Jonathan S. Halkyard
CFO & Treasurer at MGM Resorts International
Thanks very much, Bill. I certainly join Bill in gratitude to our entire team for outstanding results this quarter. What a difference in performance and momentum as we have moved through the course of the year. And now with only 60 days until the start of 2022, I could not be more excited about our prospects for the year ahead, and it's all due to the heroic efforts of our thousands of colleagues here at MGM Resorts. Now let's talk about our third quarter results in some detail. Our consolidated third quarter net revenues were $2.7 billion, a 19% sequential improvement over our second quarter results. Our net income attributable to MGM Resorts was $1.4 billion driven by a $1.6 billion net gain from the consolidation of CityCenter. Our third quarter adjusted EBITDAR improved sequentially to $765 million, led once again by our domestic operations. 12 of our 18 domestic properties achieved either all-time or third quarter EBITDAR records, and 15 achieved either all-time or third quarter margin records. This performance was driven by strong leisure, transient and domestic casino demand. We have demonstrated our ability to improve and expand our operations while maintaining cost discipline, all against the backdrop of ramping nongaming revenues and a stabilizing workforce complement. Our Las Vegas Strip net revenues were $1.4 billion, just 8% below the third quarter of 2019. Adjusted property EBITDAR for the Strip was $535 million, 21% above the third quarter of 2019. Hold had a $20 million positive impact on our EBITDAR this quarter. So Hold Adjusted Strip EBITDAR was approximately $514 million. Our Strip margins were 39% in the third quarter, a 943 basis point improvement over the third quarter of 2019 and a slight decline on a sequential basis over the second quarter of 2021. This was driven by a combination of effective casino marketing efforts and continued cost discipline across the business. Availability of labor also improved sequentially each month in the third quarter, and our payroll per FTE remained in line with the third quarter of 2019. We continue to attract strong casino demand and drive healthy performance in the third quarter. Here are a few data points. Third quarter Strip casino room nights were 27% greater than in the third quarter of 2019. Casino revenues per casino room night was up 10% above the third quarter of 2019.
And not surprisingly, our slot handle was an all-time quarterly record. All of this translated into third quarter casino revenues increasing to 26% above the third quarter of 2019, contributing 31% of our total Strip revenues in the third quarter, and that compares to our casino revenue mix of 22% back in 2019. Our Strip hotel occupancy was 82% in the third quarter, improving from 77% in the second quarter. And for the first time since reopening, the third quarter's room rates ran higher than pre-pandemic levels, with ADR 10% above that of the third quarter of 2019 or 5% when we exclude Circus Circus. We finished a strong October with occupancy of 92%, the highest since reopening, and we expect November and December to be strong but also to follow seasonal slowdowns as we typically do every year heading into the holidays. As we ramp staffing and our nongaming revenues increasingly become larger contributors to our overall business, I expect margins to come in a bit in our Las Vegas operations. Our customers demand, and are willing to pay for the breadth of offerings we provide here at MGM Resorts. And while healthy margins are an important feature of our business model and financial health, we are focused on growing our absolute EBITDAR dollars, a goal well supported by future upside from the recovery in group events and international visitation. We expect our margins to stabilize well above pre-pandemic levels, resulting from our efficiency and cost-saving efforts. Finally, it's important to note that we closed the CityCenter transactions towards the end of the quarter. And as a result, we started consolidating CityCenter within our Las Vegas Strip results beginning on September 27. Our third quarter Strip numbers include four days of Aria and Vdara's results. Led by Anton Nikodemus and his team, the CityCenter joint venture reported quarter-to-date ended September 26, adjusted EBITDA of approximately $120 million, with 40% margins. Had CityCenter been consolidated for the full quarter, our Las Vegas Strip EBITDAR would have been approximately 22% higher than what we reported in the third quarter. Its magnitude and growth potential makes CityCenter a difference maker for us financially. Our third quarter regional net revenues were $925 million, just 1% below that of the third quarter in 2019. We delivered adjusted property EBITDAR of $348 million, which was 29% above 2019 levels and 9% above what we achieved in the second quarter of 2021. Our regional casino business further strengthened in the third quarter with our slots and table games volumes improving sequentially by 6% and 11%, respectively, from the second quarter this year. We measure rated player spend levels through theoretical win or theo per day, net of promotions. Our net theo per day for our rated customers reached record levels in the third quarter, led by our younger demographic despite fewer trips as compared with their visitation pre-COVID. Unlike the younger crowd, visitation and spend from our -- from our 65-plus demographic has not yet fully recovered but we're encouraged with the resiliency in this segment's demand, especially through the Delta variant outbreak. Our third quarter regional margins of 38% were another all-time record growing 886 basis points over the third quarter of 2019. While our strong EBITDAR margin has benefited from elevated casino spend, and importantly, also validates the great work that our teams have put into maximizing the effectiveness of our operating model and rethinking how we run our business.
