Melco Resorts & Entertainment(US:MLCO)2024-04-30 17:07Financial Data and Key Metrics - Group-wide adjusted property EBITDA for Q1 2024 was approximately $299 million, with luck-adjusted EBITDA at $329 million [8] - Unfavorable win rates negatively impacted results at City of Dreams Macau and City of Dreams Manila by approximately $33 million, while a favorable win rate at Studio City had a slight positive impact of $2 million [8] - Consolidated cash on hand as of March 31, 2024, was around $1.3 billion, with $635 million excluding Studio City, the Philippines, and Cyprus operations [9] - Total depreciation and amortization expense for Q2 2024 is expected to be $135 million to $140 million, with corporate expense at $20 million and consolidated net interest expense at $120 million to $125 million [9] Business Line Performance - Melco Macau's property EBITDA reached 89% of 2019 levels in Q1 2024, with March recording the highest mass table games dropped ever at both COD Macau and Studio City [5] - City of Dreams Manila generated solid results in mass table games and slots but faced challenges in VIP gaming [7] - City of Dreams Mediterranean and satellite casinos in Cyprus showed positive EBITDA and cash flow in Q1 2024 [7] Market Performance - Macau's performance improved in March and April, with the highest daily gaming revenue since reopening in January 2023 [5] - The company gained market share in April, reflecting the steps taken to regain leadership in premium mass gaming [5] - The Philippines and Cyprus markets showed positive trends, with cautious optimism for continued profitability despite regional conflicts [7] Strategic Direction and Industry Competition - The company is focusing on debt reduction as its top priority, having paid down $250 million in debt and raised $750 million in bonds [5] - Expansion into Sri Lanka with the City of Dreams Sri Lanka project, expected to open in mid-2025, is a capital-light investment with an attractive return profile [7] - The company is enhancing its services and offerings to maintain its market-leading position in Macau, leveraging government initiatives to increase accessibility [5][6] Management Commentary on Operating Environment and Future Outlook - Management remains optimistic about Macau's growth potential, citing government initiatives like multi-entry visas and improved online visa applications [5] - The company is cautiously optimistic about expanding profitability in Europe and the Middle East despite ongoing conflicts [7] - The hiring of Tim Kelly as Property President of City of Dreams Macau is expected to strengthen the brand and customer reach [7] Other Important Information - The company is actively reviewing alternatives to refinance $300 million at Studio City by July 2025 [8] - Total CapEx for 2024 is estimated at $415 million, including $50 million for the Sri Lanka project [21] Q&A Session Summary Question: How is Melco capitalizing on the multi-entry visa arrangement in Macau? - The company is exploring opportunities to leverage its physical positioning at Studio City, including infrastructure improvements to facilitate greater tour volume [13][14][15] Question: What are the priorities for cash deployment? - Debt reduction remains the top priority, with the company continuing to look for capital-light development opportunities [13] Question: What is the update on smart gaming tables? - The company is prioritizing the adoption of smart table technology, with full implementation expected by next year [16] Question: How is the promotional environment in Macau? - The competitive environment remains intense, with signs of stabilization in player reinvestment programs [19] Question: What are the CapEx figures for 2024? - Total CapEx is estimated at $415 million, with $140 million for COD Macau, $75 million for Studio City, $40 million for Manila, and $20 million for COD Mediterranean [21] Question: What changes have been made at the property level? - The company has restructured its sales force and made customer-centric changes, including enhanced food and beverage offerings and improved gaming floor layouts [23][24][25][26][27] Question: What is the outlook for Sri Lanka? - The company sees significant potential in Sri Lanka, particularly as a gateway to the Indian market, with expected GGR of $200 million to $250 million [33][34][60] Question: How is the sales force restructuring impacting market share? - Centralizing the sales force has improved customer experience and is expected to drive further market share gains [48][49] Question: What is the EBITDA performance in April compared to 2019? - EBITDA has improved but is not yet at 2019 levels, with April trends stronger than March [51][53] Question: How are the new travel easing measures impacting bookings? - May bookings are up compared to last year, with higher room bookings at Studio City and better player quality for Golden Week [55] Question: What is the medium-term capital structure plan for Studio City? - The company is exploring various alternatives to address the 2025 maturities, including secured and unsecured options [58] Question: Does the Sri Lanka investment change interest in Thailand? - The company remains interested in Thailand but will focus on balance sheet repair before pursuing more robust involvement [63][64]