MGM Resorts International Reports First Quarter Results

May 04, 2011
Earned Adjusted Property EBITDA of $364 million; Las Vegas Strip REVPAR Increased 16%

LAS VEGAS, May 4, 2011 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) today reported financial results for the first quarter ended March 31, 2011.  Key results for the first quarter included the following:

  • Net revenue was $1.5 billion, an increase of 3% compared to the prior year quarter;
  • Rooms revenue grew by 13% led by a 16% increase in Las Vegas Strip REVPAR(1);
  • Casino revenue decreased 5% mainly as a result of a lower than normal table games hold percentage;
  • Net loss was $90 million, or $0.18 per share, compared to a net loss of $97 million, or $0.22 per share, in the prior year quarter.   The prior year results include a gain on extinguishment of debt of $142 million (or $0.21 per share) and a pre-tax non-cash charge of approximately $86 million (or $0.13 per share) representing the Company’s share of a residential inventory impairment charge at CityCenter;
  • Adjusted Property EBITDA(2) was $364 million, an increase of 95% from the prior year quarter;
  • Adjusted Property EBITDA attributable to wholly-owned operations was $301 million, a 12% increase from the prior year quarter;
  • CityCenter reported Adjusted Property EBITDA related to its resort operations of $64 million; and
  • MGM Macau reported a record quarter with operating income of $126 million, including depreciation expense of $20 million.  This represents a 158% increase in operating income from the first quarter of 2010.  The Company received approximately $31 million in distributions from MGM Macau during the first quarter of 2011.

“Our improved results are broadly based throughout our resort portfolio. Performance at our Las Vegas properties was driven by increased hotel occupancy and room rates.  MGM Grand Detroit had another impressive quarter and remains the market leader. Results from joint ventures reflected record quarters at both MGM Macau and CityCenter,” said Jim Murren, MGM Resorts International Chairman and CEO. “Our belief that the Las Vegas recovery is underway is supported by our first quarter operating results and our positive early second quarter trends.”

Discussion of First Quarter Operating Results

The following table lists items which 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,

2011

2010

Preopening and start-up expenses

$—

$(0.01)

Income (loss) from unconsolidated affiliates:



    CityCenter residential inventory impairment charge

(0.13)

    CityCenter forfeited residential deposits income

0.02

Non-operating items from unconsolidated affiliates:



    CityCenter loss on retirement of long-term debt

(0.02)

Gain on extinguishment of long-term debt

0.21



Net revenue for the first quarter of 2011 was $1.5 billion, an increase of 3% compared to the prior year quarter.  Casino revenue decreased 5% compared to the prior year quarter, primarily due to a lower table games hold percentage. The overall table games hold percentage in the first quarter of 2011 was below the low end of the Company’s normal range of 19% to 23%, which affected Adjusted Property EBITDA attributable to wholly-owned operations by approximately $34 million. The overall table game hold percentage in the first quarter of 2010 was near the mid-point of the Company’s normal range.  Slot revenues increased 1% compared to the prior year quarter.  

Rooms revenue increased 13% from the prior year quarter.  Las Vegas Strip occupancy increased from 85% to 87% and ADR increased 13% to $130, leading to an increase in REVPAR of 16%.  Food and beverage revenue increased 7%, mainly as a result of increased convention and banquet revenue. Entertainment, retail and other revenue increased 4%.

“We are seeing the benefits from initiatives put in place throughout the course of last year,” said Mr. Murren. “The operating leverage in our business model is reflected in the first quarter as margins increased despite a lower than normal table games hold percentage.”

Operating income for the first quarter of 2011 was $170 million compared to an $11 million operating loss in the first quarter of 2010.  The 2010 quarter included $86 million related to the Company’s share of a CityCenter residential inventory impairment charge.  Adjusted EBITDA was $322 million in the 2011 quarter, a 107% increase compared to $156 million in the 2010 quarter and was positively affected by improved operating performance at MGM Macau and CityCenter as discussed below.

Income (Loss) from Unconsolidated Affiliates

The Company reported income from unconsolidated affiliates of $63 million in the first quarter of 2011 compared to a loss of $81 million in the prior year period.  The Company’s share of operating income from MGM Macau increased from $23 million to $62 million and its share of CityCenter operating losses decreased from $119 million (including approximately $86 million related to a residential inventory impairment charge) to $6 million. The prior year first quarter included $7 million for the Company’s share of operating income from Borgata.

