MGM Resorts International (MGM) Q4 2014 Earnings Report, Transcript and Summary

Good morning, and welcome to the MGM Resorts International Fourth Quarter and Full Year 2014 Earnings Conference Call. Joining the call from the company today are: Jim Murren, Chairman and Chief Executive Officer; Dan D'Arrigo, Executive Vice President, Chief Financial Officer and Treasurer; Grant Bowie, Chief Executive Officer of MGM China Holdings, Limited. [Operator Instructions] Please note, this event is being recorded. Now I'd like to turn the call over to Mrs. Sarah Rogers. Please go ahead.

Good morning, and welcome to MGM Resorts International's fourth quarter earnings call. This call is being broadcast live on the Internet at mgmresorts.com. A replay of the call will be available on our website. We 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 might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in these forward-looking statements is contained in today's press release and in our periodic filings with the SEC, including our most recent Form 10-K. During the call, we will also discuss non-GAAP financial measures in talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release, which is available on our website. Finally, please note that this presentation is being recorded. With that, I'll turn it over to Jim.

Well, thank you, Sarah, and good morning, everyone. This is a good day for the MGM team. Our U.S. wholly-owned operations achieved its best EBITDA cash flow in 6 years. Last year, CityCenter's cash flow from resort operations was a new record. And at MGM China, even though it's a challenging market, we also had a record year as well in 2014. And we closed the year with very solid fourth quarter results. Our wholly-owned domestic resorts reported its best fourth quarter since 2007. Quarterly revenues and cash flow both grew 5% year-over-year, driven by our Strip property growth. CityCenter resort operations results were impacted by a really tough hold at ARIA, but the campus as a whole continued to improve in the quarter. At MGM China, of course, Grant will get you more detail in this on the fourth quarter, but I'm pleased with that property's market outperformance and its ability to grow margins year-over-year in what is obviously a very challenging macro environment there. Today, MGM China announced a special dividend of $400 million and will also recommend $120 million final dividend as part of our regular dividend policy. We have again demonstrated our commitment of sharing our returns with our shareholders with the declaration of these dividends. Really, 2014 was a great year for the company. And I'd just like to take a couple of moments to highlight the progress we have made in that very busy, busy year. First, the property improvements to our Strip properties. We completed the new Strip frontage at Monte Carlo and at New York-New York. And as you can see, if you've been out here, those properties look beautiful and are seeing a lift as they've reported increases of 9% and 14% cash flow growth, respectively, during the quarter. Also, we've had a couple of new additions to Las Vegas, and I'm proud to say that Shake Shack opened last December and is already the second-highest grossing Shake Shack in the portfolio's history, second only to Times Square. We're well underway with the development of that entertainment district. Early returns are obviously favorable to us, and that's the park between those 2 properties, which will lead up to the country's best new arena. The MGM AEG arena financing was completed last year, and construction is flying along. And it's anticipated to open in the spring of next year. Suite sales and sponsorship sales are progressing extremely well, and it's shocking how fast that arena is going up. You should come out and take a peek. At Mandalay Bay, the remodel of The Hotel into the Delano was completed in September, and our volumes and pace for that property look extremely promising. In fact, Delano had double-digit revenue growth in the month of January. Also based on the success and demand for our convention business, as you know, we commenced the expansion of Mandalay's convention area, and that will add another 350,000 square feet of meeting space when completed in the fourth quarter this year. And since announcing that expansion, Mandalay has experienced a really nice uptick in forward convention bookings, and we've signed several LOIs for new business going into that new expansion area. MGM Cotai construction is progressing really well. MGM Cotai, as you know, will be almost 2x the size of our existing property, and that allows us to develop far more amenities for our guests. The Spectacle's undulating ceiling of glass is being built as we speak, and we're continuing to refine the technology and entertainment experience there. The showroom represents an unprecedented opportunity to extend our industry-leading entertainment expertise as we will create a versatile stage and venue capable of evolving with MGM Cotai as its destination entertainment options grow and mature. This will be a first-in-the-market type of entertainment venue, and we are really excited to display it to the world. We remain on track to open this resort in the world's largest gaming market in the fall of 2016. MGM Diaoyutai, our joint venture in China, continues to make really great progress. We had our best year ever at MGM Sanya, the hotel in Hainan Island. We opened a hotel in Chengdu. We topped off the Bellagio in Shanghai, and we've recently signed an agreement to build a Bellagio in Beijing. And on the East Coast, we're developing 2 new resorts that will soon have a strong collection -- that will mean we'll soon have a strong collection of resorts on the Eastern corridor. This, of course, will allow us to expand our brand presence in that region and provide even better cross-marketing opportunities, and we've seen those results accrue to the benefit of our Detroit and Mississippi properties back here in Las Vegas. Last summer, we broke ground on MGM National Harbor in Maryland, and that remains on track to open in the fall of 2016. And we expect that resort to be one of the most successful U.S. resorts outside of Las Vegas when it's open. In Springfield, the referendum is now behind us, and we can move forward. The land has now been assembled, and we are commencing site work. We're anticipating the ground breaking this spring and targeting a second half of 2017 opening for MGM Springfield. And in New Jersey, MGM was re-licensed in September and approved to regain our stake in Borgata, the best-in-class end market leading property in Atlantic City. So I'm pleased with our accomplishments and successes in 2014 and expect that we will grow off that base here in 2015. In fact, we already are at our wholly-owned resorts. We have just accomplished the highest net revenue and EBITDA January since the peak back in 2007, and we've seen broad-based growth across all of our room categories and in our casinos. And so with that, I'd like to turn it over to Dan to talk about our operating results and our financial position.

