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Studio City International Holdings Limited Announces Unaudited First Quarter 2019 Earnings

MACAU, May 07, 2019 (GLOBE NEWSWIRE) -- Studio City International Holdings Limited (NYSE: MSC) (“Studio City” or the “Company”), a world-class gaming, retail and entertainment resort located in Cotai, Macau, today reported its unaudited financial results for the first quarter of 2019.

Total operating revenues for the first quarter of 2019 were US$151.1 million, as compared to US$156.9 million in the first quarter of 2018. The decrease in total operating revenues was due to the decrease in revenues from the provision of gaming related services, partially offset by higher non-gaming revenues.

Revenues from the provision of gaming related services are derived from the provision of facilities for the operations of Studio City Casino by Melco Resorts (Macau) Limited (the “Gaming Operator”), a subsidiary of Melco Resorts & Entertainment Limited (“Melco”) and holder of a gaming subconcession, and services related thereto.

Studio City Casino generated gross gaming revenues of US$348.9 million and US$425.6 million for the first quarters of 2019 and 2018, respectively. Affected by the Macau market-wide VIP weakness, and by increasing competition in and around Cotai, Studio City’s rolling chip volume totaled US$2.7 billion for the first quarter of 2019 versus US$6.6 billion in the first quarter of 2018. The rolling chip win rate was 3.3% in the first quarter of 2019 versus 2.7% in the first quarter of 2018. The expected rolling chip win rate range is 2.7% - 3.0%. Mass market table games drop increased to US$851.4 million in the first quarter of 2019 compared with US$825.2 million in the first quarter of 2018. The mass market table games hold percentage was 28.4% in the first quarter of 2019 compared to 27.4% in the first quarter of 2018. Gaming machine handle for the first quarter of 2019 was US$560.6 million, compared with US$581.6 million in the first quarter of 2018. The gaming machine win rate was 3.3% in the first quarter of 2019 compared to 3.7% in the first quarter of 2018. Total gaming tax and the costs incurred in connection with the operation of Studio City Casino deducted from gross gaming revenues were US$258.5 million and US$327.2 million in the first quarters of 2019 and 2018, respectively.

After the Gaming Operator deducted gaming tax and the costs incurred in connection with its operations of Studio City Casino from the gross gaming revenues, the Company recognized revenues from provision of gaming related services of US$90.4 million and US$98.4 million for the first quarters of 2019 and 2018, respectively.

Total non-gaming revenues at Studio City for the first quarter of 2019 was US$60.7 million, compared with US$58.5 million for the first quarter of 2018.

Operating income for the first quarter of 2019 was US$38.5 million, compared with operating income of US$48.1 million in the first quarter of 2018, representing a decrease of 20%.

Adjusted EBITDA(1) was US$84.2 million for the first quarter of 2019, as compared to Adjusted EBITDA of US$93.0 million in the first quarter of 2018, representing a decrease of 9%. The year-on-year decrease in Adjusted EBITDA was mainly attributable to the decrease in revenues from the provision of gaming related services.

Net income attributable to Studio City International Holdings Limited for the first quarter of 2019 was US$2.9 million, compared with US$8.8 million in the first quarter of 2018. The net income attributable to participation interest for the first quarter of 2019 was US$0.9 million.

Other Factors Affecting Earnings

Total net non-operating expenses for the first quarter of 2019 were US$34.6 million, which mainly included interest expenses, of US$34.1 million.

Depreciation and amortization costs of US$43.1 million were recorded in the first quarter of 2019 of which US$0.8 million was related to the amortization expense for the land use right.

In January 2019, the Gaming Operator informed us via our subsidiary, Studio City Entertainment Limited, that it will cease VIP rolling chip operations at the Studio City Casino on January 15, 2020. Revenues from provision of gaming related services in relation to the Studio City Casino VIP gaming operations amounted to US$0.9 million in the first quarter of 2019, compared with US$12.3 million in the first quarter of 2018. The year-on-year decrease in revenues from provision of gaming related services in relation to the Studio City Casino VIP gaming operations was primarily due to the Macau market-wide VIP weakness and increasing competition in and around Cotai, which led to a decrease in Studio City’s rolling chip volume in the first quarter of 2019 as compared with the first quarter of 2018.

