MGM Resorts International Q3
The top line
- Revenue up 140% YoY to $2.7bn and consolidated adj. EBITDAR of $765m,
- Las Vegas revenues up 187% YoY to $1.4bn but down 8% on Q319. Adj. EBITDAR up to $535m from $15m in Q320 and up 21% on Q319. Margin up 943 bps on Q219.
- Regional revenues to $925m up 66% YoY but down 1% on Q319 and adjusted EBITDAR up 139% to $348m.
- MGM China saw revenues up 517% to $289m and adj. EBITDAR back in positive territory at $7m vs. $96m loss in Q320.
- BetMGM revenues at $227m and MGM share of losses stood at $49m. Estimates for revenues in FY21 remain at $800m+ and the company will issue new guidance for next year at the time of the Q122 results.
Empire building: On the back of the news of the likely winning bids for New York mobile sports-betting, CEO Bill Hornbuckle all but confirmed BetMGM was part of one of the winning consortia. Acknowledging the less-than-ideal likely tax rate of 50%, he added that MGM was “happy we have a property there” with the Empire Casino in Yonkers.
“But I will tell you it is the largest market we will have launched in to date with the MLife database,” Hornbuckle said. “Time will tell with sports how much money is to be made. Again, for us, it’s an omni -channel play. It’s a brand play and we’re going to have a huge presence there. And hopefully someday we get to online, icasino, but that’s something for well down the road.”
View to a kill: As an ‘insider’ to the failed DraftKings/Entain negotiations, Hornbuckle said that at one point “it looked like we would walk away with the technology”.
“For now though we are content and happy with our business and how it is progressing but we wouldn’t do it without the technology platform,” Hornbuckle added. “I still like where we are. We want to be bigger, we want to be global, we want to be a lot of things.”
Just an illusion: Back in Las Vegas, MGM announced that the negotiations were underway for the sale of the Mirage which analysts estimated will fetch between $500-600m. “It’s a storied property with great brand recognition,” said Hornbuckle, adding that he agreed with the comments from Tom Reeg at Caesars yesterday that “this might be the opportune time to sell an asset in Las Vegas”. There was no hint about the identity of any potential purchasers.
Priority: Having completed transactions involving shares in MGM Properties and the City Center transactions, MGM now has liquidity of $9.8bn, but CFO Jonathan Halkyard noted that the company’s first priority was share buybacks. “I do believe that returning cash to shareholders is the case to beat when it comes to making growth capital investments,” he added.
Fat of the land: Noting the record margin performance both in Las Vegas and regionally, CFO Jonathan Halkyard said “we’ve learned a lot about doing business in the last nine months and we don’t intend to backtrack” on the margin improvements. Analysts at Truist noted that the Las Vegas recovery had been “quicker and stronger than we expected”.
Talking point: Hornbuckle echoed the comments from Flutter earlier in the week that suggested the fierce marketing environment had abated as the football season had progressed. “We are encouraged to see a more rational environment as the season progresses,” he said.
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