Today, MGM Mirage pre-announced their first quarter earnings, two weeks early. These are subject to change but let's be honest, they probably won't.
Why would a company pre-announce? Typically they have some information that is out of alignment with what the market knows and wants to give it some time to absorb. Often it's bad news...
Let's look at MGM's announcement - keep in mind that MGM Mirage only owns half of the CityCenter joint venture (the good half?)
MGM has always been very helpful in breaking out their results by property. Unfortunately, it appears that they are reporting their 50% of CityCenter's results as a single blob - no way to know Aria vs. Mandarin vs. Vdara vs. Crystals. Hopefully we'll get more detailed info in the real quarterly filing.
Compared to the year ago quarter, this time they don't have the benefit of the TI sale nor the insurance income from the Monte Carlo fire. Also, they had to write down the residential inventory at CityCenter, all of which hurt them compared to 2009Q1.
What is interesting - the CCJV netted $24 million from poor saps that abandoned their deposits on residential units. Probably can't count on that cash for 2011Q1.
CityCenter is reporting an operating loss of $255MM in the first quarter, though $171MM of that is a charge related to the write down of the residential inventory. Aria's loss is pegged at $66MM, though most of that is depreciation expense.
Did you spend time at Aria and wonder why you didn't hear your neighbor in the room next door? Chances are, you didn't have one:
"Occupancy percentage at Aria was 63% with an average daily rate of $194."
Ouch. That figure, 63%, is pretty darn low. That said though, the $194 isn't too bad - you wonder if they had lowered rates more if they could have boosted the occupancy.
As a comparison, in the first full quarter Wynn Las Vegas was open, it had an ADR of $264 and 93% occupancy... Granted, 2005 was a very different time for Las Vegas so even mention that here is probably grossly unfair.
Their non-CityCenter results aren't great either - Adjusted Property EBITDA for the wholly owned stuff is down almost 20%. Table games hold was down (it was at the high end of the range in 2009), though volume was up compared to 2009. REVPAR took another hit, to under $100 at $94.
Because of the charges and the prior year having the TI sale, they swung from $355MM operating profit to an $11MM loss. MGM Mirage has worked hard to pay down its debt and that's starting to show in the results as interest expense decreases.
So - tough quarter for MGM but they have some cash and borrowing available so they'll probably ride it out just fine. Hopefully in Q2 we'll see Aria firing on a few more cylinders - hard not to think that if this bleeding continues that they'll shed some additional service folks and degrade the experience for the guests.
In other news, the company announced a private placement: