MGM Resorts Granted $1.4bn Tax Benefit
Gambling operator MGM resorts has praised President Donald Trump after receiving a $1.4 billion tax break. According to the Las Vegas-based casino company, this break has allowed it to pull itself out of a year-on-year profit decline, instead posting significant profits during its most recent report.
Last week, MGM revealed its fourth quarter earnings report for 2017, which showed an overall 5.7% boost in revenues to $2.6 billion during the period in review. The firm’s operating income dropped by more than a fifth to $223 million late last year, while its net income reached $1.4 billion compared to just $24.7 million in the corresponding period of 2016.
While impressive, the firm’s profit gains were actually generated by the recent Washington tax reforms, which were approved last year. It was these reforms that gave MGM Resorts a big $1.43 billion non-cash income tax benefit, which increased its earnings per share to $2.42. Without the benefit, the firm’s earnings increase would have come to less than one penny per share.
Revenues Hit Hard By Mass Shooting
Revenue from domestic resorts for the firm grew by a modest 5% year on year, growing to $1.9 million in the quarter ended December 31, 2017. However, not taking into account contributions from MGM’s newest National Harbor resort in Maryland, the firm’s domestic revenues actually decreased by about 3% as table drop, slots handle, and revenue per available room all dropped in Q4.
National Harbor revealed revenues of around $186.9 million during the quarter in review, second only to the Bellagio and the Las Vegas-based MGM Grand resort. Mandalay Bay reportedly ranked fifth on this list, although the venue apparently faced challenges that the National Harbor did not.
MGM China Posts Better Performance
The casino’s overall Q4 performance was affected by the Vegas Strip mass shooting last October, with occupancy rates at MGM’s Vegas resorts dropping four points to 85% in that quarter. In a statement to analysts, MGM CEO Jim Murren noted that the Q4 results were definitely affected by the challenges caused by the shooting. However, he also added that the overall results were somewhat higher than his company had anticipated.
On a more positive note, MGM China posted a better outcome, with Macau revenues growing 10% to $549 million in Q4. However, a deferred tax liability lowered operating profits to $43 million from the $72 million posted in 2016.
The new MGM Cotai resort also opened its doors last week, which could generate may more revenues for the firm in the future, with MGM China CEO Grant Bowie noting that it may be too soon to make any judgments just yet.