LAS VEGAS, March 27, 2020 /PRNewswire/ -- In light of
the material unforeseen and unprecedented volatility in the
financial markets, MGM Resorts International ("MGM Resorts" or the
"Company") is providing the following update on its results for the
first two months of the year, the impact of COVID-19 on its
operations and an overview of the steps it is taking to help
minimize the financial impact.
"At MGM Resorts, we are committed to doing our part to mitigate
the spread of COVID-19, including the closure of our properties
across the United States," said
Bill Hornbuckle, Acting CEO and
President of MGM Resorts. "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."
Mr. Hornbuckle further addressed the state of the business in a
video message to employees which can be found on the MGM Resorts
website at www.mgmresorts.com/COVID19update.
Operations Update
Since March 16, 2020, all of the
Company's domestic properties have been temporarily closed to the
public and the Company has also experienced very high group
cancellations. This is an unprecedented public health crisis and
the Company believes that it must do all it can to assist in
mitigating the impact of the epidemic to protect the health and
safety of its employees, guests and the communities in which it
operates. The Company will continue to cooperate with local health
officials to assist in accelerating the containment of the COVID-19
pandemic.
In addition, while the Company's Macau properties are now open, visitation
remains at low levels and travel constraints continue to impact the
market.
Business Performance Update
The Company's domestic operations had a strong start for the
first two months of 2020:
- Consolidated net income attributable to MGM Resorts was
approximately $1.3 billion for the
first two months of 2020, up significantly from approximately
$27 million for the first two months
of 2019, primarily driven by an approximately $1.5 billion pre-tax gain related to the MGM
Grand/Mandalay real estate transaction;
- Consolidated net revenues were down 10% compared to the prior
year two-month period, driven by weaker visitation at the Company's
properties in Macau following news
of the coronavirus and the closures of such properties for a 15-day
period in February;
- Las Vegas Strip Resorts Adjusted Property EBITDAR(1)
was up 24%, or 27% on a same store basis excluding Circus Circus
Las Vegas, compared to the prior year two-month period; and
- Regional Operations Adjusted Property EBITDAR was up 42%, or
26% on a same store basis excluding Empire City and MGM Northfield
Park, over the prior year two-month period.
The Company has since incurred substantial operating losses in
March and the Company does not expect to see a material
improvement until more is known regarding the duration and severity
of the pandemic, including when the Company's properties can
re-open to the public.
Expense and Cash Flow Reduction Efforts
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.
Balance Sheet Update
As of March 26, 2020, the Company,
excluding MGM China and MGM Growth Properties LLC ("MGP") (the "MGM
Resorts Domestic Operations"), had operating cash and cash
investment balances of approximately $3.9
billion, including approximately $1.5
billion drawn under its revolving credit facility. In
connection with its asset light strategy, MGM Resorts Domestic
Operations made significant progress on de-leveraging its balance
sheet by utilizing the proceeds from its recently completed real
estate monetization transactions to pay off approximately
$3.9 billion of indebtedness over the
past two quarters. MGM Resorts Domestic Operations has no debt
maturing prior to 2022 and expects interest payments associated
with its approximately $5.5 billion
of debt outstanding as of March 26,
2020 to be approximately $200
million for the remainder of 2020.
Additionally, the Company has certain fixed rent payments for
the remainder of 2020 of approximately $184
million and $219 million under
its leases related to Bellagio and MGM Grand/Mandalay Bay,
respectively. The Company also has fixed rent payments under the
master lease with MGM Growth Properties LLC ("MGP") of $621 million for the remainder of 2020, or
$333 million net of expected
distributions of $288 million from
MGP based on the current annualized dividend rate of $1.90 per share and the Company's 60.64% economic
ownership.
In addition to the liquidity discussed above, the Company still
has significant real estate assets and other holdings. The Company
owns MGM Springfield and holds a 50% interest in CityCenter in
Las Vegas, a 55.95% interest in
MGM China, and a 60.64% economic interest in MGP. The Company has
also entered into an agreement with MGP to receive cash for up to
$1.4 billion of the Company's
existing operating partnership units, which the Company has not
exercised.
Furthermore, as of March 26, 2020,
MGP had operating cash and cash investment balances of
approximately $1.8 billion, including
$1.35 billion drawn under its
revolving credit facility. In addition, MGP repaid approximately
$1.7 billion of indebtedness during
the first quarter of 2020.
