MGM Resorts' (MGM) Q2 Earnings Beat On Higher Revenues

MGM Resorts International (NYSE:MGM) posted mixed results for the second quarter of 2017, wherein though earnings surpassed the Zacks Consensus Estimate, revenues lagged the same.

Earnings and Revenue Discussion

MGM Resorts reported adjusted earnings of 31 cents per share, which came above the Zacks Consensus Estimate of 28 cents by 10.7%. Also, earnings came above the year-ago quarter figure of 26 cents by 19.2% on account of higher revenues.

Total revenue of $2.64 billion lagged the Zacks Consensus Estimate of $2.66 billion by nearly 1% but jumped 16.4% year over year. This year-over-year increase reflects a significant rise in revenues from the company’s Las Vegas operations, offset to an extent by weak results at MGM China.

Adjusted property EBITDA (earnings before interest, taxes, and amortization) at MGM Resorts’ wholly owned domestic resorts was $658 million, up 28% year over year.

MGM China

Notably, the company owns approximately 56% of MGM China Holdings Limited, the owner of MGM Macau resort and casino, and is developing a gaming resort in Cotai.

MGM China’s net revenue fell 1% year over year to $449 million due to lower revenues from main-floor table games, somewhat offset by increase in revenues from VIP gamblers.

Main-floor table games revenues decreased 2% given a 8% decline in volume, offset to an extent by hold percentage increase of 110 basis points (bps) year over year to 19.3%.

Meanwhile, VIP table games revenues witnessed a rise of 1% as turnover rose 3% in the quarter. However, hold percentage decreased 20 basis points (bps) year over year to 2.9%.

MGM China’s adjusted EBITDA decreased 2% to $116 million.

Domestic Operations

MGM Resorts owns and operates several properties in Las Vegas. Apart from this, it also owns a number of assets in Mississippi and Michigan.

Net revenue of $2.1 billion at the company's domestic resorts increased 22% over the prior-year quarter, given the inclusion of Borgata Hotel Casino and Spa and MGM National Harbor. However, it marked a decrease of 1% on a same-store basis, primarily because of lower year- over-year table games hold.

Moreover, casino revenues from wholly owned domestic resorts surged a significant 41% owing to the acquisition of Borgata, opening of MGM National Harbor, somewhat offset by a decline in table games revenue.

Room revenues also climbed 9%, primarily attributable to a 1.3% rise each in Las Vegas Strip RevPAR (Revenue per Available Room) and 2.5% increase in average daily rate. However, occupancy dipped 1.1%.

While operating income at the company's wholly owned domestic resorts increased 33.3% to $520 million, adjusted EBITDA increased 28% to $658 million.

Income from Unconsolidated Affiliates – CityCenter Holdings

MGM’s urban complex, CityCenter (located in Las Vegas, with 50% owned by the company), operates through two segments, Resort and Residential. Under the Resort operations, the company has three properties, namely, Aria, Vdara and Mandarin Oriental.

Net revenue from CityCenter rose 10% year over year to nearly $314 million on the back of an increase in casino revenues.

Adjusted EBITDA was also up 36% to $106 million.

MGM Resorts presently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

In second-quarter 2017, Wynn Resorts Ltd. (NASDAQ:WYNN) posted adjusted earnings of $1.18 per share that outpaced the Zacks Consensus Estimate of $1.09 by 8.3%. Further, earnings increased 10.3% from the year-ago figure of $1.07, mainly backed by higher revenues.

Las Vegas Sands Corp.’s (NYSE:LVS) second-quarter 2017 adjusted earnings of 73 cents per share surpassed the Zacks Consensus Estimate of 61 cents by 19.7% and soared 37.7% year over year owing to higher revenues.

Another casino operator, Eldorado Resorts, Inc. (NASDAQ:ERI) , is slated to release its second-quarter numbers on Aug 8. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 25 cents.

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