MGM Resorts Posts Smaller Third-Quarter Loss Aided by Macau

MGM Resorts International (MGM), the biggest casino operator on the Las Vegas Strip, reported a narrower third-quarter loss after taking control of its Macau venture. The shares fell as cash flow missed some estimates.

The net loss was $123.8 million, or 25 cents a share, including a writedown of Circus Circus Reno, Las Vegas-based MGM Resorts said today in a statement. That compares with a loss of $318 million, or 72 cents, a year earlier, which included writedowns in Atlantic City and Vegas.

Macau is booming while Las Vegas recovers from a drop in gambling and conventions. MGM won a lower than expected percentage of table bets on the Strip, where it has 10 casino resorts, according to Patrick Scholes, an analyst at FBR Capital Markets. Cash flow for the quarter, which rose 59 percent to $444 million, missed his estimate of $457 million.

“Given the slight earnings miss, we suspect the stock will be moderately weak today,” Scholes wrote in a note.

MGM Resorts fell 5.8 percent to $10.73 at the close in New York and traded as low as $10.25. The stock has lost 28 percent this year.

Excluding some items, the loss was 14 cents, narrower than the 15-cent loss, the average of 23 analysts’ estimates compiled by Bloomberg. Revenue rose 43 percent to $2.23 billion, beating the $2.21 billion analysts expected.

Property cash flow at wholly owned U.S. casinos -- measured as adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda -- rose 10 percent to $348 million.

Outlook

The fourth quarter is “off to a very good start” with broad-based growth boosted by events, Chairman and Chief Executive Officer Jim Murren said today on a conference call. Revenue per available room in the final three months of this year will rise 10 percent from a year ago, he forecast.

Conventions will account for 14.5 percent of room nights at the company’s Las Vegas resorts this year, and about 15 percent next year, Murren estimated. Strengthening rates have let MGM remodel some rooms at Bellagio and MGM Grand properties.

MGM took an additional 1 percent stake in the Macau joint venture in June, acquiring control after partner Pansy Ho sold part of her holding in a $1.5 billion Hong Kong initial public offering. Casino betting in the Chinese territory, the world’s biggest gambling market, surged 58 percent last year and 45 percent in the 10 months ended Oct. 31.

Ebitda from MGM China Holdings Ltd. rose 65 percent to $139 million from $84 million a year earlier as sales climbed 72 percent to $623 million, the company said. The property will be debt-free this quarter and may pay dividends next year, Murren said on the call.

Macau Expansion

MGM is ready to begin ground work on a planned casino resort in Cotai, Macau, as soon as it gets government approvals, Murren said today in a phone interview. Details of the spending plan will be released next quarter, he said.

This week, MGM and Boyd Gaming Corp (BYD) agreed to form a venture with the biggest listed Internet gambling company, Bwin.Party Digital Entertainment Plc., in preparation for the U.S. to legalize online poker. MGM Resorts will own 25 percent of the venture, Boyd will hold 10 percent.

To contact the reporters on this story: Anthony Palazzo in Los Angeles at apalazzo@bloomberg.net; Beth Jinks in New York at bjinks1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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