MGM Resorts International didn’t meet Wall Street‘s consensus for the last quarter of 2013, losing eight cents a share instead of earning $0.07 EPS. But analysts were in a forgiving mood. After 
all, the company had lost $2.50 a share just a year ago. Not even cost escalation on MGM Cotai (now $2.9 billion) could dampen what CEO Jim Murren called “our best operating performance since the recession.” Deutsche Bank‘s Carlo Santarelli was moved to significantly upgrade his earnings projections for the next two years, writing, “Macau estimates, given meaningfully stronger mass results, drive the bulk of our upward revisions … As for the LV Strip, the key differentiator in the MGM story in our view, we expect the bulk of the mix driven RevPAR gains will be recognized in the 1Q14. While the cadence of business remains healthy, it appears as though the majority of the … convention room night mix improvement in 2014 will occur in the 1Q14.” Macao also drove better-than-expected cash-flow numbers.
In the last quarter of 2013, Bellagio ($299 million, -8.5%) and MGM Grand ($250 million, -9%) were slightly down while Mandalay Bay ($197 million) increased a whopping 22%. Quarterly revenue for the other Strip properties was as follows: The Mirage ($143 million); Luxor ($78.5 million); New York-New York ($67 million); Excalibur ($61 million); Monte Carlo ($62.5 million); Circus Circus ($46 million). If it were in Atlantic City, Circus Circus would be the envy of the Boardwalk. The only outlying market adversely affected last quarter was MGM Grand Detroit (-6%).
Closer to home, CityCenter continues to recover its investment at a 4% crawl and the metaresort posted a $26 million profit in 4Q13, driven by the settlement of an insurance claim. But across the Pacific Ocean, MGM was reaping $238 million in fourth-quarter cash flow from MGM Grand Paradise, a record amount. The company took a modest writedown on Borgata and a whopping, $366 million impairment charge on the North Strip land once destined for CityCenter II. A small (3%) increase in Strip slot revenue more than recompensed dropoffs elsewhere among MGM’s U.S. casinos.
J.P. Morgan analyst Joseph Greff called the results, “reasonably solid results and an encouraging LV Strip and Macau outlook.” He bumped his price targets incrementally higher. Noting that the results (obviously) didn’t account for potential sources like MGM Springfield, MGM National Harbor or the recapture of Borgata trust monies, he wrote, “we see MGM on a path to attractively grow EBITDA and meaningfully reduce its consolidated net leverage position over the next few years.”
MGM told analysts to expect casino-enabling legislation in Japan in April or May, with a regulatory apparatus in place a year beyond that, meaning that MGM’s won’t be able to apply until mid-2015. “I’m happy to say that, that MGM team has being very warmly received by the business community and the public,” Murren told analysts. Conversion of THEhotel into a Delano is back “on” again, slated for April. Regional properties were down 2%, for which “severe weather” was blamed. Crystals was up 13%, for “record results.” Even condo sales have picked up a bit, with 29 units selling at Mandarin Oriental in the last four months. So if that doesn’t make this a feel-good story, what does?