The Adjusted EBITDA for Studio City for the three months ended March 31, 2019 referred to in Melco’s earnings release dated May 7, 2019 (“Melco’s earnings release”) is US$12.2 million more than the Adjusted EBITDA of Studio City contained in this report. The Adjusted EBITDA of Studio City contained in this report includes certain intercompany charges that are not included in the Adjusted EBITDA for Studio City contained in the Melco’s earnings release. Such intercompany charges include, among other items, fees and shared service charges billed between the Company and its subsidiaries and certain subsidiaries of Melco. Also, Adjusted EBITDA of Studio City included in the Melco’s earnings release does not reflect certain costs related to the VIP operations at Studio City Casino.

Financial Position and Capital Expenditures

Total cash and bank balances as of March 31, 2019 aggregated US$585.0 million (December 31, 2018: US$377.6 million), including US$49.2 million of restricted cash (December 31, 2018: US$31.7 million). Total debt, net of unamortized deferred financing costs at the end of the first quarter of 2019, was US$1.8 billion (December 31, 2018: US$1.6 billion).

Capital expenditures for the first quarter of 2019 were US$12.3 million.

Other Information

The Company is aware that New Cotai, LLC (“New Cotai”), a shareholder of Studio City, and certain of New Cotai’s affiliates have commenced a voluntary Chapter 11 bankruptcy petition in the Southern District of New York. The Company does not anticipate that the bankruptcy of New Cotai will have any material impact on the business or operations of Studio City or the funding or the timing of the development and construction of Studio City’s Phase II expansion. Melco continues to remain the majority shareholder of Studio City.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Studio City International Holdings Limited (the “Company”) may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) growth of the gaming market and visitations in Macau, (ii) capital and credit market volatility, (iii) local and global economic conditions, (iv) our anticipated growth strategies, (v) gaming authority and other governmental approvals and regulations, and (vi) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “target”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

(1) "Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, other non-operating income and expenses. We believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results. This non-GAAP financial measure eliminates the impact of items that we do not consider indicative of the performance of our business. While we believe that this non-GAAP financial measure is useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared in accordance with U.S. GAAP. It should not be considered in isolation or construed as an alternative to net income/loss, cash flow or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. The use of adjusted EBITDA has material limitations as an analytical tool, as adjusted EBITDA does not include all items that impact our net income/loss. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP financial measure. 

(2) “Adjusted net income/loss” is net income/loss before pre-opening costs, property charges and other, loss on extinguishment of debt and costs associated with debt modification, net of participation interest. Adjusted net income/loss is presented as supplemental disclosure because management believes it provides useful information to investors and others in understanding and evaluating our performance, in addition to income/loss computed in accordance with U.S. GAAP. Adjusted net income/loss may be different from the calculation methods used by other companies and, therefore, comparability may be limited. Reconciliations of adjusted net income/loss with the most comparable financial measures calculated and presented in accordance with U.S. GAAP are provided herein immediately following the financial statements included in this press release. 

About Studio City International Holdings Limited

The Company, with its American depositary shares listed on the New York Stock Exchange (NYSE: MSC), is a world-class gaming, retail and entertainment resort located in Cotai, Macau. For more information about the Company, please visit www.studiocity-macau.com.

The Company is strongly supported by its single largest shareholder, Melco Resorts & Entertainment Limited, a company with its American depositary shares listed on the NASDAQ Global Select Market (NASDAQ: MLCO). 

For investment community, please contact:
Richard Huang
Director, Investor Relations
Tel: +852 2598 3619
Email: richardlshuang@melco-resorts.com

For media enquiries, please contact:
Chimmy Leung
Executive Director, Corporate Communications
Tel: +852 3151 3765
Email: chimmyleung@melco-resorts.com

 

           
Studio City International Holdings Limited and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands of U.S. dollars, except share and per share data)
           
  Three Months Ended
   March 31,
  2019   2018
    (Unaudited)     (Unaudited)
           
OPERATING REVENUES          
Provision of gaming related services $ 90,391     $ 98,401  
Rooms   20,960       21,833  
Food and beverage   17,513       16,053  
Entertainment   6,172       3,655  
Services fee   9,052       9,651  
Mall   6,382       6,434  
Retail and other   633       872  
Total operating revenues   151,103       156,899  
           
