MGM Notches Record Q4 Results, Buyback Binge Continues

Posted on: February 13, 2024, 04:44h. 

Last updated on: February 14, 2024, 01:08h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

After the close of U..S markets Tuesday, MGM Resorts International (NYSE: MGM) delivered record fourth-quarter results. They did so while telling investors it continues repurchasing significant amounts of its shares.

MGM rising rates
Bellagio Las Vegas. Operator MGM posted record fourth-quarter earnings and continues buying back its stock. (Image: MGM Resorts)

Helped in part by the Las Vegas Grand Prix in November, the Cosmopolitan operator said its Las Vegas Strip casino hotels posted record full-year and fourth-quarter revenue, and adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR). Consolidated EBITDAR for the last three months of 2023 was $1.2 billion, as sales jumped 22% to $4.4 billion. On the Strip, where MGM is the largest operator, revenue rose to $2.4 billion from $2.3 billion.

Same-store net revenues (adjusted for dispositions) of $2.4 billion in the current quarter compared to $2.2 billion in the prior year quarter, an increase of 10%,” according to a statement.

The disposition mentioned pertains to the Mirage, which MGM sold to Hard Rock International.

MGM Continues Repurchasing Own Shares

Over the past several years, MGM has been a devoted buyer of its own shares, signaling to investors that the company sees value in the stock while significantly reducing the number of shares outstanding.

After unveiling a new $2 billion repurchase program last November, the Bellagio operator bought back $629 million of its stock during the fourth quarter, bringing the 2023 total to $2.3 billion. Combined, MGM has $2.2 billion remaining on buyback plans announced last February and last November. The gaming company’s affinity for its shares is continuing in the early innings of 2024.

“We continue to see great value in our shares and are returning capital to shareholders by repurchasing our shares. We have already bought back approximately 6 million shares for an estimated $249 million year-to-date, adding to the approximate 54 million shares that we repurchased in 2023, totaling $7.1 billion of repurchases since 2021,” said CFO Jonathan Halkyard in the statement.

MGM’s buybacks are relevant because share repurchases are more tax-efficient than dividends, and unlike some rivals, the operator hasn’t restored its quarterly payout, which was cut during the early days of the COVID-19 crisis.

Macau, Regional Updates

Strength in Macau, where MGM owns 56% of MGM China, also contributed to a solid report. In the special administrative region (SAR), the operator’s two venues combined for adjusted property EBITDAR of $262 million compared to a year-earlier loss of $55 million. Revenue surged 462% to $983 million.

The story was less bright for MGM’s domestic regional casinos. While a topline decline was expected due to the sale of Gold Strike Tunica in Mississippi, the operator said same-store sales dropped 7% on a year-over-year basis.

Citing labor strife at MGM Grand Detroit and reduced levels of VIP play at MGM National Harbor in Maryland, the gaming company said regional casino net revenue fell $873 million from $991 million.