Thank you, Jim, and good morning, everyone. In Las Vegas, we achieved 6% growth in both revenues and EBITDA. During the quarter, we increased margins by approximately 10 basis points. And during the quarter, we saw a broad-based revenue growth in casino, hotel and food and beverage. Each of these segments were up mid-single digits at our Strip properties. Our properties continue to benefit from increased occupancy, up 3 percentage points year-over-year, driven by a higher convention mix in the quarter. This allowed us to grow fourth quarter Strip REVPAR by 7%, exceeding our guidance of 5%. This was the ninth consecutive quarter of REVPAR growth for our company. In fact, 2014 was our highest convention mix ever in the history of our company at over -- slightly over 17% of our room nights in 2014. As we look into 2015, it is our expectation based on current convention bookings to meet or slightly beat the level attained in 2014. Over 90% of that target is contracted and on the books, and over 60% of all of our future bookings are now being comprised of future corporate meeting events. Looking at the first quarter, we expect REVPAR growth of approximately 2% to 3%. This is a significant accomplishment, given we are growing over the 14% REVPAR growth in the prior year's quarter. I'm very proud of the sales and yield management teams for this extraordinary effort, and all of our operating units for putting forth a great result in 2014 and off to a tremendous start thus far in 2015. Moving over to CityCenter. CityCenter resort operations EBITDA decreased by 16% year-over-year on a tough hold comparison, as Jim mentioned, at ARIA. ARIA reported EBITDA of $60 million lower year-over-year, driven by a 450 basis point decrease in table games hold, as well as lower volumes. ARIA's hotel business continues to improve, as seen by the 9% REVPAR increase year-over-year, driven by a 20% increase in convention room nights. This higher convention mix allowed ARIA to achieve its best-ever catering and banquet revenue in the quarter. Vdara had a record fourth quarter EBITDA, driven by a 13% increase in REVPAR. Crystals recorded $11 million in EBITDA during the quarter, another strong performance at Crystals. As we announced in late December, CityCenter was able to record a global settlement related to the outstanding Perini and Harmon claims. There are several moving parts to the settlement, and due to the accounting literature, CityCenter was required to record a $39 million charge in the fourth quarter and anticipates a $160 million gain in the first quarter of 2015. Moving on to the balance sheet. Cash and cash equivalents at the end of the year was approximately $2.3 billion, of which approximately $546 million was at MGM China. We currently have approximately $1.1 billion in available liquidity under our corporate revolver and approximately $1.1 billion in excess cash on hand in the U.S. as a result of our November 2014 bond offering. We believe this available liquidity allows us to deal not only with near-term maturities, but with our upcoming growth initiatives. MGM China had approximately $1.5 billion in revolver availability at the end of the quarter and currently today. CityCenter cash at the end of the quarter was $410 million, which includes $143 million of restricted cash. And total debt at CityCenter at the end of the quarter was approximately $1.5 billion. During the fourth quarter, we invested approximately $114 million, 1-1-4, bringing our full year capital -- CapEx related to domestic operations to $387 million. We also invested $77 million on National Harbor and MGM Springfield during the quarter, bringing full year CapEx on these developments to $138 million. In addition, we invested approximately $48 million in our arena and hospitality joint ventures. To help with your 2015 modeling, we expect our CapEx to be as follows: Here at our wholly-owned domestic resorts, we expect to spend approximately $425 million in 2015, which includes a room renovation at Mandalay Bay for their main hotel tower and suites; convention expansion at Mandalay as well, as Jim mentioned, the 350,000 square-foot expansion; and our continued development of our park and entertainment district between Monte Carlo and New York-New York. Our development projects will total approximately $500 million in 2015, with National Harbor making up about $375 million; MGM Springfield about $80 million; and investments in joint ventures, predominantly our arena investments, of about $50 million. During the fourth quarter, MGM China spent approximately $14 million at MGM Macau and $37 million on our Cotai development. For the year, MGM China spent approximately $45 million on MGM Macau and $275 million on Cotai, bringing the total investment to date of approximately $500 million, excluding land and cap interest and development fees at MGM Cotai. In 2015, MGM China is expected to spend $100 million on MGM China and $1.1 billion on MGM Cotai. That concludes my report. I'll turn it over to Grant Bowie.

