MGM’s Strip properties fuel record cash flow, margins

MGM Resorts International finished off 2021 with a splash as the company reported record cash flow and margins in the fourth quarter, with some numbers exceeding those seen before the COVID-19 pandemic hit.

The Las Vegas-based casino giant’s strong quarter was buoyed by its properties along the Strip and in regional markets across the U.S. Fourth quarter revenue for the company’s Strip properties hit $1.8 billion, which was up a whopping 277 percent year-over-year and up 26 percent compared to the pre-pandemic fourth quarter of 2019. That was in part due to MGM taking over as the new operators of Aria and Vdara as well as an easing of mandated operational and capacity restrictions, but the company said revenue for the rest of its Strip portfolio without those two properties was still up 5 percent compared to the same period in 2019.

MGM President and CEO Bill Hornbuckle attributed the strong quarter to the company’s focus on efficiency.

“The strategic milestones we achieved in 2021 position us for further success in 2022, and we remain excited about our long-term opportunities including: leading the U.S. sports betting and iGaming market through BetMGM, pursuing disciplined geographic expansion such as the Japan integrated resort, and reinvesting in our core business to drive sustainable growth,” Hornbuckle said in a news release. “As part of these efforts, we are proud to have recently launched our new loyalty program, MGM Rewards, which offers an enhanced and further streamlined experience to millions of our members worldwide.”

MGM Resorts reported net income of $131 million on $3.1 billion in net revenues for the three month period ending Dec. 31. That compared to a net loss of $448 million on $1.5 billion in revenues in the fourth quarter of 2020.

Gaming and tourism have bounced back faster and stronger than most analysts predicted after the economic downturn caused by the COVID-19 pandemic. Casinos in Nevada recorded record high gaming wins in 2021, and December’s numbers exceeded $1 billion for the 10th straight month, extending the record that had stood for 14 years and was broken in November.

While the company’s U.S. casinos performed well, MGM China reported net revenue of $315 million for the fourth quarter, a slight increase of 3 percent compared to the same period in 2020 and a steep decline of 57 percent compared to the fourth quarter of 2019. MGM Resorts cited the negative performance to travel and entry restrictions that remain in place in Macau due to COVID-19.

Looking ahead, the company has a lot of moving parts that are expected to fall into place. It’s $1.6 billion acquisition of the operations of The Cosmopolitan of Las Vegas is expected to close in the first half of the year. And it’s $1.075 billion sale of the operations of The Mirage to Hard Rock International is slated to close in the second half of 2022.

The company is also betting big on its mobile sports wagering venture, BetMGM. It plans to invest another $450 million into the app this year, as the sports betting market continues its rapid expansion across the U.S. The company said BetMGM is already the top operator in U.S. iGaming (online casinos) market and estimates that it ranks second nationwide in the market for U.S. sports betting and iGaming combined.

MGM shares closed Wednesday up 2.8 percent, or $1.32, to $48.52 a share on the New York Stock Exchange.

Contact Colton Lochhead at clochhead@reviewjournal.com. Follow @ColtonLochhead on Twitter.