MGM Resorts reports wider 3rd-quarter loss of $181.2 million
MGM Resorts International reported a wider third quarter loss Wednesday, saying that slow economic conditions this summer hurt business at its Las Vegas casino resorts.
The company lost $181.2 million, or 37 cents per share, versus a loss in 2011’s third quarter of $123.8 million, or 25 cents per share.
Net revenue edged up 1 percent to $2.3 billion thanks to a 7 percent increase in sales at subsidiary MGM China in Macau. Of the $2.3 billion, $1.5 billion came from MGM Resorts’ wholly-owned domestic resorts, down 2 percent.
On the Las Vegas Strip, the company’s half-owned, $8.5 billion CityCenter complex continued to improve its financial performance. It produced adjusted EBITDA from resort operations of $59 million, up 18 percent. EBITDA is a profitability measure widely used in the gaming industry meaning earnings before interest, taxes, depreciation and amortization.
But the company’s hotel revenue fell 3 percent, mainly because of a 2 percent decrease in revenue per available room at MGM Resorts’ wholly-owned Las Vegas Strip resorts.
At these properties, including the Mirage, Bellagio, Mandalay Bay and the MGM Grand, room occupancy slipped 3 percentage points to 92 percent while the average daily rate remained steady at $124.
A key positive for the company in the third quarter was that casino revenue from its U.S. resorts increased 2 percent. Despite the slowdown affecting hotel revenue, slot revenue increased 1 percent.
In a statement, CEO Jim Murren noted the company has won a concession to build a second resort in Macau and said overall business is picking up for the fourth quarter and into 2013.
“Our third quarter operating results are reflective of a challenging consumer environment, but we had some bright spots with strong results from MGM Grand Las Vegas and the Mirage and record third quarters from MGM China and CityCenter,” Murren said. “Early fourth quarter trends are improving at our domestic resorts and forward convention booking pace is showing growth in 2013 and is further accelerating into 2014.”
During a conference call with analysts, MGM Resorts officials said that even considering the U.S. economic problems caused by Hurricane Sandy, they're expecting business to continue improving during the fourth quarter now under way.
"Visitation is up and revenue per occupied room has been moving up," Murren said.
The company this week experienced what executives called a small number of hotel room cancellations related to the East Coast storm, amounting to about 4,000 room nights and about $1 million in revenue. The cancellations came amid a busy convention week in Las Vegas with the SEMA automotive show in town. Standing for Specialty Equipment Market Association, SEMA is part of Automotive Aftermarket Week.
While Murren said business is improving in tandem with the U.S. residential real estate market picking up, Chief Financial Officer Dan D'Arrigo said the company, like other Las Vegas Strip casino operators, continues to see restrained spending by many customers.
"You still have a fragile consumer out there," he said.
MGM Resorts' numbers come as the Las Vegas casino industry hopes for a continued rebound from the deep recession that hit from 2008 to 2010. Through August of this year, visitation to the city was up 1.8 percent from 2011, while the average daily hotel room rate of $107.36 was up 3.6 percent.