管理層發言
Ladies and gentlemen, thank you for participating in the Second 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. Thank you, everybody, for joining us today for our second quarter 2026 earnings call. 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. Definitions and reconciliations 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 now turn the call over to Mr. Lawrence Ho.
Thank you, Jeanny, and thank you all for joining us today. We're confident in the long-term strength of our business and our outlook for the remainder of 2026 in Macau. Despite near-term headwinds that are reflected in our second quarter results, our priorities remain unchanged: to deepen customer engagement, attract high-quality visitation, and continue investing in our properties to anticipate the changing needs and preferences of our guests. The opening of REM marked an important milestone in the continued evolution of City of Dreams, delivering a distinctive new experience for our guests, which we believe is not available anywhere else in Macau. We continue to take steps to operate more efficiently and strengthen our business. Together with the phased opening of REM, these initiatives position us well to capture the growth in demand. We continue to enhance the gaming experience across our portfolio. We opened a new gaming area with 18 tables at City of Dreams near the Southwest entrance at the end of July. Its convenient location along the main Cotai Strip with easy accessibility is expected to attract incremental visitation, particularly from walk-in patrons. The benefits of the convenient access to games has been a proven success with our 15-table gaming area near the Grand Hyatt entrance, which we opened in October 2025. We're also commencing a revamp of the retail areas at City of Dreams in Macau. The redesign will create a seamless loop across the property, introducing a more carefully curated mix of luxury offerings with differentiated elements. The completion of this retail revamp will allow us to deliver the full integrated resort experience at City of Dreams that will be uniquely Melco. Competition remains elevated, resulting in a demanding cost environment. We're focused on being disciplined as we align our resources with the highest return opportunities and protect the guest experience. Outside of Macau, our diversified portfolio continued to demonstrate resilience and growth potential. In the Philippines, City of Dreams Manila delivered property EBITDA of $31 million in the second quarter of 2026, representing a 9% year-over-year growth. In Cyprus, despite the disruption associated with the conflict in the Middle East, property EBITDA at City of Dreams Mediterranean and our satellite casinos rose 60% year-over-year in the second quarter of 2026. In Sri Lanka, our casino operations continue to ramp, recording positive EBITDA of $3.5 million in the second quarter of 2026. We remain focused on executing a disciplined ramp-up strategy and driving further operational progress throughout the remainder of the year. With that, I turn the call over to Geoff.
Thank you, Lawrence. Our group-wide adjusted property EBITDA for the second quarter of 2026 was approximately $304 million. Adjusted for VIP hold, our property EBITDA was approximately $312 million. An unfavorable win rate at COD Macau had a negative impact on our property EBITDA by approximately $9 million. The VIP win rate at COD Macau declined from 3.9% in the second quarter of 2025 to 2.7% in the second quarter of 2026. We continue to be disciplined in our cost management with total daily OpEx in Macau for the second quarter of 2026 remaining steady at approximately $3.4 million per day, inclusive of House of Dancing Water and in line with our prior guidance. Lower-than-expected visitation and lower hold relative to prior quarters placed pressure on margins in the second quarter of 2026. We are actively evaluating opportunities to incorporate greater flexibility across our operations to better align our cost base with evolving demand and business volumes. Turning to our balance sheet. Our liquidity position remains robust. We had available liquidity of approximately $2.8 billion with consolidated cash on hand of approximately $1 billion as of the end of the second quarter of 2026. Melco Resorts, excluding its operations at Studio City, the Philippines, Cyprus and Sri Lanka accounted for approximately $492 million of the consolidated cash on hand. Our strong liquidity position reflects the extension and upsize of Melco's revolving credit facilities, which was announced in June. The maturity date of the RCF was extended from April 2027 to June 2031, and the facility size increased by approximately $821 million, resulting in a total RCF size of $2.8 billion. This provides us with added financial flexibility as we think about our upcoming maturities. Additionally, in May, Studio City issued $300 million in senior secured bonds. The net proceeds from the issuance together with a $15 million drawdown from Studio City's revolver and cash on hand were utilized to early redeem the Studio City senior secured notes due 2027. In July, Studio City redeemed an aggregate principal amount of $165 million of its outstanding 6.5% senior notes due 2028. The redemption was funded with a $150 million drawdown from Studio City's revolver, allowing for a reduction in interest expense. After cancellation of the redeemed notes, an aggregate principal amount of $335 million of the 2028 notes remain outstanding. From April 1 to August 12, 2026, we repurchased approximately 22.4 million of our ADSs for a consideration of approximately $121 million. This brings the total repurchases in 2026 to approximately 25 million ADSs for an aggregate consideration of approximately $134 million. We continue to take a disciplined approach to capital allocation, thoughtfully balancing share repurchases, cash availability, prevailing market conditions and the long-term needs of the business. Share repurchases have been opportunistic when the market price of our ADSs falls far below levels that, in our judgment, appropriately reflect the underlying value of our company. Having spent approximately $134 million on share repurchases in 2026, we currently expect to recommence dividends in 2027. As we normally do, we'll give you some guidance on non-operating line items for the upcoming third 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 $20 million to $25 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. ate expense is expected to come in at approximately $20 million to $25 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.
