Melco Resorts & Entertainment Limited (NASDAQ:MLCO) Q4 2024 Earnings Conference Call February 27, 2025 8:30 AM ET Company Participants Jeanny Kim - Senior Vice President, Group Treasurer Lawrence Ho - Chairman & Chief Executive Officer Geoff Davis - Executive Vice President & Chief Financial Officer Evan Winkler - President Conference Call Participants George Choi - Citi Ricardo Chinchilla - Deutsche Bank John DeCree - CBRE Joe Stauff - Susquehanna Praveen Choudhary - MS Operator Ladies and Gentlemen, thank ...

February 27, 2025 4Q'24 Results Presentation 1 Disclaimer Safe Harbor Statement This presentation contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. The Company may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in its annual report to shareholders, in press releases and other written materials and in oral statements made by it ...

Group 1 - Melco Resorts reported a quarterly loss of $0.01 per share, missing the Zacks Consensus Estimate of $0.08, compared to earnings of $0.13 per share a year ago, representing an earnings surprise of -112.50% [1] - The company posted revenues of $1.19 billion for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.81%, and showing an increase from year-ago revenues of $1.09 billion [2] - Over the last four quarters, Melco has surpassed consensus EPS estimates just once, while topping consensus revenue estimates two times [2] Group 2 - The stock's immediate price movement will depend on management's commentary during the earnings call, with Melco shares losing about 1% since the beginning of the year, compared to the S&P 500's gain of 1.3% [3] - The current consensus EPS estimate for the coming quarter is $0.03 on $1.19 billion in revenues, and $0.49 on $4.82 billion in revenues for the current fiscal year [7] - The Zacks Industry Rank indicates that the Gaming industry is currently in the top 22% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8]

Core Viewpoint - Studio City International Holdings Limited reported a significant increase in total operating revenues for the fourth quarter and full year of 2024, driven by the recovery in inbound tourism in Macau and the ramp-up of operations following the opening of Studio City Phase 2 [2][17]. Financial Performance - Total operating revenues for Q4 2024 were US$152.9 million, up from US$141.3 million in Q4 2023, marking a year-over-year increase of approximately 11.4% [2]. - For the full year 2024, total operating revenues reached US$639.1 million, compared to US$445.5 million in 2023, reflecting a growth of about 43.4% [17]. - Studio City Casino generated gross gaming revenues of US$321.8 million in Q4 2024, an increase from US$294.8 million in Q4 2023 [3]. Gaming Operations - The mass market table games drop increased to US$891.7 million in Q4 2024, compared to US$864.1 million in Q4 2023, with a hold percentage of 32.1% versus 30.0% in the prior year [5]. - Gaming machine handle for Q4 2024 was US$888.9 million, up from US$778.3 million in Q4 2023, with a win rate of 3.3% compared to 3.2% in the previous year [6]. Cost and Income Analysis - Operating income for Q4 2024 was US$3.1 million, down from US$13.3 million in Q4 2023, while Adjusted EBITDA was US$56.7 million, compared to US$64.8 million in the same quarter of the previous year [9]. - The net loss attributable to Studio City for Q4 2024 was US$27.7 million, compared to a net loss of US$18.6 million in Q4 2023 [10]. Capital Structure and Expenditures - Total cash and bank balances as of December 31, 2024, were US$127.8 million, down from US$228.2 million a year earlier [14]. - Total debt at the end of Q4 2024 was US$2.16 billion, reduced from US$2.34 billion at the end of 2023, primarily due to the repurchase of senior notes [14]. - Capital expenditures for Q4 2024 were US$25.6 million [16]. Market Positioning - Studio City Casino has strategically repositioned to focus on the premium mass and mass segments, with VIP rolling chip operations transferred to City of Dreams in late October 2024 [4].

