MGM Resorts International (MGM) — Q2 2022 Earnings Call Transcript

Good afternoon and welcome to the MGM Resorts International second quarter 2022 earnings call. This call is being broadcast live on the internet at investors.mgmresorts.com. We've also furnished our press release on Form 8-K to the SEC. On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements. Additional information concerning factors that could cause actual results to differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise. During the call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation of the GAAP financial measures in our press release and investor presentation which are available on our website. Finally, this presentation is being recorded. I will now turn it over to Bill Hornbuckle.

Thank you, Andrew, and thank you all for joining us this afternoon. Our second quarter results represented our highest adjusted property EBITDAR quarter in the history of Las Vegas, both on an absolute and same-store basis, and the highest second quarter in our regionals ever, with seven of our U.S. properties setting all-time records. I again want to sincerely thank our employees for their continued hard work, commitment to excellence, and dedication to creating world-class experiences for our guests. Thanks to them, our company's service scores have improved sequentially, each quarter, both overall and across all the metrics we track. I could not be more proud of the progress we have seen in servicing our customers. Before I dive into our results in more detail, let me reiterate that our long-term strategic planning remains unchanged. We're focused on continually improving our guests' experience, delivering operational excellence, investing in our people and planet, and allocating capital responsibly. So, let's turn to those results. We took another meaningful step in April to simplify our corporate structure and complete the modernization of our real estate assets with the closing of our strategic transactions between MGM Growth Properties and Vici. This transaction brought us $4.4 billion in cash, which we intend to use to invest in our core businesses, while continuing to pursue meaningful growth opportunities. One such opportunity was the acquisition of the Cosmopolitan of Las Vegas that officially closed in May. I've had the opportunity to spend some time at the property and have met a number of the CoStars. I cannot say enough about the strength of the team at the Cosmopolitan and the exceptional service culture that has been created there. Our focus now is on integrating the operations of the property into MGM Resorts portfolio and working together to maximize the future success of this world-class resort. We also recently announced another strategic divestiture in our portfolio. In June, we reached an agreement to sell the operations of the Goldstrike Tunica to the Cherokee Nation for $450 million. As a company, we felt this was an opportunity to sharpen our focus in Mississippi on Boulevard and take advantage of an attractive valuation. Goldstrike is a very special property. I'd like to again to thank every employee in Tunica for consistently delivering amazing first-class gaming and entertainment experiences to our guests. We look forward to seeing Goldstrike's continued success with the Cherokee Nation, and we expect this transaction to close in the first part of 2023. The divestiture follows our prior announcement to sell the operations of the Mirage, which is still on track for close later this year. Consistent with our strategy to grow our international online gaming footprint, we announced in May a tender offer for LeoVegas, a leading global online gaming company with licenses in eight jurisdictions, primarily in the Nordics. LeoVegas has a talented management team, a cloud and mobile-based technology platform, and an appreciable growth plan that will execute on as we develop our digital gaming presence in Europe. We also expect this transaction to close in the third quarter of this year. Shifting now back to focus on our brick-and-mortar development pipeline. We're hopeful that New York will solicit applications by the end of the year for one of three additional casino licenses. We are eager to respond and expand our existing property in Empire City, which is less than 15 miles from Manhattan, with an attractive footprint for development and growth. If we do receive a license, we'll look forward to working with the state of New York, Yonkers, and our surrounding jurisdictions to drive jobs and economic growth to that region. In Japan, we submitted our Arian development plan to the Japanese government in April and are optimistic that we will receive an approval decision in the fall of this year. Following that process, we will share further details about the project. And in the UAE, we continue to make progress on bringing the MGM brand family to Dubai, where we have a management agreement for a non-gaming integrated resort that has been developed in partnership. The project has broken ground and we're continuously monitoring the development progress and we will watch with great