My first one, perhaps for Lawrence. Glad to learn that REM is on schedule to open in the third quarter. In your view, how different is REM versus your existing non-gaming product offerings at City of Dreams? And my second question is perhaps for Geoff. On dividends, how should we think about your dividend policy?
George, we've actually soft-opened REM already. We're easing into it. The grand opening is set for after Golden Week in October. So far, the reception has been great. Macau has some of the nicest hotels in the world, so there's already an oversaturation in the luxury market. As we said in the prepared remarks, REM is unlike anything in Macau. It's unlike anything in Asia, and probably in the world. It's a very unique product and a lot of fun. It's a luxury product, but highly differentiated from anything that's in the market or even at City of Dreams. It complements our 5-star hotel offering very well. We're quite excited about REM and also about the rest of the City of Dreams Macau retail revamp. There's a lot of hoarding right now, and we're going to have to suffer through the pains over the next few months. But once it's completed, we are very excited, and I think that will probably position City of Dreams as one of the nicest properties in all of Macau.
So George, on the dividend policy, as I said in the prepared remarks, we have pushed that from towards the end of this year to sometime in 2027. We have redirected. As we've always said and as we've demonstrated, when there are opportunities to buy our shares at what we think are highly discounted prices, we'll take advantage of that. We think in 2027 we will be in a position to recommence the dividend without providing any specific target on that. The intention is to commence the dividend when it can be substantive and meaningful. We're not interested in a nominal dividend. Hopefully that gives you some direction on when and how we're thinking about the dividend policy.
Your next question comes from David Bain with Texas Capital.
Awesome. Geoff and Lawrence, super excited to be back on these calls with you. My first question would be for you, Lawrence. Over the past few years, we've seen multiple go-privates and M&A transactions, given intrinsic values in some cases exceeding public multiples. Melco is a clear example of that. I'm sure that opportunity is not lost on you. You have a lot of corporate action optionality. Is there any big-picture thinking on those types of opportunities? Is it fair to think about them when we look at shares and analyzing them?
Dave, good to talk to you again. We're always very open-minded. If you look at our transactions over the years, we've been quite innovative. At this point in time, our core focus is, although it's been a few years since COVID, we're still digging out of the COVID-related elevated debt. The priority remains on debt repayment and really improving performance in Macau. We opened Sri Lanka a year ago, we're learning that market and trying to crack the code on the Indian market. There's still a lot of work on our plates. But we're always open-minded and watching the market and what other people are doing closely.
Okay. Good enough. And then looking at the historical World Cups versus this one in 2Q '26, are there reasons that this year may have had more impact than previous years? And maybe in reverse, are we seeing more event-oriented benefits in Macau? If material, could you discuss the entertainment calendar that could match up with REM and the COD retail catalyst towards the end of the year and into next year?
From our perspective, this year's World Cup probably had a larger impact relative to prior periods. It's hard to be exact as to why. There are more opportunities for customers to access different sports betting venues. We experienced pretty significant sports betting volumes with many of our customers during the World Cup. In June and July, our experience is that sports betting was, to some degree, a substitute for some gaming activity. We saw reduced volumes and, for some players, reduced level of play relative to their historical activity. We won't know all the details for sure, but it is likely that during the World Cup period some of the gaming wallet was redirected to sports betting.
Interesting. Anything on the back-half entertainment calendar that you think is material? Is that something we should monitor more in Macau relative to the past?
We are looking at different entertainment opportunities. We had a concert at the end of July that produced good results. Certain entertainment events have driven good volumes individually, and we continue to look at opportunities that can drive gaming volume and activity within the market. We and others continue to look at entertainment as an opportunity to push the market, but I don't have a single specific item to point to at this time.
Also, the concert and entertainment calendar has become much more rational this year compared to previous years when you might have five or six events happening on a single weekend. Competitors and ourselves have learned that not all events are profitable. For example, at Galaxy and Sands there has been a roughly 50% drop-off in concerts and events in the second half of 2026.
Your next question comes from Joe Stauff with Susquehanna.
