MGM MIRAGE profit skyrockets

Wednesday, July 21, 2004 | 10:48 a.m.

MGM MIRAGE reported its second straight record quarter today, nearly doubling earnings over the same period a year ago and easily beating analysts' estimates.

The Las Vegas company that has the MGM Grand, Bellagio, Mirage and Treasure Island hotel-casinos among its holdings, reported net income of $104.7 million, or 72 cents a share, compared with $53.8 million, or 35 cents a share, for the same quarter a year ago. A survey of analysts by Thomson First Call had predicted quarterly earnings of 58 cents a share.

MGM MIRAGE stock was up 3.3 percent at midday today, climbing $1.40 from Tuesday's closing price to $43.73.

Revenue rose 10 percent from $974.1 million in 2003 to $1.07 billion for the current quarter. The company said casino revenue climbed 8 percent to $551.7 million while non-gaming revenue was up 12 percent to $520.8 million.

"We truly have nothing bad to comment about in the quarter," said Deutsche Bank gaming analyst Marc Falcone in a report issued today. "It was another tremendous quarter."

The company said cash flow of $384 million for the quarter and earnings per share were records, beating levels achieved in the first quarter of 2004.

MGM MIRAGE, which announced last month that it is acquiring Mandalay Resort Group, restating the value of the deal today to $8 billion, attributed the favorable results to increased traffic driven by new non-gaming amenities, higher room rates and customers willing to spend more on their trips.

"The composition of our customers is changing, with per-capita spending and attitudes improving," said President and Chief Financial Officer Jim Murren in a conference call this morning. "Our customers are more liquid, spending more money. And, we've expanded our revenue base by bringing more customers to Las Vegas."

Company officials listed several new restaurants at the MGM Grand hotel-casino as key contributors to the non-gaming revenue increase.

John Redmond, chief executive of MGM Grand Resorts, a subsidiary company, said the completion of the new restaurants has coincided with the opening of the Las Vegas Monorail, which is expected to drive even more traffic to the property in upcoming quarters.

"In the first couple of days (of the monorail's operation), we saw about 24,000 people," Redmond said. "It's very, very impressive and, of course, all that traffic is coming right through this area where we made this investment."