MGM Resorts International — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; comparison is with Q1 2023. MGM operates casino resorts and online gaming businesses, including Las Vegas Strip, Regional Operations, MGM China, LeoVegas and its 50% BetMGM venture. Financial statements are unaudited.
Financial performance
| Metric | Q1 2024 | Q1 2023 | Change / context |
|---|---|---|---|
| Revenue | $4.383 billion | $3.873 billion | Up 13% |
| Operating income | $458 million | $731 million | Down 37%; prior period included a $398 million Gold Strike Tunica sale gain |
| Net income | $300 million | $480 million | Down 38% |
| Net income attributable to MGM | $217 million | $467 million | Down 53% |
| Diluted EPS | $0.67 | $1.24 | Lower despite fewer weighted-average shares |
| Operating cash flow | $549 million | $704 million | Lower, primarily reflecting working-capital changes, including payroll liabilities |
| Capital expenditures | $172 million | $140 million | Higher year over year |
| Cash and cash equivalents | $2.722 billion | $2.928 billion at Dec. 31, 2023 | Quarter-end balance; includes $622 million held by MGM China |
| Long-term debt, net | $6.270 billion | $6.344 billion at Dec. 31, 2023 | Principal debt was approximately $6.3 billion, including $3.0 billion at MGM China |
Revenue growth was led by MGM China, where revenue rose 71% to $1.056 billion as Macau operations continued to recover following removal of COVID-related restrictions. Las Vegas Strip revenue increased 4% to $2.255 billion; Regional Operations revenue declined 4% to $909 million, partly due to the Gold Strike disposition and lower casino volume.
Las Vegas Strip room revenue rose 10%; occupancy was 93% versus 92%, ADR was $277 versus $258, and RevPAR was $258 versus $239. Management attributed the ADR increase in part to the Super Bowl in Las Vegas. Strip Adjusted Property EBITDAR declined 1% to $828 million, with margin falling to 36.7% from 38.4%, primarily due to payroll costs. Regional Operations Adjusted Property EBITDAR fell 12% to $274 million, with margin at 30.1% versus 33.1%, reflecting lower casino revenue and higher payroll costs. MGM China Adjusted Property EBITDAR rose 78% to $301 million, with margin improving to 28.5% from 27.4%.
Consolidated operating margin was approximately 10.5% versus 18.9%; the comparison is materially affected by the prior-year property-sale gain. Adjusted EBITDAR, a non-GAAP valuation measure that excludes significant costs including rent, was $1.235 billion in Q1 2024; the filing’s extracted table does not provide a clear comparative consolidated value. It should not be treated as operating income, cash flow or a liquidity measure.
Liquidity, debt and capital allocation
- Cash from investing activities was a net outflow of $108 million, versus $212 million of inflow in Q1 2023. The prior period included proceeds from the Gold Strike sale and repayment of the Circus Circus note.
- Cash used in financing was $629 million, including $507 million for share repurchases and $77 million of net debt repayments. MGM repurchased approximately 12 million shares; $1.7 billion remained available under the November 2023 repurchase authorization at quarter-end.
- The company amended its senior secured credit facility in February, increasing it to $2.3 billion and extending maturity to February 2029. No amounts were drawn at quarter-end; $28 million of letters of credit were outstanding under the facility. MGM reported compliance with applicable credit covenants.
- After quarter-end, MGM issued $750 million of 6.5% notes due 2032 and used the proceeds to redeem $750 million of 6.75% notes due 2025. MGM China also paid a $51 million special dividend in April; a further approximately $118 million dividend was subject to shareholder approval and expected in May.
- Liquidity should be considered alongside substantial lease obligations: operating lease liabilities were $25.2 billion at quarter-end. MGM stated annual cash rent payments of $1.8 billion were due over the next 12 months under triple-net leases, which also require payment of related property costs.
Outlook, risks and unusual items
- No specific consolidated earnings or revenue guidance is provided. Management estimated remaining-2024 capital expenditures of $675–725 million domestically and $150–200 million at MGM China.
- Expected cash interest payments over the next 12 months were approximately $345–355 million consolidated, including MGM China. Variable-rate borrowings represented approximately 5% of total borrowings at March 31, 2024.
- MGM expects to fund its approximately 306 billion yen (about $2.0 billion at quarter-end exchange rates) share of Osaka integrated-resort development costs over roughly five years. It also described a potential New York gaming project costing approximately $2 billion, including a $500 million license fee, if its bid is successful.
- The September 2023 cybersecurity incident resulted in unauthorized access to customer personal information. Consumer class actions and state and federal investigations remain ongoing. MGM says loss amounts cannot currently be estimated; remediation and other costs continue, and the extent of insurance recovery is undetermined.
- MGM guarantees potential shortfalls on approximately $3.01 billion of Bellagio landlord debt and $3.0 billion of Mandalay Bay and MGM Grand Las Vegas landlord debt. It also provides Osaka project guarantees, including an uncapped completion-funding guarantee; the guarantees’ fair values were described as immaterial, but potential obligations may be significant.
- Other key risks include substantial debt and rent commitments, competition, operating and regulatory exposure in Macau, capital-intensive resort maintenance and development, and cybersecurity and information-system risks. The filing reports no material change in market risk beyond those discussed.
- The prior-year $398 million Gold Strike gain boosted Q1 2023 results. Q1 2024 other expense included losses on foreign-currency contracts and debt and equity investments, partly offset by foreign-currency transaction gains and investment income. The effective tax rate declined to 12.7% from 25.7%, favorably affected by Macau gaming profits exempt from complementary tax.
Investor verification points
- Reconcile the year-over-year profit decline against the $398 million prior-year sale gain, current operating costs and changes in noncontrolling-interest attribution.
- Monitor Macau recovery, MGM China’s margins and dividend capacity, and the conditions attached to its credit facilities and gaming-concession investment commitments.
- Assess cash generation after lease rent, capital spending, interest, debt maturities, repurchases and the Osaka funding commitment—not Adjusted EBITDAR alone.
- Track cybersecurity litigation, regulatory investigations, remediation costs and potential insurance proceeds as estimates remain unavailable.
- Verify execution and funding implications of the Osaka development and any potential New York project, as well as continuing share repurchases and debt refinancing.