Q1 2025 Melco Resorts & Entertainment Ltd Earnings Call
Speaker Change: This is the conference operator. Thank you for holding. Please continue and the conference will begin shortly.
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Speaker Change: Ladies and gentlemen, thank you for participating in the first quarter 2025 earnings conference call of Melco Resorts and Entertainment Ltd.
Speaker Change: At this time, all participants are in listen only mode. After the call, we will conduct a question and answer session. Today's conference is being recorded.
Speaker Change: I would now like to turn the call over to Ms. Jeanny Kim, Senior Vice President, Group Treasurer of Melco Resorts and Entertainment Ltd [inaudible]
Speaker Change: and thank you all for joining us today for our first quarter 2025 earnings call. On the call are Lauren To, Geoff Davis, Evan Winkler, and our property presidents in Macau, Manila, and Cyprus.
Speaker Change: Before we get started, please note that today's discussion may contain forward-looking statements made under the safe harbor provision of federal securities laws
Our actual results could differ from our anticipated results
Speaker Change: In addition, we may discuss non-GAAP measures. A definition and reconciliation of each of these measures to the most comparable GAAP financial measures are included in the earnings release.
Speaker Change: Finally, please note that our supplementary earnings slides are posted on our investor relations website With that, I'll now turn the call over to Mr. Lawrence Hill Thank you, Jeanny and thank you all for joining us today
Lawrence Hill: We have achieved a solid set of results for the first quarter of 2025 that demonstrates our strength and our growth prospects in Macau. Mass dropped through each month during the quarter and reached record highs at both City of Dreams and Studio City.
Lawrence Hill: A market share grew from 14.7% in 4 Q2 024 to 15.7% in 1 Q2 025 and remained stable at this level in April despite new supply in the market
Lawrence Hill: Properties of visitation grew by 30% year on year during May go then week. Mass drop was stronger than 24-2024 with city of dreams growing by more than 20%.
Lawrence Hill: Radit Theo Wynne was also strong across our properties in Macau and across a broad range of customers, increasing by 12% year on year.
Lawrence Hill: House of Dancing Water premiered last night and the event was a resounding success. We're excited to have relaunched this one-of-a-kind show which will help drive visitation to city of dreams.
Lawrence Hill: We're continuing work on a number of other initiatives to drive traffic, including a revamped of our retail area and renovation of the main entrance to City of Fremes.
Stereo City property EBITDA increased 20% quarter to quarter
Lawrence Hill: Studio City experienced some disruption in 4 Q2 024 because of the renovations of the hotel lobbies, as well as the high limit areas [inaudible]
Most of these renovations were completed in January.
Lawrence Hill: Studio City's main entrance area has seen a transformation with new lobbies for the star and celebrity towers as well as the completion of the renovations at the high limit areas on the main casino floor and epic tower
Lawrence Hill: The Sequential Growth in Studio City's property Ibadar demonstrates the impact of these initiatives.
Refiring on all cylinders in the cow
Lawrence Hill: The ongoing strength that we are seeing in our business momentum is a direct result of the combined efforts and contributions of our teams.
Lawrence Hill: In the Philippines, the heightened competitive environment has had an impact on performances in 1 Q2 025. We are adjusting our cost structure and reviewing our marketing programs to enhance EBITDA contributions in the business.
For more information, visit www.FEMA.gov
Lawrence Hill: City of Dreams, Mediterranean and Cyprus achieved 10% year-over-year growth in property EBITDA for 1 Q2 025, despite the continued noise in the region.
Lawrence Hill: The property is starting to ramp up and with forward broken for the upcoming summer period materially higher than what we had this time last year.
Lawrence Hill: Real optimistic about the results that Cyprus can deliver over the rest of the year. With that, I turn the call over to Geoff.
Geoff Davis: Thanks Lawrence. Our group-wide adjusted property EBITDA for the first quarter of 2025 was approximately 341 million. Adjusted for VIP hold, our property EBITDA was approximately 313 million.
We have been highly disciplined in managing our cost base.
Lawrence Hill: We brought OpEx down to $3.1 million per day for the first quarter of 2025 compared to $3.2 million in the fourth quarter of 2024
Lawrence Hill: We are continuing to refine our cost-based to identify areas to increase efficiency and flow through And as we had previously indicated, we target to exit the second quarter of 2025 with op-ex of 3.0 million per day [inaudible]
Lawrence Hill: This excludes costs related to House of Dancing Water and Studio City's Residency Concerts.
Turning to our balance sheet, our liquidity position remains robust.
Lawrence Hill: We had available liquidity of $3.3 billion with consolidated cash on hand of approximately $1.2 billion as of the end of the first quarter of 2025 25
Lawrence Hill: Melco, excluding its operations at Studio City, the Philippines and Cyprus, accounted for approximately 662 million of the consolidated cash on hand.
