MGM RESORTS INTERNATIONAL This management's discussion and analysis of financial condition and results of operations contain forward-looking statements that involve risks and uncertainties. Please see "Cautionary Statement Concerning Forward-Looking Statements" for a discussion of the uncertainties, risks and assumptions that may cause our actual results to differ materially from those discussed in the forward-looking statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q, the audited consolidated financial statements and notes for the fiscal year endedDecember 31, 2021 , which were included in our Form 10-K, filed with theSecurities and Exchange Commission ("SEC") onFebruary 25, 2022 . The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods.MGM Resorts International together with its subsidiaries may be referred to as "we," "us" or "our."MGM China Holdings Limited together with its subsidiaries is referred to as "MGM China ."MGM Growth Properties LLC together with its subsidiaries is referred to as "MGP."
Description of our business
Our primary business is the operation of casino resorts, which offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities. We operate several of the finest casino resorts in the world and we continually reinvest in our resorts to maintain our competitive advantage. Most of our revenue is cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. We rely on the ability of our resorts to generate operating cash flow to fund capital expenditures, provide excess cash flow for future development, repay debt financings, and return capital to our shareholders. We make significant investments in our resorts through newly remodeled hotel rooms, restaurants, entertainment and nightlife offerings, as well as other new features and amenities. We also offer online gaming and sports betting through LeoVegas, our consolidated subsidiary, as well as through BetMGM, our unconsolidated affiliate.
Impact of COVID-19 - Update
As of
Macau is currently operating under a "dynamic zero" COVID-19 policy, as is mainlandChina . Our properties inMacau were open during the first half of 2022, however, gaming operations were temporarily suspended onJuly 11, 2022 due to an increase in the number of COVID-19 cases inMacau and resumed onJuly 23, 2022 , subject to certain continuing health safeguards. OnOctober 30, 2022 , a COVID-19 case was identified as connected toMGM Cotai . All guests and staff were isolated untilNovember 1, 2022 and all gaming, hotel, restaurant, and retail operations were suspended with limited operations expected to resume beginningNovember 3, 2022 . More broadly, electronic applications for individual and group travel visas toMacau resumed onNovember 1, 2022 , however, several travel and entry restrictions inMacau and mainlandChina remain in place, including COVID-19 testing and certain quarantine requirements, which have significantly impacted visitation to ourMacau properties. Although gaming operations inMacau have resumed and certain restrictions on visa applications have been lifted, protective and operational measures have had a negative effect onMGM China's operations. The extent and timing of further closures ofMGM China's properties, limitations of operations, or whether further travel restrictions to or fromMacau will be implemented is uncertain if there is an increase or continued spread of COVID-19.
Other Developments
InApril 2022 , we completed the VICI Transaction in a stock-for-stock transaction. In connection with the transaction, VICI OP redeemed the majority of our VICI OP units for cash consideration of$4.4 billion , with us retaining an approximate 1% ownership interest in VICI OP. MGP's Class B share that was previously held by us was cancelled. Accordingly, we no longer hold a controlling interest in MGP and deconsolidated MGP upon the closing of the transactions. In connection with the VICI Transaction, we entered into an amended and restated master lease with VICI. See Note 3 and Note 9 in the accompanying consolidated financial statements for discussion of the transaction and lease, respectively. InMay 2022 , we acquired the operations of The Cosmopolitan for cash consideration of$1.625 billion , plus working capital adjustments for a total purchase price of approximately$1.7 billion . Additionally, we entered into a lease 31 --------------------------------------------------------------------------------
agreement for the real estate assets of The Cosmopolitan. See Note 3 and Note 9 in the accompanying consolidated financial statements for discussion of the transaction and lease, respectively.
