MGM Resorts International (MGM) Q2 2015 Earnings Report, Transcript and Summary

Good morning and welcome to the MGM Resorts International Second Quarter 2015 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; Chris Nordling, President of Corporate Entities; Bill Hornbuckle, President; Corey Sanders, Chief Operating Officer; and Grant Bowie, CEO and Executive Director of MGM China Holdings Limited. Participants today are in a listen-only mode. After the company's remarks, there will be a question-and-answer session. Please also note that this event is being recorded. Now, I would like to turn the call over to Mr. Dan D'Arrigo Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Well, thank you, Arthur and good morning and welcome to MGM Resorts International's second quarter earnings call. This call is being broadcast live on the Internet at www.mgmresorts.com and a replay of the call will be made available on our website. We furnished our press release this morning on Form 8-K to the SEC as well. 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 a 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. And with that, I'll turn it over to Jim. James Joseph Murren - Chairman & Chief Executive Officer: Well, thank you, Dan, and good morning, everyone. I am quite pleased to report strong second quarter results for MGM. Our wholly-owned domestic resorts increased our EBITDA by 11% year-over-year, driven by both our Las Vegas Strip properties and our regional properties. Margins increased by over 150 basis points year-over-year, and profit growth was very broad-based across our entire portfolio of assets and operating segments. CityCenter resort operations' EBITDA increased by 4% year-over-year driven by growth across the entire campus. MGM China reported EBITDA of $132 million down year-over-year due to the continued market weakness, but despite this decrease, Grant and his team have been able to improve margins sequentially quarter-over-quarter. Our strong operating performance provides a great platform to launch a seminal internal transformation that we call our Profit Growth Plan. This is the product of 10 months of hard work aimed at redesigning our entire company to produce sustainable gains in profit. So, I'd like to take a few moments to provide some context to this plan. As you know, every year, we go through a strategic planning process and that includes an in-depth review of the current macro trends and a holistic view of our industry. We also obviously look for ways to constantly improve profitability. When we undertook this process late last year, we recognized that the U.S. economy, though growing, was proceeding at a slow pace. And as operators, we have prided ourselves on our ability to consistently improve our margins, end results and outpace the market. So since last year, we went deeper across all components of our business and challenged ourselves to rethink how we operate. And in doing so, we developed literally hundreds of ideas and we formulated a rigorous process to evaluate these ideas, and of course, we brought an outside expertise to assist us with the execution of the ideas and the strategies that we deem most viable and to track and report on our progress. Our Profit Growth Plan will allow us to increase revenues through enhancing of sales and pricing, while leveraging our assets, and of course, as well to reduce expenses by re-looking entirely how we run our business more effectively, using our scale to improve our purchasing power, streamlining some key back-of-the-house areas as well utilizing technology to improve better analytics and forecasting tools. And in the second quarter, we introduced the plan internally within the company and we officially launched it internally in July. Our plan will strengthen our company's organizational structure, permanently improve the way we operate, organically increase margins and profitability and strategically position MGM for the future. This is a thoughtful, collaborative effort that requires participation at every level within our company. There is still tremendous work to be done and it will not be easy, but we know we can make this work because we have the best teams in our business. And this requires a focus on change management, because the most impactful of the improvements require a different approach to operations and marketing than the industry standard. While upper management has kicked off this charge, we have made a concerted effort to engage all levels within our company, soliciting ideas from employees who truly live and breathe these processes. Among other things, this process is about empowering our employees, to ensure that we do not compromise in any way the guest experience at our resorts, but rather improve the experience and ultimately drive value for our company. Of the ideas we've identified, we've honed in on a subset of high-value initiatives which will be rolled out this year and in 2016. And therefore, by 2017, we believe we will generate approximately $300 million of incremental profit. To be clear, this benefit is incremental to our normal business growth projections. Approximately $250 million of this improvement will be driven by our wholly-owned domestic resorts and the balance will come from corporate expense and our joint ventures. We believe we can drive our property EBITDA margins back to the 30% level in 2017 and this effort will be a major catalyst in helping us achieve this goal. Our Profit Growth Plan will proactively allow us to better align ourselves in today's business environment and continue to drive value for our employees, guests, communities and shareholders. I am extremely excited about how our company is embracing this effort, thus far, to uniquely position ourselves as the leader in the industry and how we approach our business. And, of course, we'll get into this in the Q&A more, but we will update you to be clear on this every single quarter on our progress on the Profit Growth Plan. And with that, I'll turn it over to Dan to talk about our operating results and our financial position. Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Well, thank you, Jim. In Las Vegas, we guided for at least 5% REVPAR growth in our wholly-owned strip properties and actually achieved 6% in the quarter. Our wholly-owned strip EBITDA margins increased roughly 140 basis points to approximately 27%. We saw increases in many segments of our business including our casino, hotels, and food and beverage businesses. During the quarter, our convention business improved year-over-year and we also had a strong event calendar highlighted by the Mayweather-Pacquiao fight in May. Our diverse portfolio continues to benefit from an improving marketplace as evidenced by our non-luxury strip resorts producing REVPAR and EBITDA growth of 9% and 14%, respectively, while our luxury strip resorts grew by 5% and 9%, respectively. Looking forward, we continue to see strong convention bookings in the back half of this year. In fact, we went into 2015 expecting to be flat year-over-year in terms of our convention room mix. With a stronger than anticipated end-of-year for the year bookings, we now expect to outperform 2014's record year in terms of that convention mix. And based on our current trends, we expect third quarter wholly-owned strip REVPAR growth to be approximately 6%. Our regional properties had another great quarter as we continue to gain share. Our regional resorts grew EBITDA by 10% with Detroit and Tunica each up 8% and Beau up solid at 17%. These resorts collectively increased margins by approximately 150 basis points in the quarter. CityCenter resort operations' EBITDA increased 4% year-over-year driven by strength across the entire campus, as Crystals and Vdara achieved record results. Aria reported EBITDA of $63 million, primarily driven by record year-over-year REVPAR growth of 8% and increased catering and banquet business related to our corporate and convention bookings was exceptionally strong in the quarter. Looking at the balance sheet, cash and cash equivalents and deposits on hand at the end of the quarter were approximately $2.5 billion, of which, approximately $522 million was at MGM China. We had $1.1 billion in available liquidity under our corporate revolver and approximately $1.7 billion of excess cash on hand. On July 15, we repaid $875 million senior notes with cash on hand and we continue to focus on improving our balance sheet, having