Q1 2026 Melco Resorts & Entertainment Ltd Earnings Call

April 30, 2026

Operator 2: Ladies and gentlemen, thank you for participating in the Q1 2026 Earnings Conference Call of Melco Resorts & Entertainment Limited. At this time, all participants are in a listen-only mode. After the call, we will conduct a question and answer session. Today's conference is being recorded. I would now like to turn the call over to Ms. Jeanny Kim, Senior Vice President, Group Treasurer of Melco Resorts & Entertainment Limited.

Operator: Ladies and gentlemen, thank you for participating in the Q1 2026 Earnings Conference Call of Melco Resorts & Entertainment Limited. At this time, all participants are in a listen-only mode. After the call, we will conduct a question and answer session. Today's conference is being recorded. I would now like to turn the call over to Ms. Jeanny Kim, Senior Vice President, Group Treasurer of Melco Resorts & Entertainment Limited.

ladies and gentlemen, thank you for participating in the first quarter 2026 earnings conference call of Melco Resorts and entertainment Limited,

At this time, all participants are in a listen-only mode.

After the call, we will conduct a question and answer session.

Today's conference is being recorded.

I would now like to turn the call over to miss Jeannie Kim Senior, vice president group, treasurer of Melco Resorts and entertainment. Limited,

Jeanny Kim: Thank you, operator. Thank you everybody for joining us today for our Q1 2026 earnings call. We apologize for the earnings release materials being later than usual. We had a bit of an IT issue. We wanted to give all of you a little bit more time to review the materials that were released. As usual, on the call are Lawrence Ho, Geoffrey Davis, Evan Winkler, and our property presidents in Macau, Manila, and Cyprus. Before we get started, please note that today's discussion may contain forward-looking statements made under the safe harbor provisions of federal securities laws. Our actual results could differ from our anticipated results. 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.

Thank you, operator. And thank you everybody, for joining us today. For our first quarter 2026 earnings call. We apologize for the earnings release materials being later than usual. We had a bit of an IT issue and we wanted to give all of you a little bit more time to to review the materials that were released.

Jeanny Kim: Our actual results could differ from our anticipated results. 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. Finally, please note that our supplementary earnings slides are posted on our investor relations website. With that, I'll turn the call over to Mr. Lawrence Ho.

As usual, on the call, our Lawrence hoe, Jeff Davis, Evan Winkler and our property presidents in Macau, Manila and Cyprus before we get started, please note. That today's discussion may contain forward-looking statements made under the Safe Harbor, provisions of federal Securities Law.

Our actual results could differ from our anticipated results.

Jeanny Kim: Finally, please note that our supplementary earnings slides are posted on our investor relations website. With that, I'll turn the call over to Mr. Lawrence Ho.

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.

Lawrence Ho: Thank you, Jeanny, and thank you all for joining us today. We've delivered a strong Q1 with both group property EBITDA and Macau property EBITDA growing by 12% year over year. Our GGR in Macau increased by approximately 10% year over year with solid growth across all segments. In March, we officially announced the upcoming launch of REM, our new luxury hotel at COD. We remain on track to begin a phased opening early in Q3 2026. We expect REM to represent a meaningful enhancement to the COD product portfolio and to redefine contemporary luxury across Macau. At the same time, we have commenced a refresh of the retail areas at COD and have plans underway to enhance our food and beverage offerings, further elevating the guest experience and product quality. Moving on to the Philippines.

Lawrence Ho: Thank you, Jeanny, and thank you all for joining us today. We've delivered a strong Q1 with both group property EBITDA and Macau property EBITDA growing by 12% year-over-year. Our GGR in Macau increased by approximately 10% year-over-year with solid growth across all segments. In March, we officially announced the upcoming launch of REM, our new luxury hotel at COD. We remain on track to begin a phased opening early in Q3 2026. We expect REM to represent a meaningful enhancement to the COD product portfolio and to redefine contemporary luxury across Macau. At the same time, we have commenced a refresh of the retail areas at COD and have plans underway to enhance our food and beverage offerings, further elevating the guest experience and product quality. Moving on to the Philippines.

Finally, please note that our supplementary earnings slides are posted on our investor relations website with that. I'll turn the call over to more of our health.

Thank you, Jeanne, and thank you all for joining us today.

We delivered a strong first quarter with both group property, EBA and Macau property with dog growing by 12% year-over-year.

In Macau, increased by approximately 10% year-over-year, with solid growth across all segments.

In March, we officially announced the upcoming launch of ram, our new luxury hotel, at COD.

We remain on track to begin a phase opening early in the third quarter of 2026.

Temporary luxury across Macau.

