MGM Resorts Q1 Profit Tops View, But Revenues Miss

(RTTNews) - Casino operator MGM Resorts International (MGM) reported Monday a profit for the first quarter that surged 65 percent from last year, reflecting a tax benefit and higher income from unconsolidated affiliates, primarily from CityCenter Holdings, LLC.

Earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

"I am pleased to report that net income attributable to MGM Resorts increased by 65% and earnings per share increased by $0.13 year over year. MGM Resorts achieved Las Vegas Strip REVPAR growth of 1% over a very robust prior year quarter comparison of 14%. Our regional properties achieved strong EBITDA growth of 10% year over year, while MGM China maintained market share," Chairman and CEO Jim Murren said.

Las Vegas, Nevada-based MGM Resorts reported net income of $169.85 million or $0.33 per share for the first quarter, higher than $102.65 million or $0.20 per share in the prior-year quarter.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.14 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net revenue for the quarter declined 11 percent to $2.33 billion from $2.63 billion in the same quarter last year, and missed sixteen Wall Street analysts' consensus estimate of $2.40 billion.

Net revenue at the company's wholly owned domestic resorts edged up 0.5 percent to $1.58 billion from last year, with rooms revenue increasing 2 percent and slots revenue improving 5 percent.

MGM China revenues declined 33 percent to $630 million from last year's $941 million, with VIP table games revenue decreasing 45 percent., and main floor table games revenue dropping 13 percent.

MGM China paid a $400 million dividend in March 2015, of which $204 million was distributed to MGM Resorts and $196 million was distributed to noncontrolling interests.

Consolidated casino revenue declined 19 percent to $1.28 billion, with casino revenue related to wholly owned domestic resorts increasing 1 percent. Meanwhile, food and beverage revenue edged up 0.2 percent to $384 million, and rooms revenue grew 1.6 percent to $459 million from last year.

Income from unconsolidated affiliates soared to $117 million from last year's $23 million, with CityCenter generating $102 million, sharply higher than $14 million last year.

CityCenter Holdings, LLC's net revenue from resort operations decreased 4 percent to $300 million from the prior-year quarter, with Aria revenues declining 6 percent to $239 million from a year ago.

In April 2015, CityCenter announced a $400 million special dividend, which was paid on April 30, 2015 and MGM Resorts received $200 million, its 50 percent share of the special dividend.

The payment was part of the adoption of an annual distribution policy, pursuant to which it will make annual distributions of up to 35 percent of excess cash flow subject to approval by the CityCenter board of directors.

Benefit for income taxes for the quarter was $56.31 million, sharply higher than $2.66 million a year ago.

"With the anticipated difficult comparison of the first quarter behind us, we continue to see strong forward trends for the rest of the year in Las Vegas. We are actively improving our balance sheet with the recent announcement of a special dividend and regular dividend policy from CityCenter, the conversion of approximately $1.45 billion in convertible notes into equity and the agreement to amend and extend MGM China's credit facility," Murren added.

In Monday's regular trading session, MGM is currently trading at $21.18, down $0.22 or 1.03% on a volume of 1.34 million shares. In the past 52-week period, the stock has been trading in a range of $17.25 to $27.64.