MGM Resorts International Reports Second Quarter Financial And Operating Results

LAS VEGAS, July 27, 2017 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) ("MGM Resorts" or the "Company") today reported financial results for the quarter ended June 30, 2017.

"MGM Resorts continues to drive profitability and operational efficiency, as the Company produced diluted earnings per share of $0.36 in the second quarter and our domestic resorts exhibited Adjusted Property EBITDA and margin growth on a same-store basis. CityCenter reported another quarter of exceptional results driven by Aria. Our results benefited from the addition of MGM National Harbor and Borgata, which continue to lead their respective markets. In Macau, we are excited to bring world-class entertainment and diversified attractions to the marketplace with the opening of MGM Cotai in the fourth quarter," said Jim Murren, Chairman & CEO of MGM Resorts. "We remain squarely on our path to generate the best possible cash flow performance and return value to our shareholders. This quarter's results clearly demonstrate that."

 Financial Highlights:

• Diluted earnings per share for the second quarter of 2017 of $0.36, including a benefit of $0.04 related to a Borgata property tax settlement and a benefit of $0.05 from a modification of the 2016 NV Energy exit fee, compared to $0.83 in the prior year quarter, which included $0.57 related to a gain on CityCenter's sale of Crystals;
• Net revenues increase of 22% over the prior year quarter at the Company's domestic resorts to $2.1 billion, due to the inclusion of MGM National Harbor and Borgata, and a decrease of 1% on a same-store basis primarily due to lower year over year table games hold;
• REVPAR⁽¹⁾  growth of 1.2% over the prior year quarter at the Company's Las Vegas Strip resorts;
• Operating income of $520 million at the Company's domestic resorts, a 33% increase over the prior year quarter, including the impact of $41 million related to the NV Energy exit fee modification and $36 million related to the Borgata property tax settlement; 
• Net income attributable to MGM Resorts of $211 million, compared to $474 million in the prior year quarter;
• Adjusted Property EBITDA⁽²⁾ growth of 28% over the prior year quarter to $658 million at the Company's domestic resorts, and an increase of 1% on a same-store basis;
• Same-store operating margin of 25.1% in the current quarter at the Company's domestic resorts, an increase of 205 basis points compared to the prior year quarter;
• Same-store Adjusted Property EBITDA margin of 30.8% at the Company's domestic resorts, an increase of 44 basis points compared to the prior year quarter;
• MGM China operating income of $43 million compared to $51 million in the prior year quarter, and Adjusted EBITDA of $116 million, a 2% decrease compared to the prior year quarter; and
• CityCenter operating income of $57 million and Adjusted EBITDA of $105 million, a 36% increase in Adjusted EBITDA compared to the prior year quarter.

Certain Items Affecting Second 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):

Domestic Resorts

Casino revenue for the second quarter of 2017 increased 41% compared to the prior year quarter, due primarily to the acquisition of Borgata Hotel Casino and Spa ("Borgata") in August 2016 and the MGM National Harbor opening in December 2016, partially offset by a decrease in table games revenue. Casino revenues decreased 5% on a same-store basis compared to the prior year quarter. Same-store table games revenue decreased 20% primarily due to lower year over year table games hold. Same-store slot revenues increased 3%.

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

Domestic resorts rooms revenue increased 9% compared to the prior year quarter. On a same-store basis, rooms revenue increased 1% compared to the prior year quarter. Las Vegas Strip REVPAR increased 1.2%.

Mr. Murren added, "The evolution of our continuous improvement strategies have yielded strong profit opportunities with an emphasis on margin growth and maximizing cash flow."

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

Operating income at the Company's domestic resorts was $520 million for the second quarter of 2017 compared to $390 million in the prior year quarter and benefited from $36 million related to Borgata's share of a property tax settlement from Atlantic City, as well as $41 million related to a modification of the 2016 NV Energy exit fee. Domestic resorts Adjusted Property EBITDA increased 28% to $658 million in the second quarter of 2017 and was positively impacted by $101 million of Adjusted Property EBITDA from Borgata, which includes the property tax settlement discussed above, and $37 million of Adjusted Property EBITDA from MGM National Harbor. Same-store Adjusted Property EBITDA increased 1% compared to the prior year quarter.

Mr. Murren concluded, "As we look to the third quarter, we face a challenging comparison at our Las Vegas Strip resorts due to favorable table games hold of 25% and RevPAR growth of 10.7% in the third quarter of 2016. We also continue to see higher than anticipated disruption at Monte Carlo as the property undergoes its transformation to Park MGM. Despite these considerations, given our strong event calendar, we anticipate third quarter revenues to increase slightly, with our Strip REVPAR expected to grow 2%-3%. We anticipate our Adjusted Property EBITDA margins to modestly increase."

