MGM Resorts International Reports Fourth Quarter And Full Year Financial And Operating Results

LAS VEGAS, Feb. 20, 2018 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) ("MGM Resorts" or the "Company") today reported financial results for the quarter and year ended December 31, 2017.

"Our fourth quarter results further exhibited the strength and durability of our organization, and I am proud of the 78,000 men and women within our MGM family, who remain dedicated to the continued success and evolution of our Company," said Jim Murren, Chairman & CEO of MGM Resorts. "Over the years, our plan of instilling a culture of continuous improvement to elevate the guest experience, drive profitability, and enhance our financial position has allowed us to further demonstrate our disciplined approach to capital allocation and maximizing shareholder value. Our success in executing on this plan continued to mark milestone achievements in 2017."

Mr. Murren continued, "We look forward to another rewarding year in 2018. MGM COTAI, Macau's most technologically advanced resort opened its doors last week. This year, we will also welcome MGM Springfield in the third quarter, the completion of Park MGM and NoMad by the end of the year, and celebrate many more new and creative ways to entertain our guests at our destinations worldwide."

Fourth Quarter 2017 Financial Highlights:

• Diluted earnings per share for the fourth quarter of $2.42, including a non-recurring, non-cash income tax benefit of $2.52 due to enactment of U.S. Tax Reform at the end of 2017, compared to diluted earnings per share of $0.04 in the prior year quarter;
• Net revenues increased 5% over the prior year quarter at the Company's domestic resorts to $1.9 billion and decreased 3% on a same-store basis, excluding contributions from MGM National Harbor. Excluding Monte Carlo and MGM National Harbor, net revenues decreased 1% compared to the prior year quarter;
• REVPAR⁽¹⁾ decreased 4.9% compared to the prior year quarter at the Company's Las Vegas Strip resorts;
• Operating income of $305 million at the Company's domestic resorts, a 2% decrease over the prior year quarter; 
• Net income attributable to MGM Resorts of $1.4 billion, including a non-recurring, non-cash income tax benefit of $1.4 billion due to U.S. Tax Reform, compared to $25 million in the prior year quarter;
• Adjusted Property EBITDA⁽²⁾ increased 1% over the prior year quarter to $496 million at the Company's domestic resorts, and decreased 3% on a same-store basis. Excluding Monte Carlo and MGM National Harbor, Adjusted Property EBITDA increased slightly compared to the prior year quarter;
• Same-store operating margin of 17.2% in the current quarter at the Company's domestic resorts, a decrease of 97 basis points compared to the prior year quarter;
• Same-store Adjusted Property EBITDA margin of 26.9% at the Company's domestic resorts, compared to 27.0% in the prior year quarter, and 27.5% excluding Monte Carlo and MGM National Harbor;
• MGM China operating income of $43 million compared to $72 million in the prior year quarter, and Adjusted EBITDA of $147 million, a 7% increase compared to the prior year quarter; and a 25% increase compared to the third quarter of 2017; and
• CityCenter operating income from resort operations of $30 million and Adjusted EBITDA from resort operations of $97 million, a 7% increase in Adjusted EBITDA compared to the prior year quarter.

Full Year 2017 Financial Highlights:

• Consolidated net revenues of $10.8 billion and domestic resorts net revenues of $8.3 billion, an 18% increase over the prior year at the Company's domestic resorts and a 2% increase on a same-store basis, excluding contributions from  Borgata and MGM National Harbor;
• REVPAR growth of 2.4% over the prior year at the Company's Las Vegas Strip resorts;
• Operating income of $1.8 billion at the Company's domestic resorts;
• Net income attributable to MGM Resorts of $2.0 billion, including a non-recurring, non-cash income tax benefit of $1.4 billion due to U.S. Tax Reform, compared to $1.1 billion in the prior year;
• Adjusted Property EBITDA of $2.5 billion at the Company's domestic resorts, a 22% increase over the prior year and a 6% increase on a same-store basis;
• Same-store Adjusted Property EBITDA margin of 31.0% at the Company's domestic resorts, a 141 basis point increase compared to the prior year;
• MGM China operating income of  $194 million compared to $255 million in the prior year, and Adjusted EBITDA of $525 million, a 1% increase over the prior year;
• Record CityCenter Adjusted EBITDA related to resort operations of $424 million compared to $353 million in the prior year; and
• Returned $580 million to shareholders through buybacks and dividends during 2017.

Certain Items Affecting Fourth Quarter Results

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):

Results for the fourth quarter of 2017 include a non-recurring, non-cash income tax benefit of $1.4 billion, $2.52 per share on a fully diluted basis, resulting from the remeasurement of deferred tax assets and liabilities required as a result of the enactment of the U.S. Tax Cut and Jobs Act ("U.S. Tax Reform"). 

