MGM Resorts International Reports First Quarter Financial Results

LAS VEGAS, May 4, 2015 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) today reported financial results for the quarter ended March 31, 2015.

"I am pleased to report that net income attributable to MGM Resorts increased by 65% and earnings per share increased by $0.13 year over year. MGM Resorts achieved Las Vegas Strip REVPAR growth of 1% over a very robust prior year quarter comparison of 14%.  Our regional properties achieved strong EBITDA growth of 10% year over year, while MGM China maintained market share.  With the anticipated difficult comparison of the first quarter behind us, we continue to see strong forward trends for the rest of the year in Las Vegas," said Jim Murren, Chairman & CEO of MGM Resorts International. "We are actively improving our balance sheet with the recent announcement of a special dividend and regular dividend policy from CityCenter, the conversion of approximately $1.45 billion in convertible notes into equity and the agreement to amend and extend MGM China's credit facility."

Key results for the first quarter of 2015 include the following:

• Net revenue at the Company's wholly owned domestic resorts was $1.6 billion, an increase of half a percent compared to the prior year quarter;
• Slots revenue at wholly owned domestic resorts increased 5% compared to the prior year quarter;
• Rooms revenue at wholly owned domestic resorts increased 2% with a 1% increase in REVPAR⁽¹⁾ at the Company's Las Vegas Strip resorts compared to the prior year quarter;
• The Company's wholly owned domestic resorts earned Adjusted Property EBITDA⁽²⁾ of $390 million, a 3% decrease compared to the prior year quarter, partially due to a decrease in table games hold percentage;
• MGM China's net revenue was $630 million and Adjusted EBITDA was $148 million, a decrease of 33% and 38% compared to the prior year quarter, respectively; and
• CityCenter earned Adjusted EBITDA related to resort operations of $82 million, a 14% decrease compared to the prior year quarter, due primarily to a decrease in table games revenues.

First Quarter Consolidated Results

Diluted earnings per share for the first quarter of 2015 was $0.33 compared to diluted earnings per share of $0.20 in the prior year first quarter.

The following table lists certain other items that affect the comparability of the current and prior year quarterly results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

Wholly Owned Domestic Resorts

Casino revenue related to wholly owned domestic resorts increased 1% compared to the prior year quarter due primarily to a 5% increase in slots revenue as a result of a 9% increase in slots volume at the Company's regional resorts. Table games hold percentage in the first quarter of 2015 was 20.1% compared to 20.8% in the prior year quarter, which negatively affected Adjusted Property EBITDA by approximately $8 million.

Rooms revenue increased 2% compared to the prior year quarter with Las Vegas Strip REVPAR up 1%. The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Food and beverage revenue increased 1% as a result of increased convention and banquet business and the opening of several new outlets. Entertainment revenue decreased 6% due primarily to a decrease in in-house shows and timing of certain arena events. Operating income for the Company's wholly owned domestic resorts decreased 3% compared to the prior year quarter.

MGM China

Key first quarter results for MGM China include the following:

• MGM China earned net revenue of $630 million, a 33% decrease compared to the prior year quarter;
• Main floor table games revenue decreased 13% compared to the prior year quarter;
• VIP table games revenue decreased 45% due to a decrease in VIP table games turnover of 51% compared to the prior year quarter, while hold percentage increased to 3.3% in the current year quarter compared to 3.0% in the prior year quarter;
• MGM China's Adjusted EBITDA was $148 million, a decrease of 38% compared to the prior year quarter, including $11 million of license fee expense in the current year quarter compared to $16 million in the prior year quarter; and
• Operating income was $72 million compared to $165 million in the prior year quarter.

MGM China paid a $400 million dividend in March 2015, of which $204 million was distributed to MGM Resorts and $196 million was distributed to noncontrolling interests.

Income from Unconsolidated Affiliates

In April 2015, CityCenter Holdings, LLC ("CityCenter") announced a $400 million special dividend and the adoption of an annual distribution policy, pursuant to which it will make annual distributions of up to 35% of excess cash flow subject to approval by the CityCenter board of directors.  The special dividend was paid on April 30, 2015.  MGM Resorts received $200 million, its 50% share of the special dividend.

The following table summarizes information related to the Company's share of income from unconsolidated affiliates:

CityCenter's results included a $160 million gain related to proceeds received pursuant to a global settlement agreement with Perini Building Company, Inc. ("Perini") and the remaining Perini subcontractors entered into in December 2014, which resolved all outstanding project lien claims and CityCenter's counterclaims relating to the Harmon Hotel and Spa ("Harmon"), combined with certain Harmon-related insurance settlement proceeds. Excluding the impact from this gain, the Company's income from unconsolidated affiliates related to CityCenter was $22 million for the first quarter of 2015, compared to $14 million in the prior year quarter.

