Good afternoon, and welcome to the MGM Resorts International First Quarter 2020 Earnings Conference Call.

Joining the call from the company today are Bill Hornbuckle, Acting Chief Executive Officer and President; Corey Sanders, Treasurer and Chief Financial Officer; Grant Bowie, CEO and Executive Director of MGM China Holdings Limited; and Aaron Fischer, Chief Strategy Officer. Participants are in a listen-only mode.

After the company’s remarks, there will be a question-and-answer session. In fairness to all participants, please limit yourself to one question and one follow-up. Please note this conference is being recorded. Now, I would like to turn the conference over to Aaron Fischer. Please go ahead..

Good afternoon, and welcome to the MGM Resorts International first quarter 2020 earnings call. This call is being broadcast live on the Internet at investors.mgmresorts.com, and we’ve also furnished our press release on Form 8-K to the SEC.

On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities laws. Actual results may differ materially from those contemplated in these statements.

Additional information concerning factors that could cause actual results to materially differ from these forward-looking statements is contained in today’s press release in our filings with the SEC. Except as required by law, we undertake no obligation to update these statements as a result of new information or otherwise.

During the call, we will also discuss non-GAAP financial measures in talking about our performance. You can find the reconciliation to GAAP financial measures in our press release and investor presentation, which are available on our website. Finally, this presentation is being recorded. I’ll now turn it over to Bill Hornbuckle..

to simplify our operating model, maintain a commitment to strict capital discipline, and bringing intense focus on executing our current initiatives such as MGM 2020. Let me touch on a few of these areas. We are significantly reducing our operating expenses by cutting expenses across all properties and corporate departments.

This is crucial to achieving long-term recovery. We moved quickly to reduce operating costs through furloughs and freezing positions, as well as eliminating nonessential expenditures.

We also initiate a program to allow senior executives and directors to receive 2020 compensation in the form of restricted stock units and while operating efficiently and effectively with an eye towards improving margins has been a core philosophy we are taking more aggressive actions to further adjust our operating model in response to the current environment.

We believe this is a very opportunistic moment in time to operate and to take a look at all things that we’ve been doing historically. We’re carefully also managing our cash to protect the company's financial position. We have deferred, reduced our expected 2020 domestic capital expenditures by at least 50% or approximately 200 million.

We have announced that the board reduced our dividend to $0.01 per share annually resulting in quarterly savings of approximately 73 million and importantly we will continue to meet our rental obligations to MGP and Blackstone.

We also have strengthened our liquidity position in addition to the 4.6 billion of cash on our domestic balance sheet today and adjusted for the bond offering, MGP has also agreed to redeem 1.4 billion of our OP units in cash should we elect to have them redeemed.

We have additional liquidity levers including our remaining stake in MGP, our 50% stake in CityCenter and the ROFO asset MGM China. We also have a 56% stake in MGM China although to be clear, we want to continue to and – we continue to believe in the future of Macau and look forward to continuing to invest in our presence there.

We have no debt maturing prior to 2022 and just yesterday closed on our credit agreement and then providing additional flexibility on our financial covenants. MGM China is also well-positioned with our 800 million of liquidity and earlier this month it further amended its credit agreement to provide for additional financial covenant relief as well.

MGP has also drawn down on its revolver for additional liquidity. We are also continuing to advance our long-term strategic initiatives. We will drive progress in MGM 2020 by continuing to reduce expenses and pursue capital projects that will allow for higher margins and returns once our business fully recovers.

We will continue to execute on our real estate strategy over time and we continue to invest in growth opportunities such as Japan, Macau, sports betting and online gaming. And in particular, I want to emphasize we remain fully committed to our partnership with Oryx to develop a world-class integrated resort in Osaka.

Let me spend about a moment on Macau. I was recently elected to be Chairman of MGM China alongside Pansy Ho as Co-Chair. I am personally just as excited today about Macau as I was 20 years ago when I first visited. We believe the market will rebound rapidly with the Visa scheme and other restriction, once other restrictions on loosened.

MGM's China – our properties are currently incurring cash operating expenses of approximately 1.5 million per day, which is an excessive amount being earned obviously by those properties.

While we are currently focused on managing the current situation in driving efficiencies within our current footprint, we will continue to invest in our properties and expand our offerings, especially on non-gaming with more sweets and more room product.

I look forward to working with the new Chief Executive in Macau and this administration and to support the strategies for further development in Macau.

