MGM Resorts International (MGM) reported its fourth-quarter 2010 adjusted loss of 20 cents per share as compared with the Zacks Consensus Estimate of 22 cents loss per share and the year-earlier loss of 21 cents.
On a GAAP basis, net loss per share was 29 cents compared with a loss of 98 cents in the comparable quarter prior year. The reported quarter’s loss includes a 7-cent per share reduction in the company’s income tax benefit from providing reserves for certain state-level deferred tax assets. The prior-year quarter’s results included impairment charges of 73 cents per share, related to the company’s undeveloped land holdings in Atlantic City.
On a GAAP basis, loss per share in 2010 was $3.19 versus a loss of $3.41 per share in 2009.
Net revenue excluding reimbursement costs, mainly related to the company’s management of CityCenter, slipped 1% year over year to $1.53 billion but surpassed the Zacks Consensus Estimate of $1.49 billion.
For full-fiscal 2010, net revenue excluding reimbursement costs was $6.29 billion, down 3.8% year over year.
Inside the Headline Numbers
Total casino revenue tumbled 3% year over year due to lower revenues from table games. MGM Resorts’ table games volume dropped 13%. The overall table games hold, as a percentage of turnover, in the quarter, was near the low end of the company’s normal range of 18% to 22%. The percentage was slightly lower on a year-over-year basis. However, revenues from slots increased 2% during the quarter.
Revenues from rooms, excluding the impact of resort fees, fell 5% primarily on account of Las Vegas Strip where RevPAR (revenue per available room) dropped 2% and occupancy decreased from 86% to 84%. Had resort fees been included, room revenues and REVPAR would have been up 1% and 2%, respectively. Apart from Mirage, all properties posted decreases in RevPAR. CityCenter and Aria generated revenues of $257 million and $198 million, respectively.
MGM Resorts recorded an operating income of $107 million compared with an operating loss of $487 million in the year-earlier quarter. The 2009 quarter included a $548 million impairment charge related to the company’s Atlantic City land and $25 million related to its share of CityCenter’s pre-opening costs.
The operating loss related to CityCenter was partially offset by MGM Macau, which posted an operating income of $119 million, significantly up from the prior-year quarter. However, Aria was aided by high table games hold percentage, which was near the high end of its expected range and led to adjusted property EBITDA of $30 million.
Financial Position
At quarter-end, MGM Resorts’ total cash balance was $499.0 million. Total debt outstanding was $12.0 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. The Las Vegas operation has not fully recovered, but it has begun to stabilize. MGM Macau registered robust growth the reported quarter with Aria ramping up its operating performance. However, we remain cautious on CityCenter, which continues to struggle.
MGM Resorts’ close competitors Las Vegas Sands Corp. (LVS) and Wynn Resorts Ltd.(WYNN) recently reported their fourth-quarter 2010 earnings. Both companies outpaced the Zacks Consensus Estimates reflecting strong performance at Macau business. We believe Macau will drive the future of the casino companies before Las Vegas fully recovers.
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