At the same time, we have commenced a refresh of the retail areas at COD and have plans on the way to enhance our food and beverage offerings. Further elevating, the guest experience and product quality.

Lawrence Ho: Despite competitive pressures and broader industry headwinds that continued into 2026, property EBITDA for Q1 2026 grew 24% year over year, while GGR increased 9%. We continue to punch above our weight in the market and are expanding our marketing initiatives across Southeast Asia to drive additional growth. City of Dreams Mediterranean and the satellite casinos in Cyprus were impacted by the conflicts in the Middle East that escalated in late February. With the recent developments in the region, we've seen significant improvements in occupancy, visitation, and play levels in April. We remain operationally flexible in preparation for a further recovery in travel demand. Our casino operations in Sri Lanka recorded positive EBITDA in Q1 2026. We remain focused on the progressive ramp of operations throughout the year.

Lawrence Ho: Despite competitive pressures and broader industry headwinds that continued into 2026, property EBITDA for Q1 2026 grew 24% year-over-year, while GGR increased 9%. We continue to punch above our weight in the market and are expanding our marketing initiatives across Southeast Asia to drive additional growth. City of Dreams Mediterranean and the satellite casinos in Cyprus were impacted by the conflicts in the Middle East that escalated in late February. With the recent developments in the region, we've seen significant improvements in occupancy, visitation, and play levels in April. We remain operationally flexible in preparation for a further recovery in travel demand. Our casino operations in Sri Lanka recorded positive EBITDA in Q1 2026. We remain focused on the progressive ramp of operations throughout the year.

Moving on to the Philippines, despite competitive pressures and broader industry headwinds, that continued into 2026 property. EBA for the first quarter of 2026, grew 24% year-over-year, while ggr increased 9%,

We continue to punch above our weight in the market, in our expanding, our marketing marketing, initiatives across southeast Asia to drive additional growth.

City of Dreams Mediterranean and the satellite casinos in Cyprus were impacted by the conflicts in the Middle East that escalated in late February.

With the recent developments in the region. We've seen significant improvements in occupancy, visitation and play levels. In April, we remain operationally flexible in preparation for a further recovery, in travel demand.

Our Casino operations in Sri, Lanka recorded positive. EBA in 1q 2026.

Lawrence Ho: Finally, we announced today that we purchased the subsidiary of Melco International that owns the trademarks that were subject to the trademarks license agreement. These trademarks are integral to Melco's business. This purchase gives us full control of the IP and allows us flexibility to expand our brand without any incremental cost. With that, I turn the call over to Jeff.

We remain focused on the Progressive ramps of operations throughout the year.

And finally, we announced today that we purchased the subsidiary of Melco International that owns the trademarks that were subject to the trademarks license agreement.

Geoffrey Davis: Thank you, Lawrence. Our group-wide adjusted property EBITDA for Q1 2026 grew 12% year over year to approximately HKD 381 million. Adjusted for VIP hold, our property EBITDA was approximately HKD 356 million. Favorable win rates at COD Macau and COD Manila had positive impacts on our property EBITDA by approximately HKD 20 million and HKD 5 million, respectively. Daily OpEx in Macau, excluding The House of Dancing Water for Q1 2026, was approximately HKD 3.2 million per day, in line with our prior guidance. Total OpEx per day, including The House of Dancing Water and residency concerts for the last 4 quarters, has been relatively stable, and we were able to see the benefits of operating leverage this quarter with our Macau property EBITDA margin increasing to approximately 28%.

Geoffrey Davis: Thank you, Lawrence. Our group-wide adjusted property EBITDA for Q1 2026 grew 12% year-over-year to approximately HKD 381 million. Adjusted for VIP hold, our property EBITDA was approximately HKD 356 million. Favorable win rates at COD Macau and COD Manila had positive impacts on our property EBITDA by approximately HKD 20 million and HKD 5 million, respectively. Daily OpEx in Macau, excluding The House of Dancing Water for Q1 2026, was approximately HKD 3.2 million per day, in line with our prior guidance. Total OpEx per day, including The House of Dancing Water and residency concerts for the last 4 quarters, has been relatively stable, and we were able to see the benefits of operating leverage this quarter with our Macau property EBITDA margin increasing to approximately 28%.

These trademarks are integral to malco's business. This purchase gives us full control of the IP and allows us flexibility to expand our brand. Without any incremental cost with that, I turn the call over to Jeff.

Thank you, Lawrence.

Our group wide adjusted property. Ebita for the first quarter of 2026, grew 12% year-over-year to approximately 381 million.

Adjusted for VIP, hold our property. Evita was approximately 356 million.

Favorable, wind rates at COD, Macau and cod Manila had positive impacts on our property, but, uh, by approximately 20 million and 5 million respectively.