MGM Macau reported operating income of $126 million in the first quarter of 2011, which included depreciation expense of $20 million, compared to operating income of $49 million in the 2010 first quarter, which included depreciation expense of $22 million.  

Results for CityCenter for the first quarter of 2011 include the following (see schedules accompanying this release for further detail on CityCenter Holdings, LLC first quarter results):

  • Net revenue from resort operations grew 46% to $262 million compared to $179 million in the prior year quarter;
  • Aria’s net revenue increased 41% to $225 million;
  • Aria’s Adjusted Property EBITDA was $55 million.  Aria’s hold percentage was above the high end of its normal range in the current quarter which positively impacted Adjusted Property EBITDA by approximately $13 million;
  • Aria’s occupancy percentage was 86% and its ADR was $201, resulting in REVPAR of $172, a 13% increase compared to the fourth quarter of 2010 and a 41% increase compared to the prior year first quarter;
  • Crystals generated $6 million in Adjusted Property EBITDA compared to $1 million in the prior year quarter; and
  • CityCenter recorded a $24 million loss on debt retirement related to the write-off of debt issuance costs in connection with the refinancing of its credit facility in January 2011.

Financial Position

At March 31, 2011, the Company had approximately $12.3 billion of indebtedness (with a carrying value of $12.1 billion), including $2.6 billion of borrowings outstanding under its senior credit facility.  Available borrowing capacity under the senior credit facility was approximately $826 million.  The Company repaid the remaining $325 million of its 8.375% senior subordinated notes in February at maturity.

“We have made tremendous strides over the past several quarters in strengthening our liquidity profile and extending our debt maturities,” said Dan D’Arrigo, MGM Resorts International Executive Vice President and CFO.  “We currently have over $1.1 billion in available liquidity and will continue to remain focused on further improving our balance sheet.”

Conference Call Details

MGM Resorts International will hold a conference call to discuss its first quarter results at 12:00 p.m. Eastern Time today. The call will be accessible via the Internet through www.mgmresorts.com under the Investors section or by calling 1-877-274-9221 for Domestic callers and 1-706-634-6528 for International callers.  The conference call access code is 61089887.  A replay of the call will be available through Tuesday, May 10, 2011.  The replay may be accessed by dialing 1-800-642-1687 or 1-706-645-9291. The replay access code is 61089887. The call will also be archived at www.mgmresorts.com.

(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.  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, pre-opening 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.

MGM Resorts International (NYSE: MGM) is one of the world's leading global hospitality companies, operating a peerless portfolio of destination resort brands, including Bellagio, MGM Grand, Mandalay Bay and The Mirage.  The Company has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in four other properties in Nevada, Illinois and Macau. One of those investments is CityCenter, an unprecedented urban resort destination on the Las Vegas Strip featuring its centerpiece ARIA Resort & Casino.  Leveraging MGM Resorts’ unmatched amenities, the M life loyalty program delivers one-of-a-kind experiences, insider privileges and personalized rewards for guests at the Company’s renowned properties nationwide. Through its hospitality management subsidiary, the Company holds a growing number of development and management agreements for casino and non-casino resort projects around the world.  MGM Resorts International supports responsible gaming and has implemented the American Gaming Association's Code of Conduct for Responsible Gaming at its gaming properties. The Company has been honored with numerous awards and recognitions for its industry-leading Diversity Initiative, its community philanthropy programs and the Company's commitment to sustainable development and operations.  For more information about MGM Resorts International, visit the Company's Web site at www.mgmresorts.com

Statements in this release which are not historical facts are “forward-looking” statements and “safe harbor statements” within the meaning of Section 21E of the U.S. the Securities Exchange Act of 1934, as amended, and other related laws that involve risks and/or uncertainties, including risks and/or uncertainties as described in the company’s public filings with the Securities and Exchange Commission. We have based those forward-looking statements on management’s current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to statements regarding future operating results, liquidity to pay future indebtedness and potential economic recoveries. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include effects of economic conditions and market conditions in the markets in which we operate and competition with other destination travel locations throughout the United States and the world.  In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise except as required by law.

