Casino giant MGM Resorts International which closed its entire casino portfolio over six states in the middle of March due to the coronavirus pandemic – staggered the reopenings of just four regional casinos and five of its Las Vegas Strip properties starting May 25 through June 30.
So it wasn’t a surprise to investors the company reported an $857 million net loss in the second quarter. The consolidated operating loss to the company was $1 billion, compared to a consolidated operating income of $371 million a year ago.
The decline also included diminished results from the company’s two casinos in Macau.
“As we look ahead, we believe the long-term fundamentals of our business and the broader industry remain intact,” MGM CEO Bill Hornbuckle said Thursday. The announcement came on Hornbuckle’s first full day as CEO. The “acting CEO” title was removed Wednesday.
Since the quarter ended, the company reopened much of its remain portfolio. As of Thursday just Park MGM and The Mirage remained closed in Las Vegas.
However, the company began taking hotel room bookings at the properties starting in late August, but Hornbuckle said on a conference call with analysts he wasn’t sure if that date will hold. He added he can’t imagine a scenario where the properties are closed for the rest of 2020.
Regionally, the Empire Casino in New York remains closed, but MGM said the MGM Detroit will open Aug. 7.
Visitation remains down in Las Vegas due to a lack of airline flights and the cancelation of numerous conventions and business conferences. Hornbuckle said MGM Resorts has nearly 3.7 million square feet of convention space at its Las Vegas resorts, with diminished bookings in the third and fourth quarters. He said the convention activity could be down during the first three months of 2021, which includes business lost by the cancelation this week of January’s Consumer Electronics Show.
Hornbuckle said conferences that have canceled are rebooking for the next year, adding that,” fundamentally, they want to come back,” but challenges remain due to the pandemic.
“The near-term operating environment will remain challenging and unpredictable as COVID-19 case trends, health and safety protocols, and travel restrictions continue to heavily impact our business,” Hornbuckle said.
MGM Resorts’ net loss in the quarter than ended June compared to net income of $43 million in the same period last year. During the quarter, the company’s revenues fell 91% to $290 million, compared to $3.22 billion, compared to a year ago.
In Las Vegas, Bellagio, MGM Grand, and New York-New York re-opened on June 4, which marked the end to Nevada’s 78-day gaming shut down. Excalibur reopened a week later followed by Luxor on June 25. Combined, the five properties produced a combined $150.8 million in revenue during the quarter, a decline of 89.7%.
Regional properties, which began opening in late May, saw a 90.2% revenue decline to a combined $89.3 million.
At MGM’s two properties in Macau, revenues declined 95% in the quarter to $33 million as a result of ongoing travel and entry restrictions in the Chinese market, as well as other operational restrictions related to the pandemic.
MGM Resorts had cash of $4.8 billion on the books as of June 30 with total liquidity of $8.1 billion when factoring the value of its 57% stake in real estate investment trust MGM Growth and the company’s credit facilities.
“When demand returns, we will be a much stronger company,” Hornbuckle said.
MGM furloughed much of its 63,000-person workforce nationwide at the pandemic’s outset. Company CFO Corey Sanders said on the conference call less than 50% of the employees were returned to their jobs as the company began reopening properties around the U.S.
“I’m not sure we’ll see a change in that anytime in the near future,” he said. MGM filed WARN Act letters in the states that it operates, notifying workers they could be subject to layoffs, some potentially as soon as the end of this week.
The company did establish and fund an employee assistance program to help workers meet their financial obligations.
Shares of MGM Resorts closed Thursday at $16.66 on the New York Stock Exchange, up 41 cents or 2.52%
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