Daily Opex, in Macau. Excluding House of dancing water for the first quarter of 2026 was approximately 3.2 million per day in line with our prior guidance.

Total Opex per day, including House of dancing, water and residency. Concerts for the last 4 quarters has been relatively stable and we were able to see the benefits of operating leverage this quarter with our Macau property ebita margin increasing to approximately 28%.

Geoffrey Davis: We continue to be focused on managing our cost to increase flow-through and margins going forward. Turning to our balance sheet, our liquidity position remains robust. We had available liquidity of approximately HKD 2.4 billion, with consolidated cash on hand of approximately HKD 1.1 billion as of the end of Q1 2026. Melco Resorts, excluding its operations at Studio City, the Philippines, Cyprus, and Sri Lanka, accounted for approximately HKD 543 million of the consolidated cash on hand. In Q1 2026, we repaid HKD 60 million in debt at Melco Resorts and HKD 10 million in debt at Studio City. The group does not have any material debt maturities in 2026.

We continue to be focused on managing our costs to increase flow through and margins going forward.

Turning to our balance sheet, our liquidity position remains robust. We had available liquidity of approximately 2.4 billion with Consolidated cash on hand of approximately 1.1 billion. As of the end of the first quarter of 2026,

Melco Resorts excluding its operations at Studio City, the Philippines Cyprus and Sri Lanka accounted for approximately 500443 million of the Consolidated cash on hand.

In the first quarter of 2026, we repaid, 60 million in debt at Melco Resorts and 10 million in debt at Studio City.

The group does not have any material debt maturities in 2026?

Geoffrey Davis: As of 29 April 2026, we repurchased approximately 2.5 million of our ADSs for total consideration of approximately $14 million year to date in 2026. We have been opportunistic in our share repurchases in the past, and we expect to continue to make opportunistic repurchases going forward. We believe our share price is meaningfully undervalued, especially when recent trading levels of our ADSs imply a Free Cash Flow Yield of over 20%. We also announced today that the board approved a new $500 million share repurchase program. This is incremental to the existing program and increases our share repurchase authorization to $710 million. We remain focused on reducing debt and leverage and will continue to evaluate our capital allocation strategy in a disciplined manner, considering cash availability, prevailing market conditions, and our share price.

As of April 29th 2026, we repurchase. We repurchased approximately 2.5 million of our adss for total consideration of approximately 14 million year to date in 2026.

We have been opportunistic in our share repurchases in the past, and we expect to continue to make opportunistic repurchases going forward. We believe our share price is meaningfully undervalued, especially when recent trading levels of our ADSs imply a free cash flow yield of over 20%.

We also announced today that the board approved a new 500 million share repurchase program.

This is incremental to the existing program and increases our share repurchase authorization to 710 million.

Geoffrey Davis: As Lawrence mentioned, we announced today the purchase of key trademarks from Melco International for HKD 375 million. The transaction was the result of arm's length negotiations between the independent members of the two audit committees, and a professional valuation services firm was engaged to assist in the evaluation. Trademark license fee for Q1 2026 was approximately HKD 13.4 million, implying a purchase price of just under 7x the annualized Q1 fee. This is in line with Melco's current trading multiple and below the trading multiples of our Macau peers. The purchase of the trademarks provides MLCO with full ownership and control of the trademarks and eliminates any uncertainty with respect to potential increases in fees at the end of the prior royalty fee arrangements.

We remain focused on reducing debt and leverage and will continue to evaluate our Capital allocation strategy and a disciplined manner considering cash. Availability prevailing market conditions and our share price.

As Laurence mentioned, we announced today the purchase of key trademarks from Melco International for 375 million.

The transaction was the result of arms length. Negotiations between the independent members of the 2 audit committees and a professional evaluation Services. Firm was engaged with assist in the evaluation.

Applying a purchase price of just under 7 times. The annualized first quarter fee,

This is in line with Melco's current trading multiple and below the trading multiples of our Macau peers.

Geoffrey Davis: As a result of the purchase, we have an immediate increase in EBITDA and cash flow. The purchase will be funded by a combination of a drawdown from our credit facility and internal funds, but the additional debt is immaterial to our credit profile. Debt to EBITDA post-transaction is expected to increase by less than half a turn, and we expect to leverage our return back down to Q1 2026 levels before the end of 2026. Finally, as we normally do, we'll give you some guidance on non-operating line items for the upcoming Q2 2026. Total depreciation and amortization expense is expected to be approximately HKD 140 to 145 million. Corporate expense is expected to come in at approximately HKD 30 million.

The purchase of the trademarks provides mlco with full ownership and control of the trademarks and eliminates. Any uncertainty with respect to potential increases in fees, at the end of the prior royalty fee arrangements. As a result of the purchase, we have an immediate increase in ebit, da and cash flow.

