Recently, MGM Mirage (MGM) announced that it would report a loss in the first quarter as a result of an impairment charge associated with CityCenter, its joint venture project with Dubai World, the real estate investment company of the Dubai government. Additionally, the company continued to experience weak results at the Las Vegas Strip.
MGM expects to report a first quarter loss of 22 cents per share compared with earnings of 38 cents in the year ago period. This includes a non-cash impairment charge of approximately 13 cents per share at CityCenter related to its residential inventory.
However, the company experienced a 21 cent per share gain on the extinguishment of debt. The prior-year results included a gain of 44 cents per share related to the sale of Treasure Island hotel and casino.
MGM Mirage expects net revenues to be around $1.46 billion. Excluding reimbursed costs revenues, primarily payroll-related for managing CityCenter, revenues are estimated to be $1.36 billion, a decrease of 4% year-over-year.
At the Las Vegas strip, revenues per available room (RevPAR) dropped 8% year-over-year to $94 with an occupancy of 85% and an average daily rate of $111. The company projects casino revenues to be down around 5% from the prior year, with slots revenues down approximately 1% for the quarter.
MGM Mirage expects an operating loss of approximately $11 million compared with an operating income of $355 million in the 2009 quarter.
For the joint venture units, operating income at MGM Grand Macau is however, expected to be $49 million compared with an operating loss of $5 million in the year-ago quarter. However, CityCenter is expected to report an operating loss of $255 million in the quarter.
MGM Mirage said it had about $13 billion in debt as of March 31. Subsequent to March 31, 2010, the company received a tax refund of around $380 million, the proceeds of which will be used to temporarily reduce outstanding amounts under the senior credit facility. The company expects to report its first quarter 2010 results early in May.
MGM Mirage reported a fourth-quarter loss of 25 cents per share, worse than the Zacks Consensus Estimate of a loss of 14 cents. Though the cost cut initiatives provided some relief to the bottom line, the company’s earnings continue to be impacted by the economic downturn. The company continued to experience pressure on room rates in Las Vegas that weighed on its margins.
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