美高梅國際酒店集團 (MGM) 2017 Q1 法說會逐字稿

Good morning, everyone, and welcome to the MGM Resorts International First Quarter 2017 Earning Conference Call.

Joining the call from the company today 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.

(Operator Instructions) Please also note that today's event is being recorded.

At this time, I'd like to turn the conference call over to Mr. Dan D'Arrigo.

Sir, you may begin.

Thank you, Jamie, and good morning, and welcome everyone to the MGM Resorts International First 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 from those contemplated in the forward-looking 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 the press release, which is also available on our website.

Please note that our supplemental earnings deck is posted on our website, which we hope you will continue to find helpful.

Finally, this presentation is being recorded.

And with that, I'll turn it over to Mr. Jim Murren.

Well, thank you, Dan, and good morning, everyone.

Well, we started off the year in 2017 very well, and I think that the first quarter results further demonstrates the power of the MGM platform and the strategies which we talked about and have executed upon, also the strength of the markets in which we operate and many of the investments that we have made.

I'm really pleased to announce that these earnings, on an earnings per share basis, tripled in the first quarter and our net revenue and adjusted EBITDA grew 23% and 36%, respectively.

On a same-store basis, our domestic resorts grew net revenue and EBITDA by 6% and 15%, respectively, driven primarily by continued strength here in Las Vegas.

Borgata, which we consolidated into our portfolio last year, had an excellent quarter, and National Harbor is off to a great start in its first full quarter of operations.

In Macau, MGM China's strong results continue to demonstrate our ability there to consistently outperform our fair share in that very dynamic market.

First, here at home, in the first quarter, in Las Vegas, we achieved Strip revenue and EBITDA growth of 7% and 17%, respectively.

We really are executing across all segments of our business, including hotel, casino, food and beverage and entertainment.

The quarter, of course, was aided by a strong convention business calendar and a favorable Easter calendar shift.

But we also continue to drive margin improvement while delivering consistent quality experiences to our customers.

In the first quarter, Strip margins grew 290 basis points to 33%, driven in part by strong revenue growth and our company-wide continuous improvement efforts to maximize the profitability of our business.

Table game hold was modestly above our normal range.

Our normal range is between 21% and 25%.

Also in the first quarter, if you recall, we guided to a 7% Strip REVPAR.

We ultimately achieved 8.6%.

Clearly, the quarter benefited from CON/AGGs and that calendar shift.

However, even excluding these benefits, we would have grown REVPAR by approximately 4% in the first quarter.

And this is due to the execution of the strategies we've discussed, building a very strong convention base and maximizing all of our other channels, including a good mix shift into FIT in the quarter.

CityCenter had an exceptional quarter.

Both Aria and Vdara produced an all-time record quarter in revenue, EBITDA and margins.

Aria ended the quarter just shy of $100 million of EBITDA and margins of 36%, and they're nipping at Bellagio's heels.

And Bellagio had margins of 38%.

So of course, it's nice to say that Bellagio and Aria are clearly the market leaders here in terms of efficiency, margin, productivity.

And Aria and Bellagio, obviously, continue to be top-performing assets within Las Vegas and, of course, the MGM portfolio.

This year, the CityCenter board capitalized on these strong operating results to execute a dividend refinancing of the property.

In April, CityCenter distributed a total of $600 million of ordinary and special dividends to its sponsors.

To put this in perspective, over the past 3 years, CityCenter has paid out over $2 billion of dividends to its shareholders and remains very well capitalized with very prudent leverage and attractive free cash flow.

We're looking for further opportunities to grow and further opportunities to use our product offerings to maximize our ability to drive guest experiences.

We were obviously ahead of the curve when we expanded the Mandalay Bay convention center.

That's already delivered significant returns to us and have allowed us to grow our group business.

Aria is slated to open its 200,000 square-foot convention space expansion by early next year, and we're now in a position to begin working toward expanding MGM Grand's conference space, but actually also looking at exploring some space here at Bellagio as well.

And work is progressing with the Sydell Group on the transformation of Monte Carlo to Park MGM and NoMad.

We took our first step in December when we opened our 5,200-seat Park Theater, and we will continue to roll out these new guest experiences and amenities, including a completely remodeled room product, throughout this year and next.

We've also been working to work with our partners to find the best and most profitable outcomes for our results.

We did this recently with Topgolf, bringing an innovative and complementary entertainment concept to MGM Grand in The City, and we're going to do this again with an experience with Allied Esports in converting Luxor's nightclub space into the first Esports arena on the Strip.

Partnerships are not new to us.

It's something we actually excel at, and none is better evidenced in my mind than when we teamed up with AEG to create T-Mobile Arena.