interest what does or doesn’t happen around gaming in the region, hopefully in the near future. Turning to BetMGM, Adam Greenblatt and the team provided a comprehensive update at their announced Analyst Day reaffirming their long-term roadmap and path to profitability. The team at BetMGM is also working on a comprehensive refresh to improve the interface and customer experience later this year. Following a successful launch in Ontario in April, BetMGM announced a partnership with Carnival Cruises Corporation to provide onboard ship betting and gaming under the BetMGM brand. BetMGM operates now in 23 markets in the United States and Canada, across retail, online sports, and iGaming operations. In May, BetMGM committed 21% in share in the active markets in both U.S. sports betting and iGaming, which puts us in the number two position. BetMGM is the clear leader in iGaming and has reached 29% market share in May. Looking forward with the addition of Ohio, which was recently added, Massachusetts, as well as the potential for California, we continue to see great opportunity for expansion with BetMGM. The accessibility to these three states has over 45 million addressable audience. Our investment in BetMGM is an important enabler to our omnichannel strategy and a key competitive advantage that allows us to drive incremental earnings between our brick-and-mortar and online channels. Early results of this strategy have been positive with a strong acquisition story with over 43% of our MGM Rewards signups coming from BetMGM versus 33% in Q2 2021. Of these signups, we have seen substantial growth in those who are visiting MGM property for the first time. Turning to Macau, our operations were affected by limited visitation to the region due to the COVID restrictions. As you've likely seen, the Macau government closed all non-essential businesses in July in the face of rising case counts, which impacted our properties. Last week, we saw operations reopening on a limited basis and we're working to minimize our operational costs in the short-term and position our properties to capture more than our fair share of premium mass business as demand returns, hopefully in the long-term. We're also working on our concession renewal. We are pleased to have received the terms of this tender last week with no surprises, with all the submissions due by September 14. The Macau government will then review the submissions and grant new concessions, hopefully, by year-end. We remain confident in the future of Macau, and are proud to be partners in shaping the future of one of the world's premier tourist entertainment and gaming destinations. While our second quarter results were nothing short of spectacular, we are, of course, mindful of the marketplace concerns of potential recession. We also recognize that starting in the back half of the year, we'll be lapping strong comparisons driven by pent-up demand around our re-openings. With all of this in mind, it is important to highlight that we built an incredibly agile business over the last few years due to COVID and other factors, and we will adjust and pivot quickly if we see any signs of consumer demand slowing. That said, as we sit here today, our business in forward-looking pace remains extremely strong. In fact, looking ahead, we continue to be quite bullish on our domestic business outlook based on a number of tailwinds coming in the near year, including a rebound in our convention business, the return of international travel, and the lineup of exciting events to Las Vegas. Let me touch on a couple of these points a bit more. First, in 2023, we expect to grow our convention mix and rate year-over-year. Also, in terms of city-wides, we look forward to welcoming CES back in better form and once again the ConExpo Trade Show in Las Vegas in March of 2023. This will be their first return post the COVID-shortened 2020 event. In rotation, this is one of the most well-attended city-wide events of the year with historical attendance well north of 130,000. Add to that, the return of international visitation to Las Vegas, which in 2021 represented only 3% of visitors, then 10% to 15% in pre-pandemic years, our international customers have longer stay patterns than domestic guests and we expect these guests to return in forces as international flight capacity reaches over 80% of 2019 summer levels. Finally, the event calendar in Las Vegas is arguably the best the city has ever seen, and MGM will be a primary beneficiary given our scale and positioning. Las Vegas is now truly a powerhouse sports destination with the Golden Knights and Raiders calling Las Vegas home. Looking ahead in 2023, the city will host the Sweet 16 and Elite 8 rounds of the NCAA's men's tournament, our first-ever Formula One race, and then in early February of 2024, will play host to the Super Bowl. When you put it all together, the business case is incredibly compelling for continued growth and momentum in our business. As Jonathan will describe, we see tremendous value potential in the shares of MGM Resorts. With that, I'll turn it over to Jonathan to discuss the details of the quarter.

