MGM Resorts International Q3 Earnings Call Highlights

MGM Resorts International NYSE: MGM said third-quarter performance reflected resilient casino demand and convention activity, although higher travel costs and pressure on leisure room rates weighed on its Las Vegas results.

Chief Executive Officer and President Bill Hornbuckle said casino revenue at the company’s Las Vegas operations increased 8% year over year, supported by record third-quarter slot win and continued strength in high-end play. However, occupancy was flat while room rates declined as leisure and transient customers faced a more difficult macroeconomic environment.

Hornbuckle cited elevated fuel and airfare costs as factors affecting visitation, saying airline pricing to Las Vegas was about 45% higher in the third quarter than during the prior summer. He said domestic airfares had risen an average of 12% since March, while higher gas prices also pressured consumer spending.

Las Vegas Room Rates Offset Casino Strength

Chief Financial Officer Jonathan Halkyard said lower room revenue was the primary driver of the decline in Las Vegas segment adjusted EBITDA, offsetting stronger casino revenue. MGM experienced greater leisure-customer mix during the summer, which pressured room rates while occupancy remained comparable with the prior year.

Halkyard described a sequential softening in average daily rate through the quarter. July room rates were roughly flat to down low single digits year over year, followed by a mid-single-digit decline in August and a high-single-digit decline in September. October, he said, was tracking more like July.

Management said October had begun positively, with group and convention business, a busy event calendar and strong table-games play. Hornbuckle pointed to three NFL games during the month, while Halkyard said November was expected to benefit from Formula One activity. MGM also expects Las Vegas to host the National Finals Rodeo, Las Vegas Bowl and another Formula One weekend later in the year.

The company actualized more than 500,000 group and convention room nights in the third quarter, exceeding its internal expectations for convention room-night revenue. MGM remains on track for group and convention guests to represent 20% of total room-night mix for the full year, Hornbuckle said.

Chief Operating Officer Ayesha Molino said the company saw average daily rate pressure across its portfolio late in the summer, but noted stabilization and improvement in October, including a return of stronger luxury-market trends. She said MGM’s full-time-equivalent workforce was effectively flat year over year despite 54,000 additional occupied room nights, as operating teams focused on managing variable labor costs.

Regional, Macau Operations Set Records

MGM’s regional operations posted a 1% increase in same-store revenue, led by record quarterly slot win. Same-store slot drop and slot win each rose 4%, partially offset by lower table-games win. Halkyard said same-store adjusted EBITDA declined 3% after accounting for approximately $9 million of business-interruption proceeds received in the prior-year quarter and the sale of Northfield Park.

At MGM China, revenue increased 5% year over year. Reported EBITDA declined by $20 million, though the brand fee paid to MGM Resorts increased by $22 million, leaving margins consistent after accounting for that fee, Halkyard said. MGM China recorded third-quarter revenue and market-share records, with September market share reaching 19.2% and quarterly market share reaching 17.1%.

Chief Executive Officer of MGM China Holdings Kenneth Feng said MGM China’s margin was about 26.9% during the quarter. He said performance was affected by factors including gaming hold, event calendars and high-end play, while the company continued to focus on efficiency, products, service and premium-mass customers.

Golden Week visitation at MGM China’s two properties rose 10% year over year in October, according to Halkyard. Hornbuckle said renovated premium spaces, including the Cotai Supreme Club and a high-limit slot area opened in July, were helping generate higher customer play and slot volumes.

Digital Business Narrows Losses

MGM said its BetMGM North America venture generated 7% growth in third-quarter net revenue from operations and a 112% increase in adjusted EBITDA. Halkyard said iGaming accounted for nearly 70% of the venture’s net revenue from operations and remained its primary growth engine. BetMGM distributions and branding license fees paid to MGM Resorts totaled $34 million during the quarter.

MGM Digital increased third-quarter net revenue by 6%, or about $10 million, and improved EBITDA by $19 million, narrowing its loss to $4 million. The company launched online sports betting in the United Kingdom on its proprietary platform in August, and management said that platform now produces more than 80% of its online sports revenue.

Hornbuckle said MGM Digital’s business-to-consumer revenue rose 8%, led by Spain, the Netherlands and the United Kingdom. In Brazil, where the market has shut down, MGM has reduced fixed costs and is evaluating potential regulatory outcomes with its partner, Grupo Globo.

Osaka Funding and Capital Allocation

MGM Osaka remains on schedule and on budget for a 2030 opening, management said. About 70% of foundation piles have been completed, and the overall project is about 11% complete. MGM has spent approximately ¥114 billion on the project to date and expects to deploy roughly ¥150 billion to ¥160 billion, or about $1 billion, in each of 2027 and 2028 to complete its funding commitments.

Halkyard said MGM expects to fund those commitments through cash on hand and free cash flow, while potentially pursuing additional yen-denominated financing. He said the project is fully funded through MGM and partner ORIX commitments along with a Japanese senior credit facility.

The company also highlighted its capital structure, with only $675 million of domestic senior notes maturing within the next 12 months and an undrawn revolving credit facility. MGM had approximately $1.4 billion remaining under its share-repurchase authorization. Halkyard said the company did not repurchase shares during the third quarter because of circumstances surrounding discussions with its largest shareholder, People Inc., but those discussions have concluded.

Hornbuckle said People Inc. withdrew its June offer after being unable to assemble a syndicate meeting its objective. MGM amended its voting agreement with People Inc. to limit additional purchases once ownership reaches 29.9% and require the shareholder to vote with MGM’s board in a change-of-control transaction.

About MGM Resorts International (NYSE:MGM)

MGM Resorts International is a global hospitality and entertainment company that develops, owns, and operates destination resorts featuring casinos, hotels, restaurants, entertainment venues, convention facilities, retail spaces, and nightlife offerings. Its portfolio includes well-known properties such as MGM Grand, Bellagio, ARIA, Mandalay Bay, and The Cosmopolitan of Las Vegas.

The company serves customers through properties in Las Vegas and other U.S. markets, including regional destinations in Michigan, Maryland, Massachusetts, Mississippi, New Jersey, New York, and Ohio.

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