MGM Misses on Sluggish U.S. Biz - Analyst Blog
01 Novembro 2012 - 6:10AM
Zacks
MGM Resorts
International’s (MGM) third quarter 2012 adjusted loss of
23 cents per share deteriorated from the Zacks Consensus Estimate
of a loss of 16 cents per share. Loss per share was also wider than
the prior-year quarter’s loss of 14 cents per share.
However, on GAAP basis, MGM Resorts posted net loss of 37 cents per
share compared with net loss of 25 cents per share in the
prior-year quarter.
Total revenue nudged up 0.9% year over year to $2,255.0 million but
fell short of the Zacks Consensus Estimate of $2,257.0 million.
Total revenue reflected growth in revenue of MGM China revenue
partially offset by decline in domestic revenue.
MGM China generated net revenues of $665.0 million, up 7.0% year
over year. A solid 10% year-over-year increase in the main floor
table games and a whopping 37% gain in slots led to the upside in
MGM China.
Net revenues related to wholly-owned domestic resorts fell 2% to
$1.5 billion. Similar to the prior quarter, CityCenter continued to
perform better in the third quarter as well, with net revenue from
resort operations growing 3.0% year over year to $263.0
million.
Inside the Headline Numbers
Consolidated casino revenue grew 4% driven by a 7% increase at MGM
China and a 2% rise at the company's wholly-owned domestic resorts.
The overall table games hold percentage at casinos of wholly-owned
domestic resorts was 20.4%, higher than the year-ago level of
19.5%. Revenues from slots inched up 1% in the quarter. Table games
hold at the Bellagio was substantially lower than the normal level,
compensated by the performance at other Las Vegas Strip
resorts.
Room revenue declined 3.0% primarily attributable to a 2.0% dip in
RevPAR (revenue per available room) in the Las Vegas Strip
properties. A lower occupancy rate combined with flat average daily
rate led to the decline in RevPAR at these resorts.
Operating income for the wholly-owned domestic resorts in the third
quarter of 2012 was $195.0 million, up 50% year over year. MGM
Resorts reported total operating income of $137.4 million compared
with $112.6 million in the year-ago quarter.
Liquidity
At quarter end, MGM Resorts’ total cash balance was $2.44 billion.
Long-term debt outstanding was $13.8 billion.
Our Take
The key takeaways from MGM’s third quarter earnings results are a
slowdown in the company’s U.S. business, strong revenue generation
at MGM China and an improving trend at CityCenter.
The company’s convention bookings for 2013 and 2014 appear strong.
MGM also remains hopeful about its progress in China with the
official signing of the land concession contract at Cotai. Hence,
we believe that MGM Resorts is ideally positioned to take advantage
of both domestic and international opportunities and is executing
well on its business strategy.
However, a huge portion of debt in its balance sheet remains a
cause of concern. The company which competes with Las Vegas
Sands Corp. (LVS) currently holds a Zacks #3 Rank
(short-term Hold rating). Our long-term recommendation remains
‘Neutral’.
LAS VEGAS SANDS (LVS): Free Stock Analysis Report
MGM RESORTS INT (MGM): Free Stock Analysis Report
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