Thanks, Dan, and good morning. So 2014 produced a number of records for MGM China. EBITDA grew by 5% to $850 million, and margins increased 140 basis points. These results were achieved despite the many challenges confronting us in Macau, requiring us to constantly adapt and respond to the rapidly changing business environment. We're certainly not immune to the challenges in the Macau market, but I do believe we have a robust and responsive strategies that will allow us to create opportunities for future growth. For the fourth quarter, MGM China reported net revenue and EBITDA down 22% year-on-year, while the overall market was actually down 25%. Our EBITDA margin, though, was up 10 basis points year-over-year to 25.8%, thanks to growth in the main floor business and cost controls. MGM China, in fact, is the only Macau concessionaire that recorded growth in the main floor business during the fourth quarter. Our main floor table games revenue increased by 19% year-over-year, while the overall market was, in fact, down 9%. Our outperformance in the segment, which has been our strength for a number of quarters, is a result of our relentless execution of strategy and our focus on our customer experiences and operating performance. Given the current market trends, which have seen revenue migration from the VIP to the mass segment, we have reallocated capacity such that now over half of our tables are now allocated to the main floor, the result of this being that the mass business contributed approximately 75% of our profit in the fourth quarter. This compares to approximately 60% in 2013. VIP table games revenue decreased by 39% year-over-year. This was due to the market being down 32%, and for us, lower hold, which was 2.6% versus 2.8% in the prior period. We are committed to being a high-quality operator, and continuously upgrading the hospitality and gaming experiences for our customers is essential. To remain competitive, we need to -- we plan to invest approximately $100 million, as Dan indicated, in capital this coming year. Our future capital projects for MGM Macau include: a redesigned main floor layout to improve traffic flow and operating efficiencies; as well, we'll be introducing a range of non-gaming products in the form of over 15 new retail outlets; and reconceptualize food and beverage offerings to add capacity and diversity. MGM Cotai construction continues to pick up pace, as Jim has mentioned, and the project is on schedule to open in the fall of 2016. Construction of the hotel towers has now reached the 16th floor, and the progress is moving quickly. The first sections of curtain wall have been installed for quality and acceptance, and full-scale fixing of the curtain wall will commence next month. We are keen to get our property open, as MGM China has the greatest potential to grow in the market with the addition of our second property. MGM Cotai will nearly quadruple our room base and triple our gross floor area, which will allow us to expand our product offering into the retail and entertainment. These will all create opportunities for earnings and margin improvement. While we're gearing up in Cotai, we're also loading teams around our second property while developing the skill set of our local team. At MGM, we firmly believe that it is important to groom and nurture the local talent. Currently, more than 80% of our management team at MGM Macau are local employees, and we are looking to grow this percentage as we grow our business. We have always been committed to grow the business with our local team members. And in fact, over the past 12 months, we have internally promoted over 700 of our local team members. And with that, I'd like to turn back to Jim for his closing remarks.

Well, thank you, Grant. Our largest market, of course, Las Vegas, is showing solid signs of growth. Visitation was up 4% last year to a new record of over 41 million visitors. The LVCVA has the goal of reaching 45 million visitors over the next few years and growing our international mix of those visitors from about 20% now to 30%. We think these objectives are achievable. We do not expect any new capacity in the market in the near future, and airlift is scheduled to be up about 3% for the first quarter. Obviously, the U.S. consumer is feeling better. Unemployment is at its lowest level in 5 years, consumer confidence is at new highs, house prices are recovering and of course, energy costs have been cut dramatically. Remember that 70% of our Las Vegas revenues are non-gaming. Consumers are spending more, and this really helps, particularly our core properties. And I can tell you that for MGM, 2015 is off to a very strong start in Las Vegas. For example, in January, the Consumer Electronics Show had record attendance. And during that conference, the MGM portfolio had 2 of its best hotel revenue days of all time, and we continue to build off of our strong base of convention room nights. The next month, in February, the Super Bowl drew the second-largest crowd in the city's history for that event. And later this week, we kick off Chinese New Year's, which is, of course, always a major holiday for people that travel to Las Vegas from around the world, and of course, for Macau as well. MGM continues to invest where we see opportunity. We're really excited about the venues we have opening this year. Rock in Rio will debut in May. There may even be a certain fight that month in May, Bill. Our convention center expansion will open this year. That will have a profound impact on Mandalay Bay next year. The arena, it is hard to understate the impact of the neighborhood of that 20,000-seat arena. And of course, we own the neighborhood on that side of the Strip. And that opens next year, next spring. And beyond Las Vegas, we're really excited about the targeted developments we have underway, including, obviously, MGM Cotai, MGM National Harbor and MGM Springfield. And so with that, operator, we have plenty of time for questions, and I'd like to turn it over to you.

[Operator Instructions] Our first question is from Joseph Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: I have 2 questions, one relates to Las Vegas and then my second one relates to Macau. With respect to the Las Vegas Strip -- and I understand your comments were quite positive in terms of what you're seeing so far, the first month plus this year. Can you talk about what you're seeing on the Baccarat volume side? I know the last 5 months, the Strip had some squishy results. Some of that is maybe comparison-related, and it looks like you took some share in the fourth quarter. But can you talk about what you're seeing with that Baccarat consumer? And then my second question on Macau and maybe for you as well, Jim. Can you talk about what the dividend policy and maybe the leverage -- balance sheet leverage strategy is there with respect to Macau?

