MGM Mirage reports results
Key results from the quarter include:
* Non-gaming revenues increased 12%, 10% excluding Beau Rivage,
validating the Company's strategic reinvestment in non-gaming
amenities;
* Las Vegas Strip REVPAR(1) increased 9%, which represents the fifteenth
consecutive quarter of year-over-year REVPAR increases for these
resorts;
* Gaming revenues increased 4% but decreased 6% excluding Beau Rivage.
Table games volume, including baccarat, decreased 7% excluding Beau
Rivage;
* Record first quarter Property EBITDA(2) of $655 million, a 7% increase
over the prior year; Property EBITDA margins remained strong at 34% in
the first quarter;
* All-time record Property EBITDA at several Las Vegas Strip resorts,
including Bellagio, MGM Grand Las Vegas, Mandalay Bay, Treasure Island
and Monte Carlo;
* Beau Rivage, which was closed in the prior year quarter, earned
Property EBITDA of $28 million, an all-time record for any quarter for
Beau Rivage(3);
* Repurchased 2.5 million shares for $175 million during the quarter.
Recent significant developments include:
* Signed a definitive agreement with Diaoyutai State Guesthouse. The
joint venture is initially targeting locations for non-gaming luxury
hotels in the People's Republic of China;
* Signed a definitive agreement with Mubadala Development Company, an
investment and development vehicle established and wholly owned by the
Government of the Emirate of Abu Dhabi, U.A.E.;
* Announced an increase to the CityCenter construction budget to
$7.4 billion and announced increased expected gross proceeds from sales
of residential units - $2.7 billion, up from $2.5 billion -- as a
result of the strong initial public reception of the residential
offerings. The current expected net cost of CityCenter is
$4.7 billion;
* Entered into agreements to acquire 34 acres on the Las Vegas Strip
adjacent to Circus Circus Las Vegas, which together with land already
owned creates a 78-acre site available for future development;
* Completed the sale of the Primm Valley Resorts and expect to close the
sale of the Laughlin Properties -- Colorado Belle and Edgewater --
during the second quarter;
* Entered into an agreement to invest in The M Resort, an 80-acre
mixed-use development located about ten miles south of Bellagio on Las
Vegas Blvd.
The following table lists significant items which affect the comparability of the current year and prior year results (EPS impact shown, net of tax, per diluted share; negative amounts represent charges to income):
Three months ended March 31, 2007 2006
---------------------------- -------- --------
Profits from The Signature at MGM Grand $ 0.02 $ --
Preopening and start-up expenses (0.03) (0.02)
Property transactions, net (0.01) (0.05)
"We remain focused on executing our vision for the Las Vegas Strip and expanding our brands globally as evidenced by our recent Las Vegas Strip land acquisitions and our strategic partnerships with first-class organizations that share our vision," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "As leaders in shaping the future of Las Vegas and expanding markets world-wide, we and our partners are setting the bar for quality, design, and long-term sustainable growth."
Net revenues increased 9%; excluding Beau Rivage, net revenues were up 3%. The Company generated increased revenues from non-gaming operations due to strong room pricing, new and upgraded food and beverage outlets, and exclusive entertainment shows and events. As a part of the Company's efforts to continuously update its entertainment offerings, it will add a new Cirque du Soleil show starring Criss Angel at the Luxor in 2008 and is adding several new and exciting restaurants, nightclubs and other amenities at Luxor, Monte Carlo, Excalibur, New York-New York and Mandalay Bay.
Gaming revenues increased 4%, but decreased 6% excluding Beau Rivage. Table games volumes at the Company's Las Vegas Strip resorts decreased 7% compared to a robust prior year first quarter. Table games hold percentages were near the mid-point of the normal 18-22% range in both periods. Slot revenues at the Company's Las Vegas Strip resorts decreased 3% from the prior year first quarter.
Rooms revenues increased 8%, 5% excluding Beau Rivage despite having 98,000 less available rooms as a result of room remodel projects, primarily at Mandalay Bay and Excalibur. Average rates increased 8% at the Company's Las Vegas Strip resorts. Las Vegas Strip REVPAR increased 9%, led by double-digit percentage increases at Mandalay Bay, The Mirage, and TI. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:
Three Months Ended
------------------------
March 31, March 31,
2007 2006
---------- ----------
Occupancy % 96% 95%
Average Daily Rate (ADR) $ 169 $ 157
Revenue per Available Room (REVPAR) $ 162 $ 149
The Company's operating income increased 8% to $445 million, which includes $8 million of profit from closings on the final units of Tower 2 of the Signature at MGM Grand and $16 million of operating income from Beau Rivage. Excluding these items, operating income increased 2% from prior year with a margin of 23% in both quarters. EBITDA increased 3% and Property EBITDA increased 2%, also excluding these items, with comparable Property EBITDA margins of 34% in both periods.
Detailed Discussion of Certain Charges
In the first quarter of 2007, the Company incurred $5 million of net property transactions primarily related to the write-off of the net book value of the building assets of Nevada Landing, which closed in March. In the 2006 period, net property transactions of $23 million largely related to the write-off of the tram connecting Bellagio and Monte Carlo and the related tram station assets ($12 million at Bellagio and $10 million at Monte Carlo).
Preopening and start-up expenses of $14 million in 2007 primarily related to CityCenter, the Detroit permanent casino, and MGM Grand Macau. Preopening and start-up expenses of $6 million in the 2006 quarter related primarily to CityCenter, MGM Grand Macau, and The Signature at MGM Grand.
Financial Position
First quarter capital investments totaled $611 million, which included $300 million for CityCenter, $66 million for the permanent MGM Grand Detroit hotel and casino, and $40 million of trailing payments for Beau Rivage rebuilding. Remaining capital expenditures included spending of $65 million on room and suite remodel projects, primarily at Excalibur and Mandalay, expenditures for corporate aircraft of $55 million, and $85 million of other routine capital expenditures on various new and upgraded amenities at the Company's resorts.
During the quarter the Company received an additional $56 million of insurance recoveries related to Hurricane Katrina. These amounts were not recognized as income pending the final settlement of the Company's insurance claim.
During the first quarter of 2007, the Company repurchased 2.5 million shares of its common stock for $175 million, leaving 5.5 million shares available under the Company's current authorization. At March 31, 2007, the Company had $2.3 billion of available borrowings under its senior credit facility.
"We continue to generate significant operating cash flow from our existing resorts and reinvest strategically in those resorts," said Jim Murren, MGM MIRAGE President, CFO and Treasurer. "In addition, we are in the home stretch of construction in Macau and Detroit and look forward to adding significantly to our cash flow base when these resorts open in late 2007. Along with our significant available bank borrowings and ready access to the capital markets, our powerful cash flow generation will allow us to fund a pipeline of development projects for years to come."