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The Henry Fund Henry B. Tippie College of Business Cooper LaRue [[email protected]]

MGM International (MGM) November 13, 2020 Consumer Discretionary – & Gaming Stock Rating SELL Investment Thesis Target Price $19-$21 Henry Fund DCF $17.40 MGM Resorts International owns and operates many of the most unique and Henry Fund EP $17.40 iconic in the world. Their properties are concentrated in Las Vegas and Relative Multiple $24.62 which makes the COVID-19 recovery dependent on regional economies Price Data and area regulators. MGM also operates in a challenging industry due to high Current Price $25.90 overhead, thin margins, little competitive moat and a low growth outlook. For these reasons we recommend a SELL on MGM with a price target of $19-$21 52wk Range $5.90 – $26.71 which represents a 19%-26% decline over the next 12 months. Consensus 1yr Target $21.23 Key Statistics Drivers of Thesis Market Cap (B) $13.10 Shares Outstanding (M) $493.9 ● COVID-19 has caused a 61% decline in revenues and we do not forecast Institutional Ownership 66.8% revenue to rebound to pre-pandemic levels until 2024.1 Beta 1.90 Dividend Yield 0% ● The Casino & Gaming industry is a very competitive market with little Est. 5yr Growth 19.5% customer loyalty or differentiation among players, no moat. Price/Sales (TTM) 1.89 ● MGM’s business is very capital intensive with skim margins of just 4% in Price/Book (mrq) 1.86 pre- pandemic good times. Profitability (5-yr avg) Operating Margin 31.7% ● 71% of revenue is concentrated in Las Vegas and Macau, this concentration Profit Margin 8.9% makes them heavily dependent on those local economies and regulators.1 Return on Assets 3.3% Risks to Thesis Return on Equity 14.6%

● A rapid COVID-19 recovery could produce a surge of visitors to MGM MGM Industry properties. 5 Source: Factset 4 4.6 ● If MGM were to become the dominant platform for online sports betting it could add $2-$4 billion in annual revenue by 2025. 3 3.4

Earnings Estimates 2 Year 2017 2018 2019 2020E 2021E 2022E 1.8 1.9 EPS $3.39 $.82 $3.77 ($2.25) ($1.43) $.27 1 HF est. ($1.99) ($2.10) $.01 0 growth 75% (76%) 360% (153%) (5%) 101% Price/Sales Price/Book

12 Month Performance Company Description MGM S&P 500 MGM Resorts International is a holding company, 20% which engages in the ownership of casino resorts 0% offering gambling, convention, entertainment, retail and other amenities. MGM owns and -20% operates 26 unique properties across the U.S. and Macau. Roughly half of revenue comes from -40% betting earnings and the rest is a mixture of -60% rooms, entertainment, food & beverage, ect. 73% of revenue comes from properties in the U.S. and -80% 23% comes from properties in Macau. N D J F M A M J J A S O Source: Yahoo Finance Important disclosures appear on the last page of this report.

COMPANY DESCRIPTION

MGM Resorts International owns and operates many of the works most unique casinos such as the Bellagio, MGM, Grand, The Mirage, Mandalay Bay and 22 more. Their revenue is broken down into the functions of each property which are casino winnings, hotel rooms, food & beverage, entertainment and reimbursements. Casino winnings accounted for 50.5% of revenue with hotel rooms the second highest generator at 18%.1

Source: MGM 10-Q, Q3 2020 Resorts

MGM is most notorious for their range of properties located on the Las Vegas Strip. Properties in this segment include the Bellagio, MGM, Grand, The Mirage, Mandalay Bay, Luxor, New York-New York, Circus Circus Las Vegas and more. In 2019, these properties generated a collective

$5.8B in revenue which was just 2% growth over 2018.1 Source: MGM 10-Q, Q3 2020 This segment's revenue is most distributed among revenue lines due to the fact that they are seen just as MGM breaks their properties into three geographical much as general vacation properties than just gambling buckets which are Las Vegas Strip, Regional Revenue and properties. This is why only 22% of this segment’s revenue MGM . Las Vegas Strip includes 14 properties, comes from casino winnings whereas half of revenue Regional Revenue which is all non-Vegas U.S. properties comes from casino winnings in the overall company. includes 10 properties and MGM China includes 2 properties which MGM owns 56% of.1 Las Vegas and MGM Due to COVID-19 every segment has seen dramatic China segment’s properties are in very close proximity and decreases in revenue, the worst of segments being the therefore tend to behave similarly while the Regional Rooms and Food & Beverage which are highly correlated. Revenue segments includes properties across the U.S. in These two segments have seen a 61% and 64% decrease in Atlanta, New York, Michigan, Ohio, , New revenue. Casino winnings have held up the best relatively Jersey, ect. so that segment’s revenue is more consistent with a decline of 43%. This is because MGM has been able as it does not depend on the situation of one area. to retain some high roller and VIP players which bet at much higher stakes then common tourists. Below is the revenue breakdown for this segment.

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Rooms and Food & Beverage declining 59% and 61% respectively. Below is a breakdown of revenue for this segment.

Source: MGM 10-Q, Q3 2020

Given MGM’s reported first three quarters and our Q4 estimate we forecast this segment will generate $2.5B in revenue, which is a 57% decline from 2019. Going forward Source: MGM 10-Q, Q3 2020 we expect to see a gradual recovery of these segments' revenue which will lead to a full recovery of Las Vegas We are forecasting for this segment to recover to pre- properties back to 2019 levels by the last quarter of 2023. pandemic levels by Q3 2022 and then grow at a 5.3% 5- This will require 15%-20% annual growth to get back to year CAGR between 2023-2027 and 2% thereafter. We pre-pandemic levels. After recovery we forecast a 5-year believe this segment will perform slightly better than the CAGR of 3% from years 2024-2029 and 2% thereafter. Las Vegas properties as they are located in areas with much less competition. Regional Operations MGM China MGM’s Regional Operations segment includes all U.S. properties not in the Las Vegas region. These properties MGM China is technically a separate company that MGM are mostly located in the Eastern half of the U.S. from New owns 56% of. MGM China owns two properties in Macau Jersey down to Mississippi. In 2019, this segment which is an autonomous region of China similar to Hong generated $3.5B which accounted for 29% of total revenue Kong. While Macau is part of China, they operate under but now is becoming a larger percentage due to the lack of their own laws which has allowed them to become the travel to the Las Vegas properties. In 2020 these properties “Las Vegas” of China. In China gambling and casinos are will account for 37% of revenue as some people have been illegal so people from China go to Macau, which is attached less averse to visit more local properties. These properties to China, to gamble. Macau attracts a lot of very wealthy have also historically generated most of their revenue Chinese and Asian Country people. MGM’s revenue from from casino winnings which has been the least impacted this region doubled from 2017 to 2019 and accounted for line of revenue for MGM. 23% of MGM’s total 2019 revenue.

Due to COVID-19 this segment has seen a 45% decline in This region has been impacted by very strict travel revenue which is 12% less decline than the Las Vegas restrictions leading to an 83% decline in revenue in 2020. properties. Again, the worst impacted revenue lines were These properties are very dependent on very wealthy

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individuals and China’s 14-day mandatory quarantine after Cost Structure Analysis returning from Macau has kept most of these individuals away. Below is a breakdown of revenue for this segment. MGM’s net margin has historically been very volatile due As you can see this segment most heavily relies on casino to the buying and selling of properties in any given year. In winnings as these properties are used more specifically for 2019 MGM generated $2.4B of nonoperating income due gambling rather than vacation spots like Las Vegas to the sale of the Bellagio property lease to a BREIT properties. Venture and the sale of undeveloped land on the Las Vegas strip. This additional $2.4B in income caused them to have a net margin of 15% in 2019. If you take out these one-time property sales their net margin would be -4% which is 8% lower than their net margin of positive 4% in 2018. Below is a waterfall chart of MGM’s income statement showing their main costs down to net income.

