Globe Newswire

2019-07-24 20:19

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
              

source: Studio City Services Limited

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