MLCO - Earnings call transcript Q2 2021 | Melco Resorts & Entertainment Limited

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Operator

Ladies and gentlemen, thank you for participating in the Second Quarter 2021 Earnings Conference Call of Melco Resorts & Entertainment Limited. At this time, all participants are in a listen-only mode. And after the call we’ll conduct a question and answer session. Today's conference is being recorded.

Now I'd like to turn the call over to Mr. Investor Melco of Limited. and Director Yuen, Relations Resorts of Entertainment Robin go Please ahead.

Robin Yuen

for our today earnings you joining Thank all for call. second XXXX quarter

and On Davis, Macau, Lawrence are and our Winkler Manila the in Property Ho, Cyprus. Presidents call Evan Geoff

today's started, made forward-looking safe provision that the laws. securities may of contain Before we federal note discussion get harbor please statements under

Our actual results. results could anticipated differ from our

are of comparable non-GAAP we A definition measures each may GAAP of most the discuss measures. in release. these addition, earnings to In reconciliation measures the included financial and

website. Finally, Ho. slides please the note are posted that Mr. that, our supplementary on earnings our I Investor With to turn now will call over Relations

Lawrence Ho

you, Thank Robin.

work We situation soon. business swift Before I sympathies to the would and we hope recovery the of like people our impacted in flooding for to begin by about a China. our performance, express the talk to

the Our second impact results in the on continue to pandemic's the reflect business. quarter

basis, as recovery sequential progressive we a to a return on tourists However, experienced levels business in Macau.

would First, governments of situation. like Mainland the COVID-XX efficient Chinese Macau for the and handling we thank the to

and gradually restrictions economy. loosen and overall a integrated resorts visitors in travel return, industry its enjoyed Macau steady As recovery has its

out efforts vaccination goal employee before end programs We have to herd over track community hit has the of of year. government's immunity XX% the incentive rolled reached support to XX%. to rate Since vaccination the Macau's vaccination meet mid-July, is on

has vaccination almost employee at rate reached Melco, overall our Here XX%.

EBITDA, our Macau, Continuing government, mass we EBITDA trend global operations. the quarter, to delivered a the from create the sequential quarter have property customers community, for followed guidelines operations vast resources colleagues. substantial our We of have another contributes safer dedicated the overall saw which In COVID-XX positive games our by majority Macau and and last we the table of set our and environment for Macau our our operation, improvement.

demand factor a while our and registered and by EBITDA Week with the from Golden customers. over success property XX% grew of operations an of X. increase our Macau confirmed pent-up GGR, May Our expectations

hospitality Golden XX% premium GGR driven segment. long-standing levels hit For first by gaming businesses operations premium and XXXX to the of due were a and focus market quarantine pent-up highlighting month government measures. X April of seen have our Manila X and in days at We May and mass-market post City at patrons. of on experienced the our reopened for closed strong In Dreams the subsequently capacity levels, Week, similar recovery especially mass led strong of on direct growth and by demand, we industry our of Philippines, XX% premium the

from normal such, lockdown our pleased gaming on we position. were On our space government-mandated restrictions repositioned premium in to mass. from positions mid-May of to were the on Cyprus, us XX, capacity allowing the year operations after June gaming have beginning lifted gaming of with restrictions a In reopen capacity. accommodate some we the casino to our patron VIP As and

for EBITDA to Cyprus has in We profitability are that in and virtually quarter. the that Cyprus returned June, breakeven encouraged

and necessary against colleagues the Hong pandemic. to China. mass premium Looking in precaution the the premium ahead, highest of optimistic and and in will segment. We and by customers rate our guard we're direct encouraged remain especially our gaming Melco our of Macau, vaccination That increasing business, take remain and the recovery on said, well-being our priority, Kong safety the

