MGM Resorts chairman: 2013 ‘best operating performance since recession’
MGM Resorts International ended 2013 on an upbeat note.
Chairman Jim Murren told investors Wednesday that 2014 is off to an equally good beginning.
The casino company, which operates 10 resorts on the Strip, said it reduced its fourth-quarter net loss while growing revenue 9.5 percent during the three-month period that ended Dec. 31.
Murren called 2013, in which MGM Resorts grew revenue 7 percent to $9.8 billion, the company’s “best operating performance since the recession.”
On a conference call with analysts and investors, Murren said the company expects a 10 percent growth in revenue per available hotel room — a nontraditional reporting figure — during the first three months of 2014, based on a busy Chinese New Year and an improving convention business.
The company said its projected convention business in the first quarter would be at “peak” levels.
“The quality of the business is also improving, with higher-paying customers and higher banquet and catering costs,” Murren said.
The company is expanding in Las Vegas, but not adding new hotel-casinos. A remodel of The Hotel next to Mandalay Bay into the Delano Las Vegas is expected to be completed by September. A retail, dining and entertainment district between New York-New York and Monte Carlo, and a redevelopment of the casinos’ Strip frontage areas, are expected to be completed by the summer.
Work is progressing on a $350 million sports arena behind New York-New York in partnership with sports and entertainment promoter AEG. The arena is expected to open in 2016.
The opening of projects from other operators, including the redeveloped SLS Las Vegas in September and the $550 million Linq development this month, would allow MGM Resorts to continue its upward climb in Las Vegas, Murren said.
Wall Street agreed.
“Las Vegas continues to trend in the right direction,” Credit Suisse gaming analyst Joel Simkins told investors. “We believe MGM remains positioned to capitalize on increased demand in 2014, as the opening of a new hotel and other projects should draw more tourists.”
MGM Resorts shares closed Wednesday at $25.75 on the New York Stock Exchange, down 10 cents, or 0.39 percent.
“With minimal deferred (capital expenditures) across MGM’s properties, the company continues to take market share on the Strip,” Macquarie Securities gaming analyst Chad Beynon said.
MGM Resorts said its net loss in the fourth quarter was $38.3 million, or 8 cents per share. In the same quarter a year earlier, MGM Resorts lost more than $1.22 billion, or $2.50 per share.
MGM Resorts’ revenue grew 9.5 percent to $2.5 billion during the quarter.
The company said it had far fewer charges because of various business units in the 2013 fourth quarter, compared with the same period a year ago. MGM Resorts said it took a $70 million loss on an early retirement of CityCenter debt and a $12 million charge related to debt retirement for the Silver Legacy in Reno.
Of the company’s 2013 revenue, $6.1 billion came from the company’s resorts in Nevada and other U.S. markets, $3.3 billion from MGM Macau and $1.2 billion from CityCenter.
On the Strip, revenue grew 1.9 percent to $1.2 billion. Net revenue from the company’s 50 percent ownership in CityCenter increased 11 percent to $301 million.
MGM Resorts, which owns 51 percent of its MGM Macau subsidiary, said the property grew revenue 27 percent in the fourth quarter to $926 million.
The company announced two dividends to shareholders from the business unit, $128 million to be paid this month and a $500 million dividend scheduled in March. MGM Resorts would receive $65 million from the February dividend and $255 million from the March dividend.
Analysts said proceeds from the dividend could help MGM Resorts finance its projects and help finance the upcoming projects and reduce the company’s balance sheet.
MGM Resorts had $13.4 billion in long- term debt at the end of December.
Construction continued on the company’s MGM Cotai development, which is expected to open in 2016. The company said cost for the project had grown to $2.9 billion.
MGM Resorts also is pursuing expansion projects in Maryland and Massachusetts.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.
