CONF CALL
- 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
