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Studio City International Holdings Limited Announces Unaudited Second Quarter 2019 Earnings

MACAU, July 24, 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 second quarter of 2019.

Total operating revenues for the second quarter of 2019 were US$149.7 million, as compared to US$125.3 million in the second quarter of 2018. The increase in total operating revenues was due to the increase in revenues from the provision of gaming related services, partially offset by lower 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$361.8 million and US$381.0 million for the second 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 volumes totaled US$3.1 billion for the second quarter of 2019 versus US$6.1 billion in the second quarter of 2018. The rolling chip win rate was 2.76% in the second quarter of 2019 versus 2.66% in the second quarter of 2018. The expected rolling chip win rate range is 2.85% - 3.15%. Mass market table games drop increased to US$877.0 million in the second quarter of 2019 compared with US$814.3 million in the second quarter of 2018. The mass market table games hold percentage was 29.2% in the second quarter of 2019 compared to 24.5% in the second quarter of 2018. Gaming machine handle for the second quarter of 2019 was US$630.9 million, compared with US$614.9 million in the second quarter of 2018. The gaming machine win rate was 3.2% in the second quarter of 2019 compared to 3.4% in the second 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$260.7 million and US$310.8 million in the second quarters of 2019 and 2018, respectively.

Revenues from provision of gaming related services were US$101.1 million and US$70.2 million for the second quarters of 2019 and 2018, respectively, which were net of gaming tax and the costs incurred in connection with the operation of Studio City Casino deducted by the Gaming Operator.

Total non-gaming revenues at Studio City for the second quarter of 2019 was US$48.6 million, compared with US$55.1 million for the second quarter of 2018.

Operating income for the second quarter of 2019 was US$29.7 million, compared with operating income of US$16.5 million in the second quarter of 2018, representing an increase of 79%.

Adjusted EBITDA(1) was US$82.5 million for the second quarter of 2019, as compared to Adjusted EBITDA of US$60.7 million in the second quarter of 2018, representing an increase of 36%. The year-over-year increase in Adjusted EBITDA was mainly attributable to the increase in revenues from the provision of gaming related services, partially offset by lower non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for the second quarter of 2019 was US$4.4 million, compared with US$23.7 million in the second quarter of 2018. The net loss attributable to participation interest for the second quarter of 2019 was US$1.3 million.  

Other Factors Affecting Earnings

Total net non-operating expenses for the second quarter of 2019 were US$35.3 million, which mainly included interest expenses of US$33.4 million.

Depreciation and amortization costs of US$44.6 million were recorded in the second 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$6.5 million in the second quarter of 2019, compared with US$2.3 million in the second quarter of 2018.

The Adjusted EBITDA for Studio City for the three months ended June 30, 2019 referred to in Melco’s earnings release dated July 24, 2019 (“Melco’s earnings release”) is US$12.3 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. Additionally, 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 June 30, 2019 amounted to US$610.1 million (December 31, 2018: US$377.6 million), including US$60.2 million of bank deposit with original maturity over three months (December 31, 2018: US$nil) and US$29.4 million of restricted cash (December 31, 2018: US$31.7 million). Total debt, net of unamortized deferred financing costs at the end of the second quarter of 2019 was US$1.8 billion (December 31, 2018: US$1.6 billion).

Capital expenditures for the second quarter of 2019 were US$9.3 million.

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   Six Months Ended    
  June 30,   June 30,    
  2019     2018     2019     2018      
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)    
                           
OPERATING REVENUES                          
Provision of gaming related services  $   101,145      $   70,194      $   191,536      $   168,595      
Rooms     20,990         21,750         41,950         43,583      
Food and beverage     17,277         15,406         34,790         31,459      
Entertainment     3,911         2,618         10,083         6,273      
Services fee     10,326         9,955         19,378         19,606      
Mall     (4,456 )       4,264         1,926         10,698      
Retail and other     517         1,084         1,150         1,956      
Total operating revenues     149,710         125,271         300,813         282,170      
                           
