MGM Resorts International said consumer demand strengthened in the opening months of 2021 despite posting a Q1 operating loss of $246.7m (£177m/€204m).
In its financial and operating results for the three months to 31 March, the North American casino operator reported consolidated net revenues of $1.65bn, which was down 27.1% year-on-year.
The group said that while the comparative quarter in 2020 was negatively affected by property closures for a portion of the period, the 2021 first quarter was hit by midweek property and hotel closures, lower business volume and travel activity and ongoing operational restrictions due to the pandemic primarily at its Las Vegas Strip resorts.
Its Las Vegas Strip resorts, such as the Bellagio and MGM Grand, brought in net revenues of $544.9m, which was a decrease of 52.0% compared to the prior year quarter due to the pandemic and related operational restrictions as well as midweek property and hotel closures at some properties.
In Las Vegas, table game win was down 35% while slot win was 8% lower than Q1 2020. Rooms revenue decreased by 62.7% compared to the prior year quarter as a result of reduced business volume and travel related to the pandemic as well as midweek property and hotel closures at certain properties. Occupancy fell from 88% in 2020 to just 46% in 2021.
The group welcomed net revenues of $711.3m in its regional operations segment, which was a decrease of 2% compared to the prior year. Casino revenue within this segment was actually up 11% year-on-year due to a 6% increase in table games win and a 7% increase in slots win, but hospitality revenue was down.
MGM China posted a 9% rise in net revenues to $296.4m, with main floor table games win increasing 23% but VIP win was down 28% in a segment that continues to challenge casino operators in the region.
The balance sheet was boosted by a significant cut in corporate expenses, including share-based compensation for corporate employees, which decreased to $78.0m in the first quarter of 2021, from $143.8m in the prior year quarter. This was due primarily to a decrease in payroll costs, with the group having announced 18,000 redundancies in August 2020. In addition, the prior year quarter contained $44m in CEO transition expense, including $20m of stock compensation expenses.
Casino expenses were down 12% to $551.9m with food and beverage costs reducing by 60% to $135.2m and entertainment and retail outgoings falling 45% to $78.3m.
MGM posted a consolidated operating loss of $246.7m for the three-month period. This compared to income of $1.25bn in the prior year quarter, although this included a $1.5bn gain related to the MGM Grand Las Vegas and Mandalay Bay real estate transaction. Net loss attributable to MGM Resorts was $331.8m, compared to net income of $806.9m in the 2020 quarter, which included the $1.5bn gain.
“We are pleased with the meaningful progress we’ve made on multiple fronts this quarter,” said Bill Hornbuckle, chief executive and president of MGM Resorts International.
“Consumer demand strengthened at our domestic properties, and the significant changes we’ve made to our operating model have positioned us to capitalise on the recovery. Our regional properties achieved record first quarter Adjusted Property EBITDAR and Adjusted Property EBITDAR margins.
“Las Vegas operating results improved sequentially, leisure demand is improving, and we now have a tangible path to bring conventions and entertainment back at scale. MGM China continued to outperform the broader Macau market’s gradual pace of recovery.”
MGM’s Las Vegas Strip segment posted adjusted property earnings of $108m compared to $268m in the prior year quarter, which was a 60% decline. The Regional Operations segment produced adjusted property earnings of $242m compared to $152m in the prior year quarter, which was an increase of 59% due to an increase in casino revenues and realised benefits of the company’s cost-saving initiatives.
MGM China posted adjusted property earnings of $5m compared to a loss of $22m in the 2020 quarter.
During the first quarter, the group made rent payments to MGM Growth Properties Operating Partnership LP of $207m and received distributions of $72m from the MGP Operating Partnership.
Looking ahead, Hornbuckle added: “We are also deeply focused on our long-term goals including investing in digital to drive deeper customer engagement and BetMGM, our US sports betting and igaming venture, which continues to impress as the leading operator in US iGaming and the top three operator in U.S. online sports betting. Our future is bright.”
Earlier this week, MGM revealed that BetMGM recorded revenue of $163m for the first three months of 2021 – 90% of its entire 2020 total.
Jonathan Halkyard, chief financial officer, said: “Going forward, we will be disciplined in allocating our capital by maintaining a strong balance sheet, pursuing targeted growth opportunities and returning cash to shareholders.”
The quarter also saw MGM put forward an offer to acquire Entain, its partner in the BetMGM join Venture. However, after Entain’s board said the offer undervalued its business, MGM opted not to submit a new bid.