Thanks very much, Bill. I too would like to express my sincere thanks to all of our employees for the incredible results we achieved this quarter. We truly have the best team and the best talent in the business. I also want to acknowledge and thank the employees of the Goldstrike Tunica for their contributions to this great property, and also extend my welcome to the CoStars of the Cosmopolitan of Las Vegas. So, let's discuss our second quarter results in a bit more detail. Our consolidated second quarter net revenues were $3.3 billion, an increase of 44% compared to 2021 despite a $168 million negative impact from MGM China due to the COVID-related limitations to visitation Bill mentioned in his remarks. Our net income attributable to MGM Resorts was $1.8 billion, benefiting from a gain related to the sale of MGM Growth Properties. Our second quarter Las Vegas Strip net revenues were $2.1 billion and adjusted property EBITDAR for the Strip was $825 million. Our same-store net revenues in Las Vegas, which excludes ARIA, Vdara, and the Cosmopolitan in 2022, increased 60% versus the second quarter of 2021. Same-store adjusted property EBITDAR in Las Vegas was up 51% versus the second quarter last year. Now, unlike the variations we experienced in the first quarter due to Omicron, our second quarter occupancy, ADR, and profitability were consistent throughout the quarter. Second quarter occupancy was 92%, continuing the strength that we saw when we exited March. As Bill mentioned, pricing remains strong with ADR in the second quarter at a record $225. On the same-store basis, ADR of $201 was 34% above the second quarter of 2021. Our pricing power is driven by several factors; the attractiveness and sophistication of our marketing efforts, the relative value versus other destination markets, midweek conventions returning, and the benefit of certain room renovations, including the Bellagio and the ARIA Sky Suites, which we completed in 2021. Our preliminary results from July are also an encouraging sign for the third quarter with occupancy of 94% and ADR up 6% year-over-year, this being our toughest comp versus 2021, given the strong reopening trend we experienced last year. Our growth bookings continue to be robust with occupancy growth and all future months this year and rate up double digits versus 2021 in each month. In fact, during June, we booked the most rooms per day so far this year. Yes, we really liked the demand outlook for Las Vegas. Our second quarter regional net revenues were $960 million, an increase of 12% versus the second quarter of 2021. We delivered regional adjusted property EBITDAR of $340 million, which was 7% above the second quarter of 2021. Margins were 35%, down approximately 200 basis points compared to last year as we brought back more of our non-gaming operations. Moving to Macau, net revenues of $143 million in the second quarter represented a 54% decrease compared to the second quarter last year. Adjusted property EBITDAR was a loss of $52 million in the second quarter versus positive $9 million last year. Public health policies remain a headwind in the region, as entrance into Macau has been severely limited. Turning to BetMGM, our 50% share of BetMGM losses in the second quarter was $71 million, which is reported as a part of the unconsolidated affiliates line of our adjusted EBITDAR calculation and we expect to contribute $225 million to BetMGM this year. Now, in the first half of 2022, BetMGM generated net revenues associated with operations of $608 million, which is an improvement of 70% compared to the first half of 2021 and well on track to meet our forecast of $1.3 billion. Our second quarter corporate expense, including share-based compensation was $120 million, which included $21 million of transaction costs. We're strategically investing our corporate expense in growth areas, including improvements to our IT infrastructure, enhancing digital offerings for our guests, and of course, our IR efforts in Japan. So, before we wrap-up our prepared remarks, I'd like to restate our capital allocation strategy and touch briefly on how we view the valuation of our company. Our strategy is as follows; first, we will maintain a strong balance sheet with ample liquidity. Second, we will invest where we have clear advantages, exercising prudence and measuring prospective returns for our shareholders. And finally, we will return cash to those shareholders. The transactions we've completed and announced this quarter yet again demonstrate our commitment to and execution of these priorities. We bolstered our liquidity through the closing of the Vici transaction. We improved our portfolio with the acquisition of the Cosmopolitan and the announced sale of the operations of the Mirage and Goldstrike Tunica. We invested in our international digital future with the announced LeoVegas transaction. We returned cash to our shareholders through share repurchases. During the second quarter, we repurchased 32.4 million shares for $1.1 billion. Since the beginning of 2021, through last night, we repurchased 104 million shares for $4 billion, or 31% of our market cap. This activity brings our share count down to approximately 393 million shares. We've been aggressively repurchasing our shares over the past 18 months because of the value we see at current trading multiples. As of yesterday, our share price was $33 and we had 393 million shares outstanding. So, this implies a market cap of $13 billion. If we add our quarter-end domestic net debt and subtract the value of our 56% stake in MGM China, then we have the enterprise value of our domestic operations. Dividing this by the trailing 12 months EBITDA adjusted for corporate expense, Cosmopolitan, Mirage, and Goldstrike transactions, implies a trailing multiple of 5.3 times, with our stake in BetMGM for free. These deals were announced a few months ago, but our sales of the Mirage and Goldstrike traded at trailing EBITDA multiples of 17 times and 11 times respectively. But wait, there's more. Our traditional debt is all fixed rate and our lease agreements escalate by only 2% annually for the first 10 years and thereafter we have a CPI cap of 3%. So, we enjoy free cash flow operating leverage by driving EBITDAR growth above 2% or 3%. In the second quarter, our domestic same-store adjusted EBITDAR grew by 33%. Bill, back to you.

