MGM Resorts International has faced challenges in the third quarter of 2024, reporting sales and profits well below expectations, primarily influenced by a decline in casino revenue on the Las Vegas Strip.
The company announced a 5.3% increase in sales to $4.18 billion for the quarter ending September 30, 2024, although this figure fell short of analysts’ projections of $4.21 billion.
In Las Vegas, the company’s largest market, revenue increased by 1.3% to $2.13 billion, driven by higher hotel room sales despite a notable 13% decline in casino revenue. However, the Las Vegas Strip has recorded three consecutive months of revenue drops, notably impacted by a downturn in baccarat gaming.
Adjusted earnings for the third quarter were reported at 54 cents per share, down from the previous year and lower than the analysts’ average estimate of 59 cents as compiled by Bloomberg.
In contrast, MGM Resorts experienced record-breaking sales and profits in Macau, achieving revenue of $929 million and earnings of $237 million before interest, taxes, depreciation, and amortization. However, these results also still fell short of analysts’ expectations.
Caesars Entertainment, one MGM’s major competitors, also faced setbacks, with their stock tumbling 8% after reporting decreased revenue in Las Vegas and regional operations.
Despite the mixed results, Bill Hornbuckle, CEO and President of MGM Resorts, expressed satisfaction with the overall performance. “We are pleased to report record consolidated net revenues for the third quarter, driven by record results from MGM China,” he stated.
Bill Hornbuckle, CEO and President of MGM Resorts
“In Las Vegas, we drove sequential improvement throughout the quarter, and many key metrics are demonstrating strength including growth in ADR and occupancy,” Hornbuckle added.
MGM Resorts also highlighted its shareholder return strategy, with CFO Jonathan Halkyard reporting over $300 million returned through share repurchases during the quarter. “Since 2021, we have consistently demonstrated our commitment to returning cash to shareholders, reducing overall shares outstanding by 40%,” he noted.
Despite the positive aspects of the report, challenges remain, particularly concerning Las Vegas table games, where revenue was described as “a little bit soft” by analyst Joseph Greff from J.P. Morgan.
Halkyard attributed the table-game revenue decline to issues in the high-end baccarat segment. “This was almost entirely due to our high-end baccarat business. This is the way our business is, and the timing of the trips from these largest customers is not, of course, our choice,” he said.
The CEO explained that excluding baccarat, table-game revenue was up 12%. “Hold was down … 15% from the year before. And between that and missed business, it’s like an $80 million miss in baccarat for us,” he added.
The quarter began sluggishly in July, affected by extreme heat and an accident that closed Interstate 15 for three days. However, Hornbuckle mentioned that the situation improved throughout the quarter with the introduction of significant convention business in August.
Hornbuckle also addressed concerns regarding the forthcoming Formula 1 race, estimating a $30 million financial challenge similar to previous estimates. He emphasized that the earlier announcement of the race led to a quick sellout of hotel rooms, particularly at premium locations, which would impact revenue potential.
Despite these hurdles, MGM Resorts remains optimistic about maintaining a healthy mix of vacationers and business travelers, as indicated by COO Corey Sanders. “That mix is where we like it right now. I wouldn’t envision that changing that much next year,” he affirmed.
