Las Vegas casino companies, suppliers have promising outlook

Executives in boardrooms across the gaming industry had to be smiling when first-quarter results began rolling in. Shareholders, too.

The final earnings reports for the three months that ended March 31 were filed with regulators last week.

The reports revealed that casino companies and their suppliers got off to good starts in 2018, and that the outlook for the rest of the year is promising.

The reasons?

The economy is cruising along.

People have jobs and are spending more on leisure.

Mergers and acquisitions have given some companies new revenue generators.

Casino revenue from Macau is returning to levels seen three years ago.

New and refreshed properties are online or close to it.

Companies are investing in facilities to take advantage of a robust convention calendar.

And now that it appears lawful, regulated sports wagering is on the near horizon nationwide, manufacturers are ramping up to supply the anticipated growth and angling for new markets.

A few companies suffered through some bad weather typical of the winter season, but they all know summer is coming.

And Wynn Resorts, a company rocked by scandal during the quarter, is thriving when it easily could have cratered.

Analysts are posting or reiterating “buy” recommendations, seeing opportunities to invest in the future.

Macau soars

Two of the three U.S. companies operating in Macau reported double-digit revenue growth rates.

Las Vegas Sands Corp. saw revenue climb 16.7 percent from a year earlier to $3.58 billion, thanks mostly to its success in Macau, where the company is transforming an existing property into the Londoner to match its European-themed Venetian and Parisian resorts.

Sands President and Chief Operating Officer Rob Goldstein was asked during an April 25 conference call with investors why the market has broadened in Macau.

“The way it’s described to us is that the acceleration of younger people who are very affluent bring their families, want to stay as much as four nights. They want to see Bruno Mars or whoever the star is that weekend. They want to shop at the stores. They want to go to the spa, and they like to gamble,” Goldstein said. “It’s quite a great combination. So they stay longer, they gamble more and have more time to spend in our shops.”

Sands is paying a dividend of 75 cents a share this month, and its stock price has climbed more than 9 percent since the April 25 earnings announcement, closing Friday at $79.37.

Wynn Resorts’ 20.5 percent increase in revenue to $1.72 billion also can be attributed to Macau, where the company’s sweet spot is the high-end market.

New Wynn CEO Matt Maddox spent much of his company’s April 24 call dispelling rumors of a sale of the company or its under-construction Boston Harbor project. He explained how he is working to stabilize the company amid accusations that Steve Wynn sexually assaulted and harassed employees. (The former CEO has denied those allegations.)

“The future is better than the past, no matter what the media likes to say,” Maddox said at one point in his call with analysts.

He seems to be right. On May 10, Wynn stock closed at $201.51, its highest level in nearly four years. Profit-takers have since moved in, and the stock closed Friday at $194.21. Still, after the scandal broke, the stock dropped as low as $156.54.

MGM lags in Las Vegas

The third company with a Macau presence, MGM Resorts International, didn’t fare as well as its competitors, with revenue rising 3.9 percent to $2.82 billion.

MGM’s stock price plunged 8.6 percent to $32.29 on April 26, the day of the company’s earnings announcement. The decline occurred after CEO Jim Murren said it’s taking longer than expected for the company to recover from the Oct. 1 mass shooting from Mandalay Bay, an MGM property, that left 58 people dead and hundreds injured.

Since then, the price has fallen even further. It closed Friday at $31.45 a share.

But MGM sees brighter times on the horizon. Its MGM Cotai property in Macau opened during the first quarter, and MGM Springfield in Massachusetts is scheduled to open its doors by the third quarter. Park MGM — the Strip property formerly known as the Monte Carlo — is expected to be fully renovated by the end of the year. The company’s retail and hotel revenue should get a bump from the unexpected success of the Golden Knights, which has played seven home postseason games so far and could play as many as four more in the Stanley Cup Final.

Gaming analyst Joseph Greff of J.P. Morgan said in a report to investors this month that he remains confident in MGM’s convention traffic and gaming revenue.

“Las Vegas convention visitation trends remain strong, increasing by 6 percent in 2017,” the report said. “Convention visitation is tracking down 3.9 percent year to date, but we note this is attributed to the convention calendar shift (with the triennial ConExpo-Con/Agg show rotating out this year).