In summary, we remain confident in the long-term outlook of our business with a strong start of the year, which was encouraging and points to the success of a number of initiatives such as MGM 2020 that we had recently implemented. In Las Vegas, our margins were back over 30%.

We have leading assets in most of our markets, which will further support a healthy recover to our business. We will continue to simplify the way we operate and we focus resources into areas that create the most value for our shareholders.

On a more personal note to wrap up, as someone with four decades of experience in this industry, I’m honored for the opportunity to lead a great company like MGM Resorts.

The efforts I’ve outlined today speak to my intent of being clear and focused by being disciplined in all things and to striving to be transparent in my leadership of this organization. Hopefully, they will become the hallmarks of what I want to stand for and what this company stands for going forward.

While there is no proven playbook for the current challenges we face, I have faith in our deep operating experience, our expertise in safely managing public gatherings, the strength of our long-term plan, and our tenure in this business.

And more than that, I have a tremendous amount of confidence that the men and women of MGM Resorts and our partners around the world will rise to this challenge as they have on so many occasions before. I look forward to the day soon, and we will say, once again let’s entertain the world. Thank you, and with that I’ll open it up for questions..

Thank you. [Operator Instructions] And our first question today will come from Joe Greff with JPMorgan. Please go ahead..

Good afternoon everybody. Good afternoon Bill. I was going to start of Bill with you and ask specifically you what you might be doing differently then say Jim did in his tenure, but I kind of thought you laid it out pretty eloquently. So, I will not take that as one of my two questions.

So, starting with question number one, and I know you talked about it, it’s premature to talk about the timing of when you can reopen your domestic properties, and so, just – just maybe can you talk about how you think about how you will start to phase in properties particularly on the Las Vegas Strip? I think before maybe on CNBC, you said that maybe you would start with properties that are not on – that at the higher price point like Excalibur, nor would it be those properties have traditionally hosted a large percentage of international visitors.

If the Las Vegas Strip opens for the summer how many properties by the end of this year realistically optimally do you anticipate could be opened by the end of this year? How many by the middle of next year, you know how much of your views will be in reaction to airline capacity coming back? And how much of it is depended on the group business?.

Thank you, Joe. I appreciate backing of the first question and focusing on a simple one. So, let me – I have got to this maybe in three buckets and obviously Corey can and will chime in here.

Macau speaks for itself and Grant is on the phone to the extent at the end of this you want to ask some additional questions, but we are hopeful that early this summer given all the indicators and things we see in China that that market will begin to open up.

Guangdong province of note, which is critical to us is feeling better, although it goes back and forth as you know, but the order of magnitude of case loads there are significantly down, and we feel better about what’s happening and we think there is some opportunity there in early summer.

The regional properties obviously like I said in my prepared comments are going to be – as all of these places are going to be predicated on what the government says. What Governors are saying is at least the baseline mandate and our regulators.

We do see Mississippi first, obviously we see places like Empire potentially off to later in the year, time to be determined.

The good news about our regionals is their drive markets with the exception of BAW, which does have some fly capacity given the 800 keys there and the programs that we run, but we see those potentially Mississippi, potentially Maryland down the road of note and then those begin to rollout.

You’ve all seen what’s going on Michigan, so obviously we’re in the midst of all of that in Detroit. So, we will take one step at a time. More specific to your question in Las Vegas we have of you and don't know exactly when, the Governor has been speaking almost daily now on when to open.

He like most governors is looking at a three-phased process trying to open up small businesses things like golf courses et cetera, understand what happens in those – with the community in that respect. Then go to the next bucket.

In some areas, we are in that next bucket, Nevada of note, and in some areas potentially like Maryland we may be in the third bucket of activity, but in there it’s believed that gaming will open universally meaning all of gaming in Southern Nevada will have a chance to open same time when it’s deemed safe. Again, we just don't know.

We’re probably looking at two or three offerings initially. Obviously, something of a value set. We tend to lean into New York. New York because it’s one of our simpler places to run, it’s 2000 rooms. We’re probably looking at Bellagio at the other end.

I'm wanting to ensure, I'm sure the competitors set down the street is going to open because they only have one in the context of when in sands. So, want to be in the high-end business.