-4% Source: MGM 10-Q, Q3 2020

We forecast this segment to recover to pre-pandemic levels by 2025 which is the slowest recovery of the three segments. This is due to strict COVID-19 travel restrictions but also due to the laws and regulations in Macau more Source: MGM 10-Q, Q3 2020 broadly. The Chinese government does not like U.S. MGM’s largest costs are associated with the COGS for each companies such as MGM and Wynn have so heavily revenue line and their SG&A expenses. We separated each capitalized on Macau and have put restrictions in place so revenue line’s direct costs out due to the wide margin that it is very difficult for U.S. companies to expand their difference between revenue lines. In 2019, room revenue footprint. Therefore, after the 2025 recovery we forecast is the most profitable at about 65% while Food & Beverage a 3.4% 5-year CAGR from 2025-2030 and 3% thereafter. was the least at 77%.1 In 2020 the COGS associated with This segment has the highest terminal growth rate due to evert revenue line increased due to the overhead the increased population growth in the region and associated with each line. We are forecasting the COGS to development of regional economies, but we do not think go back to pre-pandemic levels by 2023 and then MGM will be able to build additional properties there. improving margins in casino revenue with others staying relatively the same until the terminal value in 2029. Below is a graph showing the previous 3 years along with our 5-

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year forecast of COGS as a percentage of each revenue Five-Year Debt Maturity Schedule line. Fiscal Year Coupon (%) Payment ($mil) 2020 -- $0 2021 -- $0 2022 7.8% $1,000 2023 6.0% $1,450 2024 5.5% $2,284 Thereafter 5.4% $6,650 Total 5.7% $11,434 Source: MGM 10-Q, Q3 2020 ESG Analysis

We believe MGM is average among their peer set when it comes to ESG initiatives but negative compared to the broader market due to the stigma casinos have. Almost As you can see there is a spike in COGS in 2020 with a 2- half of their properties have been earned certification year forecasted recovery back to previous margins as from Green Key who evaluates the environmental revenue normalizes. In 2020 we are expecting net income sustainably of , resorts and casinos. They also of -$948 million or -19% of revenue. This will gradually mention multiple initiatives to improve workforce recover until break even in 2022 and then see net margins diversity, community development and environmental of 4%-5% thereafter. initiatives which leads us to give them an average ESG rank among their peer set. Capital Structure

MGM’s capital structure has historically been heavily RECENT DEVELOPMENTS reliant on debt which has only gotten more so due to COVID-19. Due to a sharp decline in their share price, Q3 2020 Earnings Announcement MGM capital structure is now 49% equity/ 51% debt. The MGM announced their Q3 earnings on October 29th and cost of equity is 9.11% due to the high beta of 1.90 along saw a slightly positive market reaction up 3% on the day. with the 5.15% equity risk premium we as a team have Revenue and EPS both came in under expectations but decided on. The weighted average interest rate on debt is some positive guidance around the opening of properties 5.7% which results in an after-tax cost of debt of 4.85%. globally was the forward looking positive. Revenue came Due to this nearly half and half mix and such a high cost of in at $1.13B vs street estimates of $1.24B and EPS came in equity MGM’s WACC is 6.95%. at -$1.08 vs the -$1.04 that was expected.4 They specifically mentioned the stability of U.S. properties being Debt Maturity Analysis effective at cutting costs to manage losses and a bullish MGM’s business is extremely capital intensive and outlook on recovery. requires large amounts of debt to finance new properties and remodeling old ones. Fortunately, MGM has not had COVID-19 Impact to issue much additional debt due to COVID-19 because of Resorts and Casinos have been among the hardest hit their property sales in 2019 which generated $2.4B that is industries due to COVID-19. After forecasting the last now being used to get them through this time. They also quarter of 2020 we forecast MGM to see a 61% decline in do not have any debt coming due at the end of this year or overall revenue from 2019 to 2020 with Q2 and Q3 both next which is positive. down about 72% against Q2 and Q3 of 2019.2 Geographies that have been most heavily impacted are properties in

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the Las Vegas Strip and MGM China which have both seen INDUSTRY TRENDS major reductions in visitors. In 2019 MGM’s properties averaged a 91% room occupancy rate and so far in 2020 The casino and gaming industry has seen little change in that average has been just 38%2. MGM’s Regional revenue revenue segments as most people prefer to gamble in segment has held up slightly better due to different person to get the experience of being there physically, but COVID-19 restrictions by state. We forecast revenue in the for others who play more regularly, online options are Regional revenue segment to recover by Q3 2022, Las preferred. This has led to a slow but steady rise in online Vegas Strip segment to recover by Q4 2023 and lastly betting, called iGaming. Another propellent of online MGM China segment to recover by mid-2025. betting has been the legalization of sports betting in many states and is the fastest growing segment of betting. It is unclear whether there will be lasting consumer behavioral changes regarding spending money at casinos, Online Gambling but we believe it will return to relatively normal levels once COVID-19 passes and slow growth from there on. Over the years online gambling of traditional card and table games have increased in popularity as people have BetMGM & GVC Partnership become more comfortable with having electronic dealers. There is also a portion of players who prefer a real dealer BetMGM is MGM’s online betting platform for casino but want to bet virtually which has also become common games and sporting events. It is currently live in eight an option as well. Online betting has risen due to COVID- states and will be live in 11 by the end of 2020. They also 19 but not near enough to replace traditional in person have approval to go live in nine more which will likely betting as many people like to gamble specifically for the happen throughout 2021. BetMGM currently holds 18% of in-person experience. We forecast slow growth for online the online betting market which positions them third betting post COVID-19 and we have only seen a slight rise overall behind 888 Holdings and GVC. In 2019, 888 in online play this year. We just do not think the average Holdings generated $560M in online revenue, GVC person is propelled to gamble online and therefore do not generated $155M million and BetMGM generated think this will become a driver of revenue for MGM or any 4 $110M. other online gaming platform. Bet MGM’s revenue is predominantly from online casino Sports Betting games which is referred to as iGaming and GVC’s revenue is primarily from sports betting. In 2019, these two started Sports betting is a fast-growing segment casinos are a joint venture called Roar which is an online betting fighting to capture as it seem states are slowly legalizing it. 6 platform that they each own 50% of. Roar’s goal is to Currently sports betting is legal in 13 states and six others dominate the U.S. iGaming and sport betting markets. In have passes legislation to legalize it in the next year or two. July they doubled down on the partnership by investing Companies like DraftKings and FanDuel who are 100% $370M to broaden the venture and work on expanding focused on sports betting have been able to become top 4 into more states. They currently have access in 15 and are players within the segment ahead of traditional gambling working to expand that and go live in many of these states companies like MGM. This is why MGM has partnered with they have approval for but are not active yet. GVC on Roar to aggressively go after these large sport betting players. This year $833M is revenue was generated We believe the partnership will further MGM’s footprint in from sports betting and this is expected to be $7B by online betting and drive new revenue especially in sports 2025.7 We believe that BetMGM and Roar will add bottom gambling. Overall MGM’s iGaming and sports revenues are line growth to MGM but we are not confident that they a very small portion of MGM’s total but we expect it to be one of the few arears for growth in the future.

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will be able to beat the incumbent players like DraftKings For this report I chose the Michigan Consumer Sentiment and FanDuel. Index (MCSI) over the Consumer Confidence Index (CCI) because the MCSI focuses more on one’s personal MARKETS AND COMPETITION financial wellbeing and we believe is a better indicator of how people would spend money on extras, like vacations MGM does business in a highly competitive industry that or entertainment. consists of just a few key players. MGM competes with companies like Wynn Resorts, Las Vegas Sands, Ceasars Consumer sentiment was relatively flat from 2015-2020 Entertainment and Penn National Gaming. Each company until the COVID outbreak. The consumer sentiment index has their own unique properties to attract customers dropped from 101 in February to 71.8 in April. There was which leads to hundreds of millions spent every year a slight uptick in June but then down the next until another developing and updating existing properties so they can recent uptick in September to 80.4.7 This is an early have the most desirable property in the area. indication that people may be feeling more comfortable in their situation and may be more likely to spend money on The negative we see to this is that these companies spend discretionary spending. so much to improve properties that in most cases, do not even have their name on them as they are somewhat Below is a chart showing the steep drop after February “white labeled” properties. This makes it hard to create where it went from 101 to 71 and the five months since. customer loyalty or brand recognition. We do not think most tourists even know what company owns the property they are staying at and this is a problem for them which impacts their ability to create a moat.

We do not see any defensible moat for any of these players. The only real moat they have is that their business is very capital intensive and therefore it is difficult for new players to enter. These players also compete in very sight proximity to each other as different locations tend to become the popular spots for casino entertainment. The exception to this is Las Vegas Sands who also operates in a wide range of geographical regions, so their company is not so dependent on just a few regional areas.

ECONOMIC OUTLOOK Source: FRED We believe there are two key economic factors that have material effect on MGM’s revenue. They are consumer Disposable Personal Income sentiment and disposable personal income. Disposable personal income is the amount of money a Consumer Sentiment person has left over after taxes and all necessary expenses such as living, insurance and healthcare. Disposable Consumer sentiment drives how people either spend their income can be spent on things people enjoy and is an money in the economy or save it for potential hard times. indicator of the funds people have available to spend on If consumer sentiment is low it is very unlikely that people discretionary spending like visiting MGM’s properties. will spend their money on vacations, gambling or casino entertainment. Although we have seen record unemployment, disposable personal income has remained high around $15,000 for the average U.S. adult and recently spiked up in April due

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to the $1,200 stimulus check.9 Surprisingly this metric is the Revenue Decomposition in the appendix and growth actually higher than pre-pandemic due to all the rationale is incorporated with each segment in the unemployment benefit programs. We do not expect any company description portion of this report. significant drop in this metric because government intervention is filling in the gaps of lost income for the Below is a chart showing how we forecast the recovery of most part, leading to only minor lifestyle spending segments for additional context. changes for most people. This view could change if the effects of COVID are longer than expected or the government cuts back unemployment benefits.

