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MGM Resorts 4Q loss widened; performance misses analysts' expectations

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LAS VEGAS — MGM Resorts International's fourth-quarter loss widened, hurt by a hefty provision for income taxes related to its liabilities in Macau, China, the world's largest gambling market.

Nonetheless, MGM CEO Jim Murren told Wall Street analysts Tuesday that the company's earnings before taxes and non-recurring costs were the best since 2007. A considerable gap remains between the latest results and those in 2007 when, as Murren joked, he didn't have gray hair.

"It was pretty heady back then," he said of abundant spending in a pre-recession era, adding that he wasn't sure if it would ever rise to that level again.

He recalled a $300,000 check for 12 people dining at the Prime Steakhouse inside the Bellagio, mostly spent on wine. "We haven't seen that for a while," he said.

The Las Vegas-based company owns and operates 10 casino-hotels on the Las Vegas Strip, the MGM Grand Detroit, the Beau Rivage and Gold Strike Tunica in Mississippi and MGM Macau in China.

The company said that MGM China's board declared a special dividend of $400 million. It will be paid on March 19 to shareholders of record on March 10.

The company lost $342.3 million, or 70 cents per share, for the three months ended Dec. 31 because of the non-cash charge related to the income tax for the company's foreign assets. That compares with a loss of $56.8 million, or 12 cents per share, a year earlier.

The current quarter's provision for income taxes totaled $328.1 million. A year ago it was $3.9 million.

Earnings, adjusted for pretax expenses and non-recurring costs, amounted to a penny per share, missing Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 6 cents per share.

The casino and resort operator posted revenue of $2.39 billion in the period, minus promotional allowances. Analysts expected higher revenue of $2.43 billion, according to Zacks.

When other casino companies — Wynn Resorts and Las Vegas Sands — honed in on the Asian gambling hub of Macau as the recession worsened at home, MGM Resorts focused on Las Vegas and United States developments and eventually opened a single overseas property, MGM Macau.

Fortunes in Macau have shifted, though, since a government corruption crackdown scared off high-spending VIP gamblers.

Revenue and earnings at MGM's property in Macau dropped 22 percent in the last quarter. It's still a lucrative market, but just not as lucrative as it once was.

"There were many years where being a Las Vegas centric company was unattractive in investors' minds," Murren said after the call with investors.

Las Vegas has been showing signs of recovery, though, and MGM Resorts has been investing heavily in new Strip-front attractions, a 20,000-seat arena for sports and entertainment and a festival site.

Addressing long-standing rumors that The Mirage resort, which performed poorly in the last quarter and full year, could be up for sale, Murren said the company looks at anything that might generate value for shareholders.

"We're not blindly in love with any of our properties," he said.

For now, he said the company is changing its restaurants and adding a bar because the casino hotel with the iconic volcano at its entrance doesn't have enough to keep visitors there throughout the night, he said.

Elsewhere, the company is moving forward with properties in Baltimore and another in Macau. They are expected to open in the fall of 2016.

For the year, MGM Resorts posted a loss of 31 cents per share on revenue of $10.08 billion.

Its shares rose 41 cents, or 1.9 percent, to close Tuesday at $21.87.

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Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MGM at http://www.zacks.com/ap/MGM

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Keywords: MGM Resorts, Earnings Report

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