And then from there we’re talking about what other properties should open if any at that point in time and, you know we’ll go slow, we will be responsive and responsible, we will look to the economics in some of it. Most of these properties need to be between 30% and 50% to generate any kind of cash that is meaningful i.e.

meaning not going backwards from being closed. And so we're going to see how the market responds. You did mention the airlines; we were in a conversation last week with Southwest, its President and remaining of its leadership team. They are still bullish on Las Vegas. The interesting thing I think is the point-to-point carriers will come first.

And obviously the hub guys, the United, the Americans, the Deltas in the world have other challenges with hubs that may restrict some activity here, but Southwest feels relatively bullish.

They won't start here first, but I think over time you’ll see them focus on this market because as always in these circumstances, Las Vegas presents a great deal of value.

Corey, if you want to?.

I think you hit all the key points Bill. I mean, obviously safety is a key thing. We want to avoid any spikes and numbers and things like that. So, we will deal with it cautiously and in general a lot of it will be demand driven.

Just as a reminder, about 50% of the traffic coming into Las Vegas is from automobiles, and we do think there will be some pent up demand and as the opportunity comes about, we’ll definitely open up properties to maximize our cash flow..

Grant, anything to add on Macau? Grant?.

I think, Bill, I just reiterate again. Bill, thank you. I guess the challenge is that it's about opening up, as you've seen. The critical point for us is that, we expect that the volumes of traffic will be significantly restricted. We see that as actually somewhat of a positive, because by and large we think that the premium market will come back first.

That's obviously where we have that strength and that's what we're looking to. I think everybody probably also heard that Hong Kong has extended their quarantining requirements through June 7, that we do hope that within that time that there might be some adjustments with China and we're waiting just to get that information. So, we're very positive.

We're very comfortable that we're trying to manage as best we can, but most importantly, from our discussions with their customers, the demands there, the opportunity for them to travel is the only thing they're looking for. Thank you..

Great. That was my question to you Grant. You answer it. Thank you very much, guys..

Thanks, Joe..

Thank you..

Next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead..

Hi, Bill. Thank you for taking my question..

Hi, Carlo..

So, guys – you guys have spent the last several quarters, years actually kind of putting together a top down framework of how to run the business more efficiently and whatnot.

One of the questions I had was, as you sit from that perspective now, having consolidated your expense rationale and thinking along those lines, how much does that help you in an environment like this, where you're almost starting from a very low baseline firm expenses and the ability to kind of bring those expenses back on in a more kind of demand driven way?.

Yes. I'll kick it off and Corey. Look, I think it's been immensely valuable. If you recall, we actually started in 2016 with what do we call it, Corey? PGP, obviously, 2020, I became Chief Operating Officer last March or something along that lines.

And so our ability to understand, at – frankly, at most every level, whether it was corporate, centers of excellence, or the various properties, regions, how we were operating, what the things we were doing, why we were doing and what was really bringing value, we have a very clear lens on.

And so now as we think about re-launching in a post-COVID environment and the ramp it's going to take, we have another lens into that in terms of how we're going to structure the organization, and we have some work to do there, but we believe when it's all said and done, and we return back to a normal state, we're going to be a much more efficient organization focused on those things that are priority, those things that truly matter to driving the day-to-day customer experience in our business in all the places that we serve..

What I would add Carlo is, MGM 2020 really is less than a year old. And as we stood up the COEs and centralized components of it, we've evolved since then. This closing has allowed us to really rethink that. And we think there's opportunities to become even more efficient.

The other thing that MGM 2020 give us the discipline on is on our variable labor and staffing to business volume. So, we've become very disciplined, which is helping out tremendously in a time like this..

Great. Thank you, guys. And then if I could just one follow-up. Bill, you mentioned it earlier, obviously, that the $1.4 billion that's kind of available to you there. Clearly, with the balance sheet as its structured today and the more nimble paradigm that you guys are in that there is plenty of kind of runway with respect to liquidity.

Is the decision to kind of pull the string on that $1.4 billion more dependent on how this situation evolves six, nine months down the road? Or would you be advantageous in the event that you saw the valuation of that thought or fairly reflect kind of what you and myself included, think it’s worth?.

Carlo, it’s Corey. I'll take that. Look, I think the – based on the agreement we have with MGP, we really do have a long-dated option. We, as you mentioned, I think we feel really good about our liquidity position and it does give us – especially what we did last week, it gives us the ability to not be in any big rush.

When – we'll transact when we believe it's the right time to transact and the right point and would whatever is the most efficient manner in it for us. So, and just as a reminder, MGP is a pretty important stock for us. We have over $5 billion of value in MGP..

