Market Share: Increased from 14.7% in 4Q 2024 to 15.7% in 1Q 2025. Property Visitation Growth: 30% year-on-year increase during May Golden Week. Mass Drop Growth: Over 20% increase at City of Dreams compared to 2024. Rated Theo Win: 12% year-on-year increase across Macau properties. Studio City Property EBITDA: 20% quarter-to-quarter increase. City of Dreams Mediterranean EBITDA Growth: 10% year-over-year increase for 1Q 2025. Group-wide Adjusted Property EBITDA: Approximately $341 million for 1Q 2025. Adjusted Property EBITDA (VIP Hold): Approximately $313 million. Operating Expenses: Reduced to $3.1 million per day in 1Q 2025 from $3.2 million in 4Q 2024. Available Liquidity: $3.3 billion with consolidated cash on hand of approximately $1.2 billion. MLCO ADS Repurchase: Approximately $165 million repurchased in 2025 as of May 7. Upcoming Bond Maturities: Covered and will be refinanced with credit facilities and cash on hand. Expected Depreciation and Amortization Expense: $135 million to $140 million for 2Q 2025. Corporate Expense Guidance: Approximately $25 million to $30 million for 2Q 2025. Consolidated Net Interest Expense: Expected to be $100 million to $125 million for 2Q 2025.

Warning! GuruFocus has detected 4 Warning Signs with MLCO.

Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Melco Resorts and Entertainment Ltd (NASDAQ:MLCO) achieved a solid set of results for the first quarter of 2025, with market share in Macau growing from 14.7% in 4Q 2024 to 15.7% in 1Q 2025. Property visitation grew by 30% year-on-year during May Golden Week, with City of Dreams experiencing a mass drop increase of more than 20%. Studio City property EBITDA increased by 20% quarter-to-quarter, demonstrating the positive impact of recent renovations. The relaunch of the House of Dancing Water show was a resounding success, expected to drive further visitation to City of Dreams. Melco Resorts and Entertainment Ltd (NASDAQ:MLCO) maintained a robust liquidity position with $3.3 billion available and consolidated cash on hand of approximately $1.2 billion as of the end of the first quarter of 2025.

Negative Points

The heightened competitive environment in the Philippines impacted performances in 1Q 2025, prompting a review of cost structures and marketing programs. Despite the positive results, the luxury retail segment at City of Dreams continues to struggle, reflecting broader challenges in high-end retail. Melco Resorts and Entertainment Ltd (NASDAQ:MLCO) faces upcoming bond maturities in June and July, requiring refinancing through credit facilities and cash on hand. The company is experiencing increased operational expenses due to the relaunch of the House of Dancing Water and Studio City's residency concerts. There is ongoing uncertainty regarding the strategic review and potential sale of City of Dreams Manila, with the process still in early stages.

Story Continues

Q & A Highlights

Q: Ever since Londoner Grand fully opened, have you seen any impact at City of Dreams or changes in competition intensity among the operators? A: Lawrence Ho, CEO, stated that they are happy with Q1 results and maintained market share in April. The mass drop at City of Dreams was up 20% during Golden Week. There has been no cannibalization, and the company has found its groove again with strong product offerings. Evan Winkler, President, added that they haven't felt a material impact from new supply cannibalizing their business.

Q: Can you provide an update on the strategic review of City of Dreams Manila? A: Geoffrey Davis, CFO, mentioned that the process is ongoing with potential buyers signing NDAs and accessing the virtual data room. They are working through questions and will narrow down to a shortlist for the bidding process.

Q: Are you seeing any signs of weakness on the gaming floor or changes in booking patterns recently? A: Lawrence Ho, CEO, noted that April was strong, and Golden Week saw a 20% increase at City of Dreams. The tail was longer this year, and the gaming floor remains busy. Chinese policy is supportive, focusing on domestic consumption and travel, which is beneficial for them.

Q: Could you provide guidance on CapEx for the rest of the year and any projects for 2026? A: Geoffrey Davis, CFO, stated that full-year CapEx guidance for 2025 remains at $415 million. The major project highlighted is the completion of Sri Lanka.

Q: Regarding daily OpEx in Macau, will the $3 million target include costs from House of Dancing Water and residencies? A: Evan Winkler, President, clarified that the OpEx guidance excludes costs from House of Dancing Water and residencies. They aim to bring OpEx down to $3.0 million per day in the second quarter, excluding those items.

Q: Can you provide insights into non-gaming spend during Golden Week, such as retail and other consumer health indicators? A: Lawrence Ho, CEO, mentioned that visitation was up 40% year-over-year. The market has shifted towards experiences, with attractions like House of Dancing Water and Studio City being significant draws. Retail has changed globally, but non-gaming attractions are expected to drive future growth.

Q: How do you balance share buybacks with debt reduction? A: Lawrence Ho, CEO, emphasized that while debt reduction is a priority, the current low share prices present a unique opportunity for buybacks to maximize shareholder value. Geoffrey Davis, CFO, added that they make capital allocation decisions based on market conditions and will continue to focus on debt reduction over time.

Q: What impact do you expect from the opening of Sri Lanka on your P&L? A: Geoffrey Davis, CFO, indicated that they expect some impact from preopening expenses starting in August 2025.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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