MGM: CASINO LIKELY LAGGED HOTEL IN Q1

Q1 might be a bit of a disappointment for those expecting the start of a big Vegas recovery.  MGM Macau should blow it out.

As we wrote on April 14th, in “The MGM Rollercoaster”, we believe that after management promises of a strong first quarter and Street room rate surveys showing double digit growth, MGM’s Vegas results may fall short of investor expectations.  We’re a little less than 5% below Street for EBITDA for the quarter. 

1Q2011 Detail:

We estimate that MGM will report $1.5BN of revenue and $297MM of EBITDA (consolidated EBITDA less corporate & ESO expense plus JV income) which pans out to be 1% and 5% below Street estimates, respectively.

  • We estimate that MGM’s Las Vegas properties will report $1.1BN of revenues and $225MM of EBITDA, in-line and 3.5% below consensus respectively.  While our RevPAR estimates are likely close to consensus, we believe that growth in casino revenues will be disappointing – up very slightly on average.
    • We assume that RevPAR increases 8.6%, driven by a 5.2% increase in rate
    • While cost controls should be strong, we do expect to see operating costs begin to increase YoY after over 2 years of cost decreases. This quarter should also mark the first quarter of YoY increases in EBITDA.
    • Bellagio: $262MM of revenue and $73MM; 8% increase in RevPAR
    • MGM Grand: $193MM of revenue and $37MM of EBITDA; 5% increase in RevPAR
    • Mandalay Bay: $175MM of revenue and $28MM of EBITDA; 10% increase in RevPAR
    • Mirage: $138MM of revenue and $23MM of EBITDA; 7% increase in RevPAR
  • MGM Detroit estimated at $141MM of revenue and $41MM of EBITDA
  • We estimate that Beau Rivage will report $85MM of revenue and $17MM of EBITDA

Non-consolidated Entities:

  • Borgata: We estimate that Borgata will report $177MM of net revenue and $37MM of EBITDA. MGM’s ownership stake is 50%
  • City Center: Excluding condo sale revenue/and forfeitures, City Center is projected at $241MM of revenue and $42MM of EBITDA
    • Aria: $208MM of revenue and $35MM of EBITDA
    • Mandarin: $9MM of revenue and an EBITDA loss of $1MM
    • Vdara: $13MM of revenue and $1.5MM of EBITDA
    • Crystals: $11MM of sales and $6MM of EBITDA
  • MGM Macau should have another stand out quarter.  We estimate that MGM Macau will report EBITDA of $132MM, down sequentially due to low hold in 1Q compared to estimated hold of 3.1% in 4Q10.  We think that MGM Macau is on track for $550MM of EBITDA in 2011.
    • VIP Table drop $22.5BN and hold of 2.7%
    • Mass table win of $143MM
    • Slot win of $53MM

Other stuff:

  • Corporate Expense: $28MM
  • ESO: $10MM
  • D&A: $156MM
  • Net Interest Expense: $251MM