Understood. Thank you, guys..

Thank you, Carlo..

The next question comes from Stephen Grambling with Goldman Sachs. Please go ahead..

Thanks. I think in the opening remarks you mentioned still being committed to Japan.

Can you just provide an update on the milestones investors should be watching? How the investment timing and size may have evolved? Any color unexpected returns?.

Sure. What Japan like most places in the world is being impacted by COVID-19, it – I think literally as early as today, you may see Abe stick additional restrictions up to another 30 days is what has been rumored to be discussed.

I think the impact of that is, it will slow down, although, we are not definitively sure the RFP process as it currently sits in Osaka and we are ready for this. By the way, we have an RFP submission that is due end of July.

Our team has worked hard on this, as you know, we’re the lone standing applicant there, and we would submit, but I think what may happen is that the whole process gets pushed closer to the end of the year, which I think is appropriate and fine by us.

In terms of its scale, you see – in terms of other opportunities in Japan, Yokohama has expressed sincere interest is now working its way through its own process and time to tell whether others actually joined. We still see Asia as a huge build and is a huge upside for the company, and frankly, for the industry.

We're very bullish on Macau in the long run and we're absolutely bullish on Japan in the long run. You're still zone $10 billion investment. And the returns on that to be determined once we get through all the regs.

But they're significant and they would be significant to the company in its overall portfolio and how we balance our earnings as we look at everything that we have. And so, we remain bullish. I think it will get delayed and we're ready if it does not is really, I guess, my final point..

Great, thanks. And then my follow-up is related to Joe's earlier question. You had mentioned occupancies needing to be around, I think, it was 30% to 50% and generate meaningful cash flow.

Given the model has typically been run with very high occupancies on the strip, what are the biggest bottlenecks that you can tackle to help alleviate crowds, increase distance and maximize that cash flow as you think about different parts of either the property or the segment in business? Thanks?.

Yes. There's – and Corey help me with this. There's a couple different aspects to it. Obviously, getting air back and getting large group gatherings are critical to the ultimate and final recovery. We do believe because of drive-in traffic, which particularly spikes in the summer, that regionally we will see a substantial amount of drive-in.

I mean, there's obviously pent-up demand. You saw what happened in the beaches of California when they open for a weekend. I think they're going to close again, which is not what we want to do to be clear. But I think you'll see leisure demand. I think, you'll see drive traffic, and it'll push what happens from that perspective.

The casino has always been active. Our offer set that remains out there, people are still booking into the balance of this year and into next already. They're anxious. They have pent-up demand as well here and in Macau. They want to come back.

And so irrespective of large-scale events, I think, championship fight hosted with 15,000 people, the Casino segment is anxious to come back. Group, obviously, will be the last. I would tell you this on group as a way to think about it. We have lost a little less than half of our group business because of the pandemic.

Half of that has already rebooked over the next 12 months. And so if you think about it in macro, we're down about 25%, but the really encouraging thing there is that large group formats and particularly for our company tech business has come back.

And so, there's not a change of mindset around how people will come and gather into the future from the Microsoft's of the world who want to come back to this market and do it in a meaningful way. So, we're encouraged by that longer-term. And then ultimately, obviously, we have a partnership with AEG. We do a lot with Live Nation.

Getting back major events is really going to get down to the protocols that requires to host an event of that scale and time. I think that simply is going to probably be the last to cure and to heal.

Corey, you want to talk maybe the environment inside and the cost?.

I think, in general, we're going to be following a lot of protocols like many of our competitors are. We’ll have the supplies, the gear we'll need, the distancing we'll need, we're sizing that up right now on what that would mean is, how we open in all the jurisdictions. We should have a fairly good idea of that by the next time we talk.

The other area, I think where we're going to probably see some decent play, especially in Las Vegas at a property like Bellagio, or any of our high-end is the high-end casino customer. As Bill mentioned, we have been in contact with them and they were the last to leave when we closed down. I have a feeling some of them will be back the day we open.

So, that's positive, but I think the key for us to get our margins back up will be as that group business returns in what's strange is we still have quite a few rooms on the books for the back-half of the year. And as Bill mentioned, booking for next year has been very strong.

And in particular, in comparing it to where we were at the same time last year looking at 2019 and 2018, which is more apples-to-apples, which was our best year, by the way, in convention room nights. We have more rooms on the books now for 2021 than we do – we did for 2019 at the same time in 2018..

