|LAS VEGAS, April 22, 1999 - MGM Grand, Inc. (NYSE:
MGG) today reported that its first quarter profit per share rose 50% due
to strong volume, improved margins and the merger with Primadonna Resorts,
Inc. Profit from operations increased to $23.9 million, or 42 cents a share,
from $16.3 million or 28 cents a share, in the year-ago quarter. The results
topped the average estimate of 34 cents from analysts polled by First Call
First Quarter Highlights
Company revenues for the 1999 first quarter reached a record high of $251.4 million, compared with $179.8 million for the same period in 1998. The increase in 1999 revenues was driven by a 20% increase in net revenues at MGM Grand Las Vegas due to record table games volume (excluding baccarat), more normalized table games and baccarat hold percentages, record hotel revenue and increased food and beverage revenues. Company revenues further benefited from the acquisition of Primadonna Resorts on March 1st, giving MGM Grand full ownership of the New York - New York Hotel/Casino and the three hotel/casinos located in Primm, Nevada (the "Primm Properties") at the California/Nevada border. The Primadonna merger was immediately accretive to first quarter results.
Operating cash flow (EBITDA) for the three months ended March 31, 1999 climbed to $72.7 million, up from $47.5 million in the prior year's first quarter, representing the highest first quarter in the Company's history, and nearly an all-time record high. EBITDA margin expanded from 26% in the 1998 period to 29% in the most recent quarter.
"MGM Grand continues to refine its leadership position through the enhancements to its resort properties, the strengthening of its financial position, improved profitability of its core assets, and the assemblage of the highest caliber executive staff in the industry," said J. Terrence Lanni, Chairman and Chief Executive Officer of MGM Grand, Inc.
"MGM Grand's strong underlying operating performance, combined with the accretive impact of the Primadonna acquisition and the prospect of significant additional profits from the soon-to-be opened casino in Detroit should result in positive earnings comparisons for several quarters to come," said Alex Yemenidjian, President and Chief Operating Officer of MGM Grand, Inc.
MGM Grand Las Vegas - The City of Entertainment
The City of Entertainment generated operating cash flow (EBITDA) of $46.1 million, compared with $34.6 million in the 1998 period, an increase of 33%. Net revenues for the 1999 period rose 20% to $195.1 million led by higher casino, rooms, food and beverage, and entertainment revenues. Casino revenues for the 1999 quarter also increased 20% when compared with the prior year's quarter. This increase was due to record table games volume (excluding baccarat), and more normalized hold percentages in table games and baccarat in 1999. Casino volume also benefited from a heavyweight championship fight which was held at the MGM Grand Garden in The City of Entertainment during January 1999. The 1999 first quarter was also bolstered by record high room revenues, and increased food and beverage, entertainment and other revenues.
For the three months ended March 31, 1999, revenue from rooms increased 16%, food and beverage revenues increased 26% and entertainment, retail and other revenues increased by 33% when compared with the prior year. Revenue per available room ("REVPAR") increased to $105 when compared with $91 in the prior period, and the average daily room rate for the 1999 first quarter was $109, up from $100 in the 1998 first quarter. The 1999 first quarter record high occupancy percentage of 96.5% also exceeded the prior year's quarter of 90.5%. The final elements of the transformation of the Las Vegas flagship property into The City of Entertainment are nearing completion as the Mansion at the MGM Grand will open in May 1999, the Lion Habitat in June 1999 and the expanded parking facilities in July 1999.
New York - New York Hotel/Casino
During the first quarter 1999, net revenues at New York - New York totaled $54.9 million, while operating cash flow (EBITDA) was $25.8 million, representing a 47% EBITDA margin compared with net revenues of $54.0 million and operating cash flow (EBITDA) of $26.0 million in the 1998 period. As a result of the March 1st merger with Primadonna, New York - New York contributed to the Company $19.7 million in net revenues and $9.7 million in operating cash flow (EBITDA) in the first quarter. Prior to March 1st, MGM Grand, Inc. recorded $5.0 million in pretax income from its 50% equity interest in New York - New York for the two month period ended February 28, 1999 compared with $8.0 million for the three months ended March 31, 1998. On March 31, 1999, MGM Grand utilized its $1.25 billion Senior Revolving Credit Facility to refinance approximately $157.9 million of bank debt at New York - New York, resulting in future cost savings due to a lower borrowing rate.
