MGM MGM Resorts International

LAS VEGAS, Aug. 6, 2013 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) today reported financial results for the quarter ended June 30, 2013.  Loss per share for the second quarter of 2013 was $0.19 compared to a loss per share of $0.30 in the prior year second quarter.  Comparability of the current and prior year consolidated results was affected by certain items discussed below.

"We continue to see broad-based Las Vegas improvement as our Strip EBITDA increased 15%, driven by a 7% increase in casino revenues and a 5% increase in hotel revenues," said Jim Murren, MGM Resorts International Chairman and CEO.  "A strong performance at MGM China led to another quarter of record results, driven by higher volumes in both mass market and VIP."

Key results for the second quarter of 2013 include the following:

• Consolidated net revenue increased 7% over the prior year quarter to $2.5 billion;
• Consolidated casino revenue increased 11%;
• Rooms revenue at wholly owned domestic resorts increased 5% with a 2.5% increase in REVPAR⁽¹⁾ at the Company's Las Vegas Strip resorts;
• Adjusted Property EBITDA⁽²⁾ was $596 million, a 9% increase compared to the prior year quarter;
• The Company's wholly owned domestic resorts earned Adjusted Property EBITDA of $376 million, a 9% increase compared to the prior year quarter;
• MGM China's Adjusted EBITDA increased 10% to $205 million, which included $15 million of branding fee expense in the current quarter;
• CityCenter's Adjusted EBITDA related to resort operations was $67 million, a 6% decrease compared to the prior year quarter, as a result of lower table games hold percentage in the current year; and
• Consolidated operating income increased 32% to $232 million compared to $175 million in the prior year quarter.

Certain Items Affecting Second Quarter Results

The following table lists items that 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):

The current year second quarter and prior year second quarter results were affected by non-cash impairment charges of $37 million and $85 million, respectively, related to the Company's joint venture investment in Grand Victoria. In addition, the Company recorded an impairment charge of $45 million in the current year second quarter related to corporate buildings that are expected to be removed from service.  The Company's planned Las Vegas arena project, of which the Company will own 50%, will be located on the land underlying these buildings. 

The current year second quarter income tax provision was affected by $55 million of valuation allowance on U.S. deferred tax assets, including valuation allowance related to tax benefit reflected in other items in the above table.  The prior year second quarter income tax provision was affected by a valuation allowance for a portion of U.S. deferred tax assets and by a net tax benefit resulting from entering into an annual fee arrangement with the Macau government with respect to the complementary tax on dividend distributions of MGM Macau covering the years 2007 through 2011, including the dividend distributed in the first quarter of 2012.  All taxes previously accrued on MGM Macau dividends distributed in prior quarters were reversed and the cumulative agreed upon annual fee was recorded during the second quarter of 2012.

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts increased 3% compared to the prior year quarter. Table games revenue increased 4% and the overall table games hold percentage in the second quarter of 2013 was 18.1% compared to 17.7% for the prior year quarter.  Slots revenue increased 3% with a 7% increase at the Company's Las Vegas Strip resorts.

Rooms revenue increased 5% with a 2.5% increase in Las Vegas Strip REVPAR. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Operating income for the Company's wholly owned domestic resorts for the second quarter of 2013 was $239 million, an increase of 12% compared to the prior year quarter.

MGM China

On August 6, 2013, MGM China's Board of Directors announced a dividend of $113 million, which will be paid to shareholders of record as of August 26, 2013 and distributed on or about September 2, 2013.  MGM Resorts International will receive $57 million, representing its 51% share of the dividend.

Key second quarter results for MGM China include the following:

• MGM China earned net revenue of $835 million, an 18% increase over the prior year quarter, and its highest ever quarterly Adjusted EBITDA of $205 million, a 10% increase over the prior year quarter, due primarily to increases in main floor table games and VIP  revenues;
• Main floor table games and slots win increased 29% and 4%, respectively, compared to the prior year quarter;
• VIP table games turnover increased 34% from the prior year quarter, while hold percentage was 2.9% in the current year quarter compared to 3.3% in the prior year quarter; and
• MGM China's operating income was $126 million compared to $90 million in the prior year quarter.

Income from Unconsolidated Affiliates

The following table summarizes information related to the Company's share of operating income from unconsolidated affiliates, adjusted for the effect of certain basis differences:

Results for CityCenter Holdings, LLC for the second quarter of 2013 include the following (see schedules accompanying this release for further detail on CityCenter's second quarter results):

• Net revenue from resort operations decreased to $280 million, a 1% decrease from the prior year quarter;
• Adjusted EBITDA from resort operations was $67 million compared to $71 million in the prior year quarter;
• Aria's table games hold percentage was 20.8% in the current year quarter compared to 24.0% in the prior year quarter; and
• Aria's occupancy percentage was 92% and its ADR was $212, resulting in REVPAR of $194, a 4% increase compared to the prior year quarter.

Financial Position

The Company's term loan B facility was re-priced in May 2013 and now bears interest at LIBOR plus 2.50%, with a LIBOR floor of 1.00%, a 75 basis point reduction compared to the prior rate. The re-pricing will result in annual interest savings of approximately $13 million.  As of June 30, 2013, the Company reduced its outstanding indebtedness by approximately $476 million year to date. 

"Our continued focus on cost containment and investing in high return projects within our resorts is driving improved operating margins and free cash flow," said Dan D'Arrigo, MGM Resorts International Executive Vice President, CFO and Treasurer.   "We are utilizing growing cash flow and dividends from MGM China to significantly improve our balance sheet."

Conference Call Details

MGM Resorts International will host a conference call at 11:00 a.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through www.mgmresorts.com under the Investors section or by calling 1- 800-560-7376 for domestic callers and 1-706-758-3659 for international callers.  The conference call access code is 15164251. A replay of the call will be available through Tuesday, August 13, 2013.  The replay may be accessed by dialing 1-855-859-2056 or 1-404-537-3406.  The replay access code is 15164251. The call will 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 related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China.  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, preopening 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.

Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to Adjusted Property EBITDA are included in the financial schedules in this release.

About MGM Resorts International

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.  In addition to its 51% interest in MGM China Holdings, Limited, which owns the MGM Macau resort and casino and is in the process of developing a gaming resort in Cotai, 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 three other properties in Nevada and Illinois. 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 website at www.mgmresorts.com.

Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and/or uncertainties, including those described in the company's public filings with the Securities and Exchange Commission.  The Company has based 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 the amount the Company expects to receive as a result of the MGM China dividend and the timing of such distribution.  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 the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in our Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports).  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. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.