OPERATING COSTS AND EXPENSES                          
Provision of gaming related services     (5,852 )       (5,261 )       (11,634 )       (10,756 )    
Rooms     (5,095 )       (5,533 )       (10,733 )       (10,954 )    
Food and beverage     (14,302 )       (13,465 )       (29,326 )       (27,370 )    
Entertainment     (6,453 )       (3,545 )       (13,220 )       (6,886 )    
Mall     (2,273 )       (2,248 )       (5,007 )       (5,382 )    
Retail and other     (412 )       (621 )       (902 )       (1,274 )    
General and administrative     (32,819 )       (33,913 )       (63,259 )       (65,855 )    
Pre-opening costs     (60 )       (11 )       (2,549 )       (53 )    
Amortization of land use right     (825 )       (830 )       (1,648 )       (1,661 )    
Depreciation and amortization     (43,762 )       (42,135 )       (86,077 )       (83,783 )    
Property charges and other     (8,196 )       (1,164 )       (8,325 )       (3,527 )    
Total operating costs and expenses     (120,049 )       (108,726 )       (232,680 )       (217,501 )    
OPERATING INCOME     29,661         16,545         68,133         64,669      
NON-OPERATING INCOME (EXPENSES)                          
Interest income     457         696         1,961         1,439      
Interest expenses     (33,354 )       (40,102 )       (67,408 )       (80,184 )    
Loan commitment fees     (104 )       (105 )       (207 )       (208 )    
Foreign exchange losses, net     (2,214 )       (310 )       (1,301 )       (162 )    
Other (expenses) income, net     (88 )       (88 )       605         (22 )    
Loss on extinguishment of debt     -          -          (2,995 )       -       
Costs associated with debt modification     -          -          (579 )       -       
Total non-operating expenses, net     (35,303 )       (39,909 )       (69,924 )       (79,137 )    
LOSS BEFORE INCOME TAX     (5,642 )       (23,364 )       (1,791 )       (14,468 )    
INCOME TAX EXPENSE     (77 )       (328 )       (143 )       (375 )    
NET LOSS     (5,719 )       (23,692 )       (1,934 )       (14,843 )    
NET LOSS ATTRIBUTABLE TO PARTICIPATION INTEREST     1,320         -          447         -       
NET LOSS ATTRIBUTABLE TO                          
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED  $   (4,399 )    $   (23,692 )    $   (1,487 )    $   (14,843 )    
                           
NET LOSS ATTRIBUTABLE TO                          
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED                          
  PER CLASS A ORDINARY SHARE:                          
  Basic and diluted  $   (0.018 )    $   (0.131 )    $   (0.006 )    $   (0.082 )    
                           
NET LOSS ATTRIBUTABLE TO                          
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER ADS:                          
  Basic and diluted  $   (0.073 )    $   (0.523 )    $   (0.025 )    $   (0.328 )    
                           
WEIGHTED AVERAGE CLASS A ORDINARY SHARES                          
  OUTSTANDING USED IN NET LOSS ATTRIBUTABLE                          
  TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED                          
  PER CLASS A ORDINARY SHARE CALCULATION:                          
  Basic and diluted     241,818,016         181,279,400         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 loss attributable to Studio City International Holdings Limited per Class A ordinary share for the periods prior to the IPO, the Company has retrospectively presented net loss 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 the periods 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)
           
           
  June 30,   December 31,
  2019     2018  
  (Unaudited)   (Audited)
           
ASSETS          
           
CURRENT ASSETS          
Cash and cash equivalents  $   520,601      $   345,854  
Bank deposit with original maturity over three months     60,152         -   
Restricted cash     29,245         31,582  
Accounts receivable, net     1,614         1,712  
Amounts due from affiliated companies     61,412         42,339  
Inventories     10,061         9,904  
Prepaid expenses and other current assets     13,372         27,650  
Total current assets     696,457         459,041  
           
PROPERTY AND EQUIPMENT, NET     2,124,976         2,175,858  
LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS     37,708         45,766  
RESTRICTED CASH     130         129  
OPERATING LEASE RIGHT-OF-USE ASSETS     14,385         -   
LAND USE RIGHT, NET     120,170         121,544  
TOTAL ASSETS  $   2,993,826      $   2,802,338  
           
LIABILITIES, SHAREHOLDERS' EQUITY AND          
  PARTICIPATION INTEREST          
           
CURRENT LIABILITIES          
Accounts payable  $   4,436      $   6,421  
Accrued expenses and other current liabilities     69,240         62,825  
Income tax payable     33         33  
Current portion of long-term debt, net     348,957         347,740  
Amounts due to affiliated companies     16,095         21,953  
Total current liabilities     438,761         438,972  
           