Source: FRED Operating Cost Assumptions

VALUATION The largest expense for MGM is the COGS associated with each revenue line as explained in the cost structure In our analysis we calculated MGM’s share price using the analysis of this report. The second largest expense is the discounted cash flow, economic profit, dividend discount SG&A which was 19% in 2019 but shot up to almost 50% in and relative price to sales valuation methods. Each of 2020 due to the fixed costs associated with the COGS such these models are only as good as the inputs one provides as building leases. We forecasted SG&A expenses to which is why it is important to first forecast the income decrease down from 50% of revenue back to its pre- statement, balance sheet and cash flow statement which pandemic level of 19% in 2023. can be seen in the appendix. We believe that over time room, food & beverage and Revenue Forecast entertainment costs will remain relatively flat back to pre- pandemic levels and therefore have forecasted them To forecast our revenue at a granular level we split MGM accordingly. out by their three reported geographical segments which are Las Vegas Strip, Regional Revenue and MGM China as However, we see room for margin improvement in casino explained in the company description portion of this revenue due to the shift to more online betting which does report. Within each of those segments we forecasted the not require the overhead of physical casinos. This led us to Casino, Room, Food & Beverage and Entertainment & forecast a COGS for casino revenue of 54% in 2024 which Other revenue lines for each. Then we combined these by is 2% less than their 56% in 2019. This then continues to revenue line on the income statement so we could attach slowly decrease down to 52% in the continuing value year accurate variable expenses for each line. We did it this way in 2029. A line graph of each of these forecasted costs can because we believe the growth of properties is closely be seen in the cost structure portion of this report and in correlated between regions whereas variable expenses the revenue decomp in the appendix. are more similar among revenue lines. This can be seen in

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Valuation Models KEYS TO MONITOR

We calculated the valuation of MGM on a discounted cash The casino and gaming industry is certainly one of the flow, economic profit, dividend discount and relative price slower moving industries in terms of innovation and to sales ratios. We arrived at a target price range of $19- movement, but there are two key things that could cause $21 per share based on these models but put varying us to reconsider our sell rating. These two things would be weights in each models’ output. We believe that the DCF, the quicker than expected recovery of COVID-19 and if EP and relative P/S models most accurately represent the MGM is able to show indicators they can take market valuation of MGM, so this is where we focused our share from sports betting platforms like DraftKings and weights. We do not think the DDM model is very accurate FanDuel. due to MGM recently cutting their dividend to $.01 per share which causes the DDM to come out to just $10.77 COVID-19 per share. In March of this year MGM stock saw its stock plummet to Our DCF/EP model came out to $17.40 and our Relative $5.90 a share which is the lowest it has traded at since the P/S model came out to $24.62 per share. We weighted our great recession in 2009. This was of course caused by panic price target slightly closer to our DCF/EP to arrive at our selling and soon after rebounded to the $10-$15 range. In price range of $19-$21. As of today, November 13th, the past few months as people forecasted some recovery shares are trading at $25.90 which is why we have a sell to travel in 2021 shares have to above $20 per share but rating on this company. It is noteworthy that there has we believe these people are being too optimistic about the been a lot of volatility in these shares over the past week return to travel. due to the announcements from Moderna and Pfizer about positive COVID-19 vaccines which has moved the Within the last week Moderna and Pfizer have announced stock higher. positive vaccine results which has given a second wind to travel companies’ stocks driving MGM into the $24-$26 Our Forecast vs. Consensus range. We do believe these vaccines will get approval but then there is still a lot of production and logistical Our price range of $19-$21 is just barely under the Factset obstacles before wide range immunization can occur. This analyst rice target of $21.23. Of the 17 covering analysts, is why we believe MGM’s revenues will not fully recover to 13 have hold ratings, 2 have buys and 2 have sells. Given pre-pandemic levels until 2024. sell side analysts tend to error on the company favorable side we believe many of these hold ratings would also be Sports Betting sells if their companies did not have incentive to work with MGM on future financings and debt offerings. Sports Betting is the one area we see strong potential growth for MGM but it is still unclear if they will be able to On a sales comparison we are forecasting $9.7 and $11.4 offer a superior platform to DraftKings and FanDuel who billion in sales in 2021/2022 while analysts estimate $9.3 currently dominate the space. As mentioned in the recent and $11.4 in the same periods. We are right on in 2023 but developments section of this report MGM is engaging in a actually higher in 2021. We believe the discrepancy is partnership with GVC on an online betting platform called because while we think people will be more likely to visit Roar but any sizable traction is yet to be seen. We also do MGM properties towards the end of 2021, MGMs costs not think that this market is large enough to drive will remain high on this revenue so none of it actually significant revenues even if MGMBet or Roar is able to do reaches their bottom line. We are forecasting them to lose well in the space. This year less than $1 billion of revenue $1.03 billion in 2021 which is $300 million more in losses was generated for sports betting platforms and it is than analysts. This translates to our 2021 EPS forecast of expected to increase to $7 billion by 2025.7 This is still a $-2.10 vs the analysts $-1.32. relatively small market unless MGM could capture 40% or more of it which we see as unlikely.

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REFERENCES and figures included in this report are from publicly available sources. This report is not a complete 1. MGM 10-K, 2019 compilation of data, and its accuracy is not guaranteed. 2. MGM 10-Q, Q3 2020 From time to time, the University of Iowa, its faculty, staff, 3. MGM Q3 Earnings Slide Deck students, or the Henry Fund may hold an investment 4. FactSet Q3 Earnings Report position in the companies mentioned in this report. 5. “MGM Resorts International And GVC Holdings Commit To Second Round Of Investment In US Sports Betting And Online Gaming Platform BetMGM.” MGM Resorts Investor Relations, 2020, investors.mgmresorts.com/investors/news- releases/press-release-details/2020/MGM- Resorts-International-And-GVC-Holdings-Commit- To-Second-Round-Of-Investment-In-US-Sports- Betting-And-Online-Gaming-Platform- BetMGM/default.aspx. 6. “GVC and MGM Aim to 'Dominate' US Betting.” IGaming Business, 6 Oct. 2020, igamingbusiness.com/gvc-and-mgm-aim-to- dominate-us-betting/. 7. Press, Associated. “Sports Betting Market Expected to Reach $8 Billion by 2025.” MarketWatch, MarketWatch, 4 Nov. 2019, www.marketwatch.com/story/firms-say-sports- betting-market-to-reach-8-billion-by-2025-2019- 11-04?mod=home-page. 8. “University of Michigan: Consumer Sentiment.” FRED, 30 Oct. 2020, fred.stlouisfed.org/series/UMCSENT. 9. “Real Disposable Personal Income.” FRED, 30 Oct. 2020, fred.stlouisfed.org/series/DSPIC96.

DISCLAIMER

Henry Fund reports are created by graduate students in the Applied Securities Management program at the University of Iowa’s Tippie College of Business. These reports provide potential employers and other interested parties an example of the analytical skills, investment knowledge, and communication abilities of our students. Henry Fund analysts are not registered investment advisors, brokers or licensed financial professionals. The investment opinion contained in this report does not represent an offer or solicitation to buy or sell any of the aforementioned securities. Unless otherwise noted, facts

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MGM Resorts International Revenue Decomposition In Millions Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Revenue Breakdown Casino $5,013 $5,630 $6,444 $2,659 $5,184 $6,142 $6,943 $7,586 $7,965 $8,324 $8,645 $8,888 $9,097 Rooms $2,153 $2,213 $2,323 $887 $1,568 $1,853 $2,014 $2,120 $2,209 $2,309 $2,379 $2,440 $2,489 Food and beverage $1,872 $1,946 $2,139 $773 $1,510 $1,757 $1,932 $2,061 $2,161 $2,264 $2,351 $2,420 $2,470 Entertainment, retail and other $1,276 $1,313 $1,381 $554 $1,159 $1,336 $1,447 $1,537 $1,614 $1,687 $1,740 $1,786 $1,822 Corporate & Other $483 $662 $613 $241 $283 $297 $312 $328 $344 $361 $380 $399 $418 TOTAL $10,797 $11,763 $12,900 $5,115 $9,704 $11,386 $12,648 $13,632 $14,293 $14,945 $15,496 $15,932 $16,296

