What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-02 compared with 2023-05-01 · 145 added, 102 removed, 289 unchanged (46% of the section changed)

5 unchanged sentences

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 pay rent, fund capital expenditures, provide excess cash flow for future development, repay debt financings, and return capital to our shareholders.

We lease the real estate assets of our domestic resorts pursuant to triple-net lease agreements and 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, a consolidated subsidiary, as well as through BetMGM, an unconsolidated affiliate.

Impact of COVID-19 - Update

On January 8, 2023, Macau lifted the majority of its COVID-19 pandemic travel and quarantine restrictions with the exception of overseas visitors travelling from outside of mainland China, Hong Kong and Taiwan being required to present a negative nucleic acid test or rapid antigen test result, and on February 6, 2023 all remaining COVID-19 travel restrictions were removed.

As of March 31, 2023, all of our properties were open and not subject to any COVID-19 related operating restrictions.

Other Developments

In February 2023, we completed the sale of the operations of Gold Strike Tunica to CNE for cash consideration of $450 million, subject to certain purchase price adjustments.

Overview of strategic business developments

In February 2023, we completed the sale of the operations of Gold Strike Tunica to CNE for cash consideration of $450 million, or $474 million, net of purchase price adjustments and transaction costs.

At closing, the master lease with VICI was amended to remove Gold Strike Tunica and reflect a $40 million reduction in annual cash rent.

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In April 2023, the Japanese government officially certified the Area Development Plan (“ADP”) previously submitted by the city/prefecture of Osaka, Japan and our 50% owned venture.

Agreements with Osaka on the construction of the planned integrated resort are required to be finalized within 90 days of the ADP approval.

In April 2023, LeoVegas entered into an agreement to acquire the majority ownership of digital gaming developer, Push Gaming Holding Limited.

The transaction is subject to regulatory and customary approvals and is expected to close in the third quarter of 2023.

Impact of COVID-19 - Update

As of June 30, 2023, all of our properties were open and not subject to any COVID-19 related operating restrictions.

Key Performance Indicators

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

1 unchanged sentence

Operating income 371,378 2,381,451 1,102,217 2,487,239

Net income (loss) 479,883 (34,793)

Net income (loss) attributable to MGM Resorts International 466,807 (18,016)

Consolidated net revenues were $3.9 billion for the three months ended March 31, 2023 compared to $2.9 billion in the prior year quarter, an increase of 36%.

The current year quarter benefited from the inclusion of The Cosmopolitan, which was partially offset by the disposition of The Mirage and Gold Strike Tunica.

The prior year quarter 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 quarter.

At MGM China, the current year quarter benefited from the removal of travel and entry restrictions in Macau.

As a result, net revenues at our Las Vegas Strip Resorts increased 31%, Regional Operations increased 6%, and MGM China increased 130% compared to the prior year quarter.

Consolidated operating income was $731 million for the three months ended March 31, 2023 compared to $106 million in the prior year quarter.

The current year quarter benefited from a $398 million gain related to the sale of the operations of Gold Strike Tunica recorded in property transactions, net, the increase in net revenues, as discussed above, and an $85 million decrease in depreciation and amortization expense, partially offset by an increase in rent expense recorded within general and administrative expense for the VICI and The Cosmopolitan leases, which commenced in April 2022 and May 2022, respectively.

Depreciation and amortization expense decreased compared to the prior year quarter due to the deconsolidation of MGP in April 2022 and due to the MGM Grand Paradise gaming subconcession becoming fully amortized as of December 31, 2022.

Net income 243,544 1,622,625 723,427 1,587,832

Net income attributable to MGM Resorts International 200,796 1,783,937 667,603 1,765,921

Consolidated net revenues increased 21% for the three months ended June 30, 2023 compared to the prior year quarter due primarily to a 418% increase at MGM China as a result of the removal of travel and entry restrictions in Macau, partially offset by a decrease at our Regional Operations of 3% due primarily to the disposition of Gold Strike Tunica.

Net revenues at our Las Vegas Strip Resorts were flat.

Consolidated operating income decreased 84% for the three months ended June 30, 2023 compared to the prior year quarter.

The decrease was due to a $2.3 billion gain in the prior year quarter related to the VICI Transaction, an increase in rent expense recorded within general and administrative expense for the VICI and The Cosmopolitan leases, which commenced in April 2022 and May 2022, respectively, partially offset by the increase in net revenues, as discussed above, and a decrease in depreciation and amortization expense.

Depreciation and amortization expense decreased $163 million compared to the prior year quarter, due primarily to the amortization in the prior year quarter related to the MGM Grand Paradise gaming subconcession, which became fully amortized as of December 31, 2022, and the deconsolidation of MGP in April 2022.

