In preparation for MGM's 3Q earnings release Wednesday, we’ve put together the recent pertinent forward looking company commentary.
MGM RESORTS INTERNATIONAL SUBSIDIARY MGM CHINA HOLDINGS RECEIVES APPROVAL TO DEVELOP GAMING RESORT IN COTAI (10/18)
- MGM China paid the Macau Government ~$56MM as the initial payment of the contract premium. The Macau Government will arrange for the publication of the Land Concession Contract in the Official Gazette of Macau in due course.
- $2.5 billion budget- 1,600 hotel rooms, 500 gaming tables, and 2,500 slots built on an approximately 17.8 acre site. The resort will feature over 85% gross floor area of non-gaming offerings, including exciting restaurant, retail and entertainment offerings.
- Construction is expected to begin after the publication of the Land Concession Contract in the Official Gazette of Macau and is anticipated to take up to 36 months.
YOUTUBE FROM 2Q CONFERENCE CALL
- "We also experienced slower than anticipated in the year, for the year convention bookings during that brief period. And based on these current trends, we expect RevPAR in the third quarter will be slightly down.
- [Las Vegas] "We've already seen an improvement in customer trends here in the third quarter....So, we think the trends will be moderately up year-over-year for the balance of the year on visitors."
- "The softness we experienced during the second quarter for convention bookings in the year, for the year has not impacted long-term bookings. In fact looking out into 2013, we're encouraged to see convention bookings, the pace being up year-over-year and although it's still early, 2014 pace is even stronger. We've also fortunately recently seen a pickup in U.S. consumer trends at our wholly-owned properties."
- "We will begin remodeling the rooms of THEhotel in mid 2013. And through the Light Group, a subsidiary of Morgans, we will be introducing three new restaurants and a cutting-edge new nightclub, injecting some fresh energy into Mandalay Bay."
- "We continue to expect our CapEx for the full year to be approximately $350 million. Our MGM Grand room remodel continues to progress with approximately 3,300 rooms completed. The project is on schedule for a September completion date. In the fall, we will begin the remodel of the Bellagio Spa Tower rooms, which will cost us approximately $40 million and is included in our full-year capital budget. The room remodel will begin here in August and be completed right before the holidays later on this year."
- "Our stock compensation expense is estimated to be approximately $9 million to $10 million. Depreciation expense in the quarter is estimated to be approximately $230 million to $235 million. Our interest expense in the second quarter was $277 million including approximately $6 million from MGM China and $17 million in amortization expense. We estimate that our gross interest expense for the third quarter will be roughly in line with the second quarter."
- "On the gaming front, we are working to complete our Level Two expansion. This project will deliver a high-quality product to house over 40 VIP gaming tables. The project is expected to be completed in early fourth quarter."
- "On the main floor, we will introduce some new products to offer to our customers. And at the same time, we'll be focused on capital improvements next year to refresh our mass gaming experience."
- "And looking ahead into 2013, all of our room product at MGM Grand at Bellagio will be fully refreshed and we know that that leads to higher ADR and better customer mix."
- "We remain positive about the future of Las Vegas as visitation continues to grow and we expect the new international terminal at McCarran which just opened in late June will help drive future growth and that builds on the momentum we're seeing from our European visitors."
- [MGM Grand] "And we know based on the rooms that have been brought back on to service, we're getting nice increases in ADR and the mix is starting to pick up and we'll have all of that for the fourth quarter and certainly for all of next year....And the convention groups love the product. So, future bookings look really good on the convention side of the Grand."
- "We're seeing double-digit increases in the rooms on the books there. And everything's positive from that perspective both at Bellagio and MGM. Mandalay Bay is always the tough one, because there's so many rooms always on the books, but they're getting up there and their pace should be where we'd like to see them."
- [CityCenter/Aria] "We're in a really good position. Now it's just filling the holes in tough periods, but we're pretty comfortable where we are right now on the convention side for next year. Even more so in 2014."
- "So, I think you saw that we're getting decent flow through at some of our properties, especially if you kind of figure out the hold on it. Our FTEs are flat. We're managing our expanses in other ways where we can, and we're very, very focused on driving free cash."
- [Group rates] "I would suspect, we're going to see mid single-digit increases."
- [Macau tax agreement] "It's basically an annual fee in lieu of the dividend tax. That agreement covers us through the year ended 2011 and any dividends payable through the year ended 2011 and we've submitted an extension request to that agreement that's pending with the government currently. So, it's roughly about, Grant, correct if I'm wrong, about a $3 million, $4 million payment in the quarter that covered all the previous years and the extension right now is pending approval with the Macau
authorities." - [Vegas promotional environment] "There are some people out there that are probably a little more competitive than others, but from our perspective, we're back to a normal yielding process."
- [EBITDA margins in Macau] "We're still saying mid to upper 20s%."
