Hospitality and entertainment company MGM Resorts International (NYSE:$MGM) released their second quarter earnings on Thursday, July 27. MGM’s adjusted earnings for this quarter was $0.31 per share, a bit higher than the Zacks analysts’ average expectation of $0.28. Year-over-year, adjusted earnings rose by 19.2%.
Despite beating earnings expectations, however, MGM did not meet revenue expectations. Total revenue for this quarter was reported to be $2.64 billion, just a bit behind on the Zacks’ analysts’ average expectation of $2.66 billion. However, when compared year-over-year, the revenue for MGM’s 2017 second quarter rose by 16.4%. The year-over-year rise was mainly due to MGM’s operations in Las Vegas.
Adjusted property earnings before interest, taxes and amortization (EBITDA) of U.S.-based resorts fully owned by MGM was $658 million this quarter. Year-over-year, the company’s adjusted property EBITDA rose by 28%.
MGM China Operations
MGM holds about a 56% stake in MGM China Holdings Limited (HKG:$2282). MGM China owns the MGM Macau resort and casino and is currently planning to build a gaming resort in Cotai, Macau.
For its second quarter, MGM China’s net revenue was $449 million, a 1% decrease year-over-year. The decrease was mainly due to a fall of main-floor table games revenues. The revenue of that particular sector decreased by 2% with an 8% fall in volume. Despite this, hold percentage for main-floor table games revenues went up by 110 basis points (bps) year-over-year to reach 19.3%.
However, the decrease in net revenue was offset by a slight rise in VIP table games revenues. For the second quarter, turnover increased by 3%, which resulted in a 1% rise in VIP table games revenues. Despite this, hold percentage for VIP table games revenues went down by 20 bps year-over-year to reach 2.9%.
Additionally, MGM China has an adjusted property EBITDA of $116 million this quarter. Year-over-year, the adjusted property EBITDA went down by 2%.
MGM Domestic (U.S.) Operations
MGM fully owns and operates a number of resorts and/or properties in Las Vegas as well as a number of assets in Mississippi and Michigan.
Including Borgata Hotel Casino and Spa as well as MGM National Harbor, MGM’s domestic net revenue was $2.1 billion. Year-over-year, the net revenue for the company’s second quarter went up by an impressive 22%.
Casino revenues in particular went up by 41% year-over-year mainly due to the opening of MGM National Harbor as well as MGM’s purchase of Borgata, which had been previously owned by Boyd Gaming (NYSE:$BYD).
Room revenues went up by 9% thanks largely to a 1.3% increase in Las Vegas Strip Revenue Per Available Room (RevPAR) as well as a 2.5% in average daily rate. Despite these increases, however, occupancy went down by 1.1%.
Operating income for MGM’s fully owned properties in the U.S. went up by 33.3% year-over-year, reaching $520 million. Adjusted property EBITDA was $658 million this quarter, a 28% increase year-over-year.
MGM’s CityCenter Holdings
MGM holds about a 50% stake in its urban complex, CityCenter. CityCenter, located in Las Vegas, is split between two operations: Resort and Residential. The Resort branch of CityCenter is operated under Aria Resort and Casino, Vdara Hotel & Spa, and Mandarin Oriental.
MGM saw a net revenue of about $314 million from CityCenter. Year-over-year, the net revenue from CityCenter this quarter went up by 10%.
Adjusted property EBITDA from CityCenter was $106 million in MGM’s second quarter, a 36% rise year-over-year.
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