In preparation for MGM's Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from MGM’s Q1 earnings call and subsequent conferences/releases.



Post Earnings Commentary

July 22: Amendment to Borgata Settlement Agreement

  • “The amendment provides that the mandated sale of the trust property be increased by 18 months to 48 months.  During the first 36 months (or until March 24, 2013), MGM Resorts has the right to direct the trustee to sell the trust property.  If a sale is not concluded by that time, the trustee will be responsible for selling MGM's interest in the Borgata during the following 12-month period.”

June 17: Closing of $300MM in Senior Convertible Notes

  • “Closed the previously announced private offering to Emerging Corporate Limited (an entity owned indirectly by Ms. Pansy Ho) of $300 million in aggregate principal amount of its 4.25% convertible senior notes due 2015.  The Company received approximately $311 million in net proceeds from the offering.  The net proceeds will be used to repay a portion of the Company's outstanding revolving indebtedness under its senior credit facility.” 

June 3: Completion of MGM China IPO

  • “Pansy Ho and MGM China Holdings Limited (SEHK: 2282) today announced the successful completion of the previously announced initial public offering of 760 million shares, representing 20% of the post issuance base capital stock of MGM China, at an offer price of HK$15.34 per share reflecting the top of its previously announced range.”


Youtube from Q1 Conference Call

  • “Convention room nights represented 20% of our room mix in the first quarter. That’s an increase of 5 percentage points year-over-year and the best Convention mix quarter we have had since the first quarter of 2007… For the remainder of this year, we’re pacing ahead of last year in every month in terms of convention bookings.”
  • “Consumer spending is strengthening, and we will take advantage of this through a very strong event calendar that we have throughout the summer and into the second half. We see evidence that consumer spend is in fact strengthening. One metric for example which has been slow to recover has been the revenue-per-occupied room excluding Hotel and Casino, in other words, the Retail, Entertainment and Other type of revenue.”
  • Over the next four months we’re consistently outpacing last year’s rooms on the books. April occupancy end rate, for example, up nicely, driven by strength in those Retail segments. Our event calendar is also improved and it’s up significantly year over year. I think it’s up over double digits in terms of events booked at both the Mandalay Event Center and the MGM Grand Garden.”
  • “Since we launched this program, we have enrolled over one million new customers into our loyalty program… Our regional properties have seen an increase in the number of active players and in terms of trips in the first quarter, led by Beau Rivage, where trips were up approximately 10%. Our gold and platinum levels, our higher level customers, have seen trips up in the double digits indicating people are migrating up the benefit scale and the benefits are compelling.”
  • “On an actual basis, our net revenue was up 3% and our adjusted property EBITDA attributable to our wholly-owned operations was up 12%. Both of these would have been higher, up 6% and 25% respectively, had we held at the midpoint of our normal range. And to remind folks that range is 19% to 23% on our table game hold side. That negatively impacted our wholly-owned EBITDA, adjusted property EBITDA, by approximately $34 million of which over half of that $34 million was attributable to Bellagio alone.”
  • “Excluding resort fees, RevPAR was up 11% in the quarter year-over-year.”
  • “We also received approximately $31 million in distributions from MGM Macau during the first quarter. And just last week, we received a tax refund of $175 million, thereby taking our pro forma liquidity of excess cash and amounts available under our revolver to over $1.1 billion currently.”
  • 2Q11 Guidance:
    • Corporate expense:  $30MM - $35MM
    • Stock compensation expense: $9MM - $10MM
    • Depreciation expense: $150MM - $155MM
    • Gross interest expense:  $265MM - $275MM with no capitalized interest
    • RevPAR: “up in the mid single-digits in the second quarter, and we’re on pace from that standpoint, actually did a little bit better than that in April already”
    • FY2011 Capex of $275MM
    • City Center commentary:
      • “Aria experienced a higher than normal hold percentage for the first quarter, which contributed to EBITDA and had an impact of approximately $13 million”
      • “ We continue to be more efficient with the operations of Aria, which has allowed us to further reduce expenses and improve margins while overall traffic and volumes have sequentially increased each quarter. Additionally, Aria benefited from a favorable property tax adjustment in the first quarter of about $6 million… On an annualized basis, the benefit going forward is going to be about a $17 million benefit annually.”
      • “First quarter Convention business at Aria was extremely strong with over 72,000 room nights. Future bookings continue to be strong. 2011 convention room nights on the books have already surpassed forecasted totals for the year. Convention business for the 2012 year and beyond looks extremely positive as lead volumes and bookings continue to outpace last year and our forecast “
      • As of March 31st, 82% of Crystals’ leasable area was occupied by tenants open for business following the opening of Tag Heuer. Jimmy Choo is scheduled to open this August, and we are in final negotiations with Dolce Gabbana for a men’s and a separate women’s store with an estimated January 2012 opening.”
      • “Cash at CityCenter is approximately $100 million of which $20 million is cage-cash.”

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