The Company believes its strong liquidity position, valuable
unencumbered assets and aggressive cost reduction initiatives will
enable it to fund its current obligations for the foreseeable
future. While the Company is unable to predict when the properties
will re-open, the Company continues to believe that it will be able
to weather this downturn and ultimately rebound from the impacts of
the current crisis.
(1)
|
Adjusted Property
EBITDAR is the Company's primary profit measure for its reportable
segments. Adjusted Property EBITDAR is a measure defined as
earnings before interest and other non-operating income (expense),
taxes, depreciation and amortization, preopening and start-up
expenses, gain on Bellagio and MGM/Mandalay real estate
transactions, restructuring costs (which represents costs related
to severance, accelerated stock compensation expense, and
consulting fees directly related to the operating model component
of the MGM 2020 Plan), rent expense associated with triple net
operating and ground leases, income from unconsolidated affiliates
related to investments in REITs, and property transactions, net.
Also, excludes corporate expense and stock compensation expense,
which are not allocated to each operating segment.
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About MGM Resorts International
MGM Resorts International (NYSE: MGM) is an S&P 500® global
entertainment company with national and international locations
featuring best-in-class hotels and casinos, state-of-the-art
meetings and conference spaces, incredible live and theatrical
entertainment experiences, and an extensive array of restaurant,
nightlife and retail offerings. MGM Resorts creates immersive,
iconic experiences through its suite of Las Vegas-inspired brands. The MGM Resorts
portfolio encompasses 29 unique hotel and destination gaming
offerings including some of the most recognizable resort brands in
the industry. Expanding throughout the U.S. and around the world,
the company recently acquired the operations of Empire City Casino
in New York and Hard Rock Rocksino
in Ohio, which was rebranded as
MGM Northfield Park. In 2018, MGM Resorts opened MGM Springfield in
Massachusetts, MGM COTAI in
Macau, and the first
Bellagio-branded hotel in Shanghai. MGM Resorts is proud for being
recognized as one of FORTUNE® Magazine's World's Most Admired
Companies®. For more information visit us at
www.mgmresorts.com.
Forward Looking Statements
Statements in this release that are not historical facts are
"forward-looking" statements and "safe harbor statements" that
involve risks and/or uncertainties, including those described in
the Company's public filings with the SEC. The Company has based
forward-looking statements on management's current expectations and
assumptions and not on historical facts. Examples of these
statements include, but are not limited to, statements the Company
makes regarding its ability to reduce expenses, improve its balance
sheet, fund its obligations, mitigate the impact of the coronavirus
and the amount of dividends the Company expects to receive from
MGP. These forward-looking statements involve a number of risks and
uncertainties. Among the important factors that could cause actual
results to differ materially from those indicated in such
forward-looking statements include the effects of the rapid spread
of the coronavirus, economic conditions and market conditions in
the markets in which the Company operates and competition with
other destination travel locations throughout the United States and the world, the design,
timing and costs of expansion projects, risks relating to
international operations, permits, licenses, financings, approvals
and other contingencies in connection with growth in new or
existing jurisdictions and additional risks and uncertainties
described in the Company's Form 10-K, Form 10-Q and Form 8-K
reports (including all amendments to those reports). In providing
forward-looking statements, the Company is not undertaking any duty
or obligation to update these statements publicly as a result of
new information, future events or otherwise, except as required by
law. If the Company updates one or more forward-looking statements,
no inference should be drawn that it will make additional updates
with respect to those other forward-looking statements.
This release also includes preliminary financial results for the
two-month period ending February
2020. The Company's independent registered public accounting
firm has not reviewed these results and the Company's actual
results for the first two months that are reflected in its
financial statements for the quarter ended March 31, 2020 may differ as a result of the
Company's financial closing procedures, final adjustments and other
developments that may arise between now and the time the Company's
results for the first quarter are finalized.
MGM RESORTS CONTACTS:
Investment Community
AARON
FISCHER
Chief Strategy Officer
(702) 693-7152 or afischer@mgmresorts.com
News Media
BRIAN
AHERN
Director of Communications
media@mgmresorts.com
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SOURCE MGM Resorts International