August 3, 2022 - 2:32 pm
Updated August 3, 2022 - 6:36 pm
The second quarter was very kind to the Strip’s major casino companies.
A day after Caesars Entertainment posted record pre-tax earnings for its Las Vegas properties in the second quarter, MGM Resorts International did the same Wednesday.
MGM Resorts reported $825.3 million in adjusted EBITDAR (earnings before interest, taxes, depreciation, amortization and restructuring or rent costs) at its Las Vegas properties for the three months ending June 30, up 108 percent from the same quarter last year ($396.8 million).
Overall, MGM Resorts reported $3.26 billion in total revenue, up 44 percent from $2.27 billion in the same quarter last year. That produced a net income of $1.78 billion, up a whopping 1,599.3 percent from $104.75 million last year.
MGM Resorts CEO and President Bill Hornbuckle called the results “nothing short of spectacular” on the second-quarter earnings call and said the company was well-positioned even if the U.S. economy slips into a recession.
“We’ve built an incredibly agile business over the last few years due to COVID and other factors,” he said, “and we will adjust and pivot quickly if we see any signs of consumer demand slowing.”
Caesars posted pre-tax earnings of $547 million for its Las Vegas properties in the second quarter Tuesday.
The huge increase in MGM Resorts’ net income was driven mostly by the deconsolidation of MGM Growth Properties, a real estate investment trust that was bought out by Vici Properties for $17.2 billion.
MGM Resorts got $4.4 billion in cash from that deal and invested that back in the business by buying the operations of The Cosmpolitan of Las Vegas for $1.625 billion.
That transaction is already showing promise, Hornbuckle said, as the Cosmo generated a little under $60 million in pre-tax earnings in just the six weeks MGM Resorts owned it in the second quarter.
“This business in rocking and rolling right now,” Hornbuckle said.
The Vici money has also helped MGM Resorts continue to buy back shares of its stock. Jonathan Halkyard, MGM Resorts’ chief financial officer and treasurer, said the company bought back 32.4 million shares in the second quarter for $1.1 billion. Since the start of 2021, MGM Resorts has bought back 104 million shares for $4 billion, about 31 percent of the company’s market capitalization.
“We’ve been aggressively repurchasing our shares over the past 18 months because of the value we see at current trading multiples,” Halkyard said.
MGM shares, traded on the New York Stock Exchange, closed up $1.14 (3.45 percent) to $34.20 a share on Wednesday. In after-hours trading following the earnings call, shares climbed another 2.46 percent to $35.04.
MGM Resorts continues to weather a storm in Macao, which has had severe travel restrictions related to COVID-19, including a recent 12-day casino shutdown that occurred after the second quarter. MGM China’s net revenue was $143 million in the second quarter, down 54 percent from $310.6 million in the same quarter last year.
Net revenue was $706.1 million in the same quarter in 2019, before the pandemic.
“We remain confident in the future of Macao and are proud to be partners in shaping the future of one of the world’s premier tourist, entertainment and gaming destinations,” Hornbuckle said.
MGM Resorts International
Second-quarter revenue and earnings for Las Vegas-based MGM Resorts International, operators of the MGM Grand, Bellagio, The Cosmopolitan of Las Vegas, Aria and Mandalay Bay among other Strip properties. (NYSE: MGM)
2Q 2022: $3.26 billion
2Q 2021: $2.27 billion
2Q 2022: $1.78 billion
2Q 2021: $104.75 million
Earnings per share
2Q 2022: $4.20
2Q 2021: $0.14