Core Viewpoint - Melco Resorts & Entertainment Limited reported a significant recovery in its financial performance for the fourth quarter and full year of 2024, driven by improved gaming and non-gaming operations, alongside a strategic focus on enhancing customer experience and market share in Macau [2][5][36]. Financial Performance - Total operating revenues for Q4 2024 were US$1.19 billion, a 9% increase from US$1.09 billion in Q4 2023 [2]. - Operating income for Q4 2024 was US$97.0 million, compared to an operating loss of US$94.4 million in Q4 2023 [2]. - Adjusted Property EBITDA for Q4 2024 was US$295.4 million, slightly down from US$303.4 million in Q4 2023 [3]. - For the full year 2024, total operating revenues reached US$4.64 billion, up from US$3.78 billion in 2023 [36]. - Operating income for 2024 was US$484.6 million, compared to US$65.0 million in 2023 [37]. - Net income attributable to Melco for 2024 was US$43.5 million, or US$0.10 per ADS, a significant recovery from a net loss of US$326.9 million in 2023 [38]. Gaming Operations - Rolling chip volume increased to US$6.24 billion in Q4 2024 from US$5.19 billion in Q4 2023, with a win rate of 2.35% [7]. - Mass market table games drop rose to US$1.53 billion in Q4 2024, compared to US$1.44 billion in Q4 2023, with a hold percentage of 32.0% [8]. - Gaming machine handle for Q4 2024 was US$1.03 billion, up from US$0.96 billion in Q4 2023, maintaining a win rate of 3.1% [8]. Non-Gaming Operations - Total non-gaming revenue at City of Dreams for Q4 2024 was US$85.6 million, an increase from US$80.1 million in Q4 2023 [9]. - Non-gaming revenue at Studio City for Q4 2024 was US$73.2 million, compared to US$65.3 million in Q4 2023 [18]. - City of Dreams Mediterranean and Other reported total operating revenues of US$59.2 million in Q4 2024, up from US$47.3 million in Q4 2023 [24]. Capital Expenditures and Financial Position - Capital expenditures for Q4 2024 were US$94.9 million, focusing on enhancement projects and new developments [33]. - As of December 31, 2024, total cash and bank balances were US$1.27 billion, with total debt at US$7.16 billion, a slight reduction from the previous quarter [30]. - Available liquidity, including cash and undrawn credit facilities, was approximately US$3.35 billion as of December 31, 2024 [30]. Share Repurchase Program - For the year ended December 31, 2024, the company repurchased approximately 20.7 million ADSs for about US$112 million under its US$500 million share repurchase program [34]. - From January 1, 2025, to February 26, 2025, an additional 3.7 million ADSs were repurchased for approximately US$20 million, leaving US$368 million remaining under the program [35].

Core Viewpoint - Melco Resorts & Entertainment Limited is evaluating potential strategic alternatives for City of Dreams Manila, with no decisions made yet regarding any specific alternatives [1][3]. Group 1: Company Overview - Melco Resorts & Entertainment Limited is a developer, owner, and operator of integrated resort facilities in Asia and Europe, with operations including Altira Macau, City of Dreams Macau, and City of Dreams Manila [5]. - The company is majority owned by Melco International Development Limited, which is led by Mr. Lawrence Ho, who serves as Chairman, Executive Director, and CEO [6]. Group 2: Strategic Evaluation - Melco has engaged CBRE Capital Advisors, Inc. and Moelis & Company LLC as financial advisors to assist in exploring strategic alternatives for City of Dreams Manila [2]. - The exploration of potential strategic alternatives does not guarantee any transaction will occur, and the company will not provide updates unless further disclosure is deemed appropriate [3].

Core Viewpoint - Melco Resorts & Entertainment Limited is evaluating potential strategic alternatives for City of Dreams Manila, with no decisions made yet regarding any specific alternatives [1][3]. Group 1: Company Overview - Melco Resorts & Entertainment Limited is a developer, owner, and operator of integrated resort facilities in Asia and Europe, with operations including Altira Macau, City of Dreams Macau, and City of Dreams Manila [5]. - The company is majority owned by Melco International Development Limited, which is led by Mr. Lawrence Ho, the Chairman, Executive Director, and CEO of the company [6]. Group 2: Strategic Evaluation - Melco has engaged CBRE Capital Advisors, Inc. and Moelis & Company LLC as financial advisors to assist in exploring potential strategic alternatives for City of Dreams Manila [2]. - The company has stated that there is no assurance that the exploration of potential strategic alternatives will lead to any transaction [3].

Core Insights - Melco Resorts & Entertainment has been recognized in the S&P Global Sustainability Yearbook 2025 as an "Industry Mover" in the Casinos & Gaming sector, indicating its strong sustainability performance [2] - The company's Studio City Phase 2 has achieved a BREEAM New Construction "Excellent" rating, marking it as the first BREEAM certified project in Macau [3][4] Group 1: Sustainability Recognition - Melco has been included in the S&P Global Sustainability Yearbook 2025, which features companies scoring in the top 15% of their industry based on the S&P Global 2024 Corporate Sustainability Assessment (CSA) [2] - The company was selected from a pool of 7,690 global companies across more than 60 industries, highlighting its competitive sustainability performance [2] Group 2: Studio City Phase 2 Development - Studio City Phase 2 has received the BREEAM "Excellent" rating for New Construction, following its earlier "Excellent" rating for the design stage, showcasing its commitment to high sustainability standards [3] - This development is also recognized as the first BREEAM certified project in China under the International 2016 New Construction: Bespoke scheme [4] Group 3: Leadership Commitment - Mr. Lawrence Ho, Chairman and CEO of Melco, emphasized the company's dedication to sustainability and its goal to inspire guests towards a sustainable future, reflecting a commitment at all operational levels [5]

