MGM Resorts International 4th-quarter loss narrows as revenue increases 55 %

The company’s revenue rose 55 percent to us$ 2.3 billion from us$ 1.48 billion, but its expenses rose slightly faster at 57 percent. Key among those costs was a us$ 96 million write-down reflecting the tumbling value of the company’s Borgata casino in Atlantic City, New Jersey, which it is selling, and of its Silver Legacy casino in Reno, Nevada.

CEO Jim Murren was upbeat in an interview and during a conference call with investors because his company is generating more cash overall. He said that will help it reduce its interest payments and debt and, by next year, return to profitability. Murren said things already have improved from the Great Recession, and that should continue this year. “(Gambling) is coming back in Las Vegas. Our table play is improving nationally and internationally. Our slot business has been really, very strong,” CEO Jim Murren told investors.

MGM Resorts reported a loss of us$ 113.7 million, compared with a loss of us$ 139.2 million in 2010’s fourth quarter. Excluding one-time costs and a tax gain of 9 cents per share, MGM Resorts lost 21 cents per share.

Analysts polled by FactSet expected a slightly smaller adjusted loss of 20 cents per share but lower revenue, of us$ 2.21 billion.
The results for 2011’s fourth quarter include MGM China, which runs a Macau casino and went public in Hong Kong in June. Macau is the only place in China where gambling is legal. U.S. casinos have been slow to recover from the economic downturn, and U.S. gambling companies are looking abroad for growth.
But MGM Resorts said Wednesday that its U.S. properties also were doing better. Its 10 Las Vegas casinos include the Bellagio, MGM Grand and Mandalay Bay.
Occupancy at its Las Vegas Strip resorts climbed to 87 percent from 84 percent, while the average daily room rate rose to us$ 129 from us$ 118. Revenue per available room, known as revpar, increased to us$ 111 from us$ 98. This figure is a key gauge of a lodging company’s health. Revenue rose at each of MGM Resorts’ properties in the United States except for the Gold Strike Tunica in Mississippi, where it fell less than 1 percent.
Also helping the company’s results: The massive CityCenter development in Las Vegas, which MGM Resorts owns jointly with Dubai World, lost less money. “Las Vegas will have, in general, not just ourselves, but the market will have a much better year in 2012 because the recovery in revenue is more broad-based next year, and everyone, including ourselves, are managing our costs,” Murren said.

Murren said higher revenue and hosting more gamblers and visitors of all types will make it easier for the company to refinance its debt. “The first order of business is to drive your operating cash flows. Those cash flows allow us to reduce debt, which lowers interest,” he said. “It also allows us to get more favorable treatment in the bond market.”

MGM Resorts said it had us$ 13.6 billion of debt at year’s end. It had a cash balance of us$ 1.9 billion, including about us$ 720 million related to MGM China. The company is trying to improve its balance sheet and cut its debt, said Chief Financial Officer Dan D’Arrigo in a statement. For the full year, MGM Resorts posted a profit of us$ 3.11 billion. That compares with a loss of us$ 1.44 billion in the prior year. Revenue rose 30 percent to us$ 7.85 billion from us$ 6.06 billion.

MGM China also declared a dividend of about us$ 400 million on Wednesday, which will be paid March 20. MGM Resorts, which owns 51 percent of MGM China, will receive about us$ 204 million. The Las Vegas company’s stock fell 25 cents, or 1.7 percent, to us$ 13.94 in afternoon trading.