MGM Resorts International reports $181.2 million third-quarter loss
Casino operator MGM Resorts International on Wednesday reported its loss for the third quarter widened amid a smaller tax benefit than the year-earlier period. But the gaming company posted improved revenue, led by its business in China.
MGM Resorts reported a tax benefit of $2.6 million for the third quarter, a significant decrease from the previous-year number of
$79.7 million.
The Las Vegas-based company lost $181.2 million, or 37 cents per share, in the three months ended Sept. 30, compared with a loss of $123.8 million, or 25 cents, a year earlier. Excluding one-time items, the company posted a loss of 23 cents per share.
Revenue rose 1 percent to
$2.25 billion from the year-earlier quarter. The company attributed the increase to a 7 percent rise in sales at its Chinese subsidiary, MGM China in Macau.
The MGM China unit, which accounts for early 30 percent of the company’s overall business, gained approval earlier this month to build a $2.5 billion casino on the Cotai Strip, its second resort in Macau.
MGM Resorts Chairman and CEO Jim Murren said it will be a matter of months until the company breaks ground on the Cotai resort, with a completion date of three years. He didn’t believe the project would suffer from a slowdown in the Chinese economy.
“Gaming in Macau is a $36 billion to $37 billion industry today,” Murren said. “We are only scratching the surface. It’s a young market. We are helping to drive it to become a $50 billion plus gaming market.”
MGM Resorts competes with Wynn Resorts Ltd. and Las Vegas Sands Corp. in Macau, the world’s largest gambling region. MGM Resorts stock lost 28 cents, or 2.64 percent, to close at $10.31 on heavy volume of 15.27 million shares traded Wednesday on the New York Stock Exchange.
Of the $2.25 billion in revenue, $1.5 billion was generated by MGM Resorts’ wholly owned domestic resorts, a decline of 2 percent. Casino revenue, the largest contributor to earnings, was up 4.2 percent.
MGM Resorts’ revenues have improved over the last few years, driven by steady growth in Macau and improved figures from its Las Vegas hotels and casinos after a share downturn during the recession.
“Our third-quarter operating results are reflective of a challenging consumer environment,” Murren said. “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 City Center.”
Murren said 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.”
The company fell short of forecasts in the third quarter after beating estimates in the previous two quarters. In the second quarter, MGM Resorts topped estimates by 2 cents, and in the first quarter, it was 7 cents ahead of expectations.
Analysts polled by Yahoo Finance expected MGM Resorts to post a loss of 17 cents a share on revenue of $2.28 billion.
MGM Resorts, which owns a dozen casinos on the Strip and others cross the country, reported revenue at U.S. casinos increased 2 percent. However, room revenue was off by 3 percent as Strip revenue per available room declined 2 percent as the occupancy rate fell to 92 percent from 95 percent.
“We are still far from where we were in 2006 and 2007 in terms of spending patterns,” Murren said. “But we are getting there. The consumer is coming back to Las Vegas.”
The company’s half-owned CityCenter complex continued to improve its performance. It posted adjusted EBITDA from operations of $59 million, up 18 percent, according to the company’s earnings report.
EBITDA, a measure of cash flow, is defined as earnings before interest, taxes, depreciation, and amortization.
Murren told analysts in a conference call that CityCenter “continues to show progress,” as the company continues to “see an indication of a recovery in Las Vegas.” He said the “MGM Grand had its best quarter in two years, while The Mirage had its best quarter in the last three years.”
Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.