Consolidated net revenues increased 28% for the six months ended June 30, 2023 compared to the prior year period due primarily to a 230% increase at MGM China as a result of the removal of travel and entry restrictions in Macau, a 14% increase at our Las Vegas Strip Resorts as the current year period benefited from the inclusion of a full year of operating results of The Cosmopolitan, which was partially offset by the disposition of The Mirage, and a 1% increase at our Regional Operations as a result of increases in non-gaming revenues, partially offset by the disposition of Gold Strike Tunica.

Consolidated operating income decreased 56% for the six months ended June 30, 2023 compared to the prior year period.

The decrease was due to a $2.3 billion gain in the prior year period related to the VICI Transaction and an increase in rent expense recorded within general and administrative expense for the VICI and The Cosmopolitan leases, partially offset by a $399 million gain in the current year period related to the sale of the operations of Gold Strike Tunica recorded in property transactions, net, the increase in net revenues, as discussed above, and a $248 million decrease in depreciation and amortization expense.

Depreciation and amortization expense decreased compared to the prior year period due to the deconsolidation of MGP in April 2022 and due to the amortization in the prior year period related to the MGM Grand Paradise gaming subconcession.

Net Revenues by Segment

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

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Las Vegas Strip Resorts

Las Vegas Strip Resorts net revenues for the three months ended March 31, 2023 for each revenue type increased compared to the prior year quarter due primarily to the inclusion of The Cosmopolitan, partially offset by the disposition of The Mirage, and also due to the early part of the prior year quarter being negatively affected by the spread of the omicron variant.

Las Vegas Strip Resorts casino revenue was $501 million for the three months ended March 31, 2023 compared to $475 million in the prior year quarter, an increase of 5%.

Las Vegas Strip Resorts casino revenue decreased 1% for the three months ended June 30, 2023 compared to the prior year quarter due primarily to an increase in non-gaming incentives and increased 2% for the six months ended June 30, 2023 compared to the prior year period due primarily to an increase in table games drop and slot handle.

Both the three and six months ended June 30, 2023 benefited from a full period of operating results of The Cosmopolitan, partially offset by the disposition of The Mirage.

The following table shows key gaming statistics for our Las Vegas Strip Resorts:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(Dollars in millions)

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Slot win % 9.3 % 9.3 % 9.4 % 9.3 %

Las Vegas Strip Resorts rooms revenue was $752 million for the three months ended March 31, 2023 compared to $485 million in the prior year quarter, an increase of 55%, due primarily to an increase in REVPAR.

Las Vegas Strip Resorts rooms revenue increased 2% for the three months ended June 30, 2023 compared to the prior year quarter and increased 23% for the six months ended June 30, 2023 compared to the prior year period due to an increase in RevPAR.

The six months ended June 30, 2023 also benefited from a full period of operating results of The Cosmopolitan, partially offset by the disposition of The Mirage.

The following table shows key hotel statistics for our Las Vegas Strip Resorts:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

96 % 92 % 94 % 85 %

Average daily rate (ADR) $ 234 $ 225 $ 246 $ 213

Revenue per available room (RevPAR)

Las Vegas Strip Resorts food and beverage revenue was $583 million for the three months ended March 31, 2023 compared to $384 million in the prior year quarter, an increase of 52%, and Las Vegas Strip Resorts entertainment, retail and other revenues were $341 million for the three months ended March 31, 2023 compared to $318 million in the prior year quarter, an increase of 7%.

$ 224 $ 208 $ 231 $ 182

Las Vegas Strip Resorts food and beverage revenue increased 7% for the three months ended June 30, 2023 compared to the prior year quarter due primarily to a full quarter of operating results of The Cosmopolitan and an increase in catering and banquet revenue, partially offset by the disposition of The Mirage.

Las Vegas Strip Resorts entertainment, retail and other revenues decreased 9% for the three months ended June 30, 2023 compared to the prior year quarter due primarily to the disposition of The Mirage, partially offset by a full quarter of operating results of The Cosmopolitan.

Las Vegas Strip Resorts food and beverage revenue increased 25% for the six months ended June 30, 2023 compared to the prior year period due primarily to a full quarter of operating results of The Cosmopolitan and an increase in covers and catering and banquet revenue, partially offset by the disposition of The Mirage.

Las Vegas Strip Resorts entertainment, retail and other revenues decreased 1% for the six months ended June 30, 2023 compared to the prior year period due primarily to the disposition of The Mirage, partially offset by a full quarter of operating results of The Cosmopolitan and an increase in revenue from theater shows.

Regional Operations

Regional Operations casino revenue was $717 million for the three months ended March 31, 2023 compared to $704 million in the prior year quarter, an increase of 2%, due primarily to an increase in slot handle over the prior year quarter.

Regional Operations casino revenue decreased 7% for the three months ended June 30, 2023 compared to the prior year quarter due primarily to the disposition of Gold Strike Tunica.

Regional Operations casino revenue decreased 3% for the six months ended June 30, 2023 compared to the prior year period due to the disposition of Gold Strike Tunica, partially offset by an increase in slot handle.

