Q2 2024 Mohegan Gaming & Entertainment Earnings Call

Participants

Ari Glazer; CFO; Mohegan Gaming & Entertainment

Joe Hasson

Joffre Wells; Corporate Treasurer; Mohegan Gaming & Entertainment

Raymond Pineault; President & CEO; Mohegan Gaming & Entertainment

Colin Alexander Mansfield; Director of Credit Research & Lead Analyst; CBRE Securities, LLC, Research Division

David Levine; VP; MidOcean Partners LLP

David Richard Hargreaves; Research Analyst; Stifel, Nicolaus & Company, Incorporated, Research Division

James Forristall Kayler; MD; BofA Securities, Research Division

Luis Ricardo Chinchilla; Research Analyst; Deutsche Bank AG, Research Division

Michael Patrick Kerrane; Senior Fixed Income Research Analyst; Truist Securities, Inc., Research Division

Presentation

Operator

Greetings, and welcome to the Mohegan Second Quarter 2024 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Joffre Wells, Vice President of Capital Markets, Investor Relations and Corporate Treasury.
Thank you, Joffre. You may begin.

Joffre Wells

Thank you, operator. Good morning, everyone, and thank you for joining us.
Participating in today's call are Ray Pineault, our CEO; Ari Glazer, our CFO; and Joe Hasson, our Interim COO.
With that, I will now review our disclaimers. I would like to remind everyone that our comments today may contain forward-looking statements made under the safe harbor provisions of the Federal Securities Laws, and actual results may differ materially from any predictions contained in these statements.
In addition, our comments may also refer to non-GAAP financial measures. A reconciliation of these measures to corresponding GAAP financial measures can be found in our press release, which is available on our website under the Investor Relations section at www.mohegangaming.com.
On today's call, Ray will provide some opening remarks. Joe will provide the operating segment walk through and property results, and Ari will provide a financial review, after which we will open up the call for questions. As a reminder, the earnings release and supplemental earnings deck for the quarter ended March 31, 2024 were posted on our website earlier today.
And with that, I will turn the call over to Ray.