Lawrence Hill: We have two bond maturities coming up this year, one in June at Melco and the other in July at Studio City. Both maturities are already covered and will be refinanced with the drawdowns under the respective credit facilities and free cash on hand.
Lawrence Hill: We have repurchased approximately 165 million in MLCO ADS's in 2025 as of May 7th.
Lawrence Hill: Our consolidated leverage has improved with the growth in EBITDA, and we intend to continue to work on reducing our leverage through EBITDA growth and repayment of debt.
Lawrence Hill: As we normally do, we'll give you some guidance on non-operating line items for the upcoming 2nd quarter of 2025.
Lawrence Hill: Total Depreciation and Amortization Expense is expected to be approximately 135-140 million Corporate Expense is expected to come in at approximately 25-30 million and consolidated net interest expenses is expected to be approximately 100-125 million
Lawrence Hill: This includes finance liability interest of around 7 million relating to fees payable in relation to the Macau Gaming Concession and the Cypress Gaming License.
Lawrence Hill: And Finance, Luis Interest of Approximately 5 Million Relating to City of Dreams, Manila This concludes our prepared remarks, operator of back to you for the Q&A.
Lawrence Hill: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.
Speaker Change: If you wish to cancel your request, please press star 2. If you're on a speaker phone, please pick up the handset to ask your question.
Speaker Change: Your first question comes from George Choy with City. Please go ahead.
Thanks guys, congratulations on a very solid set of results.
Speaker Change: I have a couple questions about May. Firstly, I guess this is for Lawrence.
Speaker Change: Ever since London the Grand Open, fully open in May, April , do you guys feel any impact in that dream? And do you feel any change in terms of competition and testing among the six operators?
Speaker Change: Hey, George. So maybe I'll start and maybe Evan and others can supplement. But I think your question is like ever since London or Grand opened in April , have we seen any increased
Yau
No, look, we're very happy with Q1.
Speaker Change: And as I mentioned in the prepared remarks, we've maintained our Markusher in April .
Speaker Change: If anything, I think our product has held up very well.
Speaker Change: And, you know, I think with all the hard work between the teams at, you know, both City of Dreams and Studio City, Studio City, successfully repositioning, you know, during and post-COVID
Speaker Change: And City of Dreams, now reopening House of Dancing water, I think we found our groove again.
Speaker Change: And so I don't think there has been any cannibalization but I don't know maybe Evan can supplement.
Alvin: No, I think with Lauren said it well, I think we're feeling good in our business and at least as of today I don't think that we felt that there's been a material impact
Alvin: In terms of that opening and new supply cannibalizing any of the business at the city of dreams, we've had fairly good momentum since that period, so at least right now.
It doesn't appear to have a...
for having impact.
Alvin: And I think George as well, you know, I think so far in the market, um...
Reinvestment has, as we mentioned on the past call,
And we hope this continues to hold
It's more rational.
Speaker Change: Everybody's, all the operators within Macau are more rational now than they were a year ago.
Alvin: And I think that's why, you know, together with our cost discipline, I think we exceeded what we had guided last quarter in terms of operating costs.
Alvin: And as long as I think the whole market, you know, everybody is, you know, behaving I think we can continue to strive for, you know, a new goal as well.
Alvin: Post-COVID, you know, we started slow and then last year at a certain time I think even we were we gone
Alvin: Overboard with regards to the reinvestment, I think now that we've rediscovered our identity and we offer a premium product and so we should never be the most competitive and most aggressive in terms of marketing schemes and because at the end of the day we have probably the two best hotels.
on improving our margin.
Speaker Change: Thanks a lot for the sort of color. I guess switching gear over to Manila, which please provide us with any update on this strategic review on the City of Grains Manila.
Speaker Change: Sure, George. So we continue to run the process with the advisors.
Speaker Change: Potential Buyers are signing NDAs in the virtual data room and are working through a series of questions.
Speaker Change: And over time, we will whittle down that group to a short list for the bidding process, but we're remaining close dialogue with our advisors and we'll come back when there's something to announce.
Speaker Change: Thank you very much for all tempering to the queue.
Thank you.
Speaker Change: Thank you. Your next question comes from Ricardo Chinchilla with Deutsche Bank. Please go ahead.
Speaker Change: Okay guys, thank you so much for being in the question and congrats on this solid result.
Speaker Change: I was hoping you could give us a little bit of color on what are you seeing very recently on the gaming floor? Are you guys seeing any sign of weakness from any of the sets of your database or anything that would point out to other than...
Speaker Change: Something changing from the strong results that you guys commented on April ?
Speaker Change: So, the last part that you say that Trump, what was the Trump thing, Joseph?