Core Insights - Melco Resorts & Entertainment has achieved significant recognition in the 2025 Forbes Travel Guide, leading among integrated resorts in Asia and topping the competition in Macau with a total of 107 FTG Five-Star awards [1][2] Awards and Recognition - The company received three new FTG Five-Star awards in 2025 for its Hotel, Restaurant, and Spa categories, specifically for Studio City's Epic Tower, The Spa at Epic Tower, and Altira Macau's Aurora restaurant [1][2] - The total of 19 FTG Five-Star awards for Melco properties includes notable establishments such as Morpheus, City of Dreams, and Nüwa, City of Dreams Macau [2] Company Overview - Melco Resorts & Entertainment operates integrated resort facilities in Asia and Europe, including Altira Macau and City of Dreams in Macau, and City of Dreams Manila in the Philippines [3] - The company is majority owned by Melco International Development Limited, which is led by Mr. Lawrence Ho, who serves as Chairman and CEO [4]

Financial Performance - Melco Resorts Finance Limited reported a total revenue of HK$5.2 billion (approximately US$663 million) for the third quarter of 2024, representing a 15% increase compared to the same period last year[6]. - The company achieved an adjusted EBITDA of HK$1.8 billion (approximately US$230 million), reflecting a 20% year-over-year growth[6]. - The company reported a net income of HK$800 million (approximately US$102 million) for the third quarter, a significant improvement from a net loss of HK$200 million in the same quarter last year[6]. - Total operating revenues for Q3 2024 were US$997.4 million, a 17.9% increase from US$846.1 million in Q3 2023[23]. - Net income for Q3 2024 was US$10.6 million, compared to a net loss of US$26.6 million in Q3 2023[24]. - Total operating revenues for the nine months ended September 30, 2024, were US$2.98 billion, a 32.5% increase from US$2.25 billion in the same period of 2023[36]. - Net income for the nine months ended September 30, 2024, was US$19.5 million, compared to a net loss of US$145.9 million in the comparable period of 2023[37]. Visitor and Market Trends - User data indicated a 25% increase in the number of visitors to Melco's integrated resorts in Macau, with a total of 1.5 million visitors in Q3 2024[6]. - The company anticipates a continued recovery in the gaming market, projecting a revenue growth of 10-15% for the next quarter[9]. Operational Developments - Melco is investing HK$1.2 billion (approximately US$153 million) in new technology and product development to enhance customer experience and operational efficiency[6]. - The company plans to expand its market presence by opening two new gaming venues in Macau by the end of 2025[6]. - Melco Resorts Finance Limited has initiated discussions for potential acquisitions to strengthen its portfolio in the Asia-Pacific region[9]. Gaming Performance - Melco's gaming machine win rate improved to 12.5%, up from 11.8% in Q3 2023, indicating better performance in the gaming segment[6]. - Total operating revenues at City of Dreams for Q3 2024 were US$602.5 million, up from US$542.5 million in Q3 2023[26]. - Rolling chip volume for Q3 2024 was US$3.30 billion, down from US$4.43 billion in Q3 2023, with a win rate of 3.97% compared to 2.48%[27]. - Mass market table games drop increased to US$1.40 billion in Q3 2024, compared to US$1.32 billion in Q3 2023, with a hold percentage of 32.3%[28]. Cash Flow and Debt Management - Cash and cash equivalents as of September 30, 2024, were US$580.6 million, with restricted cash of US$125.2 million[40]. - Net cash provided by operating activities for Q3 2024 was US$126.3 million, compared to US$114.7 million in Q3 2023[43]. - Net cash used in investing activities for Q3 2024 was US$37.9 million, primarily for property and equipment acquisitions of US$28.6 million[45]. - Net cash used in financing activities for the nine months ended September 30, 2024, was US$178.6 million, primarily due to the repayment of US$994.2 million under the 2020 Credit Facilities and financing costs of US$27.2 million, offset by US$750.0 million from the issuance of 2032 Senior Notes and US$100.3 million from the drawdown of the revolving credit facility[53]. - As of September 30, 2024, the company's total gross indebtedness amounted to US$5,008.2 million, including US$1.15 billion in 2029 Senior Notes and US$750.0 million in 2032 Senior Notes[55]. Asset and Liability Overview - Total assets decreased to US$5,851.5 million as of September 30, 2024, from US$5,967.2 million at the end of 2023[60]. - The company reported total liabilities of US$6,072.2 million as of September 30, 2024, compared to US$6,198.2 million at the end of 2023[60].