MGM Resorts expects to have cut about 1,000 jobs by June

MGM Resorts International executives said Monday they’ll continue to focus on a cost-cutting initiative that is putting hundreds in the unemployment line.

Chief Financial Officer Corey Sanders said in an earnings call the company expects it will have cut about 1,000 jobs by June, including the 254 announced last week, and that 35 executives have taken voluntary retirement as part of its MGM 2020 Plan. The initiative is aimed at leveraging a more centralized organization to maximize profitability and lay the groundwork for a digital transformation that is expected to improve cash flow by $300 million a year by 2021.

Revenue was flat and cash flow dipped by 10 percent on the Strip for the quarter that ended March 31, but the Las Vegas-based company reported 12.6 percent more revenue in this year’s first quarter than in 2018 and improved results in Macau and at the company’s regional properties.

While the results failed to meet analysts’ expectations, executives fielding questions Monday said the best is yet to come for the company.

MGM Chairman and CEO Jim Murren said the company’s regional properties performed well during the quarter with MGM Detroit and MGM National Harbor in Maryland reporting increases in cash flow. He also noted that MGM Springfield, the western Massachusetts property that opened last summer, Park MGM in Las Vegas and MGM Cotai in Macau continue to ramp up their respective customer bases after grand openings or major upgrades.

MGM Cotai, the company’s second property in Macau that opened in February 2018, completed its first full first quarter. Cotai’s cash flow was more than 10 times greater than last year’s first quarter at $61.7 million.

Murren also noted that during the quarter, the company received an extension to its Macau subconcession to June 2022, placing it in line with other operators in the Chinese enclave.

MGM plans to exploit its new sports wagering platform as new markets emerge nationwide and take advantage of a full calendar of entertainment events scheduled in Las Vegas, including two Paul McCartney concerts at T-Mobile Arena, residencies by Aerosmith and Janet Jackson at the Park Theatre, and the Cinco de Mayo weekend fight between Canelo Alvarez and Daniel Jacobs.

“With the return of Lady Gaga and Bruno Mars later in the year, 2019 is looking outstanding,” Murren said in remarks to analysts.

Murren said demand continued to run high in Las Vegas and non-gaming revenue grew by 4 percent over the first quarter of 2018.

By property, cash flow was higher in the quarter this year compared with the first quarter of 2018 at The Mirage, Excalibur, Park MGM and Circus Circus with other properties in MGM’s Las Vegas portfolio showing declines.

Baccarat numbers were down from last year, mostly as a result of a tough comparison against a strong 2018 quarter and because gamblers played luckier and the company experienced a lower hold this year.

The report on baccarat revenue paralleled reports last week from the state Gaming Control Board reflecting the volatility of the game.

Ben Combes, a gaming analyst with Credit Suisse, said his company is maintaining a neutral position on MGM, noting that the company’s first-half outlook is strong with room rates rising and convention attendance and Las Vegas air capacity all positive.

He acknowledged the company didn’t meet expectations in part due to baccarat volatility, but added that the company introduced its high-end Mansion product in Macau, which should keep MGM strong going into Golden Week, a holiday period that begins in the fall.

Share prices for MGM closed up when the market closed Monday, but took a dive after hours once earnings were posted.

Stock closed up 1 percent, 29 cents, to $28.60 a share on above-average volume. After hours, shares fell 3.9 percent, $1.12, to end at $27.48 a share.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.