Lawrence and Geoff, first, could you update how to think about the outlook for Macau-based OpEx per day over the next couple of quarters with your new suite product launch? Specifically, how should we think about that number? Second, could you comment on post-World Cup trends in Macau and whether demand is rebuilding, in line with pre-World Cup trends or strengthened?
From an OpEx perspective, with REM opening and ramping up, and including REM and other activities, we're probably looking at something closer to $3.3 million to $3.4 million per day. Looking at activity on a post-World Cup basis, unfortunately we were surprised that the impact was probably more significant this year than in past years. Coming out of that period, in late July and early August we've seen a reversion to normality. Customers are returning, plane volumes are normalizing, and overall it looks like the dip in activity has returned to normal as we move into the back half of 2026.
To confirm, the $3.3 million to $3.4 million guidance is all-in, including House of Dancing Water.
Your next question comes from John DeCree with CBRE.
Two questions. Geoff, in your prepared remarks you mentioned evaluating opportunities to create better flexibility in the cost structure to align with business volumes. Could you elaborate? Are you looking at variable costs to adjust during unusual demand shifts? And second, on regional gaming competition, are you seeing increased competition from other regional gaming markets compared to pre-pandemic levels?
I'll start and then hand over to Evan. We are casting a wide net in reviewing our cost base and finding areas for efficiency. With the opening of REM and as that ramps up, we think we can keep our $3.4 million per day OpEx number consistent going into the third quarter as we find and execute on cost savings. As for specific measures, I'll hand it over to Evan for more detail.
Post-COVID, we spent time enhancing products and services across Macau—wet and dry amenities in rooms, butler service, enhanced staffing and offerings on the gaming floor. With Tim, Kevin and Raymond at the property level, we are reviewing each of those areas to identify where we have a high guest impact and areas where we may be spending without adequate return. We're looking across the board to trim where we can without negatively impacting guest experience, particularly at premium levels. This will be an exercise throughout the back half of 2026, reviewing the last couple of years of data to identify areas to strategically trim and redeploy dollars into higher-return parts of the guest journey. It won't be seismic, but it should be significant.
On regional competition, I would say not so much. Macau serves predominantly the Mainland Chinese market. We're seeing more Southeast Asian and Korean tourists in Macau, but they remain a small portion. Manila serves a huge domestic market and a large Korean market. Given geopolitical tensions in the past, Chinese tourist flows to the Philippines had been disrupted, but visa schemes have improved and we've seen some uptick in Chinese tourists in 2026. Each market serves its own catchment area.
Next question comes from George Choi with Citi.
A couple follow-ups. On City of Dreams, as you start construction work on the retail renovation, how should we think about disruption over the next couple of quarters? And secondly, Geoff, could you provide the latest guidance on CapEx for this year and next year?
I'll start and Tim can supplement. We're excited about the retail podium redesign, but we'll suffer through significant construction disruption between now and mid-next year. You're already seeing it in parts of the retail arc that abut the Cotai Strip; work will cycle through various areas of the property through summer of next year. It's hard to put a precise dollar figure on the guest impact. Tim has done an excellent job making the property feel better during the construction, but activity will be evident. We expect some guest impact between now and June of next year. The positive is that from June 2027 onward, we expect one of the best and most innovative retail experiences in Macau and across Asia, but there will be an impact during construction.
For the remainder of this year, we've got about $225 million of CapEx across the group. For next year, that figure will drop down to somewhere in the range of $275 million to $300 million.
Your next question comes from Peter McGuire with Vanguard.
Could you review the capital structure moves you've made so far and how you'll address 2027 maturities? Also, within the VIP business, was the softness relative to competition, such as Wynn, and how did that segment perform?
On the MLCO 2027 maturity, we haven't made any definitive plans yet. We have many options and will monitor all avenues for refinancing those notes. We'll remain opportunistic. One option is using the upsized RCF; we could draw on that if necessary. That decision will be made later this year.
On the VIP business, from a premium direct and VIP rolling chip standpoint, we continue to be strong. While Wynn has a nice offering, they are generally not our leading competitor in that segment. Over time, they appear to be shifting more towards premium direct versus VIP based on volume trends, but we continue to take our fair share of business. We did take a hit during the World Cup where some premium players likely shifted to sports betting. Those players have now come back. We feel good about the rolling volume in August and about the VIP rolling chip business heading into the back half of the year. I don't see a single competitor that poses a significant new threat on the horizon.
Don't forget, in Q2 our VIP win rate was 2.7%, which is below our normal level of around 3% and well below where we were last year in Q2. It was a material decline versus prior year.
There are no further questions at this time. I'll now hand back to Jeanny Kim for closing remarks.
Thank you, everybody, for participating in our call today, and we will speak to you again next quarter. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.