$111 million, Up 5% Over Prior Year;
Room Rates, Gaming Volume Surge Up
|LAS VEGAS, April 19, 2005 - MGM MIRAGE (NYSE: MGG) today reported its
first quarter 2005 financial results. Adjusted earnings from continuing
operations per diluted share ("Adjusted EPS") increased to an all-time
record $0.87 in the first quarter of 2005, eclipsing the Company's previous
best of $0.74 earned in the second quarter of 2004; the Company earned
$0.70 in the 2004 first quarter. The strong earnings resulted from several
positive factors, including strong gaming volumes and continued strength
in hotel and other non-gaming results, driven by a strong convention calendar
and increased room rates as well as new amenities at several resorts.
REVPAR (revenue per available room) at the Company's Las Vegas Strip resorts was $167, an impressive year-over-year increase of 15%, on top of last year's 11% first quarter increase over 2003. Table games volume, including baccarat, increased 9% in the quarter and slot revenue increased 13%.
Adjusted EPS (and Adjusted Earnings) excludes discontinued operations, preopening and start-up expenses, restructuring costs, property transactions, and loss on early retirement of debt.(1) On a GAAP (Generally Accepted Accounting Principles) basis, diluted earnings per share from continuing operations increased to $0.75 in the 2005 quarter from $0.66 in the first quarter of 2004. GAAP diluted EPS, including the results of discontinued operations, was $0.75 in the 2005 period versus $0.72 in 2004.
"The excellent operating results of the first quarter continue to demonstrate the power of our focused strategy, and we continue to build momentum leading up to the combination with Mandalay Resort Group," said Terry Lanni, MGM MIRAGE's Chairman and CEO. "Our ongoing investments in our premium portfolio of resorts will allow us to further raise the bar when it comes to generating superior results among gaming companies, and the addition of Mandalay's properties and people will further solidify our competitive position."
First Quarter 2005 Company Highlights
* Generated net revenues of $1.2 billion, up 13% from 2004;
* Produced property-level EBITDA(2) of
$437 million, up 18% over prior
* The addition of the Spa Tower at Bellagio
propelled that resort to
* MGM Grand Las Vegas reported record
results on several fronts as it
* Invested $105 million of capital in
the Company's resorts, with new
* Reduced debt by $124 million;
* Announced the sale of Mandalay's interest
in MotorCity Casino in
* Announced a 2-for-1 stock split, subject
to stockholder approval of an
Detailed Financial Results
The following table shows key financial results on a Company-wide basis
Except where noted, all references in this release to operating results, including statistical information, exclude the results of Golden Nugget Las Vegas, Golden Nugget Laughlin and MGM Grand Australia for all periods presented. The results of these operations are classified as discontinued operations.
Net revenue in the first quarter increased 13% from prior year. Results were strong in all operating departments. A solid convention calendar and increased visitation to Las Vegas yielded significant gains in room rates and the Company experienced excellent levels of customer play during the key Super Bowl and Chinese New Year periods.
Casino revenue increased 10% in the 2005 quarter. Table games volume, including baccarat, was up 9% from the prior year's quarter, with a 39% increase in baccarat volume, continuing the trend from the latter half of 2004. Table games hold percentages were at the mid-point of the Company's normal range for both the 2005 and 2004 first quarters. Company-wide slot revenue in the quarter was up 13% from 2004, on top of a 10% increase in 2004 over 2003. Bellagio's slot revenue increased over 30% due to the additional customers from the Spa Tower expansion, and other strong performances were turned in at Beau Rivage, MGM Grand Detroit and New York-New York.
Non-casino revenue was up 16% in the quarter. Hotel revenue was up 17%, with occupancy of 92% in the first quarter of 2005, versus 90% in 2004, and a higher average daily room rate ("ADR") of $155 versus $138 in 2004. This is the highest quarterly ADR in the Company's history. As a result, REVPAR was $143, up 15% over REVPAR of $124 in 2004. We had significantly more rooms available with the Bellagio expansion and a full complement of rooms available at New York-New York, which was remodeling its rooms in the prior year, partially offset by room remodel activity at MGM Grand Las Vegas.
