MGM Resorts International has posted its Q1 financial results showing what will be widely viewed as inevitable losses due to the coronavirus pandemic. Consolidated net revenues fell 29% to $2.3bn year-on-year, primarily driven by the temporary suspension of domestic and Macau casino operations and continued travel restrictions.
Consolidated operating income increased to $1.3bn compared to $370m year-on-year, helped by a $1.5bn gain related to the firm’s MGM Grand Las Vegas and Mandalay Bay real estate transaction. That gain also helped improve net income which was up to $807m from $31m in the prior year quarter.
The update also revealed that consolidated adjusted EBITDAR decreased 61% to $295m in the current quarter compared to $748m year-on-year, primarily attributable to the temporary suspension of casino operations.
“The year started strong with results ahead of expectations, however the COVID-19 pandemic resulted in the closure of our properties which had a material negative impact on our first quarter results,” said Bill Hornbuckle, Acting CEO and President.
“It is still premature to predict the opening dates of our domestic properties. In the meantime, we are collaborating with public health officials, experts in epidemiology and biosafety, and both state and federal government to come up with a set of protocols that will help deliver a safe, secure environment for our employees and guests.
“We are aggressively managing our cash outflows and strengthening our liquidity position to make certain that despite a lack of revenue, we are able to advance our longer term strategic initiatives such as a new integrated resort in Japan, growing our business in Macau, and establishing a leading presence in sports betting and online gaming. With premier assets in most of the markets in which we operate, we are confident we will emerge from the crisis in a strong position.”
Chairman Paul Salem commented: “During this unprecedented crisis MGM Resorts maintains a strong liquidity position. We have benefitted from the Bellagio, MGM Grand Las Vegas, and Circus Circus Las Vegas real estate transactions, which generated approximately $6.9bn of cash.
Salem also noted that in addition to $4.6bn of cash on the balance sheet as of March 31, 2020, excluding MGP and MGM China and adjusted for the recent bond offering, the company also has access to $1.4bn of additional liquidity upon the redemption of its operating partnership units in MGP. “Furthermore, we have recently cut our dividend to maintain maximum flexibility and allow us to continue to invest in our business,” he confirmed.
CFO and Treasurer Corey Sanders added: “We continue to implement an extensive number of initiatives to optimize our cash position, and currently estimate that while all of our properties are closed in the US our domestic cash outflows, including interest, taxes, and rent (net of dividends received from MGP), are approximately $270m per month.
“After the quarter end, we accessed the debt capital markets to bolster our liquidity position and amended our credit agreement to provide for additional flexibility with respect to our financial covenants. As such, our balance sheet remains sound.”