Aug 4: Hornbuckle: ‘We’re rockin' and rollin'

MGM Resorts and Everi Q2s, Caesars Entertainment analyst update, OSB analyst update +More

Earnings+More

Aug 4

Good morning. On today’s agenda:

MGM Resorts is riding the wave in Las Vegas.
Everi hits records in both gaming and fintech.
The Caesars Entertainment story has only just begun, says CBRE.

Note: E+M will send an Earnings Extra email later today to cover Bally Corporation and Penn National.

She started shaking to that fine, fine music.

MGM Resorts Q2

Revenue rose 44% YoY to $3.26bn while adj. EBITDA was up 49.1% to $919.7m.
Las Vegas revenues more than doubled to $2.14bn, up 113%.
Regional revenues were up 12.1% to $959.7m; MGM China down 54% to $143m.
BetMGM revenues up 24% QoQ to $337m; share of losses rose to $71.2m.

Hellzapoppin’: CEO Bill Hornbuckle said the results for the quarter were “nothing short of spectacular” and while the company was “mindful” of talk of recession, he insisted the business wasn’t seeing it as yet.

Putting on the Ritz: “We just came through hell and back with Covid, we've learned how to manage this company at scale,” he said. “We're premium operators with high-end product,” he said.
CFO Jonathan Halkyard added that MGM had “done the forensics” and has the “playbooks” to deal with whatever might come along in terms of adverse consumer behavior.

Co-starring: Added to the MGM mix for this quarter was the Cosmopolitan where Hornbuckle said that in the six weeks of ownership in Q2 it produced just under $60m of EBITDAR.

Bill Hornbuckle: “This business is rockin' and rollin' right now.”

Onwards: Deutsche Bank said management was ”clearly confident” in the continued strength in Las Vegas. Tailwinds include the rebound in international visitation, solid forward bookings and a strong event calendar including Formula 1 next year and the Super Bowl in 2024.

Regional beat: The team at JMP noted that MGM’s regionals portfolio outperformed the market at 7% vs. 5%. Hornbuckle pointed out MGM’s properties tended more towards being resort-type casinos compared to other properties.

Digital

Pinpoint: On digital, Hornbuckle reiterated the thinking behind the LeoVegas acquisition, due to complete in Q3, and while admitting it wasn’t “needle-moving,” he said it was a “great place to start”.

Nordic exposure: “It's a learning curve for us to understand (the rest of the world) and we think we'll learn a lot from these guys.”
Not saying nothing: Management wasn’t asked and didn’t comment on the news of LeoVegas’ UK Gambling Commission fine yesterday

On point: On BetMGM, Hornbuckle added little to previous commentary, saying it was “hitting its marks” before adding that in common with commentary from Caesars and elsewhere, BetMGM had pulled back on marketing.

“While (market) share continues to be important, especially in new markets, we are getting smarter and smarter in how we do this.
Ontario: Asked about Ontario, Hornbuckle said BetMGM had achieved “high single-digit” market share “and growing”.

Asia

Fly/ointment: The only negative in the quarter remains Macau but Halkyard noted that alongside BetMGM it was now effectively one of two “embedded growth vehicles”. “Those do not require much more capital, at least as compared to the company's financial resources.”

Asian interest: Hornbuckle added that MGM is hopeful it will get the go-ahead in Japan later in the year but refused to be drawn on the reports of a rebuffed bid for Genting Singapore.

**Sponsor’s message**: Venture capital firm Yolo Investments manages €550m in capital across 80 of the most exciting companies in fintech, gaming & blockchain. Their Gaming Fund, regulated by Guernsey Financial Services Commission, a dedicated 29-company, €183m AUM portfolio has invested in fast-growth assets including Dabble, Kalamba, SimWin & ThriveFantasy.

Yolo Investments has just opened its fund to new investors as it looks to scale new cutting-edge concepts, including its exclusive high-roller land and live casino brand, Bombay Club, global banking network & OTC desk Aims Group (aimsgroup.io).

Get in touch with your pitch or disruptive products to plug into our investment network!

Everi Q2

Revenue up 14% to $197.2m while adj. EBITDA nudged up 2% to $94.4m.
Gaming revenue rose 13.1% to $112.3m while fintech was up 165 to $84.9m.

Every day I write the book: CEO Randy Taylor noted that the last three quarters on the machines sales side had been the company’s best ever quarters as the company reaffirmed its target of 15% ship share.