Domestic Resorts

Casino revenue for the fourth quarter of 2017 increased 13% compared to the prior year quarter, due primarily to the MGM National Harbor opening in December 2016. On a same-store basis casino revenues were flat compared to the prior year quarter. Same-store table games revenue increased 4% year-over-year due primarily to higher table games hold at the Company's Las Vegas Strip resorts, partially offset by a 3% decrease in table games drop. Same-store slots revenue decreased 2%.

The following table shows key gaming statistics for the Company's Las Vegas Strip resorts:

Domestic resorts rooms revenue decreased 5% compared to the prior year quarter. On a same-store basis, rooms revenue decreased 6% compared to the prior year quarter. Las Vegas Strip REVPAR decreased 4.9% compared to the prior year quarter.

The following table shows key hotel statistics for the Company's Las Vegas Strip resorts:

Operating income at the Company's domestic resorts was $305 million for the fourth quarter of 2017 and included a $15 million charge for MGM National Harbor's share of real estate transfer taxes recorded in connection with the MGM Growth Properties Operating Partnership LP's (the "MGP Operating Partnership") purchase of its long-term leasehold interests and real property improvements and a $20 million charge related to asset disposals at Monte Carlo recorded in property transactions, net, compared to $312 million in the fourth quarter of 2016.

Domestic resorts Adjusted Property EBITDA increased 1% to $496 million in the fourth quarter of 2017 and was positively impacted by a full quarter of operations at MGM National Harbor, partially offset by a decrease at Monte Carlo as a result of disruption related to its transformation to Park MGM. Same-store Adjusted Property EBITDA decreased 3% compared to the prior year quarter. Excluding MGM National Harbor and Monte Carlo, Adjusted Property EBITDA increased slightly compared to the prior year quarter.

Mr. Murren continued, "Consistent with our prior guidance, after taking into consideration the tough year-over-year citywide convention comparison and continued construction disruption at Monte Carlo, we expect our Las Vegas Strip REVPAR to decrease 4 to 6 percent, and our Las Vegas Strip net revenues to decrease 3 to 5 percent in the first quarter. As a result, we anticipate that our Las Vegas Strip Adjusted Property EBITDA margins will decline approximately 250 basis points."

Mr. Murren concluded, "As we look at the underlying fundamentals of our business, the first quarter is not reflective of our outlook for the full year. We remain optimistic about the rest of 2018, driven by the demand we see for our resorts, our strong group and event calendar, and a healthy U.S. economic backdrop, which we believe will drive year-over-year increases in Las Vegas Strip net revenues and profitability. We expect Las Vegas Strip REVPAR for the year to be up a healthy 2 to 4 percent."

Corporate Expense

Corporate expense was $116 million in the fourth quarter of 2017, an increase of $44 million compared to the prior year quarter. The current quarter included a $16 million charge for the MGP Operating Partnership's share of real estate transfer taxes recorded in connection with the MGM National Harbor transaction, $8 million of expenses related to the launch of the Company's corporate brand campaign, a $5 million increase in legal expenses, and a $5 million increase in charitable contributions.

MGM China

On February 20, 2018, as part of its regular dividend policy, the Board of Directors of MGM China Holdings Limited ("MGM China") announced it will recommend a final dividend for 2017 of $47 million to MGM China shareholders subject to approval at the MGM China 2018 annual shareholders meeting to be held in May, bringing the total 2017 dividend to $104 million including the interim dividend paid in September of 2017. If approved, MGM Resorts will receive $26 million, representing its 56% share of the dividend.

Key fourth quarter results for MGM China include:

• Net revenues of $549 million, a 10% increase compared to the prior year quarter;
• Net revenues increased 17% when compared to $471 million in the third quarter of 2017;
• Main floor table games revenue increased 21% compared to the prior year quarter due to a 10% increase in volume and an increase in hold percentage to 21.0% in the current year quarter from 19.0% in the prior year quarter;
• VIP table games revenue decreased 5% compared to the prior year quarter despite a 23% increase in turnover due to a decrease in hold percentage to 3.1% in the current year quarter from 3.7% in the prior year quarter;
• Operating income was $43 million compared to $72 million in the prior year quarter;
• Adjusted EBITDA increased 7% to $147 million compared to $138 million in the prior year quarter, including $10 million of license fee expense in the current year quarter and $9 million in the prior year quarter;
• Adjusted EBITDA increased 25% when compared to $118 million in the third quarter of 2017, including $8 million of license fee expense in the third quarter of 2017; and
• Operating margin was 7.8% in the current year quarter, and Adjusted EBITDA margin was 26.9% compared to 27.5% in the prior year quarter.