The purchase will be funded by a combination of a draw down from our credit facility and earn internal funds.

But the additional debt is immaterial to our credit profile.

Debt to EBITDA post-transaction is expected to increase by less than half a turn, and we expect to leverage our return back down to first quarter 2026 levels before the end of 2026.

And finally, as we normally do, we'll give you some guidance on non-operating line items for the upcoming second quarter of 2026.

Total depreciation and amortization expense is expected to be approximately 140 to 145 million.

Geoffrey Davis: Consolidated net interest expense is expected to be approximately HKD 115 to 120 million. This includes finance liability interest of around HKD 6 million relating to fees payable in relation to the Macau gaming concession and the Cyprus gaming license, and finance lease interest of approximately HKD 5 million relating to City of Dreams Manila. That concludes our prepared remarks. Operator, back to you for the Q&A.

Corporate expense is expected to come in at approximately 30 million, and Consolidated. Net interest, expenses, expected to be approximately 115 to 120 million.

This includes Finance liability interest of around 6 million relating to fees payable. In relation to the Macau gaming concession. And the Cyprus gaming, license and finance lease interest of approximately 5 million relating to City of Dreams Manila

That concludes our prepared remarks operator, back to you for the Q&A.

Operator 2: Your first question comes from George Choi with Citi. Please go ahead.

Thank you.

If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

If you wish to cancel your request, please press star 2.

If you are on speaker phone,

please pick up the handset to ask your question.

Operator: Your first question comes from George Choi with Citi. Please go ahead.

Your first question comes from George Choy with City. Please go ahead.

George Choi: Hi. Good evening. Thank you very much for taking my questions, we appreciate. I just wanna say that we appreciate the purchase of the trademark license from Melco International. I think that's a very good deal. Two questions from me, if that's all right. Firstly, perhaps for Lawrence or Evan, how do you view your current OpEx level, in particular player reinvestments? Secondly, for the upcoming Labor Day holidays, which is a few hours away, if you can provide us with any color in terms of the upcoming holidays, that'd be very much appreciated. Thank you very much.

Hi good, uh, good evening. Um, thank you very much for taking my questions and, uh, we appreciate, I just want to say that we appreciate the purchase of the trimmer license from Google international. I think that's a very good deal. Um, but, um, 2 questions on the, uh, if that's all right. Uh, firstly. Um, perhaps for Lawrence, or as in, how do you view, um, your current Opex level, um, in particular play of the Investments and secondly, um, for the, um, upcoming Liberty holiday holidays, which is a few hours away. Um, if you can provide us with any color, uh, in terms of, um, the the upcoming holidays, that we very much, appreciate it. Thank you very much.

Lawrence Ho: Hey. Hi, George. It's Lawrence. Maybe I'll take the second question first and then let Evan and Jeff elaborate a little bit on the OpEx question. For May Golden Week, if, you know, if anything, I think with the conflict in the Middle East, we're seeing people travel shorter distance in China. I see there's I read somewhere that, you know, there's 10% cancellation of flights from China to international markets. If anything, that has really benefited us. I think so far for May Golden Week, we're seeing both occupancy and player quality improve on a year-on-year basis, so we're quite happy about that and excited about tomorrow effectively starting. On OpEx, maybe I'll hand it off to Evan and Jeff to elaborate.

Hey, hi George is Lawrence. So maybe I'll take the second question first, and then that Evan and draft elaborate a little bit on the, the Opex question. Um, for May golden week. If you know, if anything I think with the conflict in the Middle East, we're seeing um people travel shorter distance in China. So I see there's um, I read somewhere that, you know, there's 10% cancellation of flights from China to International markets. So if anything that has really benefited us. So, I think so far for, um, May golden week, we're seeing both occupancy and player quality improved on a year-on-year basis. So we're quite happy about that and excited about, um, tomorrow, effectively starting. Um, on on all packs, maybe I'll hand it off to to Evan and, and just to elaborate

Evan Winkler: Sure. Why don't I start and Geoffrey can join in. I think from an OpEx perspective, we're fairly stable on where we are. Market remains very competitive, so we did see player reinvestment levels tick up. I think Lawrence has set the tone to begin with, which is we're not leading the market up, but when you go through periods of intense competition, we obviously react to the market. An environment where it's very competitive, we have seen some increase in player reinvestment levels. I think they're stable for now. We don't see anything on the horizon that would make them increase, but we also don't see anything on the near-term horizon that would decrease those levels.