Chain reaction: Taylor added that Everi had seen no noticeable impact of supply chain worries on its machines business. “We managed it very well,” he said. “There wasn’t anything we didn't get delivered that we wanted delivered”.

Hunger games: On the fintech side, having acquired the Australian-based eCash for $23m in February Taylor said had the appetite for more fintech M&A but it was noted the company is also planning to spend more on R&D in this area.

The cashless rollout also continues, noting that usage of cashless products “grows every day”.
“Now it’s just a matter of penetrating the marketplace,” he added. “This is evolutionary.”

Eiffel Tower, PAris — Photo by Ameer Basheer on Unsplash

Caesars analyst reaction

We’ve only just begun: The biggest story from Caesars is the “improved profitability profile” and outlook for limited future losses, said the team at CBRE, who noted the difference between the $69m adj. EBITDA loss in Q2 vs. $554m in Q1.

“This business remains underappreciated and represents significant upside in the share,” they added.

The beginning is the end is the beginning: CBRE are equally enthusiastic about the prospects for Las Vegas, suggesting that despite fears of a leisure consumer slowdown it continues to flourish. They expect a Q3 slowdown before a convention-led ramp in Q422/Q123.

Mind the gap: On the potential Strip asset sale, CBRE suggests that while there is no shortage of bidders, the tight credit conditions might mean a substantial enough difference in the value of bids vs. asking price.
Take it easy: With debt levels poised to fall already, and with pared back digital losses, the team say they “sense less urgency” from Caesars for a sale.

IGT analyst reaction

Meet the Flintstones: The team at Macquarie suggest IGT’s characteristics of consistent results, a clear capital allocation and upcoming catalysts including the influx of $700m from the Poste Pay sale in Italy make it a “bedrock” name.

Comfort zone: They add that they “feel comfortable” that lottery will hold up well in any given economic environment and suggested the above-estimates gaming machine sales signaled “another leading market-share quarter for the company”.
For digital, Macquarie are forecasting a 38% improvement in EBITDA in 2023 given the US expansion. They also estimate iSoftBet will add an EBITDA contribution of $10m= in 2023.

OSB analyst update

Digging your scene: Aggregate US sports betting and igaming in June is estimated to have been $725m, according to the analysts at Wells Fargo. They add that this represents a 17% rise YoY but a 5% sequential decline due to lower levels of both handle and hold in sports betting.

The team’s Q2 GGR estimate is $2.67bn, up ~50% YoY with sports betting at $1.46bn (+65% YoY) and igamign at $1.2bn (+34% YoY).
The team also estimated promotions declined for the fourth straight month, down 17% MoM across PA, CO, MI and VA.

Leaders: Wells Fargo estimate FanDuel ahead of the pack at 27% (down 6% MoM) followed by BetMGM (22%), DraftKings (18%), Caesars (8%), RSI (8%) and Penn/Barstool (4%).

Earnings in brief

SJM: Revenues fell 20% to HK$4.13bn with NGR down 24.9% to HK$3.81bn.Adj. EBITDA fell heavily to a loss of K$1.18bn, more than double last year’s loss. The company noted that the Grand Lisboa property reopened its doors on July 31. The company also announced it was raising US$637m to strengthen liquidity ahead of the licensing renewal process.

Newslines

The big reveal: Gaming Innovation Group revealed that the previously undisclosed name of the operator that its Sportnco subsidiary is supplying in Columbia is Betsson. The initial contract is for two years with options to extend.

Alt-rocks: Alternative sports data provider ALT Sports Data has officially partnered with Thrill One Sports & Entertainment to unlock new markets around sports betting on events such as Nitro Rallycross and Street League Skateboarding.

Trib-ulations: Better Collective has announced that its Action Network subsidiary will supply sports-betting content to The Chicago Tribune. Yesterday, it was announced that rival Catena Media was taking over from Better Collective as the provider of betting-related content to NJ.com.

The Juan and only: Affiliate Playmaker has acquired sports media publisher JuanFootball for $2.8m. the coma y said JuanFootball’s social media properties generate a monthly reach in excess of 50 million.

Jam today: OddsJam has announced it has acquired odds comparison platform OddsBoom for an undisclosed sum. As part of the acquisition, OddsBoom founder Mark Knight joins OddsJam’s executive team.