Author: David Mckee

“No Recession yet, just all time records,” reported Truist Securities analyst Barry Jonas of MGM Resorts International‘s 2Q22 earnings call. Better-than-ever Las Vegas Strip and regional revenues beat the pants off Wall Street‘s expectations, outweighing “weakness” in Macao, where gaming revenue is all but nonexistent, leading to a $52 million negative return on investment. CEO Bill Hornbuckle basically swore off any further capital investment in the Chinese enclave, turning his gaze toward Thailand instead. He hedged his commitment on a long-term renewal in Macao, adding, “Sports entertainment is a big push—they would love to see more of that activity case in that market—and I think we’re ideally positioned to be able to do that as well.”

Recorded Jonas, “bookings in Vegas continue to show growth in 2H:22, and are up double digits vs. 2021 in each month. [Management] did note that they would be monitoring for signs of slowing, and would pivot quickly in the event consumer demand slows.” Strip occupancy ran at 92% and is improving during the current quarter, with more rooms booked per day than ever during July. Average room rates are a lofty $225/night and climbing. International travelers are anticipated to achieve 80% of pre-pandemic levels this summer.

MGM’s regional properties, gradually being winnowed down to a handful of trophy properties (sayonara, Gold Strike Tunica), contributed $960 million, a 12% jump from 2021. “[Management] highlighted the strength of MGM’s differentiated regional portfolio, noting that its higher end properties are seeing the same strength as Las Vegas, while 2/3 of the regional consumer database had a household income over $110K,” wrote Jonas. Even that regional haul was dwarfed by the Strip, where MGM banked $2.1 billion in revenue, a 112% moonshot from last year.

Continue reading Cosmic quarter at MGM; New name, same old Penn

Vici Properties is sanguine about the U.S. economy, at least as it pertains to gambling. It can afford to be. Vici owns the real estate of 11 Las Vegas Strip casinos, which are sitting pretty these days. True, Vici lost $58 million last quarter, but that’s a big improvement on $301 million in red ink in 2Q21. We certainly don’t hope for a repeat of the Great Recession but find Vici CEO Ed Pitoniak short-memoried when he says that “The gaming customer has proven to be more resilient through both garden-variety recessions and full-blown crises than just about any other discretionary consumer out there. That was proven through both the great financial crisis and throughout the COVID-19 pandemic.” Well, the last time we had a “great financial crisis,” in 2008-9, Las Vegas imploded. So we hope for Vici’s sake that the mild recession currently underway doesn’t morph into something worse or else Pitoniak might be rudely awakened.

Continue reading Vici foresees blue skies; Ruffin + Athletics?; Phil the Shill

Along with Resorts Atlantic City, the Golden Nugget (seen above in its Trump Marina days) has inked a new labor pact with Unite-Here, bringing to an end any uncertainty about a strike on the Boardwalk. Workers get substantial pay increases, as they desired, and casino bosses get four years of peace. Union local prexy Robert McDevitt called the negotiations “long and difficult” but everyone is making nice in the wake of the deal. “We were one of the final casinos that was approached for negotiations and we are proud it was a swift and amicable agreement,” remarked Nugget General Manager Tom Pohlman. Resorts’ durable President Mark Giannantonio echoed Pohlman: “We’re really thrilled for the employees. They’ve been working really hard for us, and now we’re happy we can put this behind us and move forward with our business.” Only that remains is formal ratification of the contract, which should be a slam dunk.

Continue reading Peace in Atlantic City; Storm over Vegas

“No gaming consumer slowdown, at least not yet.” That was the headline of JP Morgan analyst Joseph Greff‘s appraisal of Boyd Gaming‘s 2Q22 earnings call. Loyalty players and core customers remain steadfast, as Boyd grew revenues 4% “despite a tough year-over-year comparison.” Unrated players are the Achilles heel, although Greff (rightly) theorizes that their 2Q21 gambling spree “was likely goosed up from stimulus checks.” While unrated play is as much as 40% of overall win, it’s not very profitable in the final analysis. Greff ratcheted his price target on BYD from $83/share down to $71 “despite limited evidence that the U.S. regional gaming consumer is slowing in any meaningful way.” Why? He predicts a 10% revenue decline next year, with serious consequences for the bottom line.

Even so, Greff likes Boyd’s regional diversity “which generates attractive free cash flow.” He’s (not unreasonably) factoring in a “mild” recession, which may be already here, and which he freely admits could be worse than modeled. Fortunately for Boyd, it is not in a position where debt reduction is necessary. Or as CEO Keith Smith put it, “We’re dealing in an uncertain environment and economy, but everything we see says the business is pretty stable. If something were to happen, given our current financial strength, we’re not losing sleep.”

Continue reading Boyd outperforms; Vegas airport sets record, joblessness drops