MGM MGM Resorts International

LAS VEGAS, Feb. 13, 2019 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) ("MGM Resorts" or the "Company") today reported financial results for the quarter and year ended December 31, 2018. On January 1, 2018, the Company adopted the new revenue recognition accounting standard (ASC 606). As such, certain previously reported 2017 numbers have been retrospectively adjusted under the new standard to assist with comparability to the prior period.

Fourth Quarter 2018 Financial and Strategic Highlights:

Consolidated Results

• Consolidated net revenues increased 18% compared to the prior year quarter to $3.1 billion;
• Consolidated operating income increased 50% compared to the prior year quarter to $336 million;
• Net loss attributable to MGM Resorts of $23 million, compared to net income of $1.4 billion in the prior year quarter;
• Diluted loss per share of $0.06 in the current quarter compared to diluted earnings per share of $2.39 in the prior year quarter;
• The current quarter included a non-recurring, non-cash income tax expense of $92 million, $0.17 per share on a diluted basis, primarily resulting from recently issued guidance on certain international provisions of the U.S. Tax Cut and Jobs Act ("Tax Act"), including the treatment of foreign tax credits resulting from Global Intangible Low-Taxed Income and other provisions impacting foreign tax credit utilization. The prior year quarter included a non-recurring, non-cash income tax benefit of $2.50 per share on a diluted basis, due to enactment of the Tax Act at the end of 2017; and
• Consolidated Adjusted Property EBITDA increased 21% compared to the prior year quarter to $821 million.

Las Vegas Strip Resorts

• Net revenues increased 6% to $1.4 billion compared to the prior year quarter;
• REVPAR⁽¹⁾ increased 8.2% compared to the prior year quarter; and
• Adjusted Property EBITDA⁽²⁾ of $401 million, a 15% increase compared to $349 million in the prior year quarter and Adjusted Property EBITDA margin of 29.1%, a 222 basis point increase compared to the prior year quarter. Excluding insurance proceeds of $24 million in the current year quarter, Adjusted Property EBITDA increased 8% and Adjusted Property EBITDA margin increased 51 basis points compared to the prior year quarter.

Regional Operations

• Net revenues increased 18% to $782 million including contributions from the opening of MGM Springfield on August 24, 2018 of $78 million; and
• Adjusted Property EBITDA of $195 million, a 32% increase compared the prior year quarter and Adjusted Property EBITDA margin of 24.9% in the current quarter, a 277 basis point increase compared to the prior year quarter. The prior year quarter was negatively affected by a $15 million real estate transfer tax charge at MGM National Harbor.

MGM China

• Net revenues increased 33% to $687 million including contributions from the opening of MGM Cotai of $287 million; and
• Adjusted Property EBITDA of $167 million, an 11% increase compared to the prior year quarter, reflecting the opening of MGM Cotai.

Strategic Highlights

• Distributed $63 million to shareholders via the Company's quarterly dividend of $0.12 per share; and
• Repurchased $150 million of the Company's common stock in the fourth quarter.

"We had a strong finish to the year, driving growth across all Las Vegas segments in the fourth quarter. Our fourth quarter consolidated net revenues grew by 18% and our consolidated Adjusted EBITDA by 21%, before certain one-time benefits," said Jim Murren, Chairman and CEO of MGM Resorts International. "Our Las Vegas Strip Resorts achieved the best fourth quarter Adjusted Property EBITDA since 2007. We also continued to gain share within our regional markets and realized record fourth quarter revenues and Adjusted Property EBITDA performance at MGM Grand Detroit, MGM National Harbor, Beau Rivage, and Gold Strike Tunica. Additionally, we closed out the year with the official openings of Park MGM and NoMad Las Vegas, both of which have received overwhelmingly positive responses.

"Looking ahead, we remain highly focused on our strategic priorities, including maximizing the performance of our premier properties, driving consolidated free cash flow growth and successfully executing MGM 2020 – our recently announced plan dedicated to improving efficiencies, reducing costs, and investing in key technologies to position the Company for further profitability. Through MGM 2020, we are reinvesting in our business and we expect to begin to see the financial benefits in the back half of 2019," Mr. Murren continued. "We also remain committed to targeted growth opportunities such as sports betting and the pursuit of an Integrated Resort in Japan. Importantly, we will continue to prudently allocate capital, with a focus of returning excess cash to shareholders."