Okay, Joe, let me tackle that. January, we had a very strong Baccarat month. Our volume was up -- well, it was up double digits in January. In fact, overall table games were up high single digits in the month of January. And so I'd say we're off to a good start there. That said, just so you kind of understand the frame of the issue, because China is obviously topical, we've looked at this. Here in Las Vegas, our cash flow exposure to Chinese Baccarat play is in the low single digits. Less than 5% of our EBITDA comes from China here in Las Vegas in terms of Baccarat. It's important, and as I said, it was up nicely overall in January. But I just wanted to frame the quantum of that for you. And I think the second half, the question goes to Grant.

Joe, so the issue on the dividend, in terms of -- I'm assuming you're talking about go-forward leverage, Joe? Joseph Greff - JP Morgan Chase & Co, Research Division: Exactly, exactly.

Okay. So clearly, we are going to maintain the annual commitment, the annual bonus -- the annual dividend. The bigger issue obviously is going to be the go-forward special dividend, and obviously, that will be mapped out against our cash requirements. We're still looking very positively at being able to generate significant cash, and I'm sure that all of our shareholders would see us being able to distribute back. But that will obviously need to be determined on a cash by cash basis. So we continue to reaffirm the commitment to our existing policy, with the board addressing opportunities for special dividends as they see it as appropriate.

Our next question is from Harry Curtis from Nomura.

Jim, let's start with you. Let's go back to 2007, when your properties generated about $2 billion worth of EBITDA. Still a fairly wide gap between what you generated in '14 and that peak. What are the drivers going to be to help you close that gap? And specifically, how important is the casino piece in 2015 and '16 versus how big it was then?

Okay, Harry, let me take a stab at that. Yes, those were the good old days when Jim didn't have gray hair. You're talking about the '07 time, right? So if you break up our portfolio here between maybe luxury and non-luxury, the non-luxury is outperforming right now the luxury, right? So the core -- if you look at core REVPARs, you look at core cash flows, they're growing more rapidly than luxury because, obviously, they were the ones that were most devastated by the recession. We had just tremendous declines on cash flows at our core properties. Properties that were doing $80 million a year got down to $20 million, and the $150 million got down to $80 million. And it was just a devastation to our cash flows. They are doing better now, and we expect them to continue to improve. You probably saw that in the fourth quarter, their margins were up almost a couple hundred basis points and they were up almost 100 basis points for the year. And we expect them to continue to improve, but they're still 50% off of where they were back in 2007. And that means that's about a $300 million EBITDA opportunity if we were to restore the core properties' cash flows to where they were in '07. I think that is an achievable goal. If the city-wide convention market continues to improve, if the LVCVA does as it wants and expands and improves, as we expand our convention business and the consumer generally improves, that's a big opportunity for us. And that, frankly, is the best sense of how the U.S. consumer is doing, is right there. The luxury properties are also down from their peaks, and that's a combination of high-end gaming and the food and beverage side. We feel like we can improve on both of those, and we don't know if we're going to get fully back to where we were in '07 on the luxury side. It was pretty heady back then. But people are starting to spend money remarkably here. Corey Sanders showed me a check at Prime, which I couldn't believe. Corey, it was a group that spent $300,000?

Yes.

$300,000 for dinner at Prime. That's a pretty good check. You would have liked the wine, Harry. And we haven't seen that in a long time. So I'm not saying that's a trend. But to get the kind of cash flow numbers the luxury properties got up and down the Strip, you're going to have to see that type of abundant spending. We don't see that. We're not predicting that, but we do predict that we'll be able to continue to grow REVPAR in our luxuries, we do predict that they'll benefit from the convention business and that they'll get back a lot of the cash flow they lost from that peak. So if I were to model out over the next few years, I think we're lifting off operationally on the core properties. We held up pretty well in the luxuries. I think we'll grow there, but I think the delta will be better in core.

So I'm guessing that dinner was not a Nomura-sponsored dinner?

No, it was not.

So then my second question speaks to or addresses the issue of margins in Las Vegas. I would have expected a bit better performance on the margin side in the fourth quarter given your revenue growth. Can you talk to why they might have been held back and your expectations for margin expansion this year?

Sure, Harry, this is Dan. I think when you look at the fourth quarter, clearly, we had a pretty tough comp in the prior year's fourth quarter, given some accruals and some different things that benefited the fourth quarter in '13. So on a year-over-year basis, that kind of held us back. I think when you kind of look at our overall margin improvement, we are improving margins. We're going to continue to be focused on improving margins. And I think as you kind of look at the opportunities as we go forward in terms of cost structure and driving top line, we're in a good position as we look into 2015 and beyond. And really, when you look at the last couple of years and how we've been able to improve margin in '13 and '14, we've been able to really kind of drive roughly about a 50% flow-through overall in the business. And as we said before, it's really a longer-term view than either a monthly or a quarter-by-quarter view. And we're pretty proud of that accomplishment over the past couple of years. We're going to keep our head down and stay focused on driving margin improvement in 2015 and beyond.

