Company Results

MGM Resorts International Reports Fourth Quarter And Full Year Financial Results

Net revenue at the Company's wholly owned domestic resorts increased 5% compared to the prior year quarter; Rooms revenue at wholly owned domestic resorts increased 6% compared to the prior year quarter

MGM Resorts International

MGM Resorts International (NYSE:  MGM) today reported financial results for the quarter and year ended December 31, 2014.  

"MGM Resorts International reported its best fourth quarter EBITDA since the peak in 2007 and its best full year in six years at its wholly owned domestic resorts.  For the full year, CityCenter resort operations and MGM China each achieved record performances," said Jim Murren, Chairman & CEO of MGM Resorts International. "When I reflect on this year, I am extremely proud of the accomplishments of the MGM Resorts International team and believe that 2015 will be another great year. In fact, we are already off to a good start with strong January results in the U.S."

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

  • Net revenue at the Company's wholly owned domestic resorts increased 5% compared to the prior year quarter;
  • Rooms revenue at wholly owned domestic resorts increased 6% compared to the prior year quarter;
  • The Company's wholly owned domestic resorts earned Adjusted Property EBITDA(1) of $373 million, a 5% increase compared to the prior year quarter;
  • MGM China's net revenue was $719 million and Adjusted EBITDA was $185 million, each a 22% decrease compared to the prior year quarter; and
  • CityCenter earned Adjusted EBITDA related to resort operations of $78 million, a 16% decrease compared to the prior year quarter, due primarily to a decrease in table games hold percentage at Aria.

Fourth Quarter Consolidated Results

Diluted loss per share for the fourth quarter of 2014 was $­­­0.70 compared to diluted loss per share of $0.12 in the prior year fourth quarter.  The current year fourth quarter income tax provision was unfavorably impacted by a non-cash charge due to an increase in valuation allowance recorded against the Company's foreign tax credit deferred tax asset. The Company's income tax provision per diluted share was $0.67 for the quarter.  Absent the impact of the valuation allowance, a small tax benefit would have been recorded in the quarter. 

The following table lists certain other 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 December 31,                                 

2014

2013

Preopening and start-up expenses

$    (0.02)

$      —

Income (loss) from unconsolidated affiliates:

     Harmon-related property transactions, net       

(0.02)

Non-operating items from unconsolidated affiliates:

     CityCenter loss on retirement of long-term debt

(0.09)

     Silver Legacy gain on retirement of long-term debt

0.02

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts increased 5% compared to the prior year quarter due to increases in both table games volume and hold percentage. Table games hold percentage in the fourth quarter of 2014 was 21.8% compared to 20.2% in the prior year quarter. Slots revenue increased 5% compared to the prior year quarter, due to slightly higher win along with a reduction in the Company's accrual for slot points based on a change in estimated point redemption.

Rooms revenue increased 6% with Las Vegas Strip REVPAR(2) up 7%.  The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Three months ended December 31,

2014

2013

 Occupancy %         

88%

85%

 Average Daily Rate (ADR)

$    138

$   133

 Revenue per Available Room (REVPAR)

$    121

$   114

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 10% for the fourth quarter of 2014 compared to the prior year quarter. 

MGM China

On February 17, 2015, as part of its regular dividend policy, MGM China's Board of Directors announced it will recommend a final dividend for 2014 of $120 million to MGM China shareholders subject to approval at the MGM China 2015 annual shareholders meeting. If approved, MGM Resorts International will receive $61 million, its 51% share of this dividend. In addition, MGM China's Board of Directors announced a special dividend of $400 million, which will be paid to shareholders of record as of March 10, 2015and distributed on or about March 19, 2015.  MGM Resorts International will receive $204 million, its 51% share of the special dividend.  