Unconsolidated Affiliates

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

The Company's share of CityCenter Holdings, LLC ("CityCenter") operating results for the fourth quarter of 2017, including certain basis difference adjustments, was $24 million.

Key fourth quarter results for CityCenter include the following (see schedules accompanying this release for further detail on CityCenter's fourth quarter results):

• Net revenues from resort operations were $306 million, a 1% increase compared to the prior year quarter, due primarily to an increase in food and beverage revenues related to catering and banquets and other revenues;
• Operating income from resort operations was $30 million compared to operating income of $27 million in the prior year quarter;
• Adjusted EBITDA from resort operations was $97 million, a 7% increase compared to the prior year quarter;
• Aria's table games drop decreased 2% and table games hold percentage was 25.4% compared to 29.2% in the prior year quarter;
• Aria had record fourth quarter slots revenue of $47 million, an increase of 15% compared to the prior year quarter;
• REVPAR at Aria increased 1% to $220, compared to the prior year quarter; and
• REVPAR at Vdara decreased 5% to $173, compared to the prior year quarter, and Adjusted EBITDA decreased 11% compared to the prior year quarter to $8 million.

MGM Growth Properties

During the fourth quarter of 2017, the Company made rent payments to the MGP Operating Partnership in the amount of $188 million and received distributions of $73 million from the MGP Operating Partnership. On December 15, 2017, the Board of Directors of MGP Growth Properties LLC ("MGP") approved an increased quarterly dividend to $0.42 per Class A share (based on a $1.68 dividend on an annualized basis) totaling $30 million, which was paid on January 16, 2018 to holders of record on December 29, 2017. The Company concurrently received an $82 million distribution attributable to its ownership of MGP Operating Partnership units.

On October 5, 2017, the MGP Operating Partnership completed the $1,187.5 billion purchase of the long-term leasehold interest and real property improvements related to the MGM National Harbor casino resort. Following the MGM National Harbor transaction, subsidiaries of MGM Resorts collectively own 73.4% of the MGP Operating Partnership units.

MGM Resorts Dividend and Share Repurchases

On February 19, 2018, the Company's Board of Directors approved a 9% increase in the Company's quarterly dividend from $0.11 per share to $0.12 per share totaling $68 million. The dividend will be payable on March 15, 2018 to holders of record on March 9, 2018.

On September 5, 2017, MGM Resorts announced the adoption of a $1.0 billion stock repurchase program and has repurchased 10 million shares of its common stock at $32.75 per share for a total aggregate amount of $327.5 million under such program to date. All shares repurchased under the Company's program have been retired.

Full Year 2017 Results

Consolidated net revenue for 2017 was $10.8 billion, a 14% increase over 2016. Consolidated operating income was $1.7 billion compared to $2.1 billion in the prior year, which included a $430 million gain recognized on the Borgata acquisition and a $401 million gain related to the sale of Crystals. Net income attributable to MGM Resorts was $2.0 billion, including a non-recurring, non-cash income tax benefit of $1.4 billion due to U.S. Tax Reform, compared to $1.1 billion in the prior year. Adjusted EBITDA increased 1% compared to the prior year to $2.8 billion.

Net revenue from domestic resorts was $8.3 billion, an 18% increase over the prior year and a 2% increase on a same-store basis. Operating income from domestic resorts was $1.8 billion a 35% increase over the prior year. Domestic resorts Adjusted Property EBITDA was $2.5 billion, a 22% increase over the prior year and a 6% increase on a same-store basis.

MGM China net revenue was $2.0 billion for 2017, a 3% increase from 2016. MGM China operating income was $194 million compared to $255 million in the prior year. The current year operating income included $87 million of preopening expense related to the MGM Cotai project compared to $28 million of preopening expense in the prior year. MGM China Adjusted EBITDA was $525 million compared to $521 million in the prior year, a 1% increase from 2016.

CityCenter reported net revenues of $1.3 billion from resort operations, a 6% increase compared to the prior year. Operating income from resort operations was $198 million and included a benefit of $8 million from the NV Energy exit fee modification, compared to operating income from resort operations of $7 million in the prior year, which included $26 million of NV Energy exit expense and $82 million of accelerated depreciation associated with the April 2016 closure of the Zarkana theatre. Adjusted EBITDA related to resort operations was a record $424 million compared to $353 million in the prior year and was positively impacted by increases in casino, rooms and food and beverage revenues.