I was just saying, correct me if I'm wrong, Dan, but if you look at the average of the flow-through in the fourth quarter of this past year and the one in the year before, it's about 50%, 48%, 50%. And the flow-through over the last couple of years, if you looked at the average of last 2 years, it's been about 50%.

About 50%.

So it's -- there'll be ups and downs, but 50% is still a pretty good benchmark. It just -- and if you look at the core properties, obviously, they did better.

So using a mid -- in Vegas, using a mid- to high single digit EBITDA growth, assuming roughly 5%, 6% top line growth is not unreasonable then?

No.

No.

Our next question is from Felicia Hendrix of Barclays.

Jim, in your -- I don't remember if it's Jim or Dan, sorry. But in your prepared -- I think it was you, Dan. In your prepared remarks, you talked about some of the convention stack for 2015, and I -- you talked a lot about booking. I was just hoping you could tell us a bit about rate. This actually might even be for Corey.

Yes, when you look at the bookings, obviously, I did mention that, that we got about 90% of our 2015 goal contracted on the books, and that's pacing at roughly about a mid-single digit increase year-over-year. And I think as we kind of fill in some of the shoulder periods and weaker periods on the convention side within the year -- for the year, our goal is to continue to kind of drive that rate.

You might also mention, Dan, the mix of convention business, right? So we have a lot of it already booked. But increasingly, corporates are becoming a higher percentage of our bookings. It was under 50% a couple of years ago. It was like 50%, Sarah, last year?

Yes.

And now 60% of our future bookings are corporates. And clearly, that's a positive sign for the market and for us from a revenue perspective for that group business.

Okay, great. And then just when you talked about the convention booking mix being the highest at over 17% for 2014, if you remove CON/AGG, what would that have looked like?

You want to do that? I think you have that, don't you?

Well, I have REVPAR -- sorry, maybe you can hear me better now. So I mean in terms of the percentage of room nights, we don't have that handy. But I can tell you that we're able to achieve a similar convention mix this year, and that's lapping the strong first quarter because of CON/AGG.

It still would've been a record year-over-year when you look at it overall from a historical standpoint. Remember, our prior peak period was in the low 16% mix. So we still would've been above that level, excluding CON/AGG in '14.

And did we give the first quarter mix, Dan?

We have not.

Do you want that?

It's about 23% convention mix in the first quarter.

And what was the last year?

That's similar on a year-over-year basis.

So that's kind of good depth. So our convention mix in the first quarter this year will be about 23%. That's what it was last year, with CON/AGG, so you could get a sense that things are -- we've been able to work around CON/AGG not being here.

Yes, very helpful. And then, Jim, you talked about this a little bit before, but your core properties did better than expected in the quarter. The luxury properties lagged, you talked about that. You also talked about some things that you're doing in the convention and meeting area -- arena that should improve that. It looks like you're kind of working your way towards that improvement just given the stack, but anything else you want to add there?

Well, on the core properties, I think that we're taking the view that these properties that we own on the core side can all do better than they are right now. And the first start was with New York-New York and Monte Carlo because they're center Strip, and we felt that there was a lot we could do to have an immediate impact. And we are seeing that impact. You look at the traffic counts going into Monte Carlo today versus where they were before we started this, it's significant. We're up 20%, 30% in terms of traffic counts of people walking into Monte Carlo this January versus last January as a result of what we did there. We're seeing high slot handles at Monte Carlo. We see really good room revenue at Monte Carlo in January. So that has to be largely due to what we had done in front of that building. In the same kind of story, you could see it in New York-New York. Shake Shack isn't the only success there. We've seen big volume increases at Nine Fine Irishmen and our other venues as well. So our strategy will be to take a look at these properties and find ways where we could deploy some capital with an outsized return, with the idea that more people go to those kind of properties than any other kind in Las Vegas. The mid-market properties are the bread and butter of Las Vegas. It's not the part that a lot of people talk about a lot about because it's not Baccarat, it's not the big shows, but it's where you can make the most money over time. So we're looking at Excalibur and further improvements to Monte Carlo, in Luxor, but not in dramatic, major capital type of projects, but in ways that we can improve those core properties. And I think that the non-gaming side is going to help us a lot. This arena is going to help that part of the Strip an awful lot. It will be programmed over 120 nights a year, and that's going to draw a lot of traffic up and down that part of the boardwalk area. In terms of other capital projects we're looking at, they're not big ones. They're room remodels that make sense. I guess we're doing Monte Carlo -- I mean, Mandalay Bay now, right, Sarah? We're really encouraged that when we do these room remodels more intelligently, meaning we don't spend quite as much and we get more impact for that, we do get a revenue impact and an EBITDA impact right away. So the strategy is to put capital into these properties to make them more relevant, to capture more than our fair share of market. And if you've done some of the analysis, you know that we have an outsized share of market in slots and in any metric relative to their competitive set. We think we can increase the gap there and be able to integrate those core properties better within our luxury properties through our loyalty programs.

Our next question is from Chris Jones of Union Gaming.

