管理層發言
Ladies and gentlemen, thank you for participating in the First Quarter 2026 Earnings Conference Call of Melco Resorts & Entertainment Limited. Today's conference is being recorded. I would now like to turn the call over to Ms. Jeanny Kim, Senior Vice President, Group Treasurer of Melco Resorts & Entertainment Limited.
Thank you, operator, and thank you, everybody, for joining us today for our first quarter 2026 earnings call. We apologize for the earnings release materials being later than usual. We had a bit of an IT issue, and we wanted to give all of you a little bit more time to review the materials that were released. As usual, on the call are Lawrence Ho, Geoff Davis, Evan Winkler and our property presidents in Macau, Manila and Cyprus. Before we get started, please note that today's discussion may contain forward-looking statements made under the safe harbor provisions of federal securities laws. Our actual results could differ from our anticipated results. In addition, we may discuss non-GAAP measures. A definition and reconciliation of each of these measures to the most comparable GAAP financial measures are included in the earnings release. Finally, please note that our supplementary earnings slides are posted on our Investor Relations website. With that, I'll turn the call over to Mr. Lawrence Ho.
Thank you, Jeanny, and thank you all for joining us today. We delivered a strong first quarter with both group property EBITDA and Macau property EBITDA growing by 12% year-over-year. Our GGR in Macau increased by approximately 10% year-over-year with solid growth across all segments. In March, we officially announced the upcoming launch of REM, our new luxury hotel at City of Dreams (COD). We remain on track to begin a phased opening early in the third quarter of 2026. We expect REM to represent a meaningful enhancement to the COD product portfolio and to redefine contemporary luxury across Macau. At the same time, we have commenced a refresh of the retail areas at COD and have plans underway to enhance our food and beverage offering, further elevating the guest experience and product quality. Moving on to the Philippines. Despite competitive pressures and broader industry headwinds that continued into 2026, property EBITDA for the first quarter of 2026 grew 24% year-over-year, while GGR increased 9%. We continue to punch above our weight in the market and are expanding our marketing initiatives across Southeast Asia to drive additional growth. City of Dreams Mediterranean and the satellite casinos in Cyprus were impacted by the conflict in the Middle East that escalated in late February. With the recent developments in the region, we've seen significant improvement in occupancy, visitation and play levels in April. We remain operationally flexible in preparation for a further recovery in travel demand. Our casino operations in Sri Lanka recorded positive EBITDA in 1Q 2026. We remain focused on the progressive ramp of operations throughout the year. And finally, we announced today that we purchased the subsidiary of Melco International that owns the trademarks that were subject to the trademark license agreement. These trademarks are integral to Melco's business. This purchase gives us full control of the IP and allows us flexibility to expand our brand without any incremental cost. With that, I turn the call over to Geoff.
Thank you, Lawrence. Our group-wide adjusted property EBITDA for the first quarter of 2026 grew 12% year-over-year to approximately $381 million. Adjusted for VIP hold, our property EBITDA was approximately $356 million. Favorable win rates at COD Macau and COD Manila had positive impacts on our property EBITDA by approximately $20 million and $5 million, respectively. Daily OpEx in Macau, excluding House of Dancing Water for the first quarter of 2026 was approximately $3.2 million per day, in line with our prior guidance. Total OpEx per day, including House of Dancing Water and Residency Concerts for the last four quarters has been relatively stable, and we were able to see the benefits of operating leverage this quarter with our Macau property EBITDA margin increasing to approximately 28%. We continue to be focused on managing our costs to increase flow-through and margins going forward. Turning to our balance sheet. Our liquidity position remains robust. We had available liquidity of approximately $2.4 billion with consolidated cash on hand of approximately $1.1 billion as of the end of the first quarter of 2026. Melco Resorts, excluding its operations at Studio City, the Philippines, Cyprus and Sri Lanka accounted for approximately $543 million of the consolidated cash on hand. In the first quarter of 2026, we repaid $60 million in debt at Melco Resorts and $10 million in debt at Studio City. The group does not have any material debt maturities in 2026. As of April 29, 2026, we repurchased approximately $2.5 million of our ADSs for a total consideration of approximately $14 million year-to-date in 2026. We have been opportunistic in our share repurchases in the past, and we expect to continue to make opportunistic repurchases going forward. We believe our share price is meaningfully undervalued, especially when recent trading levels of our ADSs imply a free cash flow yield of over 20%. We also announced today that the board approved a new $500 million share repurchase program. This is incremental to the existing program and increases our share repurchase authorization to $710 million. We remain focused on reducing debt and leverage, and we'll continue to evaluate