shares rose 1.6% after the casino operator announced blowout second-quarter earnings that were nearly double the year-ago quarter and topped analyst expectations by 16 cents a share.
MGM Mirage, which announced a deal to purchase
Mandalay Resort Group
for $4.8 billion in cash just over a month ago, announced record second-quarter net income of $104.7 million, or 72 cents a share, up from the $53.8 million, or 35 cents a share, it had last year.
Excluding all items, which is how Wall Street views the company, MGM said it earned 74 cents a share, crushing Wall Street's 58-cent estimate, according to Thomson First Call, and up from the 43 cents a share it had a year ago. In reaction to the upside surprise, shares of MGM -- which have fallen nearly 15% since its bid for Mandalay was accepted on June 15 -- were up 67 cents to $43.
Revenue came in at $1.07 billion, up 10% from last year, and slightly better than the $1.05 billion expected by Wall Street. The company said that casino revenue grew 8% while hotel revenue grew 9% in the quarter, driven by strong results from its properties on the Las Vegas Strip, which include the MGM Grand and the Bellagio.
"The announced acquisition of Mandalay Resort Group accelerates our growth initiatives and will add to the ranks of our management and employee talent, enhance our portfolio of resorts, and provide additional amenities to our customers," said Terry Lanni, MGM's chairman and CEO. "Las Vegas is becoming one of the world's leading business and leisure travel destinations, and we believe MGM Mirage is uniquely positioned to benefit from that success."
Indeed, revenue per available room, a key industry metric called revpar, grew 12% on the Las Vegas Strip, more than any other region within the company. Total hotel occupancy was at 94% for the quarter, with an average room rate of $131, up $10 from last year. Total revpar across the company's properties rose 11% year over year.
Going forward, the company said its current third-quarter estimate of 53 cents a share was "reasonable," noting that it would represent a 56% increase from the third quarter of 2003. MGM also reiterated its previous guidance of revpar growth between 6% and 8%.