The following table shows key gaming statistics for our Regional Operations:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(Dollars in millions)

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Slot win % 9.6 % 9.5 % 9.6 % 9.5 %

Regional Operations rooms revenue was $67 million for the three months ended March 31, 2023 compared to $56 million in the prior year quarter, an increase of 20%, due to an increase in occupancy.

Regional Operations food and beverage revenue was $112 million for the three months ended March 31, 2023 compared to $91 million in the prior year quarter, an increase of 23%, and Regional Operations entertainment, retail and other revenue, and reimbursed costs was $50 million for the three months ended March 31, 2023 compared to $40 million in the prior year quarter, an increase of 25%, as non-gaming amenities had not yet returned to pre-COVID-19 volumes in the comparative prior year quarter.

Regional Operations rooms revenue increased 8% for the three months ended June 30, 2023 compared to the prior year quarter and increased 14% for the six months ended June 30, 2023 compared to the prior year period due to an increase in RevPAR, partially offset by the disposition of Gold Strike Tunica.

Regional Operations food and beverage revenue increased 5% for the three months ended June 30, 2023 compared to the prior year quarter and increased 13% for the six months ended June 30, 2023 compared to the prior year period.

Regional Operations entertainment, retail and other revenue increased 20% for the three months ended June 30, 2023 compared to the prior year quarter and increased 22% for the six months ended June 30, 2023 compared to the prior year period.

The changes were driven by an increase in covers as non-gaming amenities had not yet returned to pre-COVID-19 volumes in the comparative prior year periods, partially offset by the disposition of Gold Strike Tunica.

The following table shows key gaming statistics for MGM China:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(Dollars in millions)

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Main floor table games win % 21.8 % 24.8 % 22.8 % 22.6 %

MGM China net revenues were $618 million for the three months ended March 31, 2023 compared to $268 million in the prior year quarter, an increase of 130%, due to the current year quarter being positively affected by the removal of COVID-19 related travel and entry restrictions in Macau.

MGM China casino revenues increased 454% for the three months ended June 30, 2023 compared to the prior year quarter and increased 248% for the six months ended June 30, 2023 compared to the prior year period due to the removal of COVID-19 related travel and entry restrictions in Macau.

Corporate and other

Corporate and other revenue primarily includes revenues from LeoVegas, other corporate operations, and management services.

The increase in the current year quarter compared to the prior year quarter is primarily due to the acquisition of LeoVegas in September 2022.

The increase in the three and six months ended June 30, 2023 compared to the comparative prior year periods is primarily due to the acquisition of LeoVegas in September 2022.

Adjusted Property EBITDAR and Adjusted EBITDAR

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

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Las Vegas Strip Resorts

Las Vegas Strip Resorts Adjusted Property EBITDAR was $836 million for the three months ended March 31, 2023 compared to $594 million in the prior year quarter, an increase of 41%.

Las Vegas Strip Resorts Adjusted Property EBITDAR margin increased to 38.4% for the three months ended March 31, 2023 compared to 35.7% in the prior year quarter as the current year quarter primarily benefited from the increase in rooms revenues discussed above.

Las Vegas Strip Resorts Adjusted Property EBITDAR decreased 6% for the three months ended June 30, 2023 compared to the prior year quarter.

Las Vegas Strip Resorts Adjusted Property EBITDAR margin decreased to 36.2% for the three months ended June 30, 2023 compared to 38.6% in the prior year quarter due primarily to an increase in payroll related expenses compared to the prior year quarter.

Las Vegas Strip Resorts Adjusted Property EBITDAR increased 14% for the six months ended June 30, 2023 compared to the prior year period.

Las Vegas Strip Resorts Adjusted Property EBITDAR margin was 37.3% for the six months ended June 30, 2023, flat compared to the prior year period as the increase in rooms revenues discussed above was offset primarily by an increase in payroll related expenses.

Regional Operations

Regional Operations Adjusted Property EBITDAR was $313 million for the three months ended March 31, 2023, which was flat compared to the prior year quarter.

Regional Operations Adjusted Property EBITDAR margin decreased to 33.1% for the three months ended March 31, 2023 compared to 35.2% in the prior year quarter.

The margin decreases were due primarily to an increase in contribution from lower margin non-gaming outlets and venues.

MGM China Adjusted Property EBITDAR was $169 million for the three months ended March 31, 2023 compared to Adjusted Property EBITDAR loss of $26 million in the prior year quarter.

The increase was due primarily to the increase in revenues, discussed above, and the prior year quarter included an $18 million charge related to litigation reserves.

Regional Operations Adjusted Property EBITDAR decreased 14% for the three months ended June 30, 2023 compared to the prior year quarter.

Regional Operations Adjusted Property EBITDAR margin decreased to 31.7% for the three months ended June 30, 2023 compared to 35.4% in the prior year quarter due primarily to the decrease in casino revenues and an increase in payroll related expenses.

