MGM Resorts International annual report, FY2023

MGM Resorts International — FY2023 Form 10-K Summary

Reporting period: Fiscal year ended December 31, 2023. This filing reports full-year results; it does not provide a separate Q4-only financial summary. MGM operates casino resorts in the U.S. and Macau and online gaming businesses, including LeoVegas and its 50%-owned BetMGM venture. Its three reportable segments are Las Vegas Strip Resorts, Regional Operations, and MGM China.

Financial performance and liquidity

Metric	FY2023	FY2022
Net revenue	$16.16 billion	$13.13 billion
Operating income	$1.89 billion	$1.44 billion
Net income	$1.31 billion	$207 million
Net income attributable to MGM Resorts	$1.14 billion	$1.47 billion
Diluted earnings per share	$3.19	$3.49
Cash from operating activities	$2.69 billion	$1.76 billion

• Revenue rose 23%, with MGM China up 368% as Macau travel restrictions ended and Las Vegas Strip revenue up 5%. Regional Operations revenue declined 4%.
• Operating income increased 31%, but comparisons include significant non-recurring and timing effects. FY2023 included a $399 million gain on the Gold Strike Tunica sale; FY2022 included a $2.28 billion gain on the VICI transaction and a $1.07 billion gain on The Mirage sale. Depreciation and amortization also fell sharply in 2023 after the Macau gaming subconcession was fully amortized in 2022.
• Net income attributable to MGM Resorts declined despite higher consolidated net income; noncontrolling interests and unusual prior-period items affect comparability.
• Adjusted Property EBITDAR, the company’s segment GAAP measure, was $3.19 billion for Las Vegas Strip Resorts, $1.13 billion for Regional Operations, and $867 million for MGM China. Las Vegas margin was 36.3%, down from 37.4%; Regional margin was 30.9%, down from 33.9%. MGM China moved from a $203 million EBITDAR loss to $867 million of EBITDAR.
• Cash and cash equivalents were $2.93 billion at year-end, versus $5.91 billion a year earlier. Cash used in investing was $714 million and cash used in financing was $5.00 billion; financing uses included $2.29 billion of share repurchases and net debt repayments.
• Debt principal totaled $6.37 billion, including $3.1 billion at MGM China. Operating lease liabilities were $25.20 billion; annual contractual cash rent was approximately $1.8 billion. The company also provides shortfall guarantees on $3.01 billion of Bellagio landlord debt and $3.0 billion of Mandalay Bay and MGM Grand Las Vegas landlord debt.
• The company reported $932 million of capital expenditures in 2023. At year-end, it had no borrowings under its $1.675 billion corporate revolving credit facility; MGM China had $371 million drawn on its first revolving facility and none on its second.

Material changes and outlook

• Macau’s recovery was the largest operating change: arrivals increased 395% year over year, and MGM China casino revenue rose 391%. The company’s 56%-owned MGM China operates MGM Macau and MGM Cotai.
• Las Vegas Strip hotel occupancy increased to 93% from 89%; ADR rose to $256 from $229 and RevPAR to $237 from $203. The Cosmopolitan contributed a full year of results, while The Mirage disposition partly offset growth. Management cited the inaugural F1 race as a contributor to volume and hotel performance.
• Gold Strike Tunica was sold in February 2023 for $450 million stated consideration, or $474 million net of adjustments and transaction costs; the related lease amendment reduced annual cash rent by $40 million.
• The board suspended regular dividends in February 2023 and emphasized share repurchases. MGM repurchased $2.3 billion of shares during 2023; subsequent to year-end it repurchased approximately $320 million more and completed the February 2023 plan.
• Management’s 2024 capital expenditure estimates are approximately $830–$860 million domestically and $200–$250 million at MGM China. These are estimates, not earnings guidance; the filing provides no consolidated revenue or profit guidance.
• MGM expects its proportionate funding for the Osaka integrated resort’s currently unfinanced development costs to be about 306 billion yen, approximately $2.2 billion at year-end exchange rates, over the next five years, subject to project scope, financing, and investor participation. A potential full-scale New York gaming project is estimated at about $2 billion, including a $500 million license fee, contingent on the licensing process.
• In February 2024, after the reporting date, MGM amended its corporate credit facility to increase it to $2.3 billion and extend maturity to February 2029.

Risks, contingencies, and unusual items

• A September 2023 cybersecurity incident disrupted domestic operations and exposed certain customers’ personal information. MGM reported that the incident’s response costs were not material to 2023 results and did not expect a material effect on financial condition or results, but class actions and state and federal inquiries are ongoing. The company says potential losses cannot yet be estimated.
• High fixed commitments include triple-net leases, rent escalators, property maintenance and capital spending, debt service, and landlord-debt guarantees. MGM cautions these obligations may constrain liquidity, investment, and responses to downturns.
• Debt maturities include $750 million in 2024, $1.925 billion in 2025, and $1.521 billion in 2026, including MGM China debt. MGM China’s revolving-facility financial covenant waivers run through December 31, 2024, with covenants scheduled to resume in 2025.
• Collective bargaining agreements covered approximately 37,000 employees at year-end; multiple agreements covering Las Vegas and regional properties were scheduled to expire in 2024. Wage increases or labor disruptions could affect costs and operations.
• Macau’s ten-year gaming concession runs through December 31, 2032. MGM Grand Paradise has gaming and non-gaming investment obligations that increased to MOP 19.7 billion, about $2.4 billion, after Macau gaming revenue exceeded the contract threshold. Concession compliance, renewal, regulation, and Macau market conditions remain material risks.
• MGM reported an effective tax rate of 10.7% in 2023, favorably affected by a reduction in the valuation allowance on foreign tax credit carryforwards. Realization remains dependent on future income; substantial credits are scheduled to expire in 2024–2027.

Important facts for investors to verify

• How much of Macau’s 2023 rebound is sustainable, and whether MGM China can generate cash while meeting concession investment requirements.
• Cash available after rent, debt service, capital expenditures, repurchases, and planned Osaka funding; also review the 2025–2026 maturities and the landlord-debt guarantees.
• Progress, financing terms, timing, and expected returns for Osaka, the potential New York license, and digital gaming investments.
• Cyber incident litigation, regulatory inquiries, remediation costs, insurance recovery, and any effects on customer activity or reputation.
• Outcomes of 2024 labor negotiations and the potential impact of wages, benefits, or work interruptions on segment margins.
• Comparability of reported earnings across periods, particularly the effects of asset-sale gains, the prior VICI gain, amortization changes, and noncontrolling interests.