MGM Resorts International (MGM) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Record Las Vegas Performance: Las Vegas achieved top and bottom line growth year-over-year, with net revenues growing 3% due to higher rate and occupancy. The integration with Marriott contributed significantly, booking over 410,000 room nights year-to-date.

• MGM China's Strong Performance: MGM China net revenues grew 37% year-over-year, with a market share of 16%. Adjusted property EBITDAR reached $294 million for the quarter, marking a 40% increase.

• Digital Business Growth: The acquisition of LeoVegas and the strategic relationship with Playtech are expected to yield significant long-term returns, starting with a double-digit stabilized return by 2027.

• Share Repurchase Program: Through strategic use of excess cash for share repurchases, the share count has decreased by approximately 40% in three years, enhancing shareholder value.

• Expansion and Development: Investments in luxury resorts in Las Vegas, expansion in New York, and potential opportunities in Japan and the UAE are highlighted as key growth drivers.

Pessimistic Highlights

• Formula One Softness: The Formula One event in Las Vegas is showing some softness in bookings compared to the previous year, presenting a potential headwind for Q4.

• BetMGM Investment Year: 2024 is an investment year for BetMGM, with a focus on improving the sports product and customer acquisition, impacting profitability.

Company Outlook

• Las Vegas Growth Continues: The company expects continued growth in Las Vegas, driven by transient group demand and strategic partnerships, despite potential headwinds from Formula One softness in Q4.

• Digital Strategy Optimism: MGM is optimistic about its digital strategy, including BetMGM and international digital ventures, expecting these to contribute significantly to long-term growth.

• Development Pipeline: MGM is excited about its development pipeline, including projects in Japan, the UAE, and potential opportunities in Thailand, aiming for long-term value creation.

Q & A Highlights

• Q: Can you provide more details on the contribution from the Marriott partnership? (Joseph Greff, JPMorgan)

  A: The partnership has produced 410,000 booked room nights year-to-date, with a significant portion already stayed. The incremental benefit comes from both rate premium and increased daily spend by Marriott customers. (Jonathan Halkyard)

• Q: How are you addressing the softness in Formula One bookings? (Joseph Greff, JPMorgan)

  A: While Formula One bookings are softer compared to last year, the company is focused on maximizing the event's success. The presence of an NFL game is expected to support room demand at the south end of the strip. (William Hornbuckle)

• Q: Can you discuss the trends in the core gaming customer in Las Vegas? (Shaun Kelley, Bank of America)

  A: The core gaming customer remains solid, with record table game drop in Q2. Slot handle was down slightly due to a shift in mix from casino customers to group room nights. (Corey Sanders)

• Q: What are the plans for further investment in BetMGM and the digital segment? (Shaun Kelley, Bank of America)

  A: The focus is on improving the sports product and customer acquisition for iGaming. The company is optimistic about the long-term prospects of BetMGM and the overall digital strategy. (Gary Fritz)

• Q: How do you view the potential for market share gains in Las Vegas? (Steven Wieczynski, Stifel)

  A: The company is focused on capturing in-market share of customers' spend through investments in connecting properties and enhancing luxury offerings, aiming for market share gains. (Jonathan Halkyard)