Raymond Pineault

Thank you, Joffre. Good morning, everyone, and thank you for joining our fiscal 2024 second quarter earnings call.
Before diving into our operating results, I want to highlight the strides we've made this year towards our long-term objective of becoming one of the premier global integrated resort operators. A transformation of this magnitude takes time, and I believe the strategy we're implementing puts us on the right path. We're excited to share some of the important milestones we've reached this year and have helped build a foundation for our future.
Core to that foundation is Mohegan's guiding philosophy, The Spirit of Aquai, which is based on our 4 key principles; welcoming, mutual respect, cooperation and building relationships. These principles define who we are and how we treat each other, and they all rely on one element, people. It's why we place such emphasis on the people we bring into Mohegan.
Our focus on people, process and systems has become an extension of our ethos to ensure Mohegan thrives for 13 generations to come and beyond. I'm excited to have Ari and Joe on the call today. Collectively, they add tremendous depth to our leadership team and will help ensure we maintain an unwavering focus as we execute our strategy.
Ari, as our CFO, brings a wealth of knowledge, with over 20 years of Investment Banking experience, advising global gaming and hospitality companies. His deep relationships in the industry will serve us well, as we continue working to optimize our capital structure. Our analysis is well underway, and we look forward to sharing more once we conclude our findings.
In regard to Joe, appointing him as Interim COO was an easy decision, given his prior experience as COO of Station Casinos and Red Rock Resorts. Joe has been with us in a leadership position at Mohegan for 4 years now, and the organization as a whole stands to benefit even more from his 40-years of experience in gaming and hospitality.
Ari and Joe are a reflection of our commitment to continuous growth, as the respective records of operating excellence and success will complement our leadership team and propel us towards our goals. Reflecting further on our guiding philosophies, building relationships is a principle that has brought added focus to our process for how we engage the analyst, investor communities.
As we look to grow our investor universe, we are being increasingly proactive with our outreach. We believe this ground game is crucial to establishing greater awareness and interest in Mohegan. As part of our effort to provide more visibility, we devised new reporting segments. This should make it easier to understand our structure and track performance.
In our supplemental earnings deck, you will now see 5 core operating units domestic, international, digital, corporate and other and management development other. We believe this refinement, combined with our effort to increase communication, is making a difference and we will continue to be diligent in our drive to build strong relationships with our investors.
Turning to systems. On April 1, Mohegan celebrated go-live for our global ERP rollout of Workday as our new Back of House system to streamline our finance, HR and IT platforms across the organization. Workday will enable us to centralize operating functions in addition to a variety of work streams to vastly improve cross functional collaboration. It will significantly upgrade our ability to run real-time analytics to provide deeper insight across the company to better inform our decision making.
As Mohegan's evolution progressed and we began to implement our strategy, it became clear that our transformation required us to enhance our technology infrastructure to support our growth. In addition, we also deployed Birchstreet to streamline our procurement needs across the enterprise, which enable us to realize greater efficiencies. We believe the benefits from a cost-out perspective will become evident over time. As you can imagine, a rollout of this scale demanded contributions across the organization and I want to convey my gratitude to everyone that worked on the integration and all of our team members supporting this mission critical initiative. Well done.
Moving to digital. We are excited to share that we launched in Pennsylvania on April 2. The growth of our brand confirms our belief that digital is a natural complement to our land-based resorts, and we are optimistic that we can continue to drive success through our differentiated approach using enhanced data analytics.
This has helped us derive greater insight into player segmentation and preferences, to better inform our marketing efforts and ensures we provide the best experience for our guests online and at our resorts. This has enabled us to increase our wallet share as we continue to diversify our revenue streams by engaging our guests anywhere they want to play. Our expansion in digital represents another important component to our strategy to transform into a premier global integrated resort operator.
Shifting to INSPIRE. We marked a historic moment in Mohegan's history, with a grand opening of the resort on March 5, headlined by 2 consecutive days of performances from the Grammy Award-Winning band, Maroon 5. These early demonstrations of the resort's arena and MICE capabilities are paying dividends as we continue to enjoy increased brand awareness from hosting marquee events like the World Table Tennis Championship tournament, which was broadcast regionally and in China from March 27 to the 31.
These milestone events have been an important part of the ongoing marketing effort to highlight INSPIRE as one of the premier destinations in Asia. In the last few weeks alone, we've opened our innovative food court concept and the digital interactive art attraction, Le Space, which is Korea's largest media art exhibition hall. It provides captivating and immersive experiences that engage the senses through touch, motion, recognition and sound.
Heading into the summer, we have a packed calendar and we'll be hosting the 2024 Weverse Con Music Festival on June 15 and 16, which will utilize our arena and the outdoor Discovery Park. This event historically has been a huge draw from China and Japan, and will continue to showcase INSPIRE'S ability to successfully host blockbuster events. The highlight reel we shared during the prior quarter was only a sample of the amenities INSPIRE offers to the region. It's an absolute category killer that is second to none, and we're encouraged by the trends we saw with month-over-month improvements in our March and April results at the casino resort.
Finally, as you saw in our Tuesday press release, we've reached an agreement, subject to regulatory approvals, transition management and all operations of the casino at Virgin Hotels Las Vegas to our partners. Mohegan was proud to be the first Native American tribe to operate in the Las Vegas Strip corridor. And now that we've completed our objectives to launch the casino and its day-to-day operations, we believe this is a natural progression for the casino to be managed in-house.
Now, I'll turn the call over to Joe for the segment walk.