We just celebrated its first anniversary, and it has already set new standards for not only venue design and amenities, but it is one of the busiest arenas in the world, validating our investment and our partnership with AEG.

In fact, we just recently announced a long-term content deal with UFC and we're all looking forward to welcoming The City's first professional sports team, the Vegas Golden Knights, this fall.

Entertainment continues to be a key driver for our company and the primary reason people visit our resorts.

And our forward calendar this year is shaping up well across all of our larger scale venues in the United States.

And with T-Mobile and the new Park Theater, we're on track to more than double the number of shows hosted in our large scale events this year versus last year.

Over on the East Coast, MGM National Harbor completed its first full quarter of operations, and we are very pleased with how the property is performing overall.

We finished the quarter as the market leader, commanding a 30% share in the region and the only property in the region with a fair share premium.

Our table games are performing very well with a win per unit per day of over $5,800.

And poker is also running ahead of our expectations.

Slots are doing well as well with a $261 win per unit per day in the first quarter, and we believe that there is substantial opportunity to grow this as we optimize our slot floor and leverage our targeted marketing efforts.

And like any new property, it takes time to ramp up that floor and build our database.

But that said, we are pleased that we have added over 240,000 new members to our M life rewards program, and we're very encouraged by the consistent pace of the sign-ups we continue to see.

We know that we're off to a good start there, but we see opportunities to continue at National Harbor to grow revenue, grow margins and grow cash flows, and we intend to do so.

Over in Atlantic City, Borgata posted another great quarter and is the undisputed leader in the market.

In fact, they had a record March in slot revenue and continue to post strong top line numbers.

We're extremely pleased with how the acquisition has worked out for MGM Resorts and MGP.

And our team at Borgata has done an outstanding job.

That team and our teams across the company have been working seamlessly on the transition to our M life loyalty program, which will be done this summer, and we believe that will positively impact both Borgata and the Las Vegas properties with cross-property play.

There may be some downtime because of the transition to the current rewards -- from the current rewards system to M life, but we've done this before, and we expect to be able to minimize that disruption to our customers.

In Macau, MGM China reported a great first quarter with revenues increasing by 7% year-over-year and EBITDA increasing 25%.

MGM Macau continues to capture more than our fair share despite the new competition in this very rapidly changing marketplace.

We continue to see growth and opportunity in our mass business, supported by premium mass, and we remain optimistic about the market's recent uptick in VIP.

Grant's online and, of course, he will be available to talk about that.

We're progressing on the construction of MGM Cotai as we look forward to the opening of that second resort, our second resort in Macau, which we will open later this year.

It'll have roughly a 1,400 hotel rooms and suites, great meeting space, spas, retail offerings, a very diverse lineup of F&B and Asia's first-of-its-kind theater.

The entertainment component alone, we believe, will help drive greater diversification in the market and bring Macau further into this diversification of hospitality and global tourism.

So looking ahead into the current quarter, our second quarter, this, as we've been saying for a while, would be one of the toughest comparisons we have this year, given the Easter calendar shift in April.

And that's going to impact convention room nights.

Our second quarter of '16 also benefited from higher-than-normal table games hold.

It was specifically 25.6%.

And as a result of those 2 factors, we believe our Strip revenues will be about flat, relatively consistent with the second quarter of last year, with casino revenues likely being down slightly and nongaming revenues being up.

And we're projecting Strip REVPAR to be up 1.5% to 2.5% against that tough comp and margins will be probably essentially flat from a year ago.

We continue to expect our full year targets to remain, as we said, unchanged.

We expect that we can achieve Las Vegas Strip revenue growth of the low to mid-single digits.

We think that our REVPAR will grow 4% or 5% for the year.

We expect margin improvement this year of 50 to 100 basis points versus where we ended up in 2016.

And the macro picture here in Las Vegas, fortunately, continues to bode favorably for everyone here, especially given the limited expected supply growth, the very healthy convention and leisure demand and the overall strength in the U.S. consumer.

We've had a clear vision for this company since I became the CEO.

And with the execution of those strategies over the past many years, this vision has come to fruition.

We are the premier owner/operator of some of the best entertainment assets in the world.

We have transformed this company from the inside out to fully embrace a one company, one culture mindset, to leverage our scale and the high standards for excellence and to continuously elevate our business.

We have developed a culture of continuous improvement that has allowed us to provide growth opportunities to the best talent that we have in our company and to become the employer of choice in this industry for newly recruited talent, and we have developed talent from within.

We have a very deep bench of highly experienced people that have been promoted and are driving innovation.