InJune 2022 , theMacau government enacted a new gaming law that provides for material changes to the legal form of gaming concessions inMacau , including discontinuing and prohibiting gaming subconcessions subsequent to their expiration, and also includes material changes to the rights and obligations provided for under the new gaming concessions to be awarded in the upcoming public tender, such as limiting the term of concessions to a maximum of 10 years. As a result, we reassessed the useful life of theMGM Grand Paradise gaming subconcession intangible asset and reduced the useful life to align with the contractual term of the subconcession, which expires onDecember 31, 2022 , thereby accelerating the recognition of amortization within our statements of operations. See Note 1 and Note 6 in the accompanying consolidated financial statements for further discussion. Certain events relating to the loss, termination, rescission, revocation or modification ofMGM Grand Paradise's ability to game inMacau , where such events have a material adverse effect on the financial condition, business, properties, or results of operations ofMGM China , taken as a whole, may result in a special put option triggering event underMGM China's senior notes and in an event of default underMGM China's revolving credit facilities. Management cannot provide any assurance that it will be able to obtain a gaming concession in the public tender; however, management submitted its bid onSeptember 14, 2022 , and believes thatMGM Grand Paradise will be successful in obtaining a gaming concession. For a description of certain risks applicable toMGM Grand Paradise's subconcession and related matters, refer to our Annual Report on Form 10-K for the year endedDecember 31, 2021 under the heading "Risk Factors- Risks Related to Our Macau Operations." InSeptember 2022 , we acquired LeoVegas through a tender offer at a cash price ofSEK 61 per share, for a total fair value of equity interests acquired of approximately$556 million , inclusive of cash settlement of equity awards. See Note 3 in the accompanying consolidated financial statements for discussion of this transaction. Pending Transactions OnDecember 13, 2021 , we entered into an agreement to sell the operations of The Mirage to an affiliate ofHard Rock for cash consideration of$1.075 billion , subject to certain purchase price adjustments. Upon closing, the master lease between us and VICI will be amended to remove The Mirage and reflect a$90 million reduction in annual cash rent. See Note 3 in the accompanying consolidated financial statements for discussion of the transaction. OnJune 9, 2022 , we entered into an agreement to sell the operations of Gold Strike Tunica to CNE for cash consideration of$450 million , subject to certain purchase price adjustments. Upon closing, the master lease between us and VICI will be amended to remove Gold Strike Tunica and reflect a$40 million reduction in annual cash rent. See Note 3 in the accompanying consolidated financial statements for discussion of the transaction.
Key Performance Indicators
Key performance indicators related to gaming and hotel revenue are:
•Gaming revenue indicators: table games drop and slots handle (volume indicators); "win" or "hold" percentage, which is not fully controllable by us. Our normal table games hold percentage at ourLas Vegas Strip Resorts is in the range of 25.0% to 35.0% of table games drop for Baccarat and 19.0% to 23.0% for non-Baccarat however, reduced gaming volumes as a result of the pandemic could cause volatility in our hold percentages; and •Hotel revenue indicators (forLas Vegas Strip Resorts ) - hotel occupancy (a volume indicator); average daily rate ("ADR," a price indicator); and revenue per available room ("REVPAR," a summary measure of hotel results, combining ADR and occupancy rate). Our calculation of ADR, which is the average price of occupied rooms per day, includes the impact of complimentary rooms. Complimentary room rates are determined based on standalone selling price. Because the mix of rooms provided on a complimentary basis, particularly to casino customers, includes a disproportionate suite component, the composite ADR including complimentary rooms is slightly higher than the ADR for cash rooms, reflecting the higher retail value of suites. Rooms that were out of service during the nine months endedSeptember 30, 2021 as a result of property closures due to the pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR. 32 --------------------------------------------------------------------------------
Additional key performance indicators at
•Gaming revenue indicators -MGM China utilizes "turnover," which is the sum of nonnegotiable chip wagers won byMGM China calculated as nonnegotiable chips purchased plus nonnegotiable chips exchanged less nonnegotiable chips returned. Turnover provides a basis for measuring VIP casino win percentage. Win for VIP gaming operations atMGM China is typically in the range of 2.6% to 3.3% of turnover however, reduced gaming volumes as a result of the pandemic could cause volatility inMGM China's hold percentages.
Results of Operations
Summary Operating Results
Certain of our properties or portions thereof were temporarily closed due to COVID-19 during the comparative periods in 2021 as follows:
•Park MGM andMandalay Bay's hotel tower operations were closed midweek and full week hotel operations resumedMarch 3, 2021 . •The Mirage's hotel tower operations were closed midweek, with the entire property closed midweek startingJanuary 4, 2021 , and re-opened onMarch 3, 2021 . •MGM Springfield's hotel was closed and partial hotel operations resumed with midweek closures onMarch 5, 2021 . Full hotel operations resumed onDecember 13, 2021 . •MGM Grand Detroit's hotel tower operations were closed and resumed onFebruary 9, 2021 .
The following table summarizes our consolidated operating results:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Net revenues $ 3,416,072 $
2,707,539
(1,045,971) 1,892,782 1,441,268 1,909,852
Net income (loss) (1,061,087) 1,337,936 526,745 1,092,302
Net income (loss) attributable to MGM Resorts
International (576,830) 1,350,433 1,189,091 1,123,357
Consolidated net revenues were $3.4 billion for the three months ended September
30, 2022 compared to $2.7 billion in the prior year quarter, an increase of 26%.
