MGM Resorts International (NYSE: MGM) on Thursday reported its first quarter 2012 results. The current year quarter included the results of MGM China Holdings, Limited on a consolidated basis. Key results for the first quarter of 2012 include the following:
Consolidated net revenue increased 51% to $2.3 billion; excluding MGM China, net revenue increased 5% compared to the prior year quarter;
Consolidated operating income was $193 million compared to $170 million in the first quarter of 2011;
Net loss per share attributable to MGM Resorts was $0.44 compared to a loss of $0.18 per share in the prior year first quarter – affected by certain items as discussed further below;
Rooms revenue for the Company's wholly owned domestic resorts increased 3% compared to the prior year quarter with a 4% increase in REVPAR(1) at the Company's Las Vegas Strip resorts;
The Company's wholly owned domestic resorts earned Adjusted Property EBITDA(2) of $321 million, a 7% increase compared to the prior year quarter and was affected by a lower than normal table games hold percentage in both periods;
MGM China reported Adjusted Property EBITDA of $165 million, which included $12 million of branding fee expense; excluding branding fees, Adjusted Property EBITDA increased 21% over the prior year quarter; and
CityCenter's Adjusted Property EBITDA for resort operations was $32 million and was negatively affected by a significantly lower than normal current quarter table games hold percentage.
"We continue to see growth across our domestic business fundamentals with revenues, casino volumes, REVPAR and Adjusted EBITDA all increasing year over year, while MGM China continues to report strong results," said Jim Murren, MGM Resorts International Chairman and CEO. "Our forward booking pace remains strong, M life is further enhancing its capabilities, we continue to focus on online and social media initiatives, and are finalizing our build out for MGM Macau and our future Cotai plans."
Casino revenue related to wholly owned domestic resorts increased 9% compared to the prior year quarter. Total table games volume increased 5% compared to the prior year period. The overall table games hold percentage in the first quarter of 2012 was 18.7% compared to 17.7% for the first quarter of 2011, in each case below the low end of the Company's normal range of 19% to 23%. Slots revenue increased 7% compared to the prior year quarter.
The following are the key first quarter results for MGM China:
MGM China earned net revenue of $702 million, an 18% increase over the prior year quarter. The increase was driven by year-over-year increases in volume measures for VIP table games, main floor table games, and slots of 6%, 13% and 27%, respectively. VIP table games hold percentage was 3.2% in the current year quarter and 2.9% in the prior year quarter; and
MGM China's operating income was $68 million and Adjusted Property EBITDA was $165 million, which included $12 million of branding fee expense. Excluding branding fees, Adjusted Property EBITDA increased 21% over MGM Macau's prior year first quarter results.
MGM China completed its initial public offering of shares on The Stock Exchange of Hong Kong Limited on June 3, 2011 and the Company acquired an additional 1% interest in MGM China, which owns the MGM Macau resort and casino. This acquisition increased the Company's ownership interest to 51% and, as a result, the Company began consolidating MGM China as of June 3, 2011. Prior to June 3, 2011, the results of MGM Macau were accounted for under the equity method of accounting.
The Company's cash balance at March 31, 2012 was $1.6 billion, which included approximately $575 million of cash and cash equivalents related to MGM China. MGM China paid a $400 million dividend in March 2012, of which approximately $204 million remained within the consolidated Company and approximately $196 million was distributed to noncontrolling interests.
At March 31, 2012, the Company had approximately $13.4 billion of indebtedness, including $1.3 billion of borrowings outstanding under its senior credit facility and $552 million related to the MGM China credit facility.
During the first quarter of 2012 the Company completed the following financing transactions:
In January, issued $850 million of 8.625% senior notes due 2019, for net proceeds to the Company of approximately $836 million;
In February, amended and restated its senior credit facility such that loans and revolving commitments aggregating approximately $1.8 billion were extended to February 2015; and
In March, the Company issued $1.0 billion of 7.75% senior notes due 2022, for net proceeds to the Company of approximately $986 million. A portion of the proceeds from the issuance were used to repay the remaining non-extending term loans under the senior credit facility.
At March 31, 2012, the Company's senior credit facility consisted of approximately $820 million in term loans and a $1.3 billion revolver (approximately $360 million of which has not been extended and matures in February 2014) and had approximately $855 million of available borrowing capacity. Interest on the extending loans is subject to a LIBOR floor of 1% and a pricing grid based upon collateral coverage levels. The interest rate on extending loans was 6% at March 31, 2012 and has subsequently reduced to 5%. Interest on non-extending revolving loans remains at 7%.
"The positive trends we experienced throughout 2011 continued into the first quarter. However, our financial results were negatively impacted by our table games hold percentage. Had we held at the midpoint of our normal range at our wholly owned resorts and at Aria our total Adjusted Property EBITDA would have increased by approximately $32 million," said Dan D'Arrigo, MGM Resorts International Executive Vice President, CFO and Treasurer. "In addition, we continue to take steps to improve our financial profile. During the first quarter we issued $1.85 billion in long term senior notes and successfully completed an amendment and extension of our senior credit facility, both at progressively lower rates."
Read the full earnings report here.