reduced our total debt by $2.3 billion at MGM Resorts this year. CityCenter cash at the end of the quarter was approximately $192 million and total debt at the end of the quarter was approximately $1.5 billion. In June, with the support of our lenders, MGM China amended and restated its senior credit facility, upsizing the term loan by $1 billion, increasing their total capacity under the facility to $3 billion. The amendment also extended the maturity date by 18 months to April of 2019, and currently, MGM China has approximately $1.55 billion outstanding in term loans and has roughly $1.4 billion in available liquidity under its revolver. In terms of CapEx during the quarter, we invested approximately $197 million in total CapEx related to our domestic operations. That included about $98 million on National Harbor and Springfield in the quarter. In addition, we invested approximately $15 million as part of our arena joint venture equity contributions. During the second quarter, MGM China spent approximately $8 million at MGM Macau and $96 million on our MGM Cotai development. And just to kind of help with a few modeling points going forward. As you've recently seen, we've announced a new theatre project at the Monte Carlo. We expect to incur some one-time expenses at both Luxor and MGM as we relocate some of the existing shows, Blue Man Group and Jabbawockeez into Luxor and MGM, respectively. And we anticipate expenses related to such moves to be approximately $6 million in each of the next two quarters. That will impact those properties, predominantly at Luxor. Corporate expense for the second half of the year will be up slightly as we incur some upfront costs to implement our Profit Growth Plan, as well as other corporate initiatives. As a result, corporate expense in the third quarter is expected to be $60 million to $65 million for Q3. With that, I'll turn it over to Grant for an update on Macau. Grant R. Bowie - Chief Executive Officer & Executive Director, MGM China Holdings Ltd.: Thanks, Dan. Good morning, good evening, everybody. In the second quarter, Macau total gaming revenue was down 37% year-on-year. While for MGM China, net revenues of $557 million was down by 33% year-on-year. We recorded an adjusted EBITDA of $142 million, a decrease of 37% year-on-year and that was before the license fee of $10 million compared to $14 million last year. Despite the opening of a new property in Macau, MGM's market share in June actually increased over April and May. More importantly, we've been able to maintain our margins in the current market that Jim indicated. Our property EBITDA margin before license fee was 25.5% during the quarter, a 20-basis-point sequential improvement compared to the first quarter. Over the years, we have run our business with a lean and efficient operation in this dynamic market, and we continue to manage our costs and streamline our operation in a disciplined manner while remaining focused on our main floor business by offering high quality experiences consistent with our namesake property. On the main floor table games win dropped by 23% year-on-year and this was in line with the market performance and declined by 5% sequentially compared to the broader market decline of 7.5%. In June, we have completed the first phase of expansion of our supreme lounge, including adding 61 high-limit slot machines. The early read shows customers have reacted positively to this remodeling. Our mix shift towards the high-margin main floor business continued in the second quarter with a record high of 80% of MGM's China's profit coming from the mass segment. We continue to shift tables from VIP to mass with an additional 49 tables to the main floor versus last year and this now represents nearly 60% of our table allocation. Despite additional tables on the main floor and increase of table operating hours, we've had a stable average head count per open hour. In other words, our strategy of capacity and resource allocation managed to drive incremental main floor play visitation. VIP table games revenue decreased by 43% year-over-year, driven primarily by lower turnover, which declined 54% year-over-year, while hold percentage increased to 3.2% from 2.7% in the prior-year quarter. MGM China continues to compete with a focus on precision of their marketing efforts like quality offerings and best-in-class service standards. Our implementation of our targeted marketing initiatives is expected to drive existing customer share of wallet, while seeking opportunities for new customer acquisition. Expanding and yielding the database are always our key priorities. Today, the board of MGM China also announced an interim dividend of $77 million, representing a payout of 35% of net income. At MGM Cotai, we are on target to complete all floors in the hotel tower by early November this year. Our spectacle roof structure is progressing quickly with the completion milestone in September. The majority of our set out contracts have been awarded and we will be commencing the set out of the casino areas in August. We remain on target for fourth quarter of 2016 opening. And with that, I'd like to turn back to Jim for his closing remarks. James Joseph Murren - Chairman & Chief Executive Officer: Well, thank you, Grant. The second quarter is a vivid example of how our company differentiates itself with our dominate entertainment position and the diversity of our resort offerings in our markets. We hosted a great variety of events. We showcased all of our properties, as well as the City and really as a whole on a worldwide stage. And all our properties really truly delivered across the board. Bellagio's margins were the best of the strip luxury resorts in the quarter. MGM Grand shined as the host of the big fight. Aria, our newest resort on the strip has secured its place as one of the most profitable resorts in Las Vegas. Crystals is leading the way in Las Vegas on the retail experience and our core properties again outperformed the market. And we believe we're just getting started. The first phase of the expansion at Mandalay Bay's Convention Center is opening this month and the demand is incredible The Las Vegas arena is looking great and we've also recently announced the 5,000-seat theater at Monte Carlo. And now, we'll open up to the park in the entertainment district and create a truly unique experience. They will be great additions to Las Vegas, to our entertainment offerings and to the benefit of the neighborhood. And we own the neighborhood. We will continue to work on growing this market and we're encouraged by the strength of not only our forward convention calendar, but the increased visitation to Las Vegas as a whole and the strong airline passenger growth, as well as the projected additional airline capacity coming into the marketplace. This dynamic, along with the implementation of our Profit Growth Plan and our development pipeline, we believe, will allow us to grow our business and outperform in the markets in which we operate. And to be clear, this plan sits on top of our company and does not mean we have lost focus on evaluating all of our strategic options. And in fact, our board and management teams have been looking at this aggressively. And it remains clear that there is a significant value gap between how the market values our assets and what we believe they're worth. And as you know, we've been reviewing this phenomenon for over a year with the added brainpower of our external advisers, legal tax financials. We see various great strategic options for our business going forward. We have a benefit of having a broad portfolio of properties and brands in many markets, much more than most. And that is an advantage that creates multiple options for us. It also creates an obligation as we need to take the appropriate time to thoroughly vet all of these opportunities. And of course, this includes various real estate structures and we need to narrow the field in terms of what is best to continue to maximize short, medium and long-term sustainable value to our shareholders. And I'm pleased to say we're getting much closer to that decision and we'll be able to provide our conclusions by the end of the year, if not, sooner. I think we have the right advisors in place, the proper internal focus and brainpower, and we will determine the best course of action for all of our constituents. And with that, operator, I'd like to turn it over. So, we can move into Q&A.

