MGM Resorts International (MGM)

[MCArmel1]

MGM Resorts beats by $0.08, revenue in-line

Aug 4 2015, 08:08 ET | About: MGM Resorts International (MGM) | By: Jignesh Mehta, SA News Editor

MGM Resorts (NYSE:MGM): Q2 EPS of $0.19 beats by $0.08.
Revenue of $2.38B (-7.8% Y/Y) in-line.
Press Release

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MGM Resorts International Reports Second Quarter Financial Results
Tue August 4, 2015 8:00 AM|PR Newswire | About: MGM

LAS VEGAS, Aug. 4, 2015 /PRNewswire/ -- MGM Resorts International (MGM) (NYSE: MGM) today reported financial results for the quarter ended June 30, 2015.

"We are continuing to drive increased profits at MGM Resorts with second quarter wholly owned Adjusted Property EBITDA up 11% driven by growth at our Las Vegas and regional resorts. These resorts are continuing to gain operating momentum while we continue to make significant progress on our development pipeline in Cotai, Maryland, and Massachusetts," said Jim Murren, Chairman & CEO of MGM Resorts International. "We are focused on positioning the Company for future growth, and are pleased to announce the implementation of our Profit Growth Plan to further enhance our business practices and profitability."

Key results for the second quarter of 2015 include the following:
•Net revenue at the Company's wholly owned domestic resorts was $1.7 billion, an increase of 4% compared to the prior year quarter;
•Rooms revenue at wholly owned domestic resorts increased 6% with a 6% increase in REVPAR(1) at the Company's Las Vegas Strip resorts compared to the prior year quarter;
•The Company's wholly owned domestic resorts earned Adjusted Property EBITDA(2) of $458 million, an 11% increase compared to the prior year quarter;
•Adjusted Property EBITDA margin for wholly owned domestic resorts increased 158 basis points to 26.9% in the current year quarter;
•MGM China's net revenue was $557 million and Adjusted EBITDA was $132 million, decreases of 33% and 37%, respectively, compared to the prior year quarter; and
•CityCenter's Adjusted EBITDA related to resort operations was $84 million, a 4% increase compared to the prior year quarter.

Second Quarter Consolidated Results

Diluted earnings per share for the second quarter of 2015 was $0.17 compared to diluted earnings per share of $0.22 in the prior year quarter.

The following table lists certain items that affect the comparability of the current and prior year quarterly results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):


Three months ended June 30,


2015


2014


Preopening and start-up expenses


$ (0.02)


$ (0.01)


Property transactions, net:

Investment in Grand Victoria impairment (0.04)


Other property transactions, net (0.01)


IRS (IRS) audit settlement 0.06

The prior year second quarter results were affected by a non-cash impairment charge of $29 million related to the Company's joint venture investment in Grand Victoria. Additionally, the prior year second quarter income tax provision was affected by a $31 million benefit resulting from the settlement of the Company's 2005-2009 IRS audits during the quarter.

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts increased 5% compared to the prior year quarter due to a 4% increase in table games volume and a 7% increase in slots volume. Table games hold percentage in the second quarter of 2015 was 21.4% compared to 21.3% in the prior year quarter.

Rooms revenue increased 6% compared to the prior year quarter with Las Vegas Strip REVPAR up 6%. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Three months ended June 30,

2015


2014


Occupancy %


96%


96%


Average Daily Rate (ADR)


$ 150


$ 141


Revenue per Available Room (REVPAR)


$ 144


$ 135


Food and beverage revenue grew 3% as a result of increased catering business related to a higher convention room mix in the quarter, the opening of several new outlets and closed circuit viewing parties for the Mayweather vs. Pacquiao fight. Entertainment revenue decreased 3% due to a decrease in the number of in-house shows compared to the prior year quarter. Operating income for the Company's wholly owned domestic resorts increased 15% to $338 million compared to $294 million in the prior year quarter.

Profit Growth Plan

The Company has announced the Profit Growth Plan today for sustained growth and margin enhancement. The Profit Growth Plan's initiatives are focused on the following:
•Improve business process continue to optimize MGM's scale for greater efficiency and lower cost throughout our business; and
•Drive revenue generation identify areas of opportunity to organically drive incremental revenue growth.

The Profit Growth Plan includes a significant number of opportunities to enhance our business operations. The plan is expected to result in $300 million of annualized Adjusted EBITDA benefit. The Profit Growth Plan commenced in July 2015 and it is expected to begin to show results as early as the second half of 2015 and be fully realized by the end of 2017.

"The Profit Growth Plan represents a further advancement in how we conduct business at MGM Resorts, with greater focus on streamlining business process, leveraging our size and scale to reduce costs and drive market share, and innovations in customer service. This plan will redefine the way we operate in critical areas and position MGM Resorts for future growth, for the benefit of our Company as a whole and our shareholders," said Mr. Murren.

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