The current quarter benefited from the inclusion of the net revenues of The
Cosmopolitan and a full quarter of net revenues related to Aria as well as from
comparative increases in business volume and travel activity at our domestic
resorts, primarily at our Las Vegas Strip Resorts . At MGM China , the current and
prior year quarters were significantly impacted by travel and entry restrictions
in Macau due to the impact of COVID-19 with the current quarter being negatively
affected by property closures and more significantly impacted by restrictions
compared to the prior quarter. As a result, net revenues at our Las Vegas Strip
Resorts increased 67%, Regional Operations increased 5%, and MGM China decreased
70% compared to the prior year quarter.
Consolidated operating loss was $1.0 billion for the three months ended
September 30, 2022 compared to operating income of $1.9 billion in the prior
year quarter. The current quarter reflected an increase in depreciation and
amortization expense, an increase in rent expense recorded within general and
administrative expense for the Aria, VICI, and The Cosmopolitan leases, which
commenced in September 2021 , April 2022 , and May 2022 , respectively, and a
decrease in income from unconsolidated affiliates, partially offset by the
increase in net revenues, as discussed above. In addition, the prior year
quarter benefited from the gain on consolidation of CityCenter , net of $1.6
billion . Depreciation and amortization expense increased $1.1 billion compared
to the prior year quarter, due primarily to the change in useful life of the MGM
Grand Paradise gaming subconcession.
Consolidated net revenues were $9.5 billion for the nine months ended September
30, 2022 compared to $6.6 billion in the prior year period, an increase of 44%.
The current year period benefited from the inclusion of The Cosmopolitan and a
full year of net revenues related to Aria. The current year period was initially
negatively affected by a decrease in business volume and travel due to the
spread of the omicron variant in the early part of the period, however, business
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volumes subsequently improved at our domestic resorts with a significant
increase primarily at our Las Vegas Strip Resorts over the prior year period,
which was negatively affected by midweek property and hotel closures, lower
travel activity, and operational restrictions due to the COVID-19 pandemic. At
MGM China , the current and prior year period were significantly impacted by
travel and entry restrictions in Macau with the current year period being
negatively affected by property closures and more significantly impacted by
restrictions related to the COVID-19 pandemic compared to the prior year period.
As a result, net revenues at our Las Vegas Strip Resorts increased 108%,
Regional Operations increased 13%, and MGM China decreased 44% compared to the
prior year period.
Consolidated operating income was $1.4 billion for the nine months ended
September 30, 2022 compared to $1.9 billion in the prior year period. The
current year period benefited from a $2.3 billion gain related to the VICI
Transaction and the increase in net revenues, as discussed above, partially
offset by an increase in rent expense recorded within general and administrative
expense for the Aria, VICI, and The Cosmopolitan leases, which commenced in
September 2021 , April 2022 , and May 2022 , respectively, an increase in
depreciation and amortization expense, and a decrease in income from
unconsolidated affiliates. The prior year period benefited from the gain on
consolidation of CityCenter , net of $1.6 billion . Depreciation and amortization
expense increased $1.2 billion compared to the prior year period, due primarily
to the change in useful life of the MGM Grand Paradise gaming subconcession.
Net Revenues by Segment
The following table presents a detail by segment of net revenues:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Las Vegas Strip Resorts
Casino $ 575,868 $
422,541
735,653 403,010 1,916,949 846,053
Food and beverage 599,846 308,522 1,544,886 614,572
Entertainment, retail and other 389,655 246,894 1,089,565 461,766
2,301,022 1,380,967 6,101,090 2,930,499
Regional Operations
Casino 721,192 719,630 2,159,010 2,024,149
Rooms 84,754 70,766 211,780 160,269
Food and beverage 115,432 92,148 312,621 211,661
Entertainment, retail and other, and reimbursed
costs 52,557 42,579 141,022 96,677
973,935 925,123 2,824,433 2,492,756
MGM China
Casino 70,325 252,445 422,476 784,984
Rooms 6,989 16,683 30,472 47,585
Food and beverage 7,703 15,808 36,084 50,323
Entertainment, retail and other 2,469 4,123 9,841 13,152
87,486 289,059 498,873 896,044
Reportable segment net revenues 3,362,443 2,595,149 9,424,396 6,319,299
Corporate and other 53,629 112,390 110,873 303,949
$ 3,416,072 $ 2,707,539 $ 9,535,269 $ 6,623,248
