A single penny turned out to be the difference between MGM Resorts International’s first profitable quarterly earnings since 2008 and another net loss.
The Strip casino giant surprised Wall Street Thursday with a net profit of $6.5 million, or earnings per share of 1 cent, for the quarter that ended March 31.
The figure might not seem earth-shattering. However, in the same quarter a year ago, MGM Resorts reported a net loss of $217.2 million or a loss of 44 cents per share.
Overall revenues for MGM Resorts grew 3 percent to $2.35 billion.
MGM Resorts Chairman Jim Murren called the quarterly results the company’s “best we have reported” since 2008.
“The focus is to balance our long term opportunities and maximize our performance of today,” Murren said.
The results were not anticipated. Analysts polled by FactSet Research expected the company to record a net loss of 10 cents per share in the quarter.
“Net-net, we find the results to be better than anticipated into recently elevated expectations,” Deutsche Bank gaming analyst Carlo Santarelli told investors. “We believe that, regardless of recent share strength, the stock will respond well.”
Shares of MGM Resorts increased 5.43 percent Thursday on the New York Stock Exchange to close at $14.55, up 75 cents over Wednesday’s closing price. They also rose after hours.
The casino operator owns 10 resorts on the Strip including Bellagio, MGM Grand, Mandalay Bay and half of the CityCenter development. Macquarie Securities gaming analyst Chad Beynon said the company’s higher-end properties continue to outperform.
“MGM is capitalizing on this business on both the gaming and nongaming side,” Beynon said. “The company is benefiting from recent room remodels and updated entertainment and food and beverage.”
Murren said international high-end business “was the only bright spot during the recession and it remains robust.” He said the company’s goal is to rebuild its national mid-market business “by investing into the buildings themselves.”
Murren said MGM Resorts will spend $350 million this year to upgrade hotel rooms and other offerings at its Las Vegas properties.
The company announced plans in April to build a $100 million outdoor retail and dining district, which includes a public park, along the Strip between New York-New York and Monte Carlo. The development will serve as entry into a planned 20,000-seat sports arena and events center the company will construct on the back end of the site.
Last month, MGM Grand opened the $100 million Hakkasan nightclub.
The company credited results from the MGM Grand Macau and CityCenter for boosting the quarterly numbers.
MGM Grand Macau reported net revenue of $748 million, a 6 percent increase over the prior year quarter. In March, MGM China, the publicly traded subsidiary that owns MGM Grand Macau, paid a $500 million dividend to shareholders. MGM Resorts, which owns 51 percent of the company, received $255 million of the dividend.
At CityCenter, net revenue from the company’s resort operations was $308 million in the quarter, a 32 percent increase from the prior year quarter. At CityCenter’s Aria, table game hold percentage was 28 percent, compared to 16 percent a year ago, while hotel room occupancy was 89 percent with an average daily room rate was $209.
Aria’s revenue per available room, a nontraditional measure of profitability, was $186, a 5 percent increase compared with the first quarter of 2012.
On the Strip, MGM Resorts said total revenues increased 2.4 percent to $1.2 billion.
Hotel room revenue increased 2 percent while revenue per available room increased 1 percent.
Credit Suisse gaming analyst Joel Simkins said the company’s first quarter results from the Strip exceeded expectations.
“MGM management is normally optimistic, even during tough times and we expect his trend to continue particularly on the heels of some very solid results,” Simkins said.
MGM Resorts is also actively pursuing casino expansion opportunities in Massachusetts, Maryland and Toronto.
Contact reporter Howard Stutz at firstname.lastname@example.org or 702-477-3871. Follow @howardstutz on Twitter.