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)





Three Months Ended



March 31,


March 31,



2011


2010

Revenues:





Casino

$  582,323


$  610,757


Rooms

368,337


325,676


Food and beverage

336,824


316,156


Entertainment

119,593


116,682


Retail

46,150


43,889


Other

114,223


109,006


Reimbursed costs

86,288


93,323



1,653,738


1,615,489


Less: Promotional allowances

(148,784)


(158,097)



1,504,954


1,457,392

Expenses:





Casino

342,868


345,945


Rooms

116,986


100,746


Food and beverage

198,248


182,612


Entertainment

88,211


90,996


Retail

29,159


27,999


Other

78,297


78,027


Reimbursed costs

86,288


93,323


General and administrative

269,562


276,054


Corporate expense

36,485


24,878


Preopening and start-up expenses

-


3,494


Property transactions, net

91


689


Depreciation and amortization

152,397


163,134



1,398,592


1,387,897






Income (loss) from unconsolidated affiliates

63,343


(80,918)






Operating income (loss)

169,705


(11,423)






Non-operating income (expense):





Interest expense, net

(269,914)


(264,175)


Non-operating items from unconsolidated affiliates

(40,290)


(23,350)


Other, net

(3,955)


141,855



(314,159)


(145,670)






Loss before income taxes

(144,454)


(157,093)


Benefit for income taxes

54,583


60,352






Net loss

$  (89,871)


$  (96,741)






Per share of common stock:





Basic:





Net loss per share

$      (0.18)


$      (0.22)







Weighted average shares outstanding

488,539


441,240







Diluted:





Net loss per share

$      (0.18)


$      (0.22)







Weighted average shares outstanding

488,539


441,240



MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)





March 31,


December 31,




2011


2010







ASSETS

Current assets:





Cash and cash equivalents

$      431,275


$        498,964


Accounts receivable, net

317,974


321,894


Inventories

95,097


96,392


Income tax receivable

173,451


175,982


Deferred income taxes

84,567


110,092


Prepaid expenses and other

264,047


252,321



Total current assets

1,366,411


1,455,645







Property and equipment, net

14,426,622


14,554,350







Other assets:





Investments in and advances to unconsolidated affiliates

1,941,786


1,923,155


Goodwill

86,353


86,353


Other intangible assets, net

342,626


342,804


Deposits and other assets, net

596,551


598,738



Total other assets

2,967,316


2,951,050




$ 18,760,349


$   18,961,045













LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:





Accounts payable

$      138,533


$        167,084


Accrued interest on long-term debt

238,175


211,914


Other accrued liabilities

795,732


867,223



Total current liabilities

1,172,440


1,246,221







Deferred income taxes

2,371,875


2,469,333

Long-term debt

12,081,108


12,047,698

Other long-term obligations

215,764


199,248

Stockholders' equity:





Common stock, $.01 par value: authorized 600,000,000 shares,





issued 488,581,951 and 488,513,351 shares and outstanding





488,581,951 and 488,513,351 shares

4,886


4,885


Capital in excess of par value

4,068,751


4,060,826


Accumulated deficit

(1,156,736)


(1,066,865)


Accumulated other comprehensive income (loss)

2,261


(301)



Total stockholders' equity

2,919,162


2,998,545




$ 18,760,349


$   18,961,045



MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA - NET REVENUES

(In thousands)

(Unaudited)






Three Months Ended



March 31,


March 31,



2011


2010


Bellagio                                                                      

$    251,384


$    249,047


MGM Grand Las Vegas

224,386


224,244


Mandalay Bay

178,343


167,193


The Mirage

148,293


135,492


Luxor

79,344


76,251


New York-New York

64,333


59,922


Excalibur

60,743


59,105


Monte Carlo

62,067


52,378


Circus Circus Las Vegas

42,234


41,959


MGM Grand Detroit

143,092


139,924


Beau Rivage

80,097


81,996


Gold Strike Tunica

36,284


36,997


Management operations

100,487


103,843


Other operations

33,867


29,041



$ 1,504,954


$ 1,457,392











MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA - ADJUSTED PROPERTY EBITDA

(In thousands)

(Unaudited)






Three Months Ended



March 31,


March 31,



2011


2010


Bellagio

$      53,901


$      61,966


MGM Grand Las Vegas

36,868


38,486


Mandalay Bay

36,444


25,400


The Mirage

32,399


25,425


Luxor

20,114


12,763


New York-New York

21,128


18,067


Excalibur

16,142


14,867


Monte Carlo

13,760


6,449


Circus Circus Las Vegas

4,573


1,693


MGM Grand Detroit

43,533


40,505


Beau Rivage

13,136


16,703


Gold Strike Tunica

9,448


10,061


Management operations

700


(3,862)