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Las Vegas Strip Resorts casino revenue was$576 million for the three months endedSeptember 30, 2022 compared to$423 million in the prior year quarter, an increase of 36%, due primarily to the inclusion of The Cosmopolitan and a full quarter of casino revenue related to Aria, and increases in business volume and travel activity in the current year quarter.Las Vegas Strip Resorts casino revenue was$1.5 billion for the nine months endedSeptember 30, 2022 compared to$1.0 billion in the prior year period, an increase of 54%, due primarily to the inclusion of The Cosmopolitan and a full year of casino revenue related to Aria and was negatively affected by a decrease in business volume and travel due to the spread of the omicron variant in the early part of the current year period; however, business volumes subsequently improved with a significant increase over the prior year period, which was negatively affected by midweek property and hotel closures, lower travel activity, and operational restrictions due to the pandemic. The following table shows key gaming statistics for ourLas Vegas Strip Resorts : Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (Dollars in millions) Table games drop$ 1,604 $ 917 $ 4,235 $ 2,223 Table games win$ 389 $ 251 $ 1,015 $ 552 Table games win % 24.3 % 27.4 % 24.0 % 24.8 % Slots handle$ 6,193 $ 3,863 $ 16,144 $ 9,804 Slots win$ 577 $ 369 $ 1,502 $ 932 Slots win % 9.3 % 9.6 % 9.3 % 9.5 %Las Vegas Strip Resorts rooms revenue was$736 million for the three months endedSeptember 30, 2022 compared to$403 million in the prior year quarter, an increase of 83%. The current year quarter benefited from the inclusion of The Cosmopolitan and a full quarter of revenues from Aria and an increase in REVPAR due to an increase in occupancy and ADR as a result of an increase in business volume and travel activity in the current year quarter.Las Vegas Strip Resorts rooms revenue was$1.9 billion for the nine months endedSeptember 30, 2022 compared to$846 million in the prior year period, an increase of 127%. The current year period benefited from the inclusion of The Cosmopolitan and a full year of revenues from Aria. Although operations were initially negatively affected by the omicron variant in the early part of the period, REVPAR increased significantly due to an increase in occupancy and ADR as business volume and travel activity improved in the current year period. The following table shows key hotel statistics for ourLas Vegas Strip Resorts : Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Occupancy(1) 93 % 82 % 88 % 69 % Average daily rate (ADR)$ 227 $ 181 $ 218 $ 158 Revenue per available room (REVPAR)(1)$ 210 $ 148 $ 192 $ 109 (1)Rooms that were out of service, including midweek closures, during the nine months endedSeptember 30, 2021 due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.Las Vegas Strip Resorts food and beverage revenue was$600 million for the three months endedSeptember 30, 2022 compared to$309 million in the prior year quarter, an increase of 94%, andLas Vegas Strip Resorts entertainment, retail and other revenues were$390 million for the three months endedSeptember 30, 2022 compared to$247 million in the prior year quarter, an increase of 58%, due primarily to the inclusion of The Cosmopolitan and a full quarter of revenues from Aria and an increase in business volume and travel activity in the current year quarter.Las Vegas Strip Resorts food and beverage revenue was$1.5 billion for the nine months endedSeptember 30, 2022 compared to$615 million in the prior year period, an increase of 151%, andLas Vegas Strip Resorts entertainment, retail and other revenues were$1.1 billion for the nine months endedSeptember 30, 2022 compared to$462 million in the prior 35 -------------------------------------------------------------------------------- year period, an increase of 136%, due primarily to the inclusion of The Cosmopolitan and a full year of revenues from Aria. The current year period was initially negatively affected by the omicron variant in the early part of the period; however, business volume and travel activity subsequently improved with a significant increase over the prior year period, which was negatively impacted by temporary midweek property and hotel tower closures at certain properties, lower business and travel activity, and operational restrictions related to the pandemic. Regional Operations Regional Operations casino revenue was$721 million for the three months endedSeptember 30, 2022 compared to$720 million in the prior year quarter, flat compared to the prior year quarter, and$2.2 billion for the nine months endedSeptember 30, 2022 compared to$2.0 billion in the prior year period, an increase of 7%, due primarily to table games win increasing 12% over the prior year period and slots win increasing 11% over the prior year period, as the prior year period was negatively affected by midweek hotel closures at certain properties and operational restrictions related to the pandemic primarily during the first quarter of 2021. The following table shows key gaming statistics for our Regional Operations: Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (Dollars in millions) Table games drop$ 1,152 $ 1,080 $ 3,263 $ 2,861 Table games win$ 217 $ 214 $ 660 $ 590 Table games win % 18.8 % 19.8 % 20.2 % 20.6 % Slots handle$ 7,426 $ 6,900 $ 21,190 $ 18,797 Slots win$ 703 $ 661 $ 2,016 $ 