Uh, sure why don't I start him? Jeff can join in. Um, I think from an Opex perspective,

We're fairly stable on where we are. Um, Market remains very competitive. So we did see player reinvestment levels. Pick up. Um, I think Lawrence has set the tone to begin with, which is, we're not leading the market up, um, but when you go through periods of intense competition, we obviously react to the market. Um, and so an environment where it's very competitive, um, we have seen, um, some uh, increase in player reinvestment levels. I think they're stable for now, uh, we don't see,

Anything on the horizon.

Evan Winkler: As I look into the next quarter, we are seeing, you know, just our typical salary increase takes place on 1 April, so we're gonna see a tick up related to that. We have a little bit of enhancement in terms of some higher level, butler and other service amenities around our suite product. As you know that, within Macau, that's continued to be an area of customer focus. Some of our competitors have made some announcements of things that they're looking to do prospectively. I think luckily, a lot of ours were already from a hardware position, better, but from a software position, we will have a slight tick up there. The biggest jump up is gonna be in Q3 as we start to open REM.

Evan Winkler: REM, we've probably got another 30,000 to 40,000 a day in Operating Expenses. I think we view that as a big positive. We've got 149 keys opening. Just walked the product today with Lawrence and Tim, and it looks spectacular. I think it's gonna be highly differentiated in the market. We spent a lot of time on that property, making sure that we had the right mix. It's very heavily weighted towards the one-bedroom suite product, with some flexibility in terms of combining suites and combining rooms with lock off rooms.

Evan Winkler: I think we feel like we're gonna be hitting the market with a very good product here, going into Q3, and we'll have some slight expense from that, but receive obviously a pretty big revenue uplift as that ramps.

A hardware positioned, uh, better, but from a software position, we will have a slight tick up there. Um, and then the biggest jump up is going to be, uh, in Q3 as we start to open REM, um, REM, we've probably got another 30 to 40,000 a day in operating expenses. Uh, I think we view that as a, a big positive. Um, we've got 149 Keys opening, uh, just walked the product today with, uh, Lawrence and Tim. And it looks spectacular. I think it's going to be highly differentiated in the market. Uh, we spent a lot of time on that property making sure that we had the right mix. Um, it's very heavily weighted towards the 1-bedroom Suite product um with some flexibility in terms of combining Suites and combining uh rooms with lockoff rooms. So I think we feel like we're going to be hitting the market with a very good product here um going into Q3 uh and we'll have some slight expense from that but uh should receive obviously a a pretty big Revenue. Uplift is that ramps?

George Choi: Thank you very much. If I can ask a follow-up question. Given your purchase of the trademark license, any change in your CapEx for this year at all?

Thank you very much and, uh, if I can, um, ask a follow-up questions, so, um, given your, um, purchase of the trademark license. Um, any change in your capex, um, for for, for this year at all.

Evan Winkler: Total CapEx for this year has come down from about HKD 450 to approximately HKD 425. With the amount spent in Q1, we've got approximately HKD 350 million to go for the remainder of this year.

uh, so total capex for this year has come down from about 450 to approximately 425

Uh, and with the amount spent in the first quarter, we've got approximately 350 million to go for the remainder of this year.

George Choi: Understood. That's very clear. Thank you very much.

On the ship that that's very clear. Thank you very much.

Operator 2: Our next question comes from Karl Choi with Bank of America. Please go ahead.

Operator: Our next question comes from Karl Choi with Bank of America. Please go ahead.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced.

You may press star 1 to ask a question.

Our next question comes from Carl Choy with Bank of America. Please go ahead.

Karl Choi: Hi, good evening. Thanks for taking my question. Two questions here. Number one is, can you discuss a little bit about the timing of resuming your dividend, the trademark purchase? Does that mean that we may be pushing back the timing of a resumption towards 2027? Second part on, you know, competition, understanding that, you know, that maybe the reinvestment rate for now, you know, you expect it to be stable near term, but sort of how much, you know, one of your larger competitors has been, you know, quite vocal about stepping up service offerings and things like that. Do you feel like you still need to respond further beyond what you have said on the call? Thanks.

Hi, good evening. Thanks for taking my question. Uh, 2 questions here. Number 1 is, uh, can you uh, discuss uh, a little bit about the timing of our resuming, your dividend. Uh, the trademark purchase does that mean that the we may be pushing back the timing of a of resumption towards, uh, 2027 and second part on, you know, competition, um, understanding that, uh, you know, um, you know that maybe the reinvestment rate for now, you know, you expected to be uh, stable near. But sort of how much you know uh 1 of your larger competitors has been, you know, quite vocal about stepping up service offerings and things like that. And so do you feel like uh you still need to respond further? Uh beyond what you have said on the call. Thanks.

Lawrence Ho: Hey, Karl. Maybe I'll. It's Lawrence. You know, I think our goal is still to resume the dividend at the end of this year, but I think maybe we'll let Geoffrey elaborate on our capital priorities.

