Studio City International Holdings Limited — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; audited consolidated U.S. GAAP results, with comparisons to 2020 and 2019. This is an annual filing, not a standalone 2021 Q4 report, and it does not provide clear Q4-only financial results. Studio City operates the non-gaming resort business in Macau; Melco Resorts’ subsidiary operates Studio City Casino under services and right-to-use arrangements.
Financial performance and liquidity
| Metric | 2021 | 2020 | 2019 |
|---|---|---|---|
| Total operating revenue | US$106.9m | US$49.2m | US$626.7m |
| Operating income (loss) | (US$191.6m) | (US$279.9m) | US$178.0m |
| Net income (loss) attributable to Studio City International Holdings | (US$252.6m) | (US$321.6m) | US$33.6m |
| Adjusted EBITDA, a non-GAAP measure | (US$56.5m) | (US$113.8m) | US$361.0m |
| Adjusted EBITDA margin | (52.9%) | (231.3%) | 57.6% |
| Net cash from (used in) operating activities | (US$136.8m) | (US$167.4m) | US$228.5m |
Revenue rose 117.2% year over year as inbound tourism and gaming-related and non-gaming activity improved, but remained far below 2019. Casino gross gaming revenue at the property, before the operator’s deductions, was US$380.8m in 2021 versus US$264.4m in 2020 and US$1.432bn in 2019. The company’s recognized gaming-related service revenue was negative US$1.5m in 2021 and negative US$42.7m in 2020, reflecting the contractual residual after gaming taxes and operating costs. Hotel occupancy improved to 51% from 28%; ADR declined to US$123 from US$128, while REVPAR increased to US$62 from US$36.
Net non-operating expenses were US$110.9m, including US$91.0m of interest expense net of capitalized amounts and a US$28.8m loss on extinguishment of debt related to refinancing. Capitalized interest was US$23.7m. The filing reports no clear conventional gross-margin figure; the disclosed operating and Adjusted EBITDA measures provide the relevant profitability indicators.
At year-end, cash and cash equivalents were US$499.3m; current assets were US$563.7m and current liabilities US$254.7m. Total principal debt was approximately US$2.10bn: US$500m of 6.0% notes due 2025, US$500m of 6.5% notes due 2028, US$1.10bn of 5.0% notes due 2029, and a small term-loan balance. The US$233m revolving facility was undrawn and available subject to conditions. Operating cash flow was negative, investing cash outflow was US$407.2m, and financing cash inflow was US$471.5m. Capital expenditures on an accrual basis were US$503.7m. Contractual obligations totaled US$3.161bn, including scheduled principal, fixed interest, leases and construction commitments.
Material changes and unusual items
- Revenue and losses improved from the exceptionally weak 2020 results, but the business remained substantially below pre-pandemic 2019 levels and continued to incur operating and net losses.
- The company issued US$1.10bn of 5.0% notes due 2029 in 2021 and used proceeds in part to tender for and redeem its 7.25% notes due 2024. The refinancing produced the US$28.8m extinguishment loss.
- Construction-in-progress costs for the remaining project reached US$721.5m at year-end. The estimated project budget was approximately US$1.2bn, excluding pre-opening and financing costs; contracted but unpaid construction and equipment commitments were US$298.9m.
- After year-end, the company issued US$350m of 7.0% senior secured notes due 2027 in February 2022 and completed a US$300m equity private placement in February–March 2022.
Outlook, risks and contingencies
- Management gave no numerical earnings or revenue guidance and said it could not reasonably estimate the future financial impact of COVID-19. It cited continuing travel restrictions, quarantine requirements, outbreaks and uncertain customer recovery. Cost reductions and capital-spending deferrals were implemented; management said available liquidity and financing sources were expected to support operations and capital expenditures for at least 12 months after the financial statements were issued.
- The Gaming Operator’s subconcession was due to expire June 26, 2022. An extension to December 31, 2022 required Macau government approval; the operator had applied for it. The proposed Macau gaming-law changes, concession tender and future operating arrangements remained uncertain and could affect casino operations, property ownership requirements, cash flows and debt terms.
- The land concession required full development by December 27, 2022, following an extension granted in 2021. Further extension was discretionary; failure to meet the deadline could put the land concession and investment at risk. Construction also faced cost, schedule, labor and supply-chain risks; a fatality at the construction site in December 2021 led to a temporary suspension of certain works.
- Gaming promoter arrangements at Studio City ended in December 2021 amid increased regulatory scrutiny. VIP rolling-chip operations were scheduled to continue only through December 31, 2022, subject to early termination on 30 days’ notice. The filing also highlights promoter-related legal and regulatory exposure.
- Other principal risks include high leverage and debt covenants, negative operating cash flow, dependence on Melco Resorts and related-party services, concentration in one Macau property, competition, cross-border travel and currency controls, and the possible loss of NYSE listing if the PCAOB cannot inspect the auditor. The auditor expressed unqualified opinions on the financial statements and internal controls, while noting that PCAOB inspection access was unavailable.
- The company reported no legal or administrative proceedings it considered likely to have a material adverse effect. It paid no dividends and did not expect to do so in the foreseeable future.
Most important facts for investors to verify
- Progress and final terms of the subconcession extension, new concession award, amended gaming law and approval of any required changes to the casino operating arrangements.
- Whether the remaining project can be completed within the revised timetable and budget, and how the remaining funding need will be financed.
- Cash burn, committed and undrawn liquidity, debt-service capacity, covenant compliance and refinancing needs; distinguish principal debt from the larger contractual-obligation total, which includes interest and other commitments.
- Recovery in Macau visitation, gaming revenue and hotel occupancy, and the effect of discontinued gaming promoter arrangements and possible VIP-table termination.
- Terms and use of proceeds from the post-year-end US$350m notes and US$300m equity placement, including dilution and updated leverage.
- Whether the Macau tax exemption application is approved and whether PCAOB inspection and NYSE continued-listing risks change.