MGM: SHOULD BE TWO STRAIGHT

MGM should beat for the first time in a while. Q1 looks good too. That may be when the good times end.

MGM should beat the Street (earnings release: February 14th) and be very bullish (like every quarter) about 1Q2011.  We’re 7% ahead of the street on EBITDA for 4Q2010.  We’re close to Street estimates for all regions aside from Macau where we believe MGM will materially exceed investors’ expectations.

Q1 faces a very easy comparison, especially on the convention side.  MGM will focus on this during their conference call and analysts’ will likely raise expectations.  Will the good times last?  We don’t think so.  We’re looking for a Q2 hangover and remain well below the Street for 2011 EBITDA despite higher Q1 projections.

Here is the detail of our Q4 projections:

Detail:

• We project Las Vegas Strip revenues and EBITDA of $1.15BN and $248MM, respectively
  • RevPAR up 1% with larger increases at Bellagio, Mandalay Bay, and Circus Circus and declines at Monte Carlo, NY NY, and Luxor
  • Extrapolating on a continuation of the trends we saw in 3Q2010, we expect big EBITDA YoY increases at a few properties
    • Bellagio +26%
    • NY NY +14%
    • Monte Carlo +45%
    • Circus Circus +81%
  • However, some properties should see continued EBITDA declines
    • Mandalay Bay -9%
    • Luxor -5%
    • Excalibur -2%
• MGM Grand Detroit revenues and EBITDA are estimated at $132MM and $38MM, respectively
  • Casino revenues of $144MM
  • Fixed operating expenses of $66MM
• We expect a monster quarter out of MGM Macau, projecting $120MM of EBITDA; we’re 27% ahead of consensus
  • The only qualifier here is if the property takes a big reserve against roughly $100 million owed by a large junket
  • Slot win of $42MM
  • VIP Table drop of $19.5BN, hold of 3.1%
  • Mass win of $124MM
• Excluding condo sale revenues and forfeitures, we project CityCenter revenues and EBITDA of $235MM and $26MM, respectively.
  • Adjusted for 3Q high hold, clean EBITDA would have been $14MM at Aria
  • $153 RevPAR at Aria
  • $98MM of casino revenue at Aria
• We expect Borgata to report flattish YoY results with revenues and EBITDA of $175MM and $35.6MM, respectively.
  • $97MM in slot revenues
  • $47MM of table revenues, a 12% YoY decline due to an 8% decrease in drop and lower hold
  • Flat YoY expenses at $139MM