Key fourth quarter results for MGM China include the following:

  • MGM China earned net revenue of $719 million, a 22% decrease compared to the prior year quarter; 
  • Main floor table games revenue increased 19% compared to the prior year quarter. Main floor table games volume decreased 4% and hold percentage was 27.2% in the current year quarter compared to 22.2% in the prior year quarter; 
  • VIP table games revenue decreased 39% due to lower VIP table games turnover of 32% compared to the prior year quarter, as well as hold percentage of 2.6% in the current year quarter compared to 2.8% in the prior year quarter; 
  • MGM China's Adjusted EBITDA was $185 million, a 22% decrease compared to the prior year quarter; 
  • MGM China's Adjusted EBITDA margin increased by 10 basis points compared to the prior year quarter to 25.8% as a result of an increase in main floor table games mix; and 
  • Operating income was $109 million compared to $162 million in the prior year quarter.

Income (Loss) from Unconsolidated Affiliates

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

Three months ended December 31,      

2014

2013

 (In thousands)

CityCenter        

$    (18,114)

$       12,037

Borgata         

11,304

(196)

Other        

4,683

4,069

$    (2,127)

$       15,910

In September 2014, the Company was relicensed in the state of New Jersey.  As a result, the Company resumed accounting for its 50% interest in Borgata under the equity method and has adjusted its prior period financial statements retroactively as required by generally accepted accounting principles.  

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

  • Net revenue from resort operations decreased by 4% to $289 million compared to $301 million in the prior year quarter, due to lower table games hold and volume at Aria; 
  • Adjusted EBITDA from resort operations was $78 million, a decrease of 16% compared to the prior year quarter; 
  • Adjusted EBITDA at Aria decreased by 22% year over year driven primarily by a decrease in table games volume and hold; 
  • Aria's table games hold percentage was 21.5% compared to 26.0% in the prior year quarter; 
  • Aria's occupancy percentage was 91.1% and its ADR was $217, resulting in REVPAR of $198, a 9% increase compared to the prior year quarter; 
  • Vdara reported record fourth quarter EBITDA led by a 13% increase in REVPAR; and 
  • Crystals reported Adjusted EBITDA of $11 million, an increase of 2% from the prior year quarter.

CityCenter reported an operating loss of $58 million for the fourth quarter of 2014 compared to operating income of $26 million in the prior year quarter.  The lower fourth quarter result was due to decreased operating results at Aria as discussed above and a property transaction charge of $39 million.  The property transaction charge primarily relates to a settlement with an insurer participating in CityCenter's Owner Controlled Insurance Program in conjunction with the global settlement discussed below. In addition, the prior year quarter included $26 million of income related to property transactions, net, primarily related to a $33 milliongain associated with the settlement of insurance claims for errors and omissions with respect to the original construction of CityCenter.

As previously announced, in December 2014, the Company and CityCenter entered into a settlement agreement with Perini Building Company, Inc. ("Perini"), general contractor for CityCenter, the remaining Perini subcontractors and relevant insurers to resolve all outstanding project lien claims and CityCenter's counterclaims relating to the Harmon Hotel and Spa. The settlement was subject to execution of a global settlement agreement among the parties described above, which was subsequently executed, and CityCenter's procurement of replacement general liability insurance covering construction of the CityCenter development (which was obtained in January 2015). The proceeds pursuant to such global settlement agreement, combined with certain prior Harmon-related insurance settlement proceeds, will result in a gain of approximately $160 million to be recorded by CityCenter during the first quarter of 2015.

Full Year 2014 Results

Consolidated net revenue for 2014 was $10.1 billion, a 3% increase over 2013, and Adjusted Property EBITDA increased 5% compared to the prior year to $2.5 billion. Net revenue from wholly owned domestic resorts was $6.3 billion, a 5% increase compared to the prior year.  Adjusted Property EBITDA from wholly owned domestic resorts increased 5% to $1.5 billion for 2014.

MGM China net revenue was $3.3 billion for 2014, a 1% decrease from 2013, and Adjusted EBITDA was a record $850 millioncompared to $814 million in the prior year. CityCenter reported net revenue from resort operations of a record $1.2 billion, a 3% increase compared to the prior year, and Adjusted EBITDA related to resort operations of $317 million compared to $316 million in the prior year.

