MGM Q4 results miss forecasts, MGM China to pay special dividend

MGM Resorts International posted worse-than-expected Q4 results as Macau revenue fell, but said its MGM China unit will pay a special dividend.

The company reported reported a loss of $342.3 million, or 70 cents a share, in the last quarter of 2014. On an adjusted basis, it had a profit of $0.01, below the $0.07 analysts had been expecting, according to Capital IQ.

The company’s Macau casino MGM China particularly struggled, earning a net revenue of $719 million, 22 percent less than the previous year’s quarter. MGM China’s VIP table games revenue posted a similar hit to other operators as a result of China’s anti-graft measures, decreasing 39 percent due to lower turnover. The casino’s adjusted EBITDA was $185 million, a 22 percent decrease compared to the same quarter the year before.
MGM Resorts’ total consolidated net revenue for 2014 was $10.1 billion, a 3 percent increase over 2013. MGM China’s net revenue for 2014 was $3.3 billion, a 1 percent decrease from 2013, and adjusted EBITDA was a $850 million compared to $814 million in the prior year.

MGM China’s board said it will recommend a final dividend for 2014 of $120 million to MGM China shareholders. If approved, MGM Resorts International will receive $61 million, its 51% share of this dividend. In addition, MGM China announced a special dividend of $400 million, which will be paid to shareholders of record as of March 10, 2015 and MGM Resorts International will receive $204 million from the special payout. 

“Macau results were below Street consensus (mix of stale and new numbers). EBITDA margins were 25.8 percent, below our outlook for 28.7 percent. Demonstrating solid cash flow generation even in a difficult environment, MGM China’s Board announced a special dividend of $400m (MGM Resorts will receive $204m) and will recommend a final 2014 dividend of $120m (MGM Resorts will receive $61m),” said David Bain, an analyst at Sterne Agee.

Dan D’Arrigo, CFO of MGM said the company expects to improve its liquidity to expand its operations this year. “We believe that our improved cash flows, the announced dividends from MGM China, $1.25 billion in capital raised in the fourth quarter, along with revolver availability provides us with adequate liquidity to fund our 2015 maturities and growth initiatives.”