Melco Resorts & Entertainment Limited Q4 FY2025 earnings call

Management Statement and Operational Highlights

• 2025 Performance: Group property EBITDA was $1.4 billion, up 17% YOY. Macau showed strong EBITDA growth, Philippines had headwinds but positive market developments, Cyprus saw significant EBITDA growth, and Sri Lanka was ramping up operations.
• 2026 Initiatives: Plan to open the renovated Countdown Hotel in 2026, revamp the retail area at COD Macau, and upgrade F&B offerings.
• Balance Sheet: Liquidity was robust with approximately $2.4 billion available liquidity and $1.2 billion consolidated cash on hand. Repaid $400 million in debt in 2025, with $35 million repaid in January 2026 and $25 million planned.
• Trademark License Agreement: Agreement with Melco International has an initial term of ten years, with a trademark license fee of 1% in 2025 increasing to 1.5% from 2026.

Segment Performance

• Macau: Fourth quarter Macau property EBITDA grew 24% year over year, and full year Macau property EBITDA grew 25% compared to 2024. Group property EBITDA for the full year of 2025 was $1.4 billion, growing by 17% compared to 2024. 2026 has seen Macau market GGR up by 24% year over year with increasing market share. Plans include opening the renovated Countdown Hotel in 2026, revamping the retail area at COD, and upgrading F&B offerings.
• Philippines: 2025 performance was impacted by competitive pressures and industry headwinds. Positive developments include visa-free travel for Chinese nationals, Manila Airport upgrades, and online gaming market rationalization. Evaluated strategic alternatives for COD Manila but no options fully realized the property's value yet.
• Cyprus: City of Dreams Mediterranean and satellite casinos in Cyprus achieved 78% year-over-year growth in property EBITDA to $21 million for 2025.
• Sri Lanka: Progressively ramping up operations with promising signs in 2026.

Guidance

• Total depreciation and amortization expense expected to be approximately $140 million to $145 million in 2026.
• Corporate expense expected to be approximately $35 million in 2026.
• Consolidated net interest expense expected to be approximately $115 million to $120 million in 2026.
• Total CapEx for 2026 is $450 million, with approximately $100 million for the renovated Countdown Hotel, $375 million in Macau, and $35 million to $40 million each in Manila and Cyprus.

Risks

• Competitive intensity in Macau could impact EBITDA margins.
• Uncertainty in the Philippines market despite positive developments.
• Dependence on successful execution of renovation and upgrade projects in Macau.

Q: About the additional traffic generated by House of Dancing Water and converting it to gaming and other business.

A: Since reopening House of Dancing Water in May, there's a meaningful uptick in property visitation. There's good spend on non-gaming during and after the show, but it's difficult to directly track conversion from show attendees to gaming. Over time, it's generating repeat visits but no direct formula for conversion.

Q: View on competitive intensity in Macau and expectations on EBITDA margins.

A: Competition in Macau is still very intense. Anticipate this level of competition to continue. Margin is managed through disciplined cost management, and comfortable with margin in mass market which is growing.

Q: Quantifying nonrecurring items in operating expense.

A: Additional bad debt was approximately $5 million for the quarter, and the anniversary expense was about $6 million. These expenses are in property margins.

Q: CapEx number and breakdown.

A: Total CapEx for 2026 is $450 million. The renovated Countdown Hotel is approximately $100 million. Macau has roughly $375 million, Manila and Cyprus each have $35 million to $40 million.