Majestic Research

Reuters

MGM Mirage 4th-Qtr Profit More Than Doubles

By Deena Beasley
Published: February 14, 2007

MGM Mirage Inc, the world’s No. 2 casino operator, said on Wednesday its fourth-quarter profit more than doubled, driven by strong results at its Las Vegas Strip casinos as well as condominium sales and proceeds from property insurance.

The company’s shares gained 4.6 percent to $73.44 in early trading on the New York Stock Exchange.

“Trends in Las Vegas have been strong, but even given that, the magnitude of the strength at MGM was impressive,” said Matt Jacob, an analyst at Majestic Research.

MGM’s net income rose to $201.6 million, or 69 cents a share, from $97.8 million, or 33 cents a share, a year earlier.

The Las Vegas-based company said the results included 15 cents a share from sales of Las Vegas condominiums and 17 cents a share in insurance proceeds. Earnings per share from continuing operations for the quarter were 68 cents, MGM said.

Bear Stearns analyst Joe Greff calculated that MGM posted an adjusted profit of 52 cents a share, which is comparable to the 51 cents a share he had been expecting.

Wall Street analysts, on average, expected an adjusted profit of 47 cents a share, according to Reuters Estimates.

Net revenue for the quarter rose 11 percent to $1.85 billion.

MGM, which acquired Mandalay Resort Group in April 2005, said fourth-quarter gaming revenue at casinos open at least a year rose 13 percent, helped by strong sales on the Las Vegas Strip and the reopening at the end of August of its Beau Rivage casino in Mississippi, which was closed by Hurricane Katrina.

“We expect 2007 to be another year of strong financial performance. We expect outstanding returns on new amenities to drive organic growth,” Jim Murren, MGM’s president and chief financial officer, said in a statement.

Jacob said early first-quarter data for Las Vegas look strong, and key upcoming events will include the Chinese New Year holiday and college basketball’s March Madness.

MGM’s Same-store revenue per available room, a key measure of hotel performance, rose 8 percent in the fourth quarter at the Las Vegas Strip properties, which include resorts like the Bellagio and MGM Grand.

In addition to its Nevada operations, MGM owns a casino in Detroit and has a joint venture with Boyd Gaming Corp. (BYD.N: Quote, Profile , Research) to run the Borgata hotel-casino in Atlantic City, New Jersey.

MGM is constructing a 66-acre Las Vegas CityCenter project, which has an estimated budget of $4 billion, including proceeds of $3 billion from the sale of condominiums.

Overseas, MGM has a joint venture to build two casinos in the Chinese gambling enclave of Macau, the first of which is expected to open late next year.

The company also announced this week that it is studying plans for a mixed-used development on land it owns in Jean, Nevada, about 25 miles south of Las Vegas.

Over the past year, MGM’s stock has risen about 80 percent, compared with a gain of about 49 percent for the Dow Jones U.S. Gambling Index.