MGM Resorts (MGM) Also Pre-announces Terrible Third Quarter 2010 Results
From today's announcement of third quarter 2010 results:
Net revenue for the third quarter of 2010 is expected to be approximately $1.56 billion. Excluding reimbursed costs revenue mainly related to the Company’s management of CityCenter (approximately $89 million in the 2010 third quarter and $16 million in the 2009 third quarter), net revenue is expected to be approximately $1.47 billion, a decrease of 3% from 2009. Reimbursed costs revenue represents reimbursement of costs, primarily payroll-related, incurred by the Company in connection with the provision of management services.Operating loss includes a variety of non-cash items which I have added back to come up with a third quarter adjusted EBITDA of approximately positive $271 million.
Las Vegas Strip REVPAR was $97 for the third quarter of 2010, a decrease of 2% from the third quarter of 2009, with occupancy of 93% and an average daily rate of $105. Bellagio and Mandalay Bay both recorded REVPAR increases in the third quarter.
Third quarter total casino revenue was approximately 9% lower than the prior year, with slots revenue down approximately 3% for the quarter.
Operating loss for the third quarter of 2010 is expected to be approximately $206 million which includes the CityCenter investment impairment, the Borgata impairment and the Company’s share of the CityCenter residential impairment charge discussed further below.
Unfortunately, the company's third quarter interest expense was $285 million, which EBITDA failed to cover, meaning that they burned $14 million. And, that's not counting the cash that needs to be invested (cap ex) to maintain the hotels, something that competitor CEO Steve Wynn commented on in last quarter's conference call.
Year-to-date adjusted EBITDA for 2010 has been $670 million, compared with $852 million for the first three quarters of 2009 - so it's down 22%!
Truly, the bulls' optimism regarding MGM is wildly inconsistent with the facts. See my comments regarding the massive stock offering by MGM and its largest holder Tracinda.
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