Diluted loss per share attributable to the Company for 2014 was $0.31 compared to diluted loss per share of $0.35 in 2013. The following table lists items that affect the comparability of the current year and prior year annual results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

Year ended December 31,                               

2014

2013

Preopening and start-up expenses    

$      (0.05)

$   (0.02)

Property transactions, net

(0.05)

(0.17)

Income (loss) from unconsolidated affiliates: 

     Harmon-related property transactions, net

(0.02)

Non-operating items from unconsolidated affiliates: 

     CityCenter loss on retirement of long-term debt

(0.09)

     Silver Legacy gain on retirement of long-term debt

0.02

The tax provision in 2014 increased $263 million compared to 2013 primarily as a result of an increase in valuation allowance recorded against the Company's foreign tax credit deferred tax asset in 2014 and realization of deferred tax assets in 2013 that were previously offset by valuation allowance, partially offset by tax expense recognized in 2013 as a result of re-measuring net deferred tax liabilities in Macau.

Financial Position

"As a result of a successful year and our continued focus on our balance sheet, we improved leverage and raised significant capital in 2014," said Dan D'Arrigo, Executive Vice President, CFO and Treasurer of MGM Resorts International. "We believe that our improved cash flows, the announced dividends from MGM China, $1.25 billion in capital raised in the fourth quarter, along with revolver availability provides us with adequate liquidity to fund our 2015 maturities and growth initiatives."

The Company's cash balance at December 31, 2014 was $2.3 billion, which included $546 million at MGM China.  At December 31, 2014, the Company had $2.7 billion of borrowings outstanding under its $3.9 billion senior secured credit facility and $553 millionoutstanding under the $2.0 billion MGM China credit facility.

 

1    "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.

2    REVPAR is hotel revenue per available room.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is one of the world's leading global hospitality companies, operating a portfolio of destination resort brands including Bellagio, MGM Grand, Mandalay Bay and The Mirage. The Company is in the process of developing MGM National Harbor in Maryland and MGM Springfield in Massachusetts.  The Company also owns 51 percent of MGM China Holdings Limited, which owns the MGM Macau resort and casino and is developing a gaming resort in Cotai, and 50 percent of CityCenter in Las Vegas, which features ARIA Resort & Casino. 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

December 31,

December 31,

2014

2013

2014

2013

Revenues:

Casino

$

1,399,640

$

1,570,905

$

5,878,775

$

5,875,782

Rooms

419,470

394,283

1,768,012

1,646,303

Food and beverage

366,352

348,465

1,558,937

1,469,582

Entertainment

141,289

142,257

560,116

522,911

Retail

45,204

44,996

191,351

194,602

Other

116,018

115,429

507,639

490,349

Reimbursed costs

94,397

89,649

383,434

364,664

2,582,370

2,705,984

10,848,264

10,564,193

Less: Promotional allowances

(196,824)

(192,771)

(766,280)

(754,530)

2,385,546

2,513,213

10,081,984

9,809,663

Expenses:

Casino

852,053

979,620

3,643,881

3,684,810

Rooms

128,349

122,509

548,993

516,605

Food and beverage

213,427

199,312

908,916

844,431

Entertainment

108,660

104,648

422,115

386,252

Retail

23,741

25,365

99,455

107,249

Other

85,926

84,072

361,904

354,705

Reimbursed costs

94,397

89,649

383,434

364,664

General and administrative

324,532

317,378

1,318,749

1,278,450

Corporate expense

69,458

63,567

238,811

216,745

Preopening and start-up expenses 

13,629

3,383

39,257

13,314

Property transactions, net

480

2,012

41,002

124,761

Depreciation and amortization

202,654

207,474

815,765

849,225

2,117,306

2,198,989

8,822,282

8,741,211

Income (loss) from unconsolidated affiliates

(2,127)

15,910

63,836

68,829

Operating income 

266,113

330,134

1,323,538

1,137,281

Non-operating income (expense):

Interest expense, net of amounts capitalized

(200,903)

(208,461)

(817,061)

(857,347)

Non-operating items from unconsolidated affiliates

(18,773)

(93,230)

(87,794)

(208,682)

Other, net

(5,800)

(2,153)

(7,797)

(9,062)