And we constantly strive to optimize our company's structure with these long-term sustainable benefits in mind.

We're very excited about the fact that our free cash flow prospects this year and beyond are so favorable.

We're moving out of a development stage and into this operation stage, and we believe that will substantially increase our free cash flow.

We're going to maintain a strong balance sheet, we are disciplined in terms of capital allocation, and returning value to our shareholders will continue to be the top of the board and the management's priorities.

Every decision that we make is deliberate and centered around this vision, and we will continue to do so going forward as we build upon this organization and build upon our competitive advantages in Las Vegas, Macau, our regional markets or anywhere else across the globe where we will call home.

And with that, operator, I'd like to turn it back over to you so we can get to the Q&A.

(Operator Instructions) And our first question today comes from Harry Curtis from Nomura Instinet.

There are a lot of places where we could begin.

But I wanted to start with Cotai.

A question we get often is, what's behind the delay?

And is it systems?

Is it construction?

Are you reconfiguring it in one way, shape or form, particularly given how the VIP numbers have started to lift?

Grant, if you could just give us some sense of where this is going, particularly on the marketing side as you open.

Okay.

Well, I think everyone understands building anywhere in the world is complicated, and I think everyone has seen from all the other operators, it's probably just as complicated in Macau.

We're very, very committed to making sure we do something different.

We need to be bringing something unique into the market.

And that's really the crux, the key aspects for us.

And we say that quarter-after-quarter, it's about getting it right.

Picking up on your point, Harry, about VIP, yes, it's starting to move.

That seems to be positive.

There is some uptick with civil operators, and I think we have consistently heard that.

I just want to reiterate though that in terms of our mass business, that is continuing to be very strong.

Very important for us that we manage that portfolio.

With only one operating business unit at the moment, that does put us at something of an advantage.

But the critical point is that we are starting to build out the combined business unit strategy between Macau and Cotai.

And we will be launching, in the not-too-distant future, a very significant marketing program that starts reinforcing and building on that brand value that Jim was talking about in his presentation.

That's what's critical for us is making sure we get the property right, get the messaging right, get all the activities that we need to put in place.

Specifically, with VIP, I'm very comfortable now that we have got in the pipeline some additional VIP operators that will be new to us coming into that property in Macau.

And so that's all part of building out this whole MGM Macau presence rather than just simply saying Cotai property or Macau property is really important to us.

Is that sort of the direction you're looking for, Harry?

Is there anything else I can add?

That's very helpful.

It's -- probably be some additional questions on that.

But I wanted to move over to Dan.

I had a question on a new slide that you presented, Page 24, when you discussed free cash flow.

And Dan, can you give us a sense of, as we get deeper into this year, your perspective of how your domestic free cash flow is likely to evolve?

Well, sure, Harry.

What we tried to do at 24 is give the investment community kind of the building blocks of that domestic profile and look of how all of the pieces are coming together to give you better perspective of that sources and uses more or less.

So that's what 24 really gives folks.

It isolates the domestic group apart from MGP and MGM China.

And I think as we continue to move throughout the year, as Jim mentioned earlier, and move beyond our development cycle here with the closeout of National Harbor, obviously, we'll be finishing this year, and next year Springfield and getting that open by September of next year, we'll be heavily out of that capital intensive development cycle, and see our cash flow -- our free cash flow continuing to improve and grow as not only we grow operationally and maximize our profitability at our existing properties, we bring on Borgata for the full year, continue to ramp up National Harbor, and the lowering of the development capital will just have a profound impact on growing our free cash flow profile starting this year and into next year.

But can you -- I guess as a follow-up, can you discuss the timing or the pacing of how your CapEx actually winds down this year and next?

Well, sure.

I mean, obviously, we've laid out what our capital plans are in terms of not only our maintenance and our same-store property growth capital, but our project plans.

So I think we have about another $80 million-ish to close out National Harbor construction costs.

We'll spend about $240 million, $250 million this year in total for Springfield and a little less next year in completing that property.

I think it's around $230 million, $240 million for Springfield next year.

But those are really the only 2 remaining large pieces of capital.

And then, of course, from time to time, you're going to see kind of us pulling on the various levers and opportunities we have, much like you saw here in April with our ability to bring $300 million back into this restricted group from CityCenter.

So it's going to continue to build.

It will be a little bit choppy because of some of those positive effects like CityCenter coming in from time to time.

And future dividends from Macau, as Grant, Bill and our construction team bring that project to its completion later this year and ramp up next year, I would expect those dividends to pick up in '18 and '19 as well.

So there's a lot more positive inputs coming in over the next 2 years than just the incremental free cash flow on a same-store basis.