LONG-TERM DEBT, NET     1,432,585         1,261,904  
OTHER LONG-TERM LIABILITIES     5,526         4,017  
DEFERRED TAX LIABILITIES     1,190         1,044  
OPERATING LEASE LIABILITIES, NON-CURRENT     13,207         -   
AMOUNT DUE TO AN AFFILIATED COMPANY     282         -   
TOTAL LIABILITIES     1,891,551         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     (8,056 )       (14,063 )
Accumulated losses     (799,585 )       (798,098 )
Total shareholders’ equity     847,992         843,472  
PARTICIPATION INTEREST     254,283         252,929  
Total shareholders’ equity and participation interest     1,102,275         1,096,401  
TOTAL LIABILITIES, SHAREHOLDERS' EQUITY          
  AND PARTICIPATION INTEREST  $   2,993,826     $   2,802,338  
           

 

Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net Loss Attributable to Studio City International Holdings Limited to
Adjusted Net Income (Loss) Attributable to Studio City International Holdings Limited
(In thousands of U.S. dollars, except share and per share data)
                       
  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2019     2018     2019     2018  
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                       
Net Loss Attributable to                      
  Studio City International Holdings Limited $   (4,399 )   $   (23,692 )   $   (1,487 )   $   (14,843 )
 Pre-opening Costs     60         11         2,549         53  
 Property Charges and Other     8,196         1,164         8,325         3,527  
 Loss on Extinguishment of Debt     -          -          2,995         -   
 Costs Associated with Debt Modification     -          -          579         -   
 Participation Interest Impact on Adjustments     (1,905 )       -          (3,333 )       -   
Adjusted Net Income (Loss) Attributable to                      
  Studio City International Holdings Limited $   1,952     $   (22,517 )   $   9,628     $   (11,263 )
                       
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO                      
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED                      
  PER CLASS A ORDINARY SHARE:                      
  Basic and diluted $   0.008     $   (0.124 )   $   0.040     $   (0.062 )
                       
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO                      
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED                      
  PER ADS:                      
  Basic and diluted $   0.032     $   (0.497 )   $   0.159     $   (0.249 )
                       
WEIGHTED AVERAGE CLASS A ORDINARY SHARES                      
  OUTSTANDING USED IN ADJUSTED NET INCOME (LOSS)                      
  ATTRIBUTABLE TO                      
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED                      
  PER CLASS A ORDINARY SHARE CALCULATION:                      
  Basic and diluted     241,818,016         181,279,400         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   Six Months Ended
  June 30,   June 30,
  2019   2018   2019   2018
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                       
Operating Income $   29,661   $   16,545   $   68,133   $   64,669
Pre-opening Costs     60       11       2,549       53
Depreciation and Amortization     44,587       42,965       87,725       85,444
Property Charges and Other     8,196       1,164       8,325       3,527
Adjusted EBITDA $   82,504   $   60,685   $   166,732   $   153,693
                       

 

Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net Loss Attributable to Studio City International Holdings Limited to Adjusted EBITDA
(In thousands of U.S. dollars)
                       
  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2019     2018     2019     2018  
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
                       
Net Loss Attributable to                       
  Studio City International Holdings Limited $   (4,399 )   $ (23,692 )   $   (1,487 )   $   (14,843 )
Net Loss Attributable to Participation Interest     (1,320 )       -          (447 )       -   
Net Loss   (5,719 )      (23,692 )       (1,934 )       (14,843 )
  Income Tax Expense     77         328         143         375  
  Interest and Other Non-Operating Expenses, Net     35,303         39,909         69,924         79,137  
  Property Charges and Other     8,196         1,164         8,325         3,527  
  Depreciation and Amortization     44,587         42,965         87,725         85,444  
  Pre-opening Costs     60         11         2,549         53  
Adjusted EBITDA $   82,504     $   60,685     $   166,732     $   153,693  
                       

 

Studio City International Holdings Limited and Subsidiaries  
Supplemental Data Schedule  
                           
            Three Months Ended   Six Months Ended  
            June 30,   June 30,  
              2019       2018       2019       2018    
Room Statistics:                      
    Average daily rate (3)     $   132     $   135     $   133     $   137    
    Occupancy per available room       100 %     100 %     100 %     100 %  
    Revenue per available room (4)     $   132     $   135     $   133     $   137    
                           
Other Information:                      
    Average number of table games       293         293         293         293    
    Average number of gaming machines       985         959         980         951    
    Table games win per unit per day (5)   $   12,812     $   13,509     $   12,660     $   14,399    
    Gaming machines win per unit per day (6)   $   225     $   237     $   218     $   244    
                           
                           
    (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