Hey, Carlos.

Evan Winkler: Yeah. All things being equal, we would definitely like to resume the dividend by year-end. That said, of course, we'll look at the opportunity set out there, and that would include our share price over the course of this year as well. As you know, we've been opportunistic over time and thus far this year in buying back the stock when we think it's on sale, and we think it's on sale at these levels. It's all dependent on a variety of different variables, but we would like to recommence the dividend and think that the balance sheet should be in shape for that by the end of this year.

Geoffrey Davis: Yeah. All things being equal, we would definitely like to resume the dividend by year-end. That said, of course, we'll look at the opportunity set out there, and that would include our share price over the course of this year as well. As you know, we've been opportunistic over time and thus far this year in buying back the stock when we think it's on sale, and we think it's on sale at these levels. It's all dependent on a variety of different variables, but we would like to recommence the dividend and think that the balance sheet should be in shape for that by the end of this year.

Our goal is still to resume the dividend at the end of this year, but I think maybe we'll just elaborate on our capital priorities.

Yeah, so, um, the ultimate is all things being equal. We would definitely like to resume the dividend, um, by year end, uh, that's said, of course, we'll look at the opportunity set out there and that would include, uh, our share price, uh, over the course of this year, as well as you know, we've been opportunistic over time and, and thus, far this year, in buying back the stock when we think it's on sale, and we think it's on sale at these levels. So it's all dependent on a variety of different variables, but we would like to recommence the dividend.

Lawrence Ho: Karl, on your reinvestment question, I'm sure you guys, you know, are super smart, and you can back out the fact that Melco is the most disciplined in terms of our reinvestment. It's a constant internal discussion as well, which is sort of an annoying one because, you know, we see our competitors keep taking it up. As Evan mentioned earlier on, we don't wanna lead that race. I don't know. I'll let Evan elaborate on it further.

And think that the balance sheet should be in shape for that by the end of this year.

Evan Winkler: No, look, I think we feel good on where we are on a relative basis sitting here today. I think as you've remarked, a number of our competitors have done more aggressive things in the marketplace over the last few months, and we've responded. I don't get the sense that they're gonna double down on that because I think they've experienced that you sort of hit a point where the incremental benefit of that spend is very muted, and you end up having dilution, obviously, in profitability. That's why I say I feel like we've hit a stable point. I don't see in the near term a need for us to ratchet up.

Evan Winkler: That being said, as Lawrence articulated, if one of our competitors did something relative to the status quo that was very, very aggressive and the market followed, we probably would reluctantly need to change our approach. Again, I think we are fighting to be disciplined and obviously are encouraging our other competitors to compete in a healthy way in the marketplace. Sitting here today, I think we feel like we're stable.

Lawrence Ho: Yeah. You know, we, you know, we respect the fact that Macao being the biggest market in the world is always gonna be very competitive. I think we've always encouraged that we should compete based on product and service and not rebates and commissions and stuff like that. You know, it's unfortunate that we can't, you know, this is out of our control. At the same time, I think on product and service standpoint, we've talked, Evan talked quite a bit about REM. We're very excited about the all-new suite product. I think in due course, we're happy to, you know, show it off with our phase opening in Q3 because it's truly a unique product in not only in Macao, but Macao, Hong Kong, probably the entire Asia. It's probably something that's never been done before.

On that because I think, um, they've experienced that you sort of hit a point where the incremental benefit of that spend is very muted and you end up having dilution obviously in profitability. So that's why I say I feel like, um, we've hit a stable point. I I don't see in the near term a need for us to ratchet up. Um, that being said, as Lawrence. Articulated, if 1 of our competitors did something relative to the status quo, that was very, very aggressive and the market followed. Um, we probably would reluctantly need to, to change our approach. Um, but again, I think we are fighting to be disciplined and, and obviously our encouraging, um, our other competitors to compete in a healthy way, um, in the marketplace. So, sitting here today, I, I think we feel like we're stable. Yeah. And, and, you know, we, you know, we respect the fact that Macau being the biggest Market in the world is always going to be very competitive, but I think we've always encouraged that we should compete based on product and

Service and not, um, rebates and commissions and stuff like that. Um, but you know, it's unfortunate that we can't, you know, this is out of our control. Um, but at the same time I think on product and service standpoint, we've talked Evan, talked quite a bit about Ram. We're very excited about the all new sweet product and I think in due course, we're happy to, um, you know, show it off.

Lawrence Ho: At the same time, we're also redoing our retail at City of Dreams. If anything, we've always felt that with our partnership with DFS ending, that was always an area of weakness. I think from a product offering standpoint, starting next year, we're gonna have some exciting new brands that we're dealing directly with, where we think will really complement the luxury proposition of City of Dreams.