Great. Thank you so much..

The next question comes from Thomas Allen with Morgan Stanley. Please go ahead..

Hi, Corey, respecting your last comments, you're still working through this.

I'm just trying to figure out, when you do reopen these properties and they're going to be clear social distancing measures, like having to keep a space between slot machines, like, can you just give us a rough sense of like, what kind of percentage of positions you can get back online versus history? Will it be 30%, 50%, 70%, any rough sense in kind of the difference between Vegas and regional?.

We're still working on those numbers. We'll be able to give you some good ideas. I could tell you the regionals that will have more of an impact. The floors in Las Vegas were built 10, 15 years ago. And this is our chance to probably right size them with the proper distancing and positioning.

The regionals will take a little bit more effort, and we'll be able to talk more about it in the next quarter..

And Tom, at Park, MGM and at ARIA, we're – actually, we’re putting down in particularly two of those places, new casino carpet, now is a good time to do it. And so we're reconfiguring those floors with the space in mind for distancing. And so, the environment will feel a little different when people walk in from day one..

And the only other thing I would add is, some of these jurisdictions might have limits to number of people in the building. And if that would be the case, our floor format would be adjusted for that..

Helpful. Thank you.

And then, look, this may be a long shot, but you're in a lot better liquidity position than some of your peers, have you given any thought about going on the offense?.

It’s Bill. Yes, we've given, of course, you always give a thought. But look, we're going to stay very focused. We don't know how long this is going to take. We like the projects that ultimately, if we come out of this, we've defined sports betting, hopefully, an extension of a license and continuation in Macau, in Japan, very – on principle.

You never say, never; but that's not going to be our focus. And again, not knowing how long all of this takes and what it does do to our balance sheet look, right now, it's strong. We're up and operating and be stronger than it's ever been, I think, in the history of the company and many, many decades anyways.

And so, we are fortunate in that respect, but again, we just don't know..

Helpful. Thank you. Operator The next question will be from Shaun Kelley with Bank of America. Please go ahead..

Hi, good afternoon. Hi, Bill..

Hi, Shaun..

Just wanted to – you have a unique position on some of these larger scale group events, and Bill, I know you spent a lot of time in your – in some of your prior roles and some of these bigger sports relationships and whatnot.

Just kind of any insights may be there? I mean, obviously, you said the group piece, which isn't good anymore maybe convention, they take time to come back, but what are your thoughts specifically on some of the event like things? So, let's call it sports and some of the key entertainment pieces here.

Just what are you hearing? What are some of those vendors and the Live Nation of the world is saying at the moment? Could you just give us a little bit more color there? Because I think this is important to so many people....

Yes. I mean, obviously, this is coming from our perspective. So, I don't want speak for Live Nation or AEG, but I would say this.

As it relates to first entertainment here, we have a mindset that we will open some of our smaller showrooms and I'll give a simple example like Carrot Top or something that's small and intimate with a one person show can be open and relatively simplistically, we can provide the proper protections, et cetera.

Obviously, that begins to scale a little bit differently when you get to Cirque and then when you get to the big events, on the convention side, it's not easy, but remember, we're fortunate we have 3.5 million square feet of space in Las Vegas. And so our ability to stretch things out more than most, if not all, is unique. And so we can host an event.

And yes, it will be a bit of a space pig, but at least we'll be able to host the event. And so we can set up as we have with various meeting planners and already organizations, different protocols to how to do that. Until we get all the health and safety protocols, we're not going to be definitive, but we do have that unique capacity.

As it relates to sports and obviously, for us and you remember how we were talking about this before this started with the Raiders what we've seen with hockey, long-term Las Vegas will recover. Long-term, the Raiders stadium is in our backyard, but we may see a few games this year with our people.

A simple example, we were creating a large pre-game environment outside of Mandalay and Luxor, which can be pretty special, you walk over to the bridge and go to the game to be able to come back tailgate party. We put that on hold, because it's our general view that if it were fortunate enough to see real fans, it won't be 65,000.

And so we'll probably see stuff like that spring. We have been an ongoing dialogue with leagues and other sporting activities around televised-only events, I think boxing, MMA, NBA, NHL, et cetera, and we can host some of that.

We are working diligently with those to do that, but I think the idea that we're going to get 15,000 people in T-Mobile for a concert anytime this year is probably a stretch..

