LAS VEGAS, Aug. 6, 2013 /PRNewswire/ – MGM Resorts International (MGM) today reported financial results for the quarter ended June 30, 2013. Loss per share for the 2nd quarter of 2013 was $0.19 compared to a loss per share of $0.30 in the prior year 2nd quarter. Comparability of the current & prior year consolidated results was affected by certain items discussed below.
“We continue to see broad-based Las Vegas NV improvement as our Strip EBITDA increased 15%, driven by a 7% increase in casino revenues & a 5% increase in hotel revenues,” asserted Jim Murren, MGM Resorts International Chairman & CEO. “A strong performance at MGM China led to another quarter of record results, driven by higher volumes in both mass market & VIP.”
Key results for the 2nd quarter of 2013 contain 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 NV 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 in that affect the comparability of the current & prior year quarterly results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):
Three many months ended June 30,
2013
2012
Property transactions, net
Investment in Grand Victoria impairment
$ (0.05)
$ (0.11)
Corporate buildings impairment
(0.06)
—
Other property transactions, net
(0.01)
(0.01)
Tax adjustments:
MGM China shareholder dividend tax
—
0.07
Deferred tax valuation allowance
(0.11)
(0.13)
The current year 2nd quarter & prior year 2nd quarter results were affected by non-cash impairment charges of $37 million & $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 2nd quarter related to corporate buildings in that are expected to be removed from service. The Company’s planned Las Vegas NV arena project, of which the Company will own 50%, will be located on the land underlying these buildings.
The current year 2nd quarter income tax provision was affected by $55 million of valuation allowance on U.S. deferred tax assets, in addition to valuation allowance related to tax benefit reflected in other items in the above table. The prior year 2nd quarter income tax provision was affected by a valuation allowance for a portion of U.S. deferred tax assets & by a net tax benefit resulting from entering in to an annual yearly fee arrangement with the Macau government with respect to the complementary tax on dividend distributions of MGM Macau covering the years of time 2007 through 2011, in addition to the dividend distributed in the 1st quarter of 2012. All taxes previously accrued on MGM Macau dividends distributed in prior quarters were reversed & the cumulative agreed upon annual yearly fee was recorded during the 2nd 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% & the overall table games hold percentage in the 2nd 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 NV Strip resorts.
Rooms revenue increased 5% with a 2.5% increase in Las Vegas NV Strip REVPAR. The following table shows key hotel statistics for the Company’s Las Vegas NV Strip resorts:
Three many months ended June 30,
2013
2012
Occupancy %
95%
94%
Average Daily Rate (ADR)
$ 134
$ 131
Revenue per Available Room (REVPAR)
$ 127
$ 124
Operating income for the Company’s wholly owned domestic resorts for the 2nd 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 formally announced a dividend of $113 million, which will be paid to shareholders of record as of August 26, 2013 & distributed on or about September 2, 2013. MGM Resorts International will receive $57 million, representing its 51% share of the dividend.
Key 2nd quarter results for MGM China contain the following:
MGM China earned net revenue of $835 million, an 18% increase over the prior year quarter, & 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 & VIP revenues;
Main floor table games & slots win increased 29% & 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:
Three many months ended June 30,
2013
2012
(In thousands)
CityCenter
$ 861
$ 642
Other
5,821
5,344
$ 6,682
$ 5,986
Results for CityCenter Holdings, LLC for the 2nd quarter of 2013 contain the following (see schedules accompanying this release for further detail on CityCenter’s 2nd 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% & 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 & 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 yearly 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 & investing in high return projects within our resorts is driving improved operating margins & free (no cost) cash flow,” asserted Dan D’Arrigo, MGM Resorts International Executive Vice President, CFO & Treasurer. “We are utilizing growing cash flow & dividends from MGM China to considerably 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 contain a brief discussion of these results followed by a question & 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 & 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 & other non-operating income (expense), taxes, depreciation & amortization, preopening & start-up expenses & property transactions, net. “Adjusted Property EBITDA” is Adjusted EBITDA before corporate expense & 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 'cause management believes these measures are 1) widely used measures of operating performance in the gaming industry, & 2) a principal basis for valuation of gaming companies.
Management believes in that while items excluded from Adjusted EBITDA & Adjusted Property EBITDA may be recurring in nature & should not be disregarded in evaluation of the Company’s earnings performance, it is useful to exclude such items when analyzing current results & trends compared to other periods 'cause these items can vary considerably depending on specific underlying transactions or events in 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 & start-up expenses will be considerably different in periods when the Company is developing & constructing a major expansion project & will depend on where the current period lies within the development cycle, as well as the size & scope of the project(s). Property transactions, net includes normal recurring disposals, gains & losses on sales of assets related to specific assets within the Company’s resorts, yet moreover includes gains or losses on sales of an whole entire operating resort or a group of resorts & impairment charges on whole entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period.
In addition, capital allocation, tax planning, financing & 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 & GAAP operating income (loss) to Adjusted Property EBITDA are included in the financial schedules in this release.
