MGM Resorts International
) first-quarter 2013 adjusted earnings of 3 cents per share
comprehensively beat the Zacks Consensus Estimate of a loss of 10
cents per share as well as the prior-year quarter's loss of 9
cents per share. The better-than-expected bottom-line performance
can be attributed to an improved top line. Further, the
first-quarter result marks MGM Resorts' return to
However, on a reported basis, MGM Resorts posted earnings of 1
cent per share compared with a net loss of 44 cents per share in
the prior-year quarter.
In the first quarter, total revenue grew 3% year over year to
$2.4 billon, which also beat the Zacks Consensus Estimate of $2.3
billion. Higher revenues in both Las Vegas market and China
boosted total revenue in the quarter. Visitation in Las Vegas
market remains strong ensuring a speedy recovery from the damage
due to the recession five years ago.
The company owns and operates several properties located in
Nevada, Mississippi and Michigan. Casino revenues related to
wholly-owned domestic resorts grew 3%. The overall table games
percentage at casinos of wholly-owned domestic resorts was 21.9%,
higher than the year-ago level of 18.7%. Revenues from slots
declined 2% in the quarter. The decrease was due to lower slots
revenues at the company's regional resorts, which overshadowed
the 4% increase in the company's Las Vegas Strip resorts slots
Room revenues increased 2.0%, primarily attributable to a 1.0%
rise in RevPAR (revenue per available room) in the Las Vegas
Strip properties. A slightly higher average daily rate led to the
rise in RevPAR at these resorts.
Similar to the prior two quarters, CityCenter continued to
perform well in the first quarter with net revenue from resort
operations growing 32.0% year over year to $308.0 million.
Adjusted EBITDA from resort operations skyrocketed to $93 million
from $32 million recorded in the prior-year quarter.
Consolidated operating income for the wholly-owned domestic
resorts surged 20% to $234.0 million in the first quarter due to
stringent cost control initiative.
MGM China's net revenue was up 6.0% to $748.0 million due to
increases in main floor table games and slots revenues. Main
floor table games and slots win increased 26% and 19%,
Adjusted EBITDA grew 10% due to a higher contribution from the
main floor business, which represents around 65% of EBITDA.
At the end of Mar 31, 2013, cash and cash equivalents stood at
$1.48 billion versus $1.54 billion at the end of Dec 31, 2012.
Long-term debt was $13.69 billion as opposed to $13.59 billion at
the end of Dec 31, 2012.
We remain enthusiastic about MGM Resorts' turnaround in the
quarter in terms of profitability. Strong revenue generation at
MGM China and an improving trend at Las Vegas are impressive. The
company's convention bookings for 2013 and 2014 appear
strong. However, higher debt in its balance sheet acts as a
MGM Resorts currently retains a Zacks Rank #2 (Buy). Other
companies in the industry, which are expected to perform well,
Wynn Resorts Ltd.
Las Vegas Sands Corp.
Bally Technologies, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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