Las Vegas Casino revenue $1,437 $1,408 $1,296 $734 $1,341 $1,529 $1,651 $1,750 $1,820 $1,884 $1,941 $1,989 $2,029 Rooms $1,779 $1,776 $1,864 $729 $1,295 $1,541 $1,664 $1,747 $1,817 $1,899 $1,956 $2,005 $2,045 Food and beverage $1,410 $1,402 $1,518 $548 $1,083 $1,256 $1,369 $1,465 $1,538 $1,615 $1,680 $1,730 $1,765 Entertainment, retail and other $1,120 $1,131 $1,154 $455 $951 $1,093 $1,181 $1,252 $1,314 $1,373 $1,414 $1,450 $1,479 Total: $5,746 $5,717 $5,831 $2,466 $4,669 $5,419 $5,865 $6,214 $6,490 $6,771 $6,991 $7,174 $7,317 Regional Revenue Casino revenue $1,835 $2,027 $2,538 $1,496 $2,553 $2,859 $3,117 $3,335 $3,468 $3,590 $3,697 $3,771 $3,847 Rooms $319 $318 $317 $131 $228 $260 $292 $309 $324 $339 $349 $358 $365 Food and beverage $410 $429 $494 $193 $369 $432 $484 $508 $529 $547 $564 $578 $589 Entertainment, retail and other $146 $161 $201 $85 $179 $207 $226 $242 $254 $265 $276 $284 $290 Total: $2,710 $2,935 $3,550 $1,905 $3,329 $3,759 $4,118 $4,394 $4,575 $4,741 $4,886 $4,991 $5,091 MGM China Casino revenue $1,742 $2,195 $2,610 $429 $1,290 $1,754 $2,175 $2,501 $2,676 $2,850 $3,007 $3,127 $3,221 Rooms $55 $119 $142 $27 $44 $52 $58 $64 $67 $71 $74 $77 $79 Food and beverage $51 $115 $127 $32 $58 $69 $79 $88 $95 $102 $108 $113 $116 Entertainment, retail and other $10 $21 $26 $14 $30 $36 $40 $44 $46 $48 $50 $52 $54 Total: $1,858 $2,450 $2,905 $502 $1,422 $1,910 $2,352 $2,696 $2,885 $3,071 $3,240 $3,369 $3,470

Corporate and other $483 $662 $613 $241 $283 $297 $312 $328 $344 $361 $380 $399 $418

TOTAL: $10,797 $11,763 $12,900 $5,115 $9,704 $11,386 $12,648 $13,632 $14,293 $14,945 $15,496 $15,932 $16,296

Rev % of Total Casino 46.4% 47.9% 50.0% 52.0% 53.4% 53.9% 54.9% 55.7% 55.7% 55.7% 55.8% 55.8% 55.8% Rooms 19.9% 18.8% 18.0% 17.3% 16.2% 16.3% 15.9% 15.6% 15.5% 15.5% 15.4% 15.3% 15.3% Food and beverage 17.3% 16.5% 16.6% 15.1% 15.6% 15.4% 15.3% 15.1% 15.1% 15.1% 15.2% 15.2% 15.2% Entertainment, retail and other 11.8% 11.2% 10.7% 10.8% 11.9% 11.7% 11.4% 11.3% 11.3% 11.3% 11.2% 11.2% 11.2% Reimbursed costs 4.5% 5.6% 4.8% 4.7% 2.9% 2.6% 2.5% 2.4% 2.4% 2.4% 2.4% 2.5% 2.6% TOTAL 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% MGM Resorts International Quarterly Income Statement In Millions Fiscal Years Ending Dec. 31 2017 2018 2019 2020 Q3 YTD Q4 2020E 2020E Q1 2021E Q2 2021E Q3 2021E Q4 2021E 2021E Revenue 10797 11763 12900 3669 1446 5115 1733 2114 2625 3231 9704 Casino 5013 5630 6444 1905 754 2659 916 1124 1405 1739 5184 Room 2153 2213 2323 641 246 887 283 340 421 523 1568 Food & Beverage 1872 1946 2139 553 221 773 264 327 408 510 1510 Entertainment, retail and other 1276 1313 1381 391 163 554 204 255 318 382 1159 Corporate and other 483 662 613 179 63 241 66 69 72 76 283 Cost of Goods Sold (COGS) 6,193 6,919 7,603 2,542 899 3,441 1,095 1,332 1,655 2,006 6,088 Casino 2673 3200 3624 1197 422 1,620 513 630 787 957 2,886 Room 749 792 830 321 106 427 119 139 169 199 626 Food & Beverage 1415 1502 1662 534 188 721 219 261 327 398 1,206 Entertainment, retail and other 954 1000 1051 343 126 468 157 196 242 290 886 Reimbursement Costs 402 425 437 147 58 205 87 106 131 162 485 Depreciation & Amortization 994 1,178 1,376 1,052 211 1,263 327 344 361 379 1,309 Gross Income 3610 3,666 3,920 74 336 411 311 439 609 847 2,307 SG&A Expense 2035 2,335 2,481 1,948 578 2,526 607 634 788 808 2,836 EBIT (Operating Income) 1575 1,331 1,439 (1,874) (242) (2,116) (296) (196) (178) 39 (529) Nonoperating Income 17 73 2,474 1,399 43 1,442 52 63 79 97 291 Interest Expense 669 770 848 488 231 719 253 253 253 253 1,013 Unusual Expense - Net -36 - 290 126 43 169 52 63 79 97 291 Income Before Taxes 960 634 2,775 (1,089) (474) (1,562) (549) (449) (432) (214) (1,543) Income Taxes -1133 50 632 (85) (57) (142) (66) (54) (52) (26) (197) Consolidated Net Income 2092 584 2,143 (1,004) (417) (1,420) (483) (395) (380) (189) (1,345) Minority Interest 154 138 168 (321) (116) (437) (87) (106) (53) (65) (309) Net Income 1938 445 1,975 (683) (301) (984) (396) (289) (327) (124) (1,036)

Per Share Weighted average common shares outstanding 572,253 544,253 524,173 493,517 493,517 493,519 493,517 493,517 493,517 493,517 493,522 Basic EPS 3.39 0.82 3.77 -1.38 -0.61 -1.99 -0.80 -0.59 -0.66 -0.25 -2.10 EPS Growth Rate 74.8% -75.8% 360.3% -136.7% -55.9% -152.9% 31.7% -27.0% 13.1% -62.1% 5.3% Dividends per Share 0.44 0.48 0.52 0.29 0.01 0.01 0.01 0.01 0.01 0.01 0.01 MGM Resorts International Income Statement In Millions Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Revenue 10797 11763 12900 5115 9704 11386 12648 13632 14293 14945 15,496 15,932 16,296 Casino 5013 5630 6444 2659 5184 6142 6943 7586 7965 8324 8645 8888 9097 Room 2153 2213 2323 887 1568 1853 2014 2120 2209 2309 2379 2440 2489 Food & Beverage 1872 1946 2139 773 1510 1757 1932 2061 2161 2264 2351 2420 2470 Entertainment, retail and other 1276 1313 1381 554 1159 1336 1447 1537 1614 1687 1740 1786 1822 Corporate and other 483 662 613 241 283 297 312 328 344 361 380 399 418 Cost of Goods Sold (COGS) 6,193 6,919 7,603 3,441 6,088 6,908 7,669 8,196 8,557 8,871 9,209 9,421 9,604 Casino 2673 3200 3624 1,620 2,886 3,317 3,749 4,059 4,221 4,370 4,539 4,622 4,730 Room 749 792 830 427 626 667 725 742 773 797 821 842 846 Food & Beverage 1415 1502 1662 721 1,206 1,353 1,478 1,576 1,653 1,709 1,787 1,839 1,865 Entertainment, retail and other 954 1000 1051 468 886 1,002 1,085 1,138 1,194 1,248 1,288 1,321 1,348 Reimbursement Costs 402 425 437 205 485 569 632 682 715 747 775 797 815 Depreciation & Amortization 994 1,178 1,376 1,263 1,309 1,375 1,443 1,516 1,591 1,671 1,755 1,842 1,934 Gross Income 3610 3,666 3,920 411 2,307 3,103 3,535 3,920 4,145 4,403 4,532 4,669 4,757 SG&A Expense 2035 2,335 2,481 2,526 2,836 2,334 2,403 2,454 2,430 2,541 2,634 2,708 2,770 EBIT (Operating Income) 1575 1,331 1,439 (2,116) (529) 769 1,132 1,466 1,715 1,862 1,898 1,960 1,987 Nonoperating Income 17 73 2,474 1,442 291 342 379 409 429 448 465 478 489 Interest Expense 669 770 848 719 1,013 892 888 906 901 920 940 961 983 Unusual Expense - Net -36 - 290 169 291 342 379 409 429 448 465 478 489 Income Before Taxes 960 634 2,775 (1,562) (1,543) (123) 244 560 814 942 958 1,000 1,005 Income Taxes -1133 50 632 (142) (197) (15) 29 67 98 113 115 120 121 Consolidated Net Income 2092 584 2,143 (1,420) (1,345) (109) 215 493 716 829 843 880 884 Minority Interest 154 138 168 (437) (309) (114) (126) ------Net Income 1938 445 1,975 (984) (1,036) 5 341 493 716 829 843 880 884