our capital allocation strategy in a disciplined manner, considering cash availability, prevailing market conditions and our share price. As Lawrence mentioned, we announced today the purchase of key trademarks from Melco International for $375 million. The transaction was the result of arm's length negotiations between the independent members of the two audit committees and a professional valuation services firm who was engaged to assist in the evaluation. Trademark license fee for the first quarter of 2026 was approximately $13.4 million, implying a purchase price of just under 7x the annualized first quarter fee. This is in line with Melco's current trading multiple and below the trading multiples of our Macau peers. The purchase of the trademarks provides MLCO with full ownership and control of the trademarks and eliminates any uncertainty with respect to potential increases in fees at the end of the prior royalty fee arrangements. As a result of the purchase, we have an immediate increase in EBITDA and cash flow. The purchase will be funded by a combination of a drawdown from our credit facility and internal funds, but the additional debt is immaterial to our credit profile. Debt-to-EBITDA post transaction is expected to increase by less than half a turn, and we expect to leverage our return back down to first quarter 2026 levels before the end of 2026. And finally, as we normally do, we'll give you some guidance on nonoperating line items for the upcoming second quarter of 2026. Total depreciation and amortization expense is expected to be approximately $140 million to $145 million. Corporate expense is expected to come in at approximately $30 million and consolidated net interest expense is expected to be approximately $115 million to $120 million. This includes finance liability interest of around $6 million relating to fees payable in relation to the Macau gaming concession and the Cyprus gaming license and finance lease interest of approximately $5 million relating to City of Dreams Manila. That concludes our prepared remarks. Operator, back to you for the Q&A.
分析師問答
Your first question comes from George Choi with Citi.
I just want to say that we appreciate the purchase of the trademark license from Melco International. I think that's a very good deal. But two questions from me, if that's all right. Firstly, perhaps for Lawrence or Evan, how do you view your current OpEx level, in particular, player reinvestments? And secondly, for the upcoming Labor Day holidays, which is a few hours away, if you can provide us with any color in terms of the upcoming holidays, that would be very much appreciated.
George, it's Lawrence. I'll take the second question first and then let Evan and Geoff elaborate a little bit on the OpEx question. For May Golden Week, with the conflict in the Middle East, we're seeing people travel shorter distance in China. I read that there is approximately 10% cancellation of flights from China to international markets. If anything, that has benefited us. So far for May Golden Week, we're seeing both occupancy and player quality improve on a year-on-year basis. We're quite happy about that and excited about tomorrow effectively starting. On OpEx, I'll hand it off to Evan and Geoff to elaborate.
Sure. I'll start and Geoff can join in. From an OpEx perspective, we're fairly stable on where we are. The market remains very competitive, so we did see player reinvestment levels tick up. Lawrence has set the tone, which is we're not leading the market up. When you go through periods of intense competition, we obviously react to the market. In an environment where it's very competitive, we have seen some increase in player reinvestment levels. They are stable for now. We don't see anything on the horizon that would make them increase, but we also don't see anything in the near term that would decrease those levels. As I look into the next quarter, we are seeing our typical salary increase take place on April 1, so we'll see a tick up related to that. We have a little bit of enhancement in terms of some higher-level butler and other service amenities around our suite product. Within Macau, that's continued to be an area of customer focus. Some of our competitors have made announcements of things they're looking to do prospectively. Fortunately, a lot of our hardware position is already better, but from a software position, we will have a slight tick up. The biggest jump is going to be in Q3 as we start to open REM. REM will add approximately $30,000 to $40,000 a day in operating expenses. We view that as a big positive. We have 149 keys opening; I walked the product today with Lawrence and Tim, and it looks spectacular. It's going to be highly differentiated in the market. We've spent a lot of time on that property, making sure we have the right mix. It's very heavily weighted towards the one-bedroom suite product with some flexibility in combining suites and lock-off rooms. We feel we're going to be hitting the market with a very good product going into Q3, and while there will be a slight increase in expense, we should receive a pretty big revenue uplift as that ramps.
And if I can ask a follow-up question. So given your purchase of the trademark license, any change in your CapEx for this year at all?
So total CapEx for this year has come down from about $450 million to approximately $425 million. With the amount spent in the first quarter, we've got approximately $350 million to go for the remainder of this year.
Our next question comes from Karl Choi with Bank of America.