Just staying on topic on the core properties. Could you talk a little bit more about what else is driving it, in terms of your M life program or even perhaps if you're seeing just better economic lift from that region as well? Certainly, it's good to see that, and we've seen some pretty strong stock performance there as well. And then also, just out of Macau, if you could talk a little bit about your CapEx spend over there, where you're looking to, I guess, redo the main floor, some timing on that as to what the impact might be to the main floor from the refresh?

Chris, it's Corey. With regards to the core properties and lift, I think there's a few factors that are definitely driving it. Lower gas prices helped. The fact that we have such a solid convention base, which fills our luxury properties, and the fact that there's a 3% lift in air seats also helps those properties. And then we do see a lot of benefit with the regional properties filling casino room nights in the core properties. So I think all those things are beginning to help those properties drive rate.

Our next question is from Shaun...

Hang on. Grant, did you want to take the Macau question?

Sure. So Chris, we're working through the process. We're looking at hopefully getting the work commenced in probably the third quarter. And as you correctly note, what we're doing is making sure that we protect ourselves in terms of any revenue loss. So what we wanted to do first is put in all the incremental gaming that doesn't actually take away from anything we've got. So that's really the focus is to maximize that and then minimize any significant impact. At this point in time, we're actually pretty confident that we should be able to keep all the productive capacity that we currently have available. And then once we have obviously completed it, we'll be adding more capacity into the floor.

Our next question is from Shaun Kelley of Bank of America Merrill Lynch.

Just wanted to ask a little bit about 2 subjects. The first is just, in general, your cash tax position heading into 2015 from 2014. And then secondarily, we're starting to see a lot more creative financing structures as it relates to regional gaming assets. And I'm curious, would you guys -- I think you've spoken before that those types of transactions may not make sense for the overall business. But I'm curious if you would consider that either for any of your regional gaming properties or maybe some sort of creative financing solutions to help de-risk the properties in Massachusetts and Maryland, given the size of those investments.

Shaun, this is Dan. As far as cash taxes, we will pay some taxes. It's pretty minimal this year in terms of our overall cash taxes. It's probably less than $50 million in the year as far as our cash taxes this year.

And I think your next part were some of the other kind of corporate strategies, for example, like REITs that Penn pursued last year and Pinnacle looks like it's pursuing right now. We are -- we look at everything. I think that those who have followed us a lot know that we're an active corporate finance organization here. We've bought properties, we've sold properties, we've done just about everything that we can -- that's been done out there. The concept of converting gaming assets to REITs is not a new one. It was very actively discussed before the recession. In fact, a couple of companies pursued that and then canceled those plans. And more recently, the dialogue is there again. We look at this all the time. We're pitched by every bank that is out there in terms of whether or not we should do that. And there's some merit to it. We believe that our assets are undervalued around the portfolio of our assets. And so we should -- we believe that as we're working for the shareholders, we should explore every opportunity as they come across our desk. And so I'd have to say, there's nothing definitive. There's nothing to report, but we do look at these type of corporate transactions. We do know there's great value in cross-marketing in the gaming industry. And one would know -- you just have to look at the fourth quarter, or if we could show you the January numbers in Detroit, which is great, we're doing great in Detroit in January and down in Mississippi. And the amount of business we get between our regional properties and our core properties here in Las Vegas is growing rapidly. So we do know that there's value in a portfolio of properties. Whether we have to own them all is the question that you're asking. We don't have the answers to that at this point in time. But I have to tell you that we're shareholder-oriented. We look at this stuff all the time. We are going to continue to look at it. I see some challenges around it from a tax perspective, but that doesn't mean that can't be overcome. And so we're going to continue to explore them.

Our next question is from Carlo Santarelli of Deutsche Bank.

When we look at the last couple of quarters, obviously, you guys have pretty much consistently been in a 2-year stack REVPAR range of about 8%. And when we look at the 1Q guidance on top of a plus 14% last year, it shows obviously a meaningful uptick, as you guys have obviously filled in the convention hall pretty nicely. When we think about the rest of the year, do you kind of look at the 1Q as being maybe the trough year-over-year REVPAR growth quarter, just given the difficult comparison?

Carlo, it's Dan. I think you're spot-on as we look at 2015. Clearly, March will be a tough comp, given the impact CON/AGG had from a year-over-year standpoint. And as we've mentioned previously, it's our goal, and we think we can do it, to grow each quarter on a year-over-year basis. And first quarter, given that tougher comp, will probably be the trough quarter out of all 4.

Great. And then just really quickly for Grant. Grant, if you could just comment a little bit on maybe how the reclassifications in Macau have gone thus far and what your plans are on a go-forward basis?

So in terms of, obviously, just maximizing opportunities, we will just keep moving product into the mass market to the extent that we see that as being incremental and as long as we can create more floor space to actually achieve that. At this point in time, as I think everyone is seeing, the jacket market is soft, and we don't see any significant opportunities for that to change. So I think the focus is clearly moving that into the mass environment.

Our next question is from Joel Simkins of Crédit Suisse. Joel H. Simkins - Crédit Suisse AG, Research Division: I have 2 quick questions. Jim, you sort of referenced this potential Pacquiao-Mayweather fight sometime in the second quarter. I guess, what are your expectations around that? What does that at least mean in the short term? And then secondly, I'd say, a longer-term question. There's been some fits and starts around the couple of proposed developments around the Strip. Are your expectations that we would not see any meaningful supply growth on the Strip until at least the end of the decade?

