Melco Resorts & Entertainment Limited — FY2021 Form 20-F
Business context and reporting period. This is an audited annual report for the fiscal year ended December 31, 2021, prepared under U.S. GAAP—not a standalone Q4 filing. Melco develops and operates integrated casino resorts in Macau, the Philippines and Cyprus. Macau remained its principal market. The auditor issued an unqualified opinion on the financial statements and internal controls; the filing also notes that the PCAOB could not inspect the Hong Kong-based auditor at that time.
Key financial metrics
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Operating revenue | US$2.012 billion | US$1.728 billion | Up 16.5%; FY2021 remained about 65% below FY2019 revenue of US$5.737 billion. |
| Casino revenue | US$1.676 billion | US$1.471 billion | Up 13.9%; 83.3% of FY2021 revenue. |
| Operating loss | US$577.5 million | US$940.6 million | Improved; operating margin was approximately -28.7% versus -54.4%. |
| Net loss attributable to Melco | US$811.8 million | US$1.263 billion | Loss narrowed; diluted loss per share was US$0.566. |
| Adjusted EBITDA | US$165.0 million | Negative US$177.3 million | Improved materially; non-GAAP measure. |
| Adjusted Property EBITDA | US$235.1 million | Negative US$104.3 million | Improved materially; non-GAAP measure. |
| Operating cash flow | Negative US$268.8 million | Negative US$861.0 million | Cash use decreased, but operating cash flow remained negative. |
| Investing cash flow | Negative US$674.6 million | Negative US$53.3 million | Higher construction and property spending. |
| Financing cash flow | Positive US$821.7 million | Positive US$1.264 billion | Debt issuance and borrowings funded operations and investment, partly offset by repayments. |
| Cash and cash equivalents | US$1.653 billion | US$1.755 billion | Year-end cash; restricted cash was immaterial. |
| Gross debt | US$6.600 billion | Not clearly stated in the supplied comparative debt table | Includes US$399.7 million drawn under the 2020 revolving facility. Cash less gross debt implies approximately US$4.95 billion net debt, before lease liabilities. |
| Total assets / total liabilities | US$8.884 billion / US$8.064 billion | US$9.021 billion / US$7.183 billion | Total equity fell to US$819.9 million from US$1.838 billion. |
Material changes versus the prior comparable period
- Revenue recovery reflected stronger mass-market table games, gaming-machine and non-gaming activity as visitation improved; rolling-chip performance was softer. COVID-19 restrictions continued to disrupt operations across all three markets.
- FY2021 segment revenue: City of Dreams Macau US$1.147 billion; Studio City US$372.3 million; City of Dreams Manila US$268.6 million; Mocha Clubs US$85.0 million; Altira Macau US$56.2 million; and Cyprus operations US$52.6 million.
- Adjusted Property EBITDA returned to positive territory, led by City of Dreams Macau at US$202.0 million and City of Dreams Manila at US$89.0 million. Altira Macau and Studio City remained negative at US$54.0 million and US$20.5 million, respectively.
- Interest expense, net of capitalized amounts, increased to US$350.5 million from US$340.8 million. FY2021 also included a US$28.8 million loss on extinguishment of debt, principally from refinancing Studio City notes.
- Melco issued additional 2029 notes and drew US$399.7 million under the 2020 credit facilities; it used proceeds in part to redeem Studio City notes. The company repurchased 16.1 million ordinary shares for approximately US$52.0 million.
Outlook, management commentary and principal risks
- Management said recovery remained uncertain, dependent on travel and visa restrictions, quarantine rules, COVID-19 developments and customer behavior. Cost reductions and deferred or reduced capital spending were among the measures used to preserve cash.
- City of Dreams Mediterranean was expected to open in the second half of 2022, subject to approvals and completion. Its Cyprus license required opening by September 30, 2022; delay could trigger penalties and, after a grace period, license termination.
- Studio City’s remaining development had an estimated US$1.2 billion budget, with approximately US$721 million incurred by year-end 2021. The Macau land concession required full development by December 27, 2022; further extension was discretionary.
- Melco’s Macau gaming subconcession was due to expire June 26, 2022. The company applied for an extension through December 31, 2022, subject to government approval, and still needed to secure a new concession. Proposed Macau gaming-law changes could affect concession terms, casino premises, gaming promoters, capital requirements and gaming-table allocations.
- Gaming-promoter arrangements in Macau were terminated in December 2021. About 14.0% of FY2021 casino revenue came from customers sourced through Macau promoters. Promoter-related revenue was approximately 1.0% in the Philippines and 11.9% in Cyprus.
- Debt, refinancing and covenant risks remain significant. Lenders waived certain financial covenants under the 2020 credit facilities through specified 2022 test dates; future compliance and access to financing are not assured. The quarterly dividend program remained suspended.
- Other material risks include dependence on Macau and PRC visitation, regulatory and licensing changes, customer credit losses, construction delays and cost inflation, foreign-exchange exposure, and possible U.S. trading restrictions under the HFCAA. The filing identifies a potential Nasdaq delisting under then-current law if PCAOB inspection restrictions persisted.
- The filing reports ordinary-course legal and administrative proceedings and states management did not expect them to have a material adverse effect. A New South Wales proceeding related to the Crown share acquisition sought approximately AUD3.676 million plus interest and costs; the company said the outcome’s financial impact was not expected to be material.
Most important facts an investor should verify
- Whether Macau travel restrictions eased, visitation and gaming revenue recovered, and the company achieved sustained positive operating cash flow.
- Whether Melco secured the Macau subconcession extension and a new concession, and what final gaming-law amendments mean for its operations and Studio City arrangements.
- Whether City of Dreams Mediterranean opened on schedule and within budget, and whether Studio City met its land-concession development deadline or received an extension.
- Current gross debt, cash, undrawn borrowing capacity, covenant status, refinancing needs and capital commitments; the filing reports US$452.7 million of contracted but unincurred capital commitments at year-end.
- Collection performance on casino receivables: the allowance for casino credit losses was 83.4% of gross casino receivables at year-end 2021, versus 72.2% a year earlier.
- Developments in PCAOB inspection access and the HFCAA, which could affect the U.S. listing and liquidity of Melco’s ADSs.