Disciplined customer reinvestment is a key component of this, where we track marketing efficiency across all of our properties against specific goals. With the return of more nongaming amenities, we'll continue to exercise prudence in our marketing reinvestment strategies, taking a test-and-learn approach to ensure intended returns on any increases in reinvestment. We're also rightsizing labor in the near term, which has had a near-term favorable impact on our margins, but it's also caused capacity constraints in certain segments of our operations. Overall, I believe our regional margins will stabilize well above 2019 levels. Moving on to BetMGM. Our 50% share of BetMGM's losses in the third quarter amounted to $49 million, which is reported as a part of the unconsolidated affiliates line of our adjusted EBITDAR calculation. Net revenues associated with BetMGM operations were $227 million in the quarter, exhibiting a 17% sequential growth from the second quarter, led by the continued strength in iGaming. This was partially offset by heavier customer acquisition and reactivation spend from BetMGM's successful Arizona launch and the return of football, resulting in September first-time deposits growing to over 5 times, 5 times that of September 2020. We know that an omni-channel customer is worth more than a single channel customer. We're particularly excited about the mutually beneficial advantages of our omnichannel strategy with BetMGM, and we remain its top partner for driving new players. In the third quarter, 16% of BetMGM's new players were attributed to MGM, meaning they were active with MGM in the last 12 months. This percentage has remained in a relatively stable range while BetMGM has significantly broadened its reach, illustrating our ability to continually optimize the conversion of M life members to BetMGM. The BetMGM team previously disclosed during their April Investor Day that MGM-sourced players have much lower customer acquisition costs and over 5 times the marketing ROI when compared to non-MGM-sourced players. What's also encouraging is that in New Jersey, our most mature market, based upon preliminary data, we found that MGM-sourced omni customers are spending more on property at Borgata than they did when they were exclusively land-based. And clearly, the benefit goes both ways. In the third quarter, 42% of our new M life sign-ups have come from BetMGM, which plays a crucial role in our database expansion, a database, which currently stands at over 37 million members. Finally, in Macau, third quarter market-wide gross gaming revenues sequentially declined 26% from the second quarter and was 27% of the third quarter 2019. MGM China's third quarter results were also sequentially lower from the second quarter with net revenues of $289 million and adjusted property EBITDAR of $7 million. Hold adjusted EBITDAR was a $2 million loss. While the latest hurdles surrounding the local outbreaks in Macau negatively impacted travel in September and most of October, the situation has now largely been contained. And with quarantine-free travel having resumed on October 19, the market has seen daily visitation rebound from less than 1,000 in the first 18 days to over 26,000 for the remainder of the month. Our third quarter corporate expense, excluding share-based compensation, was $105 million, which included approximately $18 million of transaction costs for both MGM and MGP. We expect that our net corporate expense will run at a similar level in the fourth quarter, heavily driven by our ramping Japan effort as well as our investments in IT and digital. In the near term, we also expect to incur incremental costs related to our recently announced transactions. We believe repurchasing our shares is an attractive use of capital. In the third quarter, we repurchased 17.2 million shares for $687 million, and we purchased an additional 1.8 million shares for $80 million in the fourth quarter through today. That's $1.1 billion of share repurchases year-to-date, or approximately 5% of our market cap, and that is this year since March.
Over the past few months, we announced some significant deals that simplify our corporate structure, further bolster our liquidity position and advance our vision to be the world's premier gaming entertainment company. We closed the CityCenter transactions in the third quarter. In October, we closed the MGM Springfield transaction for cash proceeds of $400 million. Our transaction with VICI is on track to close in the first half of next year, subject to regulatory approval, at which point we will bring in an additional $4.4 billion in proceeds. In September, we announced an agreement to acquire the operations of The Cosmopolitan of Las Vegas for $1.625 billion. This represents a multiple of approximately 8 times adjusted EBITDA, inclusive of expected operational synergies, and revenue growth opportunities that we have identified. The transaction is expected to close in the first half of next year, subject to regulatory approvals. As of September 30, our liquidity position, excluding MGM China and MGP, was $6.4 billion, or $9.6 billion when adjusted for the Springfield, VICI and The Cosmopolitan transactions. So our approach to capital allocation is critical. And our approach to capital allocation will be as follows. First, we'll maintain a strong balance sheet with adequate liquidity. Second, we will return cash to our shareholders. And finally, when assessing potential growth opportunities, we'll invest where we have clear advantages, and will exercise discipline in measuring prospective returns for our shareholders. With that, I'll turn it back to Bill for his closing remarks.