Thursday’s quarterly financial report dealt with records for Mandalay Resort Group (MBG) but it was the shareholders of MGM MIRAGE Inc. (MGG) that were smiling broadly on Friday.
With the huge numbers still ringing in their ears, MGG shareholders watched the price of their stock rise $2.84 a share on Friday before closing at its 52-week high of $63.54. The reason, of course, was because MGM MIRAGE is in the process of acquiring and needs only the approval of the FTC and various regulatory boards to complete the purchase.
For the reporting period that ended on Oct. 31, Mandalay Resort Group reported net income of $67.1 million, or $0.99 per diluted share, a figure that not only blew away last year’s $0.63 per share but also topped the analysts’ consensus figure of $0.88 per share.
In making the announcement, Glenn Schaeffer, MBG president and CFO, credited the company’s "expanding convention business and the overwhelming popularity of Las Vegas as a resort destination."
Operating cash flow at the company’s Las Vegas Strip properties, including its 50% interest in Monte Carlo Hotel/Casino, increased $42.5 million or 33% in the third quarter, driven by an 18% increase in revenue per available rooms, commonly referred to as REVPAR, and a 14% increase in casino revenues. Total operating cash flow was $66.2 million, spurred by room rates at Mandalay Bay that averaged $210 per day with 90% occupancy.
Also making a major contribution was Luxor that produced operating cash flow of $40.3 million, a 28% jump from last year.
In Detroit, Mich., MotorCity Casino, in which the company has a 53% interest, generated operating cash flow of $35.5 million compared with $32.5 million a year earlier.
Since MGG’s acquisition announcement, it was generally felt that the company would sell its MotorCity Casino interest since the Michigan law would prevent MGM MIRAGE Inc. from operating its wholly owned casino as well as the newly-acquired facility.
However, last week, Terry Lanni, MGG chairman and CEO, said the company was rethinking its original plan to shed the MotorCity interests.
"MGM Grand Detroit and MotorCity are both great properties with consistently strong operating results and terrific growth prospects," he said, adding, however that "since making that initial determination regarding MotorCity, we have been approached by several parties concerning the possible sale of MGM Grand Detroit and we have decided to explore this alternative. If such a transaction were to occur, we would maintain Mandalay’s interest in MotorCity and look forward to working closely with Mandalay’s partners and the City of Detroit to develop and enhance that property."
After the Mandalay Resort Group quarterly report was published, a number of analysts said the results boded well for the future of Las Vegas and enhanced the prospects for the Wynn Resort property that will open in April.
Investors rode those promising prospects to greater heights for the price of Wynn Resorts Ltd. shares closing on Friday at $60.37, an increase of $2.37 per share for the day.