MGM Mirage reports falling profit in quarter

By Richard N. Velotta

Published Monday, May 4, 2009 | 1:56 p.m.

Updated Monday, May 4, 2009 | 3:10 p.m.

Las Vegas casino giant MGM Mirage suffered through a "brutal" first quarter with revenue down 19.3 percent and earnings off 12.5 percent compared with last year, company officials said today.

While MGM Mirage chairman and CEO Jim Murren said convention cancellations peaked in January and February, traffic appears to be rebounding with Las Vegas property occupancy at 95 percent in March and 97 percent in April.

Murren said weekends have been solid, bolstered by events like last weekend’s Pacquiao-Hatton fight and this month’s opening of "The Lion King" at Mandalay Bay, but midweek bookings remain volatile.

"It’s still tough, but it was brutal at the early part of the year," Murren said in a conference call with investors today. "I don’t want to give false hope or expectation, but we think the worst of it’s behind us."

Murren said from December through February, convention bookings fell 29 percent. The company is projecting convention traffic to be down 25 percent in 2009.

The company, which operates the MGM Grand, Bellagio, The Mirage and Luxor in Las Vegas, reported earnings of $105.2 million, or 38 cents a share, on revenue of $1.66 billion for the quarter, down from earnings of $118.3 million, or 40 cents a share, on revenue of $2.06 billion in the first quarter of 2008.

Revenue per available room fell 34 percent to $102 for the quarter and casino revenue declined 16 percent with slot revenue down 12 percent. The company’s table games volume, excluding baccarat, was down 20 percent for the quarter, but high-end gaming fared better with baccarat down only 1 percent.

In the conference call, Murren affirmed that the company wouldn’t have a "fire sale" of properties to raise cash after the close of the sale of the Treasure Island resort to Ruffin Acquisition LLC for $775 million.

Murren said one of the biggest achievements for the company was the completion of the financing of CityCenter, which is still targeted for a sequenced fourth-quarter opening.

Bobby Baldwin, chief design and construction officer for the company, said Vdara would open Oct. 1, the Mandarin Oriental, Veer towers and Crystals retail center would open Dec. 3 and Aria would open Dec. 16.

More than 105,000 room nights already have been booked at Aria. The company also announced that the Elvis Presley-themed Cirque du Soleil show has started rehearsals in Montreal and that shows would begin when Aria opens.

Murren said the company is projecting a 5 to 6 percent increase in Las Vegas visitation in 2010, largely because of the pending opening of CityCenter.

MGM Mirage’s Detroit and Mississippi properties fared well in the quarter. Cash flow was up 18 percent to $41 million in the first quarter at MGM Grand Detroit and the combined cash flow for Beau Rivage in Biloxi, Miss., and Gold Strike Tunica was up 15 percent to $31 million for the quarter.

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MGM Mirage at a glance:

+ The company is Nevada’s largest taxpayer and has about 56,000 employees worldwide.

+ MGM Mirage resorts in Las Vegas include MGM Grand, Bellagio, Mandalay Bay, Mirage, Luxor, Excalibur, New York-New York, Monte Carlo and Circus Circus

+ The company recently announced that is has completed financing for CityCenter, the largest non-public construction project in the world.

+ “While we experienced significant group cancellations early in the quarter and experienced a continuation of negative consumer spending trends from the fourth quarter, cancellations have tapered off and we see signs that business levels seem to be stabilizing,” Jim Murren, MGM Mirage chairman and CEO

- The company had 52-week week stock price lows March 3 ($2.40), March 5 ($1.88) and March 6 ($1.81).

- May 1 stock price: $7.86. (52-week low: $1.81)