Regional Operations Adjusted Property EBITDAR decreased 7% for the six months ended June 30, 2023, compared to the prior year period.

Regional Operations Adjusted Property EBITDAR margin decreased to 32.4% for the six months ended June 30, 2023 compared to 35.3% in the prior year period.

The margin decreases were due primarily to the decrease in casino revenues and an increase in payroll related expenses.

MGM China Adjusted Property EBITDAR was $209 million for the three months ended June 30, 2023 compared to Adjusted Property EBITDAR loss of $52 million the prior year quarter due primarily to the increase in revenues, discussed above.

MGM China Adjusted Property EBITDAR was $378 million for the six months ended June 30, 2023 compared to Adjusted Property EBITDAR loss of $78 million in the prior year period.

The increase was due primarily to the increase in revenues, discussed above, and the prior year period included an $18 million charge related to litigation reserves.

Supplemental Information - Same-store Results of Operations

The following table presents the financial results of Las Vegas Strip Resorts and Regional Operations on a same-store basis for the three months ended March 31, 2023 and 2022.

The following table presents the financial results of Las Vegas Strip Resorts and Regional Operations on a same-store basis for the three and six months ended June 30, 2023 and 2022.

Same-Store Adjusted Property EBITDAR is a non-GAAP measure, discussed within “Non-GAAP measures” below.

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

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Acquisitions (1)

(300,998) (150,761) (609,166) (150,761)

Dispositions (2)

— (148,754) — (276,551)

Las Vegas Strip Resorts same-store net revenues $ 1,845,652 $ 1,837,661 $ 3,713,636 $ 3,372,756

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Acquisitions (1)

(114,949) (59,097) (244,803) (59,097)

Dispositions (2)

— (43,378) — (76,270)

Las Vegas Strip Resorts Same-Store Adjusted Property EBITDAR $ 661,580 $ 722,792 $ 1,367,535 $ 1,283,534

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

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Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

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Interest Expense

Gross interest expense was $131 million and $196 million for the three months ended March 31, 2023 and 2022, respectively.

The decrease from the prior year quarter is due primarily to a decrease in debt outstanding as a result of the repayment of the $1.0 billion 7.75% senior notes in March 2022, the derecognition of MGP OP’s senior notes in connection with the deconsolidation of MGP in April 2022, and the repayment of the $1.25 billion 6% senior notes in March 2023, partially offset by an increase in the debt outstanding under MGM China’s revolving credit facilities.

Gross interest expense was $113 million and $137 million for the three months ended June 30, 2023 and 2022, respectively, and $243 million and $333 million for the six months ended June 30, 2023 and 2022, respectively.

The decrease from the prior year periods is due primarily to a decrease in debt outstanding as a result of the repayment of the $1.0 billion 7.75% senior notes in March 2022, the derecognition of MGP OP’s senior notes in connection with the deconsolidation of MGP in April 2022, and the repayment of the $1.25 billion 6% senior notes in March 2023, and the decrease in the debt outstanding under MGM China’s first revolving credit facility.

See Note 6 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 income, net was $46 million and $34 million for the three months ended March 31, 2023 and 2022, respectively.

Our effective income tax rate was a provision of 25.7% on income before income taxes and a benefit of 51.1% on loss before income taxes for the three months ended March 31, 2023 and 2022, respectively.

The prior year quarter was unfavorably impacted by losses in Macau from which we could not benefit.

Other, net was income of $24 million and expense of $43 million for the three months ended June 30, 2023 and 2022, respectively.

The change from the prior year quarter is primarily due to an increase in interest and dividend income of $28 million and a change in the gain/loss on the fair value of equity instruments of $29 million.

Other, net was income of $70 million and expense of $9 million for the six months ended June 30, 2023 and 2022, respectively.

The change from the prior year period is primarily due to an increase in interest and dividend income of $80 million.

Our effective income tax rate was 13.8% and 22.1% for the three and six months ended June 30, 2023, respectively, compared to 26.1% and 25.3% for the three and six months ended June 30, 2022, respectively.

The effective rate for the

three and six months ended June 30, 2023 was favorably impacted by an increase in Macau income that was offset by expiring net operating losses from prior years subject to valuation allowances.

The effective rate for the three and six months ended June 30, 2022 was driven primarily by tax expense recorded on the VICI Transaction and was unfavorably impacted by an increase in the valuation allowance for Macau deferred tax assets and by losses in Macau from which we could not benefit, partially offset by the favorable impact of a decrease in state deferred tax liabilities as a result of the VICI Transaction.

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, 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 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.

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, gain on REIT transactions, net, property 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 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.

“Adjusted Property EBITDAR margin” is Adjusted Property EBITDAR divided by related segment net revenues.