Joe Hasson

Thank you, Ray, and good morning. And Ray, thank you so much for the opportunity to be here today.
For our consolidated business on a consolidated basis, net revenues of $461.7 million increased 13.8% compared with the prior year and were the highest quarterly net revenues in our company's history. Adjusted EBITDA of $84 million decreased 17.8% year-over-year and was primarily impacted by 2 main factors during the period. INSPIRE experienced elevated labor and marketing spend that is typical with the launch of a destination resort of its magnitude and incurred one-time expenditures related to the resort's grand opening.
In addition, as mentioned on our previous call, Niagara Resorts' operating results are now impacted by non-controlling interest adjustments related to our equity partners' 40% ownership of the operating entity, which resulted in a reduction in Mohegan's share of the profits. Excluding these factors, our consolidated adjusted EBITDA would have been up from prior year results.
Moving on to the domestic segment. In the second quarter, our domestic segment generated net revenues of $300.4 million, an increase of $3.1 million or 1% from the prior year. Gaming revenues decreased $7.1 million or 3.3% compared with the prior year, primarily due to lower gaming volumes. Non-gaming revenues increased $10.2 million or 12.9% over the prior year, primarily driven by entertainment, food and beverage revenues.
Hotel revenues increased by $961,000 or 4% from the prior year, and ADR of $149 increased 4.2% from the prior year. Hotel occupancy of 92% was down slightly from the prior year. For the quarter, our domestic properties generated adjusted EBITDA of $79.7 million and an adjusted EBITDA margin of 26.5%.
In our international segment, net revenues of $108.1 million increased $37.3 million or 52.8% compared with the prior year, primarily due to the opening of INSPIRE. Gaming revenues increased $9.9 million or 21.7% compared with the prior year. Non-gaming revenues of $52.3 million increased $27.4 million or 110.1% over the prior year, with the majority of the growth attributed to INSPIRE, along with strong entertainment, food and beverage revenues at Niagara Resorts.
After accounting for non-controlling interest of $5 million in the period, the adjusted EBITDA loss was $16.6 million for the quarter. As a reminder, INSPIRE's casino did not open until February 3, and its grand opening was held on March 5. The resort is still in its ramp-up phase. However, we are pleased with the trends we are seeing in April and May.
In our digital segment, net revenues of $38.8 million increased $16.1 million or 70.8% compared with the prior year period. The increase is partially due to an accounting adjustment in the current period, which increased both net revenues and expenses by $8.8 million. Excluding the tax reimbursements, net revenues would have been $30 million, up $7.3 million or 32%, respectively, from the prior year period. Adjusted EBITDA of $20.2 million increased $2.1 million or 11.6% from the prior year period. Note that the prior year period benefited from a favorable one-time cumulative adjustment related to the revenue share allocation from our Connecticut digital gaming partner.
Going to the management development and other segments of our business. At ilani in Washington, net revenues increased 6.3% from the prior year. Gaming revenues grew 4.7%, primarily due to increased slot volumes during the period. Non-gaming revenues grew 20.2%, driven by hotel revenues and continued growth in food and beverage sales. In Atlantic City, Resorts Casino Hotel net revenues were in line with the prior year results. Gaming volumes yielded mixed results, with slot handle increasing by 4.6% compared with the prior year, while table drop was down 3.3%. Non-gaming revenues increased 9.6% driven by higher food sales and hotel revenues.
I will now turn it over to Ari for a review of additional financial information.

Ari Glazer

Thank you, Joe.
I'll highlight a few figures from our balance sheet at quarter end. Cash and cash equivalents totaled $197.8 million. Total debt, including finance leases and excluding unamortized debt issuance cost and discounts was $3.21 billion, which is a reduction of $133.5 million from the December quarter. The decrease primarily relates to paydowns of our corporate revolver and the Niagara credit facility and the conversion of the Las Vegas finance lease to an operating lease. The total net leverage ratio under the Mohegan credit agreement was 4.7x, a decrease of 0.26x from the end of the December 2023 quarter.
We had $96 million drawn on our $263 million revolver. And after factoring in approximately $21 million in outstanding letters of credit, we had approximately $146 million available for borrowing under the Mohegan credit facility. From a cash flow perspective, distributions to the Tribe totaled $14 million for the quarter, and capital expenditures totaled $38.7 million for the quarter, with the majority related to the development costs of Mohegan INSPIRE.
Now, we'll open the call for questions. I'll turn things over to the operator.

Question and Answer Session

Operator

(Operator Instructions) Our first question is from Ricardo Chinchilla with Deutsche Bank.

Luis Ricardo Chinchilla

I wanted to start with the Mohegan INSPIRE property. I was hoping if you could give us a cadence of how the loss in the quarter was generated, either by month or by just letting us how much was the expenses related to incremental marketing and with the grand property opening? And if we are now going breakeven or even generating positive EBITDA at the property and your expectations with regards to cash flow burn or further support from the domestic entity to the Korea property for the full-year 2024?

Raymond Pineault

Well, Ricardo, thanks for the question. We appreciate it. Always nice to hear from you. I'm going to turn it over to Joe to provide his initial thoughts on your questions. There was a lot there.

Joe Hasson

Ricardo, thank you. This is Joe. What we see right now is breakeven EBITDA on the near horizon measured month-to-month. Of course, during the initial ramp, like any resort of that caliber, as I mentioned in my earlier comments, we have to spend both labor and marketing dollars in order to give the ramp and the launch the right oomph and the right velocity. But again, near-term horizon, we see on a month-to-month basis, breakeven EBITDA approaching in the immediate ramp.

Raymond Pineault

And Ricardo, the only thing I would add to that is that on your question is that we currently do not anticipate any additional support from the domestic entity. As Joe mentioned, we anticipate near-term ramp to EBITDA neutral or better, and therefore, no further support do we anticipate from the domestic entity.

