Good morning, and welcome to the MGM Resorts International Third Quarter 2017 Earnings Conference Call. Joining the call from the company are Jim Murren, Chairman and Chief Executive Officer; Dan D'Arrigo, Executive Vice President and Chief Financial Officer; Bill Hornbuckle, President; Corey Sanders, Chief Operating Officer; and Grant Bowie, CEO and Executive Director of MGM China Holdings Limited. Participants are in a listen-only mode. After the company's remarks, there will be a question-and-answer session. In fairness to all participants, please limit yourself to one question and one follow-up. Please note this event is being recorded. Now, I'd now like to turn the call over to Mr. Dan D'Arrigo.

Well, thank you, Steve. Good morning and welcome to the MGM Resorts third quarter 2017 earnings call. This call is being broadcast live on the Internet at www.mgmresorts.com, and we have furnished our press release on Form 8-K to the SEC this morning. On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results may differ materially for those contemplated in these statements. Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today's press release and in our periodic filings with the SEC. During the call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation to GAAP financial measures in our press release, which is also available on our website. Please note that our supplemental earnings deck is posted to our website as well. Finally, this presentation is being recorded. And with that, I'll turn it over to Jim.

Thank you, Dan, and good morning, everyone. Sorry, we're a couple of minutes late. I know it's been a busy day for all our investors today with many calls. Before I get into our very strong – obviously, very strong third quarter results, I want to take a moment to remember the 58 innocent people who lost their lives and the hundreds of more injured people because of evil individual that made a decision to carry out a devastating act of violence. Of course our thoughts and prayers remain with the victims and their families as they recover from the senseless tragedy, as well as the victims of the most recent attacks in Sutherland Springs, Texas and in of course New York City. I also again want to thank the first responders and the various law enforcement agencies who are working diligently to examine the events of October 1. We have always appreciated their support and during this trying time and we continue to work with them through this investigation. This heinous act of one person impacted our entire city and community, but in the days and weeks following the outpoint support we've received from fellow Las Vegans as well as our guests, partners and corporate leaders from across the U.S. has been heartening. We've also now learned of incredible acts of bravery by many of our own. Security officers and employees that help alert police to the shooter's location, employees that drove victims to hospitals, while under fire, delivered potentially life-saving first aid, worked with first responders to assist the wounded and led those in harm's way to safety. The morning after, 500 MGM Resorts employees from all across our properties arrived at Mandalay Bay. They immediately assisted staff in the front desk, service in guest rooms, answering phones…

Thank you. We will now begin the question-and-answer session And the first question comes from Harry Curtis with Nomura.

Hey. Good morning, everyone, and thanks, Jim, for your comments. I had one question in Vegas and one for Grant in Macau. In Vegas, I wonder if you could give us a little bit more of your strategy with respect to reintroducing Monte Carlo and what disruption has it caused, but what kind of returns on investment are you likely to enjoy there? And then secondly in Macau. Grant, it seems to me that some of your competitors who aren't necessarily VIP-oriented have recently kind of dialed up their marketing efforts and I'm wondering if the competitive environment just for VIP has shifted at all in the last quarter or two. Thanks.

Thank you, Harry. I'll start and I'll maybe turn over to Corey, who's got a cold, he's soldiering through. And then we'll turn over to Grant. We – I underestimated the impact of the disruption at Monte Carlo. It has been incredibly disruptive to the employees, to the guests, the building has been under the most comprehensive renovation of any property that we've ever undergone. And it has had a meaningful impact on its cash flows for the last couple of quarters, and that will continue into this quarter and probably into the first quarter and start rapidly improving in the second quarter. When we have open venues and we've only opened a few new ones, they've been profoundly successful. A couple new restaurants, the room product as it's being unveiled to the customers has been extraordinarily highly received. The returns on capital on Monte Carlo, I would say, would be some of the highest we've ever committed over the last five years, well in excess of any new build. Just imagine the fact that it's a 3,000-room hotel that we've added a $90 million theater to and now $550 million underway, taking a property that is well-positioned geographically, but poorly positioned in the market to a property that is right at the center of the Strip and with extremely high brand recognition and that's driving a lot of revenue. So, I would expect very high returns and I would think that Monte Carlo's cash flows, once they become fully integrated as Park MGM, will double. So that's the kind of project that I think you should look toward the future for us. It is straddled over three years, so it fits within our capital expenditure guidelines that we've set for ourselves and articulated. But it is a very attractive way to deploy capital and that's where we're focusing our capital is where we dominate, which is here and obviously in Las Vegas. And if we are right on our expectations of Monte Carlo and its returns to Park MGM, that bodes well for our other existing properties in Las Vegas. So, I'll stop there. Do you want to add anything else?

