MGM Resorts International is setting its sights on significant improvements in Q4 2018 and beyond, after a number of mitigating factors affected the figures reported in its third quarter update.
Operating income for the period came in at $435m across MGM’s domestic resorts, down the from the previous years $545m, with the Las Vegas headquartered firm pointing to a series developments impacting the figure.
Chief amongst those is the $31m pre-opening expenses of MGM Springfield, in addition to continued disruption at Park MGM and a decrease in casino and non-casino revenues at its Las Vegas Strip resorts.
Addressing its Q3 performance, Jim Murren, chairman and CEO of MGM Resorts International, commented: “Our third quarter operating performance exceeded our expectations despite the tough year on year comparison, resulting from robust casino business and an exceptionally strong event calendar last year.
“During the quarter, we successfully opened MGM Springfield, which has been well received by our customers. Earlier this month, we also officially opened the NoMad Hotel at Park MGM, which will help expand our customer reach.
“We remain highly focused on our strategic priorities, including maximising the performance of our portfolio of premier properties, driving growth in free cash flow and delivering on our capital allocation strategy.”
Net revenue during the third quarter saw a two per cent dip to $2.2bn, excluding contributions from the opening of MGM Springfield, domestic resorts adjusted property EBITDA of $627m is a 12 per cent decrease compared to $712m in the prior year.
Regarding its MGM China operations, the firm recorded a 37 per cent boost in net revenues to $606m, with operating income reaching $52m (2017: $38m).
Regarding MGM’s outlook, Murren explained: “Stabilising market conditions are positioning MGM Resorts for improvement in the fourth quarter. Looking further out, our growth will be driven by the continued ramp of our newly opened properties, along with our disciplined approach to improve our margins throughout our resort portfolio.
“We also are executing on additional targeted growth opportunities in key areas including sports betting and Japan’s upcoming integrated resort market.
“Our focus on balance sheet strength will help ensure prudent capital allocation and the continued return of capital to shareholders. Overall, we remain confident that we will deliver on our 2020 goals.”
Adding: “We expect to deliver positive results in the fourth quarter at our Las Vegas Strip resorts, with net revenues up slightly and Las Vegas Strip REVPAR up one to two percent.
“We also expect Las Vegas Strip adjusted property EBITDA margins to be flat to up slightly. These projected results are in line with our previously stated full year guidance.
“Heading into 2019, the completion of Park MGM and NoMad, the expanded MGM Grand convention space, and a better backdrop in group business position us well in Las Vegas. We will also benefit from a full year of operations at MGM Springfield.”