MGM Resorts International‘s (MGM) third quarter 2011 adjusted loss of 14 cents per share bettered the Zacks Consensus Estimate by a penny.
On a GAAP basis, MGM Resorts posted net loss of 25 cents per share compared with a net loss of 72 cents per share in the prior-year quarter.
Net revenue jumped 37.5% year over year to $2.23 billion. The increase was mainly driven by strong results from Las Vegas Strip as well as at MGM China. Total revenue surpassed the Zacks Digest average of $2.21 billion.
Inside the Headline Numbers
Casino revenue related to wholly owned domestic resorts decreased 2% year over year because of a lower table games hold percentage. The overall table games hold, as a percentage of turnover, was on the lower end of the company’s usual expected range of 19% to 23% as against the mid-point of the range recoded in the year-ago quarter. However, revenues from slots climbed 4% during the quarter.
Revenues from rooms climbed 11% year over year primarily attributable to higher RevPAR (revenue per available room) at Las Vegas Strip (up 13%). RevPAR increased as occupancy improved from 93% to 945%. The average daily rate (ADR) spiked 11.7% year over year to $124.
Consolidated adjusted EBITDA increased 58.6% year over year. The company’s wholly owned domestic resorts clocked 10%, MGM China posted 65.5% and CityCenter recorded 26% EBITDA growth.
MGM Resorts reported an operating income of $0.1 billion compared with an operating loss of $0.2 billion in the year-earlier quarter. Operating income for the company’s wholly owned domestic resorts in the third quarter of 2011 was $130 million including an $80 million impairment charge at Circus Circus.
Financial Position
At quarter end, MGM Resorts’ total cash balance was $1.82 billion. Long-term debt outstanding was $13.1 billion.
Our Take
We believe MGM Resorts is ideally positioned to take advantage of both domestic and international opportunities, and is executing well on its business strategy. Moreover, the acquisition of a controlling interest in MGM China will strengthen its position in Macau and ensure higher profitability. The company also remains hopeful on the development at Cotai.
The company holds a Zacks #3 Rank (short-term Hold rating). Our long-term recommendation remains Neutral.
MGM Resorts’ close competitors Las Vegas Sands Corp. (LVS) recorded adjusted earnings of 55 cents per share in the third quarter of 2011, surpassing our estimate.
