MGM Resorts International — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022. This is an annual filing; the supplied text does not provide standalone fourth-quarter results. The company operates domestic casino resorts, Macau resorts through its 56% interest in MGM China, and online gaming businesses including LeoVegas and the 50%-owned BetMGM venture.
Financial performance
| Metric | 2022 | 2021 |
|---|---|---|
| Net revenue | $13.13 billion | $9.68 billion |
| Operating income | $1.44 billion | $2.28 billion |
| Consolidated net income | $206.7 million | $1.21 billion |
| Net income attributable to MGM Resorts | $1.47 billion | $1.25 billion |
| Operating cash flow | $1.76 billion | $1.37 billion |
| Investing cash flow | $2.12 billion | $1.54 billion |
| Financing cash flow | $(3.02) billion | $(2.81) billion |
| Cash and cash equivalents at year-end | $5.91 billion | $4.70 billion |
| Principal debt outstanding | $8.76 billion | $12.86 billion |
Revenue rose 36%, while operating income fell 37%. The filing reports 2022 Adjusted EBITDAR of $3.50 billion, a non-GAAP valuation measure that excludes, among other items, lease rent. Segment results: Las Vegas Strip Adjusted Property EBITDAR was $3.14 billion, with a 37.4% margin; Regional Operations was $1.29 billion, with a 33.9% margin; MGM China recorded a $203 million Adjusted Property EBITDAR loss.
Operating cash flow increased year over year, principally reflecting improved domestic property performance and lower cash interest, partly offset by higher lease payments. Capital expenditures were $765 million. The company repurchased $2.8 billion of shares during 2022.
Material changes versus 2021
- Las Vegas Strip revenue increased 77%, supported by improved travel and business volumes, inclusion of The Cosmopolitan from May 2022, and a full year of Aria operations. Strip hotel occupancy was 89% versus 74%; ADR was $229 versus $173; REVPAR was $203 versus $128.
- Regional Operations revenue increased 12%, while MGM China revenue fell 44% to $674 million amid Macau travel restrictions, temporary closures, and lower visitation.
- Operating income included a $2.3 billion net gain on the VICI Transaction and a $1.1 billion gain on the Mirage operating sale. The prior year included a $1.6 billion gain on CityCenter consolidation.
- Depreciation and amortization increased to $3.48 billion, including $2.7 billion of intangible amortization. A change in Macau gaming law shortened the useful life of MGM Grand Paradise’s gaming subconcession, which was fully amortized by year-end.
- The 2022 effective tax rate was 77.1%, versus 17.3% in 2021, reflecting items including Macau losses that could not be tax-benefited and changes in deferred tax liabilities. The large gap between consolidated net income and income attributable to MGM Resorts also reflects the reported net loss attributable to noncontrolling interests.
Liquidity, commitments and outlook
- Year-end cash included $860 million held by MGM China; MGM China also had approximately $124 million of restricted cash. The company had no borrowings on its $1.675 billion revolving credit facility.
- Approximately $1.29 billion of principal debt was due in 2023; management expected to repay it with cash on hand. Estimated 2023 cash interest was approximately $480 million consolidated, including MGM China.
- Annual cash rent under triple-net leases was approximately $1.7 billion. Operating lease liabilities totaled $25.2 billion at year-end; the leases also require the company to bear substantial property costs and capital spending.
- Planned 2023 capital expenditures were approximately $795–$835 million domestically and $110–$150 million at MGM China. Planned 2023 BetMGM contributions were approximately $75 million. The filing gives no earnings or revenue guidance.
- Macau’s new ten-year gaming concession began January 1, 2023. MGM Grand Paradise committed approximately $2.1 billion to gaming, non-gaming and tourism projects over the concession term, subject to possible increases; the concession also entails substantial gaming taxes, premiums and other payments.
- The company announced a further $2.0 billion share repurchase authorization in February 2023 and suspended regular dividends in favor of repurchases. It reported approximately 6 million post-year-end shares repurchased for $210 million.
Management commentary and key risks
Management cited a strong recovery in domestic resort activity after pandemic-related restrictions, particularly on the Las Vegas Strip. Macau remained heavily affected during 2022, though most travel restrictions were lifted by February 2023. Strategic priorities include digital gaming, BetMGM, LeoVegas, a proposed Osaka integrated resort with ORIX, and pursuing a downstate New York gaming license.
Key risks include substantial debt and fixed rent commitments; the $3.01 billion and $3.0 billion shortfall guarantees on Bellagio BREIT Venture and VICI BREIT Venture debt; economic, travel and gaming-market volatility; labor negotiations, including significant Las Vegas agreements expiring in 2023; competition; cyber and data-security risks; and Macau concession, regulatory, investment and visitation risks. BetMGM generated a $234 million share of operating losses in 2022. The filing reports audited financial statements and effective internal controls; the auditor’s internal-control audit excluded The Cosmopolitan, acquired in 2022.
Most important facts for investors to verify
- Whether domestic demand and margins remain robust, and how much reported growth reflects acquisitions and property changes rather than comparable-property performance.
- Macau’s recovery, MGM China liquidity and covenant position, and the ability to meet concession investment and payment obligations.
- Debt refinancing and repayment needs, cash available outside subsidiaries, lease escalators, and exposure under the two shortfall guarantees.
- The sustainability of earnings after adjusting for the VICI and Mirage gains, accelerated Macau concession amortization, and the unusually high tax provision.
- BetMGM’s funding needs and path to profitability, as well as execution, timing and capital requirements for Japan and potential New York expansion.