MGM 1Q2013 REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

 

OVERALL

  • BETTER - With higher hold, MGM handily beat consensus and even us in Las Vegas and the Strip.  Volume metrics were solid.  In Macau, EBITDA was in-line with our estimate but above the Street. 

MGM COTAI OPENING

  • SAME:  MGM Cotai remains on track to open 1H 2016.
  • PREVIOUSLY: "We remain on track, as we've said before, for an early to mid 2016 opening." 

STRIP TRENDS

  • BETTER:  2Q Strip trends are better than that seen in 1Q.  MGM picked up some market share and remain committed to cost containment. 
  • PREVIOUSLY: "Our international casino business continues to be strong, as this was a record fourth quarter for our Strip properties when you include ARIA for both the international drop and win. And we're seeing some encouraging signs in our domestic casino play, as our non-baccarat table drop at our wholly-owned Strip properties increased 6% year-over-year."
    • "But we are starting to see domestic customers again, starting to see their activity pick up. And it's been a while since we've been able to say that, so we're pleased with the direction that's going."

STRIP REVPAR

  • SAME:  1Q REVPAR increased 1% with room revenues up 2%
  • PREVIOUSLY: "Looking at the room trends here in the first quarter, we anticipate the trends to be similar to what we saw in the fourth quarter, with room revenues up low single-digits and essentially flat REVPAR."

CONVENTION OUTLOOK

  • SAME:  Convention in the quarter for the year picked up in 1Q.  April will benefit from a stronger convention calendar.  
  • PREVIOUSLY: "We like the way our convention business is shaping up for the calendar year 2013, and obviously the leisure and transient business has been performing well for us. But that's a big part of our business, so I think it's too premature right now to go out with full-year guidance. But we like the way the calendar is shaping up, and we like the way the convention business is booked and the pace that we're on, and I think the best is to kind of leave it at that for now."

ARIA

  • BETTER:  Hold was high as Aria EBITDA grew 300% YoY in 1Q.  1Q total gaming revenues were $130MM vs $71MM last year.  1Q table revenues were $90MM vs $33MM last year.
  • PREVIOUSLY: "While it is still early, ARIA is off to a good start in 2013, and we expect to continue to build traction throughout the year. Convention sales are pacing well, as room nights on the books for 2013 as of February 1 are 14% ahead of last year at this time....2014 is looking even stronger as we look forward. So there's still work to do in 2014, but its pace is actually even up higher than what we're experiencing here in 2013."

MGM CHINA VIP

  • SAME:  Margins increased 80bps to 26.2% in 1Q from 25.4% last year.  Top-tier junket volume was strong and MGM saw benefits from its level 2 expansion. 
  • PREVIOUSLY: "We're seeing early signs of success from our level 2 VIP gaming floor expansion, which opened in late September. We're also expecting to add another junket operator in the second quarter of 2013. The fourth quarter was our strongest volume quarter for the year for our own in-house VIP business. We expect to see continued growth in this business with the support from the MGM International marketing team."
    • "This transition of mix has also driven an increase in our pre-branding-fee EBITDA margins by 60 basis points. We expect this positive trend of increasing main floor mix to continue, driven by upgrades to our main gaming floor product, marketing efforts, and of course the strong growth in the Macau mass market revenues."