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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, rent expense related to triple-net operating leases and ground leases, and income from unconsolidated affiliates related to investments in real estate ventures.

“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, rent expense related to triple-net operating leases and ground leases, 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.

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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.

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 triple-net operating leases and ground leases, and is provided for the limited purposes discussed herein.

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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 MGM Resorts International to Adjusted EBITDAR:

A reconciliation of GAAP net income to Adjusted EBITDAR is included herein.

The following table presents a reconciliation of net income attributable to MGM Resorts International to Adjusted EBITDAR:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

(In thousands)

Net income (loss) attributable to MGM Resorts International $ 466,807 $ (18,016)

Net income attributable to MGM Resorts International $ 200,796 $ 1,783,937 $ 667,603 $ 1,765,921

Net income (loss) attributable to noncontrolling interests 42,748 (161,312) 55,824 (178,089)

Net income (loss) 479,883 (34,793)

Provision (benefit) for income taxes 165,779 (36,341)

Income (loss) before income taxes 645,662 (71,134)

Net income 243,544 1,622,625 723,427 1,587,832

Provision for income taxes 39,141 572,839 204,920 536,498

Income before income taxes 282,685 2,195,464 928,347 2,124,330

Non-operating (income) expense:

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Depreciation and amortization 203,503 366,255 407,004 654,893

Gain on REIT transactions, net — (2,277,747) — (2,277,747)

Triple-net operating lease and ground lease rent expense 564,158 483,454 1,134,713 745,906

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Guarantor Financial Information

As of March 31, 2023, all of our principal debt arrangements are guaranteed by each of our wholly owned material domestic subsidiaries that guarantee our senior credit facility.

As of June 30, 2023, 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 by MGM Grand Detroit, MGM National Harbor, Blue Tarp reDevelopment, LLC (the entity that owns the operations of MGM Springfield), MGM Sports & Interactive Gaming, LLC (the entity that owns our 50% interest in BetMGM), and each of their respective subsidiaries.

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Current assets $ 4,561,993 $ 6,733,048

Intercompany debts due from non-guarantor subsidiaries 144,016 —

Other long-term assets 28,469,704 28,802,794

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Other long-term liabilities 28,346,816 28,285,295

Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2023

Income Statement (In thousands)

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Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges, but can be affected by changes in working capital, the timing of significant interest payments, and tax payments or refunds.

Cash provided by operating activities was $704 million in the three months ended March 31, 2023 compared to $420 million in the prior year quarter.

The change from the prior year period was due primarily to the increase in Adjusted Property EBITDAR at our Las Vegas Strip Resorts and MGM China discussed within the Results of Operations section above and a decrease in cash paid for interest, partially offset by an increase in triple-net lease rent payments and the change in cash paid (refunded) for taxes, net.

Cash provided by operating activities was $1.3 billion in the six months ended June 30, 2023 compared to $933 million in the prior year period.

The change from the prior year period was due primarily to the increase in Adjusted Property EBITDAR at our Las Vegas Strip Resorts and MGM China discussed within the Results of Operations section above, a decrease in working capital primarily related to collection of receivables, and a decrease in cash paid for interest, partially offset by an increase in triple-net lease rent payments and the change in cash paid (refunded) for taxes, net.

Investing activities.

Our investing cash flows can fluctuate significantly from year to year depending on our decisions with respect to strategic capital investments in new or existing resorts, business acquisitions or dispositions, and

the timing of maintenance capital expenditures to maintain the quality of our resorts.

Capital expenditures related to regular investments in our existing resorts can also vary depending on timing of larger remodel projects related to our public spaces and hotel rooms.

Cash provided by investing activities was $212 million in the three months ended March 31, 2023 compared to cash used in investing activities of $237 million in the prior year quarter.

In the three months ended March 31, 2023, we received $439 million in net cash related to the sale of the operations of Gold Strike Tunica, received $153 million in cash related to the principal portion of the Circus Circus Las Vegas note receivable that was repaid, and made payments of $140 million in capital expenditures, as further discussed below, contributed $25 million to BetMGM, and made $218 million in net investments in debt securities.

In comparison, in the prior year period we made payments of $102 million in capital expenditures, as further discussed below, and contributed $125 million to BetMGM.

Cash used in investing activities was $59 million in the six months ended June 30, 2023 compared to cash provided by investing activities of $2.2 billion in the prior year period.

In the six months ended June 30, 2023, we received $447 million in net cash related to the sale of the operations of Gold Strike Tunica, received $153 million in cash related to the principal portion of the Circus Circus Las Vegas note receivable that was repaid, made payments of $393 million in capital expenditures, as further discussed below, contributed $50 million to BetMGM, and made $216 million in net investments in debt securities.

In comparison, in the prior year period we received $4.4 billion in net cash proceeds related to the VICI

Transaction, which were partially offset by net cash paid of $1.6 billion to acquire The Cosmopolitan, payments of $237 million in capital expenditures, as further discussed below, and contributed $150 million to BetMGM.