MGM China

Key second quarter results for MGM China include:

• Net revenues of $449 million, a 1% decrease compared to the prior year quarter;
• Main floor table games revenue decreased 2% compared to the prior year quarter due to an 8% decrease in volume partially offset by an increase in hold percentage to 19.3% in the current year quarter, from 18.2% in the prior year quarter, and against 22.2% hold percentage in the first quarter of 2017;
• VIP table games revenue increased 1% compared to the prior year quarter due to a 3% increase in turnover partially offset by a decrease in hold percentage to 2.9% in the current year quarter, from 3.1% in the prior year quarter, and against 3.4% hold percentage in the first quarter of 2017;
• Operating income was $43 million compared to $51 million in the prior year quarter;
• Adjusted EBITDA decreased 2% to $116 million, compared to $119 million in the prior year quarter, including $8 million of license fee expense in both the current and prior year quarters; and
• Operating margin was 9.6% in the current year quarter, and Adjusted EBITDA margin was 25.9% compared to 26.4% in the prior year quarter.

MGM China paid the previously announced $78 million final 2016 dividend in June 2017, of which $44 million was received by MGM Resorts.

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 second quarter of 2017, including certain basis difference adjustments, was $38 million which included $4 million related to our share of CityCenter's portion of the NV Energy exit fee modification. In the prior year quarter, we recorded a $406 million gain related to the sale of The Shops at Crystals ("Crystals"), and CityCenter's results included $20 million of accelerated depreciation associated with the April 2016 closure of the Zarkana theatre.

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

• Net revenues from resort operations were $314 million, a 10% increase compared to the prior year quarter, due primarily to an increase in casino revenues;
• Operating income from resort operations was $58 million and included $8 million related to the NV Energy exit fee modification discussed above, compared to operating income of $0.2 million in the prior year quarter, which included $20 million of accelerated depreciation related to the Zarkana theatre closure;
• Adjusted EBITDA from resort operations was $106 million, a 36% increase compared to the prior year quarter;
• Aria's table games volume increased 14% and table games hold percentage was 26.8%, compared to 19.5% in the prior year quarter;
• REVPAR at Aria increased 3% compared to the prior year quarter to $236; and
• Vdara reported REVPAR of $188 in the current year quarter, and Adjusted EBITDA increased 23% to $10 million compared to the prior year quarter.

On August 1, 2016 the Company completed the previously announced acquisition of Boyd Gaming Corporation's interest in Borgata, at which time the entity operating Borgata became a consolidated subsidiary of the Company and the real estate assets associated with Borgata were contributed to MGM Growth Properties LLC ("MGP"). Prior to the acquisition, the Company held a 50% interest in Borgata, which was accounted for under the equity method.

MGM Growth Properties

During the second quarter of 2017, the Company made rent payments to MGP in the amount of $165 million and received distributions of $72 million from MGM Growth Properties Operating Partnership LP (the "Operating Partnership"). On June 15, 2017, MGP's Board of Directors approved a quarterly dividend of $0.3950 per Class A share totaling $23 million and representing a 1.9% increase over the prior annual dividend rate, which was paid on July 14, 2017 to holders of record on June 30, 2017. The Company concurrently received a $73 million distribution attributable to its ownership of Operating Partnership units.

MGM Resorts Dividend

On July 26, 2017, the Company's Board of Directors approved a quarterly dividend of $0.11 per share totaling $63 million, which will be paid on September 15, 2017 to holders of record on September 11, 2017.

Financial Position

The Company's cash balance at June 30, 2017 was $1.8 billion, which included $403 million at MGM China and $377 million at MGP. At June 30, 2017, the Company had $13.3 billion of principal amount of indebtedness outstanding, including $244 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, $2.2 billion outstanding under the $3.0 billion MGM China credit facility, and $455 million outstanding under the $525 million MGM National Harbor credit facility.

"MGM Resorts continues to strengthen its financial and strategic position," said Dan D'Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts. "In July, we used excess cash on hand to redeem all of our outstanding $475 million 11.375% senior notes due 2018, which further enhances our capital structure and overall cost of debt. We believe our strong free cash flows will continue to allow us to concurrently return capital to our shareholders, strengthen our balance sheet and prudently grow our business through strategic investments."

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 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 5199705. A replay of the call will be available through Thursday, August 3, 2017. The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088. The replay access code is 10110178. The call will be archived at www.mgmresorts.com. In addition, MGM Resorts will post supplemental slides today on its website at www.mgmresorts.investorroom.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, 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 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 a 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 27 unique hotel offerings including some of the most recognizable resort brands in the industry. The company is expanding throughout the U.S. and around the world, developing MGM Springfield in Massachusetts and MGM COTAI in Macau, and debuting the first international Bellagio branded hotel in Shanghai. The 77,000 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 to execute on future development and other projects (including the opening of MGM Cotai expected to take place in the fourth quarter of 2017) and the Company's ability to execute its strategic plan 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.