1,810 Slots win % 9.5 % 9.6 % 9.5 % 9.6 % Regional Operations rooms revenue was$85 million for the three months endedSeptember 30, 2022 compared to$71 million in the prior year quarter, an increase of 20%, due to increased business volume and travel activity over the prior year quarter. Regional Operations rooms revenue was$212 million for the nine months endedSeptember 30, 2022 compared to$160 million in the prior year period, an increase of 32%, due to an increase in business volume and travel activity over the prior year period, which was negatively affected by midweek hotel closures at certain properties and operational restrictions related to the pandemic primarily during the first quarter of 2021. Regional Operations food and beverage revenue was$115 million for the three months endedSeptember 30, 2022 compared to$92 million in the prior year quarter, an increase of 25%, and Regional Operations entertainment, retail and other revenue, and reimbursed costs was$53 million for the three months endedSeptember 30, 2022 compared to$43 million in the prior year quarter, an increase of 23%, due primarily to increased business volume compared to the prior quarter. Regional Operations food and beverage revenue was$313 million for the nine months endedSeptember 30, 2022 compared to$212 million in the prior year period, an increase of 48% and Regional Operations entertainment, retail and other revenue, and reimbursed costs was$141 million for the nine months endedSeptember 30, 2022 compared to$97 million in the prior year period, an increase of 46%, due primarily to increased business volume and the prior year period being negatively affected by operational restrictions related to pandemic. 36 --------------------------------------------------------------------------------
The following table shows key gaming statistics for
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(Dollars in millions)
VIP table games turnover
VIP table games win $ 8 $ 72 $ 55 $ 221
VIP table games win % 2.6 % 4.0 % 2.8 % 3.3 %
Main floor table games drop
Main floor table games win
Main floor table games win % 21.4 % 21.3 % 22.4 % 21.0 %
MGM China net revenues were$87 million for the three months endedSeptember 30, 2022 compared to$289 million in the prior year quarter, a decrease of 70%, and$499 million for the nine months endedSeptember 30, 2022 compared to$896 million in the prior year period, a decrease of 44%, due to the current and prior year period being significantly impacted by travel and entry restrictions inMacau with the current year period being negatively affected by property closures and more significantly impacted by restrictions related to the COVID-19 pandemic. Corporate and other Corporate and other revenue in the current year periods primarily includes revenues from LeoVegas, other corporate operations, and management services. In the prior year periods, corporate and other revenue also included reimbursed costs revenue related to ourCityCenter management agreement (which was terminated upon the acquisition ofCityCenter inSeptember 2021 ). See below for additional discussion of our share of operating results from unconsolidated affiliates.
Adjusted Property EBITDAR and Adjusted EBITDAR
The following table presents Adjusted Property EBITDAR and Adjusted EBITDAR.
Adjusted Property EBITDAR is our reportable segment GAAP measure, which we
utilize as the primary profit measure for our reportable segments. See Note 13
in the accompanying consolidated financial statements and "Reportable Segment
GAAP measure" below for additional information. Adjusted EBITDAR is a non-GAAP
measure, discussed within "Non-GAAP measures" below.
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Las Vegas Strip Resorts $ 846,355 $ 534,548 $ 2,265,256 $ 1,039,472
Regional Operations 321,984 348,234 975,113 908,564
MGM China (70,410) 6,996 (148,157) 20,352
Corporate and other (148,120) (124,745) (552,265) (368,713)
Adjusted EBITDAR $ 949,809 $ 2,539,947
Las Vegas Strip Resorts
Las Vegas Strip Resorts Adjusted Property EBITDAR was $846 million for the three
months ended September 30, 2022 compared to $535 million in the prior year
quarter, an increase of 58%. Las Vegas Strip Resorts Adjusted Property EBITDAR
margin decreased to 36.8% for the three months ended September 30, 2022 compared
to 38.7% in the prior year quarter due to an increase in contribution from lower
margin non-gaming outlets and venues and an increase in general and
administrative expense primarily related to payroll.
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Las Vegas Strip Resorts Adjusted Property EBITDAR was $2.3 billion for the nine
months ended September 30, 2022 compared to $1.0 billion in the prior year
period, an increase of 118%. Las Vegas Strip Resorts Adjusted Property EBITDAR
margin increased to 37.1% for the nine months ended September 30, 2022 compared
to 35.5% in the prior year period as the current year period benefited from the
increase in revenues, partially offset by an increase in contribution from
lower-margin non-gaming outlets and venues and an increase in general and
administrative expenses primarily related to payroll and advertising.
