MGM MGM Resorts International

LAS VEGAS, Feb. 18, 2016 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) today reported financial results for the quarter and year ended December 31, 2015.

"Our strong fourth quarter domestic results culminated a very successful 2015. MGM Resorts continues to excel both in Las Vegas and at our market-leading regional resorts, with our wholly owned domestic Adjusted Property EBITDA up 15% in the quarter and 11% in the year," said Jim Murren, Chairman & CEO of MGM Resorts International. "We remain focused on driving profitability throughout our existing portfolio. We are ahead of pace with our Profit Growth Plan and are well on our way to reaching our 30% margin target by 2017. This year is a particularly exciting year for MGM Resorts with the completion of the expansion at the Mandalay Bay Convention Center, as well as the grand openings of the T-Mobile Arena and MGM National Harbor. These targeted growth investments, combined with the increased profitability at our existing operations, establish a platform for sustainable, long-term growth."

Key results for the fourth quarter of 2015 include:

• Net revenue at the Company's wholly owned domestic resorts increased 2% compared to the prior year quarter;
• Rooms revenue at wholly owned domestic resorts increased 10%, with a 12% increase in REVPAR(1) at the Company's Las Vegas Strip resorts compared to the prior year quarter;
• The Company's wholly owned domestic resorts earned Adjusted Property EBITDA(2) of $431 million, a 15% increase compared to the prior year quarter;
• Wholly owned domestic resorts Adjusted Property EBITDA margin was 27.3%, a 330 basis point increase compared to the prior year quarter;
• MGM China's net revenue was $499 million and Adjusted EBITDA was $131 million, a decrease of 31% and 29%, respectively, compared to the prior year quarter;
• MGM China's operating loss was $1.4 billion in the current year quarter, which included a $1.5 billion non-cash impairment charge on goodwill from the 2011 MGM China acquisition; and
• CityCenter earned an all time record Adjusted EBITDA related to resort operations of $106 million, a 36% increase compared to the prior year quarter.

Fourth Quarter Consolidated Results

Loss per share for the fourth quarter of 2015 was $1.38, including the non-cash goodwill impairment charge of $1.5 billion, or $1.33 per share, compared to loss per share of $0.70 in the prior year fourth quarter.

The non-cash impairment charge, which is included in "Property transactions, net," relates to goodwill recognized in the acquisition of a controlling interest in MGM China Holdings Limited ("MGM China"). The Company recorded a $3.5 billion non-cash gain in 2011 in connection with that acquisition.  The current impairment charge, which represents approximately 42% of the amount of the previously recognized gain, resulted from the Company's annual review of its goodwill carrying values and was incurred as a result of reduced cash flow forecasts for MGM China's resorts based on current market conditions and lower valuation multiples for gaming assets in the Macau market.

The following table lists certain other 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):

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts decreased 5% compared to the prior year quarter due to a decrease in table games volume and table games hold percentage, as well as a decrease in slots revenue. Table games hold percentage in the fourth quarter of 2015 was 20.0% compared to 21.8% in the prior year quarter. Slots revenue decreased 3% compared to the prior year quarter, as the prior year quarter was positively affected by a reduction in the Company's accrual for slot points based on a change in estimated point redemption.

Rooms revenue increased 10% with Las Vegas Strip REVPAR up 12%.  The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Food and beverage revenue related to wholly owned domestic resorts increased 2% as a result of increased convention and banquet business. Wholly owned domestic resorts Adjusted Property EBITDA was $431 million in the fourth quarter of 2015, a 15% increase compared to the prior year quarter, and was positively affected by approximately $35 million of incremental Adjusted Property EBITDA as a result of the Company's Profit Growth Plan initiatives. Operating income for the Company's wholly owned domestic resorts increased 20% for the fourth quarter of 2015 compared to the prior year quarter and operating margin increased 300 basis points to 19.5%.

Corporate Expense

Corporate expense increased $21 million compared to the prior year quarter.  The current year quarter included $13 million of costs incurred to implement initiatives in relation to the Profit Growth Plan and $9 million of costs incurred relating to the proposed REIT transaction.

MGM China

On February 18, 2016, as part of its regular dividend policy, MGM China's Board of Directors announced it will recommend a final dividend for 2015 of $46 million to MGM China shareholders subject to approval at the MGM China 2016 annual shareholders meeting to be held in May, bringing the total 2015 dividend to $122 million including the interim dividend paid in August. If approved, MGM Resorts International will receive $23 million, its 51% share of this dividend.

The Company has made the strategic decision to move the opening of its MGM Cotai development from the fourth quarter of 2016 to the end of the first quarter of 2017 based on current market conditions and the timing of other resort openings in the area. There is no change to the current budget of $3.0 billion, which excludes development fees, capitalized interest and land related costs.

Key fourth quarter results for MGM China include the following:

• MGM China earned net revenue of $499 million, a 31% decrease compared to the prior year quarter;
• Main floor table games revenue decreased 14% compared to the prior year quarter;
• VIP table games revenue decreased 49% due to a decrease in VIP table games turnover of 57% compared to the prior year quarter, while hold percentage increased to 3.0% in the current year quarter compared to 2.6% in the prior year quarter;
• MGM China's Adjusted EBITDA was $131 million, a 29% decrease compared to the prior year quarter, including $9 million of license fee expense in the current year quarter and no expense related to license fees in the prior year quarter;
• MGM China's Adjusted EBITDA margin increased by 45 basis points compared to the prior year quarter to 26.3% as a result of an increase in main floor table games mix; and
• MGM China's operating loss was $1.4 billion in the current year quarter, which included a $1.5 billion non-cash impairment charge on goodwill from the 2011 MGM China acquisition, compared to operating income of $109 million in the prior year quarter.