visitation Aaron superstars, next Joey This and of the premium segment. represents world's the including Studio Lai to In ongoing, us we that challenges. City to and XXXX moved additional has XX%, water should parks. X reopen embarked premium Leon hotel Upon A-List residency hotel strategic the luxury COVID-XX Dream passes Phase namely, be expect City XXXX. selling Studio year, of starting renovated enhance in will XXX Studio years. direct construction the restaurant, and entertainment integrated than City December nongaming a luxury its transformation aligns and of At gaming completion rooms down development across on and Kwok, Studio of for resort announced of approximately Yung brand and Such the City, VIP with park remains both and high-margin Dreams, There space one committed and opportunity from inventory broader closed in X at indoor-outdoor differentiate building largest competition. out. focus summer by series our company's luxury Phase MICE entire continued water City's Phase X shows the a we global portfolio that entertainment XX, facilities, and featuring with outdoor of XXXX. at expansion Melco Nuwa quickly suites. brought Hosted its park new and X third the and fine to Macau, March existing we've reopened approximately proposition The upon will will additional an its We mass While in Canton this offering two for no lineup hotel Hotel a shift undergoing newly space operations Melco drive shut room incredible of offerings completion, is City's state-of-the-art Studio remains hotel May Macau. opening Altira, have water a end launched and the Cineplex, program. later increase into towers VIP we've Consequently, Altira at suites season dining the rooms of to City. hotel quarter at the with guest a junket the of business At the the have an Hotel. first on and March Morpheus in Melco's grand is expected we

the to mass existing assets We will premium the and to VIP gaming to support refocus premium the some of reallocate space segment mass initiative. nongaming cater

demographic premium we will Altira historically enjoyed level on VIP cost enhance believe to VIP align Although it of shift. this material playing with through the which reinforce have implement positioning. and strategic also we've Accordingly, its segment, and strategic the realignment. incur focused necessary new cost a this not to mass its has always Altira made structure base capital be will reassessed expenditures do to efforts We at

The Melco park Zhongshan expect In they We Kong-listed approximately portfolio. this part City with to expect the complete. with development park After our transformation desire central parent expected brand Greater to IP, take a to we in as theme is in highlight of use in nongaming company, partner. the Melco of assets in potentially theme overall Bay is as stable The Guangdong. XX to development and transformation, our larger recently property higher-margin, other mixed-use property their the in alignment will theme an components to Resorts park a which Hong government's excellent represents emerge more months the a a Altira develop build Area, to announced International, local the opportunity area. stronger,

construction outlets approximately the remain globally amphitheater forward. MICE the maintain Turning terms City Europe's has and committed continues We in remain industry to largest completion, with actively integrated our where of for that continues. partners. continued family a assets activities, to and dining process rooms, to to The than our feet to challenges and variety represents development. opportunities with COVID disciplined and of development approach space, continue retail. best and with move luxury Japan the timing country within and square the quality tourism respect there in present world-leading and engaged After the Mediterranean a all to segment Dreams integrated But country's for our market we Japan resort hotel an potential of the development to it XXX we luxury of our focus convinced more XXX,XXX outdoor progress is fit Cyprus. bringing gaming a on pursue resort, in of the travel. adventure will patient be of including park, In Japan. integrated new fine Japan, remain resort continue great remain that We of premium market

our Melco's in activity by prospects. long-term In world. environment. most in remains my have operating improvement and am Macau the improved, view, for of in encouraged medium- financing profile thanks Meanwhile, growth normalization and recent sheet liquidity travel the remain I visitors. I market our balance to Finally, restrictions all debt Guangdong attractive optimistic resort the and integrated

overcome to these near-term that, With towards challenges will and to Geoff of a the We over some greater future. call build turn through the numbers. go I

Geoff Davis

VIP Altira, EBITDA negatively On our win a At EBITDA Investor while property $X million, win Manila Thanks, luck-adjusted Lawrence. COD Details sequential at $XX increase affected quarter $XX million, unfavorable slides favorable million, in On and EBITDA EBITDA earnings XX% group-wide a affected $X came million. the A website. basis, respectively. on an luck-adjusted we by negatively by million. of approximately COD of and of group-wide at and by supplementary Relations this Studio be and VIP million XXXX, second impacted positively adjustments overall million approximately represents these approximately City in EBITDA. approximately was basis, In $XX rate found in by reported property the $X rate $XX can results consolidated were a respectively. posted our property

to which program at incurred in EBITDA special-leave is note off our of duration, the compensation would During property exit in You that accounting colleagues standards by expense reduced our of which launched EBITDA. its trade-off a property offset the the of X May, that the one-off exiting expense we take XX properties. the a quarter The launched months subsequent $XX salary second we time to quarter, program, one-off items us program, base Also require expenses. company. staff our we affects reduced million that voluntary Macau charge Thinking second whereby Thinking periods reduces provides scheme In Chapter impacted New for for overall You May, salary. over We to front-loaded over employees take a allows Melco be but the

reflected a incur our charge property program that of other and for We the of New million quarter second Chapter line from in charges statements. is will $XX the financial the

