MGM MGM Resorts International

LAS VEGAS, Nov. 8, 2017 /PRNewswire/ -- MGM Resorts International (NYSE: MGM) ("MGM Resorts" or the "Company") today reported financial results for the quarter ended September 30, 2017.

"We delivered excellent third quarter results across all key metrics, resulting in diluted earnings per share of $0.26 and double-digit growth in net revenues and Adjusted EBITDA — a strong affirmation of the strategies we have implemented to drive profitability and increase operational efficiency," said Jim Murren, Chairman & CEO of MGM Resorts. "We continue to stimulate increased demand by leveraging our unique portfolio of offerings, including sports and entertainment events and a strong convention business, while maximizing profits throughout the entire enterprise. Our strong business model and prominent position in key markets give us confidence in our long-term fundamentals and ability to continue driving shareholder value."

"We again wish to thank our employees and first responders – including the men and women who acted heroically –for their incredible acts of compassion and courage during the tragic and senseless events of October 1^st, a date we will not forget. We are grateful to our loyal guests, partners and the many corporate and civic leaders who have stood beside us during the most challenging of days.  We remember all those we lost and continue to pray for those who are working toward recovery," said Mr. Murren.

Financial Highlights:

• Diluted earnings per share for the third quarter of 2017 of $0.26, compared to $0.93 in the prior year quarter, which included a benefit of $0.60 related to a $430 million gain on the Borgata acquisition and a $0.20 charge related to the NV Energy exit. The third quarter of 2017 included a non-cash charge of $38 million ($0.07 per share) related to foreign tax credit valuation while the prior year quarter included a net non-cash benefit of $133 million ($0.23 per share) related to foreign tax credit valuation and remeasurement of Macau deferred tax liabilities;
• Net revenues increase of 18% over the prior year quarter at the Company's domestic resorts to $2.2 billion and an increase of 4% on a same-store basis, excluding contributions from Borgata and MGM National Harbor;
• REVPAR⁽¹⁾  growth of 4.2% over the prior year quarter at the Company's Las Vegas Strip resorts;
• Operating income of $546 million at the Company's domestic resorts, an 82% increase over the prior year quarter, which included $139 million related to the NV Energy exit expense; 
• Net income attributable to MGM Resorts of $149 million, compared to $536 million in the prior year quarter, which included a $430 million gain on the Borgata acquisition;
• Adjusted Property EBITDA⁽²⁾ growth of 25% over the prior year quarter to $714 million at the Company's domestic resorts, and an increase of 12% on a same-store basis;
• Same-store operating margin of 25.8% in the current quarter at the Company's domestic resorts, an increase of 987 basis points compared to the prior year quarter;
• Same-store Adjusted Property EBITDA margin of 33.0% at the Company's domestic resorts, an increase of 241 basis points compared to the prior year quarter;
• MGM China operating income of $35 million compared to $84 million in the prior year quarter, and Adjusted EBITDA of $118 million, a 21% decrease compared to the prior year quarter; and a 2% increase compared to the second quarter of 2017;
• CityCenter operating income of $51 million and Adjusted EBITDA of $107 million, a 17% increase in Adjusted EBITDA compared to the prior year quarter; and
• Over $500 million returned to shareholders through buybacks and dividends year to date.

Certain Items Affecting Third 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):

Domestic Resorts

Casino revenue for the third quarter of 2017 increased 32% compared to the prior year quarter, due primarily to the acquisition of the Borgata Hotel Casino and Spa ("Borgata") in August 2016 and the MGM National Harbor opening in December 2016. Casino revenues increased 6% on a same-store basis compared to the prior year quarter. Same-store table games revenue increased 11% due primarily to an 8% increase in table games drop and higher year-over-year table games hold. Same-store slots revenue increased 2%.

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

Domestic resorts rooms revenue increased 7% compared to the prior year quarter. On a same-store basis, rooms revenue increased 3% compared to the prior year quarter. Las Vegas Strip REVPAR increased 4.2% compared to the prior year quarter.

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

"The successful execution of our operating strategies continues to provide company-wide margin expansion and allows us to optimize our cash flow," added Mr. Murren.

Operating income at the Company's domestic resorts was $546 million for the third quarter of 2017 compared to $301 million in the prior year quarter and benefited from increases in both casino and non-casino revenues. Operating income in the prior year quarter included $139 million of NV Energy exit expense associated with the Company's strategic decision to exit the fully bundled sales system of NV Energy and $8 million in real estate transfer taxes recorded in connection with the Borgata transaction.