Regional Operations
Regional Operations Adjusted Property EBITDAR was$322 million for the three months endedSeptember 30, 2022 compared to$348 million in the prior year quarter, a decrease of 8%. Regional Operations Adjusted Property EBITDAR was$975 million for the nine months endedSeptember 30, 2022 compared to$909 million in the prior year period, an increase of 7%. Regional Operations Adjusted Property EBITDAR margin decreased to 33.1% for the three months endedSeptember 30, 2022 compared to 37.6% in the prior year quarter. Regional Operations Adjusted Property EBITDAR margin decreased to 34.5% for the nine months endedSeptember 30, 2022 compared to 36.4% in the prior year period. The margin decreases were due primarily to an increase in contribution from lower margin non-gaming outlets and venues and an increase in general and administrative expense primarily related to payroll.
MGM China Adjusted Property EBITDAR was a loss of$148 million for the nine months endedSeptember 30, 2022 compared to Adjusted Property EBITDAR of$20 million in the prior year period. The decrease was due primarily to the decrease in revenues, discussed above, and the current year period included an$18 million charge related to litigation reserves. License fee expense was$9 million and$16 million for the nine months endedSeptember 30, 2022 and 2021, respectively.
Supplemental Information - Same-store Results of Operations
The following table presents the financial results ofLas Vegas Strip Resorts on a same-store basis for the three and nine months endedSeptember 30, 2022 and 2021. Same-Store Adjusted Property EBITDAR is a non-GAAP measure, discussed within "Non-GAAP measures" below. Three Months Ended Nine Months Ended September 30, September 30, 2022 2021 2022 2021 (In thousands) Las Vegas Strip Resorts net revenues$ 2,301,022 $
1,380,967
(694,103) (13,529) (1,538,236) (13,529)
Las Vegas Strip Resorts Adjusted Property EBITDAR
(276,055) (5,878) (623,607) (5,878)
Las Vegas Strip Resorts Same-Store Adjusted
Property EBITDAR $ 570,300 $
528,670
(1)Excludes the net revenues and Adjusted Property EBITDAR of The Cosmopolitan and Aria.
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--------------------------------------------------------------------------------Income (loss) from Unconsolidated Affiliates
The following table summarizes information related to our share of operating income (loss) from unconsolidated affiliates:
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
CityCenter $ - $ 40,747 $ - $ 128,127
VICI BREIT Venture - 38,959 51,051 116,876
BetMGM (23,582) (49,060) (186,804) (154,275)
Other 6,115 4,465 15,865 2,142
$ (17,467) $ 35,111 $ (119,888) $ 92,870 In
InSeptember 2021 , we completed the acquisition of the 50% ownership interest inCityCenter held byInfinity World and now own 100% of the equity interest inCityCenter . Accordingly, we no longer account for our interest inCityCenter under the equity method of accounting, and we now consolidateCityCenter in our financial statements. InApril 2022 , we completed the VICI Transaction pursuant to which the assets and liabilities of MGP were derecognized, which included MGP OP's investment in VICI BREIT Venture. Accordingly, we no longer have an ownership interest in VICI BREIT Venture. Non-operating Results Interest Expense Gross interest expense was$125 million and$200 million for the three months endedSeptember 30, 2022 and 2021, respectively, and$458 million and$599 million for the nine months endedSeptember 30, 2022 and 2021, respectively. The decrease from the respective prior year periods is due primarily to a decrease in debt outstanding as a result of the derecognition of MGP OP's senior notes in connection with the deconsolidation of MGP, partially offset by an increase in the debt outstanding underMGM China's revolving credit facilities. See Note 7 to the accompanying consolidated financial statements for discussion on long-term debt and see "Liquidity and Capital Resources" for discussion on issuances and repayments of long-term debt and other sources and uses of cash.