Full Year 2018 Financial and Strategic Highlights:

• Consolidated net revenues for 2018 of $11.8 billion, an increase of 9% compared to the prior year; with Las Vegas Strip Resorts net revenues decreasing 1%, Regional Operations net revenues increasing 8%, and MGM China net revenues increasing 32%;
• Consolidated operating income of $1.5 billion in 2018 compared to $1.7 billion in 2017;
• Net income attributable to MGM Resorts of $467 million, compared to $2.0 billion in the prior year;
• The current year included non-recurring, non-cash income tax expense of $20 million for Tax Act adjustments, including the impact of recently issued guidance on certain international provisions mentioned above. The prior year included a non-recurring, non-cash income tax benefit of $1.4 billion due to enactment of the Tax Act;
• Consolidated Adjusted Property EBITDA increased 1% compared to the prior year to $3.3 billion;
• Las Vegas Strip Resorts Adjusted Property EBITDA of $1.7 billion, a 4% decrease compared to the prior year;
• Regional Operations Adjusted Property EBITDA of $759 million, a 4% increase over the prior year;
• MGM China Adjusted Property EBITDA of $568 million, a 6% increase over the prior year;
• Distributed $261 million to shareholders during 2018 via the Company's quarterly dividend of $0.12 per share; and
• Repurchased $1.3 billion of the Company's common stock during 2018.

Certain Items Affecting Fourth 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):

Las Vegas Strip Resorts and Regional Operations

Casino revenue for the fourth quarter of 2018 decreased 3% compared to the prior year quarter at the Company's Las Vegas Strip Resorts partially due to lower table games hold, and increased 20% at the Company's Regional Operations due primarily to the opening of MGM Springfield and an increase in slots and table games win at MGM National Harbor.

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

The following table shows key gaming statistics for the Company's Regional Operations:

Rooms revenue increased 10% compared to the prior year quarter at the Company's Las Vegas Strip Resorts. Las Vegas Strip Resorts REVPAR increased 8.2% compared to the prior year quarter.

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

Food and beverage revenue increased 11% at the Company's Las Vegas Strip Resorts compared to the prior year quarter due to an increase in catering and banquets revenues and the opening of new outlets at Park MGM. Food and beverage revenue increased 17% at the Company's Regional Operations due primarily to the opening of MGM Springfield.

Operating income at the Company's Las Vegas Strip Resorts was $282 million, compared to $211 million in the prior year quarter. The current year quarter benefited from increases in rooms and food and beverage revenues discussed above, included business interruption insurance proceeds of $24 million primarily at Mandalay Bay and was negatively impacted by $14 million of preopening expenses at Park MGM. Las Vegas Strip Resorts operating income in the prior year quarter included a $20 million asset disposal charge related to the repositioning and rebranding at Park MGM. Las Vegas Strip Resorts Adjusted Property EBITDA was $401 million, a 15% increase compared to $349 million in the prior year quarter. Excluding business interruption insurance proceeds discussed above, Adjusted Property EBITDA increased 8% compared to the prior year quarter.

Operating income at the Company's Regional Operations was $133 million in the current quarter and benefited from an increase in casino revenues at MGM National Harbor discussed above. Operating income was $94 million in the prior year quarter, which was impacted by a $15 million real estate transfer tax charge at MGM National Harbor. Regional Operations Adjusted Property EBITDA was $195 million, a 32% increase compared to $147 million in the prior year quarter.

Corporate Expense

Corporate expense, including share-based compensation for corporate employees, was $118 million in the fourth quarter of 2018, an increase of $2 million compared to the prior year quarter. The current quarter included $8 million in costs incurred to implement MGM 2020 and finance modernization initiatives and $5 million of MGM China corporate expense.

MGM China

Key fourth quarter results for MGM China include:

• Net revenues of $687 million, a 33% increase compared to the prior year quarter. The current quarter benefited from the opening of MGM Cotai in February 2018, which contributed $287 million of net revenues;
• Main floor table games win increased 31% compared to the prior year quarter due to the opening of MGM Cotai;
• VIP table games win increased 18% compared to the prior year quarter due to the opening of VIP junket rooms in September 2018 at MGM Cotai;
• Operating income was $62 million in the current quarter compared to $45 million in the prior year quarter;
• Adjusted Property EBITDA increased 11% to $167 million compared to $150 million in the prior year quarter. The current quarter included $12 million of license fee expense compared to $10 million in the prior year quarter; and
• Operating margin was 9.0% in the current year quarter, and Adjusted Property EBITDA margin was 24.3% in the current quarter compared to 29.1% in the prior year quarter, due primarily to the ramp up of operations at MGM Cotai.