Okay, Bill's like, you're going to get in trouble, Jim. Listen, I'm just responding to newspaper rumors. I'm just -- look, we're holding the date. We're holding the date on May 2 for a fight, and we hope it's a big, big fight. And if it's the fight that we hope it is, it'll be the biggest fight. And if it's that fight, then our REVPAR in May at the MGM Grand is going to go through the roof. So -- but we have a pretty good calendar this year of events, both concerts and fights. We know Mayweather is going to fight at some point in time, right, Bill?

That's right.

And he will -- so he will fight. And so we're working as hard as anyone that cares about boxing on that very event. And I could just say that we're working very hard, and we're all hopeful. I have to say that also, the events this year are going to -- they're going to be really fun for Las Vegas in general. And what we're up to on our festival lot across from Luxor, what we're up to at Rock in Rio, what Caesars' is doing behind on the LINQ, there are some new events this year that are going to drive incremental traffic from some people that don't typically come to Las Vegas, which I think, over time, is really good. I'm struggling with what's going to happen out here from a capacity perspective, frankly. We have heard for many quarters that Genting was going to break ground, and they have not. And I remember saying last quarter, we hope they do. And we do hope that because we do believe they'll drive some incremental business. Steve Wynn very famously said many years ago the worst neighbor is a vacant lot, and we ascribe to that theory. So we hope that they build. There's no evidence that we see out here being active in the market in terms of engaging consultants, architects, urban planners that, that is going to happen anytime soon. But we hope that, that does. And of course, James Packer and Andrew Pascal are working on a project. I haven't gotten an update from them on that. My guess is here we are in '15 already, that nothing opens until beyond 2018. And it could even be later than that. And it's not necessarily a certainty that a new property opens at all. And so I can tell you, we're not going to build a new property, and I doubt Caesars is going to building a new property. And I don't think Boyd is going to go onto the Strip, and I don't think Steve Wynn or Sheldon Adelson will build properties. So I think the capacity is fairly well defined over the next 5 to 10 years. I really think that. And meanwhile, I think the LVCVA numbers of driving to 45 million tourists is a reasonable expectation. And I don't think we can fully understand or appreciate what the expansion to the Las Vegas Convention Center will do for visitation. I think that would be an interesting analysis to do. When they expanded the convention center in the past, in years past, we saw a quantum change in convention attendance. The -- Rossi Ralenkotter, who runs the convention center, has a list of conventions that he could get if he had that expansion, and it's a big list that would generate hundreds of millions of dollars of incremental revenue to the city. So I'm just looking at the landscape broadly with a fairly limited amount of supply, if any at all, with some ambient growth in the consumer confidence and activity driving traffic here, the unexpected benefit of much lower gas prices, which you really see if they stay anywhere near this level during the summer, you're going to see traffic to Las Vegas we haven't seen in 10 years. The fact that the airlines are healthy -- Southwest is in our local paper today talking about growing more flights into Las Vegas. You know Southwest is the largest carrier into Las Vegas and our largest partner. And the fact that these kind of non-gaming events, festivals, music festivals, concerts, drive a lot of traffic here and they spend money. That's why we're feeling very good about this year and next year. You've been reading a little bit about potentially a hockey team coming to Las Vegas. Can you imagine what would happen to Las Vegas if a professional sports team was here? And so far so good. The potential owner is trying to get to 10,000 season tickets. In about a couple of days, he got 5,000 seats, and he's a couple of thousand seats over that right now. So he is well on his way of demonstrating to the NHL that there's a strong fan support here in Las Vegas. We're going to be, I'm sure, we're going to be a regional site for March Madness once we get the arena up and running. We do the Pac-12 basketball tournament already at the MGM, and it's a big hit. So if you think about over the next few years, sports is going to be a big component to the growth of the city, and we, of course, are going to be the leading player in that. And these concerts and festivals are going to be another major growth. We are the major player there. And the convention business is going to be a major part of the growth, and Las Vegas Sands and MGM are the biggest there. And so that's why we're feeling good about the future over the next few years.

Our next question is from Steve Wieczynski of Stifel. Steven M. Wieczynski - Stifel, Nicolaus & Company, Incorporated, Research Division: Jim, so one of the properties you haven't talked about is The Mirage. Again, it's not a huge property for you guys, but it seems like that property is always kind of popping up here with rumors it's potentially for sale. But you guys just started a pretty extensive renovation project that seems like it's going to take a while to complete. So I guess maybe how do you view that property longer term in terms of your portfolio? And then also maybe talk about the decision to remove, seems like a lot of high-end play, from that property as well.

