MGM Resorts 4Q loss widens; customer spending dips
LAS VEGAS (AP) — MGM Resorts International reported a bigger loss for its fourth quarter, as customers spent less on food and entertainment and the casino company booked big charges to write down the value of some land in Las Vegas and Atlantic City.
CEO Jim Murren said the one-time expenses were needed to position the company for long-term growth.
"With all that we accomplished in 2012, I think 2013 will be a better year," he told analysts and investors on a conference call Wednesday. "I consider 2013 to be the beginning of the new era for our company with the refinancing and the strong fourth-quarter results being the concluding chapter to a company that was recovering from the recession."
MGM Resorts owns and runs 15 properties in Nevada, Mississippi and Michigan, including CityCenter, Bellagio, Mandalay Bay, Luxor, Aria and MGM Grand properties on the Las Vegas Strip, among others. It also is the majority owner of MGM China Holdings Ltd., which owns the MGM Macau casino-resort and is developing a new Cotai resort.
MGM China's board declared a special dividend of $500 million that will be paid on March 18 to shareholders of record on March 11. MGM Resorts said that it expects to receive $255 million, representing its 51 percent share of the dividend and expects the Chinese unit to continue to be able to pay out dividends while moving forward with the Cotai project.
Murren emphasized MGM's commitment to expanding into new markets, but not through acquisitions. He highlighted projects in Maryland and Massachusetts that are expected to cost about $800 million each and open no sooner than 2016.
"That gives us plenty of time to deleverage the balance sheet, get our house in order, and take on those projects when we need too," he said.
The casino operator lost $1.22 billion, or $2.50 per share, for the three months ended Dec. 31. That compares with a loss of $113.7 million, or 23 cents per share, for the final quarter of 2011. Stripping out impairment charges and other one-time items, MGM Resorts lost 23 cents per share in the latest period — slightly more than the 22 cents that analysts had forecast, according to FactSet.
Revenue dipped slightly to $2.29 billion from $2.3 billion, also missing Wall Street's average estimate of $2.32 billion. While casino and lodging revenue improved during the quarter, customers visiting MGM Resorts' properties spent slightly less on food and drinks. Spending dropped 10 percent on entertainment and 4 percent on retail shopping.
Meanwhile, MGM spent 2 percent more on promotions during the period, and other corporate spending also increased.
For the year, MGM Resorts lost $1.77 billion, or $3.62 per share. It reported a profit of $3.11 billion, or $5.62 per share, in the prior year. Annual revenue climbed 17 percent to $9.16 billion from $7.85 billion.
The company's stock rose about 2 percent in morning trading after the report, but was up just 2 cents at $12.76 by afternoon.