Sure. Harry, from a pricing perspective, our goal is probably within a few years to ramp up to our total strategy because there will be a transition period as Park MGM is introduced and NoMad is getting completed. But the goal on this project is we believe there's an opportunity to price this product right around or above a Mirage-ish or MGM-type property. There's not a lot of product in the town with that. We think there's an opportunity from the Park MGM perspective to hit that sweet spot. The NoMad will be more on the higher end, and should be priced with some of the luxury properties. But, overall, that's the overall strategy with the property.

Thank you, Corey. Grant?

Thank you. And the next question comes from Joseph Greff with JPMorgan.

Sorry. Harry, do you want me to finish that?

Yeah. We lost you there, Grant. Go ahead.

Sorry, Harry, I think we're seeing as you've noticed the strengthening in the VIP market across the board. And I think what everybody is doing pragmatically is taking that opportunity as it seems to be settled. And we're the same; we're obviously positioning ourselves for COTAI and building out VIP for COTAI. But even in the Macau property, we will be opening a new VIP Room, bringing in a new operator in December. So I think to your point, yes, there is a focus on VIP, but I think it's probably because after a very quiet few quarters and almost over two years, we're now seeing some growth. And I think everybody is just repositioning and rebalancing their portfolio in that sector. Thank you.

Thank you.

Thanks, Grant.

Hello?

Operator, I think we had a question from Joe?

Yes, Joseph Greff from JPMorgan, please.

Good morning, everybody. And, Jim, thank you for the earlier comments. A couple of questions here. Looking out to 2018 in Las Vegas, can group room nights exceed 2017 levels or is the CON/AGG rotating out in the 1Q just too much to overcome?

CON/AGG is I think too much to overcome.

Yeah, look, our goal is always to maximize that base around the 19%, 20%. CON/AGG will be a little bit of a challenge. There is a chance we can get there, but it's going to be a tough challenge.

Said another way, would you expect 2Q through 4Q group to be up in 2018 versus Q3 through 4Q 2017?

Yes. After we get through the first quarter and obviously the city-wide rotation, we expect group business and overall RevPAR to be up in the balance of the year.

Great. And, Grant, hopefully you're still there. But how much VIP product will be open on day one of the COTAI opening? And when does The Mansion product open?

So, at the opening we'll have our own in-house VIP. And I think as we've indicated earlier, we wouldn't have junket initially, but we do have a program to bring that online as quickly as we can. So that is a focus for us. At the moment, based on the construction program, we're looking to get The Mansion, again, online before the middle of the year. And we're just going to work as quickly as we can. Clearly, bringing the junket and The Mansion and ramping up the VIP all needs to come together because we've got to be up to service that customer at the level we know we want to and make the impression that Jim indicated we're going to create with The Mansion.

Great. And then one final one back to Corey in Las Vegas. Monte Carlo disruption in the 3Q and what you've disclosed to expect into 4Q is a little bit under $20 million. When does that disruption piece – is it really middle of 2018 before we see no disruption impact?

I think, yeah, at the end of the first quarter, we'll have the property rebranded. But we'll also be doing about 600 rooms in NoMad. So, there'll be a little bit of an offset there. But in general, most of the disruption, or at least EBITDA decrease, should end by the first quarter.

Thank you very much.

I don't know if you've been out lately, but, literally, the exterior of the building the signs are down. It's being refaced from the exterior. It's incredibly challenging to navigate in the interior. And there are pockets of really brilliance in terms of Primrose and the Steakhouse and the lobby area – but it is literally a full-on construction project right now and it really won't feel like an integrated resort until the second half of the year.

Great. Thank you.

Thank you. And the next question comes from Shaun Kelley with Bank of America.

Hey, good morning, everyone. And, Jim, thanks for all the heartfelt comments around the tragedy. So, I just wanted to follow up on Vegas and maybe we could drill down a little bit more on specifically 1Q 2018. As we think about the different things you are lapping, CES and – or the CES shift and then also the lack of CON/AGG. Can use just help us drill down a little bit more in terms of magnitude on how much you think that could impact the year? And specifically, if you'd be willing to give us a range on what you think RevPAR will be down in the first quarter.