Speaker Change: No, I was not mentioning on Trump. I was mentioning that if you, this might be my phone, apologize, that if you have seen any, any sort of weakness in the last couple of weeks
Speaker Change: or anything more recent given the macro concerns with regards to its spending in your casino floors.
Speaker Change: Or any other indications in your booking patterns, anything that would point out to something changing from the strong results that you saw during the Golden Week in April .
Speaker Change: Oh, sorry, it's my bad. No, so as we said, you know, April , you know, I think post the trade war and all the stuff.
Speaker Change: The City of Dreams is up 20%, but I think furthermore what I didn't mention is the tail was longer this year.
than previous year during Golden Week.
Speaker Change: And so we were happy about that and you know, right before this call, like 10 minutes ago, I just walked the gaming floor, a city of dreams, and for a Thursday night is really, really full.
Speaker Change: So I don't know, you know, I think how much of it is an impact from the opening of House of Dancing Water, but I'm sure when we get House of Dancing Water up and running, you know, that's two shows a day.
The whole trade war thing in April , April held up [inaudible]
Speaker Change: You know, stronger than we had expected, and, you know, as we've always said...
Speaker Change: Chinese policy is the most important thing to us, even more important than the Chinese economy.
Speaker Change: Key Criterias for us. So, if anything, we're quite happy with what we're seeing in the past, you know, in addition to Q1 and so far in Q2. I don't know if there is anything anybody want to add.
Speaker Change: I think Lauren said that while we were pleasantly surprised, I think there was a question mark in terms of what would happen during
Speaker Change: Golden Week, and there were certainly rumors and market types that some of the larger players are we might see some.
Speaker Change: Reduction in terms of volume. We didn't see that. We had a very solid golden week. And as we've moved into the posi golden week period, as Lawrence articulated, we can't specifically say what it is, but we're certainly not seeing that sort of pullback.
Speaker Change: We're kind of hangover effect that you get right after the holiday period. We've actually continued to have pretty strong for ups here in the following days. So I think we're feeling pretty good right now about the market.
For more information, visit www.FEMA.gov
Speaker Change: Perfect, thank you so much for my follow up Could you please give us some guidance on CapEx for the balance of the year or any you know projects that we should be aware of
Speaker Change: So for 2025, full year CAPEX guidance remains unchanged as $415 million.
Speaker Change: And as far as major projects, the only one I'd highlight would be the completion of Sri Lanka.
https://www.youtube.com.au
Perfect. Thank you so much.
Thank you. Thank you.
Speaker Change: Your next question comes from Joe Stauff with Susquehanna. Please go ahead.
Jo Storff: You think you'll be around 3 million and I just wanted to confirm that that would include, you know, say the incremental up-ex from house-dancing water and any residual from residences that you would have and then...
Jo Storff: Essentially within, so largely that obviously would be a third quarter number but for the second quarter are we still expecting approximately 3.2 or is that going to be a touch higher?
Jo Storff: I'm sorry, so let me take the first part of that. The Obex Guides that we gave excludes both House of Dancing Water and the Residency. So those costs would be incremental to the one that we gave and the one that was reported.
Jo Storff: We had brought down off-ex to 3.1 per day excluding those two items.
Jo Storff: in this first quarter. And the guidance that we given and reiterated is to bring that down to 3.0 not 3.2 in the second quarter. And that's still where we're looking to take it.
Speaker Change: I wanted to ask, essentially, maybe quarter to date, you're seeing strength.
Speaker Change: And wondering, you know, if that does include maybe any notable improvement based mass, you know, that you've seen, whether it be, you know, in the studio city or elsewhere.
I think just across the board, we're getting uh...
Speaker Change: was articulated earlier, we're getting increasing drop numbers across the system.
Speaker Change: And so, we're seeing some general strength. I mean, there are some pockets and weak to weak. You have different sort of ups and downs within player categories within the database. We tend to get a lot of our big players here obviously during holiday periods. And then in some of the other periods, it's reverting to more of sort of that middle tier or mass mass, but we're seeing general sort of solid results across in the market right now, our crossbow properties. [inaudible]
Got it. Thanks very much. Nice quarter.
Thank you.
Speaker Change: Your next question comes from Praveen Choudhary with MS. Please go ahead.
Praveen Chowdhury: Thank you. Congratulations, Lawrence, Geoff, and everybody in the team. Amazing inaugural show of House of Dancing Waters and also very strong first quarter results. I have two quick questions. The first one is...
Praveen Chowdhury: If we think about the market share and the strength that you have talked about in April and May
Praveen Chowdhury: And Golden Week has been a strong, and you're also working on sequentially taking down the cost.
Praveen Chowdhury: Would it mean that, uh, you know, hold a decent EBITDA, should be...
