MGM YOUTUBE

In preparation for the MGM Q2 earnings release on August 3rd, we’ve put together the pertinent forward looking commentary from MGM's Q1 earnings release/call.

MGM 1Q YOUTUBE

  • “We’re starting to be able to yield up rates. In the first quarter, we yielded up room rates a little over half the time. But in the month of April, we yielded up rates almost 70% of the time. And we continue to catch premium to the market, both in terms of occupancy and in terms of rate.”
  • “We see also some of the macros in terms of McCarran Airport. The passenger declines have slowed and load factors are moving up, and our contacts with the airlines are promising, particularly for the back-half of this year and into 2011….we still expect 38 million plus visitors to come to Las Vegas this year.”
  • [Convention room nights mix] “So the 14.5% mix is lower than we’d like it to be and lower than we believe it will be next year…. We’re building toward a normalized convention room mix for an annual basis of about 15%.”
  • “Our REVPAR was down 8% in the first quarter. It will be down less again here in the second quarter, probably in the mid to low single digits, and that’s four, five quarters in a row where our REVPAR trends are starting to sequentially improve, and we’re going to be in the black, we believe in the second half of the year for sure in REVPAR….The degree of how positive we are in REVPAR will be determined by the convention business, particularly in the fourth quarter.”
  • “Following the quarter March 31, the company received a tax refund of approximately $380 million and also completed a convertible bond offering, which netted proceeds of 1.12 billion. The proceeds of both of these events will used to temporarily reduce the outstanding amounts under our senior credit facility. The convertible notes were offered at a rate of 4.25% and at a conversion premium of approximately 27.5%. In connection with this offering, we entered into a cap call transaction, increasing the conversion premium to approximately 50% or $21.86 per share.”
  • “Our stock compensation expense in the second quarter is estimated to be approximately $9 to 10 million. Depreciation expense in the quarter is estimated to be approximately $165 to 175 million. We estimate that our gross interest expense for the second quarter is in a range of approximately $280 to 290, again with no capital interest expense expected in the quarter.”
  • [Aria] “For May, we’re forecasting occupancy of 80%.... April was 69%....I would say that we were, in Aria in May for example, might run in the mid 70s midweek and in the low 90s on weekends.”
  • “Maintaining the momentum of strong lead volumes and conversions, we expect to meet our convention forecast for the very first year of operation for Aria at 160,000 room nights. Currently, we have 102 of those room nights on the books. For 2011, Aria has over 46,000 room nights, convention room nights, on the books, and this is a 127% increase of what we had on the books this time last year.”
  • “Several tenants have scheduled to open over the next several months, including such notables as Prada, Christian Dior, Zegna, and Gucci. Now this will result in Crystals being 76% occupied by the end of the third quarter and 82% occupied by year’s end.”
  • “Most of the cost cuts that we made on labor side are permanent, thought we will be bringing people back on a volume-related basis. But our FTEs were down 4% in the quarter I believe versus the first quarter of a year-ago, and our occupancies, as you see, are relatively high. So we don’t expect that labor of course, which is the biggest component of our expense structure, will move up materially. There will be some as it relates to convention business, the FTEs around catering and conventions, but that will be minimal relative to the base of FTEs that we have. So the FTE component will be flat to down for the balance of this year. Our other controllable costs are in very good shape. So we believe that as the revenues are starting to pick up here, that a very high margin of that revenue will come down to profit.”
  • [IPO] "Kind of late third quarter, early fourth quarter.”
  • “I think there are 864 rooms of the 1,525 or so at Vdara currently being operated as a hotel. The remaining 600 and some odd rooms are all under contract, or these apartments are all under contracts. As we process through those, which will be somewhere mid-summer, we suspect that we’re going to close about 175 of the Vdara’s 600 units, and the rest will be returned to Vdara for hotel inventory. So that will make the hotel size approximately 1,350 rooms and about 175 residences.”
  • [Convention room bookings] “865,000 rooms so far we’ve booked, through the first quarter of this year, for conventions for next year….this is same-store number of rooms we have on the books for the calendar year 2011 [excluding City Center]…. Fourth quarter is unclear. We might be down a bit in the fourth quarter, because of some city-wides that are moving in and out. But in a general sense, it looks like, at least for the third quarter, we can say we think we’re going to be up. It looks like we’re going to be up in the second quarter as well, by the way, both in terms of convention room revenue and in terms of room nights.”
  • “So the room rates that we’re getting for this year in the convention block is about what we were doing back in ‘04, ‘05, and the room pricing that we’re getting on conventions for next year is very comparable to what we achieved in a really good year of 2007.”
  • “So as we get closer and closer to what we consider to be full occupancy, which will be in the low-90s given the marketplace currently, we’re not going to be able to drive rate beyond what it is now. And it runs in the $180 to $190 range at Aria, a little bit more at Mandarin and a little bit less at Vdara.”
  • “So we look to make money in the second quarter, and all the various components of CityCenter are going to be at least breakeven or making money by the end of the first quarter – second quarter, pardon me.”
  • “CityCenter, when you kind of look at it in its totality, it doesn’t make much money at 65%. But it starts to make money around 75%, and of course, as you get to 90, you start to make a lot of money.”
  • “Our market share in baccarat, if you pull Aria out, was 38%.  And of course when you add Aria to it, Aria’s share was about 8%, a little over 8%. So our baccarat market share is 46, 47% with Aria in terms of market share. A year ago, our baccarat market share was 37.5%. So our market share has moved up without Aria.”