Yeah. I'll start and then Dan or Corey or anyone can jump in. We – when we went into strategic planning back in July, we expected the first quarter to be flat to down anyway. But we expected the first quarter to accelerate after we got through that and we'd expect it to be up for the balance of the year. So, before October 1, we had expected that to be the challenge, we knew that would be the challenge. But we thought and we still believe today based on our really – almost non-existing cancellations and actually new bookings for 2018 that will be up every other quarter in 2018. But I think we want to quantify the magnitude maybe, Dan, or...

Yeah. I think Shaun, it's probably a little bit too early for us to kind of get into what that magnitude will be, but in the next quarter we'll definitely – quarterly call we'll definitely give you kind of how we're thinking about the full year. But as Jim said, RevPAR will be up in 2018, challenging first quarter and then strength thereafter.

And we just gave guidance I think in the fourth quarter, didn't we, Cathy?

Yes.

All right, which was...

Right.

5% to 7% down.

Down 5% to 7%. So, we don't expect the first quarter to be down as much as the fourth quarter if that helps you.

Yeah. That's helpful. So, negative but maybe not quite as negative is what we saw in the fourth quarter is probably at least an assumption.

And what I would expect is what was down in the first quarter is probably the result of CON/AGG and the shift at CES.

Right. So, if there is a decline it'll be for those city-wide reasons and it will not be as much as the fourth quarter.

Thank you very much. And then maybe just as a follow-up. Can you just talk about sort of what you're able to do on the operating expense base, I mean, clearly, between the comp that you faced in Q1 and then just the overall business environment, which at times has been robust as it was in 3Q and other times, it's not quite as robust. I mean, what's the natural rate of expense growth and is there any incremental expense growth that might occur a little bit?

So, this is Corey. I'll answer it. Even in the fourth quarter, we were down 3% in FTEs, and I think we have our engine pretty well dialed in to match our labor with our forecast. And in particular, in Q4, even before the incident, we usually go into slow period plans, which we accelerated. So, we will hopefully be able to offset any cost increase there. As we operate in the future and a lot of PGP initiatives, they're all driven to constantly increase our margins over time. And so we believe, based on what we have in place that we'll be constantly be able to do that and therefore manage the labor, in particular our biggest cost through our new technology that we're using.

And as we've said before, but it bears repeating, our goal is to increase our EBITDA margins 50 basis points to 100 basis points a year, and that remains the target that we feel is achievable. We've obviously come off a tremendously strong third quarter. And therefore we'll have a good year with our nine-month results already booked overall, but we expect to continue to not only drive revenue growth in 2018 but margin growth as well.

Thanks very much.

Thank you. And the next question comes from Carlo Santarelli with Deutsche Bank.

Hey, everyone. Good morning and condolences. Corey, Jim, Dan, whoever kind of wants to take a stab at it, but the large-scale conventions relative to smaller groups which you guys have done a great job this year backfilling, especially in the third quarter versus kind of events, could you talk about the dynamics of maybe not down to profitability, but the dynamics of how those events are different for you guys from an earnings perspective as we look at next year. And maybe you have some holes to fill in the first quarter with CON/AGG moving out and some of the other puts and takes throughout the back half of the year.

Well, I'll start and then I'll move it to either my left or right. We have – and I'm sure Mike Dominguez and his team are on the call listening in as many of our thousands of employees are listening and many of them are shareholders of MGM. We have the best convention sales team in the world, not just in the gaming industry or in the United States. And what we have been able to accomplish in terms of booking conventions, moving conventions from other cities, improving the portfolio of product, standardizing our delivery of product, filling in calendars where we no longer have any real slow periods in our calendar for conventions has been remarkable. We had pre-booked the expansion to the Mandalay Bay Convention Center before we even started construction, and it's been remarkably successful. And we're expanding the MGM Grand Conference Center as we speak and already pre-booking into that expansion. And we're looking for other growth opportunities as well including in the building we are right now at Bellagio. But the large group business of which there are still significant groups we do not get in Las Vegas or we don't have at MGM Resorts is significantly more profitable. So you want to share anything on that?

