Updated from 9:42 a.m. EDT
MGM Mirage (MGG) reported another record quarterly profit, as increased spending at its Las Vegas casinos drove a surge in third-quarter earnings.
The company lowered fourth-quarter guidance, however, primarily as a result of rising interest expenses on its debt.
MGM Mirage, which in June announced a deal to purchase Mandalay Resort Group (MBG) for $4.8 billion, said it earned $126.9 million, or 89 cents a share, vs. $47.2 million, or 31 cents a share, a year ago, including the results of discontinued operations.Excluding all items, which is how Wall Street views the company, MGM said it earned 57 cents a share, matching the analyst consensus, according to Thomson First Call, and up from the 34 cents a share it had a year ago. Net revenue rose 6% year over year to $1.04 billion, in line with the Wall Street estimate. The company attributed the increase to strong casino and hotel volumes, continued increases in room rates and increased customer spending throughout its resort network. Casino revenue increased 5% in the quarter, while hotel revenue was up 8%, with a higher occupancy rate of 93%, up from 92% in the third quarter of last year. Revenue per available room, or revpar, in Las Vegas jumped 10% year over year on what the company said was "robust" travel to the city. "All of our resorts continue to generate industry-leading results, with our success in the third quarter building upon the foundation we've established through 2004," said Terry Lanni, MGM Mirage's chief executive, in an earnings news release. "We believe these positive trends will continue into the fourth quarter and throughout 2005. All of our indicators point to continued success for the Las Vegas leisure and convention businesses in the foreseeable future, and our resorts are uniquely positioned to benefit from that success." The company's shares fell $2.75, or 5.0%, to $52.30. Looking ahead, MGM Mirage said it expects adjusted EPS of 35 cents to 45 cents in the fourth quarter, compared to 36 cents in the prior-year period, and below the consensus forecast for 50 cents a share. The company attributed the forecast to non-operating items, primarily higher interest expenses. MGM Mirage issued $1 billion of fixed-rate debt in the latest quarter. Revpar is forecast to grow by 8% to 10% in the fourth quarter of 2004.