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MGM Resorts International’s (MGM - Analyst Report) first quarter 2012 adjusted loss of 9 cents per share bettered from the Zacks Consensus Estimate as well as prior-year quarter’s loss of 16 cents loss per share.

However, on a GAAP basis, MGM Resorts posted net loss of 44 cents per share compared with a net loss of 18 cents per share in the prior-year quarter.

Net revenue jumped 51% year over year to $2.29 billion. However, excluding MGM China, net revenue increased 5% year over year.  MGM China scored net revenue of $702 million, up 18% year over year. Year-over-year increases in VIP table games volume, main floor table games, and slots were recorded in MGM China.

Inside the Headline Numbers

Casino revenue related to wholly owned domestic resorts increased 9% year over year because of a higher table games hold percentage. The overall table games hold, as a percentage of turnover, was 18.7%, better than the year-ago level of 17.7% but on the lower end of the company’s usual expected range of 19% to 23%. However, revenues from slots increased 7%.

Revenues from rooms grew 6.9% year over year, primarily attributable to higher RevPAR (revenue per available room). For wholly owned domestic resorts, room revenue inched up 3%, with RevPAR at Las Vegas Strip up 4%. However, CityCenter had a tough first quarter, with net revenue from resort operations falling 11% year over year to $234 million.

Operating income for the wholly owned domestic resorts in the first quarter of 2012 was $195 million, up 20% year over year.  

MGM Resorts reported a total operating income of $192.6 million compared with $169.7 million in the year-earlier quarter.

Financial Position

At quarter end, MGM Resorts’ total cash balance was $1.63 billion. Long-term debt outstanding was $13.4 billion.

Our Take

We believe MGM Resorts is ideally positioned to take advantage of both domestic and international opportunities, and is executing well on its business strategy. The company also remains hopeful of development in China. However, a huge portion of debt in its balance sheet remains a cause of concern.  Further, while China is contributing strongly to the company’s growth, domestic business environment is rebounding slowly.

The company which competes with Las Vegas Sands Corp. (LVS - Analyst Report) holds a Zacks #3 Rank (short-term Hold rating). Our long-term recommendation remains Neutral.

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