MGM Resorts International, the casino giant whose Strip properties include Bellagio, MGM Grand and Aria, reported its third-quarter earnings today.
Company: MGM Resorts International (NYSE: MGM)
Revenue: $2.7 billion, compared to $2.5 billion in the third quarter last year.
Income: $536 million, compared to a loss of $66 million for the third quarter last year.
Earnings per share: $0.94, compared to earnings per share of $0.12 for the same quarter one year earlier.
What it means: The company had a strong third quarter. Highlights included:
• Domestic casino revenue for the third quarter of 2016 increased 23 percent.
• Domestic rooms revenue increased 14 percent compared to the third quarter last year.
• MGM China's net revenues decreased 6 percent, while operating income and Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) increased 34 percent and 17 percent, respectively, compared to the third quarter 2015.
• City Center's net revenues and Adjusted EBITDA related to resorts operations increased 11 percent and 41 percent, respectively, compared to the third quarter 2015.
In a conference call with investors about the results, Jim Murren, chairman and CEO of MGM Resorts, lauded the company’s performance and was optimistic about 2017 for the company and Las Vegas.
“I think the city will do well next year, and we typically do better than the city,” Murren said. “There’s no new capacity coming online in this market.
By having the limited amount of supply with room rates that are still below prerecession peaks and a convention business that’s growing and growing for us, it bodes well.”
In an interview with the Las Vegas Sun after the call, Murren said he has three reasons for that optimism.
“One is the convention buzz we’re hearing, starting with CONEXPO-CON/AGG (an international trade show for the construction industries in March) in the first quarter. It looks like it will be higher than this year,” Murren said.
“Next year will be slightly higher still and more consistently spread throughout the year because conventions are so anxious to be here that they’re willing to be more flexible in terms of dates. In the old days there was not a lot of convention business that came in August and July, but today you do see that.”
“The second (reason) is airlift continues to drive visitors to Las Vegas,” Murren said. “Domestic carriers are adding capacity as are international carriers.”
Entertainment was the third reason Mullen gave for his bullish take on Las Vegas and MGM.
“I had to check this it because was so stunning, but we’re going to produce and host five times the number of events in 2017 nationwide as we did this year,” Murren said.
“Part of that is because of the opening of National Harbor (MGM’s new Washington, D.C., area property opening in December) and its great new theater.
“Part of it is because we now own Borgato, and it, too, has a great music venue.
But most of that increase is here in Las Vegas by virtue of the fact that Park Theater is opening up on Dec. 17 and it will be highly occupied in 2017.”
“Having T-Mobile Arena in a full year instead of a partial year and great events in the MGM Grand Garden and Mandalay Bay Events Center drives people here and people drive occupancy.”
Murren said he didn’t think that MGM, or Las Vegas in general, has too many venues or that they’ll start to take business from each other.
“Certainly we compete and people were surprised when we were supportive of the new stadium because clearly that would compete,” Murren said.
Murren said that former MGM chief Kirk Kerkorian taught him that anything benefiting Las Vegas benefits the company.
“If we can drive more events to town, to the Thomas & Mack or our places or any of them … it’s good for us,” Murren said. “There are a lot of events out there in the world we just don’t get.
“The Thomas & Mack Center is a great venue with a great historical context, and it will continue to do well. And I don’t see any falloff to the (MGM Grand Garden Arena) even though we own and manage the T-Mobile.”