The following table shows key gaming statistics for MGM China:

Unconsolidated Affiliates

The following table summarizes information related to the Company's share of income from unconsolidated affiliates:

Key fourth quarter results for CityCenter Holdings, LLC ("CityCenter") include the following (see schedules accompanying this release for further detail on CityCenter's fourth quarter results):

• Net revenues were $335 million, a 13% increase compared to the prior year quarter, due to an increase in casino, rooms and food and beverage revenues;
• Aria's table games win increased 16%, due to a 22% increase in table games drop partially offset by a decrease in table games hold percentage to 24.0% in the current quarter compared to 25.4% in the prior year quarter;
• Aria's slots win increased 6% compared to the prior year quarter due primarily to an increase in slots handle;
• REVPAR at Aria increased 12% compared to the prior year quarter to $238;
• REVPAR at Vdara increased 14% compared to the prior year quarter to $192;
• Operating income from resort operations was $46 million compared to operating income of $32 million in the prior year quarter; and
• Adjusted EBITDA from resort operations was $111 million, a 15% increase compared to the prior year quarter.

MGM Growth Properties

During the fourth quarter of 2018, the Company made rent payments to MGM Growth Properties Operating Partnership LP ("MGP Operating Partnership") in the amount of $193 million and received distributions of $85 million from the MGP Operating Partnership. In December 2018, the Board of Directors of MGM Growth Properties LLC ("MGP") approved a quarterly dividend of $0.4475 per Class A share (based on a $1.79 dividend on an annualized basis) totaling $32 million, which represents an increase of $0.11 per share year to date, and a total increase of 6.5% year to date, which was paid on January 15, 2019 to holders of record on December 31, 2018. The Company concurrently received an $87 million distribution attributable to its ownership of MGP Operating Partnership units.

In the current quarter, the Company recorded within Management and other operations $67 million in net revenues and $23 million in Adjusted Property EBITDA related to MGP's Northfield casino.

MGM Resorts Dividend and Share Repurchases

On February 13, 2019, the Company's Board of Directors approved a quarterly dividend of $0.13 per share totaling approximately $70 million. The dividend will be payable on March 15, 2019 to holders of record on March 8, 2019.

During the fourth quarter, MGM Resorts repurchased approximately 6 million shares of its common stock at an average price of $25.13 per share for an aggregate amount of $150 million. Approximately $1.4 billion remains available under the $2.0 billion share repurchase program. All shares repurchased under the Company's program have been retired.

Full Year 2018 Results

Consolidated net revenue for 2018 was $11.8 billion, a 9% increase over 2017. Consolidated operating income was $1.5 billion compared to $1.7 billion in the prior year. Net income attributable to MGM Resorts was $467 million, which included non-recurring, non-cash income tax expense of $20 million for Tax Act adjustments, including the impact of recently issued guidance on certain international provisions mentioned above, compared to $2.0 billion in the prior year which included a non-recurring, non-cash income tax benefit of $1.4 billion due to the Tax Act. Consolidated Adjusted Property EBITDA was $3.3 billion in the current year, a 1% increase compared to the prior year.

Las Vegas Strip Resorts net revenue was $5.7 billion in both the current and prior year periods. Operating income of $1.2 billion at the Company's Las Vegas Strip Resorts was negatively affected by disruption related to the repositioning and rebranding at Park MGM. The prior year benefited from $41 million related to the NV Energy exit fee modification. Las Vegas Strip Resorts Adjusted Property EBITDA was $1.7 billion, a 4% decrease compared to the prior year.

Regional Operations net revenue increased 8% to $2.9 billion including contributions from the opening of MGM Springfield in August 2018 of $120 million, compared to $2.7 billion in the prior year. Operating income at the Company's Regional Operations was $518 million in the current year compared to $517 million in the prior year, and Adjusted Property EBITDA was $759 million, a 4% increase compared to the prior year.

MGM China net revenue was $2.4 billion for 2018, a 32% increase from 2017. The current year benefited from the opening of MGM Cotai in February 2018, which contributed $729 million of net revenues. MGM China operating income was $216 million compared to $204 million in the prior year. MGM China Adjusted EBITDA was $568 million compared to $536 million in the prior year, a 6% increase from 2017.