Thanks, Jonathan. I know my new Chief Sales Officer is going to come for me. As a company, we've been busy this year in our pursuit of our vision to be the world's premier gaming entertainment company. I could not be more proud of the progress we've made, but understand there is clearly more work to do. Again, I'd like to thank all of our employees for their contribution to everything we have accomplished. There is a lot of excitement in the rest of 2022 and beyond. I can't wait for what's to come. I truly believe our best days are yet to come. And with that operator, I'd like to open it up for questions.

Good afternoon, guys. Bill, my first question to you is – and to Jonathan as well, can you talk about maybe any aspirations for large scale M&A, particularly in Asia? Given the news about your potential interest in Singapore, that to us is a little bit different than some of the other capital allocation activities that you've talked about. But I'll leave it open-ended and you can discuss it as you wish.

But Joe, obviously, we love our position in Macau. We're excited about Japan. I'm not going to comment on anything else. We'll continue to be aggressively looking at M&A and active to the extent it makes sense. But I really don't want to comment on the Singapore situation. I don’t know Jonathan, you want to–. So, we stand as we are Joe.

Okay. Understood. You mentioned the forward momentum in Las Vegas, and it's reassuring that our portfolio isn't showing any signs of consumer pullback amidst any downturn we're experiencing or may face. This aligns with observations from others in the industry. Can you discuss what the contingency plan would be for managing the business if we enter a downturn, and if you observe a decline in spend per visit and length of stay? How would you handle that from an operating expenses and labor standpoint? Additionally, how might this impact your margins, considering the gains you've made recently? That's all from me.

I'll start off and may pass this over to Jonathan or Corey. Inflation is an interesting factor for our business since we set our hotel room prices daily, putting us in a strong position. Much of our food and beverage pricing is also dynamic. Our company has managed energy costs effectively and we have already secured energy purchases through the end of 2023. Approximately 60% of our employees are under some form of union contract, with a significant increase expected next year due to a culinary contract. We have around 35,000 employees in various review cycles, and overall, we feel optimistic about our status. Broadly speaking, we have navigated the challenges posed by COVID-19 and have learned to manage this company at a premium level, as we are operators of high-end products. Our margins remain robust, ranging from the high 30s to the 40s, with some key properties exceeding that. While we are aware of potential uncertainties, I am confident in our operating model and our ability to manage costs. Jonathan, you can delve into some specifics regarding possible future scenarios, but that is my overall perspective.

Yes. Joe, we've done certainly forensics on prior recessions and the impacts of changing customer behavior and pricing on our operating model tried to adjust it for things like the very dramatic, the different supply environment that we have now, which is better than what was experienced back in 2007-2008. And it really depends upon where any reduction in demand would come, whether it be from visitation or pricing or both. I certainly believe having seen this now, just in my relatively brief time with the company, our company has dealt with pretty material reductions in demand last August, September and then of course, back in January; the operating model really works here, and the company has playbooks and I’m confident that we will be able to adjust as much as possible to that kind of reduction and maintain margins, perhaps not where they are now but above where they've been in the past under such circumstances. Another thing I would add is we still have a number of initiatives in flight that would help us greatly in such a situation, and those would include, of course, the cost work that we’ve done over the past couple of years and also the MGM Rewards program, which is designed, in part, to stimulate increased visitation from our regional properties in Las Vegas, visitation that I don't think we get our fair share of now. Also cross-property visitation while our customers are within Las Vegas. These are huge opportunities that I think would be a bit of a buffer for us in that kind of environment.

And I think maybe one last comment here to think about our regionals. In many cases, market-leading large-scale resorts, they're not smaller properties that do $15 million or $20 million, they’re large scale places that hopefully do a couple hundred million. So our regional portfolio even sets up a little different, you know, two-thirds of our database, the average household income is over $110,000. So, it's such that we have an up-market opportunity in the context of where our customer base is, and therefore, who may or may not be impacted, and how severely by a significant downturn.

Great. Thank you.

Hey, guys, thanks and good afternoon. It's awesome. I know getting into property-level stuff, and you certainly gave some same-store metrics that were certainly helpful. But I wanted to ask around Cosmo, I believe I could disguise that in the release at the time of acquisition, it was LPM run rating a little over 415 or so. I was wondering as you've kind of gotten into the asset, and it's only been a couple of months, but had some time to integrate? Is there anything along the lines of synergies that you think exists there that might be tangible enough to call out?

Well, there are certainly synergies in this transaction, they relate to the things you might expect, the combination of some facilities that the Cosmopolitan needed to maintain and pay for associated with their relatively small footprint, things like warehouse space, corporate offices, and the rest. I'm proud to say that on the day after we closed the transaction, we had their employees, the CoStars, able to park in the Bellagio garage, and therefore not have to take bus transportation from a remote spot. The synergies I think we will realize over the next couple of years. I would note that you can probably do this math yourself, but I'll save you a step on the same-store sales or same-store EBITDA calculation; in the six weeks that we owned the Cosmopolitan of Las Vegas during the second quarter, it generated just under $60 million of EBITDAR. So, this business is rocking and rolling right now. Corey?