Luis Ricardo Chinchilla

That's great to hear. On my follow up, I was hoping if you could comment on your refinancing strategy. You have upcoming maturities for 2025 and then you have the bonds in the domestic entity. Do you guys anticipate to further tackle Korea, then tackling the U.S. domestic debt? Or how are you guys thinking about that financing strategy and perhaps timing on when you anticipate those discussions to begin?

Ari Glazer

Sure. Thanks, Ricardo. It's Ari. I appreciate the question. Look, I'll share some thoughts that hopefully are helpful. First off, to level set, right, today is May 9, is my ninth day at Mohegan. So, I think it's safe to say we are still early in developing our plans and our refinancing strategy and timing. But I'll share some thoughts. Obviously, it is a near-term focus. As you know, I've spent my whole career on Wall Street in capital markets advisory roles. And look, it gives me a lot of confidence that we have the tools to tackle the capital structure and optimize Mohegan's cost of capital over time. Look, when I look at the restricted group and the trading levels on our securities, I don't think it comes close to reflecting the strength of our underlying business.
So, I intend to be very focused on optimizing our capital structure and addressing that over time. We're going to do that with your help by educating investors and all our external stakeholders on this incredible business we have, these amazing assets we own and the durable cash flows that they generate. I think we are still in an elevated interest rate environment.
And so I'm not in a rush to refinance the '26 and '27 bonds. But certainly, we're going to need to replace them sooner than later, and I'd say in the next few quarters. I'm cautiously optimistic that we're going to see a more accommodating tone from the Fed and then we're going to see rates start to improve. But look, either way, we're going to be prepared. We are developing a game plan. We're going to be tactical, and we're going to approach the market when we think conditions are the most favorable.

Luis Ricardo Chinchilla

Got it. That was helpful. One last one for me, and it's housekeeping related. Do you guys need to make, like, one-time payments or to incur one-time costs related to the termination of the -- or the transition from the Mohegan Las Vegas Resort or from the management contract that is terminated over the summer? That would be it.

Ari Glazer

Yes. I'll take that one too, Ricardo. So, look, you'll see some more disclosure in our quarterly filings on the accounting for the Las Vegas transaction. But the biggest piece of it is going to be a reduction in our lease liability because we're taking, what was a 17-year lease and basically, it's going to be a 1-year lease through the transition period. So, that's a balance sheet adjustment. It's not an income statement adjustment. There's also a small adjustment on the asset side of the balance sheet, just as we reclassify the Las Vegas assets and liabilities as a held-for-sale item. So, that's kind of accounting housekeeping. In terms of payments, the payments that we will make as part of the transaction approximate the lease payments that we otherwise have from now until the close of the deal.

Operator

Our next question is from Colin Mansfield with CBRE Institutional Research.

Colin Alexander Mansfield

Maybe going back to Korea for a moment. Is there any additional color you guys are able to share at this point from a casino performance perspective? I think having the segments broken out are extremely helpful. But anything else you guys can share, whether it's gaming performance metrics or demographic compositions or maybe revenue mix between gaming and non-gaming that you guys have experienced since the casino opened, that would be great?

Raymond Pineault

Colin, pleasure to hear from you, and thanks for the question. I'm going to turn it over to Joe to give you a little color.

Joe Hasson

Colin, thank you for the question. Here's what we're seeing so far. We're encouraged by the ramp, and it is occurring both in the casino and in the non-gaming segments of the business. That business is designed as a blockbuster category killer, and the non-gaming amenities are fabulous. But of course, we look to the ramp of casino revenues as well. What we see most evidently is that in the most recent days, recognizing that the grand opening was only a month or so ago, we are seeing a trend line that is very encouraging with the ramp increasing. And again, it's coming from both segments, in the casino and in the non-gaming segments, and we would expect that to continue.

Colin Alexander Mansfield

Awesome. That's helpful. And looking forward to getting over there and seeing the asset in person soon. Maybe one follow-up. Turning to Niagara. Leverage is coming down there nicely. You're well below the leverage-based covenant for restricted payments. So, how are you guys thinking about capital allocation plans going forward around CapEx and also distributions potentially out of there, since free cash flow looks like it's sitting up quite nicely. So, what do you guys have planned there for capital allocation?

