The fourth quarter brought a relatively strong end to a challenging year for MGM Resorts International.

During the company’s fourth quarter and full-year 2020 earnings call, MGM Resorts President and CEO Bill Hornbuckle said the company had to make several difficult decisions during the year, including having to furlough many employees. The company expects it will be able to rehire and retrain them as the recovery begins and operating restrictions abate.

In the early days of the pandemic, it was critical to create and sustain a liquidity cushion for the company while top line was still under pressure and the travel climate was uncertain because a fortified balance sheet was essential to protecting equity value, he said. It also enabled the company to be aggressive in identifying new opportunities to invest for growth.

“We have kept an unwavering focus on the future, and particularly on several attractive [return on investment] growth opportunities that align to our long-term vision,” he said.

Fourth quarter Las Vegas Strip revenue was $480 million, roughly flat from the third quarter, Hornbuckle said. Adjusted earnings before interest, taxes, depreciation, amortization and restructuring or rent costs was $54 million, up from $15 million in the third quarter, driven almost entirely by October and the first half of November.

The fourth quarter started relatively strong in Las Vegas, with hotel occupancy at approximately 46% in October, making it the strongest month since the start of the pandemic, he said. Demand fell as public health concerns rose, and that has continued into the present. The quarter ended with occupancy at 38%, breaking down to 52% on weekends and 31% during the week.

“It's our belief these headwinds will continue into the near term,” he said. “With current Nevada gathering guidelines in effect and public health sentiment where it is, we expect midweek business will be challenged throughout the first quarter.”

In the current demand environment, MGM Resorts has remained flexible to minimize its cash usage and maximize portfolio-wide profitability, Hornbuckle said. During the fourth quarter, the company closed its hotel towers at Mandalay Bay Resort and Casino and Park MGM during midweek. In early January, the company also announced full closure of The Mirage during midweek as well.

“We remain diligent in closely aligning labor needs to demand,” he said.

The company is closely monitoring the rollout of the approved vaccines, he said. As the burden on the healthcare system eases, gathering and travel restrictions are being lifted. Given the increased demand over the summer, most of the population appears willing to resume travel when possible. Gross bookings in January was the strongest since the start of the pandemic, and guests are increasingly booking 90-plus days out.

“While the return of the larger groups will ultimately depend on the easing of gathering guidelines and other factors, we remain bullish on the long-term demand,” he said. “We still have significant rooms on the books in the third quarter and have more on the fourth quarter than we had at this time last year. Both 2022 and 2023 are approximately on pace.”

MGM Resorts’ regional operations performed “exceptionally well” in the fourth quarter despite being subject to a series of operating restrictions, Hornbuckle said. Regional operations’ revenue in the fourth quarter was $595 million, up 7% compared to the third quarter. Similarly, adjusted EBITDAR was up 9% to $159 million.

The regional properties delivered 129 basis points year-over-year EBITDAR margin growth to 27%, and this is despite statewide restrictions, including the full closure of the MGM Grand Detroit Resort for a month and a week-long exposure and extended hurricane repairs at the Beau Rivage Resort & Casino in Biloxi, Mississippi.

Adjusting for those headwinds and other state-by-state restrictions, the company believes margins for the quarter would have been up 580 basis points year over year.

“I expect continued strong regional margins as revenues return toward our 2019 levels,” he said.

In the fourth quarter, MGM China’s revenue was $305 million, up sequentially from the third quarter’s $47 million, Hornbuckle said. Adjusted property EBITDAR was also up sequentially from a $96 million loss in the third quarter to $41 million in the fourth quarter, including a $23 million bonus accrual reversal.

“We're pleased to finally see that MGM China's back in the black, driven by strong market share gains as well as continued cost mitigation efforts,” he said.

The reemergence of COVID-19 cases in China and the subsequent government actions to limit travel during the Chinese Lunar New Year have affected demand in the short term, but he expects the broader rate of recovery will continue to be gradual and driven by premier mass market.

The company has been building a new hotel tower at MGM Cotai and is currently adding new suites in the property’s south tower, which should be ready later this year, Hornbuckle said. MGM Macau has started the remodeling work on its villas and gaming space. Both properties will have new food and beverage options as well. The company has also been building another hotel tower at MGM Cotai.

MGM Resort’s consolidated fourth-quarter 2020 revenue was $1.5 billion, incrementally better than it’s third quarter revenue of $1.1 billion, Hornbuckle said. Adjusted EBITDAR improved to $97 million.

Full-year revenue reached $5.2 billion, roughly 40% of 2019 levels, he said. Full-year adjusted EBITDAR loss was approximately $148 million.

The company’s liquidity remains strong and has served as its foundation when navigating through the pandemic and remaining focused on longer-term goals, he said. As of Dec. 31, 2020, MGM Resorts had $8.8 billion of consolidated liquidity, which includes $2 billion in its MGM Growth Properties operating partnerships and $1.2 billion in MGM China.

“We remain diligent in navigating near-term operating environments, aggressively managing our operating model and our cost structure,” he said. “I am optimistic about the long-term recovery of all of our markets and believe that MGM is well-positioned to gain share.”

As of press time, MGM Resorts’ stock was trading at $35.78, up 13.6% year to date. The New York Stock Exchange Composite Index was up 5.6% for the same time period.