MGM Resorts Posts Narrower Loss as Strip Gambling Recovers
MGM Resorts International (MGM), the biggest casino operator on the Las Vegas Strip, reported a narrower fourth-quarter loss as Nevada’s gambling recovery picked up and convention business improved.
The net loss of $113.7 million, or 23 cents a share, compared with a loss of $139.2 million, or 29 cents, a year earlier, Las Vegas-based MGM Resorts said today in a statement. Excluding items, the loss was 21 cents, compared with the 20- cent average loss of 17 estimates compiled by Bloomberg.
MGM Resorts, recovering from several years of gambling and convention declines, cited better conference business and improving trends on the Strip, where industry casino revenue rose 5.1 percent last year. The industrywide jump was the second-straight annual gain and the biggest since 2006. MGM also cited strong growth overseas.
“The revenue growth on the convention side led this recovery,” MGM Chief Executive Officer Jim Murren said on a conference call today. “The other aspects of our business are catching up. Gaming is coming back in Las Vegas.”
Revenue rose 56 percent to $2.3 billion in the fourth quarter, boosted by the acquisition of a majority interest in MGM China, owner of the MGM Macau resort and casino. Analysts projected $2.21 billion on average.
Absent Builders
While Las Vegas room revenue will probably only rise by 2 percent to 3 percent in the first quarter, those numbers should increase at a mid-to-high single percentage rate for all of 2012 as MGM draws leisure travelers to boxing matches and concerts, Murren said on the conference call.
First-quarter room-revenue numbers will suffer the absence of a construction-industry convention held last year that will not return this quarter, Murren said in a telephone interview.
“Year-over-year will be up nicely on conventions in number of rooms and rates,” he said.
At MGM Resorts’ wholly-owned U.S. properties, adjusted earnings before interest, taxes, depreciation and amortization rose 18 percent to $319 million in the quarter. On the Strip, hotel revenue increased 13 percent to $111 per room in the fourth quarter from a year earlier.
On Feb. 17, the company’s 50 percent owned CityCenter Holdings completed the sale of $240 million in aggregate principal amount of 7.625 percent senior secured first lien notes due 2016, according to a regulatory filing. MGM Resorts and partner Dubai World opened City Center in Las Vegas in December 2009 after the $8.5 billion project skirted bankruptcy.
Total gambling revenue on the Las Vegas Strip was $6.07 billion last year, according to state data supplied by the Las Vegas Convention & Visitors Authority. Industrywide, gambling revenue in Macau rose 42 percent to $33.6 billion in 2011.
MGM Resorts fell 3 percent to $13.77 at the close in New York. The shares have risen 32 percent this year.
(A replay of the MGM Resorts conference call will be available through Feb. 29 at +1-855-859-2056, access code 43802425.)
To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net.
To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net
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