Yes. And the other thing I would add, Carlo, is that we've identified immediately procurement savings that and they go both ways; they go on buys that they were getting through Blackstone, and on buys that we get.

Great. Thank you guys. And then if I could just one follow up. I was wondering if you guys had any color you could add on the launch in Ontario and how that's gone. Maybe at an industry level or at a company level what the experience there has been to date acknowledging if a soccer season on the sports side, but perhaps we could set some color on the gaming side.

Carlo, it's Bill. It is a softer sports season as you know, we're exactly where we thought we would be, particularly with our iGaming business. Obviously, as you know, it was a great market, it's now been regulated. So there's a couple of dozen competitors. We're in the single-digit high-single-digit market share and growing. It's clearly a real marketplace that is used to iGaming and sports betting. So our entry into that has been productive, and we're pretty excited about what that ultimately all leads to.

Great. Thanks, Bill. Thank you, everyone.

Afternoon, everyone. Thanks for taking my question. Could we just spend a moment on LeoVegas and just talk through the strategies for that, and how it, you know, sort of pitches to the obviously this very busy plate that you have and what success looks like with it?

Sure, again, Bill. So, David, pretty straightforward. We believe ultimately that the digitization of our business and therefore our ability to take brands through omnichannel and otherwise and make something real is a real business, and obviously, BetMGM is heading to a $2 billion revenue line next year, hopefully profitability by the end. We are interested in the rest of the world. And so a smaller acquisition, you know the numbers, we were probably going to be in at just under $600 million, hopefully throwing up between 40 and 50 the first year. But it's got an expandable platform. It's got a built-in team that we really like in terms of its management. So we're looking at M&A, we're looking at gaming studios. They have dabbled in before live dealers live gaming and so we liked the entry. We recognize it's not as large scale and therefore needle moving, as we might want over time, but we thought it was a great place to start. Most importantly, we liked the platform and the players, I mean the team. In essence, that’s it. We think over time it’s in Canada, as well. So, it's an open marketplace, obviously, for BetMGM, LeoVegas, and our partners and entertainment as well. So we just liked the exposure it gives us; it's a learning curve for us to understand the rest of the world, and we think we'll learn a lot from these guys.

Understood. And as my follow-up, for Jonathan, I just wanted to talk about share repurchases. You've obviously done a fair amount of that of late, and just thinking through how share repurchases might be an ongoing or recurring aspect of the strategy and, frankly, something that happens quarter in and quarter out and how we might think about that?

Sure, David. We noted in our results today that we bought back $1.1 billion of shares in the second quarter, marking the largest investment since this program resumed just over a year ago. This shouldn’t be a surprise, as we acquired shares at an attractive price of just over $34. I want to point out that since the end of the quarter, we've repurchased an additional 5.3 million shares at a price slightly above $29, which means we continued the program into the third quarter. My comments at the end about the attractiveness of the share value are definitely one of the reasons behind our aggressive approach, and we plan to keep repurchasing shares. Additionally, this aligns with our asset-light strategy to return capital to our shareholders and optimize our business leverage. We have repurchased $4 billion in the last 15 months, indicating that more of this strategy is behind us than ahead. We still have just under $1 billion left in our share repurchase authorization and will be opportunistic with it, considering various upcoming capital needs that we are excited about, including projects like LeoVegas and New York.

Understood. Thank you.

Hi, good afternoon, everyone. I have two questions, both related to Las Vegas. So, the first would be just wondering in the second quarter, we obviously all saw a bit of the return of both group convention and some event — some really large-scale events business. Can you just give us a sense of maybe relative to your normal or stabilized mix, how much group made up in the second quarter just to get a sense of maybe what anymore out in the recovery there? And then the second part would just be to just talk a little bit about the health of the Las Vegas gaming customer, specifically, maybe some areas about rated versus unrated play, those types of metrics, just to give us a sense of how that's trending as we get kind of further and further into the recovery? Thanks.