With our phase opening in Q3, because it's truly a unique product— and not only in Macau, but Macau, Hong Kong, probably the entire Asia— it's probably something that's never been done before. Um, and at the same time, um, we’re also redoing our retail at City of Dreams. Um, if anything, we've always felt that with our partnership with BFS ending, that was always an area of weakness. So, I think from a product offering standpoint, starting next year, we're going to have some exciting new brands that we're dealing directly with, um, where we think will really complement the luxury proposition of City of Dreams.

Karl Choi: Got it. That's good to hear. If I may ask a follow-up question. I just want to go back to the GGR trends for a second. Good to hear about the good color about the upcoming May Holiday. I just want to go back to April. There's some market chatter that I think for the sector overall, win rate was low. More specifically, there was some chatter that, yeah, VIP volume was also weak. Just want to see if that's something you've seen, and also if that's the case, is that really more transitory, nothing to be worried about, you know, especially as you look forward? That's something that you would have to pay attention. Thanks.

Um, got it, that's good to hear. If I may ask you a follow-up questions, I just want to go back to the dgr transfer a second. Um, good to hear about the uh good color about the upcoming May holiday but just want to go back to April. Uh, there's some Market chatter that uh I think for the sector overall we uh win rate was uh uh low. Uh but more specifically, there was some chatter that. Yeah, the the IP volume was also weak just like to see if that's something you've seen. And also if that's the case is that really more transitory nothing to be worried about you know, especially as you look forward or uh that's something that uh that we have to pay attention.

Evan Winkler: It's harder for us to answer that sort of market-wide. For us, it was probably not the strongest month, but to be fair, that is a business that we track almost player by player, given the concentration that exists in some of the large VIP play. Some of the players that had come in Q1 are due to be coming later in the quarter. I don't know that April set the world on fire for VIP. At the same time, I don't think there was anything we saw that was concerning in terms of the future health of that business.

Um, it's harder for us to answer that sort of Market wide, um, for us. It was probably not the strongest month but I to be fair, that is a business that we

Track almost player by player given the concentration that exists in some of the large VIP play. Um, and so, some of the players that had come in q1 are due to becoming later in the quarter. Um, so I I don't know that April set the world on fire for VIP at the same time, I don't think there was anything, we saw that was concerning in terms of the future health of that business.

Karl Choi: That's good to hear. Thank you.

That's good to hear. Thank you.

Operator 2: Your next question comes from DS Kim with JP Morgan. Please go ahead.

Operator: Your next question comes from DS Kim with JP Morgan. Please go ahead.

Your next question comes from DS, Kim. With JP Morgan, please go ahead.

DS Kim: Juan, thanks for taking my question, and good evening. As George said earlier, I really appreciate also us purchasing Trademark at a reasonable, if not attractive valuation. Kudos to that. Just wanted to check on very high-level stuff, if I may, because we in the market came across a news or government announcement last month that they want to establish, I think, a 20 billion MOP fund to support economic diversification. They target to raise, if I'm not mistaken, up to 9 billion MOP from private capital, private parties. Just wondering, has there been any discussion between or with the government as to if we need to or if we want to participate in that fund?

DS Kim: They target to raise, if I'm not mistaken, up to 9 billion MOP from private capital, private parties. Just wondering, has there been any discussion between or with the government as to if we need to or if we want to participate in that fund? If that's the case, is it gonna come out of our previous commitment for the non-gaming commitment at the license signing? Or would there be additional burden or commitment that we need to do in the future?

Go on. Thanks for taking my question and good evening and, and as I as George said earlier, I really appreciate also us, purchasing trademark at a reasonable way. It's not attractive valuation kudos to that. Uh, but just wanted to, uh, check on very high level stuff if I may because, uh, we end the market came across, uh, news or government announcement last month that, uh, they want to establish. I think a 20 billion mob fund, uh, to support economic diversification and, uh, they target to raise, if I'm not mistaken up to 9 billion mob, from private Capital, private parties. So just wondering has their

DS Kim: If that's the case, is it gonna come out of our previous commitment for the non-gaming commitment at the license signing? Or would there be additional burden or commitment that we need to do in the future?

There been any discussion uh, between or with the government as to if we need to, or if we want to participate in that fund. And if that's the case, is it going to uh, come out of our previous commitment for the non-gaming, uh, uh, commitment at the licensed signing or would they, would there be additional burden or commitment that we need to do, uh, in the future?

