MGM Resorts International Results

MGM Resorts International Reports Third Quarter 2019 Financial And Operating Results

MGM Resorts International (NYSE: MGM) ("MGM Resorts" or the "Company") today reported financial results for the quarter ended September 30, 2019.

Third Quarter 2019 Financial Highlights:

Consolidated Results

  • Consolidated net revenues increased 9% compared to the prior year quarter to $3.3 billion;
  • Consolidated operating income decreased 42% compared to the prior year quarter to $238 million. Excluding a non-cash impairment charge of $219 million in the current quarter related to Circus Circus Las Vegas and adjacent land, included within property transactions, net, consolidated operating income increased 11% compared to the prior year quarter;
  • Net loss attributable to MGM Resorts of $37 million, including the $219 million non-cash impairment charge discussed above, compared to net income attributable to MGM Resorts of $143 million in the prior year quarter;
  • Diluted loss per share of  $0.08 in the current quarter compared to diluted earnings per share of $0.26 in the prior year quarter;
  • Adjusted diluted earnings per share ("Adjusted EPS")(1) of $0.31 in the current quarter compared to Adjusted EPS of $0.23 in the prior year quarter; and
  • Consolidated Adjusted EBITDA(2) increased 14% to $814 million in the current quarter compared to $716 million in the prior year quarter.

"We performed well in the third quarter, which came in line with our expectations. Our consolidated net revenues increased by 9 percent and consolidated Adjusted EBITDA increased by 14 percent," said Jim Murren, Chairman and CEO of MGM Resorts. "Our Las Vegas Strip Resorts saw an increase in revenues by 4 percent with non-gaming revenues up 6 percent thanks to a robust performance in rooms and food and beverage. Gaming revenues at our Las Vegas Strip Resorts declined by 3 percent due to ongoing weakness in Far East baccarat volumes, offset by increases in slots and domestic table games play. Adjusted Property EBITDA at our Regional Properties increased by 27 percent with notable strength at MGM National Harbor and Borgata. We were very pleased with the ramp up of our Cotai property, which generated $80 million in Adjusted Property EBITDA during the quarter, despite some challenges in the market place."

Mr. Murren continued, "We recently announced two significant transactions, which form part of our broader asset-light strategy and the shift in our business model away from a capital-intensive real estate business towards a developer, manager and operator of leading gaming, hospitality and entertainment properties. We entered into an agreement to sell Circus Circus Las Vegas for consideration of $825 million and entered into an agreement with Blackstone Real Estate Income Trust that values the real estate of Bellagio at $4.25 billion, representing a purchase price multiple of 17.3x rent. We expect that the agreements to sell Circus Circus Las Vegas and to monetize the Bellagio real estate assets will provide us with net after tax cash proceeds, including expected debt breakage costs, of $4.3 billion, a majority of which will be used to fortify our balance sheet and then return capital to shareholders. Following these transactions, we will still retain several highly valuable real estate assets including MGM Grand Las Vegas, MGM Springfield, our 50 percent stake in CityCenter and our 68 percent economic ownership in MGM Growth Properties LLC. I am excited about the prospects for our business as we enter 2020.  We expect the combination of a healthy Las Vegas market and successful implementation of MGM 2020 to drive EBITDA and free cash flow growth.  Simultaneously our asset light transition will generate significant proceeds from real estate monetization that can be used to strengthen our balance sheet, meaningfully reduce our shares outstanding, and invest in select growth initiatives.  Our increased profits spread across fewer shares outstanding will result in enhanced free cash flow per share and generate meaningful value for our shareholders."

Las Vegas Strip Resorts

  • Net revenues increased 4% compared to the prior year quarter to $1.5 billion;
  • Table Games Hold Adjusted Las Vegas Strip Resorts Net Revenues(3) increased 4% compared to the prior year quarter to $1.5 billion;
  • Adjusted Property EBITDA of $441 million, a 5% increase compared to $420 million in the prior year quarter;
  • Table Games Hold Adjusted Las Vegas Strip Resorts Adjusted Property EBITDA(2) of $438 million a 6% increase compared to the prior year quarter; and
  • Adjusted Property EBITDA margin of  29.3%, a 41 basis point increase compared to the prior year quarter.

Regional Operations

  • Net revenues increased $158 million or 20% compared to the prior year quarter to $935 million, including $52 million in net revenues from Empire City Casino, which was acquired on January 29, 2019, $64 million in net revenues from MGM Northfield Park's operations, which was acquired from MGP on April 1, 2019, and a full quarter of operations at MGM Springfield, which opened on August 24, 2018;
  • Adjusted Property EBITDA of $264 million, a 27% increase compared the prior year quarter; and
  • Adjusted Property EBITDA margin of 28.2% in the current quarter, a 152 basis point increase compared to the prior year quarter.