Hey Shaun, it's Corey. In Q2, we were about 93% of 2019 room nights in the convention segment, and we actually had our highest catering and banquet numbers since the fourth quarter of 2019. So, pretty positive environment there. We did have one large group that canceled, it's been the only group that's not come back. We're happy to say we're seeing most of our big groups come back considerably. With regards to the gaming customer. The business is strong in all age groups across all segments of it, especially in Las Vegas. Even our lower end is strong there, and our unrated continues to outpace where we were in 2019. It's flattened out since 2021, but all indications are very strong trends.

And Shaun, we have said in 2022, we'd be at about 90% pace to 2019. With the exception of his cancellation, we're right on that point. That's been the return of what we expected, and we've seen it. I think next week, we have Cisco in town with 27,000 people. So, tech is back, large scale is back. That continues to look real positive into the next year, particularly given the events that are going to cycle through.

Thank you very much.

Hey, good afternoon, everyone. Thanks for taking my questions. I wanted to hit on capital allocation and your general strategy there. I think you guys have talked about becoming more global and the importance of diversifying your revenues and cash flows. I mean, how do you prioritize that in terms of — or what's the pecking order for diversification? Is it Europe or international or Asia? Or is it just really the media, that is digital versus brick-and-mortar?

I think, Dan, it's actually both. I mean, obviously, we have a keen interest. We're going to invest several billion dollars in Japan if we're given the opportunity. And so that will be another cornerstone for us in Asia. Between that and Macau, we feel pretty comfortable with what's going on there. Obviously, we'll watch like everybody, what happens in Thailand or any place else for that matter. But we like where we are. Furthermore, we'd love to be in Japan at scale. For us, obviously domestically, particularly if you think about Las Vegas and some other places, there's only so many places we can go and continue to grow. That's why digital, among many reasons, is so attractive to us, and so we're going to continue to lean into that. Obviously, continue to invest in BetMGM. While painful, it's going to be productive. We sincerely believe that now two and a half years into this journey, it’s hitting its marks, it’s doing what it said it was going to do. Time will tell in that business how quickly it goes profitable. But at the end of the day, if I said we’re going to invest $1 billion in a business and ultimately reap hundreds of millions, and by the way, the build cycle is three years, you’d all say let’s go. We’re excited by that and we remain so. We’ll watch for other opportunities in digital, either through our LeoVegas vehicle or anything else that potentially comes up, that could be meaningful for either strategic or broader economic reasons.

Only other point...

Got it. Then just going BetMGM, I think you guys said that you're still on pace for the $450 million total investment, which you're 50% of. As you're pacing through, I think you have $160 million or so through the first half of the year. How should we think about the back half of the year and the cadence?

The third-quarter cadence goes way down given the seasonality. Then we get back into football, which is productive. So the back half of the year, we're going to still have the target number of about 2 to 2.25 invested on MGM's behalf. We are pacing as we thought we would. iGaming has been a little better, which is accretive to us, sports betting not as much. You've probably seen this or heard about this. We are continuing to pull down some of our marketing spend. While share continues to be important, particularly in new markets, we're getting smarter and smarter and smarter about how we do this. We feel comfortable as we think about 2023 and beyond, our ability to make money in this business is within our grasp.

Got it. Thank you so much.

Good afternoon. Thanks for taking my question. In terms of the Macau gaming draft bill that was released, how are you guys thinking broadly about what's expected from a rebidding process, whether it's time commitments or capital when we see this in the back half of the year? Thanks.

I'll kick this off, and then we have Hubert on the phone. Maybe he can add some color. Obviously, we just got last week the final request for RFP RFI. The process has started. We have until September 14 to make our submission. It's been a tough couple of years. Time to tell who ultimately shows up for submissions, but I'm pretty confident the original six licensees will be there. A 10-year window presents some challenges when you think about we're still in the midst of COVID. The idea of a significant investment would have to be something we'd really understand and study. The government wants several things around social programming, employment, job opportunities, and other considerations that we're going to dig heavily into. There are a lot of things around programming and existing square footage that we already own as we de-lever on junkets and into really more mass gaming around experiences, around culture, around event activity. Ultimately, there's a big push on which kind of plays to our daily work in sports. They'd love to see more of that activity in that market. I think we're ideally positioned to be able to do that as well. Hubert, I don't know if you want to add any more color?

Thank you, Bill. Thank you, Chad, for the question. I think that in terms of timing, we're progressively working on the tender package. We'll submit, of course, before the September 14 deadline. In terms of commitments, the government does focus on overseas markets. This is, I think, where MGM has a lot of strength with its global distribution network. So we'll be able to focus on that. There are a lot of requirements, as Bill mentioned, on the non-gaming side as well. So we'll leverage our traditional strength in arts and culture and together with the show that we are currently underway to produce to leverage these strengths for the non-gaming diversification that government is asking for.

