MGM Resorts’ Q4 Below Expectations

LAS VEGAS—In the fourth quarter, MGM Resorts International saw adjusted earnings per share (EPS) reach eight cents on revenue of $3.19 billion, according to an earnings report, which was lower than Wall Street estimates of 26 cents on the same revenue. In addition, Chairman and CEO Jim Murren revealed that he will step down from his role prior to the expiration of his contract.

“This was not a decision that I made lightly,” said Murren. “However, I know the company is well positioned, our balance sheet is strong, we have an efficient operating model and a powerful strategic plan. Our growth areas of sports betting, Japan and entertainment have never looked better. Our bench of management talent is deep. The company is strong and growing. In my 22 years with MGM Resorts, I’ve accomplished a lot, and I’m proud of the company it has become.”

MGM Resorts began 2019 with two major plans: to focus on its asset-light strategy, unlocking the value of its real estate assets and recycling capital into higher growth for a higher return opportunity; and implement its strategic plan, MGM 2020, which realized material cost savings and revenue enhancements to position the hotel and entertainment company for future growth.

Coronavirus impact

“As a result of the increased volatility in our business due to coronavirus as well as the market-wide weakness in Far East Baccarat in Las Vegas, MGM Resorts believes it is appropriate to withdraw its fiscal 2020 full year financial targets. Our Macau casinos are currently closed,” said Corey Sanders, CFO and treasurer of MGM Resorts. “While the coronavirus will clearly have a near-term impact to MGM China, we remain confident that it will not have a long-term impact on our business.”

Fourth Quarter 2019 Financial Highlights

  • Consolidated net revenues increased 4% compared to the prior year quarter to $3.2 billion.
  • Consolidated operating income increased to $3 billion compared to $336 million in the prior year quarter. The current year quarter included a $2.7 billion gain related to the Bellagio real estate transaction.
  • Net income attributable to MGM Resorts of $2 billion, including the $2.7 billion gain discussed above, compared to net loss attributable to MGM Resorts of $23 million in the prior year quarter.
  • Diluted earnings per share of  $3.91 in the current quarter compared to diluted loss per share of $0.06 in the prior year quarter.
  • Adjusted diluted earnings per share of $0.08 in the current quarter and Adjusted EPS was a loss per share of $0.03 in the prior year quarter.
  • Consolidated Adjusted EBITDAR decreased 3% to $682 million in the current quarter compared to $703 million in the prior year quarter, primarily attributable to a decrease in tables games revenues driven by Far East Baccarat at the company’s domestic resorts and the inclusion of $24 million in insurance proceeds in the prior year quarter. Excluding Circus Circus Las Vegas, which was sold in December 2019, and the impact of the insurance proceeds discussed above, consolidated Adjusted EBITDAR increased 3% compared to the prior year quarter.

“We are proud of the progress we made during 2019 as we took important steps to evolve our organization,” said Murren. “However, our fourth quarter results were below our expectations, primarily due to lower than expected hold, weakness in Far East Baccarat, and certain one-time items. All other dimensions of our business in Las Vegas performed on or ahead of plan. For full year 2019, we generated strong consolidated net revenue and Adjusted EBITDAR, which increased 10% and 6%, respectively, year over year. We are also executing on our stated MGM 2020 plan, which is realizing material cost savings and revenue enhancements and transforming the way we operate to position MGM Resorts for future growth and long-term value creation. Finally, we were pleased to return more than $1.3 billion to shareholders in the form of dividends and buybacks in 2019.”

Leave A Reply