Melco Resorts & Entertainment(MLCO)2023-11-07 16:09Financial Data and Key Metrics Changes - Group-wide adjusted property EBITDA for Q3 2023 was approximately 291 million, reflecting a favorable win rate impact of around 19 million in Macau [7][8] - Macau operating expenses increased to approximately 2.4 million per day in Q2 2023, primarily due to the addition of full-time employees and increased marketing costs [7][8] - As of September 30, 2023, the company had around 1.2 billion drawn on its revolving credit facility [8] Business Line Data and Key Metrics Changes - Both gaming and non-gaming revenues improved, with a 65% increase in adjusted property EBITDA quarter-to-quarter driven by the opening of Phase 2 at Studio City and the addition of new hotels [5][6] - City of Dreams Manila continues to generate solid earnings with a strong margin profile, while City of Dreams Mediterranean and Cyprus have been severely impacted by the conflict in Israel [6] Market Data and Key Metrics Changes - Macau's recovery continued to strengthen in Q3 2023, with visitation and casino player hours benefiting from growth, particularly during the October Golden Week [4][5] - GGR excluding junkets reached close to 2019 levels, indicating a robust recovery in the Macau market [4] Company Strategy and Development Direction - The company is focused on reducing debt and deleveraging, having repaid 100 million at the end of October [8] - The company aims to return money to shareholders through dividends or buybacks while maintaining a disciplined approach to debt reduction [41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery in Macau, noting that travel and tourism are leading sectors in China, with strong visitation trends continuing into November [12][13] - The company anticipates that the reopening of The House of Dancing Water show will contribute positively to operating expenses and overall performance [14][42] Other Important Information - The company is experiencing a shift in the business towards a premium mass market-driven economy, leading to elevated reinvestment rates as competitors attempt to attract customers [21][26] - The company is gradually rolling out new products and amenities, with a major property relaunch for Studio City Phase 2 expected in early 2024 [31][34] Q&A Session Summary Question: How should we think about OpEx installation in Macau going forward? - Management anticipates OpEx in Macau to increase to approximately 0.1 million per day [14][15] Question: Is there any sign of moderation in gaming demand and non-gaming revenues? - Management is optimistic about the ongoing recovery in Macau, noting that October was the best month since reopening and that November has started strong [12][13] Question: Can you discuss the levels of premium mass reinvestment compared to 2019? - Management indicated that reinvestment rates have climbed slightly due to increased marketing efforts and competition, but they expect a return to more normalized levels over time [21][22] Question: What are the barriers to growth in GGR for Macau? - Management noted that the VIP market has fundamentally changed, leading to increased volatility and fewer players, which impacts quarter-to-quarter performance [47] Question: What is the timeline for the House of Dancing Water opening? - The House of Dancing Water is expected to relaunch in late Q4 2024, with preparations currently underway [42] Question: How is the promotional environment affecting reinvestment levels? - Management acknowledged that there is increased competition and promotional activity as customers explore different properties, which has contributed to higher reinvestment rates [26]