Earnings

MGM's Las Vegas Strip Profit Falls 12% As Payroll Climbs, And Asset-Sale Gains Prop Up The Nine Months

MGM's third-quarter Strip earnings fell to $531 million from $601 million, and nine-month operating income includes a $265 million property gain.

MGM Resorts, the casino and entertainment company behind Bellagio, MGM Grand and Aria, saw Las Vegas Strip earnings fall to $531 million in the third quarter from $601 million a year earlier, a 12% drop, according to its 10-Q filed Wednesday. Over nine months, operating income of $924 million leans on a $265 million gain on property transactions, most of it from selling a casino.

Payroll up, rooms cheaper

The company attributes the Strip decline mainly to higher payroll-related expenses, lower revenue, and the absence of $23 million in business-interruption insurance proceeds it received a year earlier. Strip payroll expense was $682 million against $639 million, while Strip revenue slipped 2% to $1.95 billion.

Room revenue drove the revenue dip: average daily rate fell to $218 from $236 at 89% occupancy in both periods. Casino revenue rose, helped by a higher table-games win percentage of 25.3% against 22.6%.

The company reported a third-quarter net loss attributable to MGM of $17 million, or $0.07 per diluted share, against a $285 million loss a year earlier. Consolidated Adjusted EBITDA, an earnings measure that strips out property transactions and impairments, fell to $403 million from $506 million.

One-time gains carry the nine months

Nine-month operating income rose 36%, but the filing credits a $265 million gain in property transactions, of which $253 million came from selling MGM Northfield Park for $546 million in cash. A $51 million gain from partially ending the VICI lease also sits in that line. The prior year carried a $256 million goodwill charge and $93 million of other write-downs tied to Empire City, and the current period includes a $111 million goodwill charge in MGM Digital.

Nine-month Consolidated Adjusted EBITDA fell to $1.59 billion from $1.79 billion, and operating cash flow dropped to $1.7 billion from $1.9 billion.

Buybacks, Osaka and a voting cap

MGM paid $262 million for share repurchases over nine months, the same figure the prior quarter's 10-Q showed at six months, so the third quarter added none. Last year's nine-month buyback bill was $717 million. About $1.4 billion remains under the April 2025 authorization. It repaid $400 million of 4.625% notes in September and held $2.4 billion of cash.

In October MGM funded JPY19.4 billion, about $123 million, into MGM Osaka. About JPY333.0 billion, roughly $2.1 billion, remains to be funded quarterly through 2028. MGM China's revolver stood at $331 million at September 30.

Separately, an 8-K filed Wednesday describes an amended voting agreement with People Incorporated and Barry Diller that caps their ownership at 29.9%. CFO Jonathan Halkyard said the framework lets MGM "confidently pursue value-creating share repurchases."

The $443 million sale of MGM Springfield to Clairvest-managed funds, agreed in March, is still pending and carries termination rights and approvals the company says are largely outside its control.