And Dan, maybe just to add to that, Harry, I think you're focused on CapEx.

So just if you looked at the next 3 or 4 years, our CapEx is $400 million or $500 million a year.

Yes, I think, this year for our properties, it's about $540 million this year, which is inclusive of The Park MGM and NoMad construction, which is probably a couple of hundred million in that number this year alone.

Right.

But I mean, if you're going to model out over the next 3 -- I mean, if you're doing like a 3- or 4-year model, you're going to figure CapEx is no more than $500 million a year.

Right, yes.

And we have no projects of any material nature like Springfield or National Harbor on the horizon.

Beyond '18, that's right.

So we have -- and in that $400 million or $500 million a year is all our room remodels, all the refreshes, expansions to convention centers, all the areas that we spend money on to continue to grow our market share in our market.

So that's what I was trying to allude to, Harry, is that we just had a major capital finish at National Harbor that's tailing out right now.

We're going to finish Springfield, and there's no new project on the horizon in the United States and we like what we own.

And so we believe, with our operating revenues and cash flows growing, and our CapEx to be completely controlled by ourselves and very definable, that's where you lead to -- even before dividends, that's where you lead to rapidly accelerating operating free cash flow.

And our next question comes from Joe Greff from JPMorgan.

Maybe this is a question for Corey, but whoever wants to answer it.

Can you talk about how next year's convention room nights in the Las Vegas Strip look?

I don't know if you want to talk about it in terms of pacing versus a year ago and maybe you can talk about it both with and without the impact of this year's CON/AGG, CONEXPO.

Sure, Joe.

It looks pretty good.

And similar to few years ago when CONEXPO rotated out, we actually are in a similar spot to where we are this year.

We're a little bit behind in the first quarter, but we're really comfortable that we'll be able to fill that spot there for CONEXPO.

But in general -- and the rest of quarters are actually looking very comparable to where we are today.

And the pricing for those room nights versus this year?

Yes, pricing -- we continue to be able to raise prices in this segment, so it's up.

Yes, I mean, in fact, Joe, right now we have NAB, of course, in town, right, Corey and Bill, Dan?

It's performing extremely well for the market.

Well, I could say it's performing extremely well for us and probably for the market.

So here we are in the second quarter, that's doing well.

Obviously, we had the CEO of a very, very large tech company yesterday, and he's looking to move more business to Las Vegas from another state in the United States.

So there's a lot of untapped potential for the market, which will benefit our competitors, ourselves and the convention center at large.

Great.

And then maybe this is a question for you, Jim and Grant.

Over in Asia, obviously, we're not seeing it so much in the 1Q here but -- and I asked this question last night on another gaming conference call, are you starting to see any signs of the Chinese consumer returning to Las Vegas?

And do you think what's going on and maybe some of the dynamics in China and Macau are actually encouraging those players to stay closer to home in Macau?

Do you want to tackle that Grant?

Sure, I'll start.

I think, Joe, what we're seeing -- let's first talk about China itself.

If you start looking at consumer trends in China, there is clearly momentum building in the consumer products market.

If you look at some of the areas that the Chinese use as their own indicators, they're starting to improve, there's starting to be some momentum.

We're clearly starting to see it coming into Macau.

And that's all very positive for us.

And I think, to your point about geopolitical issues, I think that, hopefully, that those people within China will play within China.

But I think if they're going to travel, and obviously that's probably something that Jim and Corey and Dan, et cetera, can have a view on, they are also seeing the United States is a positive destination too.

So all of the indicators at the moment within China are positive.

And I see most of the issues that we've seen in the world being positive for Macau, certainly.

And Joe, here in Las Vegas, as we pointed out, I think it was last fall, we started to see players coming back into the market.

The most recent data point is really around Chinese New Year.

So we had a really good showing around Chinese New Year with our customers in terms of numbers and volume up this Chinese New Year versus last year.

And as you recall, the last couple of Chinese New Year periods, we were actually down and we were down double digits against each of the prior years.

So we have seen that pick up recently with respect to play coming out of China and Asia, broadly speaking, which is a good sign.

And I would say, Joe, in our bigger customers, the people like 50,000 and above, the number of trips are actually up in the first quarter for that region.

Our next question comes from Carlo Santarelli from Deutsche Bank.

Jim, I think you laid out pretty clearly the second quarter and some of the challenges there.

I wanted to talk a little bit about what is actually the toughest comp quarter of the year, the 3Q.

And maybe Corey, if you could help better frame or help us better understand the influence of having that Microsoft business in the quarter.

And in a period with a lot less visibility, what it's like to have 4% or 5% of your room nights kind of on the books already with that?