Domestic resorts Adjusted Property EBITDA increased 25% to $714 million in the third quarter of 2017 and was positively impacted by a full quarter of operations at Borgata and $37 million of Adjusted Property EBITDA from MGM National Harbor. Same-store Adjusted Property EBITDA increased 12% compared to the prior year quarter.

Mr. Murren continued, "As a result of the October 1st incident, our business in Las Vegas will be impacted in the near term primarily due to a short-lived uptick in cancellations and a temporary suspension of marketing efforts. Since restarting such efforts, our booking pace has largely rebounded to normal levels. We are also making significant progress on the transformation of Monte Carlo to Park MGM, and as expected, will continue to experience disruption at the property. As a result, in the fourth quarter, we expect our Las Vegas Strip revenues to decrease by a low to mid-single digit percentage, with non-hotel elements partially offsetting a 5%-7% REVPAR decline. Accordingly, we anticipate our fourth quarter Las Vegas Strip Adjusted Property EBITDA margins to decrease by roughly 100 basis points."

Mr. Murren concluded, "We are encouraged by the current trajectory of our business, supported by the strength of our forward convention bookings, our entertainment and sports calendar, and the conclusion of our high returning capital investment projects next year. We remain confident in the stability of our business and the enduring power of the Las Vegas brand."

MGM China

Key third quarter results for MGM China include:

• Net revenues of $471 million, a 6% decrease compared to the prior year quarter;
• Net revenues increased 5% when compared to $449 million in the second quarter of 2017;
• Main floor table games revenue decreased 11% compared to the prior year quarter due to a 3% decrease in volume and a decrease in hold percentage to 18.4% in the current year quarter from 20.1% in the prior year quarter;
• VIP table games revenue decreased 3% compared to the prior year quarter due to a 6% decrease in turnover, partially offset by an increase in hold percentage to 3.3% in the current year quarter from 3.0% in the prior year quarter;
• Operating income was $35 million compared to $84 million in the prior year quarter;
• Adjusted EBITDA decreased 21% to $118 million compared to $150 million in the prior year quarter, including $8 million of license fee expense in the current year quarter and $9 million in the prior year quarter;
• Adjusted EBITDA increased 2% when compared to $116 million in the second quarter of 2017, including $8 million of license fee expense in the second quarter of 2017; and
• Operating margin was 7.4% in the current year quarter, and Adjusted EBITDA margin was 25.1% compared to 30.0% in the prior year quarter.

MGM China paid an interim dividend of $56 million in September 2017. The Company received $32 million representing its 56% share of the dividend.

Unconsolidated Affiliates

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

The Company's share of CityCenter Holdings, LLC ("CityCenter") operating results for the third quarter of 2017, including certain basis difference adjustments, was $35 million. In the prior year quarter, CityCenter's operating results included $13 million related to our share of CityCenter's NV Energy exit expense.

Key third quarter results for CityCenter include the following (see schedules accompanying this release for further detail on CityCenter's third quarter results):

• Net revenues from resort operations were $322 million, a 5% increase compared to the prior year quarter, due primarily to an increase in casino revenues and rooms revenues;
• Operating income from resort operations was $52 million compared to operating income of $8 million in the prior year quarter, which included $26 million of NV Energy exit expense;
• Adjusted EBITDA from resort operations was $108 million, a 17% increase compared to the prior year quarter;
• Aria's table games volume increased 5% and table games hold percentage was 23.5% compared to 25.4% in the prior year quarter;
• Aria's slots revenue increased 3% compared to the prior year quarter;
• REVPAR at Aria increased 8% to $239, compared to the prior year quarter; and
• REVPAR at Vdara increased 4% to $195, compared to the prior year quarter, and Adjusted EBITDA increased 9% compared to the prior year quarter to $11 million.

On August 1, 2016 the Company completed the acquisition of Boyd Gaming Corporation's interest in Borgata, at which time the entity operating Borgata became a consolidated subsidiary of the Company and the real estate assets associated with Borgata were contributed to MGM Growth Properties LLC ("MGP"). Prior to the acquisition, the Company held a 50% interest in Borgata, which was accounted for under the equity method.

MGM Growth Properties

During the third quarter of 2017, the Company made rent payments to MGP in the amount of $165 million and received distributions of $73 million from MGM Growth Properties Operating Partnership LP (the "Operating Partnership"). On September 15, 2017, MGP's Board of Directors approved a quarterly dividend of $0.3950 per Class A share totaling $28 million, which was paid on October 13, 2017 to holders of record on September 29, 2017. The Company concurrently received a $73 million distribution attributable to its ownership of Operating Partnership units.

