MGM has provided an update on the 2020 plan to reduce costs, drive margin improvement and position the company for future growth.
US.- Earlier this year, MGM Resorts International introduced a plan to reduce costs, improve efficiencies and position the company for future growth. As it has released its latest financial results, MGM has now given an update on the 2020 plan.
MGM has reported that revenues declined by 64.9% to US$43.3 million in the second quarter of the year when compared to the US$123.7 million posted in the same period in 2018. MGM said that increased expenses impacted its bottom line.
The company also registered a 2% increase in operating income when compared to 2Q18 to US$371.1 million. This includes the US$43 million in restructuring costs related to the operating model of the MGM 2020 plan.
Corey Sanders, CFO and treasurer of MGM Resorts, said: “During the quarter, we made significant progress on phase one of MGM 2020 with reductions in labour and sourcing savings.
“We are transforming the company’s operating model to maximise both efficiencies and guest satisfaction. The company is also empowering our leaders to make faster decisions. We feel increasingly confident that we will achieve our phase one adjusted EBITDA uplift target of US$200 million in 2020, compared to when we started the plan. In fact, we now expect roughly US$100 million in 2019 compared to our previous guidance of around US$70 million.”
The 2020 plan announcement
The company introduced the plan back in January. It said that it expects to deliver annualised adjusted EBITDA uplift of US$300 million in aggregate. It consists of US$200 million by the end of 2020 and an additional US$100 million by the end of 2021.
The program called “MGM 2020” aims to leverage a more centralised organisation in order to boost profitability. It also aims at laying the groundwork for a digital transformation to increase revenue through key investments in technology.