By Ben Blaschke
Melco Resorts & Entertainment Ltd has comfortably beaten consensus with its 1Q unaudited financial results, announcing net revenue of US$1.28 billion – up 16% year-on-year.
The company attributed the increase in net revenue to improved group-wide rolling chip and mass market table games revenues.
On a US GAAP basis, operating income for the first quarter of 2017 was US$158.5 million, compared with operating income of US$65.8 million in the first quarter of 2016, representing an increase of 141%.
Studio City in Macau and City of Dreams Manila were Melco Resorts’ star performers, with the former reporting net revenue of US$277.9 million for the quarter compared to US$178.7 million in the first quarter of 2016 – an increase of 55.67%. Studio City generated Adjusted EBITDA of US$67.8 million compared with Adjusted EBITDA of US$22.1 million in the first quarter of 2016.
Rolling chip volume totaled US$3.6 billion for the first quarter with a rolling chip win rate of 2.4%. Mass market table games drop increased to US$656.3 million compared with US$547.0 million in the first quarter of 2016. Gaming machine handle was US$497.4 million, up from US$409.7 million.
Net revenue at City of Dreams Manila was US$157.4 million for 1Q compared to US$95.4 million 12 months earlier, representing a 64.9% year-on-year increase. City of Dreams Manila generated Adjusted EBITDA of US$61.1 million in the first quarter of 2017 compared to US$28.6 million in the comparable period of 2016.
Rolling chip volume totaled US$2.4 billion versus US$1.5 billion in the first quarter of 2016. Mass market table games drop increased to US$153.9 million for the first quarter of 2017, compared with US$120.4 million last year. Gaming machine handle for the first quarter of 2017 was US$729.9 million, compared with US$451.4 million in the first quarter of 2016.
City of Dreams Macau reported a slight increase in net revenue of US$693.2 million compared to US$678.6 million in the first quarter of 2016. Adjusted EBITDA was US$213.5, representing an increase of 4% compared to US$205.6 million in the comparable period of 2016.
Rolling chip volume totaled US$12.6 billion for the first quarter of 2017 versus US$9.8 billion in the first quarter of 2016.
“In the first quarter of 2017, we delivered a strong set of results as highlighted by a 42% year-on-year increase in group-wide Adjusted property EBITDA, driven by expanding revenues across both Macau and the Philippines,” said Chairman and CEO Lawrence Ho.
“City of Dreams delivered Adjusted property EBITDA of approximately US$214 million, a sequential increase of over 13% compared to the prior quarter, despite an increase in supply in Macau. We recently announced a range of exciting enhancements to City of Dreams, our flagship integrated resort in Macau, which we believe will help us continue to be one of the leaders of the market in the premium segments in Macau.
“We will replace the Hard Rock hotel brand at City of Dreams with a temporary hotel brand, ‘The Countdown’, beginning in July 2017. The Countdown Hotel will operate until March 31, 2018, at which time we will open Morpheus, an approximately 780 room, luxury hotel that will change the landscape in Macau with what we believe is a truly iconic design. Upon the opening of Morpheus, The Countdown will be rebranded and redeveloped into a new hotel concept which we believe will enhance the integrated resort’s premium positioning.
“Studio City generated a year-over-year increase in Adjusted property EBITDA of approximately 207%, driven by a 39% year-over-year increase in mass table games revenue and contribution from the rolling chip operations which continues to ramp up following its introduction in November 2016.
“City of Dreams Manila delivered a fifth quarter of record Adjusted property EBITDA as a result of improvements across all gaming segments. Our investment in the Philippines gaming market provides our company with ongoing diversification of earnings and has enabled us to participate in, and contribute to, one of the world’s fastest growing gaming and tourism markets. Our entry into the Philippine gaming market highlights our dedication to investing in development opportunities that create long term value for our shareholders.
“Early this year, we received shareholder approval to change our company’s name to Melco Resorts & Entertainment Limited, reflecting a corporate identity which is more closely aligned to our long term vision of building the world’s leading luxury gaming, entertainment and hospitality company.”
Net revenue at Altira Macau was US$109.1 million compared to US$108.4 million in the first quarter of 2016, with net revenue from Mocha Clubs totaling US$31.1 million, slightly down from $31.8 million in 1Q16.
Union Gaming’s Grant Govertsen said Melco Resorts’ revenue of US$1.28 billion, “compared favorably to our forecast of US$1.23 million and consensus of US$1.8 million. Adjusted property-level EBITDA was US$353.3 million (+42% y/y) and after adjusting for luck was closer to US$347 million.
“This compared favorably to our forecast of $324 million and consensus of $329 million. All of the relevant operating assets delivered upside relative to our expectations (COD, Studio City, COD Manila).”