And what it may allow you to do with pricing?

Corey, you want me to start?

Yes.

Because he looked right at Corey.

You said Corey, but I'll start.

It's -- when we were more concerned about the third quarter, that was before we had the Microsoft business on the books.

That clearly helps us profoundly in the quarter in terms of not only the business itself, but as you suggest, how we can plan around the rest of the market.

We had a very, very strong third quarter.

That's why it is a challenging quarter.

But we're seeing, and I was with Mike Dominguez yesterday with this very large tech CEO, and he's seeing some business coming into the third quarter, not only because Microsoft's going to be here, we're getting some ancillary business that's being booked, but also just general in the quarter, in the year, for the year, for the quarter.

So yes, tough quarter, tough comp, but we did better than we thought in the first quarter.

Where, as I said, that April here, NAB is better than we predicted.

It's a good bellwether.

Even though it's a tough comp this quarter, we are seeing good growth and we're just going to do our best.

We've been outperforming our expectations, and we're just going to do our best in terms of the convention side.

One thing I alluded to, and maybe Corey can get in more specifically, is our mix shift.

One of the things that helped us in the current quarter, right, Corey, is shift out of leisure into FIT?

That's right.

So how is that going to look?

Yes, over the last few quarters, we've been really focused on that.

We actually shifted probably about 2% into that FIT channel.

We haven't talked about this in a long time.

But actually, the premium in that channel compared to the leisure channel could be anywhere from $30 to $60 depending on the season of the year.

So with the convention base, it allows us to do it.

When you look what Microsoft has done for us now in the third quarter, we're actually ahead of convention room nights on the books compared to the prior year now with that.

So it's allowed us to solidify our base.

Our convention rate actually is a little higher now, which should hopefully allow us to yield our rates up a little better than normal.

Just as a reminder, summertimes are -- there's peak times when there's decent convention business, and when there's not, it's a -- we'll always fill the rooms, but the rate's always a little bit of a challenge.

Right.

Great.

That's very helpful.

And then if I could, just one follow-up.

Jim, you talked a little bit earlier about capital returns, and obviously, as you look at the free cash flow profile over the next 12, 18, 24 months, there is clearly going to be a lot of discretion with your cash going forward as you -- especially once Cotai is open.

How do we -- or how do you guys right now, if you look at it right now, 24 months out, how are you kind of thinking about the buyback, obviously dividend in place as of last quarter and other kind of capital returns or capital needs for things that maybe haven't necessarily come to fruition yet in terms of projects or expansions?

Sure.

We spent probably -- Dan, what?

This is -- I would say, the majority of the discussions we have at the board level is that, over the past several years, we've been good forecasters internally of our business.

We've laid out a rolling 5-year plan to our board over the past many years.

And fortunately for us, we've been executing on that 5-year plan.

So the board is -- this is not a new discussion to the board.

We discussed what we're going to do and how we evolve our investment decisions as we go from 2014 to '15, '15 to '16, '16 to '17 and beyond.

And it is the board's belief that we have high confidence in where our numbers are going over the next 3 years.

We see our competitive position in our marketplace.

We think we have a better understanding than most of the macro dynamics within the markets in which we currently operate.

We are very confident in our property positioning.

We have no looming capital needs, no deferred maintenance, no projects that we put on hold that need to be jumpstarted.

Our capital spend is very well defined and will be very, very highly scrutinized by our board over the next several years.

We have no interest in building for growth's sake.

And we have no interest in expanding for expansion's sake.

We like what we own, we like the markets that we're in.

And in order for us to get attracted to anything else, it has to be outsized in terms of its potential return to shareholders.

So with that in mind, if we know where we are in a market, in all our markets, and we know very clearly what we believe our capital expenditures will be, and we have this stated goal of being in the 3 to 4x leverage range, which we are knocking on that door, then the logical discussion evolves to what do you do with that excess free cash.

And we concluded that the first best use of that was to institute the quarterly dividend and expect that, that dividend will grow over time.

But share repurchase clearly has been something we've discussed at the board level for 3 years.

It is not a matter of if we are going to do that.

It's a matter of when we do it.

And I would say that a board as engaged as ours, that spends as much time on this as our board does, that meets as often as we do a year, about 8 times a year, we will have constant updates for you.

As of right now, here in April, we believe that our path is well understood and that we are using the cash that we have appropriately, and that share repurchase today, this day, is not the right idea.

But we do believe that it is our job to return the capital that we are generating to our owners.

And that's going to be making sure that we grow our revenues and cash flow, making sure our competitive advantages are there, making sure that we have a fortress balance sheet that will protect us against any unforeseen event and making sure that we have the ability to return the capital in the form of dividends and share repurchase in the future.

