LAS VEGAS MGM Resorts International has posted disappointing second quarter results, held back by massive charges related to its Las Vegas CityCenter development.
MGM lost US$883 million during the quarter—US$2 a share—about three times higher than its US$212 million loss in the second quarter of 2009. However, the results include a one-time charge of US$1.12 billion related to CityCenter.
Total revenue rose slightly, to US$1.54 billion from US$1.49 billion. RevPAR for MGM’s Vegas Strip properties slipped 2%, although performance at Bellagio and MGM Grand improved, the company says. Occupancy and ADR across the portfolio both held steady, dropping a point and a dollar, respectively. Quarterly gaming revenue was down 6% year over year.
“The Las Vegas operating environment remains difficult, but as we expected, we are seeing a gradual recovery,” says CEO Jim Murren. “CityCenter is seeing improved business activity. Aria is gaining brand awareness, which led to a 17 percentage point sequential occupancy increase in the quarter and higher non-casino revenues.”
MGM reports an improved convention mix that boosted RevPAR, and the company expects that trend to continue through the rest of 2010.
MGM retains about US$13.3 billion of debt, and it has $1.5 billion in available borrowing capacity along with US$570 million of invested cash available for future liquidity needs.
“We have made tremendous progress in addressing our balance sheet and liquidity needs by amending and negotiating the extension of our credit facility, accessing the secured bond market, and in April successfully issuing US$1.15 billion in convertible notes. These transactions have provided over US$2 billion of available liquidity,” says Chief Financial Officer Dan D’Arrigo. “Additionally, our Macau bank refinancing was an overwhelming success. MGM Macau now has a solid long-term capital structure and our focus is on advancing our potential IPO transaction.”