CityCenter reported net revenues of $1.3 billion, a 4% increase compared to the prior year. Operating income from resort operations was $191 million compared to $204 million in the prior year, which included a benefit of $8 million from the NV Energy exit fee modification. Adjusted EBITDA related to resort operations was $419 million compared to $417 million in the prior year. During 2018, CityCenter sold the Mandarin Oriental Las Vegas and adjacent retail parcels for $214 million in cash and recorded a loss on sale of $133 million, the majority of which was recognized during the first quarter. MGM Resorts recorded a $12 million gain related to the reversal of basis differences in excess of its share of the loss recorded by CityCenter. CityCenter paid dividends of $625 million during 2018, of which MGM Resorts received its 50% share, or $312.5 million.

During the year ended December 31, 2018, the Company made rent payments to the MGP Operating Partnership in the amount of $767 million. During the year ended December 31, 2018 the Company received $333 million of distributions attributable to its ownership of units in the MGP Operating Partnership.

Diluted earnings per share was $0.81 in the current year, compared to $3.34 in 2017. The current year included non-recurring, non-cash income tax expense of $20 million, or $0.04 per share on a diluted basis for Tax Act adjustments, including the impact of recently issued guidance on certain international provisions mentioned above. The prior year included a non-recurring, non-cash income tax benefit of $1.4 billion, or $2.47 per share on a diluted basis, due to enactment of the Tax Act.

The following table lists items that affect the comparability of the current year and prior year annual results (approximate EPS impact shown, net of tax, per share; negative amounts represent charges to income):

Financial Position

The Company's cash balance at December 31, 2018 was $1.5 billion, which included $510 million at MGM China and $60 million at the MGP Operating Partnership. At December 31, 2018, the Company had $15.3 billion of principal amount of indebtedness outstanding, including $750 million outstanding under its $2.3 billion senior secured credit facility, $2.8 billion outstanding under the $3.6 billion MGP Operating Partnership senior secured credit facility and $2.4 billion outstanding under the $2.8 billion MGM China credit facility.

In December 2018, MGM Resorts amended its credit facility for an increase in the total revolving credit commitments to $1.5 billion and an increase in the total term loan A commitment to $750 million and extended the maturity date to 2023. In addition, the revolving and term loan A facilities were repriced at LIBOR plus 1.50% to 2.25% determined by reference to a net leverage ratio pricing grid.

"In 2018, we were active in the debt capital markets, extending MGM Resorts' and MGM China's maturities, returned $1.5 billion to shareholders, announced two accretive transactions that provide entry into New York and Ohio, and announced the Park MGM transaction with MGP," said Dan D'Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts. "We remain focused on enhancing our free cash flow generation and managing our balance sheet to achieve our consolidated net leverage target of 3 to 4 times by year end 2020."

Conference Call Details

MGM Resorts will host a conference call at 5:00 p.m. Eastern Time today which will include a brief discussion of the results followed by a question and answer period. The call will be accessible via the Internet through http://investors.mgmresorts.com/investors/events-and-presentations/ or by calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 3924102. A replay of the call will be available through Wednesday, February 20, 2019. The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088. The replay access code is 10127989. The call will be archived at http://investors.mgmresorts.com. In addition, MGM Resorts will post supplemental slides today on its website at http://investors.mgmresorts.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 and property transactions, net. "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense, which are not allocated to each property. "Adjusted Property EBITDA margin" is Adjusted Property EBITDA divided by net revenues. 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 Adjusted Property EBITDA margin 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 as the primary measure of the Company's operating resorts' performance.

Adjusted EBITDA, Adjusted Property EBITDA and Adjusted Property EBITDA margin 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 Adjusted Property EBITDA margin. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA, Adjusted Property EBITDA, or Adjusted Property EBITDA margin information may calculate Adjusted EBITDA, Adjusted Property EBITDA, or Adjusted Property EBITDA margin in a different manner.

Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to 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 Adjusted Property EBITDA margin 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 Adjusted Property EBITDA margin.

About MGM Resorts International

MGM Resorts International (NYSE: MGM) is an S&P 500® 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 29 unique hotel and destination gaming offerings including some of the most recognizable resort brands in the industry. Expanding throughout the U.S. and around the world, the company acquired the operations of Empire City Casino in New York in 2019, and in 2018, opened MGM Springfield in Massachusetts, MGM COTAI in Macau, and the first Bellagio-branded hotel in Shanghai. The over 82,000 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 any guidance), the Company's ability to generate free cash flow growth, return capital to shareholders and further de-lever, and the Company's ability to execute its strategic plan, capital allocations strategy, and deliver on its 2020 goals. 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.