"The third quarter offered signs of stability and recovery driven by strength at our U.S. Regional Operations. We saw sequential improvement in all our markets and several of our regional properties delivered quarterly Adjusted Property EBITDAR records," said Bill Hornbuckle, CEO of MGM Resorts International.
The company reported a net loss of $535 million in the third quarter, largely driven by pandemic-related operational restrictions, casino closures, and limited traffic in Macao and Las Vegas, the Las Vegas Review-Journal reports. Net revenues were $1.1 billion, down 66 percent year over year.
"We remain focused on responding to the pandemic with effective health and safety protocols. We have modified our operating model to adapt to the current environment and we are executing on our long-term growth initiatives, particularly in U.S. sports betting and iGaming, where BetMGM has gained significant momentum," Hornbuckle continued.
But the company has a strong liquidity position — nearly $4.5 billion in domestic operations as of Sept. 30 — and is focusing on investments in Macao, Japan and its sports betting platform, BetMGM.
"Our domestic liquidity, excluding MGP and MGM China, remained substantial at $4.5 billion as the Company worked diligently to significantly reduce our cash outflows during the third quarter," said Corey Sanders, Chief Financial Officer and Treasurer of MGM Resorts. "In October, we opportunistically issued an additional $750 million in aggregate principal amount of senior notes at an attractive rate to further fortify our financial position."
Las Vegas properties
MGM has reopened all of its properties as of Sept. 30, and Hornbuckle said all markets have seen sequential improvements.
In Las Vegas, occupancy rates in the third quarter were 44 percent, compared with 92 percent the year before. Room revenue dropped 71 percent year over year as properties continued to face limited occupancy. Gaming revenue also dipped, with slots handle and table games in Las Vegas down 41 percent to $3.3 billion and $842 million, respectively.
Hornbuckle said certain amenities, hotel towers and brands in Las Vegas may close down during the holiday season but believes that overall MGM’s properties are better off open than closed.
"The general notion of being open versus closed for the quarter provided the company a net benefit of about half a billion dollars," he said. "Collectively, we are very happy that we’re open for the company, for the communities — particularly Las Vegas — and our employees and for our stakeholders. It’s been very beneficial."
The company permanently laid off about 18,000 employees in August, and Hornbuckle said the company has brought back roughly 29,000 of its workforce.
Midweek bookings continue to be a challenge in Las Vegas with the absence of conventions and group business. Hornbuckle said he was encouraged by Gov. Steve Sisolak’s announcement earlier this week saying the state could bring back larger meetings early next year.
September was an “exceptional” group business booking month for MGM. Hornbuckle said bookings beyond 2022 are strong, while 2021’s business is less certain.
"We are very optimistic that meetings and events at scale will eventually fully return," he said. "That said, we continue to believe the material recovery of Las Vegas is dependent on the return of larger-scale conventions and entertainment platforms … and significant air travel."
Hornbuckle painted a positive outlook for the company Thursday, saying the third quarter offered signs of stability and recovery thanks to MGM’s regional properties.
Regional property revenues dipped 40 percent, while Strip revenues were down 68 percent and MGM China’s revenue fell 94 percent.
The company believes it can cut out $450 million of annualized domestic costs by streamlining operations and reducing costs, including certain corporate expenses and fixed labor.
This new operating model has allowed MGM to focus on future investments.
The company is expanding its footprint in the Chinese territory of Macao with the construction of additional suites at MGM Cotai, and adding food and beverage offerings. Hornbuckle said the company also wants to build another hotel tower at MGM Cotai down the road, along with additional entertainment assets.
Despite gross gaming revenue down 93 percent year over year in Macao, Hornbuckle said he expects to see long term success in the region.
MGM is also expanding its sports betting brand, BetMGM. Currently live in 8 states, it’s set to be in 11 by the end of the year. Hornbuckle said he believes it’s a top-three player in all of the markets in which it operates.
“We have doubled our market share since January,” he said. “We’ve been aggressively working to introduce new customers to BetMGM … BetMGM will naturally drive expansion at MGM’s customer base as well, ultimately leading to growth at our brick and mortar business.”
The company is also chasing after the opportunity to build an integrated resort in Osaka, Japan. As for the Las Vegas market, Hornbuckle said MGM has had its fill.
See the company's full report here.