MGM MGM Resorts International

MGM Resorts International’s (MGM) third quarter 2011 adjusted loss of 14 cents per share bettered the Zacks Consensus Estimate by a penny.

On a GAAP basis, MGM Resorts posted net loss of 25 cents per share compared with a net loss of 72 cents per share in the prior-year quarter.

Net revenue jumped 37.5% year over year to $2.23 billion. The increase was mainly driven by strong results from Las Vegas Strip as well as at MGM China. Total revenue surpassed the Zacks Digest average of $2.21 billion.

Inside the Headline Numbers

Casino revenue related to wholly owned domestic resorts decreased 2% year over year because of a lower table games hold percentage. The overall table games hold, as a percentage of turnover, was on the lower end of the company’s usual expected range of 19% to 23% as against the mid-point of the range recoded in the year-ago quarter. However, revenues from slots climbed 4% during the quarter.

Revenues from rooms climbed 11% year over year primarily attributable to higher RevPAR (revenue per available room) at Las Vegas Strip (up 13%). RevPAR increased as occupancy improved from 93% to 945%. The average daily rate (ADR) spiked 11.7% year over year to $124.

Consolidated adjusted EBITDA increased 58.6% year over year. The company’s wholly owned domestic resorts clocked 10%, MGM China posted 65.5% and CityCenter recorded 26% EBITDA growth.

MGM Resorts reported an operating income of $0.1 billion compared with an operating loss of $0.2 billion in the year-earlier quarter. Operating income for the company’s wholly owned domestic resorts in the third quarter of 2011 was $130 million including an $80 million impairment charge at Circus Circus.

Financial Position

At quarter end, MGM Resorts’ total cash balance was $1.82 billion. Long-term debt outstanding was $13.1 billion.

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 acquisition of a controlling interest in MGM China will strengthen its position in Macau and ensure higher profitability. The company also remains hopeful on the development at Cotai.

The company holds a Zacks #3 Rank (short-term Hold rating). Our long-term recommendation remains Neutral.

MGM Resorts’ close competitors Las Vegas Sands Corp. (LVS) recorded adjusted earnings of 55 cents per share in the third quarter of 2011, surpassing our estimate.

MGM Resorts (NYSE:MGM)
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