(225,476)

(303,844)

(912,652)

(1,075,091)

Income before income taxes

40,637

26,290

410,886

62,190

Provision for income taxes

(328,109)

(3,883)

(283,708)

(20,816)

Net income (loss)  

(287,472)

22,407

127,178

41,374

Less: Net income attributable to noncontrolling interests

(54,791)

(79,212)

(277,051)

(213,108)

Net loss attributable to MGM Resorts International

$

(342,263)

$

(56,805)

$

(149,873)

$

(171,734)

Per share of common stock:

Basic:

Net loss attributable to MGM Resorts International

$

(0.70)

$

(0.12)

$

(0.31)

$

(0.35)

Weighted average shares outstanding

491,308

490,185

490,875

489,661

Diluted:

Net loss attributable to MGM Resorts International

$

(0.70)

$

(0.12)

$

(0.31)

$

(0.35)

Weighted average shares outstanding

491,308

490,185

490,875

489,661

 

 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

December 31,

December 31,

2014

2013

      ASSETS

Current assets:

Cash and cash equivalents

$

2,283,715

$

1,803,669

Accounts receivable, net

473,345

488,217

Inventories

104,011

107,907

Income tax receivable

14,675

-

Deferred income taxes, net

-

80,989

Prepaid expenses and other

151,414

238,657

Total current assets

3,027,160

2,719,439

Property and equipment, net

14,441,542

14,055,212

Other assets:

Investments in and advances to unconsolidated affiliates

1,559,034

1,469,261

Goodwill 

2,897,110

2,897,442

Other intangible assets, net

4,364,856

4,511,861

Other long-term assets, net

412,809

431,395

Total other assets

9,233,809

9,309,959

$

26,702,511

$

26,084,610

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

164,252

$

144,990

Construction payable

170,439

96,202

Income taxes payable

-

14,813

Current portion of long-term debt

1,245,320

-

Deferred income taxes, net

62,142

-

Accrued interest on long-term debt

191,155

188,522

Other accrued liabilities

1,574,617

1,770,801

Total current liabilities

3,407,925

2,215,328

Deferred income taxes 

2,621,860

2,419,967

Long-term debt

12,913,882

13,447,230

Other long-term obligations

130,570

141,590

Stockholders' equity:

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

   issued and outstanding 491,292,117 and 490,360,628 shares 

4,913

4,904

Capital in excess of par value

4,180,922

4,156,680

Retained earnings (accumulated deficit)

(107,909)

41,964

Accumulated other comprehensive income 

12,991

12,503

Total MGM Resorts International stockholders' equity

4,090,917

4,216,051

Noncontrolling interests

3,537,357

3,644,444

Total stockholders' equity

7,628,274

7,860,495

$

26,702,511

$

26,084,610

 

 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA - NET REVENUES

(In thousands)

(Unaudited)

Three Months Ended

Twelve Months Ended

December 31,

December 31,

December 31,

December 31,

2014

2013

2014

2013

Bellagio

$

294,110

$

298,759

$

1,248,203

$

1,177,402

MGM Grand Las Vegas

292,031

249,765

1,098,642

1,038,346

Mandalay Bay

204,280

197,174

874,126

792,282

The Mirage 

141,582

143,347

572,699

576,573

Luxor

86,886

78,503

354,041

325,578

New York-New York 

71,507

66,749

286,998

271,572

Excalibur

62,550

60,879

269,486

260,462

Monte Carlo

67,704

62,539

277,845

262,901

Circus Circus Las Vegas

49,254

45,658

209,662

197,885

MGM Grand Detroit

133,235

130,769

530,436

537,994

Beau Rivage

85,115

81,977

344,178

340,814

Gold Strike Tunica

38,118

36,219

157,733

149,186

Other resort operations

28,072

27,009

118,035

121,649

  Wholly owned domestic resorts

1,554,444

1,479,347

6,342,084

6,052,644

MGM China

718,688

925,751

3,282,329

3,316,928

Management and other operations

112,414

108,115

457,571

440,091

$

2,385,546

$

2,513,213

$

10,081,984



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