Despite higher revenue on the Strip and abroad, MGM Resorts posts a second-quarter loss
MGM Resorts International, the largest casino company on the Strip, reported its second-quarter earnings today. MGM Resorts owns the MGM Grand, Bellagio, Mandalay Bay, Circus Circus and a 50-percent share in CityCenter, as well as 51-percent of a casino in Macau.
Revenue: $2.48 billion, up 6.8 percent from a year ago.
Earnings: Loss of $93 million, down 36.1 percent a year ago.
Earnings per share: Loss of 19 cents, down 57.9 percent from a year ago.
Quote: “We continue to see broad-based Las Vegas improvement as our Strip (cash flow) increased 15 percent, driven by a 7-percent increase in casino revenues and a 5-percent increase in hotel revenues," Chairman and CEO Jim Murren said. "A strong performance at MGM China led to another quarter of record results, driven by higher volumes in both mass market and VIP.”
What it means: Despite record revenue in Macau and improved performance on the Strip, MGM reported a loss. Even so, the company performed better than analysts expected.
While tourism in Las Vegas continues to grow, visitors still aren’t spending at pre-recession levels.
The company’s local properties showed steady improvement, but CityCenter revenue lagged by 6 percent compared to the second quarter of 2012. Analysts attributed the loss to gamblers' luck in the casino. The hold percentage on Aria’s table games was 20.8 percent, compared with 24 percent a year ago. But occupancy and room rates increased at Aria, resulting in a 4-percent revenue increase over last year.
CityCenter’s Crystals mall had its best quarter ever. MGM executives said they have no plans to sell it, although they have received inquiries about buying it.
Murren said the company anticipates a revenue bump in the third quarter because of the Floyd Mayweather-Canelo Alvarez fight Sept. 14 at the MGM Grand Garden Arena and an outdoor music festival across the street from the Luxor in September.
The company took a $37 million hit for a joint-venture with Hyatt for the Grand Victoria Casino Elgin in Illinois and a $45 million hit to remove buildings to make way for an arena between New York-New York and the Monte Carlo.
The company also deferred tax assets as it prepares to pay a $113 million dividend announced today to shareholders of MGM China, the company’s Macau subsidiary.
In Macau, net revenue increased by 18 percent over last year, as table game and slot revenue increased 29 percent and 4 percent, respectively. Executives said construction is continuing on the MGM Cotai, the company’s new resort in Macau.