That's helpful. And then as my follow-up, and this one is a little bit technical, so my apologies, but just, I think in the covenant waiver that came through yesterday on some of the MGP shares were pledged as collateral for the credit facility.

And so I was just wondering if you could elaborate on what kind of restrictions that means for either the OP unit repurchase or specifically, maybe the ability to sell down MGP shares in the future?.

Yes. Shaun, it’s Corey. Yes, we did agree to pledge our OP units as collateral under our revolver credit facility. We did not agree to any restrictions on our ability to monetize the units, though, so for cash. So, we are not limited in our ability to pursue, for example, the cash redemption of up to $1.4 billion or future other sales.

There – in the amendment, it does provide that if we sell units under a certain level of falling below 30%, then incremental proceeds would have to be used to reduce the commitments as long as we're in this waiver period..

Great. Thanks for that, Corey..

The next question will come from Harry Curtis with Instinet. Please go ahead..

Hi, Bill. I wanted to ask a question about CapEx first. And now that you've been in the CEO chair for such a long period….

Thanks, Harry..

… as you look at CapEx not in the next 6 or 12 months, but how do you feel or maybe prioritize CapEx projects globally and their potential returns once your core business settles down? What are the best opportunities? And maybe Grant can chime in on this as well..

Maybe a general overview and then Corey and Grant can clearly clean up. Look, we've seen that we've reduced our CapEx, I think, I mentioned in my pre opening remarks in half this year.

There are things that are going to be essential to maintain the stores in the condition that we think they ought to be simple things like room remodels, Bellagio and others that will be just – going to be ongoing maintenance costs, and things that we're going to want to do. We will become more disciplined on some of the projects.

We will become more focused on what's to be accomplished and why with a real mindset for margin around it in terms of just the day-to-day CapEx stuff. Domestically, with maybe the exception of New York, I think our primary focus is going to be Asia.

And so, to the extent, we can work our way through a license in Macau and a renewal, which we're very hopeful for. And think, frankly, all this activity around COVID-19, Grant and the team have done a magnificent job putting us in good stead there with the government, but time to tell, that would be a large priority.

And then ultimately, for us, it's still all about Asia and it's Japan. Japan represents without a doubt, the chance to move the needle. I mean, we're talking about something that would generate EBITDA in the 20-odd percent range to boost our company and put Asia at roughly a 50% EBITDA percentage in terms of our total EBITDA.

So, we're focused on that..

To Bill's point, everything – our main focus, especially on growth will be increasing our return on investment. Domestically, as Bill mentioned, outside of New York, the digital technology components have become big. And I think, as we open up in this environment, you'll start seeing benefits from that. And we still think there's a future there.

Grant, I don't know if you want to talk a little bit about Asia..

I think the critical issue, I'll just repeat what I've – what we've said previously. We've got the south suites coming on, and that's really important. More accommodation for us is really important.

In terms of the existing capital allocation we have, we've critically reviewed all those items and we're actually pulling back on ones, because what we also want to be prepared is, we want to have some money left in the kitty. We don't want to spend for the sake of spending.

So, we're actually taking monies we would have allocated and then identified when we reopened. There may be some adjustments we need to make, maybe some food and beverage things. So, rather than spending and then having to come back and do it again, we're pulling back.

Reiterating what Bill said as well, the focus for all of us is all about the concession renewal. And we have significant plans that we've discussed earlier about opportunities to develop, but we also need to be mindful what the expectations of the Chief Executive are. And he is – he does have different views.

And what we're excited about is – and we're putting aside funds that we will be in a position to obviously respond to the diversification strategies that he is putting forward..

And then, Harry, it's not huge capital dollars in respect to some of the other things we're talking about, but sports betting, iGaming is a real opportunity. I was just reading this morning, Morgan Stanley's piece. I think the market is $8.5 billion – $10 billion, whatever it is it's becoming real.

In New Jersey, this month alone, if we paced out what we did the last couple of weeks in iGaming, it's $100 million business for us. Pennsylvania is around the corner, Michigan is around the corner…..

Colorado..

…and Colorado is around the corner. And given what's happening in states because of the stress of COVID, we think that'll open sooner than later.

And well not extensive capital dollars, it does run in the hundreds of – a couple hundred million potentially before we turn the corner and really make something of this, but it is without a doubt, I think, one of the things that's not been unlocked in our value and our valuation, but it can and it will be over time..

