MGM Resorts International reported record earnings during the first three months of the year, driven by strong performance in Las Vegas and Macau.
During the company’s first-quarter 2024 earnings call, Chief Financial Officer Jonathan Halkyard said MGM Resorts’ consolidated business generated record-setting revenues of $4.4 billion — a 13% year-over-year increase — and net income of $217 million. Adjusted earnings before interest, taxes, depreciation, amortization and rental costs exceeded $1.2 billion.
MGM Resorts' operating activities generated $549 million in cash, with free cash flow of $377 million, Halkyard said. That includes $215 million in cash flow from MGM China’s operating activities and $15 million in capital expenditures. Its Las Vegas Strip properties achieved 4% net revenue growth supported by 7% year-over-year growth in average daily rate. Luxury resorts on the strip drove top-line growth up 5%.
Las Vegas Performance
MGM Resorts' Las Vegas properties reported net revenue of $2.3 billion compared to $2.2 billion in the first quarter of 2023, driven primarily by an increase in ADR, according to the company's earnings release. Its adjusted property EBITDAR amounted to $828 million, down 1% from the year prior.
Looking at what MGM Resorts has been able to accomplish, the strength in Las Vegas continues to be at the high end, where it makes roughly 75% to 80% of its adjusted property EBITDA, President and CEO Bill Hornbuckle said.
“The idea of a luxury campus and being focused on the epicenter of activity here has paid off, and we feel it will continue to,” he said.
The company’s partnership with Marriott International and its loyalty program, Marriott Bonvoy, is off to a great start, Hornbuckle said. To date, it's booked more than 140,000 room nights. The most surprising development from the partnership has been group business.
“The activity case in that segment was a little unexpected,” he said. “They do know a lot of people we didn’t know, and we’re quite pleased by that.”
Executives are excited by the opening of connectivity between MGM Resorts and the Cosmopolitan of Las Vegas, Hornbuckle said. The company has finished the bridge that ties together the Cosmopolitan, Vdara Hotel & Spa and Bellagio Las Vegas.
"Next quarter I'll talk to you more extensively about plans to do a similar thing in the front of Bellagio that will tie up the front end of the Strip to the Cosmopolitan and creating what we truly hope is a luxury campus," he said.
There was some fatigue at the lower end of the market, but overall ADR was up 7% during the quarter, Hornbuckle said. The company expects that to hold into the second quarter with higher occupancies through the balance of the year.
Las Vegas saw the closure of the Tropicana Las Vegas – a DoubleTree Hotel by Hilton, and the advent of the Oakland Athletics' ballpark is coming, he said. Considering MGM Resorts’ positioning in the market, it has more than 1 million seats a month for sports and entertainment accessible within a mile of the epicenter of its resorts thanks to the T-Mobile Arena, Allegiant Stadium and the proposed ballpark.
Convention business has been returning, most notably from the tech sector, Hornbuckle said. The group forecast is up 6.5% compared to 2023, and its year-to-date production is up 29% for all future dates. The Mandalay Bay Convention Center had one of its most successful months ever in April.
Regional Updates
For MGM Resorts' domestic regional properties, poor winter weather broadly affected performance in January, but there was a quick recovery in February and acceleration into March, Halkyard said.
The domestic regional properties generated $909 million in net revenue during the quarter compared to $946 million in 2023, according to the company's earnings release. The company attributes this drop primarily to the closure of the Gold Strike Tunica in February 2023 and a decrease in casino revenue.
MGM China’s properties in Macau lapped the start of the recovery last year, achieving another record with net revenue up 71% year over year, Halkyard said. It earned its first-ever $300 million quarter in adjusted property EBITDA.
MGM Cotai and MGM Macau generated $1.1 billion in net revenue, up from $618 million during the first quarter of 2023, according to the earnings release.
Given the strength of MGM China’s operating performance over the past 15 months, there’s no need for MGM Resorts to continue supporting its liquidity. In March, the company terminated the subordinated loan agreement. The revolving credit facility is nearly paid down, and dividend payments have been returned with about $94 million to be paid to MGM Resorts in the second quarter.
In Japan, MGM Resorts and its partner, Orix, closed on 530 billion Japanese yen ($3.4 billion) for project financing of its integrated resort in Osaka, Halkyard said.
“This was the largest project financing ever in Japan and one of the most significant integrated resort financings globally,” he said. “With this important milestone achieved, we'll continue to develop this soon-to-be iconic resort.”
As of press time, MGM Resorts' stock was trading at $41.31 a share, down 7.8% year to date. The NYSE Composite Index was up 4.4% for the same period.