“Convention visitation was (down) 16.7 percent in January, but up 11.3 percent year over year in February,” Greff said in his report. “On the gaming front, Las Vegas Strip gross gaming revenue excluding baccarat comparisons get easier as the year progresses, having increased 3.2 percent in 2017.”

MGM also is well-positioned to take advantage of the anticipated wave of sports gambling.

Caesars plans growth abroad

Caesars Entertainment Corp., the largest Las Vegas gaming company without a presence in Macau, is in an international growth spurt in its first full quarter since escaping bankruptcy protection.

In its May 2 earnings call, CEO Mark Frissora noted better-than-expected revenue and cash flow and highlighted plans for two Caesars Palace-branded resorts in Dubai and Mexico. The company is looking to break ground next month on its planned Caesars Forum Convention Center.

Las Vegas’ two other big operators — Boyd Gaming and Red Rock Resorts — didn’t fare as well for different reasons.

Boyd’s revenue declined 0.7 percent to $606.1 million for the quarter. The company cited bad weather at its Midwestern regional casinos and a downturn for its downtown Las Vegas properties. It said reduced access from the $1 billion Interstate 15 highway reconstruction project hurt its downtown operations, and higher jet fuel prices affected its business from Hawaii.

Red Rock Resorts, operator of the Station Casinos properties, has seen revenue decline at Palace Station and its newly acquired Palms property as it invests hundreds of millions of dollars into renovation projects.

Red Rock revenue fell 1.1 percent to $421 million.

The company expects the picture to improve with the Palace Station work nearly complete, but it says it’s going to take until the end of the year for the Palms to get to where executives want it.

Locals market thriving

Executives for Boyd and Red Rock say their hopes are resting on the Las Vegas economy continuing to thrive.

“In our view, the regional consumer is very healthy, and we expect better trends are ahead as winter concludes,” said analyst John DeCree of Las Vegas-based Union Gaming. “The first quarter is always choppy as the unfavorable weather moves around, ultimately impacting one or two markets; this year for Boyd, it was the Midwest, which was also impacted by a new competitor” near its Blue Chip property in northwest Indiana.

Manufacturers with a strong presence in Las Vegas thrived in the quarter, with London-based IGT revenue up 5.2 percent to $1.21 billion, Las Vegas-based Scientific Games up 11.9 percent to $811.8 million and Everi Holdings up 9.9 percent to $111 million.

IGT and Scientific see big opportunities with their technology being used for new sports-betting products in other states. Executives for both companies said when that occurs will depend on the speed at which states begin opening outlets and whether they’ll allow wagering from mobile devices.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

Contact Richard N. Velotta at or 702-477-3893. Follow @RickVelotta on Twitter.