Thank you very much. Appreciate it. And then a separate follow-up. Just in terms of CapEx, slide nine, you noted the $750 million to $800 million for this year. Can you just kind of remind us, are there other, I guess, medium-sized maintenance projects, particularly in Vegas, that could be on the come in the next couple of years? Or how should we think about kind of a go-forward maintenance? Just trying to square what free cash flow could be going forward? Thanks.

Now, the largest components of our CapEx, Chad, are room renovations and our technology investments. Through the first six months of the year, we've invested about $250 million in CapEx. So we're behind pace, but I'm confident we'll be pretty close to the number that we've outlined for this year. Those will continue going into 2023 and 2024, so probably a reasonable number for maintenance CapEx is going to be kind of in the 5% or 6% of net revenue. We, of course, have a lot of flexibility on timing of those investments if we need to, but we've set forward a multiyear schedule of room renovations that we think are important in order to maintain and grow revenues. I'll just point out what we have going on right now is room renovations have just begun at New York, New York, one in a large segment of the MGM Grand, and then down in Biloxi, a room renovation at the Beau Rivage business, which under the leadership of Brandon Bardo and his team is just having a phenomenal year so far.

Thank you very much. Appreciate it.

Hi, everyone. Thanks for taking my question. Maybe one, Bill or Jonathan, on the labor market and your hiring needs. How do you feel about staffing right now? Is it still difficult to get labor? Or are you kind of where you need to be? And then perhaps in the context of build some of the events that you've outlined as international comes back, convention ramps, the big city-wides, will you need to kind of continue staffing to get ready for those busy peak periods?

Yeah. Good question. Thank you, John. So look, I guess if there's such thing as good news when I tell you this number, we're under 4,000 open jobs. And remember, in any given usual time, and I'm making usual 2018, 2019, et cetera, we've always had between 1,200 and 1,500. It's just hard to keep the cycle going at the scale that we need. We're in a better shape. We still have some key areas like most people in hospitality, around housekeeping, security, cooks, that we struggle with in terms of getting people back to work. That continues and it's seeable here and even into our regions for sure, in some of the offshoot markets like Atlantic City and the Beau in Mississippi. Obviously, Tunica has been a challenge, but it soon won't be our challenge. I still feel our ability to flex up. We flex up into — think about our portfolio into the Bellagio and the ARIA’s of the world with employees. I’m not overly concerned. Things like F1 will be a significant undertaking for the community, but the company — we're trying to get our head. We've assembled teams around all of that in terms of the opportunity, which is amazing. I think what's going to be ultimately for retail business of note and potentially gaming business. Generally speaking, we're in decent shape. We're not running around with our hair on fire, if you will anymore. But there's still some kind of interesting state of the economy; there are 1.5 million jobs available in this industry out of the 11 million jobs still open in America. We represent that I think, fairly squarely. But we are getting by and pretty excited by the folks that are coming back on board. I think we're in decent shape.

That's great, Bill. Thanks. And maybe the follow-up to that with that in context. Like you said, F1, obviously a big opportunity, a lot of big events, big revenue opportunity. In Vegas, how would you think about or how should we think about the margin profile as some of those big revenue events come back but probably some costs as well as you hire? Would you expect margin stability or any kind of pullback in leisure consumer spending, which is hard to predict at this point, but how would you think about kind of if the cadence as business still ramps in Vegas on the revenue side as well?

Look, Corey will have a view on this, but I will tell you as it relates to something like F1, the retail potential in the upside of that is substantive. We're talking room rates, 3x what we are normally and potentially then some. There are packages that sell for that event at $100,000 retail. The scale and scope we have access to our ticket will be about 20 million, 25 million. We have access to those tickets and then the ability to charge as we want and package as we want. I don't think that won't be a margin hurt. I'm pretty excited by that one. I got to tell you, some of the other activity. Corey, do you want to add anything?

Yes. What I would add, John, is our margins probably already seen the impact because of the way we have to record T-Mobile and in the Grand Garden. Now we're going to benefit from these outside events and including what will happen at the Sphere, they bring U2 and others; they will just bring more people into the city. I think we saw that, especially with Allegiant with the NFL games, which will be in the fourth quarter and the events that they've had. I don’t think these upcoming events will allow us to bring premium customers in and actually maintain or increase our margins.

Understood. That's really helpful, everyone. Thank you so much, and congratulations on another good quarter.

