Casino operator MGM Resorts International turned in its Q4 and FY 2013 report card on Wednesday, which showed the company achieving its “best operating performance since the recession” of 2008. Revenue in the final quarter of the year rose 10% to $2.5b, while adjusted earnings rose 21% to $609m.
Revenue from MGM’s wholly owned domestic operations was basically flat at $1.48b but earnings on the Las Vegas Strip have risen for five consecutive quarters and Q4’s numbers were the best the company has generated in five years. The CityCenter property, in which MGM holds a 50% stake, turned in its best quarter and year to date.
Revenue from MGM China’s operations in Macau – in which MGM holds a 51% stake – rose nearly 27% to $926m and earnings rose 35% to a record $238m. Turnover from VIP gamblers rose 32%, mass market gaming was up 12% and slot handle rose 16%. MGM China’s numbers were suitably impressive that the company has decided to pay a special dividend in two parts: $128m this month and a further $500m in March.
Despite the cash haul, various expenses and impairment charges resulted in MGM Resorts recording a net loss of $38.3m for the quarter, although that’s a dramatic turnaround from Q4 2012’s $1.22b loss. For 2013 as a whole, overall revenue rose 7% to $9.8b, with domestic revenue rising 2% to $6.1b and MGM China up 18% to $3.3b. CityCenter generated $1.25b in revenue in 2013, up 5% over 2012’s contribution. As of Dec. 31, MGM’s long-term debt stood at $13.45b, a small improvement over $13.59b a year ago.
DIGITAL AND FUTURE PLANS
On a post-earnings call with analysts, MGM CEO Jim Murren (pictured) touted the success of MGM’s social casino operation myVEGAS, which recently passed the 2m Facebook fan milestone. Murren says 80k of these myVEGAS players have since visited an MGM brick-and-mortar casino in Las Vegas, adding credence to his November comments that the social casino was “becoming an extremely interesting customer acquisition tool.”
Murren made no mention of MGM’s market-leading online gambling partnership in New Jersey with Boyd Gaming and Bwin.party digital entertainment, other than to say MGM was still talking with state regulators about re-approving its gaming license so MGM can once again be a proper 50/50 partner with Boyd in Atlantic City’s market-leading Borgata casino. MGM famously walked away from Atlantic City in 2010 and put its Borgata stake into a trust after New Jersey regulators raised questions about MGM China minority partner Pansy Ho‘s suitability. Murren said MGM hopes to resolve the matter sometime in the first half of 2014.
Looking ahead, Murren says MGM is on track to complete its second Macau casino, MGM Cotai, by early 2016. The cost of the project has risen $300m to $2.9b due to what Murren says is a decision to “increase the scope and the complexity of our entertainment offerings.” Murren is undoubtedly aware that Macau officials have decreed that in future, priority for the allocation of scarce gaming tables will be given to those operators who devoted more of their properties to non-gaming amenities. Murren said MGM was also pursuing expansion opportunities in Japan and South Korea, but had no concrete info to provide.
On the domestic front, MGM is looking forward to breaking ground in a few months on its casino in Prince George’s County, Maryland, which is due to open in 2016. Murren is also looking forward to the official confirmation (hopefully by May) that MGM will be allowed to build the sole casino in western Massachusetts.