Lehman Brothers bet big on Las Vegas
Lehman Brothers collapsed 10 years ago, helping send the country into the Great Recession.
Fremont9 opens downtown
Fremont9 apartment complex has opened in downtown Las Vegas. (Marcus Villagran/Las Vegas Review-Journal) @marcusvillagran
Ross & Snow launches in Las Vegas
Luxury shoe brand Ross & Snow has opened in Las Vegas, featuring "functional luxury" with premium shearling footwear. (Bailey Schulz/Las Vegas Review-Journal)
Remote Identification and Drones
DJI vice president of policy and public affairs discusses using remote identification on drones. (Bailey Schulz/Las Vegas Review-Journal)
Drones and public safety in Nevada
Two representatives in the drone industry discuss UAV's impact on public safety. (Bailey Schulz/Las Vegas Review-Journal)
Frontier Airlines to launch flights from Las Vegas to Mexico
Frontier, a Denver-based ultra-low-cost carrier, will become the first airline in more than a decade to offer international service to Canada and Mexico from Las Vegas when flights to Cancun and Los Cabos begin Dec. 15. (Rick Velotta/Las Vegas Review-Journal)
MGM Resorts International CEO Jim Murren addresses Oct. 1 lawsuits
MGM Resorts International Chairman and CEO Jim Murren addresses criticism his company has received for filing a lawsuit against the survivors of the Oct. 1 shooting. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International opens the doors on MGM Springfield
Massachusetts’ first hotel-casino opens in downtown Springfield. The $960 million MGM Springfield has 252 rooms and 125,000-square-feet of casino. (K.M. Cannon/Las Vegas Review-Journal)
MGM Resorts International prepares to open MGM Springfield
Las Vegas-based MGM Resorts International gave news media and invited guests a preview of the $960 million MGM Springfield casino in Massachusetts. The commonwealth's first resort casino will open Friday, Aug. 24. (K.M. Cannon/Las Vegas Review-Journal)
A Walk Through Circus Circus
It only takes a short walk through Circus Circus to realize it attracts a demographic like no other casino on the Strip: families with young children. (Todd Prince/Las Vegas Review-Journal)
Morphy Auctions, a vintage slot machines seller, wants gaming license
Vice president Don Grimmer talks about Morphy Auctions at the company's warehouse located at 4520 Arville Street in Las Vegas on Thursday, Aug. 16, 2018. (Rick Velotta/Las Vegas Review-Journal)
Nevada's venture capital money doesn't stay in state
Zach Miles, associate vice president for economic development for UNLV, said there’s venture money in Southern Nevada, “but trying to find the right groups to tap into for that money is different.” According to a 2017 report from the Kauffman Foundation, Las Vegas ranked number 34 out of 40 metropolitan areas for growth entrepreneurship, a metric of how much startups grow. With a lack of growing startups in Las Vegas, investment money is being sent outside of state borders. The southwest region of the U.S. received $386 million in funding in the second quarter, with about $25.2 million in Nevada. The San Francisco area alone received about $5.6 billion. (source: CB Insights)
Neon wraps can light up the night for advertising
Vinyl wrap company 5150 Wraps talks about neon wraps, a new technology that the company believes can boost advertising at night. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Nevada on the forefront of drone safety
Dr. Chris Walach, senior director of Nevada Institute for Autonomous Systems, talks to a reporter at NIAS's new Nevada Drone Center for Excellence of Public Safety, located inside the Switch Innevation Center in Las Vegas. K.M. Cannon Las Vegas Review-Journal @KMCannonPhoto
Motel 8 on south Strip will become site of hotel-casino
Israeli hoteliers Asher Gabay and Benny Zerah bought Motel 8 on the south Strip for $7.4 million, records show. They plan to bulldoze the property and build a hotel-casino. Motel 8 was built in the 1960s and used to be one of several roadside inns on what's now the south Strip. But it looks out of place today, dwarfed by the towering Mandalay Bay right across the street.
Project billed as one of the world's largest marijuana dispensaries plans to open Nov. 1
Planet 13 co-CEO Larry Scheffler talks about what to expect from the new marijuana dispensary, Thursday, July 19, 2018. (Marcus Villagran/Las Vegas Review-Journal) @brokejournalist
Oasis Biotech opens in Las Vegas
Brock Leach, chief operating officer of Oasis Biotech, discusses the new plant factory at its grand opening on July 18. (Bailey Schulz/Las Vegas Review-Journal)
UNLV Tech Park innovation building breaks ground
Construction on the first innovation building at the UNLV Tech Park is underway. (Bailey Schulz/Las Vegas Review-Journal)
Caesars Forum Meeting Center
Caesars broke ground Monday on its $375 million Caesars Forum Meeting Center (convention center) just east of the High Roller observation wheel. (Caesars Entertainment)
Technology reshapes the pawn shop industry
Devin Battersby attaches a black-colored device to the back of her iPhone and snaps several of the inside and outside of a Louis Vuitton wallet. The device, installed with artificial intelligence capabilities, analyzes the images using a patented microscopic technology. Within a few minutes, Battersby receives an answer on her app. The designer item is authentic.
Recreational marijuana has been legal in Nevada for one year
Exhale Nevada CEO Pete Findley talks about the one year anniversary of the legalization of recreational marijuana in Nevada. (K.M. Cannon/Las Vegas Review-Journal)
Young adults aren't saving for retirement
Financial advisors talk about saving trends among young adults. (Bailey Schulz/Las Vegas Review-Journal)
News Headlines
Local Spotlight
Add Event
Home Front Page Footer Listing
You May Like

You May Like