Our next question comes from Thomas Allen from Morgan Stanley.

Just on the regional properties, I was impressed by the flow-through at both Detroit and Borgata.

I'm wondering, are you starting to roll out programs there?

Are you just starting to roll out programs there?

And then on National Harbor, is there an opportunity on margins there?

So on Detroit, they've been rolling out programs consistently with our PGP initiatives, and there's still some opportunities there.

They're probably a little bit behind.

With the Borgata acquisition, we matched up all our initiatives with what they could potentially achieve.

And yes, we are seeing results from those in the first quarter, and we expect to see results from them throughout the year.

And National Harbor.

Margins.

On National Harbor margins, yes, we think there's a lot of opportunities there to improve them.

The workforce is stabilized now, which is a positive thing.

Now it's matching forecasts with volumes and implementing some PGP initiatives there that we probably delayed for their opening to make sure that they could execute for their opening.

Helpful.

And this is my follow-up.

It was helpful the new slide you put in, showing the hold adjustments.

But one thing that stood out was that you had 5 quarters in a row of high hold.

Did you think about thinking of maybe increasing the theoretical hold?

Well, Thomas, this is Dan.

We've looked at it, and we studied it.

And obviously, it will be something we continually look at.

We feel comfortable that 21% to 25% is the right range, and obviously it'll be something we continue to evaluate.

A lot of the initiatives and a lot of the approach that we've taken over the past 18, 24 months with respect to how we drive profitability in our table games business is driving some of that increase, and we'll continue to monitor that.

But based on the work that we've done thus far, looking at the past couple of years, 21% to 25% seems to be the right range in terms of that hold percentage.

Yes, if you went back -- if you went back 5 years, you would say you shouldn't change the range.

So we get the point, we're going to watch it quarter-to-quarter, but we did a lot of work on this and we've gone back over the last 3 to 5 years, and that's the, for right now, range.

We may be able to tighten it up and hopefully move it up at some point.

Our next question comes from Felicia Hendrix from Barclays.

So guys, so realizing that your 2017 EBITDA guidance provided at the Investor Day is old news, given everything that's happened since then, I was just hoping you could frame for us how you're thinking about full year EBITDA now year-over-year.

Should we expect to see growth year-over-year?

I just think it would be helpful if you could give us a bridge as we think about that, particularly given that the second quarter could be kind of flattish and then there was also the gain on sale of assets, which makes for a tougher comp.

Well, sure, Felicia.

I think when you look at our full year and the guidance and color we've given, we do believe that, for the full year, we'll be able to grow low to mid-single digits on the top line and improve our margins by 50 to 100 basis points.

So that would put us in kind of a 30% to 31% range overall in terms of our margins.

That's adjusting for some of the ins and outs from the prior year as well as really kind of normalizing the hold.

Overall, as we look at our Strip performance and the guidance we've given for 2017, probably one of the bigger deltas from the Investor Day is really the timing of MGM Cotai, as when we were putting those models together last year for the Investor Day, Cotai was still on target for an early 2017 opening.

And obviously, with the later opening, that pushed that timing out and that impacted the model.

That's probably the biggest singular change.

There's always ins and outs and odds and ends, but we feel pretty good that here in Las Vegas, we'll be able to continue to grow and maximize the opportunity here.

The regionals as well, and obviously, you've seen the power of Detroit, Borgata and our ability to ramp with National Harbor coming online this year.

So we feel good about directionally where we're heading overall for 2017.

I think just to be clear, because I might not have been clear.

I was really more talking about the second half because you gave the guidance in the deck, I saw that.

But you guys, you had the upside in the first quarter, flattish in the second quarter, so I just wanted to kind of confirm that you do actually see growth in the second half.

Yes.

We do.

We do.

The biggest change from that deck is the shift to the opening of Cotai, Felicia.

But operationally, we remain on track.

Okay, great.

And then, you completed your PGP program ahead of plan.

So I was just wondering if you could talk about what drove the acceleration.

And then as you think about the next several years, how should we think about profitability drivers with that program being completed?

Well, you want me to do it?

Or Corey, you want to...

You start it.

I'll start it.

So the way we were able to upsize it and get it done so quickly is to create top-down focus in this whole organization.

It wasn't an initiative that was sidelined by a handful of people.

It was pervasive throughout the entire organization.

And there's no one here at this company that's not acutely aware of what we've been doing.

And I'm talking tens of thousands of people.

So it takes a very coordinated effort.

It also may -- takes a very focused effort in the project management office that has, since its inception, been led by Jeff Gebben, who is a rock star.