$X.X market to City to In senior favorable to partially transaction our of purposes. corporate the profile. approximately to At due liquidity The yield clarity of $XXX $X.X of approximately notes of liquidity this May, we a Studio Turning will billion. revolver City, its its Cyprus, available end was utilized cash fund implies billion, approximately and hand. in Melco, tap approximately Macau billion $X at quarter Phase million. for had of and end June, billion Studio structure, and which debt undrawn sheet. be our tap excluding XXXX. When more X second of capital proceeds The facilities provide on combined XXXX with and consolidated increased at balance X% at and used par, additional to City's To of cash equated million the debt our XX.X% of operations conditions the an priced on $XXX general weighted had of for average Studio City Studio maturity $X.X the of the approximately gross extended Philippines CapEx The X.XX%. maturity Manila

prepared interest. net $XX million, guidance you to the interest And million, to corporate $X expense give line That depreciation we'll consolidated of approximately $XX City lease $XXX do, and capitalized $XX to approximately Operator, relating expense be $XX million be Q&A. our quarter. finance to to million of $X interest of at to normally third and items we the is you expense includes expected million expected for concludes As million expected million. in million Total upcoming some back Manila to on is is $XXX Dreams million come to for $XX nonoperating amortization remarks. approximately to which

Operator

Ng Bank First Instructions] from of Billy question America. [Operator line comes of of the

is open. go Your Please line ahead.

Billy Ng

Okay. have of couple questions. I a

happening seen that daily may can have really anything few want China last you from in appreciated. like recovering. The know, that impact is, recently or traffic? in be to on already weeks, has now, like we first what's data booking you will ground share of another that has it any a question been Macau received, the on But sense as looks the right just there outbreak Or our get you the had

Lawrence Ho

Lawrence here. it's Billy,

conjunction ever another hand outbreak said, it outbreak summer mini in you Nanjing of that's to in David. I visitation the since maybe the the as currently we've But in with very the last terms So -- few period. over happening, has in been under Guangdong minor holiday weeks, control seen strong

David Ross

Sure. Thanks, Lawrence.

seems most But the far, June of we've So not issues, recent slowed from really much Billy, impact seen when things had the Obviously, boy, dramatically we outbreak. an for down after It got we us. week. track really July, And got back just each week very passing anything it strong. of we to to get on that with when July. first was better

impact. So far, no

to we school come part started into holidays. be as as may and into the starting play, as more of Macau well And hit to more I school well. visitors come it the think holidays are as

So with are results no impact. pretty happy the going. where We're

Billy Ng

that a will confident stage? will maybe border you sense thing broader do -- question Lawrence, which Macau, another that have -- is of gets and in once that like a at I how Kong you sense see here to rate XX% think, get encouraging. be And I mentioned Hong And kind vaccination the government, I but for number, do think we is the reopening. you get you regarding to lead is that will Macau the further about Do mentioned normalization that from Macau? same goal a think bit they And quite like

Lawrence Ho

Yes.

order because is what for most colleagues terms because been China. schemes think get and Certainly, the Macau in to of I we immunity around around community I Or the protect vaccination to with variant, think medical family around goal. that of certainly ease immunity. having is world to medical as hope business the Melco travel and get-go, community. for close hit to programs incentive normal the they're also our for international proactive in has That I with think importantly, we even colleagues own because to do And vaccinated need to get well from for herd to we the our is encourage can with asking back higher most it our world before, think the Delta the greater and the to get for and the back that was to what potentially anything for now themselves to community XX%. their

think is and I do about respectively. the I Hong think XX% Kong rate Macau, -- in around vaccination XX% in So that and is China

ease can on a think I the various to that then for point we XXXX to think our at opens borders back can levels. XX%, up. get sooner be the up to business a I to So flexibility more really it lot time, in path the And normalization

than anything, those sooner hoping if percentages hit we that we're later. So rather

Billy Ng

think also $XX And Geoff. I million One you is quick right? related question charge just $XX for about so one-off $XX last impact, Like one is -- And that's mentioned two the now second a correctly? million the the mentioned, reversed another right on And could is I line. year. in already compensation, that, but you to as property be EBITDA reflected the half Do of together, both million understand one-off,

Geoff Davis

the above we've million below So in quarter. one We One one line, $XX got line. X either anticipate reversing is of the charges wouldn't those. roughly is second the

Billy Ng

congrats That's right. results. solid clear. All the And on

Operator

Joe the Next line question from of is of Greff JPMorgan.

