MGM Resorts (MGM) Q1 Earnings & Revenues Beat Estimates

MGM Resorts International (NYSE:MGM) reported adjusted earnings of 34 cents for the first quarter of 2018. The Zacks Consensus Estimate was pegged at earnings of 31 cents. The company had reported earnings of 36 cents in the prior-year quarter.

Total revenues of $2.82 billion surpassed the consensus estimate of $2.80 billion by 0.7% and increased 3.9% year over year. The improvement was backed by higher revenues at MGM China.

The company also announced that CityCenter Holdings — a prominent venture between MGM Resorts and Infinity World Development — entered into a definitive agreement to sell the Mandarin Oriental Las Vegas and adjacent retail parcels for approximately $214 million in cash. The deal is expected to close in summer this year.

MGM Resorts International Price, Consensus and EPS Surprise

MGM Resorts International Price, Consensus and EPS Surprise | MGM Resorts International Quote

MGM China

MGM China’s net revenues increased 25% year over year to $596 million, courtesy of $85 million net revenue contribution from recently opened, MGM Cotai.

Opening of MGM Cotai also facilitated a 20% year-over-year increase in Main floor table games win. VIP table games win rose 26% from the prior-year quarter primarily driven by a 24% increase in turnover at MGM Macau.

MGM China’s adjusted property EBITDA (earnings before interest, taxes, and amortization) increased 5% to $152 million from $145 million in the prior-year quarter. However, adjusted property EBITDA margin came in at 25.5%, a decline of 500 basis points (bps) from the year-ago quarter. Operating margin was 9.2% in the quarter.

Domestic Operations

MGM Resorts owns and operates several properties in Las Vegas. It also owns a number of assets in Mississippi and Michigan.

Net revenues of $2.1 billion from the company's domestic resorts declined 1% from the prior-year quarter. Notably, casino revenues rose 2%, owing to a 6% increase in table games win and a 2% increase in slots win, which again was driven by an increase in slots volume at MGM National Harbor.

Room revenues fell 5% due to a 4.3% decrease in RevPAR (revenue per available room) at the company's Las Vegas Strip resorts. Las Vegas Strip RevPAR decreased 4.5% in the quarter with average daily rate (ADR) declining 2.3%. Occupancy dipped 200 bps.

Operating income at the company's wholly owned domestic resorts deteriorated 5.3% to $451 million. The decline in operating income was due to a decrease in room revenues and food and beverage revenues owing to a decline in occupied room nights and lower convention base at the company's Las Vegas Strip resorts.

Also, adjusted EBITDA decreased 5% year over year to $616 million.

Income From Unconsolidated Affiliates – CityCenter Holdings

MGM’s urban complex, CityCenter operates through two segments — Resort and Residential. Currently, the company has two properties — Aria and Vdara — under the Resort operations.

Net revenues from CityCenter declined 3% year over year to $304 million due to a decrease in casino revenues.

Operating income from resort operations was $40 million in the quarter, compared with $58 million in the prior year quarter. Adjusted EBITDA from resort operations was $93 million, marking a 16% year-over-year decrease.

Balance Sheet

MGM Resorts ended the quarter with cash and cash equivalents of $1.52 billion as of Mar 31, 2018, compared with $1.49 billion as of Dec 31, 2017.

On Apr 25, 2018, the company's board of directors approved a quarterly dividend of 12 cents per share, totaling $67 million. The dividend will be payable on Jun 15, 2018 to holders of record as of Jun 8, 2018. During the first quarter, MGM Resorts repurchased 10 million shares of its common stock at $36.24 per share for a total aggregate amount of $362.4 million.

Zacks Rank & Peer Releases

MGM Resorts carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wynn Resorts (NASDAQ:WYNN) posted impressive results for first-quarter 2018, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $2.30 per share increased 79.7% on a year-over-year basis. This improvement can be attributed to substantial rise in operating income from Macau operations (Wynn Palace and Wynn Macau) and income tax benefit from U.S. tax reform, partially offset by a decrease in Redemption Note fair value.

Las Vegas Sands (NYSE:LVS) delivered an impressive performance, with both earnings and revenues beating the Zacks Consensus Estimate for the fifth straight quarter. Adjusted earnings per share of $1.04 surpassed the consensus mark of 86 cents by 20.9% and increased 57.6% year over year on higher revenues.

Upcoming Peer Release

Melco (NASDAQ:MLCO) is anticipated to release first-quarter 2018 numbers on May 3.

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