About MGM Resorts International
MGM Resorts International (MGM) is one of the world’s leading global hospitality companies, operating a peerless portfolio of destination resort brands, in addition to Bellagio, MGM Grand, Mandalay Bay & The Mirage. In addition to its 51% interest in MGM China Holdings, Limited, which owns the MGM Macau resort & casino & is in the process of developing a gaming resort in Cotai, the Company has noteworthy holdings in gaming, hospitality & entertainment, owns & operates 15 properties located in Nevada, Mississippi & Michigan, & has 50% investments in three other properties in NV & Illinois. One of those investments is CityCenter, an unprecedented urban resort destination on the Las Vegas NV 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 & personalized rewards for guests at the Company’s renowned properties nationwide. Through its hospitality management subsidiary, the Company holds a growing number of development & management agreements for casino & non-casino resort projects around the world. MGM Resorts International supports responsible gaming & 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 & recognitions for its industry-leading Diversity Initiative, its community philanthropy programs & the Company’s commitment to sustainable development & operations. For more information about MGM Resorts International, visit the Company’s website at www.mgmresorts.com.
Statements in this release in that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 & involve risks and/or uncertainties, in addition to those described in the company’s public filings with the Securities & Exchange Commission. The Company has based forward-looking statements on management’s current expectations & assumptions & not on historical facts. Examples of these statements include, yet are not limited to, statements regarding the amount the Company expects to receive as a result of the MGM China dividend & the timing of such distribution. These forward-looking statements involve a number of risks & uncertainties. Among the noteworthy factors in that could cause actual results to differ materially from those indicated in such forward-looking statements contain effects of economic conditions & market conditions in the markets in which the Company operates & competition with other destination travel locations throughout the United States & the world, the design, timing & costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals & other contingencies in connection with growth in new or existing jurisdictions & additional risks & uncertainties described in our Form 10-K, Form 10-Q & 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 in that it will make additional updates with respect to those other forward-looking statements.
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
June 30,
June 30,
2013
2012
2013
2012
Revenues:
Casino
$ 1,443,157
$ 1,299,196
$ 2,844,577
$ 2,634,230
Rooms
437,710
418,766
838,960
812,386
Food & beverage
394,247
391,891
754,129
764,844
Entertainment
121,001
120,909
234,855
241,309
Retail
52,748
52,086
97,455
98,710
Other
127,914
132,900
251,740
246,023
Reimbursed costs
92,741
90,938
182,977
181,477
2,669,518
2,506,686
5,204,693
4,978,979
Less: Promotional allowances
(188,253)
(182,921)
(371,280)
(367,624)
2,481,265
2,323,765
4,833,413
4,611,355
Expenses:
Casino
916,807
826,211
1,792,053
1,693,685
Rooms
134,001
129,897
261,710
256,052
Food & beverage
225,696
222,567
430,436
434,206
Entertainment
89,940
88,559
173,665
177,347
Retail
27,865
29,241
53,831
56,824
Other
92,819
88,835
178,792
175,057
Reimbursed costs
92,741
90,938
182,977
181,477
General & administrative
314,324
309,478
618,225
612,767
Corporate expense
52,364
42,540
98,988
84,800
Preopening & start-up expenses
3,506
-
5,652
-
Property transactions, net
88,131
90,467
96,622
91,384
Depreciation & amortization
218,151
235,643
430,069
472,452
2,256,345
2,154,376
4,323,020
4,236,051
Income (loss) from unconsolidated affiliates
6,682
5,986
23,026
(7,323)
Operating income
231,602
175,375
533,419
367,981
Non-operating income (expense):
Interest expense, net of amounts capitalized
(214,500)
(276,323)
(439,947)
(560,665)
Non-operating items from unconsolidated affiliates
(38,864)
(20,836)
(60,943)
(47,702)
Other, net
(4,951)
46
(6,233)
(57,530)
(258,315)
(297,113)
(507,123)
(665,897)
Income (loss) before income taxes
(26,713)
(121,738)
26,296
(297,916)
Benefit (provision) for income taxes
(3,865)
51,304
(34,296)
24,175
Net loss
(30,578)
(70,434)
(8,000)
(273,741)
Less: Net income attributable to noncontrolling interests
(62,380)
(75,018)
(78,412)
(88,964)
Net loss attributable to MGM Resorts International
$ (92,958)
$ (145,452)
$ (86,412)
$ (362,705)
Per share of usual stock:
Basic:
Net loss attributable to MGM Resorts International
$ (0.19)
$ (0.30)
$ (0.18)
$ (0.74)
Weighted average shares outstanding
489,484
488,931
489,388
488,896
Diluted:
Net loss attributable to MGM Resorts International
$ (0.19)
$ (0.30)
$ (0.18)
$ (0.74)
Weighted average shares outstanding
489,484
488,931
489,388
488,896
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
June 30,
December 31,
2013
2012
ASSETS
Current assets:
Cash & cash equivalents
$ 1,278,673
$ 1,543,509
Accounts receivable, net
440,326
443,677
Inventories
101,110
107,577
Deferred income taxes, net
141,516
179,431
Prepaid expenses & other
248,615
232,898
Total current assets
2,210,240
2,507,092
Property & equipment, net
14,042,309
14,194,652
Other assets:
Investments in & advances to unconsolidated affiliates
1,408,139
1,444,547
Goodwill
2,900,543
2,902,847
Other intangible assets, net
4,609,088
4,737,833
Other long-term assets, net
551,818
497,767
Total other assets
9,469,588
9,582,994
$ 25,722,137
$ 26,284,738
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 229,599
$ 199,620
Income taxes payable
7,682
1,350
Accrued interest on long-term debt
193,660
206,736
Other accrued liabilities
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