And so we went into this with good guidance from other companies that are Fortune 100 companies that really helped us a lot.

We went into this with good guidance with Bain as our consultant.

And we have really taken it on board as a change of our lifestyle here.

And it has led to not only what you saw financially, but it has led to a morale accelerator here and really a cultural boost.

And so we believe that this is a program that's now just part of our life.

As it relates to what it means for the future, we -- as we said, we think we understand our business quite well, and we're expecting 50 to 100 basis point increase in our margins against a pretty good year in 2016.

And we don't think we're going to end there.

We expect and would be disappointed if we can't grow margins every year over the next 3 or 4 years because we continuously find ways to do our business better.

And so I don't know where this journey is going to end, but it's not going to end this year, and I expect continued leadership in our industry in terms of margin -- in terms of the absolute margin and the growth of the margin.

And what I would add is continuous improvement is now part of our culture, and it's actually part of our compensation plans and everything else.

All of our executives are bonused on it.

We have a list of initiatives we could constantly and continue to work on that have some pretty good size.

And with the change in technology and the advancement in analytics and eventually AI, there's probably numerous opportunities out there to constantly find new ways to make additional EBITDA.

The great thing about the PMO office is it gives us the structure to sustain what we have already achieved, but also continue to look for new opportunities, which some we could accelerate because they're easier, and some are a little bit harder.

But there's still opportunities out there.

Okay, that's helpful.

Dan, just a quickie.

On the hold impact this quarter, how much did it benefit?

And were there specific properties that had higher holds that you want to call out?

Mirage held exceptionally well.

Bellagio was a benefactor of that hold.

And I would say, MGM Grand was not a benefactor of hold in the quarter, if I was to look at the highs and lows in the quarter.

That's right.

And the total amount was?

I think we said in the appendix of the deck $16 million.

But that size is more in line with the midpoint of the normal range.

Right.

And we held a couple of basis points just higher than the high end of the range at 25.2%.

Yes, and that was about mid-teens, right?

Mid-teens millions?

EBITDA.

In EBITDA?

Yes.

$16 million.

Yes.

1-6.

And that's a long [stated] Strip number.

Our next question comes from Shaun Kelley from Bank of America.

So I was just maybe wondering if I could follow up on National Harbor.

I know it's smaller.

But when we think about opportunities in the second half of the year, I think the game plan there eventually was still to look to partner with MGP for that property.

And so looking at the ramp right now, Jim, what do you think is the right time line to kind of be considering the next steps for National Harbor?

Sure.

So when we were on the road with the MGP road show, we -- last year, we tackled this question.

We said that it was our best guess at that time, that the most appropriate time to discuss the transaction between MGM and MGP would have been after you have a couple of quarters of operations, so that both companies can properly underwrite what the right valuation would be.

And I think that's exactly the timetable that we're on today.

National Harbor has done everything and a bit more than we had hoped it to do when we built it last year.

The trajectory is exactly what we would have hoped to see.

The upside is very apparent to us in terms of its cash flow potential and the real estate value of the asset is unquestionably pristine.

And so I would expect that we would hold to that timetable that we discussed on the road show and start having robust discussions this year, as early as the third quarter.

Great.

And then I guess the second area sort of goes in along with the same idea is, obviously, through the Borgata transaction, MGM actually increased its stake in MGP.

And we continue to hear from investors that liquidity at MGP is one of the bigger challenges for possibly people not actually owning more of that company.

So curious for MGM's appetite to possibly either proactively sell down there or continue to look for -- or do you expect to think that the opportunity there is really going to be to shrink MGM's stake through third-party growth on the MGP side?

Yes.

So I think that, as an MGP shareholder, I like the scarcity value and I like my position.

But we do believe that MGP would benefit from and would be definitely benefiting from more liquidity.

And that is absolutely a goal of MGP, is to increase its public float, and it will do so because James Stewart, who I'm looking at, and Andy, are aggressive young men, and they're out on the prowl and they will be acquiring assets, and I'm sure they'll be acquiring assets that MGM Resorts has nothing to do with.

And they'll be raising equity to do that.

I also believe that even in a transaction with MGM Resorts, it's something that MGM Resorts should look at and allow for us to return cash to our shareholders rather than take back OP units just as a matter of course.

And so I think that between the ROFO assets, which we can always tailor in terms of our consideration, in terms of OP units or cash, and third-party transactions, the public float of MGP will go up pretty profoundly over the next several years without MGM Resorts having to or wanting to do a secondary just for a secondary's sake.

And so I think that the objectives of the investors that would like to see more public float at MGP will be achieved through what I believe to be very substantial growth in that company and growth that will be done with the balance sheet rigor that Andy and James have promised.