OPERATING COSTS AND EXPENSES          
Provision of gaming related services   (5,782 )     (5,495 )
Rooms   (5,638 )     (5,421 )
Food and beverage   (15,024 )     (13,905 )
Entertainment   (6,767 )     (3,341 )
Mall   (2,734 )     (3,134 )
Retail and other   (490 )     (653 )
General and administrative   (30,440 )     (31,942 )
Pre-opening costs    (2,489 )      (42 )
Amortization of land use right    (823 )      (831 )
Depreciation and amortization    (42,315 )      (41,648 )
Property charges and other    (129 )      (2,363 )
Total operating costs and expenses    (112,631 )      (108,775 )
OPERATING INCOME    38,472        48,124  
NON-OPERATING INCOME (EXPENSES)          
Interest income    1,504        743  
Interest expenses    (34,054 )      (40,082 )
Loan commitment fees    (103 )      (103 )
Foreign exchange gains, net    913        148  
Other income, net    693        66  
Loss on extinguishment of debt    (2,995 )      -   
Costs associated with debt modification    (579 )      -   
Total non-operating expenses, net    (34,621 )      (39,228 )
INCOME BEFORE INCOME TAX    3,851        8,896  
INCOME TAX EXPENSE   (66 )     (47 )
NET INCOME   3,785       8,849  
NET INCOME ATTRIBUTABLE TO PARTICIPATION INTEREST   (873 )     -  
NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED $ 2,912     $ 8,849  
           
NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER CLASS A ORDINARY SHARE:          
Basic and diluted $ 0.012     $ 0.049  
           
NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER ADS:          
Basic and diluted $ 0.048     $ 0.195  
           
WEIGHTED AVERAGE CLASS A ORDINARY SHARES OUTSTANDING USED IN NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER CLASS A ORDINARY SHARE CALCULATION:          
Basic and diluted   241,818,016       181,279,400  
           
Note:
In connection with the Company's initial public offering (the "IPO") on October 22, 2018, the Company underwent a series of organizational transactions.  For the preparation of the accompanying unaudited condensed consolidated financial statements and the calculation of net income attributable to Studio City International Holdings Limited per Class A ordinary share for period prior to the IPO, the Company has retrospectively presented net income attributable to Studio City International Holdings Limited per Class A ordinary share and the share capital as if the organizational transactions had occurred at the beginning of the earliest period presented.  Such retrospective presentation reflects the redesignation of the issued 18,127.94 ordinary shares of $1 par value each to 181,279,400 Class A ordinary shares of $0.0001 par value each.  For period prior to the IPO date, the retrospective presentation does not include the exchange of 72,511,760 Class A ordinary shares into 72,511,760 Class B ordinary shares of $0.0001 par value each and the issuance of 115,000,000 Class A ordinary shares in the IPO.
 

 

           
Studio City International Holdings Limited and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share and per share data)
           
           
  March 31,   December 31,
  2019   2018
  (Unaudited)   (Audited)
           
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents $ 535,744     $ 345,854  
Restricted cash   49,092       31,582  
Accounts receivable, net   1,995       1,712  
Amounts due from affiliated companies   46,022       42,339  
Inventories   10,421       9,904  
Prepaid expenses and other current assets   28,901       27,650  
Total current assets   672,175       459,041  
           
PROPERTY AND EQUIPMENT, NET   2,146,271       2,175,858  
LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS   43,813       45,766  
RESTRICTED CASH   129       129  
OPERATING LEASE RIGHT-OF-USE ASSETS   14,388       -  
LAND USE RIGHT, NET   120,435       121,544  
TOTAL ASSETS $ 2,997,211     $ 2,802,338  
           
LIABILITIES, SHAREHOLDERS' EQUITY AND PARTICIPATION INTEREST          
           
CURRENT LIABILITIES          
Accounts payable $ 7,038     $ 6,421  
Accrued expenses and other current liabilities   82,017       62,825  
Income tax payable   33       33  
Current portion of long-term debt, net   348,345       347,740  
Amounts due to affiliated companies   14,697       21,953  
Total current liabilities   452,130       438,972  
           
LONG-TERM DEBT, NET   1,431,369       1,261,904  
OTHER LONG-TERM LIABILITIES   5,291       4,017  
DEFERRED TAX LIABILITIES   1,108       1,044  
OPERATING LEASE LIABILITIES, NON-CURRENT   13,761       -  
AMOUNT DUE TO AN AFFILIATED COMPANY   216       -  
TOTAL LIABILITIES   1,903,875       1,705,937  
           