On September 11, 2017, MGP closed its public offering of 13,225,000 Class A shares, including 1,725,000 shares sold pursuant to the underwriters exercise in full of their over-allotment option, at a public offering price of $30.60 per share for net proceeds of $387.5 million, and on September 21, 2017, the Operating Partnership completed the issuance of $350 million in aggregate principal amount of 4.50% senior notes due 2028. The net proceeds of the offerings were used to pay MGM Resorts a portion of the $1,187.5 billion purchase price for the long-term leasehold interest and real property improvements related to the MGM National Harbor casino resort, including the refinancing of $425 million of indebtedness assumed by a subsidiary of MGP in connection with the transaction. The MGM National Harbor transaction closed on October 5, 2017. Following the MGM National Harbor transaction, MGM Resorts and certain of its subsidiaries collectively own 73.4% of the Operating Partnership units.

MGM Resorts Dividend and Share Repurchases

On November 7, 2017, the Company's Board of Directors approved a quarterly dividend of $0.11 per share totaling $62 million, which will be paid on December 15, 2017 to holders of record on December 11, 2017.

On September 5, 2017, MGM Resorts announced the adoption of a $1.0 billion stock repurchase program and has repurchased 10 million shares of its common stock at $32.75 per share for a total aggregate amount of $327.5 million under such program to date. All shares repurchased under the Company's program have been retired.

Financial Position

The Company's cash balance at September 30, 2017 was $2.0 billion, which included $336 million at MGM China and $1.1billion at MGP. At September 30, 2017, the Company had $13.6 billion of principal amount of indebtedness outstanding, including $541 million outstanding under its $1.5 billion senior secured credit facility, $2.1 billion outstanding under the $2.7 billion MGP Operating Partnership senior credit facility, $2.3 billion outstanding under the $3.0 billion MGM China credit facility, and $478 million outstanding under the $525 million MGM National Harbor credit facility, which was repaid on October 5, 2017 in connection with the closing of the  MGM National Harbor transaction.

"We continue to take steps to strengthen our operations and enhance our financial position," said Dan D'Arrigo, Executive Vice President and Chief Financial Officer of MGM Resorts. "To date this year, we have reduced our consolidated net leverage and have returned over $500 million to our shareholders in the form of dividends and share repurchases. Given our strong balance sheet and cash flow potential, we are confident in our ability to continue maximizing shareholder value in the future."

Conference Call Details

MGM Resorts will host a conference call at 11:00 a.m. Eastern Time today which will include a brief discussion of these results followed by a question and answer period. The call will be accessible via the Internet through http://mgmresorts.investorroom.com/webcasts or by calling 1-888-317-6003 for domestic callers and 1-412-317-6061 for international callers. The conference call access code is 6575075. A replay of the call will be available through Wednesday, November 15, 2017. The replay may be accessed by dialing 1-877-344-7529 or 1-412-317-0088. The replay access code is 10112169. The call will be archived at www.mgmresorts.com. In addition, MGM Resorts will post supplemental slides today on its website at www.mgmresorts.investorroom.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, gain on Borgata transaction, goodwill impairment charges, and property transactions, net. "Adjusted Property EBITDA" is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts and MGP stock compensation plans, which are not allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China. "Same-store Adjusted Property EBITDA" is Adjusted Property EBITDA related to operating resorts which were consolidated by the Company for both the entire current and prior year periods presented. 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 Same-store Adjusted Property EBITDA 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 and Same-store Adjusted Property EBITDA as the primary measure of the Company's operating resorts' performance.

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

Reconciliations of GAAP net income (loss) to Adjusted EBITDA and GAAP operating income (loss) to Adjusted Property EBITDA and Same-store 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 Same-store Adjusted Property EBITDA 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 Same-store Adjusted Property EBITDA.

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 27 unique hotel offerings including some of the most recognizable resort brands in the industry. The company is expanding throughout the U.S. and around the world, developing MGM Springfield in Massachusetts and MGM COTAI in Macau, and debuting the first international Bellagio branded hotel in Shanghai. The 77,000 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 REVPAR and other guidance), the payment of any future cash dividends on the Company's common stock, the Company's ability to generate future cash flow growth and maximize shareholder value and the Company's ability to execute its strategic plan and improve its financial flexibility. 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.