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MGM Resorts (MGM) Q1 Earnings & Revenues Beat Estimates

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MGM Resorts International MGM reported first-quarter 2021 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. While the bottom line surpassed the consensus estimate for the fourth straight quarter, the top line beat the consensus mark for the second consecutive quarter. However, both the metrics declined sharply year over year. After reporting better-than-expected results, the company’s shares appreciated 1.7% in after-hour trading session yesterday.

The company’s results were impacted by the coronavirus pandemic. However, consumer demand increased at its domestic properties. MGM Resorts has made major changes to its operating model, which will help the company on its road to recovery. The company witnessed sequential improvement in Las Vegas results and demand for leisure is also improving. Meanwhile, MGM China continues to outperform the broader Macau market’s steady pace of recovery.

On an encouraging note, the company anticipates its business in 2022 and 2023 to be on par with pre-pandemic level. It also announced that high-end international casino business will hinge on travel restrictions. However, domestic casino demand remains strong. The company anticipates revenues from BetMGM to touch $1 billion mark in 2022.

Bill Hornbuckle, CEO and president of MGM Resorts International said “We are also deeply focused on our long-term goals including investing in digital to drive deeper customer engagement and BetMGM, our U.S. sports betting and iGaming venture, which continues to impress as the leading operator in U.S. iGaming and the top three operator in U.S. online sports betting. Our future is bright.”

Earnings & Revenues Discussion

MGM Resorts reported adjusted loss per share of 68 cents, narrower than the Zacks Consensus Estimate of a loss of 86 cents. In the prior-year quarter, the company had reported adjusted loss per share of 45 cents.

Total revenues were $1,647.7 million, which topped the Zacks Consensus Estimate of $1,565 million. However, the top line declined 22% year over year. The downside was primarily due to the temporary closure of certain properties for a portion of quarter, lower business volume, and travel and operational restrictions due to the pandemic.

MGM Resorts International Price, Consensus and EPS Surprise

MGM Resorts International Price, Consensus and EPS Surprise
MGM Resorts International Price, Consensus and EPS Surprise

MGM Resorts International price-consensus-eps-surprise-chart | MGM Resorts International Quote

MGM China

MGM China’s net revenues rose 9% year over year to $296 million. VIP Table Games Hold adjusted MGM China net revenues improved 7% year over year to $294 million.

MGM China’s adjusted property EBITDAR (Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) amounted to $5 million, against a loss of $22 million in the prior-year quarter. Moreover, VIP Table Games Hold adjusted MGM China adjusted property EBITDAR was $5 million, against a loss of $17 million in the prior-year quarter.

Domestic Operations

Net revenues at Las Vegas Strip Resorts during the first quarter were $545 million, down 52% year over year due to the pandemic. Adjusted property EBITDAR declined 60% year over year to $108 million. Casino revenues in the quarter under review were down 16% year over year at the company's Las Vegas Strip Resorts primarily due to operational and travel restrictions on account of the pandemic.

During quarter under review, net revenues from the company's regional operations totaled $711 million, down 2% from the prior-year quarter due to the pandemic and related operational restrictions. Adjusted property EBITDAR were $242 million, surging 59% year over year due to rise in casino revenues and cost saving efforts. Moreover, adjusted property EBITDAR margin expanded 1,311 basis points year over year to 34%.

Casino revenues in the quarter under review were up 11% year over year at the company's regional operations primarily due to 6% rise in table games win and a 7% increase in slots win. Notably, slots handle increased 4% at its Regional Operations.

Balance Sheet & Share Repurchase

MGM Resorts ended the first quarter with cash and cash equivalents of $6,171.5 million compared with $5,101.6 million on Dec 31, 2020. The company’s long-term debt at the end of quarter stands at $13,245.4 million, compared with $12,376.7 million as of Dec 31, 2020.

During the first quarter, the company repurchased nearly 3.15 million of shares at an average price of $37.87 per share for $119 million.

Zacks Rank & a Key Pick

MGM Resorts, which shares space with Las Vegas Sands Corp. LVS and Wynn Resorts, Limited WYNN, currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same space includes Playtika Holding Corp. PLTK, which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares Playtika Holding have gained 12.9% in the past month.

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