Evan Winkler: Hey, DS. Yeah. Again, thank you for the question, and thank you for the comment on the Trademark. On the Macau government fund, we really can't comment too much about it. All I can say is that what we had committed as part of the license renewal back in, at the end of 2022 remains. You know, that amount is not gonna increase. Just to remind everybody, we were, you know, we were lucky to have the lowest commitment among the six concessionaires, and there will be no change to that amount.

All I can say, is that the what we had committed as part of the license, renewal back in at the end of 2022 remains. Um, so, you know that amount is not going to increase. So, and just to remind everybody we were, you know, we were lucky to have the lowest commitment among the 6 concessionaires and, um, there will be no change to that amount.

DS Kim: Thank you, sir. That's really reassuring. Congrats again on a strong quarter. Thank you.

Thank you sir. Uh, that's really a real sharing and congrats again on a strong quarter. Thank you.

Operator 2: Your next question comes from George Choi with Citi. Please go ahead.

Operator: Your next question comes from George Choi with Citi. Please go ahead.

Your next question comes from George Choy with City. Please go ahead.

George Choi: Thank you. Just a quick follow-up on the aforementioned, refresh on COD's retail. How should we think about disruption, if any? Thanks very much.

Thank you. Um, just a quick follow-up on the upper-mentioned refresh on COD's retail. Um, I'm sure you think about, uh, disruption, if any. Thank you very much.

Evan Winkler: Maybe I'll take that one, and others can add. If you've been by the property, we've already started. If you go into sort of the front by the Cotai Strip and the luxury retail arc, the north section's already hoarded. We're already underway in terms of the remodel. Tim and the team here have developed a very good phasing plan. We're not gonna have any period where we think the property is gonna be massively impacted, but we are gonna be going zone by zone, in really creating a brand-new retail experience throughout that podium level. That's gonna take place from now, it's really gonna go on for the next 10 to 12 months. We're zoning it very carefully, but there is gonna be construction in various zones throughout that period.

Maybe I'll take that 1 and and others can add. So if you've been by the property we've already started. Um so if you go into sort of the front by the chi strip in the luxury retail Arc, um the north sections already hoarded. We're already underway in terms of the remodel

Um Tim and the team here of developed um a very good phasing plan. So we're not going to have any period where we think the property is going to be massively impacted, but we are going to be going Zone by Zone. Uh in really creating a brand new retail experience throughout uh that Podium level.

Evan Winkler: We're also again, gonna go through a period with our tenants where we're keeping some old friends, but on a direct basis. We're making a lot of new friends with the new exciting names that we're glad are gonna be joining us. During this next 3 to 4 quarters, we're working with them, and at various times as they're disrupted, obviously providing relief to those tenants as they are committed to us and sticking with us during this transformational period. I guess what I would say is we're very excited about where we're gonna end up.

Evan Winkler: I guess what I would say is we're very excited about where we're gonna end up. I think there's gonna be some work to do during the journey, but very proud of Tim and the construction team for really coming up with a really good phased plan, with some good ideas around hoarding and property activations that should minimize the disruption during that period.

Evan Winkler: I think there's gonna be some work to do during the journey, but very proud of Tim and the construction team for really coming up with a really good phased plan, with some good ideas around hoarding and property activations that should minimize the disruption during that period.

Um, that's going to take place from now. Uh, and it's really going to go on for the next 10 to 12 months. Um, we're zoning it very carefully but there is going to be Construction in various zones throughout that period. Um, we're also uh, again going to go through a period with our tenants where um, we're keeping uh, some old friends, but on a direct basis, we're making a lot of new friends with a new exciting names that. We're uh, glad are going to be joining us. Um and during this next 3 to 4 quarters um we're working with them. Um and at various times as they're disrupted obviously providing uh relief to those tenants, as they are um committed to us and sticking with us during this transformational period. Um, I guess what I would say is we're very excited about where we're going to end up. Um, I think there's going to be some, uh, some work to do during the journey, but, uh, very proud of, uh, Tim and the construction team for really coming up with, uh, a really good phased plan. Um, with some

Uh, good ideas around hoarding and property activations that should minimize the disruption during that period.

George Choi: All right. Thank you very much.

All right. Thank you very much.

Operator 2: Thank you. There are no further questions at this time. I will now hand back to Miss Jeanny Kim for closing remarks.

Operator: Thank you. There are no further questions at this time. I will now hand back to Miss Jeanny Kim for closing remarks.

Thank you. There are no further questions at this time.

I'll now hand back to miss Jennie Kim for closing remarks.

Jeanny Kim: Thank you, everybody, for joining the call again today. We'll see you next quarter. Thank you.

Thank you, everybody, for joining the call again today. And we'll see you next quarter. Thank you.

Operator 2: That does conclude our conference for today. Thank you for participating. You may now disconnect.

Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

That does conclude our conference for today. Thank you for participating. You may now disconnect

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