Food and beverage revenue increased 12%, as the addition of several restaurants and lounges since the first quarter of 2004 as well as overall strong customer volumes generated increased utilization at our restaurants, lounges and nightclubs. The addition of the Spa Tower led to an 18% increase in food and beverage revenue at Bellagio. Entertainment revenues were up significantly, 31%, over the prior year quarter as a result of the contribution from KA.
EBITDA increased 16% for the quarter, reflecting the operating trends described above and the benefit of the results from Borgata, which led to a 45% increase in income from unconsolidated affiliates. The Company's property-level EBITDA margin was 36% in 2005 versus 35% in the 2004 first quarter, a record margin for the Company. Operating income increased 15% over prior year.
First quarter 2005 Adjusted Earnings increased by 25% compared to 2004 due primarily to the higher operating income, offset by higher interest expense from fixed rate borrowings. Non-operating income (expense) includes a $19.5 million ($0.09 per share, net of tax) loss on early retirement of debt, which is excluded from Adjusted Earnings, and $6.7 million ($0.03 per share, net of tax) of income from the favorable resolution of a pre-acquisition contingency related to the Mirage Resorts acquisition, which is included in Adjusted Earnings. For the first quarter of 2005, Adjusted Earnings excluded $26.2 million ($17.0 million, net of tax) of items as follows:
* Net property transactions of $4.2 million
($2.7 million, net of tax),
* Preopening and start-up expenses of
$2.5 million ($1.6 million, net of
* Loss on early retirement of debt of
$19.5 million ($12.7 million, net
In the first quarter of 2004, items excluded in the determination of Adjusted Earnings included minor amounts of preopening and start-up expenses and restructuring costs, property transactions of $1.7 million ($1.1 million, net of tax) related primarily to the Bellagio expansion and room remodel projects, and a loss on early retirement of debt of $5.5 million ($3.6 million, net of tax) related to the repurchase and retirement of the Company's publicly-traded debt securities.
Income from discontinued operations includes the results of Golden Nugget Las Vegas, Golden Nugget Laughlin and MGM Grand Australia. Pretax income from discontinued operations was $14 million in the 2004 first quarter which included the $8 million gain on the sale of the Golden Nugget resorts.
The Company generated significant operating cash flow in the first quarter as a result of its positive operating results. The Company utilized available cash flow in part to repay $124 million of net debt and invest $105 million in capital projects.
First quarter capital investments included the costs for the completion of the Bellagio expansion, construction of the new theatre for Cirque du Soleil at The Mirage, the new golf course at Beau Rivage, room remodel and casino expansion activity at MGM Grand Las Vegas and other routine capital expenditures.
"We expect that tremendous cash flow generated by our resorts, along with the addition of Mandalay Resort Group, will fuel significant debt reduction through the remainder of 2005," said Jim Murren, MGM MIRAGE President, CFO and Treasurer. "We are also planning on continuing our targeted capital investments, with plans for several new restaurants and other amenities at The Mirage and MGM Grand Las Vegas, and we are working at a rapid pace on the design phase of Project CityCenter."
The Company expects same-store REVPAR growth of approximately 10% for
the second quarter, after an 11% increase in the prior year. "Our trends
remain vibrant and strong room pricing should once again lead to a year-over-year
increase in EBITDA," Mr. Murren said. "We believe our Adjusted Earnings,
on a same store basis, will be in the range of $0.70 to $0.75 per share,
excluding any impact from the Mandalay merger and before adjusting for
our proposed 2-for-1 stock split."
MGM MIRAGE, headquartered in Las Vegas, Nevada, is one of the world's leading and most respected hotel and gaming companies. The Company owns and operates 11 casino resorts located in Nevada, Mississippi and Michigan, and has investments in three other casino resorts in Nevada, New Jersey and the United Kingdom.
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 and Exchange Commission.
|Also See:||MGM Mirage Reports Lower 4th Qtr Net Income of $67.9 million, Down from $91.7 million the Year Earlier / 2004 Most Profitable Year Ever, Driven by Record Operating performances at Bellagio, MGM Grand Las Vegas and Beau Rivage / February 2005|
|MGM MIRAGE Reports 1st Qtr 2004 Net Profit of $105.8 million Double from 2003; Most Profitable Quarter Ever / April 2004|
|MGM Mirage Posts 38% Drop in 1st Qtr Net Income, $51 million vs 82 Million / Hotel Operating Statistics / April 2003|