Other operations

(1,575)


(1,088)


 Wholly-owned operations

300,571


267,435


CityCenter (50%) (1)

(5,823)


(118,611)


Macau (50%) (1)

61,680


23,099


Other unconsolidated resorts (1)

7,486


14,757



$    363,914


$    186,680









(1) Represents the Company's share of operating income (loss) before preopening expense, 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, 2011









Operating

income (loss)


Preopening and

start-up

expenses


Property

transactions,

net


Depreciation

and

amortization


Adjusted

EBITDA


Bellagio

$                  28,814


$                              -


$                           -


$                25,087


$            53,901


MGM Grand Las Vegas

17,568


-


-


19,300


36,868


Mandalay Bay

14,242


-


-


22,202


36,444


The Mirage

18,020


-


28


14,351


32,399


Luxor

10,475


-


-


9,639


20,114


New York-New York

15,283


-


(85)


5,930


21,128


Excalibur

10,948


-


-


5,194


16,142


Monte Carlo

7,965


-


-


5,795


13,760


Circus Circus Las Vegas

(144)


-


-


4,717


4,573


MGM Grand Detroit

33,690


-


103


9,740


43,533


Beau Rivage

1,933


-


39


11,164


13,136


Gold Strike Tunica

6,008


-


-


3,440


9,448


Management operations

(2,739)


-


-


3,439


700


Other operations

(2,986)


-


(7)


1,418


(1,575)


   Wholly-owned operations

159,077


-


78


141,416


300,571


CityCenter (50%)

(5,823)


-


-


-


(5,823)


Macau (50%)

61,680


-


-


-


61,680


Other unconsolidated resorts

7,486


-


-


-


7,486



222,420


-


78


141,416


363,914


Stock compensation

(9,210)


-


-


-


(9,210)


Corporate

(43,505)


-


13


10,981


(32,511)



$                169,705


$                            -


$                        91


$              152,397


$          322,193























Three Months Ended March 31, 2010














Operating

income (loss)


Preopening and

start-up

expenses


Property

transactions,

net


Depreciation

and

amortization


Adjusted

EBITDA


Bellagio

$                  37,564


$                              -


$                     (112)


$                24,514


$            61,966


MGM Grand Las Vegas

18,383


-


-


20,103


38,486


Mandalay Bay

1,867


-


-


23,533


25,400


The Mirage

9,819


-


-


15,606


25,425


Luxor

1,437


-


-


11,326


12,763


New York-New York

11,013


-


14


7,040


18,067


Excalibur

8,238


-


784


5,845


14,867


Monte Carlo

456


-


-


5,993


6,449


Circus Circus Las Vegas

(3,646)


-


-


5,339


1,693


MGM Grand Detroit

30,355


-


-


10,150


40,505


Beau Rivage

4,414


-


3


12,286


16,703


Gold Strike Tunica

6,429


-


-


3,632


10,061


Management operations

(7,193)


-


-


3,331


(3,862)


Other operations

(2,529)


-


-


1,441


(1,088)


   Wholly-owned operations

116,607


-


689


150,139


267,435


CityCenter (50%)

(122,105)


3,494


-


-


(118,611)


Macau (50%)

23,099


-


-


-


23,099


Other unconsolidated resorts

14,757


-


-


-


14,757



32,358


3,494


689


150,139


186,680


Stock compensation

(9,555)


-


-


-


(9,555)


Corporate

(34,226)


-


-


12,995


(21,231)



$                 (11,423)


$                      3,494


$                      689


$              163,134


$          155,894



MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS

(In thousands)

(Unaudited)








Three Months Ended



March 31,


March 31,


2011


2010





Adjusted EBITDA

$ 322,193


$ 155,894

   Preopening and start-up expenses

-


(3,494)

   Property transactions, net

(91)


(689)

   Depreciation and amortization

(152,397)


(163,134)

Operating income (loss)

169,705


(11,423)






Non-operating income (expense):




   Interest expense, net

(269,914)


(264,175)

   Other

(44,245)


118,505



(314,159)


(145,670)






Loss before income taxes

(144,454)


(157,093)

   Benefit for income taxes

54,583


60,352

Net loss

$ (89,871)


$ (96,741)











MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

SUPPLEMENTAL DATA - HOTEL STATISTICS - LAS VEGAS STRIP

(Unaudited)







Three Months Ended



March 31,


March 31,



2011


2010


Bellagio





   Occupancy %

90.8%


90.9%


   Average daily rate (ADR)

$225


$197


   Revenue per available room (REVPAR)

$205


$179







MGM Grand Las Vegas





   Occupancy %

90.6%


91.5%


   ADR

$136


$118


   REVPAR

$123


$108







Mandalay Bay





   Occupancy %

89.4%


84.3%


   ADR

$175


$153


   REVPAR

$157


$129







The Mirage





   Occupancy %

93.1%


89.2%


   ADR

$149


$134


   REVPAR

$138


$120







Luxor





   Occupancy %

88.0%


85.1%


   ADR

$93


$84


   REVPAR

$82


$72







New York-New York





   Occupancy %

92.0%


89.2%


   ADR

$109


$102


   REVPAR

$100


$91







Excalibur





   Occupancy %

86.0%


81.0%


   ADR

$74


$68


   REVPAR

$64


$55







Monte Carlo





   Occupancy %

91.9%


84.8%


   ADR

$98


$87


   REVPAR

$90


$74







Circus Circus Las Vegas





   Occupancy %

62.7%


67.7%


   ADR

$58


$46


   REVPAR

$36


$31



CITYCENTER HOLDINGS, LLC

SUPPLEMENTAL DATA - NET REVENUES

(In thousands)

(Unaudited)








Three Months Ended



March 31,


March 31,


2011


2010






Aria

$          224,963


$          159,633


Vdara

15,406


7,207


Crystals

11,713


6,255


Mandarin Oriental

10,321


6,043


   Resort operations

262,403


179,138


Residential operations

8,721


80,724



$          271,124


$          259,862











CITYCENTER HOLDINGS, LLC

RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS

(In thousands)

(Unaudited)








Three Months Ended



March 31,


March 31,


2011


2010





Adjusted EBITDA

$            54,882


$             (8,720)

   Preopening and start-up expenses

-


(6,202)

   Property transactions, net

(18)


(171,014)

   Depreciation and amortization

(91,756)


(69,473)

Operating loss

(36,892)


(255,409)






Non-operating income (expense):




   Interest expense - sponsor notes, net

(18,436)


(22,443)

   Interest expense - other, net

(47,057)


(29,049)

   Other

(22,642)


(3,568)



(88,135)


(55,060)






Net loss

$         (125,027)


$         (310,469)



CITYCENTER HOLDINGS, LLC

RECONCILIATION OF OPERATING LOSS TO ADJUSTED EBITDA

(In thousands)

(Unaudited)

Three Months Ended March 31, 2011









Operating loss


Preopening and

start-up

expenses


Property

transactions,

net


Depreciation

and

amortization


Adjusted

EBITDA


Aria

$             (12,818)


$                              -


$                          -


$                67,827


$            55,009


Vdara

(7,245)


-


-


10,463


3,218


Crystals

(2,287)


-


-


7,918


5,631


Mandarin Oriental

(4,453)


-


-


4,968


515


   Resort operations

(26,803)


-


-


91,176


64,373


Residential operations

(5,591)


-


-


481


(5,110)


Development and administration

(4,498)


-


18


99


(4,381)



$             (36,892)


$                              -


$                       18


$                91,756


$            54,882























Three Months Ended March 31, 2010














Operating loss


Preopening and

start-up

expenses


Property

transactions,

net


Depreciation

and

amortization


Adjusted

EBITDA


Aria

$             (65,749)


$                              -


$                          -


$                53,852


$          (11,897)


Vdara

(10,210)


-


-


6,061


(4,149)


Crystals

(3,736)


-


-


4,861


1,125


Mandarin Oriental

(9,753)


-


-


3,790


(5,963)


   Resort operations

(89,448)


-


-


68,564


(20,884)


Residential operations

(154,684)


-


171,014


303


16,633


Development and administration

(11,277)


6,202


-


606


(4,469)



$           (255,409)


$                      6,202


$              171,014


$                69,473


$            (8,720)



SOURCE MGM Resorts International

For further information: Investment Community, Daniel J. D’Arrigo, Executive Vice President, Chief Financial Officer, +1-702-693-8895, or News Media, Alan M. Feldman, Senior Vice President, Public Affairs, +1-702-650-6947