Other, net
Other expense, net was$14 million and$49 million for the three months endedSeptember 30, 2022 and 2021, respectively. The current year and prior year quarters included a net unrealized loss on equity instruments of$20 million and$48 million , respectively. Other expense, net was$23 million for the for the nine months endedSeptember 30, 2022 compared to other income, net of$70 million in the prior year period. The current year period included a$28 million net unrealized loss on equity instruments. The prior year period included a$39 million net unrealized gain on equity instruments, and a$33 million gain on the MGP OP's unhedged interest rate swaps. Income Taxes Our effective income tax rate was a benefit of 10.6% on loss before income taxes and a provision of 43.8% on income before income taxes for the three and nine months endedSeptember 30, 2022 , respectively, compared to a provision of 17.4% and 16.9% on income before income taxes for the three and nine months endedSeptember 30, 2021 , respectively. 39 -------------------------------------------------------------------------------- The effective rate for the three months endedSeptember 30, 2022 was unfavorably impacted by losses inMacau that we could not benefit and an increase in state deferred tax liabilities resulting from the issuance of income tax regulations by the state ofNew Jersey , partially offset by a decrease inMacau deferred tax liabilities resulting from an extension of the exemption from theMacau 12% complementary tax to the end of the year. The effective rate for the nine months endedSeptember 30, 2022 was unfavorably impacted by losses inMacau that we could not benefit and the increase in state deferred tax liabilities as a result of theNew Jersey income tax regulation issuance, partially offset by the decrease inMacau deferred tax liabilities resulting from the extension of the exemption from theMacau 12% complementary tax to the end of the year, the impact of the reassessment of the useful life of theMGM Grand Paradise gaming subconcession, and the impact of a decrease in state deferred tax liabilities as a result of the VICI Transaction. The effective rates for the three and nine months endedSeptember 30, 2021 were favorably impacted by tax expense recorded on the "Gain on consolidation ofCityCenter , net", at an approximately 12% effective rate due to the presence of goodwill, and were unfavorably impacted by losses inMacau that we could not benefit, partially offset by the release of tax reserves in conjunction with the closure of aNew Jersey state income tax audit.
Reportable segment GAAP measure
"Adjusted Property EBITDAR" is our reportable segment GAAP measure, which we utilize as the primary profit measure for our reportable segments and underlying operating segments. Adjusted Property EBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, property transactions, net, gain on REIT transactions, net, rent expense related to triple-net operating leases and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, and also excludes gain on consolidation ofCityCenter , net, gain related toCityCenter's sale of Harmon land recorded within income from unconsolidated affiliates, corporate expense and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGP that eliminated in consolidation. We manage capital allocation, tax planning, stock compensation, and financing decisions at the corporate level. "Adjusted Property EBITDAR margin" is Adjusted Property EBITDAR divided by related segment net revenues.
Non-GAAP measures
"Same-Store Adjusted Property EBITDAR" is Adjusted Property EBITDAR further adjusted to exclude the Adjusted Property EBITDAR of acquired operating segments from the date of acquisition through the end of the reporting period. Accordingly, we have excluded the Adjusted Property EBITDAR of The Cosmopolitan for periods subsequent to its acquisition onMay 17, 2022 and Aria for periods subsequent to its acquisition onSeptember 27, 2021 in Same-Store Adjusted Property EBITDAR for the periods indicated. Same-Store Adjusted Property EBITDAR is a non-GAAP measure and is presented solely as a supplemental disclosure to reported GAAP measures because management believes this measure is useful in providing meaningful period-to-period comparisons of the results of our operations for operating segments that were consolidated for the full period presented to assist users of the financial statements in reviewing operating performance over time. Same-Store Adjusted Property EBITDAR should not be viewed as a measure of overall operating performance, considered in isolation, or as an alternative to our reportable segment GAAP measure or net income, or as an alternative to any other measure determined in accordance with generally accepted accounting principles, because this measure is not presented on a GAAP basis, and is provided for the limited purposes discussed herein. In addition, Same-Store Adjusted Property EBITDAR may not be defined in the same manner by all companies and, as a result, may not be comparable to similarly titled non-GAAP financial measures of other companies, and such differences may be material. A reconciliation of our reportable segment Adjusted Property EBITDAR GAAP measure to Same-Store Adjusted Property EBITDAR is included herein. "Adjusted EBITDAR" is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, property transactions, net, gain on REIT transactions, net, gain on consolidation ofCityCenter , net, rent expense related to triple-net operating leases and ground leases, gain related toCityCenter's sale of Harmon land recorded within income from unconsolidated affiliates, and income from unconsolidated affiliates related to investments in real estate ventures. Adjusted EBITDAR information is a non-GAAP measure that is a valuation metric, should not be used as an operating metric, and is presented solely as a supplemental disclosure to reported GAAP measures because we believe this measure is widely used by analysts, lenders, financial institutions, and investors as a principal basis for the valuation of gaming companies. We believe that while items excluded from Adjusted EBITDAR may be recurring in nature and should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current 40 -------------------------------------------------------------------------------- results and trends. Also, we believe excluded items may not relate specifically to current trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when we are developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within our resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. In addition, management excludes rent expense related to triple-net operating leases and ground leases. Management believes excluding rent expense related to triple-net operating leases and ground leases provides useful information to analysts, lenders, financial institutions, and investors when valuing the Company, as well as comparing the Company's results to other gaming companies, without regard to differences in capital structure and leasing arrangements since the operations of other gaming companies may or may not include triple-net operating leases or ground leases. However, as discussed herein, Adjusted EBITDAR should not be viewed as a measure of overall operating performance, an indicator of our performance, considered in isolation, or construed as an alternative to operating income or net income, or as an alternative to cash flows from operating activities, as a measure of liquidity, or as an alternative to any other measure determined in accordance with generally accepted accounting principles because this measure is not presented on a GAAP basis and excludes certain expenses, including the rent expense related to our triple-net operating leases and ground leases, and is provided for the limited purposes discussed herein. In addition, other companies in the gaming and hospitality industries that report Adjusted EBITDAR may calculate Adjusted EBITDAR in a different manner and such differences may be material. We have significant uses of cash flows, including capital expenditures, interest payments, taxes, real estate triple-net lease and ground lease payments, and debt principal repayments, which are not reflected in Adjusted EBITDAR. A reconciliation of GAAP net income (loss) to Adjusted EBITDAR is included herein.