Per Share Weighted average common shares outstanding 572,253 544,253 524,173 493,519 493,522 493,524 493,527 493,528 493,528 493,528 493,528 493,528 493,528 Basic EPS 3.39 0.82 3.77 -1.99 -2.10 0.01 0.69 1.00 1.45 1.68 1.71 1.78 1.79 EPS Growth Rate 74.8% -75.8% 360.3% -152.9% 5.3% 100.5% 6471.4% 44.5% 45.3% 15.7% 1.7% 4.4% 0.5% Dividends per Share 0.44 0.48 0.52 0.01 0.01 0.01 0.01 0.30 0.30 0.41 0.41 0.41 0.41 MGM Resorts International Balance Sheet In Millions Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Revenue 10,797 11,763 12,900 5,115 9,704 11,386 12,648 13,632 14,293 14,945 15,496 15,932 16,296 Assets Cash & Short-Term Investments 1,500 1,527 2,330 6,520 8,094 9,815 10,175 10,799 11,547 12,683 13,887 15,138 16,404 Short-Term Receivables 583 686 1,375 1,330 1,456 1,139 1,265 1,363 1,429 1,494 1,550 1,593 1,630 Inventories 102 111 103 51 97 114 126 136 143 149 155 159 163 Other Current Assets 189 204 200 102 194 228 253 273 286 299 310 319 326 Total Current Assets 2,375 2,527 4,008 8,003 9,840 11,295 11,819 12,571 13,405 14,626 15,902 17,210 18,522 Gross Property, Plant & Equipment 27,885 29,747 26,774 25,178 26,186 27,495 28,870 30,313 31,829 33,420 35,091 36,846 38,688 Depreciation & Amortization 8,250 9,017 8,582 9,845 11,154 12,529 13,972 15,488 17,080 18,751 20,505 22,347 24,282 Operating Lease ROUA 0 0 4,393 11,330 11,783 12,373 12,991 13,641 14,323 15,039 15,791 16,581 17,410 Finance lease RPU assets, net 0 0 93 378 393 412 433 455 477 501 526 553 580 Net Property, Plant & Equipment 19,635 20,730 22,678 27,041 27,208 27,751 28,321 28,920 29,549 30,210 30,903 31,631 32,396 Total Investments and Advances 1,034 733 822 1,503 1,534 1,564 1,595 1,627 1,660 1,693 1,727 1,762 1,797 Intangible Assets 3,878 3,944 3,826 2,563 1,254 0 0 0 0 0 0 Goodwill 1,807 1,822 2,085 2,092 2,092 2,092 2,092 2,092 2,092 2,092 2,092 2,092 2,092 Deferred Tax Assets 885 828 1,390 0 0 0 0 0 0 0 0 0 0 Other Assets 430 455 457 205 388 455 506 545 572 598 620 637 652 Total Assets 30,044 31,039 35,266 41,407 42,315 43,157 44,333 45,756 47,278 49,219 51,244 53,332 55,459

Liabilities & Shareholders' Equity Current ST Debt & Curr. Portion LT Debt 158 43 95 118 122 125 129 133 137 141 145 150 154 Accounts Payable 255 303 235 102 194 228 253 273 286 299 310 319 326 Income Tax Payable 0 0 0 0 0 0 0 0 0 0 0 0 0 Other Current Liabilities 2,679 2,603 2,861 2,046 2,911 2,960 3,288 3,408 3,573 3,736 3,874 3,983 4,074 Total Current Liabilities 3,092 2,949 3,191 2,266 3,227 3,313 3,670 3,814 3,996 4,176 4,329 4,451 4,554 Long-Term Long-Term Debt 12,751 15,088 11,236 12,694 12,665 12,745 12,681 12,942 12,872 13,145 13,430 13,726 14,036 Operating Leases 4,278 11,104 11,548 12,125 12,731 13,368 14,036 14,738 15,475 16,249 17,061 Deferred Tax Liabilities 2,190 2,170 3,496 3,787 4,547 4,885 5,029 5,174 5,336 5,479 5,676 5,883 6,094 Other Liabilities 284 259 296 460 582 455 379 273 286 299 310 319 326 Total Liabilities 18,318 20,466 22,498 30,311 32,569 33,524 34,491 35,570 36,526 37,838 39,220 40,628 42,072 Equity Common Stock & APIC 5,364 4,098 3,536 3,361 3,361 3,361 3,361 3,361 3,361 3,361 3,361 3,361 3,361 Retained Earnings 2,253 2,423 4,201 2,992 1,951 1,952 2,288 2,631 3,197 3,826 4,469 5,149 5,833 Accumulated other comprehensive loss -4 -8 -10 -40 -40 -40 -40 -40 -40 -40 -40 -40 -40 Total Shareholders' Equity 7,613 6,513 7,727 6,313 5,272 5,273 5,609 5,952 6,518 7,147 7,790 8,470 9,154 Accumulated Minority Interest 4,114 4,060 5,041 4,784 4,474 4,360 4,234 4,234 4,234 4,234 4,234 4,234 4,234 Total Equity 11,727 10,573 12,768 11,097 9,747 9,633 9,843 10,186 10,753 11,381 12,024 12,704 13,388 Total Liabilities & Shareholders' Equity 30,044 31,039 35,266 41,408 42,315 43,157 44,334 45,756 47,278 49,219 51,244 53,332 55,459 MGM Resorts International Forecasted Cash Flow Statement In Millions Fiscal Years Ending Dec. 31 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Cash Flow From Operating Activities: Net Income (984) (1,036) 5 341 493 716 829 843 880 884 Depreciation & amortization 1,263 1,309 1,375 1,443 1,516 1,591 1,671 1,755 1,842 1,934 Change in account receivables 45 (126) 317 (126) (98) (66) (65) (55) (44) (36) Change in inventory 52 (46) (17) (13) (10) (7) (7) (6) (4) (4) Change in other current assets 98 (92) (34) (25) (20) (13) (13) (11) (9) (7) Change in accounts payable (133) 92 34 25 20 13 13 11 9 7 Change in other current liabilities (815) 865 49 328 120 165 163 138 109 91 Change in Deferred Tax Liabilities 290 760 339 143 145 162 143 197 207 211 Change in ST Debt & Curr. Portion LT Debt 23 4 4 4 4 4 4 4 4 4 Total Cash Flow from Operating Activities (161) 1,731 2,072 2,121 2,169 2,566 2,739 2,875 2,995 3,085

Cash Flow from Investing Activities Change in PP&E 1,596 (1,007) (1,309) (1,375) (1,443) (1,516) (1,591) (1,671) (1,755) (1,842) Change in Operating Lease ROUA (6,937) (453) (589) (619) (650) (682) (716) (752) (790) (829) Change in Finance lease RPU assets, net (285) (15) (20) (21) (22) (23) (24) (25) (26) (28) Change in Total Investments and Advances (681) (30) (31) (31) (32) (33) (33) (34) (35) (35) Change in Intangible Assets 1,263 1,309 1,254 ------Change in Goodwill (7) ------Change in Other Assets 252 (184) (67) (50) (39) (26) (26) (22) (17) (15) Change in Deferred Tax Assets 1,390 ------Change in other Liabilities 164 122 (127) (76) (107) 13 13 11 9 7 Total Cash Flow from Investing Activities (3,245) (258) (889) (2,172) (2,293) (2,266) (2,378) (2,493) (2,614) (2,741)

Cash Flow from Financing Activities Change in Long-Term Debt 1,458 (28) 80 (64) 261 (70) 273 285 296 309 Change in Operating Leases 6,826 444 577 606 637 668 702 737 774 812 Change in Accumulated Minority Interest (257) (309) (114) (126) ------Dividends Paid (225) (5) (5) (5) (150) (150) (200) (200) (200) (200) Change in Common Stock (175) ------Change in Accumulated other comprehensive loss (30) ------Total Cash Flow from Financing Activities 7,596 101 538 411 748 448 775 822 870 922

