MGM Resorts sets all-time record property margins, net revenues up 683% in Q2

MGM Resorts International reported on Wednesday its second-quarter 2021 financial and operating results, featuring historical record Adjusted Property EBITDAR margins across Las Vegas Strip and regional operations, and historical record regional operations Adjusted Property EBITDAR.

Consolidated net revenues reached $2.3 billion, an increase of 683% compared to the prior year quarter, benefiting from the easing of operational and capacity restrictions, whereas 2020’s same quarter was severely affected by Covid-19 measures. Consolidated operating income increased as well, reporting $264 million compared to consolidated operating loss of $1.0 billion in the prior year quarter.

"We delivered a strong second quarter, driven by robust demand and productivity efforts across our domestic portfolio. Our Las Vegas Strip and Regional Operations Adjusted Property EBITDAR margins reached all-time records and our Regional Operations also delivered an all-time quarterly record in Adjusted Property EBITDAR,” said Bill Hornbuckle, Chief Executive Officer and President of MGM Resorts International.

This record Regional Operations Adjusted Property EBITDAR margin was 37% in the current quarter, an increase of 855 basis points compared to the second quarter of 2019, while the Adjusted Property EBITDAR margin for the Las Vegas Strip reported 39.5% in the current quarter, an increase of 1,097 basis points compared to the second quarter of 2019. The record Adjusted Property EBITDAR reported $318 million compared to a loss of $112 million in the prior year quarter, and an increase of 22% compared to the second quarter of 2019.

Las Vegas Strip properties saw net revenues of $1.0 billion, an increase of 566% compared to the prior year quarter and a decrease of 31% compared to the second quarter of 2019. 

“Our U.S. sports betting and iGaming venture, BetMGM, continues to outperform as the number two operator nationwide. We also recently announced several strategic transactions that furthered our goal of becoming a more streamlined, focused organization with stronger liquidity. We continued to advance that goal today with our announced agreement with VICI and MGM Growth Properties to monetize our MGP Operating Partnership units for $4.4 billion in cash," added Hornbuckle.

MGM's real estate trust was sold to Vici for $17.2B as the brand seeks to become "asset light”. By completing this transaction, set to be closed in the first half of 2022, Vici expects to become America’s largest owner of experiential real estate, with an estimated enterprise value of $45 billion. MGM Resorts will own about 1% of the Vici operating partnership.

Other highlights of the quarterly report include total liquidity at June 30, 2021 of $9.9 billion, which included $1.6 billion at the MGP Operating Partnership and $1.8 billion at MGM China, and cash and cash equivalents balance of $5.6 billion, which included $298 million at the MGP Operating Partnership and $331 million at MGM China.

On this liquidity, Jonathan Halkyard, Chief Financial Officer and Treasurer of MGM Resorts, described it as “robust” and remarked that it provides the company with “significant flexibility as business continues to improve and stabilize.”

“As such, we have returned capital to shareholders through share repurchases during the second quarter and expect to remain programmatic in our approach through the rest of the year. As we navigate future uses of our capital, we will remain disciplined in maintaining a strong balance sheet, pursuing targeted growth opportunities and returning cash to shareholders,” added Halkyard.