MGM Resorts International has provided an update on the impact of the COVID-19 outbreak on its operations, revealing a $3.9bn warchest to support liquidity during property closures.
In a statement, MGM said its “top priority” remains the health and safety of employees, guests and the communities in which it operates, and also provided an overview of the steps it is taking in order to minimize the financial impact.
Discussing the organization’s role in dealing with the unprecedented public health crisis, Bill Hornbuckle, Acting CEO and President of MGM Resorts, stated: “We are committed to doing our part to mitigate the spread of COVID-19, including the closure of our properties across the US.
“While this will undoubtedly have a significant negative effect on our business in the near term, we are well-positioned to emerge from the current crisis in light of our strong liquidity position and valuable asset portfolio.
“With the continued execution of the MGM 2020 plan, as well as the implementation of aggressive cost savings initiatives, we believe the company will be able to manage its expenses while navigating this unprecedented event. We are currently making very difficult decisions but believe these will be in the best interest of the company, long term.”
MGM also took the opportunity to publish its results for the first two months of 2020, revealing a consolidated net income of approximately $1.3bn, a significant increase when compared to 2019’s $27m.
The organization also revealed that consolidated net revenues were down 10% when compared to the prior year two-month period, with this reduction being attributed to a dip in visitation numbers to is Macau properties, thanks to a 15-day closure in February due to the coronovirus outbreak,
The statement continued: “The company is making swift decisions to significantly reduce expenses to protect its financial position. The company estimates that 60-70% of its domestic property level operating expenses are variable and is undertaking a thorough review to significantly minimize these costs, such as the implementation of hiring freezes, furloughs and other headcount reductions.
“The company is also actively reviewing its fixed property level operating expenses and corporate expenses to identify opportunities to further drive expense reductions. In addition, the company is evaluating all capital spend projects and expects to defer at least 33% of planned 2020 domestic capital expenditures.”
