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MGM Resorts International Falls Nearly 4% After Hours on Q1 Results

By Eric Volkman – Apr 30, 2020 at 10:26PM

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It was hardly a good quarter to be in the casino business.

Since the casino industry in the world's biggest gambling enclaves is essentially shut down because of the SARS-CoV-2 coronavirus, few investors expected a standout quarter from one of the sector's mainstays, MGM Resorts International (MGM 2.13%). So they weren't terribly disappointed with the steep declines the company recorded in its Q1 of fiscal 2020 results, released after market close on Thursday.

The quarter saw a 29% year-over-year drop in revenue for MGM, to $2.3 billion. GAAP net profit ballooned to $807 million ($1.64 per share) from the Q1 2019 figure of $31 million, although that gain was due to its take from a pair of real estate divestments that closed during the quarter.

The MGM Grand casino resort in Las Vegas.

Image source: MGM Resorts International.

In January, MGM agreed to sell its MGM Grand Las Vegas and its Mandalay Bay resorts to a joint venture controlled by the similarly named though independent real estate investment trust (REIT) MGM Growth Properties and Blackstone Real Estate Income Trust. This took the form of a sale-leaseback transaction valued at nearly $4.6 billion.

Stripping that and other one-off items out of profitability, the company's non-GAAP adjusted net loss was $0.45 per share. The Q1 2019 result was a profit of $0.14.

On average, analysts tracking the stock were estimating $2.45 billion on the top line and an adjusted per-share net loss of $0.15.

In after-market action following the release of the quarterly figures, MGM's shares were down, but not precipitously. They were off by 3.7%, a deeper decline than that suffered by numerous consumer goods stocks on the day, not to mention the wider equities market.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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$33.58 (2.13%) $0.70
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MGM Growth Properties (Class A)

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