I appreciate that. And maybe one more for Grant, and this is a very broad leading question, but can you do enough to satisfy the Chief Executive? I'll leave it at that..

I think clearly, all concessionaires that are in Macau, I think, are well positioned and clearly, we will do what's necessary. Bill has made it very clear. This is the focus of the company. We're very confident. We're very positive. I think the simple thing, as I keep saying is, we just have to do – keep doing the things we're doing better.

We need to do the right thing by the people. We need to do everything well. I think during this difficult time, I think, ourselves and all the concessionaires have demonstrated our true commitment to Macau, the people of Macau and the future of Macau. And I think that's just how we need to always focus on.

One day at a time, it's not a single guy decision. It's all about a cumulative effort. And that's what we're good at. We're building confidence. We’re building respect and then hopefully for us, the rewards will flow..

Thanks. Thanks, Grant and Bill..

Thanks, sir..

The next question comes from Felicia Hendrix with Barclays. Please go ahead..

Hi, thanks so much. So Bill, there's a – there are buyers of assets out there, you have Las Vegas stands to talk about M&A.

We've seen news, Blackstone, you know acknowledging that you might not make the kind of decision now, would you be open to selling further assets?.

It's not immediately on the horizon. You would always be open to selling assets, I suspect, but it's not something that we've got in our strategic plan. We have obviously the ROFO in Springfield, which is an opportunity.

We're looking to acquire over time, the other side of city center, not go that way, but given where we are today, we've got a lot in front of us..

Look, I think we're in a really good position, and I don't think we could get the value that we got for Bellagio or MGM today..

Yes..

So we'll build that business back up. And if there's an opportune time, we'll look at for that..

Okay, thanks.

And just Grant, you had talked about the quarantine in Guangdong and just kind of watching that as we all are, just adding Hong Kong into that picture, how are you thinking about Hong Kong and the ability to travel to and from there? And how important is that to your thoughts about recovery in Macau?.

Well, I think it's pretty clear that Hong Kong, Macau, and Guangdong, the Greater Bay Area, are all in inextricably linked. We already know that the quarantining requirements in Hong Kong will not be lifted until the 7th of June at the earliest. Hong Kong is always an important feeder market.

Even many of our customers coming in from China come via Hong Kong as you know, but on the other side of it, there is a possibility, and we obviously sitting here hoping that's happening and the Chief Executive even acknowledged that he is in dialogue with Guangdong to see if they cannot be some relaxation or some progressive opening up of the Zhuhai China border.

So, we know the Hong Kong date for review. We're still positive and somewhat expected that we may see some opportunities coming up in May for China, and it'll be multi-step.

The first will be the removal of the return to China quarantining and then the ultimate objective that we see coming out in the next weeks and months is the releasing of the IDF system. And that's really the critical point for us once the obvious comes back. So Felicia, I'm sorry, I don't have the specific timings. Those are the steps.

As I said earlier, talking to the customers, they're positive, they're confident, all of us are just sitting here waiting to make sure that it's safe to travel. They're confident that we can take care of them. I think we've been very good at communicating that. So it's – we're ready to go.

And frankly, after all this time, we're very anxious to get started as you can imagine..

Yes. Okay. Thank you..

The next question will come from John Decree with Union Gaming. Please go ahead..

Hi, everyone, thanks for taking my question and all the details so far. Just one for me maybe for Corey. Last slide in your deck you talked about the CARES Act and some of the possible benefits there related to payroll tax and carry back.

I was wondering if you could give us some insight as to what that might – what that quantum might be if you've kind of sized that up.

Is it meaningful for you, it might be a little too early some of those carry backs, but I just wanted to get your initial thoughts on what that means for your company?.

Yes. I'll go through each one and I'm not sure I could quantify them all, because not knowing where our numbers are going to be that would be dependent on that, but obviously, the refund of the federal income tax five-year carry back that will play on our 2020 return, which we'll file in 2021.

That will be a pretty good number from based on where our projections are. We haven't quantified it yet, but we'll – hopefully, over the next few months, we'll be able to.

On the interest expense deduction limitation for income tax benefits, we also expect to see a little bit benefit of that in 2021, but more in 2022 since we’ll be carrying back most of our loss. There's actually two payroll provisions. One is actually on the payment of furlough in health benefits. We will receive a 50% deduction on that component.