Thank you, sir. We will now begin the question-and-answer session. And our first question comes from Joe Greff of JPMorgan. Please go ahead.

Good morning, everybody. Good evening to you, Grant. Not surprisingly, I have a bunch of questions, Jim, related to your Profit Growth Plan. One, can you talk about the $300 million that I know was over a period of time, can you clarify how much of that is operating expense related versus revenue related, and then how much of the $250 million that you said relates to wholly-owned relates to the Las Vegas Strip. And I have a couple of follow-ups. James Joseph Murren - Chairman & Chief Executive Officer: Joe, I'll tackle that, and then I'll turn it over to Corey or Chris, if you want to correct me or add to it. First, I want to stress the complexity of this plan. We focused on this last year with the idea of not looking for quick fixes or one-time gains. That would be a mistake and detrimental to our business going forward. So, it was the effort of literally hundreds, Joe, of senior managers here that have engaged in this process; and of course, as I said, months of work and hundreds of ideas were evaluated, confirmed for the design and the planning of it. We devised implementation plans for the ones that we've added and approved; and, as importantly, devised a tracking plan, so we can mark-to-market our progress. A lot of what we're doing requires a change to the way the industry has always conducted practices in operations. So, that requires significant change management. So, we've worked on that internally. We brought an outside help to help us on that, and we've also benchmarked against companies in other industries. That's where the outside consultants have really helped us. So, sustainable change, not quick one-time gains. Within the Profit Growth Plan itself, I would say about a third of it is revenue uplift and about two-thirds would be to change the way we're doing business to reduce the cost of doing business with the overarching focus that it will not hurt; but in fact, help the guest experience by empowering our employees more to be able to interact with guests and do less drudgery of day-to-day analytics and bureaucracy. So, one – I think that's kind of a mix. Now, in terms of Las Vegas versus regionals, just by the scope and scale of our Las Vegas resorts versus regionals, the majority of it is obviously on the strip. So, if you're looking at the $250 million number that I gave you, I'd say about $225 million of it is here in Las Vegas and another $25 million spread between our regional properties.

Great. And just so I kind of understand this, of the two-thirds that is related to how you do business and as a means to reduce your operating expenses, and you mentioned a few times before that this is incremental, so all things being equal, if revenues are flat, we would expect the OpEx reductions to result in higher margins. So, even what's characterized as reducing operating expenses and not revenue related, you would still expect to see the margins benefit by this like amount. James Joseph Murren - Chairman & Chief Executive Officer: That's correct. And also, to emphasize the point, this is on top of any other growth that we expect to see in our markets. And we are quite constructive on the Las Vegas market from a macro perspective. So, we have sized this, we have evaluated it, and we viewed it as a margin growth plan as well as a profit plan specific to, in addition to, our incremental growth. And let me make another point on that. We undertook a significant cost reduction plan back in 2008 and 2009, when we had to in a crisis situation. And to just remind people of that point and why we have not lost focus on this is our FTEs today are still down 15% from the time of where they were in 2007. So, if this is not a major FTE reduction plan, they're already down and have been down for years. And as you know, we've been improving our margins since 2010. And so, the Profit Growth Plan was initiated not for that purpose, but under the belief that we can do better in a variety of significant business processes based on our analysis of best-in-class companies in other industries. And we took this right to the top at our board level last year and have been engaging our board ever since. And so, I just want to make that clear that this is separate from and additive to the work around not only our operating performance and the strategic initiatives we have under way.

And Joe, this is Corey. There are some labor opportunities including in centralizing some areas that we haven't quite centralized yet that we think there's not only tremendous opportunity on labor side, but also better product coming out of that group. We also think that there's some labor savings on forecasting and scheduling using our technology from that perspective also.

Great. Then I have kind of two quick follow-ups on this. How do you see the improvements pacing between what you started last month and by the end of 2017, how much do you think you get in the first six months, first year, first year-and-a-half? And then following up on that, will this profit improvement be reinvested in the business, be used to pay down debt? Where does that incremental free cash flow from this go? Thank you. James Joseph Murren - Chairman & Chief Executive Officer: Yeah. So, we're going to give you a more precise number on that next quarter, Joe. But imagine that many of these initiatives, it's the rule of big numbers. So, a very big majority of the profit growth will come from a handful of really important strong initiatives. Those were the ones we're tackling first. So, we've honed it down and prioritized the different projects. Each project has a project leader, by the way, throughout the company. We've taken property Presidents and significant corporate people, made them the team leader on these different projects. They report directly to Chris Nordling who is riding herd over this entire project. And you can imagine, we want to get to the big ones first. And so, they'll be rolled out this year. The impact of the big ones will be felt – the majority, obviously, will be felt in 2016. And as we roll out some of the ones that take longer to set up, because of systems, because of training and education, that's why we need about 14 months to 18 months to fully deploy this and why I gave you a year-end 2016 target date to get the full impact in 2017. Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: And Joe, to answer your question around use of proceeds, so to speak, the goal is to continue and the focus continues to be on reducing leverage and improving the balance sheet. So it's our intent to continue paying down debt with these incremental free cash flow dollars.

Great. That's all for me. Thank you.

And our next question comes from Harry Curtis of Nomura. Please go ahead.

Hi. Just a quick follow-up. The $300 million, Jim, does that also factor in the impact of inflation, just basic lift in your overall costs or is that a number that by the time we get to 2017 really should be flowing through the income statement? James Joseph Murren - Chairman & Chief Executive Officer: It should be flowing through the income statement and we'll be tracking this and reporting on a quarterly basis from the next quarter on.

Okay. And then, Jim, just following up on the strategic options. There's been some discussion of The Mirage being on the market. Can you talk about whether or not it's actually on the market? And basically, what I'm trying to get at is the Pinnacle assets, the implied multiple on those is like 30% higher than what yours are being valued at. So my question is, is the thinking that you'll establish kind of a benchmark in Vegas of selling, perhaps, one asset and maybe the rest of the assets lift? Whatever you can give in terms of which way you're headed would be helpful. James Joseph Murren - Chairman & Chief Executive Officer: Sure, Harry. The Mirage is not on the market. The Mirage is an outstanding property with tremendous employees that we covet and respect dearly. We don't put properties on the market. That said, we don't put a for-sale sign out on any of our resorts. We have bought and sold properties and companies over the last 20 years and the last thing we would do is put a for-sale sign on any property. That said, I'd make a couple of points that I agree with you, number one. The virtue of not selling any properties, particularly on the strip over the last couple of years has been clearly vindicated by the growth of the asset values since that time. And I would posit that gaming assets have increased 30% to 50% just in the last year and year-and-a-half alone. So when we evaluate asset sales or asset purchases, we look at the macro environment, what level is the cash flows in the case of properties we own we're achieving, where we believe those properties will get to and we look at valuations. And we have been rewarded for not selling anything in the past, clearly given the market valuations not only of the related mark-up properties, but the Cosmopolitan and Tropicana or the Riviera and other examples. And an asset sale of any significance needs to be carefully weighed against real estate structures. If in fact, an asset is a valuable potential REIT candidate or a part of a portfolio of REIT properties, you'd have to take that into account before you determined what to do with the property. So I think that this all will be more clear to everyone including everyone on the phone by the end of this year, because we have – Dan and I and the team have made this a priority to come to a conclusion to narrow the field of options strategically as we promise our investors earlier this year come up with the best possible structure for the company, and we have the luxury of shooting for perfection in terms of a structure because we don't have to decide tomorrow. And the fact that we have a significant amount of external advisors on this for over a year. And we have great tax, legal and finance people internally, I'm confident we're going to come to the best solution for the shareholders for the medium and long-term. So in answer to the question, I saw the news report, too. I tend not to get my news from those sources. But I could tell you that there is tremendous amount of interest for Las Vegas real estate. We obviously own the best real estate in Las Vegas. Therefore, we're getting the spotlight from potential buyers. Dan and I meet with anybody that's qualified and have for years. And we'll have more to report on our corporate structure going forward, but to be clear, The Mirage is not being actively marketed at all.

