Hotel-casino investors limp to end of 2nd-quarter earnings season

  • Investors can now breathe a sigh of relief after the closure of the second-quarter earnings season for publicly traded firms running casinos in Southern Nevada.
  • The casino and gaming equipment companies reported revenue drops of over 70% for the quarter.
  • The six largest companies in Las Vegas were worst hit, with Las Vegas Sands recording a net loss of $985 million.
  • The third quarter could bring in good news as experts see positive signs of financial recovery.

Fortunately, the second-quarter earnings season has ended for publicly traded firms that run casinos in Southern Nevada. Investors can now breathe a sigh of relief.

The coronavirus pandemic and the casino closures it caused dealt savage financial havoc on investors.

While the publicly held casino and gaming equipment firms reported revenue of $2.532, it is below the $3.223 billion that MGM Resorts International alone generated in last year’s second quarter.

On average, 14 casino resort and equipment companies saw a revenue drop of 71.2%, and the net loss among them was $2.764 for the quarter.

The revenue declines and net losses were not associated with Las Vegas alone since several companies have operations in different locations.

For around two-thirds of the second quarter, Nevada casinos remained closed. However, properties in other states and nations were closed for varying periods throughout the quarter that lasted from the beginning of April to the end of June.

For instance, companies like Caesars Entertainment Corp., Penn National Gaming, and Boyd Gaming Corp. operate in different states in the US apart from Southern Nevada. MGM, Wynn Resorts Ltd., and Las Vegas Sands Corp. run other properties overseas.

However, a company passes the losses of all its properties on to stock investors.

In Nevada, McCarran International Airport was less active, casinos reduced capacity following an order from Gov. Steve Sisolak, and the cities couldn’t host trade shows and conventions. This situation affected operators.

While resort companies tried all they could to alleviate the effects of the pandemic by minimizing expenses, most of that included furloughing or laying off staff, which resulted in a more severe financial disaster at individual levels.

The six largest companies in Las Vegas were the worst hit, with Las Vegas Sands reporting a net loss of $985 million and MGM $857.3 million. Sands posted a revenue decline of 97.1%, while MGM reported a revenue decline of 91%.

While slot machines and gaming equipment makers didn’t lose as much as casino companies, they also faced tough times during the second quarter. The manufacturers depend on casinos for slot revenue and equipment upgrades.

Meanwhile, a turnaround could be on the horizon. Director of government affairs for Global Market Advisors LLC Brendan Bussmann said that while the financial devastation was great during the shutdown of casinos, several positive signs continue to point to the potential recovery of the industry.

However, he admitted that it may take some time for the Las Vegas market to go back to normal. Bussmann thinks the easing of restrictions on the borders of China and Macao will help last quarter’s big losers recover.

I'm Adam Shaw, Senior Editor and one of the first members at VegasSlots. I'm a massive football sports fan but also love casinos and occasional trips to Las Vegas. Gaming runs in the family

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