Net Increase in Cash $ 4,190 $ 1,574 $ 1,721 $ 360 $ 624 $ 748 $ 1,136 $ 1,204 $ 1,251 $ 1,266 Beginning Cash 2,330 $ 6,520 $ 8,094 $ 9,815 $ 10,175 $ 10,799 $ 11,547 $ 12,683 $ 13,887 $ 15,138 Ending Cash $ 6,520 $ 8,094 $ 9,815 $ 10,175 $ 10,799 $ 11,547 $ 12,683 $ 13,887 $ 15,138 $ 16,404 MGM Resorts International Common Size Income Statement % of Revenue Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Cost of Goods Sold (COGS) 57.36% 58.82% 58.94% 67.28% 62.73% 60.67% 60.64% 60.12% 59.87% 59.36% 59.43% 59.13% 58.94% Depreciation & Amortization 9.21% 10.01% 10.67% 24.69% 13.49% 12.07% 11.41% 11.12% 11.13% 11.18% 11.32% 11.56% 11.87% Gross Income 33.44% 31.17% 30.39% 8.03% 23.77% 27.25% 27.95% 28.76% 29.00% 29.46% 29.25% 29.31% 29.19% SG&A Expense 18.85% 19.85% 19.23% 49.40% 29.23% 20.50% 19.00% 18.00% 17.00% 17.00% 17.00% 17.00% 17.00% EBIT (Operating Income) 14.59% 11.31% 11.16% -41.37% -5.45% 6.75% 8.95% 10.76% 12.00% 12.46% 12.25% 12.31% 12.19% Nonoperating Income - Net 0.16% 0.62% 19.18% 28.20% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Interest Expense 6.19% 6.54% 6.57% 14.06% 10.44% 7.84% 7.02% 6.65% 6.30% 6.16% 6.07% 6.03% 6.03% Unusual Expense - Net -0.33% 0.00% 2.25% 3.31% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Income Taxes -10.49% 0.43% 4.90% -2.77% -2.03% -0.13% 0.23% 0.49% 0.68% 0.76% 0.74% 0.75% 0.74% Consolidated Net Income 19.38% 4.96% 16.61% -27.77% -13.86% -0.95% 1.70% 3.62% 5.01% 5.55% 5.44% 5.52% 5.42% Minority Interest 1.43% 1.18% 1.30% -8.54% -3.19% -1.00% -1.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Net Income 17.95% 3.79% 15.31% -19.23% -10.67% 0.05% 2.70% 3.62% 5.01% 5.55% 5.44% 5.52% 5.42% MGM Resorts International Common Size Balance Sheet % of Revenue Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Assets Cash & Short-Term Investments 13.89% 12.98% 18.06% 127.47% 83.41% 86.20% 80.45% 79.22% 80.78% 84.87% 89.62% 95.02% 100.66% Short-Term Receivables 5.40% 5.83% 10.66% 26.00% 15.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% 10.00% Inventories 0.95% 0.94% 0.80% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% Other Current Assets 1.75% 1.73% 1.55% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Total Current Assets 21.99% 21.48% 31.07% 156.47% 101.41% 99.20% 93.45% 92.22% 93.78% 97.87% 102.62% 108.02% 113.66% Gross Property, Plant & Equipment 258.25% 252.88% 207.56% 492.29% 269.85% 241.49% 228.26% 222.37% 222.68% 223.62% 226.46% 231.27% 237.41% Depreciation & Amortization 76.41% 76.65% 66.53% 192.49% 114.95% 110.04% 110.48% 113.62% 119.49% 125.46% 132.33% 140.27% 149.00% Operating Lease ROUA 0.00% 0.00% 34.06% 221.53% 121.43% 108.67% 102.72% 100.07% 100.21% 100.63% 101.91% 104.07% 106.83% Finance lease RPU assets, net 0.00% 0.00% 0.72% 7.38% 4.05% 3.62% 3.42% 3.34% 3.34% 3.35% 3.40% 3.47% 3.56% Net Property, Plant & Equipment 181.85% 176.23% 175.80% 528.71% 280.38% 243.74% 223.93% 212.15% 206.73% 202.14% 199.43% 198.54% 198.80% Total Investments and Advances 9.58% 6.23% 6.38% 29.40% 15.80% 13.74% 12.61% 11.94% 11.61% 11.33% 11.14% 11.06% 11.03% Intangible Assets 35.92% 33.53% 29.66% 50.11% 12.92% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Goodwill 16.74% 15.49% 16.16% 40.90% 21.56% 18.37% 16.54% 15.35% 14.64% 14.00% 13.50% 13.13% 12.84% Deferred Tax Assets 8.20% 7.04% 10.77% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other Assets 3.99% 3.87% 3.54% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Total Assets 278.25% 263.86% 273.38% 809.60% 436.07% 379.05% 350.53% 335.65% 330.77% 329.33% 330.70% 334.75% 340.32%

Liabilities & Shareholders' Equity Current ST Debt & Curr. Portion LT Debt 1.46% 0.37% 0.74% 2.31% 1.25% 1.10% 1.02% 0.98% 0.96% 0.94% 0.94% 0.94% 0.95% Accounts Payable 2.36% 2.57% 1.83% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Income Tax Payable 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other Current Liabilities 24.81% 22.13% 22.18% 40.00% 30.00% 26.00% 26.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% Total Current Liabilities 28.64% 25.07% 24.74% 44.31% 33.25% 29.10% 29.02% 27.98% 27.96% 27.94% 27.94% 27.94% 27.95% Long-Term Long-Term Debt 118.09% 128.27% 87.10% 248.19% 130.52% 111.94% 100.26% 94.94% 90.05% 87.96% 86.67% 86.16% 86.13% Operating Leases 0.00% 0.00% 33.16% 217.10% 119.00% 106.50% 100.66% 98.06% 98.20% 98.62% 99.87% 101.99% 104.70% Deferred Tax Liabilities 20.28% 18.45% 27.10% 74.04% 46.85% 42.91% 39.76% 37.95% 37.33% 36.66% 36.63% 36.93% 37.40% Other Liabilities 2.63% 2.20% 2.30% 9.00% 6.00% 4.00% 3.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Total Liabilities 169.65% 173.99% 174.41% 592.64% 335.63% 294.45% 272.71% 260.93% 255.54% 253.18% 253.10% 255.01% 258.17% Equity Common Equity 49.68% 34.84% 27.41% 65.71% 34.64% 29.52% 26.57% 24.66% 23.51% 22.49% 21.69% 21.10% 20.62% Total Shareholders' Equity 70.51% 55.37% 59.90% 123.43% 54.33% 46.31% 44.35% 43.66% 45.60% 47.82% 50.27% 53.16% 56.17% Accumulated Minority Interest 38.10% 34.51% 39.08% 93.53% 46.11% 38.30% 33.48% 31.06% 29.62% 28.33% 27.32% 26.58% 25.98% Total Equity 108.61% 89.88% 98.98% 216.97% 100.44% 84.61% 77.82% 74.72% 75.23% 76.16% 77.60% 79.74% 82.15% Total Liabilities & Shareholders' Equity 278.25% 263.87% 273.39% 809.60% 436.07% 379.05% 350.53% 335.65% 330.77% 329.34% 330.70% 334.75% 340.32% MGM Resorts International Value Driver Estimation In Millions Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

NOPLAT: Revenue 10,797 11,763 12,900 5,115 9,704 11,386 12,648 13,632 14,293 14,945 15,496 15,932 16,296 Cost of Goods Sold (COGS) 6,193 6,919 7,603 3,441 6,088 6,908 7,669 8,196 8,557 8,871 9,209 9,421 9,604 Depreciation & Amortization 994 1,178 1,376 1,263 1,309 1,375 1,443 1,516 1,591 1,671 1,755 1,842 1,934 SG&A Expense 2,035 2,335 2,481 2,526 2,836 2,334 2,403 2,454 2,430 2,541 2,634 2,708 2,770 Implied operating lease interest (+) 30 31 45 47 50 53 56 59 63 66 70 74 78 EBITDA: 1,605 1,362 1,484 (2,068) (479) 822 1,188 1,526 1,778 1,928 1,968 2,034 2,065 Adjusted Taxes: Marginal Tax Rate 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Provision for income taxes (+) (1,133) 50 632 (142) (197) (15) 29 67 98 113 115 120 121 Tax shield on interest expense (+) 100 115 127 108 152 134 133 136 135 138 141 144 147 Tax on non-operating income (-) (3) (11) (371) (216) (44) (51) (57) (61) (64) (67) (70) (72) (73) Tax shield on unusual expense (+) (5) - 44 25 44 51 57 61 64 67 70 72 73 Adjusted Taxes: (1,040) 155 432 (225) (45) 119 162 203 233 251 256 264 268

