Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MGM Resorts International (MGM, Financial) posted record third quarter consolidated net revenues and adjusted property EBITDA at MGM China.
- Las Vegas properties saw a 3% increase in ADR and a 250 basis point increase in occupancy.
- MGM China achieved a 14% year-over-year increase in net revenues and a 5% rise in adjusted property EBITDA.
- BetMGM achieved profitability with record-high gaming results and a 70% increase in first-time depositors.
- MGM's strategic ventures, such as the partnership with Grupo Globo in Brazil, are expected to expand their digital footprint and tap into emerging markets.
Negative Points
- Las Vegas table game volume was down significantly, attributed to timing issues with high-end bulk business.
- The fourth quarter is expected to face a $70 million headwind due to last year's high hold percentage.
- MGM's Macau margins were slightly lower than expected due to one-time costs and entertainment spend.
- The Formula One event is expected to result in a $30 million year-over-year EBITDA headwind.
- MGM faces challenges in maintaining growth in Las Vegas and regional markets amidst economic headwinds and competitive pressures.
Q & A Highlights
Q: Can you explain the softness in Las Vegas table game volumes and your expectations for future trends?
A: Jonathan Halkyard, CFO, explained that the decline in table game volumes was primarily due to timing issues with high-end baccarat customers. He emphasized that this is not indicative of a broader trend and expects margins to remain in the mid-30s on an EBITDA basis. William Hornbuckle, CEO, added that excluding high-end baccarat, gross profit from other segments was up 12%, indicating strong fundamentals.
Q: How is MGM evaluating its digital strategy, particularly with BetMGM and its focus on sports betting versus iGaming?
A: William Hornbuckle, CEO, stated that 2024 is an investment year for BetMGM, with new product launches expected to drive growth. He noted a 20% increase in top-line GGR and emphasized the importance of continuing to invest in both sports betting and iGaming, with a focus on long-term growth.
Q: What impact did the high-end baccarat business have on Q3 results, and how should we think about this segment going forward?
A: William Hornbuckle, CEO, noted that high-end baccarat accounted for about 30% of their drop, and fluctuations in this segment can significantly impact results. He highlighted that the hold percentage was down 15% from the previous year, contributing to an $80 million variance.
Q: Can you provide insights into the profitability and growth expectations for BetMGM, especially with the upcoming Brazil launch?
A: William Hornbuckle, CEO, mentioned that BetMGM's profitability in the U.S. is expected to hold steady, with strategic investments in Brazil through a partnership with Grupo Globo. He anticipates significant growth opportunities in Brazil, leveraging Globo's media reach.
Q: How is MGM managing operating expenses, and what should we expect for next year?
A: Jonathan Halkyard, CFO, explained that there were some unusual expenses in Q3, including a $20 million collections expense in Las Vegas and $15 million in the regions. He noted that FTE counts were flat or down, and no significant changes in operating expenses are expected for next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
