Melco Resorts & Entertainment Limited Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Macau Initiatives: Introduced new amenities like the Signature Clubhouse, reopened a gaming area, and planned renovations for the Countdown Hotel.
• Financials: Group-wide adjusted property EBITDA grew 18% YOY to ~$380 million. Liquidity was robust with $2.6 billion available. Debt reduced by $180 million in Q3, with further repayments in October/November. Canceled ADS repurchases.
• Q4 Guidance: Total depreciation and amortization expense expected to be ~$135M-$140M, corporate expense ~$25M-$30M, and consolidated net interest expense ~$115M-$120M.

Segment Performance

• Macau: Property EBITDA grew 21% year-over-year despite a ~$12M typhoon impact in September. Macau GGR grew over 30% YOY post Golden Week, with COD recording its highest monthly mass tables GGR in October. Initiatives include opening the Signature Clubhouse, reopening a gaming area, closing casinos and reallocating machines, and renovating the Countdown Hotel (expected to open Q3 2026).
• Philippines: Property EBITDA grew 45% quarter-over-quarter with good momentum in October.
• Cyprus: City of Dreams Mediterranean and satellite casinos had best quarter, with property EBITDA growing 53% YOY to $23 million.
• Sri Lanka: Opened City of Dreams Sri Lanka in August; early days of operations with focus on the Indian market.

Guidance

• Q4 nonoperating items: Depreciation/amortization ~$135M-$140M, corporate expense ~$25M-$30M, net interest expense ~$115M-$120M.
• Plan to take a balanced approach with free cash next year, aiming to recommence the quarterly dividend by the end of next year.

Risks

• Competitive environment in Macau may impact margins.
• Early days in the Sri Lanka market with potential regulatory and visitation challenges.

Question and Answer

• Q: Would new initiatives contribute positively to EBITDA growth, hold rate, and CapEx for Countdown Hotel?

A: New initiatives positively impacted EBITDA, hold rate target is 3% not adjusted yet, CapEx for Countdown Hotel is ~$125 million.

• Q: Operating environment promotions and OpEx per day?

A: Operating environment is competitive but stable, OpEx per day is ~3.3 including one-offs.

• Q: Strategic initiatives at COD, OpEx, and Sri Lanka?

A: Multiple initiatives contributed to COD's turnaround, OpEx in Q4 may spike, early days in Sri Lanka with focus on high-end guests.

• Q: Deleveraging and cash allocation strategy?

A: Focus on debt reduction, plan balanced approach next year, aim to restart quarterly dividend by end of next year.