Change in Deferred Income Taxes (151) 57 (562) 1,390 ------

NOPLAT 2,494 1,264 490 (454) (434) 703 1,025 1,322 1,545 1,677 1,712 1,770 1,797 NOPLAT Growth Rate 140.69% -49.31% -61.24% -192.56% -4.34% -261.94% 45.91% 28.99% 16.82% 8.56% 2.06% 3.43% 1.52%

Invested Capital (IC): Operating Current Assets: Normal Cash 324 353 387 153 291 342 379 409 429 448 465 478 489 Accounts Receivable 583 686 1,375 1,330 1,456 1,139 1,265 1,363 1,429 1,494 1,550 1,593 1,630 Inventory 102 111 103 51 97 114 126 136 143 149 155 159 163 Other Current Assets 189 204 200 102 194 228 253 273 286 299 310 319 326 Operating Current Assets: 1,199 1,353 2,065 1,637 2,038 1,822 2,024 2,181 2,287 2,391 2,479 2,549 2,607

Non-interest CL: Accounts Payable 255 303 235 102 194 228 253 273 286 299 310 319 326 Income Tax Payable ------Other Current Liabilities 2,679 2,603 2,861 2,046 2,911 2,960 3,288 3,408 3,573 3,736 3,874 3,983 4,074 Non-interest CL: 2,934 2,905 3,096 2,148 3,105 3,188 3,541 3,681 3,859 4,035 4,184 4,302 4,400

Other LT Operating Assets: Net Property, Plant & Equipment 19,635 20,730 22,678 27,041 27,208 27,751 28,321 28,920 29,549 30,210 30,903 31,631 32,396 Intangible Assets 3,878 3,944 3,826 2,563 1,254 814 436 187 84 33 15 - - Other Assets 430 455 457 205 388 455 506 545 572 598 620 637 652 PV of Operating Leases 540 787 4,810 811 816 833 850 868 886 906 927 949 972 Other LT Operating Assets: 24,483 25,916 31,771 30,620 29,666 29,853 30,113 30,520 31,092 31,747 32,465 33,218 34,020

Other LT operating liabilities: Other Liabilities 284 259 296 460 582 455 379 273 286 299 310 319 326

Other LT operating liabilities: 284 259 296 460 582 455 379 273 286 299 310 319 326

Invested Capital (IC) 22,463 24,105 30,444 29,648 28,016 28,031 28,216 28,748 29,234 29,804 30,451 31,147 31,901

Free Cash Flow (FCF): NOPLAT 2,494 1,264 490 (454) (434) 703 1,025 1,322 1,545 1,677 1,712 1,770 1,797 Change in IC 558 1,642 6,339 (795) (1,632) 15 185 532 485 571 647 696 755 FCF 1,936 (377) (5,849) 342 1,199 688 841 790 1,060 1,107 1,065 1,075 1,043

Return on Invested Capital (ROIC): NOPLAT 2,494 1,264 490 (454) (434) 703 1,025 1,322 1,545 1,677 1,712 1,770 1,797 Beg. IC 21,905 22,463 24,105 30,444 29,648 28,016 28,031 28,216 28,748 29,234 29,804 30,451 31,147 ROIC 11.39% 5.63% 2.03% -1.49% -1.46% 2.51% 3.66% 4.69% 5.37% 5.74% 5.74% 5.81% 5.77%

Economic Profit (EP): Beg. IC 21,905 22,463 24,105 30,444 29,648 28,016 28,031 28,216 28,748 29,234 29,804 30,451 31,147 x (ROIC - WACC) 4% -1% -5% -8% -8% -4% -3% -2% -2% -1% -1% -1% -1% EP 972 (296) (1,185) (2,569) (2,494) (1,244) (922) (638) (452) (354) (359) (345) (367) MGM Resorts International Key Management Ratios

Fiscal Years Ending Dec. 31 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Liquidity Ratios: Current Ratio (CA/CL) 76.79% 85.69% 125.58% 353.13% 304.95% 340.89% 322.00% 329.63% 335.44% 350.22% 367.31% 386.62% 406.72% Cash Ratio (Cash+Marketable Securities)/(CL) 81.95% 76.63% 98.76% 354.02% 298.34% 343.42% 320.67% 325.83% 330.48% 344.24% 360.67% 379.66% 399.65% Quick Ratio (Cash+Marketable Securities+ AR)/CL 100.80% 99.88% 141.84% 412.70% 343.45% 377.79% 355.13% 361.58% 366.25% 380.02% 396.47% 415.45% 435.43%

Asset-Management Ratios: Account Receivable Turnover (Revenue)/(Accounts Receivable) 1851.75% 1715.64% 938.24% 384.62% 666.67% 1000.00% 1000.00% 1000.00% 1000.00% 1000.00% 1000.00% 1000.00% 1000.00% Total Assets Turnover (Revenue)/(Total Assets) 35.94% 37.90% 36.58% 12.35% 22.93% 26.38% 28.53% 29.79% 30.23% 30.36% 30.24% 29.87% 29.38% Net Working Capital Turnover (Revenue/ NWC) 900.87% 869.47% 624.66% 312.50% 476.19% 625.00% 625.00% 625.00% 625.00% 625.00% 625.00% 625.00% 625.00%

Financial Leverage Ratios: Debt Ratio (TL/TA) 60.97% 65.94% 63.80% 73.20% 76.97% 77.68% 77.80% 77.74% 77.26% 76.88% 76.54% 76.18% 75.86% Equity Ratio (Common Equity/TA) 25.34% 20.98% 21.91% 15.25% 12.46% 12.22% 12.65% 13.01% 13.79% 14.52% 15.20% 15.88% 16.51% Debt to Equity (TL/Common Equity) 341.49% 499.42% 636.26% 901.83% 969.02% 997.45% 1026.21% 1058.32% 1086.76% 1125.78% 1166.91% 1208.82% 1251.76%

Profitability Ratios: Profit Margin (Net Income/ Net Sales) 17.95% 3.79% 15.31% -19.23% -4.09% -2.54% -2.59% -0.91% -7.25% 0.03% 2.20% 3.10% 4.40% Gross Margin (Sales-Cost of Revenue)/ Revenue 42.64% 41.18% 41.06% 32.72% 37.27% 39.33% 39.36% 39.88% 40.13% 40.64% 40.57% 40.87% 41.06% EBITDA Margin (EBITDA/ Net Sales) 14.87% 11.58% 11.51% -40.44% -4.94% 7.22% 9.39% 11.19% 12.44% 12.90% 12.70% 12.77% 12.67% ROE (Net Income/ TA) 6.45% 1.44% 5.60% -2.38% -2.45% 0.01% 0.77% 1.08% 1.52% 1.68% 1.64% 1.65% 1.59%

Payout Policy Ratios: Dividend Payout Ratio (Dividend/EPS) 12.99% 58.64% 13.80% -20.61% -0.48% 95.05% 1.45% 30.42% 20.94% 24.13% 23.73% 22.74% 22.63% MGM Resorts International Weighted Average Cost of Capital (WACC) Estimation

Cost of Equity: ASSUMPTIONS: Risk-Free Rate 0.75% 10-year treasury Beta 1.90 5-year monthly beta Equity Risk Premium 5.15% Henry Fund ERP Cost of Equity 9.11%

Cost of Debt: Pre-Tax Cost of Debt 5.70% Blended rate of borrowings interest rates Marginal Tax Rate 15% After-Tax Cost of Debt 4.85%

Market Value of Common Equity: MV Weights Total Shares Outstanding 493.9 Current Stock Price $25.90 MV of Equity 12,792.01 49.30%

Market Value of Debt: Short-Term Debt 118 Long-Term Debt 12,694 PV of Operating Leases 346 MV of Total Debt 13,158 50.70%

Market Value of the Firm 25,950 100.00%

Estimated WACC 6.95% MGM Resorts International Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models

Key Inputs: CV Growth of NOPLAT 1.52% CV Year ROIC 5.77% WACC 6.95% Cost of Equity 9.11%

Fiscal Years Ending Dec. 31 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

DCF Model: Free Cash Flow (FCF) 341.78 1,198.53 687.50 840.56 790.06 1,059.56 1,106.53 1,064.93 1,074.54 1,042.51 Continuing Value (CV) 24,388.03 PV of FCF 319.58 1,047.87 562.03 642.52 564.69 708.12 691.47 622.24 587.07 13,324.24

Value of Operating Assets: 19,069.81 Non-Operating Adjustments Excess Cash 153.44 Less: PV of operating leases (811.24) Less: PV ESOP (139.21) Less: Minority Interest (436.68) Total Investments and Advances 1,503.43 Current portion of LT debt (118.18) Long term debt (11,236.00) Value of Equity 7,985.37 Shares Outstanding 493.52 Intrinsic Value of Last FYE 16.18 Implied Price as of Today 17.40

