MGM Beats, Loss Shrinks

May. 5.11 | About: MGM Resorts (MGM)

MGM Resorts International (NYSE:MGM) reported first-quarter 2011 adjusted loss of 16 cents per share, beating the Zacks Consensus Estimate of a loss of 19 cents per share. The better-than-expected result was driven by significant top-line growth and margin expansion.

On a GAAP basis, net loss per share was 18 cents compared with a loss of 22 cents in the comparable quarter prior year. The reported quarter’s loss includes debt extinguishment charges related to CityCenter of a loss of 2 cent per share. The prior-year quarter’s results included a gain of 21 cents on extinguishment of debt and impairment charges of 13 cents per share, related to the company’s share of a residential inventory at CityCenter.

Net revenue jumped 3% year over year to $1.50 billion, but remains slightly below the Zacks Consensus Estimate of $1.51 billion. The year-over-year increase in revenue was mainly driven by strong results at Las Vegas Strip, as economic conditions continue to improve resulting in higher demand.

Inside the Headline Numbers

Total casino revenue tumbled 5% year over year to $582.3 million due to lower revenues from table games. The overall table games hold, as a percentage of turnovers, was below the low end of the company’s expected range of 19% to 23% in the quarter. The percentage was lower on a year-over-year basis. However, revenues from slots inched up 1% during the quarter.

Revenues from rooms climbed 13% primarily attributable to higher RevPAR (revenue per available room) at Las Vegas Strip (up 16%), as occupancy improved from 85% to 87% and average daily rate (ADR) spiked 13% year over year to $130. The company also experienced improved revenue in each of its remaining segments.

MGM Resorts reported an operating income of $170 million compared with an operating loss of $11 million in the year-earlier quarter, due to strong performance of MGM Macau and CityCenter. Further, adjusted EBITDA during the quarter soared 107% to $322 million, despite lower-than-normal table games hold percentage.

Financial Position

At quarter end, MGM Resorts’ total cash balance was $431.3 million. Long-term debt outstanding was $12.1 billion.


MGM Resorts provided positive outlook for second quarter 2011.

Our Take

We believe MGM Resorts is ideally positioned to take advantage of both domestic and international opportunities, and is executing well on its business strategy. Moreover, the company expects customer visits to improve further in the near term and will continue to make efforts to control cost. Business at Las Vegas has begun to stabilize, MGM Grand Detroit also reported strong growth and results at MGM Macau and CityCenter was also impressive in the reported quarter.

MGM Resorts’ close competitors Las Vegas Sands Corp. (NYSE:LVS) . recently reported its first-quarter 2011 earnings. The company announced adjusted earnings of 37 cents per share, which failed to beat the Zacks Consensus Estimate of 44 cents.