Please ahead. is go open. line Your

Joe Greff

or the Lawrence, publicly we're about renewal. surprised or of year hasn't talked within concession one the Are the you process them? extending Why not? government why

Lawrence Ho

COVID. the done for, of And a really for local the fighting on having is job XXX-something has days, world terms I Joe. earth focused Well, of time from Government But not XX and publicly safest the by have probably haven't of announced a year beginning were line. at that really standpoint. COVID Macau going to a they place the at counsel. makes given legislative do a on public consultation discussion I Macau the any in like amazing been, government last infections the think, which they months, rest followed this singularly the guess has They

all conduct Our a next thinking of order is to probably very still those in June tender, is do that steps tight. and

licenses two. years or years if wouldn’t think for the and debt a if the is maximum already extended because year the extend extended can SGM I I So license even get MGM's two they’ve three surprised, licenses and they be for

or So what from their the open e-Visas Macau at border And look, to we group to at the But now love COVID. stage, outcome also focus fighting know same to time, is. Kong I and it's Hong would whether tours ease, between been know up and China. this primary is the has it

with So do renewal. more at way stage this important than agree license these that the are I the government

And scenario So open or China I at possible. Kong and time, going is extend to Hong best think we get for as the borders year two. hopefully, the it as case with to then a have are soon they same

Joe Greff

there the Altira next and and mass, transition the a mass over the months, X focus think premium focus would you And property. transition more the X from over or on of to it XX cost In that then How other switch VIP losses next EBITDA would to the Or expect you about go quarters? the narrow? do structure way?

Lawrence Ho

the that you do and David, details? to go through take want

David Ross

Sure.

Joe, a So things, couple different Joe. it's of

see reduced that the the given unfortunately, lot of saw, negative And we've the much expect that is, over first in that kind back created there. last of of one, narrow. jump essentially to losses taking to which to in we're growth The we get the EBITDA start the in will of and lot we're the again, were going terms into volumes we side profitability. business, been a seeing months a exacerbated our lot the volatility think quarter business, gambling just closer equation, out too just a kind back off as been where the we But the start of expect the over narrow. losses of in over there. of whole our XX mass we to VIP really seeing has that we it's And the XXXX I to losses we've sense. of too, on didn't of And make a definitely idea, fluctuations fourth way

and a and really where on kind at mix international, product the in local creating bit our Melco, as it's of and something the always as a of kind the It little continue have bread focusing rethinking and and market of back going we've Cotai, us opportunity in And know, of So our the is, for butter been. that do on terms boutique our and we really product in a have for there. really to has idea in we that customers particularly is to unique is. you to for opportunity business grow profitability maybe there that. where the us. our guests there, on over given for our just customers, different mass but over the developing that's great premium mass than experience They're we our prided always products well premium us ourselves looking really customers. And focusing think compelling as And our market and

thought was maybe we this that and our to this move So new area kind business this time a make us to for good there Altira. at for of forward move with

Joe Greff

Great. $XX or contribution Of quarter at across this City in different the million one is property-level Is in Is to EBITDA? than Geoff. final mix embedded Dreams? is and the one mostly then Or And one revenue proportion question, charge that line and of for the EBITDA it that relative probably item proportionate item. it properties? second of

Geoff Davis

all concentration a you'd expect, properties. City as Dreams. But at there's of It's across

So proportionate to EBITDA. and the base proportionate roughly employee of sort yes, it's to more the

So majority be think about at if It's to we vast where that is yes, the going go. -- it of COD. could