Okay. So just a final thought; it may be repetitive. But from the perspective of the valuation gap that we perceived, you are highly confident that that's going to close. James Joseph Murren - Chairman & Chief Executive Officer: I am highly confident that it's going to close.

Excellent. Thank you. James Joseph Murren - Chairman & Chief Executive Officer: Thank you.

And our next question comes from Felicia Hendrix of Barclays. Please go ahead.

Hi. Thank you. Just kind of moving on to your results in the quarter. Jim and Dan, the flow-through and your performance is certainly impressive and your optimistic outlook is definitely great to hear. Just wondering in the second quarter, if you could help us understand just how much of your performance benefited from the Mayweather-Pacquiao fight, and then how much of it is sustainable. And also, how should – given the Profit Growth Plan, how should we think about your flow-through goals going forward? Does that increase the 50%? Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Well, I'll start with the last one there, Felicia. This is Dan. We're focused on the margin side. I mean, the whole concept of flow-through is a difficult one, and I'll highlight an example. We did benefit from the Mayweather fight, which is an outstanding event for the weekend. And a part of the accounting for the Mayweather fight and some of the activities around the Mayweather fight actually impacted our flow-through. And so, it actually negatively impacted, because of the accounting, flow-through by four percentage points to five percentage points in the quarter. And so, we're not going to run the business because of flow-through, because that was some pretty profitable business to be had over that weekend. And so, again, for us, we're focused on margin improvement. And as Jim pointed out earlier, our goal is to get this company back to where it once was in terms of that 30% EBITDA property margin level. And so, we'll continue to kind of stay focused. It was a great quarter. The fight did have an impact on our operations across the board. Whether you're looking at food and beverage, because of all the events we hosted in our buildings, whether you're looking at the hotel ADR, which probably benefited anywhere from a half to a full percentage point in terms of our REVPAR growth in the quarter, it did have an impact in the quarter overall. And that's not to say that we don't have other events or other opportunities going forward. There'll be more fights, there'll be more concerts and more events to continue to drive that traffic and those volumes into the building. James Joseph Murren - Chairman & Chief Executive Officer: Yeah. And maybe, I can add, Dan. It doesn't sound intuitively obvious that that fight hurt flow-through in that sense. But, the reason why it did is we hosted several great pay-per-view events in our properties. From an accounting perspective, I don't think it makes sense, but I'm not an accountant – we have to book 100% of that revenue. We don't receive that revenue, but we have to book 100% of the revenue and the expense. So yes, having the parties themselves were very effective, had great play, a lot of people in town, but from a purely accounting perspective, it hurt flow-through by 400 basis points. Now, the margin will be the key as Dan said, and we're going to focus on that and we think we're going to get to our target and we'll be able to therefore hopefully improve flow-through just by coincidence, but it's not going to be a focus of the company.

Okay. That's really helpful. Thanks. And then just switching gears; Grant, hopefully you're still with us. Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: We hope so, too.

I guess we've started to see some stabilization on the mass side. Obviously, the question is what does that mean going forward, how are things going to go? I know no one has a crystal ball, but just wondering how you think this all plays into next year, and given some government policy changes, the transit visas and now maybe some less optimistic commentary about the smoking ban recently, I'm just wondering when you think about 2016, are you seeing it was more of a share shifting game, or do you see the market growing as you kind of try to plan for your property? Grant R. Bowie - Chief Executive Officer & Executive Director, MGM China Holdings Ltd.: I think, obviously, there's quite a bit of capacity coming into the market. So clearly, we all need to drive for growth and let's hope that with some stabilization we'll get that. But I think what's really critical – and it's not just similar to the conversation that Jim just gone through, we really now need to look at process reengineering and everything we are doing in terms of opening Cotai is taking advantage to try and lever those opportunities for both this property in Cotai. So, I guess until the – some of policy changes are actually effective because we can't – clearly, we can't affect those. A real lot of focus going into making sure that our process engineering is going well. And if we get the growth that we'd all like to see, that should bode well for the performance and how much we can pull down. And so, I don't really think there's a lot of differences between the business initiatives that are going on in Las Vegas and what we really need to do here.

