MGM Resorts International’s top executive on Wednesday told investors he was proud of his company’s team reacting to “an evil individual that made a decision to carry out a devastating act of violence” on Oct. 1.
“This heinous act of one person impacted our entire city and community, but in the days and weeks following, the outpouring of support we’ve received from fellow Las Vegans as well as our guests, partners and corporate leaders from across the U.S. has been heartening,” MGM Chairman and CEO Jim Murren said in the introduction of his third-quarter earnings call.
Murren applauded the “incredible acts of bravery” undertaken by individuals in the wake of the mass shooting at the Route 91 Harvest Festival concert from a suite at the company’s Mandalay Bay resort.
He also thanked Strip competitors by name for standing by MGM after the tragedy.
“Our operating companies have spent a great deal of time and effort to implement best practices across every aspect of our business, including guest service standards, systems training, marketing and communications,” Murren said. “This support system was put to test last month and I’ve never been more proud of the strength of our employees who showed selfless dedication and spirited teamwork in the face of such unspeakable evil.”
Murren said the day after the shooting, 500 MGM employees from other properties went to work at Mandalay Bay to help guests and work phones during the chaos that ensued.
Murren had little to add about the status of investigations while thanking first responders for their work, but he said the entire wing of the 32nd floor the that housed the shooter and his arsenal of weapons and ammunition has been closed to guests.
Murren also said he expects a low– to mid-single digit percentage dip in Strip revenue as a result of the shooting, but he said he’s confident in the company’s stability, particularly in light of optimism in future convention bookings, the success Las Vegas has generated with current and future major-league sports teams, the ongoing transformation of the Monte Carlo into Park MGM and the opening of a new resort in Macau in January.
Higher quarterly revenue
In the third quarter that ended Sept. 30, MGM reported a decline in earnings, but higher revenue. The company reported earnings of $149.1 million, 26 cents a share, on revenue of $2.82 billion compared with earnings of $535.6 million, 93 cents a share, on revenue of $2.52 billion in the same quarter a year earlier.
The earnings decline was attributed to tough comparison to 2016 when the company enjoyed a $430 million gain on its acquisition of the Borgata in Atlantic City as well as a $171 million difference in a foreign tax credit valuation from 2016 to 2017.
The company also reported a 20-cents-per-share decline as a result of the company’s exit from the NV Energy system. The company told Nevada regulators in May that it would pay the $86.9 million exit fee to leave the grid by Oct. 1.
The company’s revenue was bolstered by the best quarter in Bellagio’s history, with profit margins of 42 percent. Bellagio, the company’s biggest revenue generator, saw revenue climb 9.5 percent to $375.5 million for the quarter.
The company also played luckier than normal during the quarter with table game hold at 26.8 percent — usually, it’s between 21 percent and 25 percent — and table volume up 12 percent.
Marketing, advertising on hold
MGM’s edgy new marketing and advertising campaign rolled out in September is not expected to be used again until next year.
Murren said MGM already has reached 80 percent of its goals for convention bookings for 2018, but he cautioned that the year may fall short of 2017 because the massive every-three-years ConExpo-Con/Ag construction industry show that occurred in March won’t return until 2020.
The company’s 200,000-square-foot expansion of convention facilities at Aria is expected to open in February and a 250,000-square-foot expansion at the MGM Conference Center at MGM Grand will be ready in early 2019.
Weather also affected MGM’s third-quarter results with cash flow off by $4 million to $5 million at Mississippi’s Beau Rivage property as a result of Hurricane Nate and a delay in the opening of MGM Cotai in Macau resulting from Typhoon Hato.
MGM shares rallied strongly on Wednesday, gaining $1.60, or 5.09 percent, to close at $33.06.
MGM Resorts International
Third-quarter revenue and earnings for Las Vegas-based MGM Resorts International (NYSE: MGM).
3Q 2017 3Q 2016 Change
Revenue $2.82 billion $2.52 billion +11.9%
Earnings $149.1 million $535.6 million -72.2%
Earnings per share 26 cents 93 cents -72%