MGM Resorts International — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing; the supplied text does not provide a distinct fourth-quarter results summary.
Business context
MGM operates integrated casino, hotel and entertainment resorts in the U.S. and Macau, with reportable segments of Las Vegas Strip Resorts, Regional Operations and MGM China. Its strategy combines an asset-light real-estate model with investment in resorts, BetMGM online betting and iGaming, and potential development in Japan.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Net revenue | $9.68 billion | $5.16 billion |
| Operating income (loss) | $2.28 billion | $(642) million |
| Net income (loss) | $1.21 billion | $(1.32) billion |
| Net income (loss) attributable to MGM Resorts | $1.25 billion | $(1.03) billion |
| Cash from operating activities | $1.37 billion | $(1.49) billion |
| Cash from investing activities | $1.54 billion | $2.16 billion |
| Cash from financing activities | $(2.81) billion | $2.10 billion |
Revenue rose 88%, reflecting the recovery from pandemic closures and restrictions, increased visitation and the consolidation of Aria/CityCenter from September. Las Vegas Strip revenue increased 111%, Regional Operations 72% and MGM China 84%. Las Vegas Strip hotel occupancy was 74% versus 55% in 2020; ADR was $173 versus $161, and REVPAR was $128 versus $88.
Adjusted Property EBITDAR was $1.74 billion for Las Vegas Strip Resorts, $1.22 billion for Regional Operations and $25 million for MGM China, compared with $232 million, $344 million and a $194 million loss, respectively, in 2020. Their 2021 margins were 36.7% and 35.9% for Las Vegas and Regional Operations. Consolidated Adjusted EBITDAR was $2.42 billion; it excludes rent and other items and is not a GAAP operating or liquidity measure.
Reported operating income included a $1.56 billion gain on consolidation of CityCenter. The 2020 comparison included $1.49 billion of net gains on REIT transactions. These significant items affect year-over-year comparisons. Gross interest expense increased to $800 million from $679 million.
Year-end cash and cash equivalents were $4.70 billion, plus $500 million of restricted cash. Principal debt was $12.86 billion, including $1.0 billion due in 2022; management expected to repay that maturity with cash on hand. Operating lease liabilities were $11.83 billion, and annual cash rent obligations under triple-net leases were approximately $1.6 billion. The company reported $1.37 billion of operating cash flow and $491 million of capital expenditures in 2021.
Material changes and capital allocation
- MGM acquired the remaining 50% of CityCenter for $2.125 billion and began consolidating it; the transaction generated the $1.56 billion gain noted above.
- MGM sold Aria/Vdara real estate for $3.89 billion and leased it back. MGP acquired MGM Springfield real estate for $400 million, with the property added to the MGP master lease.
- MGM repurchased $1.8 billion of its shares in 2021. It paid $5 million in common dividends, maintaining an annual rate of $0.01 per share.
- BetMGM generated an equity-method loss of $211 million in 2021; MGM contributed $225 million to the venture.
Outlook, risks and contingencies
Management said recovery was underway as domestic restrictions eased, but warned that COVID-19 variants, travel limits and renewed restrictions could materially affect demand and liquidity. Macau visitation remained constrained by travel and quarantine measures. The company planned 2022 domestic capital expenditures of approximately $775–$815 million, Macau capital expenditures of $110–$130 million, and BetMGM contributions of approximately $225 million. It also expected to continue share repurchases; after year-end it repurchased approximately 15 million shares for $670 million.
Key announced transactions remained conditional: VICI’s proposed acquisition of MGP was expected to close in the first half of 2022; MGM’s $1.625 billion acquisition of The Cosmopolitan’s operations was also expected to close in the first half of 2022; and the $1.075 billion sale of The Mirage operations to Hard Rock was expected to close in the second half of 2022. Each was subject to conditions and regulatory approvals. MGM was selected with ORIX as Osaka’s integrated-resort partner, but development remained subject to further approvals and process.
MGM China’s gaming subconcession was scheduled to expire June 26, 2022. Macau’s proposed gaming-law changes and concession tender created uncertainty; management believed MGM Grand Paradise would obtain a concession but provided no assurance. Other material exposures include high debt and fixed lease obligations, guarantees of $3.01 billion and $3.0 billion of venture debt, refinancing and covenant risks, competition, labor negotiations, credit losses and regulatory or tax changes. The filing reports effective internal control over financial reporting and an unqualified audit opinion.
Important facts for investors to verify
- How much of 2021 earnings and operating income reflects the non-recurring CityCenter consolidation gain, and how comparable operating performance looks excluding transaction effects.
- Progress and final terms of the VICI/MGP, Cosmopolitan and Mirage transactions, including resulting cash, equity interests, rent commitments and closing conditions.
- Macau concession and gaming-promoter developments, and their implications for MGM China’s revenue, debt covenants and asset rights.
- Debt maturities, access to revolving facilities, fixed rent obligations and exposure under the two shortfall guarantees.
- Whether recovery, planned capital spending and BetMGM funding generate sustainable cash flow after rent, interest, debt repayment and buybacks.