Capital Expenditures

We made capital expenditures of $140 million in the three months ended March 31, 2023, of which $6 million related to MGM China, for which the MGM China amount is inclusive of capital expenditures relating to the gaming concession investment.

We made capital expenditures of $393 million in the six months ended June 30, 2023, of which $20 million related to MGM China and is inclusive of capital expenditures relating to the gaming concession investment.

Capital expenditures at our Las Vegas Strip Resorts, Regional Operations, and corporate and other entities of $373 million primarily related to expenditures in information technology, room remodels, and convention center remodels.

We made capital expenditures of $102 million in the three months ended March 31, 2022, of which $9 million related to MGM China.

Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $93 million primarily relate to expenditures in information technology and room remodels.

We made capital expenditures of $237 million in the six months ended June 30, 2022, of which $16 million related to MGM China.

Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $221 million primarily related to expenditures in information technology and room remodels.

Financing activities.

Cash used in financing activities was $2.4 billion in the three months ended March 31, 2023 compared to $2.2 billion in the prior year quarter.

In the three months ended March 31, 2023, we had net repayments of debt of $1.8 billion, as further discussed below, distributed $18 million to noncontrolling interest owners, and we repurchased $484 million of our common stock.

In comparison, in the prior year period, we had net repayments of debt of $1.0 billion, as further discussed below, distributed $118 million to noncontrolling interest owners, and we repurchased $1.0 billion of our common stock.

Cash used in financing activities was $3.3 billion in the six months ended June 30, 2023 compared to $2.5 billion in the prior year period.

In the six months ended June 30, 2023, we had net repayments of debt of $2.0 billion, as further discussed below, distributed $162 million to noncontrolling interest owners, and repurchased $1.1 billion of our common stock.

In comparison, in the prior year period, we had net repayments of debt of $162 million, as further discussed below, distributed $206 million to noncontrolling interest owners, and repurchased $2.1 billion of our common stock.

Borrowings and Repayments of Long-term Debt

During the three months ended March 31, 2023, we had net repayments of debt of $1.8 billion, which consisted of the rep ayment of $1.25 billion of aggregate principal amount of our 6% senior notes due 2023 upon maturity, and aggregate repayments of $586 million on MGM China’s revolving credit facilities.

During the three months ended March 31, 2022, we had net repayments of debt of $1.0 billion, which consisted of the repayment of $1.0 billion of aggregate principal amount of our 7.75% senior notes due 2022, net repayments of $50 million on MGP OP’s revolving credit facility, and net borrowings of $32 million on MGM China’s first revolving credit facility.

During the six months ended June 30, 2023, we had net repayments of debt of $2.0 billion, which consisted of the rep ayment of $1.25 billion of aggregate principal amount of our 6% senior notes due 2023 upon maturity and aggregate net repayments of $758 million on MGM China’s revolving credit facilities.

During the six months ended June 30, 2022, we had net repayments of debt of $162 million, which consisted of the repayment of $1.0 billion of aggregate principal amount of our 7.75% senior notes due 2022, net draws of $40 million on MGP OP’s revolving credit facility, and net borrowings of $798 million on MGM China’s first revolving credit facility to fund an increase in share capital of MGM Grand Paradise pursuant to the capital requirements under the new Macau gaming law and for general corporate purposes.

Dividends, Distributions to Noncontrolling Interest Owners, and Share Repurchases

During the three months ended March 31, 2023, we paid $484 million relating to repurchases of our common stock pursuant to our stock repurchase plans.

During the six months ended June 30, 2023, we paid $1.1 billion relating to repurchases of our common stock pursuant to our stock repurchase plans.

See Note 11 for further information on the stock repurchases.

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In February 2023, we announced that the Board of Directors authorized a $2.0 billion stock repurchase plan.

The remaining availability under the February 2023 $2.0 billion stock repurchase plan was $2.0 billion as of March 31, 2023.

During the three months ended March 31, 2022, we repurchased and retired $1.0 billion of our common stock pursuant to our stock repurchase plans.

During the three months ended March 31, 2022, we paid dividends of $0.0025 per share, totaling $1 million and MGP OP paid $141 million of distributions to its partnership unit holders, of which we received $59 million and MGP received $82 million, which MGP concurrently paid as a dividend to its Class A shareholders.

The remaining availability under the February 2023 $2.0 billion stock repurchase plan was $1.4 billion as of June 30, 2023.

During the six months ended June 30, 2022, we repurchased and retired $2.1 billion of our common stock pursuant to our stock repurchase plans.

During the six months ended June 30, 2022, we paid dividends of $0.0025 per share in March and June 2022, totaling $2 million and MGP OP paid $283 million of distributions to its partnership unit holders, of which we received $117 million and MGP received $166 million, which MGP concurrently paid as a dividend to its Class A shareholders.

