domestic resorts reported highest quarter since 2007
  • CityCenter impacted by low hold at Aria
  • MGM Macau:  grew margins YoY in 2014
  • Shake Shack opened in December 2014 - 2nd highest grossing (1st grossing is at Times Square)
  • AEG Arena:  anticipated in Spring 2016. Construction going well
  • Mandalay Bay:  Delano had double-digit revenue growth in January
    • Will add 350k of meeting space
    • Signed LOIs for new business into that new expansion area
  • MGM Cotai:  almost 2x the size of existing property
  • Best year ever at MGM Sanya
  • Recently signed agreement to build a Bellagio in Beijing
  • National Harbor: remain on track to open in Fall 2016
  • Springfield:  groundbreak this spring.  Targeting 2H 2017 opening
  • Broad-based growth in room categories and casino
  • LV STRIP 4Q
    • Increased margins by 10bps
    • Broad-based single-digit growth in hotel, casino, and F&B
    • Higher convention mix drove REVPAR growth of 7%
    • 2014:  highest convention mix ever at slightly over 17% of room nights
    • 2015:  expect convention bookings to be at or slightly beat 2014 levels
    • Q1 2015 REVPAR guidance: +2-3%
    • CityCenter:  tough hold comparison at Aria. Aria's table game hold fell 450bps YoY and lower volumes. Higher convention mix drove highest catering/banqueting quarter revenue.
    • Crystals: strong performance
  • $1.1 bn in available under corporate revolver. $1.1 bn excess cash at US
  • MGM China:  $1.5 bn revolver availablity 
  • CityCenter: $410m cash ($134m restricted cash); total debt: $1.5 bn
  • Domestic Capex:  Invested $114m in Q4; $387m FY
  • Capex: $77m at National Harobr/Springfield in Q4; $138m FY
  • Capex: $48m at Arena/Hospitality ventures
  • 2015 capex:  domestic resorts ($425m, room renovation at Mandalay Bay, expansion of convention space at Mandalay Bay, park between Monte Carlo/NYNY) development $500m (national harbor $375m, MGM China $80m, investments in JV (predominately Arena investment) $50m
  • MGM China Q4 capex: spent $14m at MGM Macau, $37m at MGM Cotai
  • MGM China FY 2014 capex: spent $45m at MGM Macau, $275m at MGM Cotai, bringing total investment to date of $500m
  •  2015 capex:  MGM China $100m, $1.1bn at MGM Cotai
  • MGM China 
    • Q4 EBITDA Margins increased 10bps YoY
    • Only concessionaire that reported growth in mass revenue
    • Reallocated capacity. Half of tables are now allocated to mass floor. Mass contributed 75% of EBITDA in 2014 (60% in 2013)
    • MGM Macau $100m capex:  redesign traffic layout, introduced 15 retail outlets, new F&B offerings
    • MGM Cotai:  on schedule to open in Fall 2016.  
    • 80% of mgmt team are local employees.  Looking to increase that %
  • Las Vegas:  showing solid signs of growth.  Visitation up 4% in 2014. LVCVA expect 45m visitors in next few years; expect 30% international mix. No new capacity and airlift is expected to be up 3% in 1Q.
  • 70% of LV revenues are non-gaming. Customers are spending more.
  • 2015 off to very strong start in January. CES had strong attendance.  
  • Super Bowl drew 2nd largest crowd in city history
  • Rocking Rio will debut in May. 

Q & A

  • January strong baccarat month
  • LV: <5% EBITDA comes from Chinese baccarat
  • MGM China:  committed to annual dividend.  Special dividend will be on a case-by-case basis.
  • Non-luxury (core) is outperforming luxury due to easier comps.  Still 50% off of 2007 peak ($300m EBITDA opportunity)
  • Luxury:  high-end gaming and F&B improvement opportunity
  • Margins:  tough comp for 4Q 2014
  • 2015 Bookings:  mid single digit increase YoY
    • 60% of future bookings are corporate (50% a couple of years ago)
  • Will achieve similar convention mix in 2015
  • 1Q 2015 convention mix:  23% (similar YoY - last year had ConAgg)
  • Core properties:  high slot handle at Monte Carlo.  High room revenue at Monte Carlo in January
  • Rate drivers at Core properties:  lower gas prices, higher convention mix, and higher airlift
  • 2014 Cash taxes:  will pay some but minimal (<$50m)
  • REIT option?  Will look at everything.  Sees challenges from a tax perspective.
  • Doing great in Detroit and Mississippi in January 
  • MGM China:  will move product into the mass market.  Junket market is soft. 
  • Pacman vs Mayweather:  holding a date in May at MGM Grand. REVPAR will be through the roof if fight happens.
  • LV:  Genting still have not broke ground
    • Guess no new property opens in Strip until 2018
  • SouthWest talking about growing more flights into Las Vegas
  • Mirage:  had very low hold in 4Q 2014
  • M-Life loyalty:  record number of enrollments (+9% YoY); active M-Life members grew 8% YoY
  • CityCenter:  taking down Harmon (a floor/ a week) - 2.2 acres of prime real estate.  CityCenter board to decide how to best use that property. CityCenter is underleveraged.