MGM MGM Resorts International

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):

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.