LAS VEGAS, Feb. 19, 2014 /PRNewswire/ — MGM Resorts International (NYSE: MGM) today reported financial results for the fourth quarter and full year ended December 31, 2013. Loss per share for the fourth quarter of 2013 was $(0.08), an improvement compared to a loss per share of ($2.50) in the prior year fourth quarter. Comparability of the current and prior year consolidated results was affected by certain items discussed further below.
“In 2013 we achieved our best operating performance since the recession. The fourth quarter finished strong, with 6% Adjusted EBITDA growth at our wholly owned domestic resorts and record quarters at MGM China and CityCenter,” said Jim Murren, Chairman and CEO. “In 2014, we expect our Las Vegas properties to continue to improve, driven by a strong convention calendar and the completion of several capital initiatives on the Las Vegas Strip. In Macau, we continue to yield our existing resort and are well underway in more than doubling our footprint in the world’s largest gaming market with MGM Cotai set to open early 2016.”
Key results for the fourth quarter of 2013 include the following:
- Consolidated net revenue was $2.5 billion, a 10% increase over the prior year fourth quarter;
- Consolidated casino revenue increased 13% compared to the prior year quarter;
- Rooms revenue at wholly owned domestic resorts increased 3% with a 1% increase in REVPAR(1) at the Company’s Las Vegas Strip resorts;
- Adjusted Property EBITDA(2) was $609 million compared to $505 million, a 21% increase compared to the prior year quarter;
- The Company’s wholly owned domestic resorts earned Adjusted Property EBITDA of $356 million, a 6% increase compared to the prior year quarter;
- MGM China’s Adjusted EBITDA was a record $238 million, a 35% increase compared to the prior year quarter;
- CityCenter’s Adjusted EBITDA related to resort operations was a record $93 million, a 36% increase compared to the prior year quarter; and
- Consolidated operating income was $330 million compared to an operating loss of $425 million, which included significant impairment charges in the fourth quarter of 2012.
Certain Items Affecting Fourth Quarter Results
The following table lists 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):
In the fourth quarter of 2013, non-operating items from unconsolidated affiliates included $70 million related to the Company’s share of a loss on retirement of long-term debt in connection with CityCenter’s early redemption of its first and second lien senior secured notes in October 2013 and $12 million related to the Company’s share of a gain on retirement of long-term debt related to Silver Legacy’s early redemption of its second lien notes in December 2013.
In the fourth quarter of 2012, property transactions, net included an impairment charge of $65 million related to the Company’s investment in Borgata, a $366 million impairment charge related to certain of the Company’s land holdings on the north end of the Las Vegas Strip, and a $167 million impairment charge related to the Company’s land holdings in Atlantic City. Other non-operating expense in the fourth quarter of 2012 included a $47 million write-off related to the Company’s holding of South Jersey Transportation Authority (“SJTA”) road development special revenue bonds and a loss of $505 million related to the Company’s December 2012 refinancing transactions.
The current year fourth quarter income tax provision was affected by $57 million of tax adjustments, primarily related to valuation allowance on U.S. deferred tax assets, including a valuation allowance related to net tax benefit reflected in other items in the above table, compared to $372 million in the prior year fourth quarter.
In addition, corporate expense in the fourth quarter of 2013 included $8 million associated with the Company’s development efforts in Maryland and Massachusetts compared to $34 million during the 2012 fourth quarter. Corporate expense in the current year quarter also reflected a $4 million reduction in accrued payroll liabilities due to a change in the Company’s employee paid time off policy.
Wholly Owned Domestic Resorts
Casino revenue related to wholly owned domestic resorts decreased 2% compared to the prior year quarter. The overall table games hold percentage in the fourth quarter of 2013 was 20.2% compared to 21.9% for the prior year quarter. Slots revenue increased 3% compared to the prior year quarter at the Company’s Las Vegas Strip resorts, offset by decreased slots revenue at the Company’s other wholly owned domestic resorts.