MGM China

  • Net revenues increased 22% compared to the prior year quarter to $738 million;
  • VIP Table Games Hold Adjusted MGM China Net Revenues(3) of $699 million, a 19% increase compared to the prior year quarter;
  • Adjusted Property EBITDA of $182 million, a 40% increase compared to the prior year quarter;
  • VIP Table Games Hold Adjusted MGM China Adjusted Property EBITDA(2) of $168 million, a 36% increase compared to the prior year quarter; and
  • Adjusted Property EBITDA margin of 24.7% , a  321 basis point increase compared to the prior year quarter.

"We remain focused on achieving our 2020 targets of $3.6 billion to $3.9 billion in consolidated Adjusted EBITDA and significant growth in free cash flow per share," said Corey Sanders, Chief Financial Officer and Treasurer of MGM Resorts. "The key drivers remain the benefits of our MGM 2020 plan, which is currently tracking ahead of expectations; healthy market conditions in Las Vegas and regional markets; and the ongoing ramp up of newly opened properties, especially MGM Cotai. We are also targeting consolidated net financial leverage of 3-4x and approximately 1x net domestic financial leverage (excluding MGP) by the end of 2020." 

Adjusted Diluted Earnings Per Share

The following table reconciles diluted earnings per share ("EPS") to Adjusted EPS (approximate EPS impact shown, per share; positive adjustments represent charges to income):

Three Months Ended September 30,

2019

2018

Diluted earnings (loss) per share

$

(0.08)

$

0.26

Preopening and start-up expenses

0.08

Property transactions, net

0.48

(0.08)

Non-operating expense:

Remeasurement loss on MGM China senior notes

0.01

Items from unconsolidated affiliates:

CityCenter property transactions, net

(0.01)

Gain on the sale of Mandarin Oriental Las Vegas

(0.02)

Change in fair value of CityCenter swaps

0.01

Income tax impact on net income adjustments (1)

(0.10)

(0.01)

Adjusted diluted earnings per share

$

0.31

$

0.23

(1)

The income tax impact includes current and deferred income tax expense based upon the nature of the adjustment and the jurisdiction in which it occurs.

Las Vegas Strip Resorts

Casino revenue for the third quarter of 2019 decreased 3% compared to the prior year quarter at the Company's Las Vegas Strip Resorts, due primarily to an 11% decrease in table games win driven by baccarat, partially offset by a 6% increase in slots win.

The following table shows key gaming statistics for the Company's Las Vegas Strip Resorts:

Three Months Ended September 30,

2019

2018

%

change

(Dollars in millions)

Table Games Drop

$842

$897

(6)

%

Table Games Win %

24.2

%

25.4

%

Slots Handle

$3,280

$3,143

4

%

Slots Hold %

9.4

%

9.3

%

Rooms revenue increased 6% compared to the prior year quarter at the Company's Las Vegas Strip Resorts due to a 3.6%  increase in Las Vegas Strip Resorts REVPAR(4) compared to the prior year quarter, as well as a 2% increase in available rooms as a result of the completion of the rebranding and repositioning of Park MGM. Rooms revenue at Park MGM increased 49% compared to the prior year quarter.

The following table shows key hotel statistics for the Company's Las Vegas Strip Resorts:

Three Months Ended September 30,

2019

2018

%

change

Occupancy %

92%

93%

Average Daily Rate (ADR)

$164

$157

4.4%

Revenue per Available Room (REVPAR)

$152

$146

3.6%

Food and beverage revenue increased 9% at the Company's Las Vegas Strip Resorts compared to the prior year quarter due primarily to the opening of new outlets at Park MGM and NoMad Las Vegas and an increase in catering and banquets revenue which benefited from the completion of the expansion of MGM Grand's Conference Center in 2019.

Regional Operations

Casino revenue increased 26% compared to the prior year quarter at the Company's Regional Operations, due primarily to the acquisition of Empire City Casino, the acquisition of MGM Northfield Park's operations from MGP and a full quarter of operations at MGM Springfield.

The following table shows key gaming statistics for the Company's Regional Operations:

Three Months Ended September 30,

2019

2018

%

change

(Dollars in millions)

Table Games Drop

$1,122

$1,054

6%

Table Games Win %

19.6

%

19.4

%

Slots Handle

$6,666

$5,755

16%

Slots Hold %

9.4

%

9.0

%

MGM China

Key third quarter results for MGM China Holdings Limited ("MGM China") include:

  • Net revenues of $738 million, a 22% increase compared to the prior year quarter. The current quarter included $364 million of net revenues at MGM Cotai;
  • Main floor table games win increased 47% compared to the prior year quarter due to the addition of 25 new-to-market tables at MGM Cotai in 2019 and a 559 basis point increase in win percentage;
  • VIP table games win increased 5% compared to the prior year quarter due to the opening of VIP gaming areas at the end of the third quarter of 2018 at MGM Cotai and an increase in the VIP table games win percentage;
  • Adjusted Property EBITDA increased 40% to $182 million compared to $130 million in the prior year quarter. The current quarter included $13 million of license fee expense compared to $11 million in the prior year quarter; and
  • Adjusted Property EBITDA margin was 24.7% in the current quarter compared to 21.5% in the prior year quarter, increasing primarily as a result of the continued ramp up of operations at MGM Cotai.

