MGM Resorts Announces Second Round of Layoffs, 1,033 Positions Now Eliminated
Posted on: May 30, 2019, 11:24h.
Last updated on: May 30, 2019, 11:24h.
MGM Resorts is meeting with 557 employees today to inform them their services are no longer needed. It’s the second round of layoffs in as many months for the casino giant that is Nevada’s largest employer.
Last month, MGM eliminated 254 managerial positions. CEO Jim Murren revealed in a letter released Thursday that 222 additional jobs were cut prior to today’s announcement that the final round of terminations impacts 557 workers.
In total, MGM Resorts has effectively trimmed its workforce by more than 1,000 positions.
“We have taken strides to ensure our impacted colleagues were offered other options if those existed and we have provided a non-working notice period where health benefits will continue and severance to try and ease a life-changing transition,” Murren said. “I stand behind the decisions we have made and believe them necessary to assure our future, but I deeply regret the impacts they have on individuals and their families.”
MGM announced its 2020 plan in early January. The goal is to increase annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by $200 million over the next two years, and an additional $100 million by the end of 2021.
MGM Resorts is fresh off a several years-long spending spree.
The casino operator invested $1.4 billion on MGM National Harbor, $900 million to buy Boyd Gaming’s 50 percent stake in Atlantic City’s Borgata, $960 million on MGM Springfield in Massachusetts, $3.4 billion on MGM Cotai, $550 million on the Monte Carlo transformation, and $850 million to acquire Empire City in New York.
The company is now tightening its belt, and looking to improve margins for investors. Murren says the plan is to “transform the way we operate and leverage the most effective operational architecture for our company.”
The CEO told Bloomberg in March, “MGM is embarking on a major profit resurgence. We believe we’re now in a harvesting of free cash flow mode that will be put toward shareholder returns.”
Murren’s 2018 compensation totaled $12.8 million – 355 times the average salary of an MGM Resorts employee.
The ongoing trade war between the US and China has thrown global markets into a state of chaos. The uncertainty has hit the gaming industry hard, especially those companies invested in Macau such as MGM Resorts.
Shares of the casino group traded on the New York Stock Exchange are flat in 2019, as the company has weathered the volatility well. Analysts and investors are excited regarding the MGM 2020 plan.
Analysts at Morningstar and Union Gaming have both recently expressed bullishness regarding MGM shares.
Of the 17 financial institutions that provided guidance on MGM this month, four said the stock is a “strong buy,” nine said a “buy,” and four said “hold.” None of the analysts recommended selling.
However, one large potential dark cloud hovering over the casino company is the ongoing legal fight stemming from the October 1, 2017, mass shooting. MGM said this month the settlements could cost $800 million.
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