Financial

MGM Resorts First Quarter Net Revenue Increases 12%

Rooms revenue at wholly owned domestic resorts increased 13% with a 14% increase in REVPAR at the Company's Las Vegas Strip resorts compared to the prior year quarter

MGM Resorts International

MGM Resorts International (NYSE: MGM) today reported financial results for the quarter ended March 31, 2014.  Diluted earnings per share for the first quarter of 2014 was $0.21, an improvement compared to diluted earnings per share of $0.01 in the prior year first quarter. 

"We are off to a strong start in 2014, with double digit Adjusted EBITDA growth at our wholly owned domestic resorts and record results at MGM China and CityCenter," said Jim Murren, Chairman and CEO.  "In the U.S., we are executing on our strategy to drive customer loyalty by increasing incremental convention business to our properties mid-week, hosting the best events on the weekends, and continually bringing new and exciting capital initiatives to our properties. Our development projects are well underway as MGM Cotai, our second Macau property, is on schedule to open in early 2016 and we are preparing to break ground on MGM National Harbor, in Maryland this summer, where we expect to open in 2016."

Key results for the first quarter of 2014 include the following:

  • Consolidated net revenue was $2.6 billion, a 12% increase over the prior year first quarter;
  • Consolidated casino revenue increased 13% compared to the prior year quarter;
  • Rooms revenue at wholly owned domestic resorts increased 13% with a 14% increase in REVPAR(1) at the Company's Las Vegas Strip resorts compared to the prior year quarter;
  • Adjusted Property EBITDA(2) was $682 million compared to $574 million, a 19% increase compared to the prior year quarter;
  • The Company's wholly owned domestic resorts earned Adjusted Property EBITDA of $403 million, a 12% increase compared to the prior year quarter;
  • MGM China's Adjusted EBITDA was a record $241 million, a 33% increase compared to the prior year quarter, including $16 million of branding fee expense in the current quarter versus $13 million in the prior year quarter;
  • CityCenter earned record Adjusted EBITDA related to resort operations of $95 million; and
  • Consolidated operating income was $413 million compared to $302 million in the prior year quarter.

Certain Items Affecting First Quarter Results

The following table lists items that affect the comparability of the current and prior year quarterly results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

Three months ended   March 31,

2014

2013

Preopening and start-up expenses

$ (0.01)

$ —

Property transactions, net

(0.01)

Tax adjustments, net

(0.01)

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts decreased 2% compared to the prior year quarter, due to a decrease in table games hold percentage and a small decrease in slots revenue. Table games hold percentage in the first quarter of 2014 was 20.8% compared to 21.9% for the prior year quarter. Slots revenue increased 1% compared to the prior year quarter at the Company's Las Vegas Strip resorts, but decreased 5% at the Company's other wholly owned domestic resorts.

Rooms revenue increased 13% with Las Vegas Strip REVPAR up 14%.  The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Three months ended March 31,

2014

2013

Occupancy %     

92%

90%

Average Daily Rate (ADR)  

$ 147

$ 132

Revenue per Available Room (REVPAR) 

$ 135

$ 118

Food and beverage revenue increased 6% as a result of increased convention and banquet business and the opening of several new outlets. Operating income for the Company's wholly owned domestic resorts increased 20% for the first quarter of 2014 compared to the prior year quarter due primarily to the increase in rooms revenues and improved rooms margins.

MGM China

Key first quarter results for MGM China include the following:

  • MGM China earned net revenue of $941 million, a 26% increase compared to the prior year quarter;
  • VIP table games turnover increased 12% from the prior year quarter and hold percentage was 3.0% in the current year quarter compared to 2.8% in the prior year quarter;
  • Main floor table games revenue increased 45% compared to the prior year quarter;
  • MGM China's Adjusted EBITDA was a record $241 million, a 33% increase compared to the prior year quarter, including $16 million of branding fee expense in the current quarter versus $13 million in the prior year quarter; and
  • Operating income was $165 million compared to $99 million in the prior year quarter.

MGM China paid a $499 million dividend in March 2014, of which $254 million was distributed to MGM Resorts and $245 millionwas distributed to noncontrolling interests.

Income from Unconsolidated Affiliates

The following table summarizes information related to the Company's share of income from unconsolidated affiliates:

 Three months ended March 31,

2014

2013

 (In thousands)

CityCenter

$ 14,046

$ 11,695

Other  

4,730

4,649

$18,776

$ 16,344

Results for CityCenter Holdings, LLC for the first quarter of 2014 include the following (see schedules accompanying this release for further detail on CityCenter's first quarter results):

  • Net revenue from resort operations increased by 2% to $313 million compared to $308 million in the prior year quarter;
  • Adjusted EBITDA from resort operations was $95 million, an increase of 2% compared to the prior year quarter;
  • Aria's table games hold percentage was 26.8% compared to 28.3% in the prior year quarter;
  • Aria's occupancy percentage was 92% and its ADR was $229, resulting in record REVPAR of $211, a 14% increase compared to the prior year quarter;
  • Vdara reported record REVPAR of $165, an increase of 21% compared to the prior year quarter; and
  • Crystals reported Adjusted EBITDA of $11 million, an increase of 30% from the prior year quarter.