And ladies and gentlemen, our last question for today comes from Robin Farley from UBS.

Great, one Vegas question and one for Macau.

In Vegas, can you just remind us how the convention mix, the percent is tracking for 2017 overall versus '16?

And then your comments -- you talked a little bit about pacing in 2018, like behind in Q1, but the rest of the quarter is comparable.

So where would you expect '18 over all that mix to end up versus where you think '17 will be?

So Robin, for '17, we feel that -- and remember we're coming off a record year in '16, that we'll be at least as good as we were in '16.

Our goal is to be a touch better than that.

So we finished up '16 at 19% mix.

Our goal is to be 19%, kind of 19.5% kind of a range for '17 that we're on pace for right now.

And that would be our '18 goal, also.

Okay.

So in other words, the '18 mix is kind of similar to the '17 mix because of the CON/AGG comp?

Is that fair?

Correct.

Okay, great.

And then for Macau, I'm just curious if there was any collection of -- that you had reserved against that might have ended up helping EBITDA.

We saw that in some of the other operators in Macau, that some collections that hit the reserved against already ended up -- and then it -- so the gain kind of runs through and helps EBITDA.

I'm just wondering if there's anything like that.

Yes, Robin, there was some, about $3 million, but that's relatively small within the bigger scheme of things.

Okay, great.

And maybe just a last question on Macau.

With the concessions set to expire in 2020, do you have a thought about when those discussions might begin with the government about the renewal process or revisiting process for that?

Is that something that you would expect to happen in 2018 or sooner?

Well, I think the bottom line is, as far as we're concerned, we are working on the renewal every day.

And I think that's what's really important.

And the most important component in the renewal process for us is getting Cotai opened successfully, demonstrating our commitment to the marketplace and continuing to develop all those things we're looking at.

From everything we're hearing, all the gaming concessionaires are obviously very focused on meeting the expectations of the government.

But at the same time, I don't see that there is much of an incentive from the government to move too quickly on the other side of that agenda.

But I think that there is no indications that we're seeing or heard that suggests that there will be significant changes to existing conditions.

However, we all need to work on every day and we just commit ourselves to delivering on the expectations that have been set for us.

Good, and thank you, Robin.

I'd add, it's Jim.

Grant and I were together with senior officials only recently.

We got very good feedback, not only about our Cotai project, which is really -- I hope you had a chance to take a look at some of the [run].

It is really coming out beautifully, and it is going to open this year in the fourth quarter, and probably right around, right after Golden Week, probably.

But it's going to open this year, for sure.

And it's going to be very spectacular.

And there's a high degree of enthusiasm in China and in Macau for that opening as well as the continuation of MGM's presence in the marketplace.

So we feel that's critical to us, particularly as MGM is spending increasing time in the region as we go from Macau over to Japan, where I seem to be about every month, Bill?

And when I'm not there, you're there.

And look, and maybe that's a good way to finish this.

Japan, as we all know, is the largest potential opportunity that has been presented to gaming operators globally.

It has the promise of being a spectacular market, and all indications are that the government is moving deliberately toward the ultimate passage of the implementation act, which would lead us into an RFP period.

There is all kinds of game theory around this, in terms of how this is going to play out.

And some actually believe they have the "pole" position.

But I could say a few things very confidently.

One is that MGM is extremely active in the country.

That our values, our track record of being great partners, whether it's at CityCenter or National Harbor or Macau, is well received.

Our ability to design and deliver architecturally iconic, culturally relevant and environmentally friendly resorts has not been lost on everybody that we have talked to in Japan.

And we believe that this is going to be the most competitive process that the gaming industry globally has ever undertaken.

And that the only thing we can promise our shareholders is that we are going to outwork everybody.

And we think we have as good a chance, if not a better chance, than anyone.

But make no mistake, when the questions were talked about throughout this call about capital allocation.

This company is running its company to grow its cash flows, to create that fortress balance sheet, to maximize our fee cash and will not distract itself on other gaming opportunities, other growth opportunities that would derail what we believe to be the single greatest potential opportunity that we are fortunate enough now to have the balance sheet, the operating expertise, the scale, the development and operations people and the brands to be able to be a leader, at least a leader, in that competitive bidding process.

And that is -- we got our eye on that prize, and we're not going to lose sight of that.

So with that, I think we've come to our end.

We, as always, appreciate the participation.

And we'll all be here to answer any follow-up questions that you may have.

And please enjoy your day.

Thank you.

Ladies and gentlemen, with that, we will conclude today's conference call.

We do thank you for attending.

You may now disconnect your telephone lines.