Yahoo Finance Melco Resorts & Entertainment Limited (NASDAQ:MLCO) Q3 2023 Earnings Call Transcript
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) Q3 2023 Earnings Call Transcript November 7, 2023
Melco Resorts & Entertainment Limited misses on earnings expectations. Reported EPS is $-0.04 EPS, expectations were $0.02.
Operator: Ladies and gentlemen, thank you for standing by in the Third Quarter 2023 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-session. Today's conference call 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. Thank you. Please go ahead.
Jeanny Kim : Thank you, operator, and thank you, everybody, for joining us today for our third quarter 2023 earnings call. On the call are Lawrence Ho, Geoff 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 provision 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. Finally, please note that our supplementary earnings slides are posted on our Investor Relations website. With that, I'll turn that over to Mr. Lawrence Ho.
Lawrence Ho: Thank you, Jeanny. Macau's recovery continued to grow from strength to strength into the third quarter of 2023, especially during the summer months with our property visitation and casino player hours benefiting from this growth. We had solid performance over the October Golden Week and saw a robust recovery during the remainder of October, with GGR excluding junkets reaching close to 2019 levels. Both gaming and non-gaming revenues improved, and this was reinforced by our commitment to invest in world-class entertainment and enhance our non-gaming amenities. Our market-leading design standards were recognized last month by Prix Versailles with Morpheus being the only hotel in Macau to have the honor of being included as one of the World's Most Beautiful Hotels.
Studio City has been the center of entertainment for us in Macau. The opening of Phase 2, the addition of the Epic Tower and W Macau hotels, the Residency Concerts and an ongoing schedule of events drove gaming volume and contributed to a 65% increase in adjusted property EBITDA quarter-to-quarter. We expect further growth in Studio City as Phase 2 continues to ramp up. In the Philippines, City of Dreams Manila continues to generate solid earnings with a strong margin profile. City of Dreams Mediterranean and Cyprus have been severely impacted by the conflict in Israel. Our teams are working on realigning our marketing strategy there. With that, I turn the call over to Geoff to go through some of the numbers.
Geoffrey Davis : Thanks, Lawrence. Our group-wide adjusted property EBITDA for the third quarter of 2023 was approximately $281 million. Luck-adjusted group-wide property EBITDA for the third quarter of 2023 came in at $291 million. A favorable win rate had a positive impact on COD Manila of around $9 million, while in Macau, unfavorable win rates at COD and Studio City had a negative impact of approximately $19 million. Details of these adjustments could be found in the supplementary earnings slides posted on our Investor Relations website. Macau OpEx increased to approximately $2.5 million per day in the third quarter of 2023 from approximately $2.4 million per day in the second quarter. The increase in OpEx was largely due to the addition of full-time employees across our properties, including the opening of the W Macau in September and increased marketing costs.
Despite the increase in cost, our EBITDA margin increased slightly quarter-to-quarter. Turning to our balance sheet. We continue to focus on reducing debt and deleveraging. We repaid $100 million in debt during the third quarter of 2023 and repaid another $100 million at the end of October. We currently have approximately $1.2 billion drawn on our RCF, which gives us around $750 million of undrawn and available committed revolving credit facilities. We will continue to closely monitor our free cash flow, which will drive further debt reduction. As of September 30, 2023, we had around $1.5 billion of consolidated cash on hand. Melco, excluding its operation that Studio City, the Philippines and Cyprus accounted for around $800 million. Of this, approximately $125 million was restricted as collateral required for the concession-related guarantees issued to the Macau government.
As we normally do, we'll give you some guidance on non-operating line items for the upcoming fourth quarter of 2023. Total depreciation and amortization expense is expected to be approximately $145 million to $150 million, corporate expense is expected to come in at approximately $20 million, and consolidated net interest expense is expected to be approximately $130 million. This includes finance liability interest of around $7 million relating to fees payable in relation to the Macau gaming concession and the Cyprus gaming license and finance lease interest of approximately $6 million relating to City of Dreams, Manila. That concludes our prepared remarks. Operator, back to you for the Q&A.
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