MGM 3Q 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:

  •  WORSE:  "The stock went up that much for this?"  MGM missed in every region and proved our contention that a meaningful Las Vegas recovery is still far off.

LV TRENDS

  • SLIGHTLY WORSE:  MGM slightly missed Street expectations for LV 3Q EBITDA.  LV 3Q REVPAR was +3% YoY, in-line with guidance.  Luxury/international segments did well. 
  • PREVIOUSLY:
    • LV 3Q REVPAR: +3%
    • The international is still strong. I mean I think our competitors saw that as well. We certainly did at our luxury properties.

MGM MACAU MASS SEGMENTS

  • SLIGHTLY WORSE:  Slot growth is slowing due to harder comps.  Mgmt will upgrade Supreme Land with 60-70 more premium slot machines in 2014. 
  • PREVIOUSLY:  
    • It seems to be pretty strong right across the mass segments.
    • We were able to drive main floor table game volume up 11% and revenue up 29% year-over-year with our continued focus on table yield management and strategically targeting the premium segment. Slothandle increased by 11% during the quarter and we remain the market leader for a single property in terms of slot gross gaming revenue.

CONVENTION TRENDS

  • MIXED:  4Q REVPAR flat guidance was than what Street expectations.  They are seeing Q1 2014 as almost a record for convention business with convention mix approaching 16% and convention room nights approaching record levels.  MGM is also optimistic on FY 2014 as currently 88% of the room nights are booked, higher than the typical 80% booked at this time of year.  However, mgmt was hesitant to give 2014 REVPAR guidance.
  • PREVIOUSLY:
    • Convention trends for 2013 remained in line with our expectations that we had coming into the year. Our second quarter convention mix increased slightly and our rate grew mid single-digits. We continue to see moderate growth in convention room nights going into the third quarter and based on that, along with some solid retail booking trends we're seeing, we expect REVPAR in the third quarter to be up 3%.
    • These strong sales trends are solid indicator for our business in 2014 and going forward, and our 2014 pace remains up double digits. Recall in March of 2014, we have CON/AGG big citywide convention back in Las Vegas; some150,000 attendees usually show up for that show.
    • [Convention 2014 ADR] It's pacing right now up about mid single-digits right now in terms of its pace.
    • But looking beyond that, we're seeing significant pace increases in each of the second, third and fourth quarter next year. In fact, we're up at least high single-digits each quarter next year when you're looking at the non-CON/AGG piece of the business. So we're pretty excited about the pace of 2014 and the traction that we continue to make in the important segment of our room booking pace on the convention and meeting side.
    • Convention room nights as a percentage of mix, Robin, we're pacing right now for 2013 at about 14.5% to kind of 15% is the range that we're pacing with rate being up over last year.

NEW YORK NEW YORK/ MONTO CARLO

  • SAME:  NY/NY and Monte Carlo remodeled sections will open in Spring 2014
  • PREVIOUSLY:  Next year, we'll see quite a bit of growth, we think, at New York-New York and Monte Carlo because they'll both benefit from the capital we're spending this year to significantly upgrade their food and beverage offerings and retail offerings and their street frontage.

CRYSTALS

  • BETTER:  Crystals continue to perform well.  3Q EBITDA was up 26%. They added 3 tenants in 3Q and another tenant in October.
  • PREVIOUSLY:
    • Crystals had its best quarter ever, up 21% year-over-year. And we continue to add tenants as our second Starbucks is now open and we recently executed two additional leases.
    • Crystals is doing better literally every month. 

ARIA

  • SLIGHTLY WORSE:  EBITDA was negatively impacted by $17MM due to low hold but missed even after adjusting hold.  Table drop increased by 12% YoY.
  • PREVIOUSLY:  
    • Our hotel business continues to improve due to greater brand awareness and increased convention room nights. This was our best REVPAR quarter ever at $194.
    • Aria had a little bit of a challenge for the quarter, partially because they held really well last year and they had some pretty strong play. But I would say the play is still there, maybe one or two customers that may came in last year, didn't come in this year for the quarter. But the solid base is still there. We're seeing a good volume of people coming in. And I think we're pretty happy with the international number.
    • Drop at Aria is up for the six months and so is the win in baccarat

PRINCE GEORGE'S COUNTY, MD

  • SAME:  Maryland decision will be made by year-end.
  • PREVIOUSLY:  We think those presentations will happen in either late September or October. They've indicated a final decision is still expected by year-end. We're extremely excited about this opportunity and feel like we have the winning proposal.

MASSACHUSETTS

  • SAME:  Licensing will be decided in November 2013.  Final decision is expected in April 2014.
  • PREVIOUSLY:  In Massachusetts, we had a big win with the special election in Springfield to approve the host city agreement. Now the company is finalizing the details of our RFP response, which is due by the end of this year. We think we can play a major role in the revitalization of that city in Western Mass and we look forward to delivering a very comprehensive proposal to the state. The state has indicated that that final decision is expected around April of next year.

CORPORATE EXPENSE/STOCK COMPENSATION

  • SAME:  3Q corp expense was $51MM while stock comp was $6MM.  For 4Q, MGM projects ~$50MM in corp expense and $7-8MM in stock comp.
  • PREVIOUSLY:  We expect corporate expense to be in a range of $45 million to $50 million per quarter for the remainder of the year. Our stock compensation is estimated to be approximately $6 million to $7 million in the third quarter and depreciation expense is estimated to be consistent with the second quarter.

MGM COTAI

  • SAME:  MGM Cotai construction is progressing really well.  Piling/sitework will be done by the end of the year.  Basement/tower construction is up next.  MGM continues to target an early 2016 opening with a budget of $2.6BN.
  • PREVIOUSLY:  We are now anticipating an early 2016 opening.