It appears the economic downturn’s effect on the Las Vegas casino and hotel industry may be bottoming out.
MGM Mirage said this week that it has recorded a first-quarter profit, althought the company added that its adjusted results missed expectations.
Some of the profit is the result of including a gain from selling a hotel and casino, and companies have continued to cancel conventions at its Las Vegas Strip resorts, but MGM’s CEO said he sees conditions improving.
MGM Chairman and Chief Executive Jim Murren told the Associated Press that business conditions in Las Vegas were “brutal in the early part of the year” but that demand is improving and room rates seem to be “firming.”
“When people came to visit us in January, they left their wallets at home,” Murren said.
“Now, at least they’ve got their wallets in their pockets and they’re spending a little more.” Whether that trend continues, he said, remains to be seen.
Nevertheless, investors were cheered by signs that the worst may be over. MGM Mirage shares jumped 44 cents, or 4.7 percent, to $9.88 in after-hours trading Monday, after gaining $1.58, or 20.1 percent, to close the regular session at $9.44. The stock has traded between $1.81 and $53.67 during the past 52 weeks.
The Las Vegas-based company also said that it is close to announcing how it will restructure to meet its liquidity needs and improve its balance sheet, which could include selling assets, raising new capital and modifying its existing debt agreements.
Terms of some of the company’s debt are waived until June 30. During the conference call, Murren predicted that MGM will announce those details by late May or early June, well before that deadline.
For the quarter that ended March 31, MGM Mirage earned $105.2 million, or 38 cents per share, compared with profit of $118.3 million, or 40 cents per share, a year ago. But latest-quarter results include a 44-cent-per-share one-time gain from selling the Treasure Island hotel and casino in Las Vegas and smaller one-time gains related to a fire at MGM Mirage’s Monte Carlo resort and casino.
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