Casino news source: Sun Herald - http://www.sunherald.com/
Beau Rivage parent company's profits up, in part because of casino's reopening
THE ASSOCIATED PRESS
LAS VEGAS - MGM Mirage Inc., the world's second-largest gambling company, on Wednesday said its fourth-quarter profit more than doubled on profits from Las Vegas condominium sales and from insurance payouts and reopening the Beau Rivage, its Mississippi casino, after Hurricane Katrina.
Quarterly net revenue rose 11 percent to $1.85 billion from $1.66 billion in the prior year, with the reconstructed Beau Rivage contributing $89 million of the increase. The $800 million resort reopened Aug. 29 after extensive repairs for hurricane damage.
Net income jumped to $201.6 million, or 69 cents per share, compared with $97.8 million, or 33 cents per share, during the same period a year ago. Net income from continuing operations was 68 cents per share.
Analysts surveyed by Thomson Financial were looking for earnings of 48 cents per share, excluding one-time items.
Morgan Stanley analyst Celeste Brown said after subtracting condo sales and insurance profits, net income was 46 cents per share and "comparable" to estimates.
"Overall it was kind of an unspectacular quarter. Solid but unspectacular," said Keybanc Capital Markets analyst Dennis Forst. "The 68 (cents per share) got people more excited than it should have."
After surging more than 5 percent in morning trading, MGM shares were up 96 cents, or 1.4 percent, at $71.19 Wednesday afternoon on the New York Stock Exchange.
The company said it saw $86 million in income from Hurricane Katrina insurance recoveries. Property transactions, which include insurance recovery income from Katrina, contributed 17 cents per share. Profits from the sale of Tower 2 condominium units at The Signature at MGM Grand in Las Vegas contributed 15 cents per share to earnings.
The current quarter's results also were reduced by a stock-based compensation charge of 3 cents per share and pre-opening and startup costs totaling 2 cents per share.
MGM said sales of condo units at its planned $7 billion CityCenter megaresort on the Las Vegas Strip, set to open in November 2009, were expected to bring in more revenue than expected.
The company said it had obtained purchase contracts on 90 percent of the 227 units at The Mandarin worth $613 million after they were made available for sale in mid-January. The company will not book the results until later quarters.
"It's over $50 million more in profit, and that's just the Mandarin," Chief Financial Officer Jim Murren told The Associated Press. "This is a 10-round fight but we just about knocked them out in the first round."
About $2.5 billion of CityCenter's price tag is to be offset by proceeds from condo sales, but Murren said "it will be better than that probably." The company said it had taken reservations on more than half of the 2,426 units in three other towers at CityCenter.
Gambling revenue climbed 13 percent on strong Las Vegas Strip results, and the Beau Rivage. Hotel revenue gained 8 percent during the quarter.
Consensus estimates put revenue at $1.81 billion.
On Monday, MGM announced it would enter a joint partnership to develop a residential community and casino on 166 acres it owns along Interstate 15 about 25 miles south of the Strip, while closing the Nevada Landing casino there in April.
It also expects to open its $1.1 billion MGM Grand Macau on the Chinese gambling enclave in the fourth quarter and said a second Macau casino was planned.
Murren said the company was confident regulators in Nevada would approve its partnership with Pansy Ho Chiu-king as early as this month. Ho's father, billionaire casino magnate Stanley Ho, has been accused of having links to organized crime.
MGM shares have doubled since September, and shares of all major casino companies have soared in recent months due to their developments in Macau and the interest of private equity bidders. Harrah's Entertainment Inc., the world's largest casino company by revenue, agreed in December to be bought for $17.1 billion.
"It's Macau, it's private equity investors coming in to buy Harrah's. It's talk about monetizing some of the real estate," Forst said. "It's just investors getting more comfortable with gaming companies as an alternative." |
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