Updated from 9:12 a.m. EST
Investors anted up for MGM Mirage (MGG) shares Tuesday after the casino company beat Wall Street expectations for its fourth quarter.
MGM Mirage reported strong customer demand and rising room rates. Still, net income fell from a year earlier, when the company benefited from significant one-time gains.
The Las Vegas company, which is in the process of acquiring Mandalay Resort Group (MBG), said net income was $67.9 million, or 47 cents a share, down from $91.7 million, or 62 cents a share, a year before. Net income in the fourth quarter of 2003 included a 16-cent-a-share gain on the sale of land and a 9-cent-a-share reversal of tax reserves.On an adjusted basis, which is the way Wall Street analysts view the company, MGM Mirage earned 51 cents a share, up 42% from 36 cents a share a year before, and better than the average analyst estimate of 44 cents a share from Thomson First Call. The adjusted figure for the latest quarter excludes discontinued operations and preopening and start-up expenses, among other items. In reaction, shares gained $1.80, or 2.5%, to $73.61. Revenue was $1.06 billion, up 11% from $959.9 million a year earlier. Analysts surveyed by First Call had expected $1.01 billion. More visitors stayed at the company's hotels, and MGM Mirage was able to lift room rates. Hotel revenue was up 10%, with revenue per available room, or revpar, a key industry metric, increasing 12%, better than the company's previous estimates. MGM Mirage reported a 90% occupancy rate for the quarter, vs. 88% a year earlier, and an average daily room rate of $134, up from $122. Casino revenue jumped 10%, with slot revenue up 9% and table games revenue gaining 12%. "The fourth quarter of 2004 provides an exclamation point on a tremendous year for all of us at MGM Mirage," said Terry Lanni, the company's chief executive "We have again proven our ability to operate the world's best resorts, and have demonstrated vision to look to the future. In 2005, we will successfully integrate Mandalay Resort Group's properties and employees, and begin executing on the vision of Project CityCenter." Looking ahead, MGM Mirage expects revpar growth to be in the 10% range in the first quarter of 2005, driven by a busy convention calendar. The company also said the First Call consensus for first-quarter EPS of 74 cents is "reasonable."