Ari Glazer

Sure. It's Ari. Look, I think a couple of comments. One, you're right that leverage has come down and that property has performed nicely. We did make a return of capital distribution at the end of last year. And I think we will continue to evaluate those opportunities, obviously, balanced against investment opportunities in the property. We do have a partner there, and so any distributions or decisions about return of capital is going to be a joint decision. But I think we do have flexibility there, and we're going to look at that and optimize it as we go forward.

Operator

Our next question is from Michael Kerrane with Truist Securities.

Michael Patrick Kerrane

My questions have been answered. I appreciate it.

Operator

Our next question is from David Levine with MidOcean Partners.

David Levine

First one, just a clarification on the Las Vegas Virgin lease. I was a little confused by what you guys said about the one-time payment going out. Is it a year of rent payment? Or is it the full kind of like balance sheet number of like the $80 million? I'm just -- I'm kind of confused as to the size of it, the one-time payment?

Ari Glazer

Yes. Thanks for giving me a chance to clarify. So the balance sheet is just an accounting adjustment. We have a lease liability on the balance sheet just as standard finance lease accounting. The cash payments, which is, I think, your question, really approximates the lease payments that we would otherwise have between now and when the transaction closes. So, that's the way you should think about it. But is that -- I guess, just that part confuses me. Like is it all of the lease payments you'd have to pay from now until 2041 or just 1 year of it?

Raymond Pineault

Yes. 1 year.

David Levine

Okay. And then I had a couple more questions. One on digital, the $20 million of EBITDA or so, it was up against a weird comp because of, like, the true-up, I think you guys had. Is there a way to kind of quantify, like, how much EBITDA would have been up, like on a like-for-like basis, excluding that true-up you had last year? Just -- and I think that's helpful just as we think about, like, the ramp as to what digital can do and we can make assumptions on that. But I just wanted a like-for-like metric on digital.

Raymond Pineault

Yes, David. I'll take that one, and thanks for the question. I appreciate it, right? So it's going to be difficult to do because the true-up was over an extended period of time. So even though it landed in 1 quarter, it affected multiple quarters and prior quarters into this quarter. I will tell you that our ramp in digital has been phenomenal, and we continue to reap the benefits of that continued growth. That growth has continued at Ontario, as well as in our property in Connecticut. And now with Pennsylvania coming online, we're confident that, that's going to be a positive contributor moving forward as well. So the true-up is difficult to do itself. But I would tell you that the growth in digital, you can assume is well into the double digits. How about that?

David Levine

On EBITDA?

Raymond Pineault

Yes.

David Levine

Yes. Okay. Regarding like the digital in your other segments, is there any kind of commentary you can give -- I mean, it's obviously not as attractive as kind of the duopoly you have in Connecticut. But any kind of like -- I know you guys don't give guidance, but way to explain how we should think about kind of digital and your other assets from a profitability standpoint?

Raymond Pineault

David, when we think about digital and you look at in jurisdictions where we operate, right, we operate in jurisdictions where we have a built-in database and we can take advantage of that database to; one, have an omnichannel approach to the customer, so we can approach the guests in our digital. We can approach the guests at our land base. And we can continue to engage our guests that are visiting our properties now, as well as bring in new guests that haven't visited that are signing up through digital first.
We see as an opportunity to continue to feed the properties and feed digital with cross-marketing and engage those guests. We are the only bricks-and-mortar operator in Ontario, and we continue to work with the province to maximize the results there and continue to see growth, and we've seen some substantial growth in Ontario year-over-year. Pennsylvania is brand new, and I can tell you the sign-ups exceeded our expectations in the first week that it actually went live. And we're confident that, that's going to be a strong market for us moving forward.

David Levine

Okay. And then I just had some questions on the domestic retail properties. Connecticut, are you still seeing a hold issue? It seemed like hold was down or was similar to last quarter again. I briefly glanced at the presentation. Is that fair? Is your hold still rather weak there this quarter? Or was it more normalized?

Joe Hasson

Thank you, David. This is Joe. There's a bit of a volume downdraft, but it's a mixed bag. If I look at the highest end of the database, their strength at the high end, it's bolstering the midpoint of the database and that extends through our domestic business, whether it be Connecticut or the other locations where we do business domestically. So, again, I see strength at the top end of the database. I see a little bit of softness in the middle. But fortunately, when it comes to theoretical measure quarter-over-quarter, it's a near flat comparison, but there's plenty of growth in entertainment, food, beverage and lodging.

Operator

(Operator Instructions) Our next question is from David Hargreaves with Barclays.

