MGM Q2 revenue hits $4.33bn as Hornbuckle eyes Thailand opportunity

Overall net revenue for the business was 9.8% higher than Q2 2023 thanks to continued post-Covid growth driving record performance in China.

Net income attributable to MGM Resorts was $187m in Q2 compared to $201m in the prior year’s quarter. Meanwhile free cash flow for the six months ended 30 June was $613m.

Diluted earnings per share at the end of the quarter were $0.60, compared to $0.55 in 2023.

All eyes on Thailand

Hot off the firm’s positive results, and with a keen eye on potential emerging markets, Hornbuckle told analysts during the 31 July earnings call he was viewing “an opportunity” in Thailand in August.

“That is a venture that we’re interested in. And if we do, do that, we’ll do it through MGM China Holdings,” he said, noting MGM China board member and business woman Pansy Ho would join him on the the trip.

A feasibility report, which will likely suggest a regulatory framework for legal casinos in Thailand is due this week. The Thai casino study was commissioned in March, after house members approved a draft Entertainment Complex Bill.

Also providing an update on MGM’s Japan project, the CEO said the firm had broken ground on the development and was confident on the middle-of-2030 target opening date.

MGM ahead of market growth in China

MGM put its 37.4% growth in Macau (to a $1.02bn revenue) down to the removal of all remaining Covid-19 measures in the region, which has allowed for increased travel and tourism in the region. Adjusted EBITDA for the quarter was $1.2bn, while growth in Macau Revenue growth in China also drove adjusted EBITDA in the region to a record $294m, up 40.7% from last year.

CEO William Hornbuckle said the “outstanding performance” in Macau was achieved “without any real capital enhancements from where we left this market in 2019”.

“We’re obviously outperforming,” he said. “And remembering the market has only returned to 80% recovery. Well, MGM is well above that. We still see opportunities not only for growth in the market, but ultimately for us to steal additional share.”

Luxury resorts push Las Vegas revenue up in Q1

Turning to Las Vegas, revenue was up 2.7% to $2.21bn for the quarter. MGM put this down to a rise in room revenue, driven by an increase in average daily room rate and an increase in catering and banquets revenue.

“We invest meaningfully in our strip luxury offerings as this is where we see the most opportunity for profitable growth,” Hornbuckle told analysts. “In fact, 75% of our 2024 domestic property capital budget will be focused on these properties. This includes room remodels, which are under way now at the MGM Grand and suite updates across our Las Vegas portfolio.”

Regionals remain stable

As for MGM’s Regional business, revenue was marginally higher at $927m in Q2. Hornbuckle said he was content with the stability of this segment, highlighting growth plans for the future, including a planned launched in New York.

“We’ll maintain our market-leading positions in the regional markets, including an expansion in New York,” he said. “With our regional properties, again, I want to reiterate they are stable and free cash flow generating and we’re excited to have the properties that we do within our portfolio.”

The remaining $177m in net revenue in Q1 came from management and other operations, up 40.5% year-on-year.

As for revenue type, $2.2bn was attributed to casino activity, up 8.8% from last year. Rooms revenue climbed 10.3% to $899m and food and beverage revenue 7.9% to $802m. However, revenue from entertainment, retail and other slipped 4.5% to $402m, with reimbursed costs level at $12m.

Net profit slips as higher costs offset revenue growth

Looking at spending, total operating costs in Q2 were 8.8% higher at $3.87bn. Non-operating also jumped 73.0% to $154m, with these rises impacting profitability.

Pre-tax profit slipped 4.2% to $271m and while MGM received $12m in tax benefits, this was more than offset by taking off $95.7m in profit from non-controlling interests.

As such, it ended Q2 with a $187m net profit down 7% year-on-year.

H1 revenue $8.71bn at MGM

As to how Q2 impacted MGM in the first half, total net revenue in H1 was 11.5% higher year-on-year at $8.71bn. 

This was again mainly down to growth in China, with revenue within the region rising 52.6% in the six month period. Las Vegas revenue was also 3.1% higher at $4.46bn, with Regional revenue flat at $1.84bn and revenue from management and other operations up 29.8% to $340m.

Casino revenue H1 climbed 16.2% to $4.45bn, room revenue increased 1.5% to $1.86bn, and food and beverage revenue was 7.2% higher at $1.57bn. Entertainment, retail and other revenue fell 2.9% to $806m while reimbursed costs hit $24m.

Operating costs reached $7.77bn, up 17.3%, and non-operating expenses jumped 54.6% to $269m. As such, pre-tax profit hit $615m, down 33.7% on the back of higher spending. 

MGM paid $32m in tax and discounted $178m in net profit from non-controlling interests. This left a bottom-line net profit of $405m, down 39.4% last year, while adjusted EBITDAR reached $2.43bn.

“We’re excited by the progress we’re making as a company against our strategic priorities and anticipate carrying our current momentum forward into the back half of the year,” Hornbuckle said.

What about BetMGM?

Separate to the MGM results, BetMGM, the joint venture with Entain, also published an H1 update this week. The headline from this was revenue reaching $1bn in the period, up 6% on the previous year.

Despite no new state launches revenue also grew 9% year-on-year in Q2, following a slower first quarter.

BetMGM posted negative EBITDA of £123m in the first half. It expects a similar figure in H2, suggesting a full-year negative EBITDA of £250m.