MGM Reports 3Q Spike, Drops Casinos

MGM Mirage Inc. saw its third quarter profit jump 68 percent, powered by increased revenue from slot machines and better operating margins.

The casino/hotel operator also announced it would sell its three Primm, Nev., casinos for $400 million to Herbst Gaming Inc., a fast-growing company known for its chain of gas stations and roadside slot machines.

Net income rose to $156.3 million, or 54 cents per share, in the July-September period from $93.2 million, or 31 cents per share, in the same period last year.

Revenue rose 5 percent to $1.9 billion from $1.81 billion last year.

Analysts expected, on average, earnings of 41 cents per share on revenue of $1.83 billion, according to Thomson Financial.

Revenue on the Las Vegas Strip improved to $1.54 billion from $1.45 billion. The company said it also posted a 6 percent gain in revenue per available room on the Las Vegas Strip to $135 from $128.

MGM recorded a $27 million profit from sales of condo-hotel units from its Signature development at MGM Grand Las Vegas. The rebuilt Beau Rivage in Biloxi, Miss., contributed $16 million to the bottom line.

The sale of the three Primm casinos includes 2,644 rooms and 136,000 square feet of casino space between Buffalo Bill’s, Primm Valley and Whiskey Pete’s properties. The three casinos straddle Interstate 15 about 40 miles south of Las Vegas.

“Our company’s focus is really on our core strategic properties in Las Vegas, Mississippi and, in the future, New Jersey, as well as in our Asian expansion in Macao,” MGM Mirage spokesman Alan Feldman told the Los Angeles Times.

The Primm casinos provide a pre-Vegas stop for some of the 40,000 people who pass by daily, yet draw about $35 million to $40 million in annual earnings, analyst David Katz told the paper.

“I don’t know that [MGM Mirage] really and truly capture any leverage off the Primm Valley market for their Las Vegas Strip business, exposure to Atlantic City or any other markets where they play,” Katz said.