David Richard Hargreaves

Pretty much all asked, but I'd love it if you could give us some more performance indicators from Korea, maybe something about lodging occupancies or database. Any information about where sign-ups are coming from? Love to hear any of that.

Joe Hasson

Thank you. Appreciate it. This is Joe again. We see a significant ramp coming from all segments in Korea. It's, again, so early in the start and launch of that business that it's a bit of a favorable blur as we see the receptive reaction to consumers that are finding their way to that integrated resort. So as we look forward, if we are on a ramp similar to what we've seen so far, we are very confident about being able to reach the targets that we've talked about previously.

Raymond Pineault

The only thing I would add to that before your next question is, we are seeing continued ramp and receptivity, not only from the local market in South Korea, but we're actually seeing receptivity in China, in Japan, in Taiwan as well. So, really encouraged by the visitation we're seeing across the region.

David Richard Hargreaves

Sir, what do you mean by receptivity? Receptivity of -- those guests were visiting other properties, and now they're coming to Mohegan and we're continuing to -- if you look at the Paradise results, they've shown very strong results in the quarter. In their most recent report, they were up somewhere in the 50% in their last month, and we continue to see a ramp in our properties. So, I think that the world-class facility that we've built is being taken well by the guests to come and visit and get repeat visitation.

Operator

Our next question is from James Kayler with Bank of America.

James Forristall Kayler

Maybe just circling back on the domestic markets. What are you seeing in Connecticut in terms of -- the color around the high-end versus the middle of the database is good. I guess, what are you seeing on the competitive environment? And margins were down a little bit there. Like, do you think EBITDA margins can stabilize there or improve? Or is this kind of a good run rate?

Joe Hasson

This is Joe again. Appreciate the question. We expect a continued improvement in margins that we saw. One of the things that I didn't mention previously is that in the Northeast in the current quarter compared to the prior, there was some harsher weather impact to the front end of the quarter. To the extent that, that can dampen margins, one of the things that I can say about the entire domestic segment is that labor expense margins have remained relatively constant. Marketing expense margins have remained relatively constant. What we expect going forward is that in better weather quarters and as the year progresses, we'll find lift in the strength of the database going forward. Again, I mentioned that, particularly with regard to domestic. The strength right now is at the top end of the database, and it's probably very fair to say that the real cream of the crop in that is part of Mohegan Sun Connecticut.

James Forristall Kayler

Very good. And in Pennsylvania, I just went back and looked historically. I mean, I think Pennsylvania had its best EBITDA quarter, at least in many years, I guess. And there was a big margin expansion. How are you guys driving that in margin improvement in Pennsylvania? And do you think that's sustainable?

Raymond Pineault

So James, great question. Really appreciate you. We really appreciate the question. I just want to be cautious. Number one, Pennsylvania had a fantastic non-gaming revenue. As Joe pointed out, all of our properties had fantastic non-gaming quarters. There is an adjustment inside of the Pennsylvania numbers related to the Kindred departure from Pennsylvania, which relates to their purchase of the iGaming license when iGaming first went live. That is an accounting adjustment that is hitting that EBITDA figure. I would point you to normalized margins when we pass the 20% margin figure is more in line with Pennsylvania's ongoing sustainable margins.

James Forristall Kayler

Okay. So, closer to like a 20% run rate EBITDA margin?

Raymond Pineault

We were running closer to 20 -- or closer to 21% recently, but it was elevated by the adjustment in the quarter, which will also be adjustment in the next quarter.

James Forristall Kayler

Okay. Very good. That's helpful. Can you just -- it sounds like ilani had a very good quarter. Can you just update us on like what the sort of, I guess, in the LTM numbers, what the management fee is from there?

Raymond Pineault

Honestly, James, I don't have that in front of me. But as you know, they've chosen to take over self-management of the property. We will continue to have our management fee that runs through July. I'm happy to report when I look at our other business segments and I look at the continued performance of digital as well as I look -- as I foresee the continued open ramp of INSPIRE, that will more than replace that management fee that, unfortunately, will be going away. It was a natural progression for them to take over their management.

Operator

There are no further questions at this time. I'd like to hand the floor back over to Ray Pineault for closing comments.

Raymond Pineault

Thank you, Paul.
I want to take a moment to thank all our team members for their continued hard work, dedication and support. Our team members continue to deliver the exceptional guest service Mohegan is known for at all of our properties. I want to thank you all for joining our call today, and I hope you all have a wonderful rest of your day.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.