February 20, 2018 - 8:14 am
Updated February 20, 2018 - 10:12 am
MGM properties on the south Strip endured sharp revenue declines after the Oct. 1 shooting, including a 6.7 percent drop at Mandalay Bay, the Las Vegas-based casino company reported Tuesday.
But thanks to a massive one-time income tax break, MGM Resorts International was able to escape a fourth-quarter decline in earnings. Growth from other MGM properties also helped quarterly figures.
MGM, the state’s largest employer, saw revenue increase 5.7 percent, thanks, in part, to large gains at its Macau property and a full quarter of operations at its National Harbor resort outside Washington D.C.
Those gains offset declines at three properties south of Tropicana Avenue on the Las VegasStrip and at the Monte Carlo, which is transforming to become Park MGM later this year.
The quarter, which ended Dec. 31, began on Oct. 1, the day a gunman perched on the 32nd floor of Mandalay Bay, shot and killed 58 people attending a concert below. Tuesday’s earnings release was the first thorough accounting of the financial damage inflicted on properties by the 1 October incident.
In a conference call with investors, Chairman and CEO Jim Murren credited MGM’s “strong analytical horsepower” for enabling the company to diversify business and weather a difficult fourth quarter in Las Vegas resulting from the shooting.
The Monte Carlo, which is rebranding and dedicating rooms to a NoMad Hotel concept, took thousands of room nights off line, resulting in a net revenue decline of 34.5 percent to $44.1 million.
The offsets were balanced by net revenue from MGM Macau — by far the largest revenue generator for the company — up 9.8 percent to $548.6 million, while National Harbor, which opened in mid-December 2016, was up 252.6 percent to $186.9 million.
The company is expecting another bump in revenue in Macau this year with last week’s opening of MGM Cotai, a second property off the Chinese enclave’s Cotai Strip.
Overall, the company reported earnings of $1.4 billion, $2.42 a share, on revenue of $2.6 billion. That compared with earnings of $24.7 million, 4 cents a share, on revenue of $2.46 billion for the same quarter a year earlier. Without the tax break, MGM estimated earnings would have declined by 10 cents a share.
In the call, Murren said the company is well-positioned for a strong 2018 with a robust convention calendar for the year and the opening of MGM Springfield in western Massachusetts by Labor Day.
Murren also said the company’s board of directors on Monday approved a penny-per-share increase in dividends. The 12-cents-per-share dividend payment totaling $68 million will be payable March 15 to shareholders of record on March 9.
Legal sports betting
Murren said the company is poised to take advantage of legalized nationwide sports wagering, predicting that the U.S. Supreme Court would side with New Jersey in its efforts to find unconstitutional the Professional and Amateur Sports Protection Act, which limits sports betting to all but four states including Nevada.
He said his company’s efforts to expand convention space with a new facility opened at Aria last week and an expansion project underway at MGM Grand would offset a slightly weakened convention calendar. Murren noted that one of last year’s big convention events, the every-three-years ConExpo-Con/Agg construction equipment show, wouldn’t be here in 2018 and a shift in the timing of CES proved less favorable to Las Vegas resorts.
But he applauded the Las Vegas Convention and Visitors Authority’s progress to expand the Las Vegas Convention Center, which not only would benefit the company’s Circus Circus property, but is encouraging new investment from competitors at Resorts World Las Vegas and The Drew Las Vegas, formerly the Fontainebleau, on the north Strip.
Murren added a “go, Knights, go” shoutout in the call to the city’s new National Hockey League expansion team, the Vegas Golden Knights, noting that the team is likely to make the Stanley Cup playoffs, which should provide an unexpected boost for the company’s New York-New York and Monte Carlo properties in the second quarter.
He also lauded the mid-February opening of MGM Cotai, describing it as “a game-changer in the market and for integrated resorts around the world.”
The company also is forging ahead with efforts to secure an integrated resort concession in Japan, with legislation Murren expects to be formalized by the Japanese parliament in the second half of the year.
MGM shares closed up 24 cents, 0.7 percent, to $34.71 a share on trading about twice the average daily volume. After-hours trading gave back some of those gains and was down 6 cents, 0.2 percent, to $34.65 a share.
MGM Resorts International
Fourth-quarter revenue and earnings for Las Vegas-based MGM Resorts International (NYSE: MGM).
4Q 2017; 4Q 2016; Change
Revenue: $2.6 billion; $2.46 billion; +5.7%
Earnings: $1.4 billion; $24.7 million; +559.4%
Earnings per share: $2.42; 4 cents; +595%