“The company has incurred substantial operating losses in March and doesn’t 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,” the update said.
MGM closed all its domestic properties March 16 and has suffered “very high group cancellations,” the update said.
Macau is another problem, the statement said. “While the company's Macau properties are now open, visitation remains at low levels, and travel constraints continue to impact the market.”
Not surprisingly, MGM is looking to cut expenses. It estimated that 60% to 70% of its domestic property operating expenses are variable. It’s considering hiring freezes, furloughs and other staff reductions.
The company also examining all capital spending projects and expects to defer at least 33% of planned domestic capital expenditures this year.
As of March 26, MGM, excluding MGM China and MGM Growth Properties, had operating cash and cash investment balances of approximately $3.9 billion, including approximately $1.5 billion drawn under its revolving credit facility.
“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,” the update said.
Ironically, the company said it posted strong performance in the U.S. during the first two months of the year.
At last check, MGM shares traded at $12.65, down 5.95%.