Yes, that is likely a positive signal. Looking through the hold-adjusted lens, MGM Macau had a bang up quarter.
Q1 earnings two weeks from today should be a positive catalyst for MGM. We’re in-line with the Street for Vegas but higher for Macau on a hold-adjusted basis. MGM Macau held low in Q1 at the VIP tables but volumes were terrific - its best quarter ever. CEO Jim Murren appearing on CNBC ahead of earnings today at 10:15am today is probably a signal of a good upcoming quarterly announcement.
We remain concerned with the longer-term outlook for domestic gaming as we’ve discussed ad nauseam (sorry to be repetitive but we think it’s some damn good analysis). However, it does appear that there is some near-term stability in Las Vegas as management will no doubt discuss on their earnings call. But Macau was the real story in Q1. Quarterly hold-adjusted EBITDA could exceed $200 million for the first time.
We estimate that MGM will report $2.3BN of net revenue and $516MM of consolidated property level EBITDA. We also look at wholly-owned EBITDA plus MGM’s pro-rata share of MGM China and City Center, less corporate and stock compensation expense which produces EBITDA of $466MM.
We project MGM’s Las Vegas Strip properties to produce net revenue of $1,184MM and EBITDA of $273MM. We believe RevPAR is up 1.5% YoY, flatish YoY casino and other growth and low single digit (1-2%) operating expense declines.
- Bellagio: $282MM of net revenue and $72MM of EBITDA
- 2% RevPAR increase
- -2% growth in casino & other
- 1Q12 had low hold according to MGM but casino & other revenues increased 16% YoY
- 2% expense decline
- MGM Grand: $241MM of net revenue and $50MM of EBITDA
- 2% increase in RevPAR
- 2% increase in casino & other
- 2% decline in YoY expense growth
- Mandalay Bay: $183MM of net revenue and $45MM of EBITDA
- Flat YoY RevPAR
- 3% increase in casino & other
- 2% decrease YoY expenses
- Mirage: $155MM of net revenue and $33MM of EBITDA
- 2.5% RevPAR increase
- 5% increase in casino & other
- 1% increase in expenses
- Other US
- MGM Grand Detriot net revenue of $138MM and EBITDA of $40MM
- Mississippi net revenue of $121MM and EBITDA of $23MM
MGM Macau is projected to report $737MM of net revenue and $180MM of EBITDA
- If MGM Macau held at its historical average of 2.95%, we estimate that the property would have reported EBITDA of a whopping $205MM.
- We think Rolling Chip volume set a quarterly record for MGM Macau including an incredible month of March. RC climbed 16% and 38% in Q1 and March, respectively.
- Volumes tend to rise when hold is low and that was certainly the case here
- We estimate Mass revenues climbed 28%
Our assumptions in HK$MM’s are as follows:
- Net casino revenue of $5.6BN and total revenue of $5.7BN
- Net VIP win of $3.4BN
- VIP Turnover: 205,900 assuming 9% direct play
- Hold of 2.70%
- Rebate rate of 38.5% or 1.04%
- Net VIP win of $3.4BN
- Mass table win of $1.6BN
- Slot win of $573MM
- Variable expenses of $3,581MM
- $3,064MM of taxes and gaming premiums
- $495MM of commissions to junkets
- Fixed expenses of $700MM
We estimate that City Center will report $66MM of EBITDA on $277MM of net revenues
- Aria: $222MM of net revenue and $53MM of EBITDA
- Mandarin Oriental: $13MM of revenue and $1MM of EBITDA
- Crystals: $14MM of revenue and $9MM of EBITDA
- Vdara: $23MM of revenue and $6MM of EBITDA
- $6MM of development and administrative expenses
- D&A: $226MM (vs. guidance of $227MM)
- Corporate & other: $41MM (guidance of $40-45MM)
- Stock Comp: $9MM (guidance of $9MM
- Net interest expense: $234MM
- Income from unconsolidated affiliates & non-operating items from unconsolidated affiliates of ($24MM)
- $6MM of tax expense
- Minority interest of $59MM