EP Model: Economic Profit (EP) (2,568.66) (2,493.71) (1,243.75) (922.22) (637.85) (452.37) (353.83) (358.99) (345.29) (366.69) Continuing Value (CV) (6,758.55) PV of EP (2,401.80) (2,180.24) (1,016.77) (704.94) (455.90) (302.32) (221.11) (209.76) (188.65) (3,692.49)

Total PV of EP (11,373.98) Invested Capital (last FYE) 30,443.79 Value of Operating Assets: 19,069.81 Non-Operating Adjustments Excess Cash 153.44 Less: PV of operating leases (811.24) Less: PV ESOP (139.21) Less: Minority Interest (436.68) Total Investments and Advances 1,503.43 Current portion of LT debt (118.18) Long term debt (11,236.00) Value of Equity 7,985.37 Shares Outstanding 493.52 Intrinsic Value of Last FYE 16.18 Implied Price as of Today 17.40 MGM Resorts International Dividend Discount Model (DDM) or Fundamental P/E Valuation Model

Fiscal Years Ending Dec. 31 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

EPS $ (1.99) $ (2.10) $ 0.01 $ 0.69 $ 1.00 $ 1.45 $ 1.68 $ 1.71 $ 1.78 $ 1.79

Key Assumptions CV growth of EPS 0.49% CV Year ROE 9.66% Cost of Equity 9.11%

Future Cash Flows P/E Multiple (CV Year) 11.01 EPS (CV Year) $ 1.79 Future Stock Price Dividends Per Share 0.01 0.01 0.01 0.01 0.30 0.30 0.41 0.41 0.41 $ 19.72 Discounted Cash Flows 0.01 0.01 0.01 0.01 0.20 0.18 0.22 0.20 0.18 9.00

Intrinsic Value as of Last FYE $ 10.02 Implied Price as of Today $ 10.77 MGM Resorts International Relative Valuation Models

Ticker Company Price MRKT (B) Sales TTM (B) P/S WYNN Wynn Resorts $92.19 $9.94 $5.913 1.68 LVS Las Vegas Sands $58.28 $44.52 $5.975 7.45 IGT International Game Technology $11.91 $2.44 $3.810 0.64 CZR Ceasars Entertainment $63.73 $13.27 $2.570 5.16 PENN Penn National Gaming $65.42 $10.10 $5.301 1.91 AVG: $4.714 3.37

MGM MGM Resorts International $25.90 12.8 $7.310 1.75

Relative 2020 P/S $24.62 MGM Resorts International Valuation of Options Granted under ESOP

Current Stock Price $25.90 Risk Free Rate 0.75% Current Dividend Yield 0.05% Annualized St. Dev. of Stock Returns 57.00%

Average Average B-S Value Range of Number Exercise Remaining Option of Options Outstanding Options of Shares Price Life (yrs) Price Granted Range 1 10,991 23.16 4.42 $ 12.67 $ 139,209 Total 10,991 $ 23.16 4.42 $ 12.71 $ 139,209 MGM Resorts International Present Value of Operating Lease Obligations In Thousands Fiscal Years Ending Dec. 31 2013 2014 2015 2016 2017 2018 2019 Year 1 42,951 53,380 54,780 37,173 39,429 106,643 345,678 Year 2 42,164 53,372 26,067 33,018 35,525 83,150 324,281 Year 3 41,387 24,333 22,666 29,722 33,754 62,437 213,799 Year 4 16,322 22,246 20,564 29,976 35,293 47,036 316,336 Year 5 17,739 20,300 21,564 32,416 32,458 45,157 320,642 Thereafter 1,095,046 1,104,400 1,097,757 1,380,274 1,360,206 1,357,611 10,066,850 Total Minimum Payments 1,255,609 1,278,031 1,243,398 1,542,579 1,536,665 1,702,034 11,587,586 Less: Cumulative Interest 887,495 869,246 846,552 1,013,755 996,801 914,909 6,777,290 PV of Minimum Payments 368,114 408,785 396,846 528,824 539,864 787,125 4,810,296

Implied Interest in Year 1 Payment 3,292 20,983 23,301 22,620 30,143 30,772 44,866

Pre-Tax Cost of Debt 5.7% 5.7% 5.7% 5.7% 5.7% 5.7% 5.7% Years Implied by Year 6 Payment 62 54 51 43 42 30 31 Expected Obligation in Year 6 & Beyond 17,739 20,300 21,564 32,416 32,458 45,157 320,642 MGM Resorts International Effects of ESOP Exercise and Share Repurchases on Common Stock Account and Number of Shares Outstanding

Number of Options Outstanding (shares): 11 Average Time to Maturity (years): 4.42 Expected Annual Number of Options Exercised: 2.49

Current Average Strike Price: $ 23.16 Cost of Equity: 9.11% Current Stock Price: $25.90

Fiscal Years Ending Dec. 31 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E Increase in Shares Outstanding: 2.49 2.49 2.49 2.49 1.00 Average Strike Price: $ 23.16 $ 23.16 $ 23.16 $ 23.16 $ 23.16 $ 23.16 $ 23.16 $ 23.16 $ 23.16 $ 23.16 Increase in Common Stock Account: 58 58 58 58 23 - - - - -

Change in Treasury Stock 0 0 0 0 0 0 0 0 0 0 Expected Price of Repurchased Shares: $ 25.90 $ 28.26 $ 30.83 $ 33.64 $ 36.71 $ 40.05 $ 43.70 $ 47.68 $ 52.03 $ 56.77 Number of Shares Repurchased: ------

Shares Outstanding (beginning of the year) 493,517 493,519 493,522 493,524 493,527 493,528 493,528 493,528 493,528 493,528 Plus: Shares Issued Through ESOP 2 2 2 2 1 0 0 0 0 0 Less: Shares Repurchased in Treasury ------Shares Outstanding (end of the year) 493,519 493,522 493,524 493,527 493,528 493,528 493,528 493,528 493,528 493,528 MGM Resorts International Sensitivity Tables

WACC CV Growth of Noplat 17.40 8.04% 7.66% 7.29% 6.95% 6.60% 6.27% 5.96% 17.40 1.30% 1.37% 1.45% 1.52% 1.60% 1.68% 1.76% 4.42% 9.68 12.00 14.51 17.21 20.29 23.64 27.29 14.25% 17.76 17.67 17.56 17.45 17.34 17.22 17.09 4.65% 9.71 12.04 14.56 17.27 20.36 23.72 27.39 14.50% 17.74 17.65 17.55 17.43 17.32 17.20 17.07 4.89% 9.75 12.09 14.61 17.33 20.43 23.81 27.49 14.75% 17.72 17.63 17.53 17.42 17.30 17.18 17.05 5.15% 9.79 12.13 14.66 17.40 20.51 23.90 27.59 15.00% 17.71 17.61 17.51 17.40 17.28 17.16 17.03 5.41% 9.82 12.18 14.72 17.46 20.59 23.99 27.69 15.25% 17.69 17.59 17.49 17.38 17.26 17.14 17.00

5.68% 9.86 12.23 14.78 17.53 20.67 24.08 27.80 Rate Tax Marginal 15.50% 17.67 17.58 17.47 17.36 17.24 17.12 16.98 EquityRisk Premium 5.96% 9.90 12.28 14.84 17.60 20.75 24.18 27.92 15.75% 17.65 17.56 17.45 17.34 17.22 17.10 16.96

Beta CV Growth of Casino Revenue 17.40 1.63 1.71 1.81 1.90 2.00 2.09 2.20 17.40 1.71% 1.81% 1.90% 2.00% 2.10% 2.21% 2.32% 0.64% 22.39 20.56 18.76 17.02 15.39 13.81 12.26 1.71% 17.61 17.58 17.56 17.53 17.50 17.48 17.45 0.68% 22.49 20.67 18.88 17.14 15.52 13.93 12.39 1.81% 17.57 17.54 17.52 17.49 17.46 17.43 17.40 0.71% 22.61 20.78 19.00 17.26 15.65 14.07 12.53 1.90% 17.52 17.50 17.47 17.44 17.42 17.39 17.36 0.75% 22.72 20.91 19.13 17.40 15.78 14.21 12.67 2.00% 17.48 17.45 17.43 17.40 17.37 17.34 17.31 0.79% 22.84 21.03 19.26 17.53 15.92 14.35 12.82 Revenue 2.10% 17.43 17.40 17.38 17.35 17.32 17.29 17.26 Risk FreeRisk Rate 0.83% 22.96 21.16 19.40 17.68 16.07 14.50 12.97 2.21% 17.38 17.35 17.33 17.30 17.27 17.24 17.20 CV Growth of Room Room of Growth CV 0.87% 23.10 21.30 19.54 17.83 16.23 14.66 13.13 2.32% 17.33 17.30 17.27 17.24 17.21 17.18 17.15