Operator News
US – Mohegan bounces back with 206.1 per cent revenue increase
By Phil - 12 August 2021
Mohegan Gaming saw a 206.1 per cent increase in its net revenues in its third quarter, bringing in $328.2m vs. $107.2m in the prior year due to company-wide COVID-related property closures in 2020
Income from operations was $64m compared to a loss from operations of $20.5m in the prior-year period. When compared to the third quarter of 2019, consolidated net revenues declined 5.6 per cent, while Adjusted EBITDA increased 24.6 per cent.
While the Adjusted EBITDA improvement was largely driven by reductions in operating costs and expenses, including lower payroll costs and marketing expenses, net revenues continued to be impacted by the COVID-related closure of MGE Niagara Resorts and state-mandated social distancing protocols at the company’s other properties. Excluding the impact of the closure of MGE Niagara Resorts for the full quarter and adjusting primarily for table hold, the Adjusted EBITDA margin would have been 33.9 per cent for the quarter, up 707 basis points from 26.8 per cent in the third quarter of 2019.
“Another quarter of strong results demonstrates that MGE remains well positioned as we continue to emerge from the pandemic,” said Raymond Pineault, Chief Executive Officer. “In addition, we recently announced Mohegan Digital, which will provide leading sports betting and digital gaming solutions to our loyal customers and attract new customers on a broader scale. This new business line will diversify our future revenue streams and contribute to the financial stability of MGE. Finally, MGE Niagara Resorts reopened to the public on July 23rd after just over 16 months of closure due to COVID restrictions in Ontario.”
Carol Anderson, Chief Financial Officer, added: “These results are indicative of the continued recovery as most remaining COVID-related restrictions were lifted at our United States properties during the quarter. At our flagship property Mohegan Sun, while revenues were below third quarter 2019 levels, which is the closest comparable due to property closures in the third quarter of 2020, Adjusted EBITDA was $82.4m, 22.5 per cent favorable to the third quarter of 2019, and EBITDA margin was up 1,065 basis points over the same period. Outside of Connecticut, ilani in Washington State continues to perform ahead of expectations, and Mohegan Sun Pocono, Mohegan Sun Las Vegas and Resorts are generating positive results.”
Mohegan Sun generated quarterly sequential improvement due to increased visitation, positive gaming trends and removal of the final remaining COVID-related restrictions on May 19. The property will continue to reintroduce non-gaming amenities this summer, including the Arena with performances from premiere acts such as Jason Mraz and Toby Keith, and convention groups have planned to return. Adjusted EBITDA increased 323.7 per cent for the quarter, reflecting the easier year-over-year comparison. When compared to the third quarter of 2019, Adjusted EBITDA increased 22.5%, primarily due to lower labor and marketing costs and reductions in certain non-gaming amenities. Most notably, when adjusting primarily for normalized table hold, the Adjusted EBITDA margin would have been 36.6 per cent, up 635 basis points from 30.2 per cent in the third quarter of 2019.
In Pennsylvania, trends have also continued to improve in the third quarter. On May 31, the Commonwealth of Pennsylvania lifted all remaining COVID-related restrictions. Adjusted EBITDA increased $20.9m for the quarter, reflecting the easier year-over-year comparison. When compared to the third quarter of 2019, Adjusted EBITDA increased 7.4 per cent. The Adjusted EBITDA margin of 24.4 per cent improved 254 basis points, reflecting the ongoing positive impact of cost reductions, offset by the impact of COVID-related capacity restrictions impacting both gaming and non-gaming volumes. Adjusting primarily for table hold, Adjusted EBITDA vs. the third quarter of 2019 would have increased 4.6 per cent, while EBITDA margin would have improved 211 basis points to 24.1 per cent.
The negative Adjusted EBITDA at MGE Niagara Resorts reflects the impact of the properties remaining temporarily closed for the entirety of the third quarter of 2021 due to COVID-related measures implemented by the Ontario Government. Despite the decline in Adjusted EBITDA, cash flows from the MGE Niagara Resorts during the quarter were approximately breakeven, as Fallsview rent payments have been deferred and the properties continue to receive both the Fixed Service Provider Fee as well as reimbursement for Permitted Capital Expenditures while closed. MGE Niagara Resorts reopened with 2 days of invited guests only events on July 21st and 22nd, and to the public on July 23rd. On July 14, 2021, the MGE Niagara Resorts entered into an Amended and Restated Credit Agreement that permits access to the revolving credit facility in relation to capacity restrictions set by the Province of Ontario and modifies other financial and operating covenants to facilitate the re-opening process.
