MGM 15Q2 profit tumbles, but tops forecasts

MGM Resorts International posted lower Q2 revenue and earnings, dragged down by a slump in its Macau operations, but announced a "profit growth plan" designed to boost adjusted earnings before interest, tax, amortization and depreciation by about $300 million.

Despite the decline year-on-year, the results were slightly better than most analysts had expected.

"We are continuing to drive increased profits at MGM Resorts with second-quarter wholly-owned Adjusted Property EBITDA up 11 percent driven by growth at our Las Vegas and regional resorts. These resorts are continuing to gain operating momentum while we continue to make significant progress on our development pipeline in Cotai, Maryland, and Massachusetts," said Jim Murren, Chairman & CEO.

Diluted earnings per share for the second quarter of 2015 was $0.17 compared to diluted earnings per share of $0.22 in the prior year quarter.

Revenue fell to $2.38 billion, down from $2.58 billion, narrowly beating the $2.37 billion analysts had been looking for.

“2Q15 exceeded forecasts in divisions that drive MGM shares, including wholly owned Strip properties and MGM China,” Sterne Agee analyst David Bain wrote in a note.

MGM China EBITDA was $132.2 million  versus our $124.1 million estimates. Despite a 12 percent  QoQ drop in revenue, margins were flat, Bain said.

The profit plan began in July 2015 and it is expected to begin to show results as early as the second half of 2015 and be fully realized by the end of 2017. The plan includes cost-cutting measures and a study to identify areas where revenue growth can be improved, the company said, without giving further details.

MGM China earned net revenue of $557 million, a 33 percent decrease compared to the prior year quarter. Main floor table games revenue decreased 23 percent compared to the prior year quarter and VIP table games revenue decreased 43 percent.

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