CityCenter's operating income increased to $5 million for the first quarter of 2014 primarily due to increased revenues and strong margins related to its hotel operations.

Financial Position

"Our continued focus on driving revenue growth and maximizing margins is reflected in our strong flow through at our Las Vegasresorts," said Dan D'Arrigo, Executive Vice President, CFO and Treasurer.  "These factors along with continued strength at MGM China and CityCenter contributed to significant year over year growth in net income and earnings per share."

The Company's cash balance at March 31, 2014 was $1.1 billion, which included $556 million at MGM China.  At March 31, 2014the Company had $2.8 billion of borrowings outstanding under its $4.0 billion senior secured credit facility and $553 millionoutstanding under the $2.0 billion MGM China credit facility.

1    REVPAR is hotel revenue per available room.

2    "Adjusted EBITDA" is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses and property transactions, net.  "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China.  Adjusted EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies. 

Management believes that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of the Company's earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, management believes excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when the Company is developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within the Company's resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period.

In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, management uses Adjusted Property EBITDA as the primary measure of the Company's operating resorts' performance.

Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to Adjusted Property EBITDA are included in the financial schedules in this release.

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

March 31,

March 31,

2014

2013

Revenues:

Casino

$

1,583,432

$

1,401,420

Rooms

452,386

401,250

Food and beverage

383,392

359,882

Entertainment

133,777

113,854

Retail

44,616

44,707

Other

125,427

123,826

Reimbursed costs

94,975

90,236

2,818,005

2,535,175

Less: Promotional allowances

(187,607)

(183,027)

2,630,398

2,352,148

Expenses:

Casino

990,834

875,246

Rooms

134,238

127,709

Food and beverage

220,058

204,740

Entertainment

98,937

83,725

Retail

23,476

25,966

Other

87,577

85,973

Reimbursed costs

94,975

90,236

General and administrative

319,246

303,901

Corporate expense

53,351

46,624

Preopening and start-up expenses 

5,636

2,146

Property transactions, net

558

8,491

Depreciation and amortization

207,655

211,918

2,236,541

2,066,675

Income from unconsolidated affiliates

18,776

16,344

Operating income 

412,633

301,817

Non-operating income (expense):

Interest expense, net of amounts capitalized

(209,387)

(225,447)

Non-operating items from unconsolidated affiliates

(13,723)

(22,079)

Other, net

(1,434)

(1,282)

(224,544)

(248,808)

Income before income taxes

188,089

53,009

Benefit (provision) for income taxes

3,519

(30,431)

Net income 

191,608

22,578

Less: Net income attributable to noncontrolling interests

(83,448)

(16,032)

Net income attributable to MGM Resorts International

$

108,160

$

6,546

Per share of common stock:

Basic:

Net income attributable to MGM Resorts International

$

0.22

$

0.01

Weighted average shares outstanding

490,542

489,291

Diluted:

Net income attributable to MGM Resorts International

$

0.21

$

0.01

Weighted average shares outstanding

513,144

492,305

 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

March 31,

December 31,

2014

2013

      ASSETS

Current assets:

Cash and cash equivalents

$

1,114,736

$

1,803,669

Accounts receivable, net

492,535

488,217

Inventories

101,553

107,907

Deferred income taxes, net

-

80,989

Prepaid expenses and other

261,806

238,657

Total current assets

1,970,630

2,719,439

Property and equipment, net

14,034,075

14,055,212

Other assets:

Investments in and advances to unconsolidated affiliates

1,416,664

1,374,836

Goodwill 

2,896,542

2,897,442

Other intangible assets, net

4,451,496

4,511,861

Other long-term assets, net

581,302

551,395

Total other assets

9,346,004

9,335,534

$

25,350,709

$

26,110,185

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

220,523

$

241,192

Income taxes payable

20,549

14,813

Deferred income taxes, net

46,642

-

Accrued interest on long-term debt

188,281

188,522

Other accrued liabilities

1,683,569

1,770,801

Total current liabilities

2,159,564

2,215,328

Deferred income taxes 

2,305,322

2,430,414

Long-term debt

12,930,728

13,447,230

Other long-term obligations

132,249

141,590

Stockholders' equity:

Common stock, $.01 par value: authorized 1,000,000,000 shares,

   issued and outstanding 490,609,242 and 490,360,628 shares 

4,906

4,904

Capital in excess of par value

4,160,895

4,156,680

Retained earnings 

165,252

57,092

Accumulated other comprehensive income 

12,236

12,503

Total MGM Resorts International stockholders' equity

4,343,289

4,231,179

Noncontrolling interests

3,479,557

3,644,444

Total stockholders' equity

7,822,846

7,875,623

$

25,350,709

$

26,110,185

 

 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA - NET REVENUES

(In thousands)

(Unaudited)

Three Months Ended

March 31,

March 31,

2014

2013

Bellagio

$

319,856

$

300,720

MGM Grand Las Vegas

261,664

258,890

Mandalay Bay

219,384

175,513

The Mirage 

148,248

144,553

Luxor

83,693

77,789

New York-New York 

72,968

69,268

Excalibur

67,573

61,809

Monte Carlo

68,611

66,500

Circus Circus Las Vegas

48,725

45,913

MGM Grand Detroit

133,148

140,868

Beau Rivage

82,426

80,910

Gold Strike Tunica

36,919

37,042

Other resort operations

27,019

29,413

  Wholly owned domestic resorts

1,570,234

1,489,188

MGM China

941,448

747,557

Management and other operations

118,716

115,403

$

2,630,398

$

2,352,148

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA - ADJUSTED PROPERTY EBITDA

(In thousands)

(Unaudited)

Three Months Ended

March 31,

March 31,

2014

2013

Bellagio

$

105,149

$

89,579

MGM Grand Las Vegas

62,233

62,005

Mandalay Bay

56,000

39,414

The Mirage 

35,419

30,161

Luxor

17,978

15,574

New York-New York 

25,627

23,400

Excalibur

18,890

15,109

Monte Carlo

19,895

17,486

Circus Circus Las Vegas

5,309

4,557

MGM Grand Detroit

33,366

39,653

Beau Rivage

14,641

13,873

Gold Strike Tunica

9,567

9,987

Other resort operations

(1,228)

239

  Wholly owned domestic resorts

402,846

361,037

MGM China

240,725

180,455

CityCenter (50%)(1)

14,046

11,695

Other unconsolidated resorts(1)

4,730

4,649

Management and other operations

19,852

15,761

$

682,199

$

573,597

(1) Represents the Company's share of operating income (loss), adjusted for the effect of certain basis differences. 

 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED PROPERTY EBITDA AND ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended March 31, 2014

Operating

income (loss)

Preopening and

start-up

expenses

Property

transactions, net

Depreciation and

amortization

AdjustedEBITDA

Bellagio

$

81,851

$

-

$

(21)

$

23,319

$

105,149

MGM Grand Las Vegas

40,932

197

(8)

21,112

62,233

Mandalay Bay

34,411

802

(2)

20,789

56,000

The Mirage 

22,592

-

147

12,680

35,419

Luxor

8,807

3

(1)

9,169

17,978

New York-New York 

20,887

55

244

4,441

25,627

Excalibur

15,455

-

(1)

3,436

18,890

Monte Carlo

14,014

915

3

4,963

19,895

Circus Circus Las Vegas

1,537

-

(11)

3,783

5,309

MGM Grand Detroit

27,654

-

-

5,712

33,366

Beau Rivage

8,166

-

-

6,475

14,641

Gold Strike Tunica

6,365

-

-

3,202

9,567

Other resort operations

(1,769)

-

-

541

(1,228)

  Wholly owned domestic resorts

280,902

1,972

350

119,622

402,846

MGM China

164,589

2,408

(104)

73,832

240,725

CityCenter (50%)

14,046

-

-

-

14,046

Other unconsolidated resorts

4,711

19

-

-

4,730

Management and other operations

16,961

-

-

2,891

19,852

481,209

4,399

246

196,345

682,199

Stock compensation

(6,699)

-

-

-

(6,699)

Corporate 

(61,877)

1,237

312

11,310

(49,018)

$

412,633

$

5,636

$

558

$

207,655

$

626,482

Three Months Ended March 31, 2013

Operating

income (loss)

Preopening and

start-up

expenses

Property

transactions, net

Depreciation and

amortization

AdjustedEBITDA

Bellagio

$

66,392

$

-

$

4

$

23,183

$

89,579

MGM Grand Las Vegas

40,972

-

666

20,367

62,005

Mandalay Bay

20,822

(604)

582

18,614

39,414

The Mirage 

13,550

-

4,154

12,457

30,161

Luxor

3,775

-

3,179

8,620

15,574

New York-New York 

17,737

-

31

5,632

23,400

Excalibur

11,162

-

-

3,947

15,109

Monte Carlo

12,858

-

(12)

4,640

17,486

Circus Circus Las Vegas

(389)

-

-

4,946

4,557

MGM Grand Detroit

34,371

-

-

5,282

39,653



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