Praveen Chowdhury: Sequentially Growing in Q2, assuming it doesn't fall off the cliff, is that a fair assumption? That's a first question. And the second question is on Sri Lanka. Just want to understand, when do we expect potential implication to our PNL, assuming it's opening sometime in third quarter? Thank you.
Praveen Chowdhury: Well, maybe a second question first, so we do see some impact to the P&L through pre-opening expense for Sri Lanka, but above the line, we anticipate seeing that starting in August
and as far as...
Praveen Chowdhury: Your first, the first question. Yeah, I mean obviously that's our intention. We're trying to be fairly disciplined in terms of our expense and reinvestment levels and assuming we can continue to keep the momentum that that would then translate into incrementally improved EBITDA.
Speaker Change: Great. I mean, can I have a follow-up on one other point that you mentioned, $165 million. That's a lot of money that you used on buyback. Obviously we are hoping that de-leveraging.
Speaker Change: It helps the stock price and equity value Just to understand how and when you're going to use to buy back versus de-leveraging or paying of debt, how should we think about it please? Thank you.
Geoff Davis: Dave, Praveen, maybe I'll start and then just can supplement, but, you know, or as we've stated, are...
Geoff Davis: The main focus in the last couple of years has been on...
Taking down Dad and bringing down Dad's Butch
At these ridiculous share price levels, it's just...
Kind of a once in a lifetime opportunity. [inaudible]
We don't think we'll have this chance ever again.
Geoff Davis: to buy shares at these prices. So, you know, I think for us, you know, we're always thinking about how to maximize shows of value.
Geoff Davis: So I think at the current five, it was even in the fours earlier for MLCO.
Geoff Davis: But, you know, I think we're hoping that now that the market has turned a corner and hopefully people have more confidence in
Geoff Davis: in gaming stocks in general. So, I don't know, Geoff, you want an A to A supplement? So, yeah, the debt reduction is still the key priority, but we make specific capital allocation decisions based on a dynamic and changing environment.
Paydown Dead Over Time
For more information visit www.FEMA.gov
Speaker Change: Got it, very clear. So, good result, great opening of House of Dancing Water and bye-bye. Everything go in the right direction. Congratulations and thank you.
Thank you, Praveen.
Speaker Change: Thank you. Your next question comes from John DeCree with C-B-R-E. Please get the head.
Speaker Change: Hey everyone. I wanted to circle back to Golden Week and um...
Speaker Change: For us, it was a surprise, I think, the invitation numbers that we've seen to the upside obviously, so...
Speaker Change: The first question is, you know, curious, you have certainly more visibility than we do, but if it was better than expected in terms of visitation to McAllen more broadly, and then the follow-up.
Speaker Change: You've mentioned the table drop at COD, the Mass Bonquet Table drop was quite strong. I'm curious if you could offer any insights during Golda Week into non-gaming spends retail and some other things that we kind of look at to gauge the health of the consumer as well.
Any additional color would be helpful. Thanks, guys.
Speaker Change: Yeah, it's age on, so, you know, go then week was, uh, visitation was strong, you know, it was up 40% year over year.
You know, but I think fundamentally the...
Speaker Change: You know, that the market has changed somewhat and so I think that's why the attraction like...
People in China nowadays.
Speaker Change: You know, in terms of, you know, what this little rat book or...
Speaker Change: Memories and Moments Captured, so I think House of Dancing Water, together with the Studio City Attractions.
Speaker Change: Makes a huge difference, and if anything, we're very happy with the fact that I think today we're dominating.
Speaker Change: In Little Red Book from all the House of Dancing Water, Opening, Premier and all of that stuff. I think retail has kind of fundamentally changed in all part of the world, whether it's high-nan, Hong Kong, or Macau.
Speaker Change: And so that's probably less compelling now, but at the same time, you know, I think, you know, with all the non-gaming interactions that we have built years in advance, I think that will be great for us going forward.
Speaker Change: No, I think that's right. We looked, the properties were very active during Golden Week across the board. So in terms of activity within the mall and with that can be strong. As Lawrence has already said, I think on a relative basis.
Speaker Change: Studio City from a retail standpoint fair is better in this environment just because the retail mix and that property which is mass focused and
Pretty affordable, more consumable type items.
Speaker Change: In terms of COD, where it's really targeted at high-end luxury retail, that category continues to struggle. I don't think that we're struggling more than other operators, but I think across the board that area continues to be challenged this year as Lawrence said.
Great. Thanks, guys. Appreciate all that.
Speaker Change: Thank you. There were no further questions at this time. I'll now hand back to Jeanny Kim for closing remarks.
Jeanny Kim: Second concludes our public call today. We look forward to speaking to you next quarter. Thank you.
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