Global hospitality and entertainment operator MGM Resorts International (MGM -1.49%) unveiled first-quarter results on Wednesday, May 1, that outperformed analyst expectations. It managed to generate an adjusted EPS of $0.74, a significant uplift from $0.44 the previous year.
MGM's bottom-line growth came on the back of impressive top-line revenue increases, particularly from its operations in MGM China and continued strengths in the Las Vegas market. Consolidated net revenue for the quarter reached $4.4 billion, a 13% jump year over year. This quarter's achievements reflect MGM's adept strategic focus on expansion and diversification.
| Metrics | Q1 2024 | Estimates | Q1 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.74 | $0.56 | $0.44 | 68% |
| Consolidated net revenue | $4.38 billion | $4.2 billion | $3.87 billion | 13% |
| MGM China revenue | $1.06 billion | - | $618 million | 71% |
| Net income attributable to MGM | $217 million | - | $466 million | (53%) |
Data source: Company results from company. Analyst estimates from FactSet. YOY = Year over year.
A closer look at MGM Resorts International
MGM Resorts International operates at the forefront of the hospitality and gaming industry, with a rich portfolio of hotels and casinos, notably in the Las Vegas Strip and Macau, China. Known for its iconic resorts, the company also has a strategic presence in sports betting and online gaming.
More recently, MGM doubled down on digital and international market expansion. Key moves include ventures like BetMGM, acquiring online gaming company LeoVegas, and pursuing a major resort project in Japan. These initiatives are central to MGM's vision of capturing a broader share of the global gaming market.
Quarterly performance highlights
The first quarter of 2024 was notable not just for beating earnings and revenue estimates but for the underlying drivers of this success. MGM China's resurgence, with a 71% revenue increase, exemplifies the market's recovery as pandemic pressures have eased and MGM's strong positioning therein.
The company saw a small dip in quarterly revenue year over year in its regional operations (down 4%) related to adverse weather conditions in January. However, the continued strength in the Las Vegas segment (up 4%) kept the top-line growth in double-digit percentages overall.
The introduction of strategic growth drivers, particularly the company's ambitious strides in online and international arenas, underscores MGM's adaptability and forward-thinking approach. Moreover, the repurchase of 12 million shares worth $511 million during the quarter, marking a 36% reduction since 2021, speaks volumes about the company's robust financial health and commitment to enhancing shareholder value.
Operational challenges such as cybersecurity incidents have been navigated with a proactive response, minimizing impact and reinforcing resilience. Similarly, strategic decisions around property dispositions and leveraging digital platforms have aligned MGM's asset portfolio and operational model toward future growth trajectories.
Looking ahead
Management's forward guidance suggests continued momentum, buoyed by its diversified operational framework and the lifting of travel restrictions in key markets like Macau. Strategic investments totaling $830 million to $860 million in 2024 alone are expected to drive future growth in online gaming and fund numerous physical resort enhancements. Investors should closely monitor MGM's expansion into new markets (especially in Japan) and digital segments, as these underpin the company's long-term strategy.
Management's outlook for the coming quarters is optimistic, with a focus on leveraging its broad-based recovery and operational efficiencies. Notable changes in forward guidance will be critical to assess, as MGM navigates global market dynamics, regulatory landscapes, and consumer behavior trends.