Two questions here. Number one is, can you discuss a little bit about the timing of resuming your dividend; does the trademark purchase mean that we may be pushing back the timing of a resumption towards 2027? And second, on competition, understanding that the reinvestment rate for now you expect it to be stable near term, one of your larger competitors has been quite vocal about stepping up service offerings. Do you feel like you still need to respond further beyond what you have said on the call?
Karl, it's Lawrence. Our goal is still to resume the dividend at the end of this year, but I'll let Geoff elaborate on our capital priorities.
All things being equal, we would definitely like to resume the dividend by year-end. That said, we'll look at the opportunity set out there, and that would include our share price over the course of this year as well. We've been opportunistic in buying back stock when we think it's on sale, and we think it's on sale at these levels. It's dependent on a variety of variables, but we would like to recommence the dividend and think that the balance sheet should be in shape for that by the end of this year.
On your reinvestment question, we aim to be the most disciplined in terms of our reinvestment. It's a constant internal discussion because we see our competitors increasing reinvestment. As Evan mentioned, we don't want to lead that race. I'll let Evan elaborate further.
We feel good on where we are on a relative basis. Several competitors have taken more aggressive actions in the marketplace over the last few months and we've responded. I don't get the sense that they'll double down, because you reach a point where incremental benefit is muted and you dilute profitability. I feel we've hit a stable point and don't see the near-term need to ratchet up. That said, if a competitor took a very aggressive action and the market followed, we would reluctantly need to change our approach. We are focused on being disciplined and encourage healthy competition. Sitting here today, we feel stable.
We respect that Macau, being the biggest market in the world, will always be very competitive. We've always encouraged competing based on product and service, not rebates and commissions. From a product and service standpoint, Evan mentioned REM. We're very excited about the all-new suite product. We're happy to show it off with the phased opening in Q3 because it's truly a unique product in Macau, Hong Kong and probably the entire region. At the same time, we're redoing our retail at City of Dreams. With our partnership with DFS ending, that was an area of weakness. Starting next year, we're bringing in exciting new brands that will complement the luxury proposition of City of Dreams.
Got it. If I may ask a follow-up. I want to go back to the GGR trends for a second. Good color about the upcoming May holiday. But I want to go back to April: there's some market chatter that win rate was low and that VIP volume was also weak. Is that something you've seen? If so, is that transitory, or something to watch as you look forward?
It's harder for us to answer market-wide. For us, April was probably not the strongest month. We track VIP almost player by player given the concentration in large VIP play. Some players that came in Q1 are due to be coming later in the quarter. I don't think April set the world on fire for VIP, but I also don't think we saw anything concerning about the future health of that business.
Your next question comes from D.S. Kim with JPMorgan.
I also appreciate the trademark purchase at an attractive valuation, kudos to that. I wanted to ask about a government announcement last month to establish an MOP 20 billion fund to support economic diversification, targeting up to MOP 9 billion from private capital. Has there been any discussion with the government about whether you need or want to participate in that fund? If so, would that come out of your previous commitment for non-gaming commitments at the license signing, or would there be additional burden or commitment in the future?
D.S., thank you for the question and the comment on the trademark. On the Macau government fund, we can't comment too much. What I can say is that what we committed as part of the license renewal at the end of 2022 remains. That amount is not going to increase. As a reminder, we have the lowest commitment among the six concessionaires, and there will be no change to that amount.
Congrats again on a strong quarter.
Your next question comes from George Choi with Citi.
Just a quick follow-up on the aforementioned refresh on City of Dreams retail. How should we think about disruption, if any?
If you've been by the property, we've already started. In the luxury retail arc along the Cotai Strip, the north section is already hoarded. We're underway with the remodel. Tim and the team developed a good phasing plan. We don't expect a period where the property is massively impacted; we'll go zone by zone to create a brand-new retail experience throughout the podium level. This will take place over the next 10 to 12 months. We're zoning carefully, but there will be construction in various zones throughout that period. We're working with tenants, keeping some existing partners but also bringing in many new exciting names. Over the next three to four quarters, as tenants are disrupted at various times, we will provide relief to those tenants who are committed to us during this transformational period. We're excited about the outcome. There will be some work during the journey, but Tim and the construction team have developed a phased plan with hoarding and property activations that should minimize disruption.
There are no further questions at this time. I'll now hand back to Ms. Jeanny Kim for closing remarks.
Thank you, everybody, for joining the call again today, and we'll see you next quarter. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.