MGM Resorts International (MGM:US), the largest casino operator on the Las Vegas Strip, posted a smaller-than-expected second-quarter loss as gains in Macau trumped Nevada weakness. The stock rose the most in nine months.
The loss was 12 cents a share, excluding some items related to taxes and property transactions, Las Vegas-based MGM Resorts said today in a statement. Analysts had projected a loss of 15 cents, based on 24 estimates (MGM:US) compiled by Bloomberg.
Sales rose 29 percent to $2.32 billion, boosted by inclusion of the company’s 51 percent owned MGM China Holdings Ltd. subsidiary in the results for a full quarter, compared with one month a year earlier. Analysts had anticipated $2.35 billion, on average.
“The miss in Las Vegas was more than offset by strength in Macau,” Cameron McKnight, an analyst with Wells Fargo Securities, said today in a research note.
Revenue at MGM Resorts’ wholly owned domestic resorts was unchanged at $1.5 billion while casino winnings declined 1 percent, the company said. MGM China saw its sales climb 6 percent to $709 million in the quarter, driven in part by a 39 percent increase in slot machine revenue.
The stock gained 8.4 percent to $10.17 at 2:27 p.m. in New York, the biggest intraday increase since October 2011. The shares had fallen 10 percent this year through yesterday.
MGM Resorts Chairman and Chief Executive James Murren said the company began to see weakness in Las Vegas in May and the company expects hotel revenue per available room to be “slightly down” in the third quarter as a result.
“We saw a step back in the consumer in the second quarter; so far at least it was a fairly finite and brief period,” Murren said in a telephone interview. “The consumer just took a breather. We can hypothesize all the reasons for that.”
MGM China’s results benefited from investments the company made in slot machines, its VIP gaming area and a butterfly exhibit that has been attracting 50,000 visitors a month, Murren said.
“I was a little dubious when it was presented to me,” Murren said of the exhibit. “People are snaked around to get in to it. It’s gotten an enormous amount of attention, particularly in mainland China.”
Industrywide casino revenues on the Las Vegas Strip fell 18 percent to $475.1 million in May, according to the Nevada Gaming Control Board. Casinos kept the lowest percentage of blackjack bets ever that month, according Michael Lawton, a senior analyst for the board.
In Macau, the only part of China where gambling is legal, industry casino revenue has increased 17 percent this year through July, according to the city’s Gaming Inspection and Coordination Bureau.
“Given the recent declines in shares, the relief rally is not surprising given the tepid results were better than feared,” Rachael Rothman, an analyst at Susquehanna International Financial Group, said today in a research note.
The net loss was $145.5 million, or 30 cents a share, compared with net income of $3.44 billion, or $6.22, in the year-earlier period, when results included a $3.5 billion gain on the acquisition of a controlling stake in MGM China Holdings Ltd. (2282)
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