MGM Q1 2021 Earnings Report Recap

MGM's loss was smaller than expected as revenue matched estimates

MGM Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat -$0.68 -$0.86
Revenue Match $1.6B $1.6B
Las Vegas Room Occupancy Rate Miss 46% 80.9%

Source: Predictions based on analysts' consensus from Visible Alpha

Key Takeaways

  • MGM's Las Vegas room occupancy rate missed analysts' hugely optimistic expectations.
  • Las Vegas is MGM's biggest market and the room occupancy rate provides a measure of the total number of available rooms that are filled with paying guests.
  • Revenue is down nearly 27% from the year-ago quarter.

MGM Financial Results: Analysis

MGM Resorts International Inc. (MGM) reported mixed results in its Q1 FY 2021 earnings report. The company reported its fifth consecutive adjusted loss per share, but it was smaller than what analysts expected. Revenue was in line with analysts' estimates, but down 26.9% from the year-ago quarter. MGM's occupancy rate for its Las Vegas properties came in at 46% for the quarter, dramatically below expectations. MGM's low occupancy rate illustrates that leisure visitors may return to its casinos at a far slower pace than anticipated. The company's shares were up more than 1% in after-hours trading. Over the past year, MGM's shares have provided a total return of 165.9%, above the S&P 500's total return of 46.1%.

MGM Las Vegas Room Occupancy Rate

MGM owns 13 resort properties in Las Vegas, including the Bellagio, MGM Grand, Luxor, Mandalay Bay, The Mirage, and Excalibur. The room occupancy rate is a key metric indicating the percentage of a resort's available rooms being occupied by paying guests. Investors should note that rooms that were out of service during the three months ended March 31, 2021 and in 2020 due to pandemic-related hotel closures were not counted as part of the total available room count in calculating the room occupancy rate. If these were counted, the number would be far worse.

Analysts were expecting significant improvement in the room occupancy rate for MGM's Las Vegas properties after it was decimated in the previous three quarters due to the COVID-19 pandemic. Based on the Q1 numbers, they were overly optimistic because the rate came in nearly half the expected level. Despite that, the 46% occupancy rate reported for the quarter was the highest since the first quarter of FY 2020, a sign that the situation is slowly improving. Net revenues at the Las Vegas properties fell 52% compared to the year-ago quarter. MGM said the decline was driven by the pandemic and related operational restrictions.

MGM's regional operations in the broader U.S. saw net revenues decrease only 2% year over year (YOY). Only the company's properties in China exhibited growth, as net revenues for MGM China rose 9%.

MGM's Liquidity and BetMGM Outlook

Despite these financial pressures, Chief Financial Officer (CFO) Jonathan Halkyard said in the earnings release that MGM's strong liquidity position gives the company "significant flexibility amid an improving operational backdrop." One focus of investment for long-term growth is digital gaming.

MGM highlighted that its sports betting and iGaming unit, BetMGM, gained market share in the growing U.S. market. The BetMGM unit is poised to be a strong growth area for the company. In a slide presentation, MGM said that it believes the long-term addressable sports betting and iGaming market in North America is worth about $32 billion. MGM estimated that operations associated with BetMGM generated $163 million in net revenues in Q1 FY 2021. However, the gaming unit posted a $59.2 million operating loss in the company's consolidated results.

MGM did not offer any forward earnings or revenue guidance in its report.

MGM's next earnings report (for Q2 FY 2021) is estimated to be released on July 28, 2021.

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  2. TradingView. "Price Chart: MGM and S&P 500." Accessed April 28, 2021.

  3. Visible Alpha. "Financial Data." Accessed April 28, 2021.

  4. MGM Resorts International. "First Quarter 2021 Earnings," Pages 19 & 20. Accessed April 28, 2021.

  5. Yahoo! Finance. "Earnings Calendar: MGM." Accessed April 28, 2021.

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