MGM’s Strip properties fuel record cash flow and margins
MGM Resorts International ended 2021 with a bang as the company reported record fourth quarter cash flow and margins, with some numbers surpassing those seen before the COVID-19 pandemic.
The Las Vegas-based casino giant’s strong quarter was supported by its properties along the Strip and in regional markets across the United States. 26% from the pre-pandemic fourth quarter of 2019. This was partly due to MGM’s takeover as new operators of Aria and Vdara as well as a relaxation of mandatory operational and capacity restrictions, but the company said revenue for the rest of its Strip portfolio without those two properties was still up 5% from the same period in 2019.
MGM Chairman and CEO Bill Hornbuckle attributed the strong quarter to the company’s focus on efficiency.
“The strategic milestones we took in 2021 position us for further success in 2022, and we remain excited about our long-term opportunities, including: leading the U.S. online sports betting and gaming market through BetMGM, continuing to expand disciplined geography such as the integrated resort in Japan, and reinvesting in our core business to drive sustainable growth,” Hornbuckle said in a press release. “As part of these efforts, we are proud to have recently launched our new loyalty program, MGM Rewards, which provides an improved and simplified experience for millions of our members worldwide.”
MGM Resorts reported net income of $131 million on $3.1 billion in net revenue for the three months ending Dec. 31. That compared to a net loss of $448 million on $1.5 billion in revenue in the fourth quarter of 2020.
Gambling and tourism rebounded faster and stronger than most analysts predicted after the economic downturn caused by the COVID-19 pandemic. Nevada casinos reported record gambling winnings in 2021, and December numbers topped $1 billion for the 10th straight month, extending the record that stood for 14 years and was broken in November.
While the company’s U.S. casinos performed well, MGM China posted net revenue of $315 million for the fourth quarter, a slight increase of 3% over the same period in 2020 and a strong down 57% from the fourth quarter of 2019. MGM Resorts cited the negative performance of travel and entry restrictions that remain in place in Macau due to COVID-19.
Looking ahead, the company has a lot of moving parts that should fall into place. It is a $1.6 billion acquisition of The Cosmopolitan of Las Vegas operations that is expected to close in the first half of the year. And it’s the $1.075 billion sale of The Mirage operations to Hard Rock International that is expected to close in the second half of 2022.
The company is also betting big on its mobile sports betting business, BetMGM. It plans to invest an additional $450 million in the app this year as the sports betting market continues its rapid expansion across the United States. the market for US sports betting and iGaming combined.
Shares of MGM closed Wednesday up 2.8%, or $1.32, at $48.52 per share on the New York Stock Exchange.