And just as a follow-up for you, Grant, when you think about, perhaps, some of – just given what's going on in the environment now, perhaps, some inflated FTEs relative to where you would like that to be in a perfect world and then as you think about what you need at your new property, is there some kind of FTE savings, if you will, as you think about opening that new property? Can you talk a little bit about that? Grant R. Bowie - Chief Executive Officer & Executive Director, MGM China Holdings Ltd.: Absolutely. And I think that's what I mean about process reengineering. We are already adopting the shared service strategies. We are consolidating a lot of that oversight and strategic and management support. And we think that's very important. And we've already seen some really significant performance improvements over the last two quarters in terms of FTE management and that's an indicator of the quality of analytics that we've now got in place. So, it's both structural but it's also executional. You can have all the ideas you like, but you're going to make sure they're working. And these difficult times are actually giving us that opportunity to really test out that logic side. Yes, we are looking for a significant productivity and performance improvement. For now, yes, because it's good from a cost space, but also because I think we also understand we're going to be challenged by the availability of labor in the market and particularly the skills in the market, which we always know is an issue. But, we're really responding to what we know is happening. And if it's a silver lining to these difficult times, it's a little bit like 2008-2009, where the industry responded and reacted accordingly and it really gave us the margin shift that frankly the industry has been able to retain.

Okay. Thanks.

And our next question comes from Carlo Santarelli of Deutsche Bank. Please go ahead.

Good morning, everyone. Jim, your comments earlier as it pertains to your assets and the concept of the REIT. I have a two-part question. First off is, how do you guys contemplate within the context of the many iterations you might be looking at? How do you think about a sale-leaseback type of structure, given your cost of capital today? And then conversely, as you think about the development projects that you currently have, how could or how do they kind of fit into the mindset of some of your thinking around how you could potentially structure that? James Joseph Murren - Chairman & Chief Executive Officer: Sure. I don't want to get too much into our thinking right now, if you don't mind. But we're not opposed to the structure, if that helps on that point without getting too detailed on that. But I will say, maybe if you'll look at – help you a little bit more on our development projects. It's clear to us, at least, that the two projects that we have underway right now in the United States are going to be very successful. Most importantly, because of the timing of it and the scale, the National Harbor project in Maryland, it opens up at the end of next year followed by Springfield. Clearly, in light of our views of not only the size of those two markets for us, but also the durability and consistency and predictability of the cash flows, they make great candidates as to regional properties in general for that type of structure. Witness our Detroit property which, for year after year, has produced outstanding financial results. We're not also opposed to the concept in Las Vegas for that matter. And if you were to have the view, you might, that we have that Las Vegas is going to continue to grow and then MGM Resorts will do better than the market, because of the significant capital that we are willing to and have been investing to improve our properties, then you would have confidence of the levels of cash flows that could also support, reach sale-leaseback structures. So, we are in a position of, we think, of unique strength in the sense of having strong assets, great brands, great predictability of cash flows in our regionals, growing cash flows in our Las Vegas properties, and the benefit have been working on something with the luxury of thought or analysis over the past year, which is why, for the first time, we're willing to say that we're months away from coming up with a conclusion to our board. And then, once we have a conclusion with our board, we'll be sharing it with everyone else.

Great. Thank you, Jim. That's helpful. And then, Dan, if I can just ask one follow-up. With respect to the 6% REVPAR guidance for the 3Q, do you expect a similar skew between the luxury and non-luxury assets in the 3Q similar to kind of what we saw in the 2Q? Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Yeah, I think that's fair. I think you're seeing a nice pickup in terms of those non-luxury properties and their ability, particularly in the retail and the leisure space and segments to gain a little bit of traction in terms of their ability to kind of price those rooms up. So, I think that's a fair assessment. James Joseph Murren - Chairman & Chief Executive Officer: And maybe, Dan, I'd also add that because we're seeing great growth in end-of-year, before-the-year convention business. And we see that throughout the year, by the way, not just in the third quarter and into the fourth quarter and into next year, the core properties really benefit from that phenomenon as they have been for the last couple of years. And we think there's significant upside potential in the core properties side in the quarter. We think there's a lot more to come because of the macro environment on the convention side.

And then, just sorry, if I could, one follow-up, the old adage of $5 of rate is $50 million of EBITDA, is that still appropriate in the current construct? Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: I think that's fair, Carlo.

Thank you, guys.

Our next question comes from Shaun Kelley from Bank of America Merrill Lynch. Please go ahead.