Operator

you. Thank

from Next Choudhary question of of Morgan Praveen the Stanley. line is

go ahead. Your open. line is Please

Praveen Choudhary

current comfort a listing second stock is related the around the Japan, nothing a us Macau? the some political some casino. from And as has the general, questions. there to the lot Both Melco Two One around related the is has where to Do uncertainty the very to uncertainty well been that only listed candidates election, is do in you where I perspective, isolated China and have U.S. this performance. that to from opposing fact as question regulation. there give regulation are U.S. want been around of is In with

the how and time that the going we So about should think and line likelihood of through both chances? Melco's

Lawrence Ho

Lawrence. it's Praveen, Sure.

me take let questions. of So the both

industry on the we've -- in Kong. company company, one, International, a from there the and industry, Macau XX% at listed far any Hong think Melco On first risk gaming the contributed the employs of parent forever. done been shown the that local risk on also enterprises, or is effectively been bigger than the biggest crisis all, tax, important done is over It's guess, from has critically always is our in more gaming the to in regulatory nongaming of of financial we've we've Chinese the Macau. fronts worker in gaming by is probably years by Melco after industry, it But and I the considering same tax over I population, even And big government listed small, considered aways because the terms entire industry Macau pandemic. diversification, XX% time, the those to always than medium of contributing regulatory, it's a in supporting terms a revenue And anybody. investment,

in very that it's lot industries customer think of I data. with So are different new from a that sensitive China deals

whether the or it's education -- industry the tech. So or

been with on government the think years. closely I the working all that So have basis, concessionaires over the for

we So now whether renewal. the can. best or the don't it's to think any I during government continue we'll And right license expect I support surprises,

There the in market that or positions, continue are outside worry In be of of for guests Evan have we terms first country. the in the things And are we certainly, need things little about is we mayor completely landscape, But best consortium. much our to terms political a we not maybe something just And talk visitors in again, important can to and question. are outside of terms that. of and as really we Melco, election as about and do lot to our of a a of Japan and political of think, were I control. that the can too -- the we're bit Well, control. respectful foremost, are that

Praveen Choudhary

ahead, -- just Evan, could I please. If go

Evan Winkler

just to company. the that of First was be add, strategy, a we've our to continues maintained obviously, going Yokohama focus I

candidates mayor who you've platform. specifics the IR. come on pro-IR out a against In of terms other is come and running out mentioned, that have has incumbent the There are of variety a

control. And the on we'll after beyond Yokohama of XX. takes some these As place Lawrence election know are our things August more in simply articulated,

Praveen Choudhary

me, I which last from ask structure. about question one could cost is If just

a strong So see of first we quarter, of all, improvement. all But it's EBITDA. been pre-COVID very quarter-over-quarter level the good to want

my done peers when cost have new a it's done amazing good of and normalizes, job the or is some will temporary structure half to first sight So job question structure? is, you the also Because cost what cutting. second understand be half, your We permanent the of the GGR XXXX whether of want one. what cost versus have

Geoff Davis

Praveen, So Geoff. it's

been is to -- we very know, as of focus to So really mandated you proactive, and CapEx as we've Lawrence on well. the and team senior reduction management cutting cost

our So will we permanent think cost of roughly and that about savings XX% temporary. be XX%

over the at has -- think while OpEx XXXX And being 'XX So basis things our all in point levels, for can in, been from relatively XQ all improvement down think the things these quarters, XXX we that equal, OpEx as that result the least start see equal, being or again, time, bit. some you'll to start our we come for flat last to actually to I take two a of see programs margin. start effect,

of will Now expenses. the cetera, course, programs But holding successful some a when line think over about that that of normal that items expense marketing we be anticipate some on discussed payroll we've expense we on go and up. will expense, steady-state et volume-related of basis, the these in time,

Praveen Choudhary

hope to I clear. very opens Thank It's And when everybody soon live up. you. Hong Macau see Kong, Geoff.

Operator

closing Please hand like Mr. ahead. to now Thank no Yuen you. questions, there for Robin go conference would the to And I remarks. back as are further

Robin Yuen

to participating in conference We again you, speaking call our for Thank operator. next in everyone, you, look with the you. Thank quarter. Thank you today. forward

Operator

concludes you. Thank today's for call. conference Thank participating. this And you

You may all disconnect.

Melco Resorts & Entertainment Limited (MLCO) 27 Jul 212021 Q2 Earnings call transcript