Those regulations are getting written right now. We had a pretty significant payment that we will receive that credit. Actually right now, we're receiving it. And then finally, there's the deferral of the FICA tax of the employer portion, any of those payments would be deferred to 2021 and 2022.

So, we haven't quantified the amount yet over the next few months. We'll try to put some numbers around that and get that out there..

That's helpful. I appreciate the color, Corey. Thank you..

And we'll take the last question, please..

Sure. The last question will be from David Katz from Jefferies. Please go ahead..

Last. Thank you for taking my question. I – seriously, I appreciate it and all of the detail. Look, I – there's a bit of dissonance that I was hoping you could talk a bit more about, because you have talked about the efforts to size the business appropriately where ongoing pre-crisis that are still ongoing and they change.

At the same time, reopening may bear some incremental costs as well.

Have you had a moment to sort of lay those side-by-side? And ultimately, I suppose the thrust of my question is, which one is bigger? Does it come out to be net positive at the end of the day? Is that what you're ultimately hoping to solve for?.

Let me kick it off, and then Corey can clearly clean it up. Yes, the answer is, of course, it wants to be net positive. There are going to be given the protocols that we've talked about, whether they're cleaning or otherwise some additional costs, but I would offset it with a simple idea and a notion.

Protocol to clean a room in this environment is going to be extensive. And therefore, you could argue that the efficiency around room credits will have to be altered. I would argue the other side of that, which would simply say, if I'm a guest in Bellagio, I want to know that my room is pristine when I go in.

And during my stay, unless I want and need clean towels, I'm probably not going to let a guestroom attendant or any other service personnel in my room.

And so I think you'll see a varying degree of offsets, things like restaurants, even though we're talking about opening Bellagio potentially first, it won't be full service, all restaurants, there will be some, there'll be pick up, pick and go, if you will, for pick up opportunities for food and beverage.

And so, we're going to take the current state in mind until we get through all of the health protocols, it's a bit difficult. And that's why I said two weeks in my prepared comments, but we will be by then to then put in Corey and his team are working diligently around some of the costs.

We definitely think they offset kind of the moves we're talking about in terms of structure, but, Corey, maybe you could ….

Yes. What I would say, David, is we do have a decent understanding of what those costs are going to be. We think we'll end up on the better side of that. And by the way, we open the properties and ramp them. We will be able to manage component of that.

And more in particular, we should – we think we should be able to offset most of these costs at fairly low occupancies. So, as we open properties and determine that, that will be – the demand for the town will be a big component of that..

Yes, David, it’s Aaron. Just to clarify something. So, obviously, we're not giving disclosures in terms of our break-even points, but naturally, we recognize that our occupancy and utilization rates are going to be lower as we ramp up. So, what we're aiming to do through the cost-cutting is lower our break-even points..

Got it. Thank you very much. I appreciate it..

Okay. Maybe if I could just offer up a couple of closing thoughts and I appreciate everyone's time today. First and foremost, for me and the company, getting these properties up and operating, doing it in a safe manner, both for our employees and our guests is priority one. I think, again, we're ideally positioned to do that.

We understand the environment. Well, we understand the organization well. And candidly, we feel the responsibility, particularly here in Southern Nevada. Our industry to this state is the most important industry in any state in the country, more than autos are to Michigan, more than tech is to California.

And we are the largest tax payer and largest employer in the state. So, I can assure you we are keenly focused on wanting to reopen, but we will only do it safely. We are going to be a better more efficient organization moving forward, you have our commitment on that and mine.

We know how to do this and we will do this and we'll make this as effective as it can be. Obviously, as we roll out, there are going to be things that we've never experienced before.

So, we'll have some ups and downs, but I can assure you collectively, we’ll end up with a more efficient organization when we fully come out of the other side of this thing. Despite all of it, we are not going to lose track of our long-term strategic initiatives. We are keenly focused, particularly on Sports and iGaming in this timeframe.

There is real money, particularly in iGaming today, and Sports will begin to unfold this fall and hopefully sooner. And our real estate strategies in creating yet again, a fortress balance sheet are critical. The notion of asset-light moving forward is critical.

And ultimately, my goal, my desire, my push and I know it's shared by our Board is to be ever present and larger and more meaningfully involved in Asia, both in Macau and hopefully in Japan if we're fortunate enough to win a license there. So, I thank you for your time. Everyone be safe and be well. And I look forward to talking to you again next trip.

Thank you..

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