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
Corp.
First Quarter Highlights
-
All-time record high revenues
-
Earnings increased 50% to 42 cents per diluted share before preopening
and one-time items
-
Operating cash flow (EBITDA) soared 53% to a record for any first quarter
-
EBITDA margins increased from 26% to 29%
-
MGM Grand Las Vegas achieved new milestones:
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All-time high table game volume and revenues (excluding baccarat)
-
Record first quarter room revenues rose 16% as a result of all-time highs
for first quarter occupancy (96.5%), and average daily room rate ($109)
-
Record first quarter food, beverage and entertainment revenues
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Merger with Primadonna Resorts, Inc. completed on March 1, 1999
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Completed $230 million Detroit bank financing
-
Refinanced New York - New York and Primadonna bank debt
Results of Operations
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.
Primm Properties
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.
South Africa
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.
MGM GRAND, INC. AND SUBSIDIARIES
SUPPLEMENTAL STATISTICAL INFORMATION
Three Months Ended
Mar. 31,
Mar. 31,
1999
1998
ROOM STATISTICS:
MGM Grand Las Vegas
Occupancy %
96.5%
90.5%
Average Daily Rate (ADR)
$109
$100
Revenue per Available
Room (REVPAR)
$105
$91
MGM Grand Australia
Occupancy %
53.8%
60.6%
Average Daily Rate (ADR)
$57
$59
Revenue per Available
Room (REVPAR)
$31
$36
New York-New York (a) (b)
Occupancy %
98.1%
90.1%
Average Daily Rate (ADR)
$86
$88
Revenue per Available
Room (REVPAR)
$85
$79
Primm Properties (a) (b)
Occupancy %
68.4%
71.7%
Average Daily Rate (ADR)
$31
$27
Revenue per Available
Room (REVPAR)
$21
$19
Note:
(a) The Company merged with Primadonna Resorts,
Inc. effective March 1,
1999, thereby acquiring the Primm Properties and
the remaining 50% of
New York-New York.
(b) The statistics for Primm Properties and
New York-New York reflect a
full quarter in 1999. |