Bill Hornbuckle, CEO of MGM Resorts, says business will expand further into new territories after closing of deal to acquire LeoVegas, after acquisitions of Cosmopolitan and Aria boosted revenue by 56.3% in the first half suggested that it is possible to
The operator, which just completed its $1.63 billion acquisition of The Cosmopolitan of Las Vegas in mid-May, said the consolidation of assets as part of that operation had a significant impact on its results.
This was also the case for Aria, which it acquired in September 2021 by purchasing Infinity World Development Corp’s 50% stake in CityCenter Holdings for $2.12 billion, according to MGM. CityCenter, an MGM and Infinity World project, owns the CityCenter Las Vegas development, which includes the Aria resort, Vdara hotel and residential Veer Towers.
Also towards the end of the first half, MGM agreed to sell the operations of the Gold Strike Tunica land-based casino in Mississippi to Cherokee Nation Entertainment Gaming Holdings, a subsidiary of Cherokee Nation Business, for $450 million. .
Turning to digital, MGM bolstered its online operations in May by agreeing to acquire online gambling operator LeoVegas for around $607 million. MGM president and chief executive Bill Hornbuckle said on the earnings call that he expects the transaction to close in the third quarter of 2022.
“At the end of the day, we believe that the digitization of business—the ability to take brands through things like omnichannel and make something happen—is really the business,” Hornbuckle said.
“We are interested and want the rest of the world. We have significant growth plans to implement for
He further hinted that after the deal with LeoVegas, the business may take further steps to expand into new territories.
“We realize it’s not massive, so the needle is moving as needed over time. But we thought it would be a great place to start.” And most importantly, the platform and the team love it.”
Growth through acquisitions
A closer look at the Group’s second quarter results showed revenue of $3.26 billion for the three months ended June 30, up 43.9% year over year.
The Cosmopolitan and Aria acquisitions drove Las Vegas Strip revenues up 110.0% to $2.1 billion and regional business revenues increased 12.2% to $960 million. However, MGM China’s revenue fell 54.0% to $143 million. This is a result of Macau’s venue closure in line with his local Covid-19 measures.
Breaking down revenue by product type, casinos increased slightly to bring in $1.35 billion, guest room revenue increased 112.3% to $774.7 million, and food and beverage revenue increased 123.9% to 6 $77.8 million, while entertainment, retail and other revenue increased 135.6% to $445.3 million.
Turning to costs, operating expenses were down 60.4% to $827.9 million. This was largely due to his $2.28 billion gain from the sale of MGM Growth Properties, a real estate investment trust that was previously partly owned by him to MGM Resorts, to his VICI.
MGM also noted losses of $55.6 million from businesses in which it held non-controlling interests, including a net loss of $71.2 million from its BetMGM venture with Enten. However, even taking into account this and his non-operating expenses of $186 million, pre-tax profit was $2.2 billion for him, up 1,654.6% year-over-year.
Hornbuckle said BetMGM is second in the US in combined betting and online casino market share, with 21%. The net loss from BetMGM was due to his $608 million worth of earnings, up 70% year over year.
According to Hornbuckle, the business is “on track to meet our $1.3 billion projection” for the full year.
MGM ended the quarter with net income of $1.78 billion, more than 17 times its first half 2022 total, after paying taxes of $572.8 million and recording income attributable to noncontrolling interests.
In addition, adjusted earnings before interest, taxes, depreciation, amortization and rent (EBITDAR) reached $919.7 million.
A strong second quarter performance positively impacted MGM’s first half, during which revenues increased 54.3% to $6.12 billion.
Operating expenses were down 10.8% to $3.53 billion, but MGM also noted a loss of $102.4 million and non-operating expenses of $362.9 million from unconsolidated affiliates such as BetMGM .
As such, pre-tax income was $2.12 billion, compared to a loss of $305.5 million recorded at the same point in 2021. M lost last year.
MGM also noted six-month Adjusted EBITDAR of $1.59 billion.
“Next year’s convention and event calendar continues to be very strong and BetMGM looks optimistically forward as it continues to be a market leader with a roadmap for growth,” said Hornbuckle.
“We remain focused on achieving our vision of becoming the world’s premier gaming entertainment company.”