Thank you.

Great. Thank you for taking the question. I was curious regarding your JV partner Entain. You had made an offer now, I guess, over 12 months ago, and since then, obviously, Entain's stock price is down quite a bit and they've lowered guidance. Your offer — the offer you'd made last year is a significant premium to where that stock is now. I'm just curious whether — how much it makes to revisit, because I would think all the benefits of owning 100% of BetMGM are still the same as they were a year ago. I'm just curious how you're thinking about that?

Robin, we think about it all the time. Of course, it’d be foolish to think otherwise. You can't buy what's not for sale. We remain keenly focused on BetMGM. We'd like more of it. We have a great partnership with them. That business is working well because of what we all ultimately provide, our IP, our database, their technology. There are other ways to skin a cat and potentially we may have to seek those, and it is what it is. We continue to follow the math and we understand it intimately. But for now we have no story there.

Okay. All right. And then just as a follow-up, kind of unrelated. I know you've talked about the strength in Vegas that you're seeing and the forward outlook. I'm curious on the regional front. Others have talked about regional kind of flowing and having tough comps. So I'm curious your view for the regional outlook? Thanks.

Yes, Robin. This is Corey. I think we have two different sets of regional properties. Unlike our competitors, I think when we think about National Harbor, Boulevard, Borgata, you get a lot of tourists, a lot of FIT-type customers in those properties. We're seeing the same strength, we're seeing in Las Vegas. As we get into our more traditional driving markets, the high-end customers are continuing to come in and play at those levels. We're probably seeing a little softness at the bottom end of that range and a little bit in the unrated, especially at properties like Empire.

All right, great. Thank you.

Great. As we look through your different strip properties in Q2, and now. Are there any major differences in performance as you sort of moved from the higher end to the lower end?

Well, I think it ties to the broader market. Look, anything tied to luxury and high-end retail, you can obviously put into that case, Bellagio, Aria, and now The Cosmopolitan; parts of MGM and parts of Mandalay are doing amazingly well. Room rate activity remains in the high teens, ADR percentages above all things ever. Our food and beverage and our costings, sorry, our pricing, is extremely strong. It ties to just about everything else you've heard about in the broader economy; we're able to leverage up on higher-end retail products. It's done well for us. Corey?

And the high-end gaming piece in those properties, we are seeing that incremental play. So you'll see those properties outperform the legacy properties.

Got it. Got it. And I just wanted to ask about iGaming, just curious if you have any expectations around future state legalization. Do you think anything, maybe it's possible in the next year or two?

Yes, I think there are a couple of states. I think the reality is there are not a dozen right now. I think there are a couple of states that we’re clearly targeting. We think they have everything but iGaming in them, and they obviously make an interesting subject and initiating discussion with regulatory government officials and ultimately regulators. There are a couple though that we have benchmarked for next year. We think we can break into and continue to grow that because it is the key to the bottom line of that business, as you know. We're excited to continue to do that. It's going to take some time though, depending on how deep this recession may or may not be. When states need money, sometimes they turn to this vehicle, so we'll see.

Got it. All right. Thank you. Congrats on a great quarter.

Thank you, Barry.

Thank you, operator. Just a couple of key thoughts as you think about our call today. And again, congrats to our entire team. I couldn't be happier with where we are and what we've accomplished. Much has been done, and frankly, obviously much more to go. There has been, I think, a shift. There's this insatiable appetite for travel experience, experience-based economy, and the millennial stepping into it. I think we've seen it in all of our properties, particularly here in Las Vegas. When you think about The Cosmopolitan and others. I think we're in a great place. I think we're ideally suited to take advantage of it. You think about travel experiences and how things are reported out. We feel ideally situated to do that. We think we've proven our working model, our operating model has worked, I should say, whether we lever up to the success we've had in the last two quarters, or frankly, whether we need to weather the storm coming up. We're in great shape to do that. We think we've learned a great deal as we think about the future, frankly to go either way. We're not naive to what the economy may or may not do. We have constant pressure on ourselves around employment, around labor, around all things expense related, and we remain keenly focused on that. We've all lived through this before and don't want to see some of the mistakes we've made in the past replicate. So we're on that. Generally speaking, if you think about where the company is today, our balance sheet and the opportunities in front of us to go more into Asia, potentially to go more into digital, to potentially buy back and take back some more shares for our stakeholders, I think we're in an amazingly great place, and I couldn't be more excited for our future. So I appreciate everyone's time today and support generally and we hope to continue to do the same kinds of thing. So thank you.