Results for CityCenter for the first quarter of 2015 include the following (see schedules accompanying this release for further detail on CityCenter's first quarter results):

• Net revenue from resort operations decreased by 4% to $300 million compared to $313 million in the prior year quarter;
• Adjusted EBITDA from resort operations was $82 million, a decrease of 14% compared to the prior year quarter;
• Aria's table games hold percentage was 24.3% compared to 26.8% in the prior year quarter, negatively affecting Adjusted EBITDA by approximately $6 million;
• Slots revenue at Aria increased 6% compared to the prior year quarter;
• Aria's REVPAR was a record $219, a 4% increase compared to the prior year quarter;
• Vdara reported record first quarter Adjusted EBITDA led by record REVPAR of $174; and
• Crystals reported record Adjusted EBITDA of $12 million, an increase of 6% from the prior year quarter.

CityCenter reported operating income of $182 million, including the gain from the Harmon settlement, for the first quarter of 2015 compared to operating income of $5 million in the prior year quarter.

Financial Position

"Pro forma for the conversion of the convertible notes in April, MGM Resorts consolidated net debt decreased to $10.9 billion, lowering our consolidated leverage ratio to approximately 5 times," said Dan D'Arrigo, Executive Vice President, CFO and Treasurer of MGM Resorts International. "With the conversion of the convertible notes into equity, distributions from MGM China and CityCenter and continued free cash flow growth, we are confident that we will be able to continue to improve our balance sheet as we execute on our future growth projects."

The Company's cash balance at March 31, 2015 was $2.2 billion, which included $469 million at MGM China.  At March 31, 2015, the Company had $2.7 billion of borrowings outstanding under its $3.9 billion senior secured credit facility and $953 million outstanding under the $2.0 billion MGM China credit facility. On April 15, 2015, 99.97% of the Company's $1.45 billion 4.25% convertible senior notes were converted into shares of the Company's common stock.

Conference Call Details

MGM Resorts International will host a conference call at 11:00 a.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through www.mgmresorts.com under the Investors section or by calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 1535291. A replay of the call will be available through Tuesday, May 12, 2015.  The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088.  The replay access code is 10064559. The call will be archived at www.mgmresorts.com.

1 REVPAR is hotel revenue per available room.

2 "Adjusted EBITDA" is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses and property transactions, net.  "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China.  Adjusted EBITDA information is presented solely as a supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies. 

Management believes that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA may be recurring in nature and should not be disregarded in evaluation of the Company's earnings performance, it is useful to exclude such items when analyzing current results and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or events that may not be comparable between the periods being presented. Also, management believes excluded items may not relate specifically to current operating trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when the Company is developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within the Company's resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period.

In addition, capital allocation, tax planning, financing and stock compensation awards are all managed at the corporate level. Therefore, management uses Adjusted Property EBITDA as the primary measure of the Company's operating resorts' performance.

Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to Adjusted Property EBITDA are included in the financial schedules in this release.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is one of the world's leading global hospitality companies, operating a portfolio of destination resort brands including Bellagio, MGM Grand, Mandalay Bay and The Mirage. The Company is in the process of developing MGM National Harbor in Maryland and MGM Springfield in Massachusetts.  The Company also owns 51 percent of MGM China Holdings Limited, which owns the MGM Macau resort and casino and is developing a gaming resort in Cotai, and 50 percent of CityCenter in Las Vegas, which features ARIA Resort & Casino. For more information about MGM Resorts International, visit the Company's website at www.mgmresorts.com.

Statements in this release that are not historical facts are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and involve risks and/or uncertainties, including those described in the Company's public filings with the Securities and Exchange Commission.  The Company has based forward-looking statements on management's current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, statements regarding future business trends in the Las Vegas market, the Company's ability to generate free cash flow growth and execute on future growth projects, dividends the Company will receive from MGM China or CityCenter and future amendments and extensions to MGM China's credit facility. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include effects of economic conditions and market conditions in the markets in which the Company operates and competition with other destination travel locations throughout the United States and the world, the design, timing and costs of expansion projects, risks relating to international operations, permits, licenses, financings, approvals and other contingencies in connection with growth in new or existing jurisdictions and additional risks and uncertainties described in the Company's Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports).  In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.