Rooms revenue increased 3% with Las Vegas Strip REVPAR up 1%. The following table shows key hotel statistics for the Company’s Las Vegas Strip resorts:
Operating income for the Company’s wholly owned domestic resorts increased 16% for the fourth quarter of 2013 compared to the prior year quarter and benefited from a decrease of $10 million in property transactions, net and an $8 million reduction in accrued payroll liabilities due to a change in the Company’s employee paid time off policy.
On February 19, 2014, as part of its regular dividend policy, MGM China’s Board of Directors announced it will recommend a final dividend for 2013 of $128 million to MGM China shareholders subject to approval at the 2014 annual shareholders meeting. If approved, MGM Resorts International will receive $65 million, its 51% share of this dividend. In addition, MGM China’s Board of Directors announced a special dividend of $500 million, which will be paid to shareholders of record as of March 10, 2014 and distributed on or about March 17, 2014. MGM Resorts International will receive $255 million, its 51% share of the special dividend.
Key fourth quarter results for MGM China include the following:
- MGM China earned net revenue of $926 million, a 27% increase compared to the prior year quarter;
- VIP table games turnover increased 32% from the prior year quarter, while hold percentage was 2.8% in the current year quarter compared to 2.9% in the prior year quarter;
- Main floor table games revenue and slots revenue increased 18% and 4% compared to the prior year quarter, respectively, both primarily due to strong increases in volume; and
- MGM China’s Adjusted EBITDA was $238 million, a 35% increase compared to the prior year quarter and operating income was $162 million compared to $83 million in the prior year quarter.
The MGM Cotai development continues to be on schedule to open in early 2016. MGM China spent approximately $204 million in 2013 on the MGM Cotai development. We expect the project cost will be approximately $2.9 billion, excluding development fees eliminated in consolidation, land costs and capitalized interest.
Income (Loss) from Unconsolidated Affiliates
The following table summarizes information related to the Company’s share of income (loss) from unconsolidated affiliates:
Results for CityCenter Holdings, LLC for the fourth quarter of 2013 include the following (see schedules accompanying this release for further detail on CityCenter’s fourth quarter results):
- Net revenue from resort operations increased by 11% to $301 million compared to $272 million in the prior year quarter;
- Adjusted EBITDA from resort operations was $93 million, an increase of 36% compared to the prior year quarter;
- Aria’s table games hold percentage was 26.0% in the current year quarter compared to 23.9% in the prior year quarter; and
- Aria’s occupancy percentage was 85% and its ADR was $212, resulting in REVPAR of $181, a 4% increase compared to the prior year quarter;
CityCenter’s operating income increased to $26 million for the fourth quarter of 2013 and included $26 million of income related to property transactions, net, primarily related to a $33 million gain associated with the settlement of insurance claims for errors and omissions with respect to the original construction of CityCenter. The net impact of CityCenter’s property transactions to the Company’s income from unconsolidated affiliates for the fourth quarter was not significant due to equity method accounting adjustments.
In addition, CityCenter entered into a $1.775 billion senior secured credit facility in the fourth quarter of 2013 and redeemed its 7.625% senior secured first lien notes and 10.75% senior secured second lien PIK toggle notes. CityCenter recognized a loss on early retirement of long-term debt of $140 million in connection with these transactions.
Full Year 2013 Results
Net revenue for 2013 was $9.8 billion, a 7% increase over 2012, and Adjusted Property EBITDA increased 18% compared to the prior year. Net revenue from wholly owned domestic resorts was $6.1 billion, a 2% increase compared to 2012. Adjusted Property EBITDA from wholly owned domestic resorts increased 9% to $1.4 billion for 2013.
MGM China reported record results for 2013 with net revenues of $3.3 billion and Adjusted EBITDA of $814 million. Excluding branding fees of $36 million in 2013 and $30 million in 2012, Adjusted EBITDA increased by 20% year over year.