Yeah. What I would add, Carlo, is actually when you look at our business and in particular the large groups and especially if you saw it in October right after the event them being here sure helped quite a bit without having a major impact on our results. But in general, 60% of our business, or close to that, is corporate. And of that, the large groups are a small percent of it. And actually, a majority of our room nights come from the smaller groups, the large groups what allows us to do is yield our rooms a lot higher at those properties when that core business is in there. It looks strong. It continues to look strong. Many of those groups book multi-years. And so, we have a lot of that tied up. We constantly are looking for actually larger groups to actually help us on our shoulder periods also. But in general, when we look at our Strip revenue and what those large groups have done, they've actually helped us grow the total convention contribution probably about 5% to 10% a year over the last few years and we expect that to continue.

Great. That's very helpful. And then if I could just ask a follow-up. Obviously, it's always volatile as experienced in the 2Q relative to the 3Q with hold swinging almost 600 basis points, but it does feel like the natural kind of bias relative to your normal hold, if you look back over the last, call it, seven quarters has been higher. As you think about your theoretical range and maybe some of the tweaks that have been made around some of the games, does that range maybe feel a little bit like it's conservative and your experience of late is going to be more indicative of maybe the natural table game hold on the Strip going forward?

Carlo, this is Dan. I don't think the range is conservative. I think the approach we're taking with respect to our casino business over the last few years has really evolved into more focused on profitability overall as well as the customers. So, as we've talked about before, certain steps that we've taken with respect to our customers are much different today than historically, and some of which we don't deal to any longer. So, we've taken a different approach. I think that's probably helped our ability to skew more towards a higher end of that range, and how we look at customers today, how we market, how we promote those customers and the deals that are cut with the customers I think has helped our theoretical and ultimately our actual hold percentages.

Yeah, I agree with Dan. I think we're still happy with the range because we dominate in the high end. We're bigger than our next two competitors combined. Note how much money Bellagio made again, if you can but compare that to our Strip competitors. So, there is volatility in the high end and that's why I think at this point, we should keep the range where it is, but there's no doubt that the analytics around our whole table games department and the men and women that are working there has improved the profitability and also the hold percentages if you look back over the last several quarters.

Great. Thank you, guys, very much for the color.

Thank you. And the next question comes from Felicia Hendrix with Barclays.

Hi. Good morning. Thank you. So, Jim, in your prepared remarks you mentioned that the company returned to marketing at Mandalay Bay later than the other properties, for obvious reasons. So, just wondering if you could give us some more details regarding that property, perhaps maybe when did marketing start, what kind of demand are you seeing there once you did start that? And is there a percentage of the room base that's out of service?

Yeah, I'll start then because Corey has been probably the most focused of all of us. So literally on October 1, we shut down all our marketing channels. All external, internal channels Strip-wide. And if there's any affirmation that the people we have in direct marketing are worth the money that we pay them, it's certainly true that it has an immediate, instantaneous impact on bookings. We felt that when we did start slowly bringing back marketing, started pivoting our external, our websites, our digital plans, we didn't start doing that until in the middle of October. I think it was late in the second week, wasn't it Corey?

It was around the 10, 11.

Around the 10, 11. But not at Mandalay. Mandalay we took another week or two, didn't we?

Yeah, what we ended up doing in Mandalay is we probably took another week and then we started drizzling it out just to make sure that the reaction was not adversarial. And so, over time, it's at full force now. I would say that Mandalay compared to the rest of our properties probably has the most impact. We know that 20% of the cancellations came from there. But they're really close to where their booking pace was prior to the incident.

And as you know, we're so proud of our national ad campaign. We took that off air immediately. And that has not gone back up on air and probably won't go – I know it won't go back up on air until sometime next year. So, we're not fully back from a marketing perspective. We don't think it's appropriate to do so at this point in time. But in our direct marketing, here in November, all the channels are back fully functioning.

And, Felicia, I'd like to make another point, too, just to add on. It wasn't just MGM Resorts. This was the entire community for about 10 days that stopped marketing the destination. So, LVCVA, ourselves, our colleagues up and down The Strip, as well as our partners on online channels, et cetera, really shut down any outward and forward-facing marketing efforts for that 10-day period. So, it wasn't just us.

That's a good point, Dan. I mean, you'd have to be here to experience it. But this is a good point to say how appreciative we are at MGM of our competitors. We had pastries delivered from the Venetian. We had folks coming over from Tropicana. We had Cosmopolitan chipping in. We had folks at Wynn, Caesar's Properties. We all rallied around the same tragedy. And the city collectively and universally shut down its outward-facing marketing for the better part of a week and a half. People had their own views on how to restart their programs independent to themselves. But it was certainly a collective decision by the community to pause, focus on the victims and the families and the employees and the community. And we're all turning on those channels now.