The merger with Primadonna also gave MGM Grand ownership of three additional hotel/casino facilities, Whiskey Pete's, Buffalo Bill's and the Primm Valley Resort, in Primm, Nevada, as well as two championship golf courses located nearby in California. For the one month period of MGM Grand's ownership, the Primm Properties contributed $20.3 million in net revenues and $6.0 million in operating cash flow (EBITDA), representing a 30% EBITDA margin. During the first quarter 1999, the Primm Properties recorded net revenues of $58.3 million and operating cash flow (EBITDA) of $15.0 million compared with $56.4 million and $12.5 million, respectively for the prior year's quarter. EBITDA margins increased from 22% to 26% year-over-year. On March 31, 1999, MGM Grand utilized its $1.25 billion Senior Revolving Credit Facility to refinance approximately $216.6 million of bank debt at Primadonna, resulting in significant future cost savings due to a lower borrowing rate.
MGM Grand Australia
MGM Grand Australia continues to produce steady growth as it recorded operating cash flow (EBITDA) of $2.9 million for the first quarter of 1999 compared with $2.6 million in the prior year's quarter. Net revenues were $7.7 million during the 1999 period, compared with $7.5 million for the same period in 1998. MGM Grand Australia's EBITDA margin was 38% in the 1999 first quarter, up from 35% in the first quarter of 1998.
The Company earned management and development fees of $2.6 million for the first quarter ended March 31, 1999 compared with $0.7 million for the 1998 first quarter. MGM Grand South Africa contributed $2.1 million to operating cash flow (EBITDA) during the first quarter of 1999 as compared with $0.3 million in the 1998 quarter. Both net revenues and operating cash flow (EBITDA) increased quarter-over-quarter as a result of the Johannesburg casino operations which commenced in September, 1998.
The Company and its partners continue to submit bids for additional casino licenses within the remaining provinces of the Republic of South Africa. The Company's partners provide all project costs, and MGM Grand, Inc. receives fees for the development and management of the casinos.
Preopening and One-Time Charges
During the quarter ended March 31, 1999, operating income was affected by preopening and other one-time charges of $6.3 million (net of tax) related to the Company's expansion plans at the MGM Grand Las Vegas, in Detroit, Michigan and Atlantic City, New Jersey as well as a one-time charge related to the write-down of certain assets at New York - New York. The 1999 first quarter net income was also affected by the cumulative effect, net of tax, related to the Company's adoption of the recently issued Statement of Position 98-5 "Reporting on the Cost of Start-Up Activities" totaling $8.2 million. Previously, the Company had capitalized preopening costs until the development of a property was substantially completed and ready to open, at which time the cumulative costs were expensed.
MGM Grand Detroit
On March 31, 1999, the Company, along with its Detroit partners, completed a five-year, $230 million credit facility from a consortium of banks. Approximately two-thirds of the commitments were from Michigan based banks, mostly from the greater metropolitan Detroit area. The facility may be increased to $250 million at the Company's discretion. Proceeds from the new facility are being used to finance the development of the temporary MGM Grand Detroit casino, the initial development and construction of the permanent casino complex and for general working capital.
MGM Grand, Inc. is an entertainment, hotel and gaming company headquartered in Las Vegas, Nevada. MGM Grand, Inc. owns and operates: the MGM Grand Hotel and Casino and the New York - New York Hotel and Casino in Las Vegas; Whiskey Pete's, Buffalo Bill's and the Primm Valley Resort in Primm, Nevada at the California/Nevada border; two championship golf courses in California; the MGM Grand Hotel and Casino in Darwin, Australia; and manages casinos in Nelspruit, Witbank and Johannesburg, Republic of South Africa. MGM Grand is developing a temporary casino in Detroit, Michigan, which is anticipated to open in the fall of 1999, followed by the permanent hotel and casino resort thereafter. MGM Grand has also announced plans to develop a hotel and casino resort in Atlantic City, New Jersey.
Statements in this release which are not historical facts
are "forward looking" statements and "safe harbor statements" under the
Private Securities Litigation Reform Act of 1995 that involve risks and/or
uncertainties, including risks and/or uncertainties as described in the
Company's public filings with the Securities Exchange Commission.
Three Months Ended
MGM Grand Australia
New York-New York (a) (b)
Primm Properties (a) (b)
|Also See:||MGM Grand, Inc. and Marriott International, Inc. Terminate Plans for 1,500 Room Las Vegas Marriott Marquis Hotel / March 1999|