Other Factors Affecting Liquidity and Anticipated Uses of Cash

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To the extent we determine to reinstate the dividend in the future, determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our results of operations, financial condition, and other factors that our Board of Directors may deem relevant .

As of March 31, 2023, we had cash and cash equivalents of $4.5 billion, of which MGM China held $468 million, and we had $6.9 billion in principal amount of indebtedness, including $879 million outstanding under MGM China’s first revolving credit facility.

As of June 30, 2023, we had cash and cash equivalents of $3.8 billion, of which MGM China held $448 million, and we had $6.7 billion in principal amount of indebtedness, including $708 million outstanding under MGM China’s first revolving credit facility.

No amounts were drawn on our revolving credit facility or MGM China’s second revolving credit facility.

Due to the impact of the COVID-19 pandemic, in February 2022, MGM China amended each of its first revolving credit facility and its second revolving credit facility to extend the financial covenant waivers through maturity in May 2024.

As of March 31, 2023, our expected cash interest payments over the next twelve months are approximately $185 million to $195 million, excluding MGM China, and approximately $385 million to $395 million on a consolidated basis, which includes MGM China.

We are required, as of March 31, 2023, to make annual cash rent payments of $1.7 billion over the next twelve months under triple-net lease agreements, which triple-net leases are also subject to annual escalators and also require us to pay substantially all costs associated with the lease, including real estate taxes, ground lease payments, insurance, utilities and routine maintenance, in addition to the annual cash rent.

In June 2023, MGM China amended each of its first revolving credit facility and its second revolving credit facility, which extended the maturity date of each facility to May 2026, increased the amount to which MGM China may upsize its second revolving credit facility, removed the requirement for the MGM China first revolving credit facility to be fully drawn prior to utilizing the MGM China second revolving credit facility, and extended the financial covenant waivers through December 31, 2024.

As of June 30, 2023, our expected cash interest payments over the next twelve months are approximately $180 million to $190 million, excluding MGM China, and approximately $395 million to $405 million on a consolidated basis, which includes MGM China.

We are required, as of June 30, 2023, to make annual cash rent payments of $1.7 billion over the next twelve months under triple-net lease agreements, which triple-net leases are also subject to annual escalators and also require us to pay substantially all costs associated with the lease, including real estate taxes, ground lease payments, insurance, utilities and routine maintenance, in addition to the annual cash rent.

See Note 8 for discussion of our leases and lease obligations.

We have planned capital expen ditures expected over the remainder of the year of approximately $680 million to $690 million domestically, which is inclusive of the capital expenditures required under the triple-net lease agreements, each of which requires us to spend a specified percentage of net revenues at the respective domestic properties, and an estimate of approximately $135 million to $155 million at MGM China, which is inclusive of the estimated amount of the gaming concession investment for 2023 that relates to capital projects.

We additionally have planned contributions to BetMGM over the remainder of 2023 of approximately $50 million.

We continue to explore potential development or investment opportunities, such as a commercial gaming facility in New York, which may require cash commitments in the future.

We have planned capital expen ditures expected over the remainder of 2023 of approximately $450 million to $460 million domestically, which is inclusive of the capital expenditures required under the triple-net lease agreements, each of which requires us to spend a specified percentage of net revenues at the respective domestic properties, and an estimate of approximately $50 million to $80 million at MGM China, which is inclusive of the estimated amount of the gaming concession investment for 2023 that relates to capital projects.

We continue to explore potential development or investment opportunities, such as expanding our global online gaming presence and pursuing a commercial gaming facility in New York, which may require cash commitments in the future.

Additionally, we expect to have cash commitments of $80 million to $100 million over the remainder of 2023 relating to our Japan venture’s planned integrated resort in Osaka for which the amount and timing is subject to change and will be dependent upon funding of the venture from noncontrolling interests and the timing and amount of financing received by the venture.

We also expect to continue to repurchase shares pursuant to our share repurchase plans.

Subsequent to the quarter ended March 31, 2023, we repurchased approximately 4 million shares of our common stock for an aggregate amount of $172 million, excluding excise tax.

Subsequent to the quarter ended June 30, 2023, we repurchased approximately 2 million shares of our common stock for an aggregate amount of $88 million, excluding excise tax.

Repurchased shares were retired.

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There have been no significant changes in our critical accounting policies and estimates since year end.

In addition to the inherent risks associated with our normal operations, we are also exposed to additional market risks.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates and

foreign currency exchange rates.

Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt.

Our primary market exposures are to fluctuations in interest rates, foreign currency exchange rates, and equity market trading prices.

Interest rate risk.

We are subject to interest rate risk associated with our variable rate long-term debt.

We attempt to limit our exposure to interest rate risk by managing the mix of our long-term fixed rate borrowings and short-term borrowings under our bank credit facilities.

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This effect would be realized in the periods subsequent to the periods when the debt matures.