Yes, The Mirage got pummeled by hold in the fourth quarter. It was -- I don't think it could have done worse from a hold perspective, but we are putting money into that iconic property. One of the things we're doing in there, and you've noticed, is that it really -- what Mirage struggles from is the fact that it doesn't have enough to keep people there throughout the night. And so we're adding -- we're putting in a center bar and a lounge, and we've changed out some of the restaurants. We have a couple more ideas in that regard. It's got so many great elements to it. It's got probably arguably the best villa product in the city still for those who like the garden villas, and many of our customers, particularly the ones that value their privacy, love those villas. It's got 2 theaters, it's got a decent amount of convention space, it's got a great location and so -- and of course, a great brand name. And it is the sports hub for all of our properties. So that -- the Mirage sports book generates more volume than anyone else out here because it's -- we hub all of our sports activity through The Mirage. But yes, it has been rumored to be on the sale block for many, many years, really since 2000. My point on that would be we're not in charge of owning all these properties. These properties are owned by the shareholders, all of them are. And we look at anything that will generate value for shareholders. And we're not blindly in love with any of our properties. So I don't -- I can't say for sure that there'll be a sale on the Strip. But I will say this, is that we believe that if we continue to strategically invest in all these properties, their cash flows are going to go up. And sales are based on multiples and levels of cash flow. We sold Treasure Island to Phil Ruffin, who's a great man, and he is very happy with that purchase. We sold it for $755 million. And I think he's happy that he bought it, and it's doing better now. When he bought it, the cash flows promptly plummeted because he bought it in the middle of the recession. But through hard work of his, he's brought back those cash flows to a level that, I'm not sure what they are now, but they're probably at or even exceeding where they were when we sold it to him. So my point is that our job is to drive as much cash flow into these properties as possible. To do that, we need to invest in them. If we get offers on any of our properties, we're obligated by our shareholders to look at them, and we will. And we have to look at it from a pretax basis. We have to look at it from an after-tax basis. We have to look at it relative to its strategic value. We have to look at it relative to how it fits in with the portfolio as it relates to market niche. And so I always am a believer of culling a portfolio. We've sold properties as recently as last year, and we'll continue -- small ones, but we sold them as recently as last year. So we'll look at that. The good news is that in an improving market with interest rates very low and interest in Las Vegas assets increasing, by both private equity firms like Blackstone with Cosmopolitan and by strategics, and the fact that we own 42,000 hotel rooms here in Las Vegas, 10 resorts, we have, I'm sure, the beneficiary of everyone's thinking as it relates to real estate. And that's good news for our shareholders. Steven M. Wieczynski - Stifel, Nicolaus & Company, Incorporated, Research Division: One last question. Can you just comment real quick on M life, in general, and maybe how that program performed last year in terms of new sign-ups and also in terms of maybe the tier progressions, meaning folks going from Pearl or Sapphire up to your Gold and Platinum levels?

It's Sarah. So our M life loyalty program, we saw market share gains in slots for the year, both at our Strip properties and at the regions. We had a record number of enrollments, that was up 9% year-over-year, and active M life members also grew up 8% year-over-year.

Our last question is from Steven Kent of Goldman Sachs.

Just -- actually, it's a pretty quick question. On CityCenter, it looks like now the litigation is done, or it feels that way. Does this, in some way, pave the way for a broader recapitalization of that asset or outright sale? How should we be thinking about it now that this seems to be behind you, at least from the litigation front?

Well, it feels like it's behind us, too, Steve, and it really feels like it's behind us. And we lived through it more painfully than you did. Yes, there are a couple of things that will emanate from that important resolution. One is, as you can see, when you're out here, we're taking down the Harmon. It's coming down, I think, a floor a week right now. It's at a nice pace, and it'll be down certainly by the end of the year and cleaned up. And we're going to put a nice façade on that because it faces Crystals. But that's 2.2 acres of prime real estate on the Las Vegas Boulevard. So the CityCenter board is now engaged in trying to find the highest and best use of that property. So that -- we'll have meetings on that this year. As recently, Chris, as next week, I think we're having 1, or is it 2 weeks?

25th.

25th, yes. So we're having another kind of whiteboard session on what we should do there. Secondly, yes, there's an -- there are multiple opportunities of recapitalizing CityCenter. It's under-leveraged. It has cash on the balance sheet. It's got a couple of significant assets. And so Dan and his team are looking with our partners at Dubai, looking at a variety of ways that we could return value to owners, whether that be through sale of some parts of CityCenter or through dividends or through a recapitalization, we're looking at all that. And that really is going to usher in a new era for CityCenter. I think this is Phase 3. Phase 1 was struggling to get it open, Phase 2 was struggling to make it successful and profitable and cleaning up clouds of litigation and construction. And now we're in Phase 3 of an enterprise that's making a considerable amount of money, but has the capacity to make a lot more money, given its size and its quality. And how to maximize on that growing cash flow for the owners is the phase that we're in right now. Okay. I think, Sarah, you said that was the last comment. So thank you all very much for joining us. And I have to apologize in advance that it's 55 degrees here in Las Vegas. As I'm looking at my son in Connecticut at 19 and my other son in Baltimore at 16, and I'm sure New York is no better than that and everywhere else. So...

But we're going to 80.

But we're going to 80 today. So for those that haven't booked their flights for the weekend, it's better here than there. Enjoy yourselves, and we're always around for questions. Thank you.

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