Hey. Good morning, guys, and thanks for taking my questions. So, just sort of turn to the Profit Growth Plan, Jim, I think you did a great job of laying everything out in sort of mix and dollars and then you sort of alluded to this 30% margin target, and I'm curious and thinking about it in margin percentage terms, that 30% number that you mentioned is not across the portfolio overall and how would you think about that number being in sort of Las Vegas versus some of the regional properties. Can it be at similar levels between those two? We don't need too much granularity, but any direction would help? James Joseph Murren - Chairman & Chief Executive Officer: Sure. There's a lot of similarity between our wholly-owned Las Vegas properties and our regionals in terms of margins. And so, I think you'd see it across the portfolio. All properties, we think, will benefit from the plan, all of the ones that we have. In the case of the Las Vegas properties, clearly, some of the great initiatives will be company-wide and not property-specific. So, I don't think we gave a couple of examples – I'll give you a couple of examples. So, for example, in purchasing, we've taken a while on this, but we've created a consistent set of specs for a variety of our products including all of our in-room amenities, for example, our towels and linens, for so many different towels and linens that we have... Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Eight different versions. James Joseph Murren - Chairman & Chief Executive Officer: Eight different versions. So, we have gotten together as an organization and developed the optimum spec for our luxury properties, different specs for our core properties and tremendously reduce the amount of waste that we have and cost in terms of procuring, cleaning, maintaining our linens, towels. On the F&B side, same kind of process. We've done this over the years with various degrees of success, but we really drilled into this starting last year and got really aggressive on how do we not only produce the best products for our guests and keep with the trends of today of farm-to-table organic, local and create the best possible food product for our guests and for our employees, but do a much better job leveraging our scale, going directly to farmers and ranchers, going directly to the source. Cutting out some of the middlemen, we can negotiate far better rates and terms, if we use our scale. In the area of our employees, we have been thoughtful on this. This isn't an employee reduction plan at all. This is about streamlining the layers of management that we have, that any gaming company has within our organizational structure and increasing the span of responsibility of the employees themselves. We've learned a lot and I have to give a special thank you to a couple companies that have helped us more recently. FedEx was terrific as an example. Coca-Cola has been wonderful in talking to us. And so, we haven't just looked at the hospitality industry, although we have, obviously. We've reached out into organizations that has embarked on improvement plans whatever they have in the column over the last several years and picked up some best practices. And we've enhanced them. I think we've been working on it for so long and made it very MGM-specific. So, I think you'll see a lot of specific of what – we will give you a lot of specifics around these plans on a going-forward basis. But we've been excited about this day, because it's the culmination of almost a year of work internally and externally to come up with a robust number that we expect to achieve.

Great. Really appreciate all that detail. And then, the second – or my follow-up question would be to hit on the strategic alternatives. So you've kind of talked about Mirage and you've talked about real estate. But one other area that I think makes a lot of sense for you guys, is – and where there's a lot of opportunities, joint ventures, and in the quarter, I believe, you guys exited and were able to sell some of your joint venture assets in Reno. Can you talk a little bit about some of the opportunity you see in that and how do you think either Wall Street or the world sort of views the JVs and what some of your – what may be at least on the plate as it relates to the JV portfolio? James Joseph Murren - Chairman & Chief Executive Officer: Sure. First, the philosophy of what we have contracted thus far. Up in Reno, we have a tremendous history and affection for the Carano family. This was not an action we took lightly and likely would not have been an action we would have undertaken at all, if not for our confidence in the buyer, because of the overarching concern we have for – of the employees in the communities themself. So, these aren't actions you undertake lightly. We, as you know, have sold properties, many properties over the years, thinking of Golden Nugget, the Primm properties, Laughlin. But, we're very thoughtful on that. We think it's important. As it relates to the existing joint ventures, we have not many left. Obviously, the largest is CityCenter itself. And we've been working with our equity partners on ways to return cash to the shareholders. We've already done that once. We expect to continue to do it and we do have some ideas as relates to monetizing some of the CityCenter assets going forward. For those of you who are out here or going to visit soon, you'll note, which is happy news for us that Bobby Baldwin has finished deconstructing the nightmare that was the Harmon. And that allows us to spend really constructive time to develop ideas of what would maximize that two-plus acres parcel run on the corner of the strip. And clearly, though we're not ready to explain all the ideas that we have, you'd have to believe that an expansion of Crystals is the overarching use of that property and there could be others. Crystals itself is an extraordinary valuable asset. We've discussed it on prior calls and don't think that we've lost sight of that. We believe that not only it's more valuable today than it was even last quarter, but we believe with the growth plan, it would be more valuable still going forward. That and other non-gaming assets are certainly open to discussion and we are having that discussion at the CityCenter board level. As it relates to other joint ventures, they're not a focus of ours right now in terms of let the ultimate disposition, whether we're buyers or sellers of those assets because we've got, I think, bigger issues, bigger opportunities to deal with before we hit some of the smaller JVs.

Great. Thank you.

And our next question comes from Chris Jones of Union Gaming. Please go ahead.

Hi, great. Thank you. Two quick questions, first, can you just talk a little bit about your casino revenues on the Vegas Strip obviously outperforming into broader market of Nevada, Las Vegas Strip. And maybe even talk a little bit about what drove that, where the strength was coming from even despite the fact some headwinds from the Chinese, the baccarat customer and if really the regional strategy, how much of that played into that as well? That's my first question. The second one is are there any sort of overarching or overall macro assumptions that you can provide around your profit improvement and then over the next couple of years that we can sort of apply to our models as well? Thank you. Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Hey, Chris. This is Dan. I'll start and I'm sure Bill and Corey will chime in as well. I think when we look at kind of our second quarter performance, it was really strength from our domestic side of the business. As you point out, the China source business is still down year-over-year, given what's going on in that part of the world. Clearly, the events we host are more domestic-driven for the most part, whether it's the Mayweather fight or Rock in Rio which was spread over two weekends and was a great event. I think it brought some 170,000 folks over those two weekends into town. Those clearly were helpful. So when you look at our table games and our slot business ex-baccarat on the table game side, we continue to gain share as we look at the programs and the assets that we have in the market and what we're doing to drive that business from the entertainment side as well. So largely domestic in the quarter. We are seeing continued weakness in the China-sourced play. That's offset by some other pickup in other Asian markets that we're seeing, not offsetting them entirely, but we are seeing a pickup in some other markets in Asia that has benefited the softness out of China.