The following table presents a reconciliation of net income (loss) attributable
to
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
(In thousands)
Net income (loss) attributable to MGM Resorts
International $ (576,830) $
1,350,433
(484,257) (12,497) (662,346) (31,055)
Net income (loss) (1,061,087) 1,337,936 526,745 1,092,302
Provision (benefit) for income taxes (125,367) 282,135 411,131 222,263
Income (loss) before income taxes (1,186,454) 1,620,071 937,876 1,314,565
Non-operating (income) expense:
Interest expense, net of amounts capitalized 125,172 200,049 457,822 598,116
Non-operating items from unconsolidated affiliates 995 23,421 22,248 67,473
Other, net 14,316 49,241 23,322 (70,302)
140,483 272,711 503,392 595,287
Operating income (loss) (1,045,971) 1,892,782 1,441,268 1,909,852
Preopening and start-up expenses 396 1,547 1,372 1,642
Property transactions, net (11,639) 3,677 23,704 842
Depreciation and amortization 1,405,520 279,403 2,060,413 853,579
Gain on REIT transactions, net - - (2,277,747) -
Gain on consolidation of CityCenter, net - (1,562,329) - (1,562,329)
Triple-net operating lease and ground lease rent
expense 604,193 191,622 1,350,099 570,851
Gain related to sale of Harmon land -
unconsolidated affiliate - - - (49,755)
Income from unconsolidated affiliates related to
real estate ventures (2,690) (41,669) (59,162) (125,007)
Adjusted EBITDAR $ 949,809 $ 2,539,947
41--------------------------------------------------------------------------------
Guarantor Financial Information
As ofSeptember 30, 2022 , all of our principal debt arrangements are guaranteed by each of our wholly owned material domestic subsidiaries that guarantee our senior credit facility. Our principal debt arrangements are not guaranteed byMGM Grand Detroit ,MGM National Harbor , Blue Tarp reDevelopment, LLC (the entity that owns and operatesMGM Springfield ), and each of their respective subsidiaries. Our foreign subsidiaries, including LeoVegas,MGM China , and each of their respective subsidiaries, are also not guarantors of our principal debt arrangements. In the event that any subsidiary is no longer a guarantor of our credit facility or any of our future capital markets indebtedness, that subsidiary will be released and relieved of its obligations to guarantee our existing senior notes. The indentures governing the senior notes further provide that in the event of a sale of all or substantially all of the assets of, or capital stock in a subsidiary guarantor then such subsidiary guarantor will be released and relieved of any obligations under its subsidiary guarantee. The guarantees provided by the subsidiary guarantors rank senior in right of payment to any future subordinated debt of ours or such subsidiary guarantors, junior to any secured indebtedness to the extent of the value of the assets securing such debt and effectively subordinated to any indebtedness and other obligations of our subsidiaries that do not guarantee the senior notes. In addition, the obligations of each subsidiary guarantor under its guarantee is limited so as not to constitute a fraudulent conveyance under applicable law, which may eliminate the subsidiary guarantor's obligations or reduce such obligations to an amount that effectively makes the subsidiary guarantee lack value. The summarized financial information of us and our guarantor subsidiaries, on a combined basis, is presented below. Prior to the VICI Transaction, certain of our guarantor subsidiaries owned MGP OP units which were accounted for under the equity method and is reflected as such within the summarized financial information. Certain of our guarantor subsidiaries accounted for the MGP master lease as an operating lease with the operating lease liabilities, operating lease ROU assets, and related rent expense reflected within the summarized financial information. Additionally, assets held for sale and liabilities related to assets held for sale associated with The Mirage and Gold Strike Tunica are included within current assets and other current liabilities, respectively, within the summarized financial information.
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