SHAREHOLDERS’ EQUITY AND PARTICIPATION INTEREST          
Class A ordinary shares   24       24  
Class B ordinary shares   7       7  
Additional paid-in capital   1,655,602       1,655,602  
Accumulated other comprehensive losses   (19,332 )     (14,063 )
Accumulated losses   (795,186 )     (798,098 )
Total shareholders’ equity   841,115       843,472  
PARTICIPATION INTEREST   252,221       252,929  
Total shareholders’ equity and participation interest   1,093,336       1,096,401  
TOTAL LIABILITIES, SHAREHOLDERS' EQUITY AND PARTICIPATION INTEREST $ 2,997,211     $ 2,802,338  
 

 

           
Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net Income Attributable to Studio City International Holdings Limited to
Adjusted Net Income Attributable to Studio City International Holdings Limited
(In thousands of U.S. dollars, except share and per share data)
           
  Three Months Ended
  March 31,
  2019   2018
  (Unaudited)   (Unaudited)
           
Net Income Attributable to Studio City International Holdings Limited $ 2,912     $ 8,849
Pre-opening Costs   2,489       42
Property Charges and Other   129       2,363
Loss on Extinguishment of Debt   2,995       -
Costs Associated with Debt Modification   579       -
Participation Interest Impact on Adjustments   (1,428 )     -
Adjusted Net Income Attributable to Studio City International Holdings Limited $ 7,676     $ 11,254
           
ADJUSTED NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER CLASS A ORDINARY SHARE:          
Basic and diluted $ 0.032     $ 0.062
           
ADJUSTED NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER ADS:          
Basic and diluted $ 0.127     $ 0.248
           
WEIGHTED AVERAGE CLASS A ORDINARY SHARES OUTSTANDING USED IN ADJUSTED NET INCOME ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER CLASS A ORDINARY SHARE CALCULATION:          
Basic and diluted   241,818,016       181,279,400
 

 

           
Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating Income to Adjusted EBITDA
(In thousands of U.S. dollars)
           
  Three Months Ended
  March 31,
  2019   2018
  (Unaudited)   (Unaudited)
           
Operating Income $ 38,472   $ 48,124
Pre-opening Costs   2,489     42
Depreciation and Amortization   43,138     42,479
Property Charges and Other   129     2,363
Adjusted EBITDA $ 84,228   $ 93,008
 

 

           
Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net Income Attributable to Studio City International Holdings Limited to Adjusted EBITDA
(In thousands of U.S. dollars)
           
  Three Months Ended
  March 31,
  2019   2018
  (Unaudited)   (Unaudited)
           
Net Income Attributable to Studio City International Holdings Limited $ 2,912   $ 8,849
Net Income Attributable to Participation Interest   873     -
Net Income   3,785     8,849
Income Tax Expense   66     47
Interest and Other Non-Operating Expenses, Net   34,621     39,228
Property Charges and Other   129     2,363
Depreciation and Amortization   43,138     42,479
Pre-opening Costs   2,489     42
Adjusted EBITDA $ 84,228   $ 93,008
 

 

       
Studio City International Holdings Limited and Subsidiaries
Supplemental Data Schedule
       
  Three Months Ended
  March 31,
  2019   2018
Room Statistics:      
Average daily rate (3) $ 134   $ 139
Occupancy per available room   100%     100%
Revenue per available room (4) $ 133   $ 139
       
Other Information:      
Average number of table games   294     294
Average number of gaming machines   974     943
Table games win per unit per day (5) $ 12,507   $ 15,296
Gaming machines win per unit per day (6) $ 211   $ 250
       
(3) Average daily rate is calculated by dividing total room revenues including complimentary rooms (less service charges, if any) by total occupied rooms including complimentary rooms
(4) Revenue per available room is calculated by dividing total room revenues including complimentary rooms (less service charges, if any) by total rooms available
(5) Table games win per unit per day is shown before discounts, commissions, non-discretionary incentives (including the point-loyalty programs) as administered by the Gaming Operator and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis
(6) Gaming machines win per unit per day is shown before non-discretionary incentives (including the point-loyalty programs) as administered by the Gaming Operator and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis

Studio City Logo_v3.jpg

 

Source: Studio City International Holdings Limited