LAS VEGAS, Nev. – MGM Resorts International reported a surprise profit for its first quarter on the strength of room bookings and gambling tables on the Las Vegas Strip and continued profits in Macau.
CEO Jim Murren called the results the best first quarter since the beginning of the recession five years ago, and shares rallied in morning trading.
“This is the beginning of a new era for MGM,” he said on a conference call with analysts.
MGM earned $6.5 million, or 1 cent per share, in the first three months of the year, rebounding from a loss of $217.3 million, or 44 cents per share, a year ago. Analysts polled by FactSet were expecting a loss of 10 cents per share.
One of the four major U.S. casino companies, MGM Resorts operates 15 casinos in Nevada, Mississippi and Michigan, including Las Vegas Strip casinos CityCenter, Bellagio, Mandalay Bay, Luxor and MGM Grand. It also is the majority owner of MGM China Holdings Ltd., which operates the MGM Macau casino-resort and is developing a new Cotai resort.
Casinos in the U.S. have been slower to recover from the economic downturn, and gambling companies have looked abroad for growth. Macau, the only place in China where casino gambling is legal, has been the gambling capital of the world since 2006. MGM still has much of its business in on the Strip, unlike its major rivals Las Vegas Sands Corp. and Wynn Resorts International. Those companies both reported gains for the first three months of the year because of their Macau resorts, while Caesars Entertainment, which has no presence in Macau, reported a loss.
On Thursday, Murren characterized the first quarter as a “record” for its China subsidiary. MGM China revenue jumped 6 per cent to $748 million, and saw a 26 per cent jump in winnings from table games.
MGM’s overall revenue rose 3 per cent to $2.35 billion, exceeding the average analyst estimate of $2.34 billion. Revenue from rooms at MGM hotel-casinos rose 2 per cent. Table game revenue rose 16 per cent in the U.S., while overall casino revenue rose 4 per cent.
Also helping the company’s results: The massive CityCenter development in Las Vegas, owned jointly with Dubai World, posted a profit instead of a loss.
Murren said he is “feeling good” about Sin City.
MGM recently announced plans to build a $100 million public park in front of its New York, New York casino. MGM Grand welcomed a five-story nightclub last month, and Mandalay Bay will open its doors to a Cirque du Soleil-themed club on Memorial Day weekend.
Asked about ongoing negotiations with Las Vegas’ powerful hotel union, Murren emphasized the importance of reaching a compromise that reflects market conditions.
“The economy that we talked about is slowly recovering, but could be somewhat fragile,” he said.
MGM’s revenue has steadily improved for the last several years, but it has posted losses in all but a handful of quarters as it dealt with a mountain of debt and declining values of some of its properties.
In an interview with The Associated Press, Murren said the company became an illustration of the crushing effects of the recession on the gambling industry, but may now become a poster child for the recovery.
“We learned the hard way that we’re very dependent on the U.S. economy. Moderate changes in behaviour can have profoundly negative and positive impacts,” he said. “It was a near fatal blow during the recession, and now it’s starting to move in the other direction.”
MGM shares rose nearly 8 per cent after the report and set a 52-week high of $14.90. They closed Thursday at $14.55, up 5.4 per cent, or 75 cents. Shares have risen by about 25 per cent since the beginning of this year.
Hannah Dreier can be reached at http://twitter.com/hannahdreier