The following table shows key gaming statistics for MGM China:

Three Months Ended September 30,

2019

2018

%

change

(Dollars in millions)

VIP Table Games Turnover

$8,646

$9,419

(8)%

VIP Table Games Win %

3.7%

3.2%

Main Floor Table Games Drop

$2,117

$1,882

13%

Main Floor Table Games Win %

23.6%

18.1%

MGM China paid the previously announced interim dividend of $46 million in August 2019, of which MGM Resorts received $25 million, representing its 56% share of the dividend.

Corporate Expense

Corporate expense, including normal share-based compensation for corporate employees, was $109 million in the third quarter of 2019, an increase of $10 million compared to the prior year quarter. The current quarter included $7 million in costs incurred to implement the MGM 2020 Plan, $6 million related to the work of the Real Estate Committee of the Company's Board of Directors and $3 million in finance modernization initiative costs.

Unconsolidated Affiliates

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

Three Months Ended September 30,

2019

2018

(In thousands)

CityCenter

$

39,317

$

33,232

Other

(3,103)

2,263

$

36,214

$

35,495

Key third quarter results for CityCenter Holdings, LLC ("CityCenter") include the following (see schedule accompanying this release for further detail on CityCenter's third quarter results):

  • Net revenues were $320 million, a 9% increase compared to the prior year quarter, due to a 24% increase in casino revenues and an increase in rooms revenues;
  • Casino revenues at Aria increased 24% compared to the prior year quarter, due primarily to a 13% increase in table games win resulting from a 405 basis point increase in table games hold percentage and a 13% increase in slots win;
  • REVPAR at Aria increased 4% compared to the prior year quarter to $237;
  • REVPAR at Vdara increased 4% compared to the prior year quarter to $192; and
  • Adjusted EBITDA from resort operations was $110 million, a 30% increase compared to the prior year quarter.

MGM Growth Properties

During the third quarter of 2019, the Company made rent payments to MGM Growth Properties Operating Partnership LP ("MGP Operating Partnership") in the amount of $237 million and received distributions of $93 million from the MGP Operating Partnership. In September 2019, the Board of Directors of MGM Growth Properties LLC ("MGP") approved a quarterly dividend of $0.47 per Class A share (an increase of $0.01 per share based on a $1.88 dividend on an annualized basis) totaling $45 million, which was paid on October 15, 2019 to holders of record on September 30, 2019. The Company concurrently received a $94 million distribution attributable to its ownership of MGP Operating Partnership units.

MGM Resorts Dividend

On October 30, 2019, the Company's Board of Directors approved a quarterly dividend of $0.13 per share totaling approximately $67 million. The dividend will be payable on December 16, 2019 to holders of record on December 10, 2019.

During the current quarter, MGM Resorts repurchased approximately 13 million shares of its common stock at an average price of $28.33 per share for an aggregate amount of $357 million. Approximately $750 million remained available under the $2.0 billion share repurchase program as of September 30, 2019. All shares repurchased under the Company's program have been retired.

Financial Position

The Company's cash balance at September 30, 2019 was $1.2 billion, which included $490 million at MGM China and $154 million at the MGP Operating Partnership. At September 30, 2019, the Company had $15.1 billion of principal amount of indebtedness outstanding, including $1.3 billion outstanding under its $2.25 billion senior secured credit facility, $2.3 billion outstanding under the $3.6 billion MGP Operating Partnership senior secured credit facility and $776 million outstanding under the $1.25 billion MGM China revolving credit facility.

In August 2019, MGM China entered into a new $1.25 billion senior unsecured revolving credit facility and used the proceeds to fully repay the borrowings outstanding under its secured credit facility. The secured credit facility was subsequently extinguished. The new revolving credit facility matures in May 2024 and bears interest at a fluctuating rate per annum based on HIBOR plus 1.625% to 2.75%, as determined by MGM China's leverage ratio.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 30 unique hotel and destination gaming offerings including some of the most recognizable resort brands in the industry. Expanding throughout the U.S. and around the world, the company recently acquired the operations of Empire City Casino in New York and Hard Rock Rocksino in Ohio, which was rebranded as MGM Northfield Park. In 2018, MGM Resorts opened MGM Springfield in Massachusetts, MGM COTAI in Macau, and the first Bellagio-branded hotel in Shanghai. The 82,000 global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine's World's Most Admired Companies®.



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