CityCenter reported net revenue from resort operations of $1.2 billion, a 10% increase compared to the prior year, and Adjusted EBITDA related to resort operations of $316 million, a 37% increase compared to the prior year.
Loss per share attributable to MGM Resorts International for 2013 was $(0.32) compared to loss per share of ($3.62) in 2012. The following table lists items that affect the comparability of the current year and prior year annual results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):
“We accomplished many financial goals in 2013. We reduced debt and by issuing the lowest interest rate senior unsecured notes in the history of our Company, we pre-funded our only scheduled 2014 debt maturity. With CityCenter’s debt now refinanced, we have lowered its annual cash interest expense by approximately $80 million, further enhancing CityCenter’s future cash flow potential,” said Dan D’Arrigo, Executive Vice President, CFO and Treasurer. “We remain focused on further deleveraging our balance sheet in 2014 by maximizing operating cash flows and from anticipated dividends received from MGM China.”
The Company’s cash balance at December 31, 2013 was $1.8 billion, which included $1.0 billion at MGM China. At December 31, 2013 the Company had $2.8 billion of borrowings outstanding under its $4.0 billion senior credit facility and $553 million outstanding under the $2.0 billion MGM China credit facility.
Conference Call Details
MGM Resorts International will host a conference call at 11:00 a.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through www.mgmresorts.com under the Investors section or by calling 1-877-355-2280 for domestic callers and 1-706-758-3659 for international callers. The conference call access code is 43751654. A replay of the call will be available through Wednesday, February 26, 2014. The replay may be accessed by dialing 1-855-859-2056 or 1-404-537-3406. The replay access code is 43751654. The call will be archived at www.mgmresorts.com.
1 REVPAR is hotel revenue per available room.
2 “Adjusted EBITDA” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses and property transactions, net. “Adjusted Property EBITDA” is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China. Adjusted EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies.
Management believes that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of the Company’s earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, management believes excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when the Company is developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within the Company’s resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period.
In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, management uses Adjusted Property EBITDA as the primary measure of the Company’s operating resorts’ performance.
Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to Adjusted Property EBITDA are included in the financial schedules in this release.
About MGM Resorts International
MGM Resorts International (NYSE: MGM) is one of the world’s leading global hospitality companies, operating a peerless portfolio of destination resort brands, including Bellagio, MGM Grand, Mandalay Bay and The Mirage. In addition to its 51% interest in MGM China Holdings, Limited, which owns the MGM Macau resort and casino and is in the process of developing a gaming resort in Cotai, the Company has significant holdings in gaming, hospitality and entertainment, owns and operates 15 properties located in Nevada, Mississippi and Michigan, and has 50% investments in three other properties in Nevada and Illinois. One of those investments is CityCenter, an unprecedented urban resort destination on the Las Vegas Strip featuring its centerpiece ARIA Resort Casino. Leveraging MGM Resorts’ unmatched amenities, the M life loyalty program delivers one-of-a-kind experiences, insider privileges and personalized rewards for guests at the Company’s renowned properties nationwide. Through its hospitality management subsidiary, the Company holds a growing number of development and management agreements for casino and non-casino resort projects around the world. MGM Resorts International supports responsible gaming and has implemented the American Gaming Association’s Code of Conduct for Responsible Gaming at its gaming properties. The Company has been honored with numerous awards and recognitions for its industry-leading Diversity Initiative, its community philanthropy programs and the Company’s commitment to sustainable development and operations. For more information about MGM Resorts International, visit the Company’s website at www.mgmresorts.com.
Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and/or uncertainties, including those described in the Company’s public filings with the Securities and Exchange Commission. The Company has based forward-looking statements on management’s current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, statements regarding the development of MGM Cotai, including related construction and development costs, the Company’s ability to deleverage its balance sheet through maximizing operating cash flow, and the Company’s expectations with respect to its convention calendar and the completion of capital initiatives on the Las Vegas Strip. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include effects of economic conditions and market conditions in the markets in which the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in our Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports). In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.
SOURCE MGM Resorts International