During the year ended December 31, 2017, the Company made rent payments to the MGP Operating Partnership in the amount of $682 million. During the full year 2017 the Company received $290 million of distributions attributable to its ownership of units in the MGP Operating Partnership.

Diluted earnings per share was $3.37 in the current year, including a non-recurring, non-cash income tax benefit of $2.49 due to enactment of the U.S. Tax Reform, compared to $1.92 in 2016.

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

Financial Position

The Company's cash balance at December 31, 2017 was $1.5 billion, which included $676 million at MGM China and $260 million at the MGP Operating Partnership. At December 31, 2017, the Company had $13.0 billion of principal amount of indebtedness outstanding, including $373 million outstanding under its $1.5 billion senior secured credit facility, $2.1 billion outstanding under the $2.7 billion MGP Operating Partnership senior credit facility and $2.3 billion outstanding under the $2.9 billion MGM China credit facility.

"Our continued efforts to execute on our strategies have allowed us to enhance our capital structure and further strengthen the financial position of our Company," said Dan D'Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts. "With our development projects coming to completion in 2018, we remain focused on maximizing our cash flows to support our balanced approach to capital allocation, including maintaining a strong credit profile, prudently investing in high return opportunities and returning excess capital to shareholders."

Conference Call Details

MGM Resorts 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 http://investors.mgmresorts.com/investors/events-and-presentations/ or by calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 0077590. A replay of the call will be available through Tuesday, February 27, 2018. The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088. The replay access code is 10116201. The call will be archived at http://investors.mgmresorts.com. In addition, MGM Resorts will post supplemental slides today on its website at http://investors.mgmresorts.com for reference during the earnings call.

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, NV Energy exit expense, gain on Borgata transaction, goodwill impairment charges, and property transactions, net. "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts and MGP stock compensation plans, which are 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. "Same-store Adjusted Property EBITDA" is Adjusted Property EBITDA related to operating resorts which were consolidated by the Company for both the entire current and prior year periods presented. 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 presents Adjusted Property EBITDA on a "same-store" basis as supplemental information because management believes that providing performance measures on a "same-store" basis is useful for evaluating the period-to-period performance of the Company's domestic casino resorts.

Management believes that while items excluded from Adjusted EBITDA, Adjusted Property EBITDA, and Same-store 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 and Same-store Adjusted Property EBITDA as the primary measure of the Company's operating resorts' performance.

Adjusted EBITDA, Adjusted Property EBITDA and Same-store Adjusted Property EBITDA should not be construed as alternatives to operating income or net income, as indicators of our performance; or as alternatives to cash flows from operating activities, as measures of liquidity; or as any other measure determined in accordance with generally accepted accounting principles. We have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in Adjusted EBITDA, Adjusted Property EBITDA or Same-store Adjusted Property EBITDA. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA, Adjusted Property EBITDA or Same-store Adjusted Property EBITDA information may calculate Adjusted EBITDA, Adjusted Property EBITDA or Same-store Adjusted Property EBITDA in a different manner.

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

The Company does not provide reconciliations of Adjusted EBITDA, Adjusted Property EBITDA or Same-store Adjusted Property EBITDA to net income on a forward-looking basis because the Company is unable to forecast the amount or significance of certain items required to develop meaningful comparable GAAP financial measures without unreasonable efforts. These items include gains or losses on sale or consolidation transactions, accelerated depreciation, impairment charges, gains or losses on retirement of debt and variations in effective tax rate, which are difficult to predict and estimate and are primarily dependent on future events, but which are excluded from the Company's calculations of Adjusted EBITDA, Adjusted Property EBITDA and Same-store Adjusted Property EBITDA.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is an S&P 500® global entertainment company with national and international locations featuring best-in-class hotels and casinos, state-of-the-art meetings and conference spaces, incredible live and theatrical entertainment experiences, and an extensive array of restaurant, nightlife and retail offerings. MGM Resorts creates immersive, iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts portfolio encompasses 28 unique hotel offerings including some of the most recognizable resort brands in the industry. Expanding throughout the U.S. and around the world, the company opened MGM Cotai in Macau in February 2018. It is also developing MGM Springfield in Massachusetts and debuting the first international Bellagio branded hotel in Shanghai. The 78,000 global employees of MGM Resorts are proud of their company for being recognized as one of FORTUNE® Magazine's World's Most Admired Companies®. For more information visit us 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, the Company's expectations regarding future results and the Company's financial outlook (including REVPAR and other guidance), the payment of any future cash dividends on the Company's common stock, the Company's ability to generate future cash flow growth and maximize shareholder value and the Company's ability to execute its strategic plan (including the execution of the Company's development projects) and improve its financial flexibility. 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.

SOURCE MGM Resorts International

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