Income (Loss) from Unconsolidated Affiliates

The following table summarizes information related to the Company's share of income (loss) from unconsolidated affiliates:

Results for CityCenter Holdings, LLC ("CityCenter") for the fourth quarter of 2015 include the following (see schedules accompanying this release for further detail on CityCenter's fourth quarter results):

• Net revenue from resort operations increased by 12% to $323 million compared to $289 million in the prior year quarter;
• Adjusted EBITDA from resort operations was an all time record of $106 million, an increase of 36% compared to the prior year quarter;
• Adjusted EBITDA at Aria increased by 43% year over year to $85 million, driven by increases in casino revenue and rooms revenue;
• Aria's table games volume increased 12% and table games hold percentage was 26.8% compared to 21.5% in the prior year quarter;
• Aria's REVPAR was $212, a 7% increase compared to the prior year quarter;
• Vdara reported a 23% increase in Adjusted EBITDA compared to the prior year quarter, led by a 13% increase in REVPAR; and
• Crystals reported Adjusted EBITDA of $11 million, an increase of 2% from the prior year quarter.

CityCenter reported operating income of $18 million for the fourth quarter of 2015 compared to an operating loss of $58 million in the prior year quarter. Operating income in the current year quarter was negatively impacted by $20 million of accelerated depreciation associated with the scheduled April 2016 closure of the Zarkana theatre. The operating loss in the prior year quarter was negatively impacted by a $39 million property transaction charge, primarily related to a settlement with an insurer participating in CityCenter's Owner Controlled Insurance Program.

The Company's income from unconsolidated affiliates related to Borgata for the fourth quarter of 2015 increased 44% compared to the prior year quarter due to increases in casino revenue.

Full Year 2015 Results

Consolidated net revenue for 2015 was $9.2 billion, a 9% decrease over 2014, and Adjusted Property EBITDA increased 2% compared to the prior year to $2.5 billion. Net revenue from wholly owned domestic resorts was $6.5 billion, a 2% increase compared to the prior year. Adjusted Property EBITDA from wholly owned domestic resorts increased 11% to $1.7 billion for 2015.

MGM China net revenue was $2.2 billion for 2015, a 33% decrease from 2014, and Adjusted EBITDA was $540 million compared to $850 million in the prior year. CityCenter reported a record $1.2 billion net revenue from resort operations, a 3% increase compared to the prior year, and Adjusted EBITDA related to resort operations was a record $348 million compared to $317 million in the prior year.

Loss per share attributable to the Company for 2015 was $0.82 compared to loss per share of $0.31 in 2014. The following table lists items that affect the comparability of the current year and prior year annual results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

MGM Growth Properties

As previously announced by the Company on October 29, 2015, MGM Growth Properties LLC ("MGP"), a newly formed subsidiary of the Company that intends to elect and qualify to be taxed as a real estate investment trust, confidentially submitted a draft registration statement on Form S-11 to the United States Securities and Exchange Commission ("SEC") relating to its proposed initial public offering of Class A common shares.  Since that initial confidential submission, MGP has received and responded to comments from the SEC and believes that it has substantially completed the review process with the SEC, although the SEC will continue to review MGP's filings and may issue additional comments in the future. 

In addition, the Company and MGP have filed the necessary applications with relevant gaming regulatory authorities for those approvals required for the announced REIT transaction and the MGP initial public offering and are continuing to engage with these regulators to obtain all required approvals in a timely manner. 

"MGM Resorts and MGP are working diligently with our advisors and the regulators, and have made great strides thus far as evidenced by the progress we have made with the SEC, as well as the announcement of MGP's management team and Board" said Mr. Murren. "We are excited about the potential of this transaction and continue to actively work toward completing all the necessary steps in preparation for the planned IPO of MGM Growth Properties."

Financial Position

"Over the past year, MGM Resorts further strengthened its financial position as a result of a few key events: the conversion of our $1.45 billion convertible notes; the repayment of the $875 million senior notes; and MGM Resort's $200 million share of the first ever $400 million special distribution from CityCenter," said Dan D'Arrigo, Executive Vice President, CFO and Treasurer of MGM Resorts International. "Our commitment to decrease leverage and strengthen our balance sheet remains a top priority, and we believe the creation of MGP will allow MGM Resorts to further execute on this goal."

The Company's cash balance at December 31, 2015 was $1.7 billion, which included $699 million at MGM China.  At December 31, 2015, the Company had $2.7 billion of borrowings outstanding under its $3.9 billion senior secured credit facility and $1.6 billion outstanding under the $3 billion MGM China credit facility. In January 2016, MGM National Harbor entered into a $525 million credit agreement comprised of a $425 million term loan A facility and a $100 million revolving facility. In February 2016, MGM China amended its credit facility to increase its maximum permitted leverage ratio, in addition to other adjustments, to allow for more flexibility under its covenants.

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 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 6379822. A replay of the call will be available through Thursday, February 25, 2016.  The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088.  The replay access code is 10080352. The call will be archived at www.mgmresorts.com.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is one of the world's leading global hospitality companies, operating a portfolio of destination resort brands including Bellagio, MGM Grand, Mandalay Bay and The Mirage. The Company is in the process of developing MGM National Harbor in Maryland and MGM Springfield in Massachusetts.  The Company also owns 51 percent of MGM China Holdings Limited, which owns the MGM Macau resort and casino and is developing a gaming resort in Cotai, and 50 percent of CityCenter in Las Vegas, which features ARIA Resort & Casino. 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, the Company's ability to generate future cash flow growth and to execute on future development and other projects, such as the Profit Growth Plan, the expected results of the Profit Growth Plan, amounts the Company expects to receive as a result of the MGM China dividends, the completion of the initial public offering of MGM Growth Properties and, if completed, the value realized by the Company from such transaction. 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 the Company's 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.