{"id":20534,"date":"2017-11-08T07:08:11","date_gmt":"2017-11-08T15:08:11","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/?p=20534"},"modified":"2017-11-08T08:30:21","modified_gmt":"2017-11-08T16:30:21","slug":"mgm-the-lion-roars-station-doubles-down","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/mgm-the-lion-roars-station-doubles-down\/","title":{"rendered":"MGM: The lion roars; Station doubles down"},"content":{"rendered":"

MGM Resorts International<\/strong>, so long in the headlines due to bad news, made some good news this week. In the third quarter room revenues were up 4% along the Las Vegas Strip<\/strong> and table game hold was substantially higher, both powering MGM to 3Q17 result that exceeded Wall Street<\/strong>‘s expectations. It can be no coincidence that \"\"two major boxing matches fell into this time period. As for its response to the Oct. 1 massacre, MGM said it engaged in a\u201cshort-lived uptick in cancellations and a temporary suspension of marketing efforts. (According to Deutsche Bank<\/strong> analyst Carlo Santarelli<\/strong>, “investors are willing to overlook the impact of the tragedy, should the perception of a strong underlying business persist”). Since restarting such efforts, [MGM\u2019s] booking pace has largely rebounded to normal levels.” On the plus side, MGM reported “significant progress” in the conversion of Monte Carlo<\/strong> into Park MGM<\/strong>. Still, MGM was at pains to downplay expectations for 4Q17.<\/p>\n

Cash flow rocketed past stock-pickers’ predictions, on the strength of Strip business and Borgata, with no help from MGM Grand Paradise<\/strong> in Macao<\/strong>. (MGM National Harbor<\/strong> also underperformed.) Strip table game hold was 27% higher, while slots were only tightened 1%. Room rates escalated 6%.<\/p>\n

* Over at Station Casinos<\/strong>, Santarelli reported that “results were very encouraging” and that the forward-looking focus will be on the $340 million in capex improvements to the Palms<\/strong>, as revamping the property moves into Phase II. (We saw little \"\"evidence of capex reinvestment while the Palms was in private-equity hands.) “For starters, we believe the 3Q17 was the best fundamental quarter for [Station] since IPO. Same-store casino revenue grew a robust 6.2% y\/y, some of which management attributed to the new IGT<\/strong> slot system, despite only using some of the functionality at present,” elaborated Santarelli. “That said, we believe the unveiling of Phase II spend ($340 mm), which brings the total investment into Palms to ~$800 mm, likely caught most off guard from a capital outlay perspective.”<\/p>\n

Locals business is expected to grow “meaningfully,” in the area of 5%. JP Morgan<\/strong> analyst Joseph Greff<\/strong> called Station’s results “better than expected,” with revenue up 4% and Native American management fees offsetting higher corporate expenses (or vice versa). “However,” added Greff, “and on a less than positive but \"\"not fatal note, [Station] announced that its Palms property phase 2 capex will be $340m, about $200m more than our thinking, bringing all-in investment in the property to ~$810m (recall, phase I capex was $146m). Given that the property\u2019s adjusted EBITDA peaked in the high $70m range, it is not totally crazy to think it can do a 10% EBITDA return at some point close to 2020 (as an FYI, Stratosphere<\/strong> does ~$50m per year, and it is off Strip as well). We wouldn\u2019t be surprised to see the stock to sell off tomorrow on concerns over generating an adequate [return] on this level of capex, and we\u2019d be buyers on weakness.” That being said, Station’s Las Vegas<\/strong> revenues comfortably exceeded Greff’s expectations.<\/p>\n

The Palms re-do encompasses an unspecified number of F&B outlets and entertainment venues, along with 282 rooms and \"\"suites, as well as the addition of 60 new rooms. There was no mention of a new hotel tower, as previously speculated, for Palace Station<\/strong>, where $226 million of reinvestment will bring “luxury movie theaters, a third new restaurant concept, a resort style pool complex, a casino bar, new race and sports bar, renovated poker room, and a fully renovated casino floor.” Another $100 million of capex will be scattered around unspecified Station properties. After all, in the casino business if you’re not moving forward you are by definition moving backward.<\/p>\n

* There weren’t many — if any — surprises in Pinnacle Entertainment<\/strong>‘s conference call. Revenue at its newly acquired Meadows<\/strong> racino in Pennsylvania<\/strong> is the second-highest in the \"\"Pinnacle universe and management hasn’t even rolled out its MyChoice<\/strong> rewards program yet. Management has an appetite for further acquisitions, even if a Pinnacle\/Penn National Gaming<\/strong> merger remains temporarily off the table (perhaps due to the number of properties Penn would have to shed to get it past antitrust concerns).<\/p>\n

* Last night’s election results included — as predicted — a crushing defeat for New Jersey<\/strong> Lt. Governor Kim Guadagno<\/strong> (R). Let’s hope that Governor-elect Phil Murphy<\/strong> (D) is more supportive of Atlantic City<\/strong> than Gov. Chris Christie<\/strong> (R) turned out to be.<\/p>\n","protected":false},"excerpt":{"rendered":"

MGM Resorts International, so long in the headlines due to bad news, made some good news this week. In the third quarter room revenues were up 4% along the Las Vegas Strip and table game hold was substantially higher, both … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":14787,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[23,26,29,62,228,11,159,69,95,30,57,9,38],"tags":[],"_links":{"self":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/20534"}],"collection":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/comments?post=20534"}],"version-history":[{"count":1,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/20534\/revisions"}],"predecessor-version":[{"id":20535,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/posts\/20534\/revisions\/20535"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media\/14787"}],"wp:attachment":[{"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/media?parent=20534"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/categories?post=20534"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lasvegasadvisor.com\/stiffs-and-georges\/wp-json\/wp\/v2\/tags?post=20534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}