reported lower third-quarter earnings, as the year-ago period benefited from a gain on the disposal of assets, but analysts weren't expecting as steep of a drop as the company had.
Earnings also took hits from Hurricane Katrina, the storm that severely damaged MGM Mirage's Beau Rivage resort in Biloxi, Miss., and from an increase in the Las Vegas-based casino operator's bad-debt provision.
As for the fourth quarter, the company offered a guidance range that would be below to in-line with Wall Street's estimates, but it said Las Vegas trends remain strong heading into 2006.
MGM Mirage, which acquired former rival
Mandalay Resort Group
earlier this year, reported third-quarter net income of $93.2 million, or 31 cents a share, down from $126.9 million, or 45 cents a share, a year earlier.
Excluding special items, adjusted earnings were 38 cents, up 36% from 28 cents a year before, but 3 cents shy of the 41-cent analyst consensus from Thomson First Call.
In reaction, shares of MGM Mirage fell $3.48, or 8%, to $40.23.
Net revenue was $1.81 billion in the latest quarter, up 74% from $1.04 billion a year earlier. Same-store revenue, which excludes the newly acquired Mandalay resorts, the Monte Carlo and the Beau Rivage, was $1.1 billion, up 10% from a year before.
The Beau Rivage resort had operating income of $5 million in the latest quarter, down from $18 million a year earlier. The resort was shuttered after Hurricane Katrina but its business had already suffered from Hurricane Dennis in July. The Beau Rivage will remain closed for the "foreseeable future," MGM Mirage said.
At the company's Las Vegas Strip resorts, revenue per available room, a key industry metric also known as Revpar, rose 9% from a year before, following a 10% gain the third quarter of 2004.
"Despite the closure of Beau Rivage, we were able to deliver solid operating results, led by continued strength at our Las Vegas Strip resorts," said Terry Lanni, MGM Mirage's chairman and CEO. "We believe trends on the Las Vegas Strip will remain positive in the fourth quarter and into 2006. We are also confident of the Gulf Coast's future, and we are committed to rebuilding quickly."
Looking ahead, MGM Mirage expects Las Vegas Strip Revpar growth of about 6% in the fourth quarter. That would follow a 13% jump in the fourth quarter of 2004. The company forecast EPS of 30 cents to 35 cents, vs. the consensus estimate for 34 cents.