We do not enter into derivative transactions that would be considered speculative positions .

As of March 31, 2023, variable rate borrowings represented approximately 13% of our total borrowings.

As of June 30, 2023, variable rate borrowings represented approximately 11% of our total borrowings.

The following table provides additional information about our gross long-term debt subject to changes in interest rates :

Debt maturing in Fair Value March 31, 2023

Debt maturing in Fair Value June 30, 2023

2023 2024 2025 2026 2027 Thereafter Total

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Average interest rate 9.2 % N/A N/A 7.8 % N/A N/A 7.9 %

In addition to the risk associated with our variable interest rate debt, we are also exposed to risks related to changes in foreign currency exchange rates, mainly related to MGM China and to our operations at MGM Macau and MGM Cotai.

While recent fluctuations in exchange rates have not been significant, potential changes in policy by governments or fluctuations in the economies of the United States, China, Macau or Hong Kong could cause variability in these exchange rates.

We cannot assure you that the Hong Kong dollar will continue to be pegged to the U.S.

dollar or the current peg rate for the Hong Kong dollar will remain at the same level.

The possible changes to the peg of the Hong Kong dollar may result in severe fluctuations in the exchange rate thereof.

dollar denominated debt incurred by MGM China, fluctuations in the exchange rates of the Hong Kong dollar in relation to the U.S.

dollar could have adverse effects on our financial position and results of operations.

As of March 31, 2023, a 1% weakening of the Hong Kong dollar (the functional currency of MGM China) to the U.S.

dollar would result in a foreign currency transaction loss of $28 million .

Foreign currency risk.

Our worldwide operations are conducted in multiple foreign currencies, which primarily are the Hong Kong dollar and Macau pataca, but we report our financial results in U.S.

We manage the foreign currency risk through normal operating activities and, when deemed appropriate, through the use of derivative instruments.

We do not enter into derivative instruments for trading or speculative purposes.

MGM China holds U.S.

dollar denominated debt, which may cause foreign currency transaction losses.

The Macau pataca is pegged to the Hong Kong dollar and the Hong Kong dollar is pegged to the U.S.

dollar, however, the current peg rates may not remain at the same level and possible changes to the peg rates may result in severe fluctuations in the exchange rate thereof.

As of June 30, 2023, a 1% adverse change in the exchange rate would result in a foreign currency transaction loss of $28 million .

We hold forward foreign exchange contracts to hedge certain portions of forecasted cash flows denominated in foreign currencies.

As of June 30, 2023, the notional amount of the forward contracts was $316 million with a fair value of ($14 million) and a 10% adverse change in the exchange rate would result in a foreign currency transaction loss of approximately $32 million.

Equity price risk.

We have investments in equity securities of publicly traded companies that are subject to equity price volatility.

As of June 30, 2023, a 10% adverse change in the quoted market prices would result in an impact to earnings of $47 million.

Cautionary Statement Concerning Forward-Looking Statements

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Examples of forward-looking statements include, but are not limited to:

statements we make regarding the impact of COVID-19 on our business, expectations regarding the impact of macroeconomic trends on our business, our ability to execute on ongoing and future strategic initiatives, including the development of an integrated resort in Japan, a commercial gaming facility in New York and investments we make in online sports betting and iGaming, expansion of LeoVegas and the MGM digital brand, positioning BetMGM as a leader in sports betting and iGaming, the closing of the Push Gaming Holding Limited acquisition, amounts we will spend on capital expenditures and investments, our expectations with respect to future share repurchases and cash dividends on our common stock, dividends and distributions we will receive from MGM China, amounts projected to be realized as deferred tax assets, and our ability to achieve our public social impact and sustainability goals.

statements we make regarding the impact of COVID-19 on our business, expectations regarding the impact of macroeconomic trends on our business, our ability to execute on ongoing and future strategic initiatives, including the development of an integrated resort in Japan, a commercial gaming facility in New York and investments we make in online sports betting and iGaming, the expansion of LeoVegas and the MGM digital brand, positioning BetMGM as a leader in sports betting and iGaming, the closing of the Push Gaming Holding Limited acquisition, amounts we will spend on capital expenditures and investments, our expectations with respect to future share repurchases and cash dividends on our common stock, dividends and distributions we will receive from MGM China, amounts projected to be realized as deferred tax assets, and our ability to achieve our public social impact and sustainability goals.

The foregoing is not a complete list of all forward-looking statements we make.

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• disruptions in the availability of our computer systems, through cyber-attacks or otherwise, which could impact our ability to service our customers and adversely affect our sales and the results of operations;

• the global COVID-19 pandemic has continued to materially impact MGM China’s business, financial results and liquidity, and such impact could worsen and last for an unknown period of time;

• restrictions on our ability to have any interest or involvement in gaming businesses in mainland China, Macau, Hong Kong and Taiwan, other than through MGM China;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis