Normally, a break-even quarter wouldn’t be great news. But these aren’t typical times, and at least one industry analyst is painting a rosier picture of Mandalay Resorts than the company’s own executives.
Mandalay, like its Strip competitors, reported lower revenues for the period ending Oct. 31. Cash flows were off 11 percent and the company’s casinos in Jean and Tunica, Miss., were hit particularly hard.
But UBS Warburg says Mandalay is righting the ship and headed toward a break-even fourth quarter ”” even though management predicts a net loss. “With the quarter’s trends to date and the shortening booking window, bookings will improve as we move closer to New Year’s,’’ Warburg stated.
Optimists are also heartened by strong performances at Detroit’s MotorCity Casino and Elgin, Ill.’s Grand Victoria boat. Each property, half-owned by Mandalay, posted sharply higher cash flows last quarter. At $29.5 million and $33.5 million respectively, these casinos outperformed Mandalay’s Las Vegas hotel-casinos.
The fourth quarter has historically been a tough one for Mandalay. Last year, the company earned only 4 cents per share during the period. And some prognosticators see more red ink flowing before the current quarter ends on Jan. 31. Robertson Stephens downgraded Mandalay’s stock from “buy” to “market perform” in the wake of the latest earnings report last week.
Nonetheless, Mandalay appears to be feeling a bit more bullish these days. Company president Glenn Schaeffer, who halted construction of the million-dollar Mandalay convention center this fall “to conserve spending power,’’ says the project will get back on track in the first quarter, with completion due by early 2003.