Takeaway: Value levers need to be pulled to offset the negative fundamental momentum. This was not a good quarter.




  • Mayweather/Pacman fight:  record REVPAR weekend.  Tremendous gaming drop at MGM's properties.
  • LV REVPAR 1Q:  outperformed LVCVA reported Strip REVPAR of -1.5%
  • MGM China increased its market share
  • Lower volume and hold at Aria
  • Vdara/Crystals:  record EBITDA quarters
  • Had expanded credit facility to $3bn - will continue to invest in Macau
  • Arena 50/50 JV: MGM will invest $87m (equity contribution); during 1Q, secured Cola-Cola, Toshiba, and Snider Electric contracts. In negotiations with 8 other providers. Signed contracts for over 50% of the suites.  
  • Mandalay Bay expo convention space will open in Aug 2015 (already booked).  Will renovate rooms in June 2015 and will be completed by March 2016.
  • MGM Detroit:  invested $800m in total (earning $150m/year)
  • MGM National Harbor:  moving towards Q4 2016 opening
  • Springfield opening:  Late 2017 - feels like MGM Detroit return profile
  • MGM Cotai:  remain on track for Q4 2016 opening.  Mass-centric.
  • Land & Buildings:  suggested $2.6bn special dividends in MGM Macau. Pitch full of mistakes. Tabloid-like campaign.
  • Concept of REIT is not a new one. Board have evaluated that option in prior year. But MGM business model is evolving.
  • Non-luxury/regional properties were strong offset by luxury Strip resorts.  
  • LV REVPAR Q1:  Jan (Double-digit growth), Feb (low-to-mid growth), but March very tough (excluding Conagg week, REVPAR would have been up 6%)
    • But Q1 guidance had already accounted for difficult ConAgg comps
  • Q2 LV REVPAR guidance: at least 5% REVPAR (helped by Mayweather/Pacquiao fight)
  • Aria:  250bps decrease in table game hold YoY.  Lower volumes from high-end Chinese business.
  • Aria: 9% increase in convention room nights and 7% in ADR
  • CityCenter: MGM received $200m dividend last Friday.
  • Cash:  $469m at MGM China.  $1.1bn RC availabilty. $1.4bn of excess cash
  • $1.5bn convertible notes converted into net 71.7m of MGM stock
  • At end of 1Q: $950m in debt outstanding.
  • CityCenter: $1.5bn debt outstanding, does not account for special dividend paid out last week
  • Capex: $92m (domestic operations), $54m (Springfield/National Harbor). $19m Arena contribution. $14m MGM Macau. $132m at MGM Cotai.
  • MGM China:  targeted marketing efforts. Mix-shift (high-end premium floor): 50% of revs and 80% of EBITDA coming from mass. Additional 44 tables moved to mass vs prior year quarter (55% of total tables are mass). 80% of mgmt team are locals.
  • Convention:  lead volumes up 70% YoY. Corporates driving 60% of booked room nights.

Q & A

  • LV Strip REVPAR guidance: better and better at forecasting it.  
  • LV REVPAR: +4% in April 
  • Chinese LV customers:  <5% of total cash flow in LV.  -30% collectively in Q1 or $15-20m in net gaming revenues.
  • Japan/Korea/Taiwan customers doing well in LV
  • March softness:  particular in ConAgg week. 
  • May boxing weekend: benefited REVPAR by 1%
  • Cost control:  Costs up 2% in 1Q, FTEs flat in 1Q
  • Very focused on margins in LV  
  • Still expect annual 50% flowthrough in Vegas
  • Bellagio margins better than Wynn and LVS LV properties
  • Luxury LV properties:  more isolated from city-wide conventions
  • Core LV properties:  benefit from city-wide conventions.
  • Core LV REVPAR in 1Q: up 4%
  • Core REVPAR has outperformed luxury for last 3 quarters because they're farther away from peak.
  • $8m wholly-owned 'bad luck': Bellagio, Mandalay, MGM Detroit - there wasn't any bad luck, however, as hold percentage was smack dab in the middle of the historical range
  • % of room nights on the books for Q3 2015:  booked a big business for August (in the year for the year). A little softness in international leisure travel but can be offset by domestic business.
  • Q1 2015:  some high-rollers delayed their trips to come visit for the Big Fight
  • Crystals:  a couple of years, explored sale.  Had high level of interest. Being actively discussed at the board level. 
  • Only thing they agreed with Land&Buildings: MGM is undervalued
  • Cash paid taxes in 2015:  will be <$50m. Will be up a little bit in 2016.
  • MGM China:  very strong in premium mass.  Focused on building out entertainment base and MICE business on Cotai. 
  • 3Q REVPAR/4Q REVPAR guidance:  +2-3% comfortable target
  • MGM China:  Up to 35% of NI paid as regular dividends.  Board will take a look at that. 
  • Leverage constraint:  5x for MGM China

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