Yeah. And I would add, it was such a good domestic quarter to the best one. We track our quarters since 2007. It was the best quarter we have from a national marketing side ever from that tracking perspective. And the Mayweather fight was interesting because it did attract people from all over the world and people that we know very well and people we haven't seen in a while. But the quality of events besides Mayweather, the Eagles, the Bette Midlers, all those events attract that domestic customer. James Joseph Murren - Chairman & Chief Executive Officer: Yeah. Billboard Awards, I think we had too, Corey. And we had a great July by the way and that's not a typical month for international customers. So, we're off to a good start here in the third quarter, and I would have to say that's really domestically driven.

Great. Thank you. Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Thanks, Chris. Maybe we'll take one more question, operator.

Absolutely. Our final question comes from Thomas Allen of Morgan Stanley. Please go ahead. Thomas G. Allen - Morgan Stanley & Co. LLC: Hi, guys. Well, I'm trying to fit one in here, just on the 3Q REVPAR guidance. We've been hearing from investors from the past few weeks or months just about a forward rate surveys looking pretty weak especially during the summer. So, just wondering why you guys maybe bucking the trend on those rates surveys and just making sure that you're not relying too much in the quarter for the quarter business or maybe a big pickup in September or anything like that? Thanks. Daniel J. D'Arrigo - Chief Financial Officer, Treasurer & Executive VP: Thomas, I'll start. And I'm sure others will chime in. I think the strength that we're seeing is underwritten really by the convention business and it's not just what we're hoping that we book. It's actually things that we are booking. We've seen a tremendous pickup going into the back half of the year. In terms of that in the year, particularly as certain segments of the convention business whether you're looking at tech companies or pharmaceutical companies, we've had a nice pickup and I think that's a testament to the folks operating these buildings and the assets themselves and our ability to grow that and gain that market share, not just here in Las Vegas, but in the competitive, more national set as we're going up against multiple cities and multiple venues that we're competing against for that business. They're doing an outstanding job in securing and winning that business, and it's really the toolkit we have. I mean, when you look at the assets we have from top to bottom throughout the organization, the price points we can offer, the venues we can give and – I don't use arenas on Tuesday nights, but if a tech company wants to do a sponsored show at Mandalay Events Center or MGM Grand on a Tuesday night, I've got that competitive advantage that others in this market or other markets don't have. So, I think this is a true testament of the diversity of our product and what we're capable to do in the marketplace. We're also seeing a nice pickup going into the third quarter and the back half of the year in our retail and our leisure business. And as you all know, the third quarter is largely leisure and retail-focused. So, with the backdrop of the strong convention calendar and a nice pickup in our retail and leisure business, we feel highly confident in what we'll be able to achieve in the back half of the year. James Joseph Murren - Chairman & Chief Executive Officer: Yeah. Maybe I would add, Dan – I'm sorry, Bill. Would you – go ahead.

Yeah. Just maybe one comment, Tom. You may recall two years ago, we put in a fairly robust structure of regional sales organization in offices, and frankly, it's paying dividends. I mean, we have stretched ourselves out across the country much like a Marriott or a Star would, and we're focusing on the right industries and the right places. And we've got people out there approaching that business every day, and we think it's paying off. James Joseph Murren - Chairman & Chief Executive Officer: Yeah. And then, I think we mentioned it, but when you're out, please take a look at the convention extension at Mandalay. That's really important. And before we got the board to approve the capital for that, we had Mike Dominguez and the team go out and solicit levels of interest and the response was strong, but the reality has been better than our initial expectations and hopes. And my last point, because I used to do room rate surveys for many years myself, that I think directionally generally, they're very good tools except for the third quarter. Third quarter is the toughest quarter really to gauge what's happening in Las Vegas, because of the seasonality of the third quarter and the summer months. So, we feel confident in our REVPAR guidance in the third quarter. I think we hit our REVPAR guidance in just about every quarter in the last three years. So, we don't take that guidance lightly. We see a really nice REVPAR growth in the fourth quarter as well, because of that convention business that Dan, Corey, and Bill talked about. And I think that we're off to a really good start for next year. James Joseph Murren - Chairman & Chief Executive Officer: So, with that, I think we've taken everyone's allotted time. Thank you all very much for participating in the call; and as always, we're here to answer any questions that you have. Thank you.

And thank you, sir. Today's conference has now concluded and we thank you all for attending today's presentation. You may now disconnect your lines.