Thursday, Jan. 20, 2000 | 11:18 a.m.
Strong performances at all of its properties propelled MGM Grand Inc. of Las Vegas to another record quarter, the fifth in a row its earnings exceeded analysts' expectations.
The casino operator said fourth-quarter net income rose 88 percent to a record $39.9 million, or 68 cents a share, from $21.2 million, or 41 cents a share, in the 1998 period. Revenue jumped to a record $420.9 million from $214.9 million.
Before non-recurring charges related to the opening of MGM's temporary casino in Detroit, the 1999 quarter's net was $41.7 million, or 71 cents a share. Analysts had projected earnings to be 64 cents a share.
For the full year, net income after non-recurring charges related to Detroit rose to a record $86.1 million, or $1.43 a share, from $68.9 million, or $1.22 a share. Revenue increased to a record $1.4 billion from $773.9 million.
Excluding the one-time charges, 1999's earnings were $141.6 million, or $2.35 a share.
The fourth-quarter and full-year comparisons were helped by the opening of the Detroit casino, as well as MGM's acquisition of Primadonna Resorts Inc. last March. That merger gave MGM full ownership of New York-New York and three Primadonna hotel-casinos at the California-Nevada border.
In addition, all MGM properties contributed to a record total quarterly cash flow of $127 million -- 90 percent higher than in the 1998 fourth period. Full-year cash flow rose 93 percent to $421.8 million.
The company's flagship property, the MGM Grand, produced record table-game volume, room revenue and average daily rates despite a lower baccarat hold percentage than a year ago. Strong slot and non-baccarat table-game play drove the gains in casino revenue.
New York-New York's cash-flow margin of 42 percent for the quarter remained the highest in Las Vegas, while the Detroit casino generated $100.9 million of revenue and $33.4 million of cash flow in its first full quarter of operations. The company's Darwin, Australia, casino also posted higher results.
MGM's properties in Primm -- Whiskey Pete's, Buffalo Bill's and the Primm Valley Resort -- generated $54.4 million of quarterly revenue and a 30 percent cash-flow margin.
Overall, the company's cash-flow margin was an impressive 30 percent for the quarter.
"Las Vegas had a spectacular year on the high end of the market, and you see it in the MGM numbers -- they're spectacular," said Dave Ehlers, chairman of Las Vegas Investment Advisors.
"MGM is consistently above expectations," said Stuart Linde of Lehman Brothers. "The MGM Grand was hurt a little by the hold percentage, but for the most part, it was very solid.
"Detroit was a big winner," he said. "The business trends are quite good in Las Vegas, with a lot of events coming to drive people to the flagship property."
"Our company's strong profit margins and earnings, as well as our superior balance sheet, afford us the necessary financial flexibility to execute our goal of optimizing free cash flow for internal growth, cash dividends, share repurchases, debt reduction and acquisitions," MGM Grand President Jim Murren said in a statement.
MGM previously announced a 2-for-1 stock split effective Feb. 10 and a 10-cent-a-share quarterly dividend, the first by a major casino company.
MGM stock was quoted at $48.3125 a share, up 75 cents, in early afternoon trading today.
archive