And can you say what percentage of the room base is back in service at Mandalay?

All the rooms except for one wing of one floor.

Okay. Thank you for all that color. And, Corey, just when you think through the RevPAR stats that you reported this quarter, the strategy to focus on more profitable customers is really apparent when you look at the occupancy rates across the board. But what also stands out is the ADR increases that you generate at most of the properties, especially at the segment that you call the retail properties. So I was just wondering is that pure room rate lift, or is there anything else driving that? And then I was just also wondering how much runway there was left to raise ADRs at those properties. I would think given the segment that it's in, it might be hard after a point to keep pushing prices.

So, keep in mind, we thought it was going to be even a more challenging quarter going in because of the 140,000 less citywide room nights. So, we were able to achieve that even without that. And I think what drove a lot of the retail, especially in those properties, the two major events definitely helped quite a bit. But if we could layer on the events with the convention base, there are always opportunities to raise rates there. And the rates there are still below peak at some of those properties.

Yeah, that's actually a good point, Corey. I don't think we've talked about on the quarters. We have talked about a strong convention calendar for 2018, but we have an equally strong entertainment calendar at all of our arenas as well. And those big arena events drive ADR increases and it's not as episodic as it used to be. We literally have every weekend now, it seems, a major event at either Mandalay Event Center, MGM Grand Garden or T-Mobile Park Theatre and our other venues and that has an instantaneous uptick in ADR when we have them.

Even when we look at the hockey games and many of us are seasoned ticket holders there. Half the arena is the other team. And there's probably a good portion of the other team that is coming in from out of town staying New York-New York, Monte Carlo, Aria, Bellagio, Excalibur even because it's close to the arena.

Yeah, they're not staying at Monte Carlo too much right now, it's under construction but they're staying at New York-New York and Excalibur, Luxor, Aria, MGM.

Okay. Thank you.

Thanks, Felicia.

Thank you. And the next comes question comes from Thomas Allen with Morgan Stanley. Thomas G. Allen - Morgan Stanley & Co. LLC: Hi, a question for Grant, if Grant you're still awake. Can you talk about – how do you feel Typhoon Hato impacted your property if you can quantify? And do you feel like it had outsized impact given your location on the Peninsula? Thanks.

I think it's true that the Peninsula properties had more dislocation, but frankly I don't think it had any eminent effect. If anything, I think it was just a timing issue. When you look at the GGR going into October, we've seen some good growth. So, it's one of those events, it's a tragic event that – it had a lot of damage caused and obviously a lot of dislocation in the community. But in terms of business, I think we are becoming really pretty robust and pretty resilient. And so, I don't see it having any permanent impact at all. Thomas G. Allen - Morgan Stanley & Co. LLC: Okay. That's it. Thank you very much.

Thank you.

And maybe one last question please?

Okay. Thank you and that comes from John Decree with Union Gaming.

Hey, everyone. I just snuck in under the wire. Thanks for taking my question. Wanted to kind of get a little bit more forward looking and when I think about convention mix, Corey, you kind of talked about 19% to 20% range and you've got two new items coming online early next year, the Aria convention space and then the year after at MGM Grand. Does that give you the tools that you need to kind of get back convention mix up a little bit more or is the strategy just to kind of target perhaps higher-priced groups in that space?

So, keep in mind Aria is not included in our mix, but the goal of the additional space is, one, to look at getting better groups in there at higher rates. Two, to the extent it makes sense to place more convention business into a facility compared to the other business we could place into it, we will. And I think there's opportunities to improve that mix, but it's not the ultimate goal of purely sitting there and saying we want to be at a certain percent. We're going to maximize our profitability by using all the spaces we have and making sure we have the right groups in our rooms.

And to remind you, part of the impetus for us making the decision to expand our convention space was the existing groups that we have today were growing in size and we wanted to make sure that we grew with them.

Right.

Great. That's it for me. Thanks so much.

Well, I want to thank everyone for joining us today. We are working hard for you, our investors, our owners. I'm proud of our company. We are enthused about the future of MGM Resorts not only here in the United States with COTAI opening around the corner and we're very active in the pursuit of what I believe to be a tremendous opportunity in Japan and we aim to be a winner in that market as it unfolds. And we'll be in touch with you. Please call us at any point in time and thank you for the time today.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.