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MGM Resorts International
suffered large losses related to the pandemic in the fourth quarter and in 2020 due to the company’s large presence on the Las Vegas Strip.
With its heavy reliance on group travel, conventions and air travelers, the Strip was not friendly to casino operators during the pandemic. Capacity restrictions due to Covid also weighed on casino operations.
While
MGM Resorts
‘Regional casino operations and the online gambling platform, BetMGM, helped to reduce the damage, 2020 was a difficult year for the company.
MGM Resorts (ticker: MGM), whose exclusive properties in Las Vegas include Bellagio, The Mirage and Mandalay Bay, lost 92 cents per share in the fourth quarter, compared to a profit of $ 3.91 a year earlier. On an adjusted basis, it lost 90 cents per share, against a profit of 8 cents per share in the fourth quarter of 2019.
Revenue plummeted to just under $ 1.5 billion, up from nearly $ 3.2 billion in the corresponding period in 2019 – although it improved from about $ 1.1 billion in the third quarter.
For the entire year 2020, the company reported a loss of $ 2.02 per share, against a profit of $ 3.88 the previous year. On an adjusted basis, it lost $ 3.94 per share in 2020, compared to a profit of 77 cents in 2019. Year-over-year revenue fell dramatically to $ 5.2 billion in 2020 from $ 12.9 billion the previous year.
“We remain diligent in navigating the short-term operating environment, aggressively managing our operating model and cost structure,” CEO Bill J. Hornbuckle told analysts during a earnings conference call on Wednesday after the market closed. “I am optimistic about the long-term recovery of all of our markets and I believe that MGM is well positioned to gain participation”.
MGM’s shares were around $ 36 on the floor, down about 1%.
Based on the company’s 2020 annual report, about 80% of its approximately 45,000 rooms and suites were located on premises on the Strip.
Fourth quarter net revenue for this segment fell 66% to $ 480 million, practically stable compared to the third quarter, “due to the pandemic and related operating restrictions, as well as mid-week hotel closings in Mandalay Bay, The Mirage and Park MGM for part of the current quarter, ”says the statement announcing the company’s results.
“The fourth quarter started out relatively strong here in Las Vegas, with hotel occupations of around 46% during October,” said Hornbuckle, adding that October was the company’s strongest month since the pandemic began. “But public health concerns reduced visitation over the quarter.”
This continued “at least until February,” he said.
“We believe that these headwinds will continue in the short term. With current Nevada collection guidelines in place and the feeling of public health where it is, we expect midweek business to be challenged during the first quarter. “
Looking ahead, Hornbuckle said that “assuming that the majority of the population is willing to resume normal activities, which we saw glimpses of last summer, we believe that the demand for travel and visits to Las Vegas can be robust at the end of the year” .
For the company’s regional casino operations, fourth quarter net revenue outperformed, dropping 34% year over year to $ 595 million, but 7% above the third quarter. The company’s properties include the MGM Grand Detroit, which closed during part of the fourth quarter.
Regional casinos are less dependent on conventions, meetings and entertainment than Las Vegas and other larger markets.
The company said that its sports betting platform BetMGM and igaming continued to perform well and gain market share. It is now installed in 12 states, including New Jersey, Tennessee, Iowa and Colorado, and the company said it expects to be in 20 states by the end of the year.
The company has operations in Macau, but is much less dependent on the market than
Las Vegas Sands
(LVS) and
Wynn Resorts
(WYNN) are.
MGM Resorts said its MGM China net revenue fell 58% in the fourth quarter to $ 305 million, but increased sharply from $ 47 million in the third quarter.
As of December 31, cash and cash equivalents totaled approximately US $ 5.1 billion. Total liquidity was $ 8.8 billion.
Long-term net debt was about $ 12.4 billion.
Write to Lawrence C. Strauss at [email protected]