Melco Resorts & Entertainment(MLCO) - 2024 Q1 - Quarterly Report

Financial Performance - Total revenue for the year ended December 31, 2023, was $4.5 billion, representing a 15$650 million, a 20% year-over-year growth[5] - Total operating revenues for 2023 were $3.19 billion, compared to$971.67 million in 2022, representing a significant increase[15] - Net loss for 2023 was $354.2 million, an improvement from the$733.82 million net loss in 2022[15] - Total operating revenues for 2023 were $3.19 billion, a 228.4$0.97 billion in 2022[29] - Net loss for 2023 was $354.2 million, a 51.7$733.8 million in 2022[29] - Net loss decreased to $354.2 million in 2023 from$733.8 million in 2022, reflecting improved financial performance[90] Gaming Operations - The company's gaming machine handle for 2023 was $12.8 billion, with a win rate of 4.2$8.3 billion, with a hold percentage of 18.5%[9] - Studio City Casino's gaming areas contributed $1.2 billion in revenue, representing 27$500 million in revenue[4] - The company operates approximately 430 gaming tables and 628 gaming machines at City of Dreams in 2023[24] - Altira Macau's total operating revenues for 2023 were $114.0 million, representing 3.6$32.8 million (3.4%) in 2022[26] - Mocha and Other segment's total operating revenues for 2023 were $119.0 million, representing 3.7$76.4 million (7.9%) in 2022[28] - Altira Macau had an average of 44 gaming tables and 141 gaming machines in 2023, compared to 93 gaming tables and 146 gaming machines in 2022[26] - Mocha Clubs had an average of 874 gaming machines in operation in 2023, compared to 935 gaming machines in 2022[27] - The company's combined expected rolling chip win rate across properties is in the range of 2.85% to 3.15%[39] - Casino revenues for 2023 were $2.71 billion, representing 85.1$0.71 billion in 2022[71] - City of Dreams' rolling chip volume for 2023 was $19.42 billion, a 343.5$4.38 billion in 2022, with a rolling chip win rate of 2.61%[74] - Altira Macau's mass market table games drop for 2023 was $488.2 million, a 293.6$124.0 million in 2022, with a hold percentage of 22.7%[73] - Mocha and Other segment's mass market table games drop for 2023 was $176.1 million, an increase from$39.2 million in 2022, with a hold percentage of 17.0%[75] - Average net win per gaming machine per day at City of Dreams was $464 in 2023, a 232.1$140 in 2022[74] - Grand Dragon Casino operated an average of 17 gaming tables in 2023[145] - Mocha Clubs occupy a total floor area of 68,800 square feet across six locations in Macau[155] - Altira Macau's gaming and gaming support area comprises 16.38% of its total gross floor area of 104,583.39 square meters[152] - The Macau government transferred gaming equipment to the company for use at City of Dreams and Altira Macau under the Concession Contract[151][153] - Mass market table games segment accounted for 69.4% of market-wide gross gaming revenues in 2023, up from 68.5% in 2022[172] Hotel and Non-Gaming Operations - The company's average daily rate (ADR) for hotel rooms in 2023 was $250, reflecting a 10$112.6 million (262.9%) to $155.4 million in 2023, driven by higher occupancy due to increased inbound tourism to Macau[76] - City of Dreams' average daily rate was$201 with an occupancy rate of 86% and REVPAR of $173 in 2023, compared to$205, 27%, and $56 respectively in 2022[76] - Food and beverage revenues increased by$56.1 million (178.4%) to $87.5 million in 2023, primarily due to increased business activities from inbound tourism[77] - Entertainment, retail, and other revenues increased by$47.3 million (25.3%) to $233.8 million in 2023, driven by higher management fee income[79] - The House of Dancing Water at City of Dreams is expected to re-open in late 2024 after being closed since June 2020[24] - The House of Dancing Water theater at City of Dreams, temporarily closed since June 2020, is expected to re-open in late 2024[138] Debt and Financing - Total debt outstanding as of December 31, 2023, was$6.2 billion, including $1.15 billion in 2029 Senior Notes[3] - The 2020 Credit Facilities were amended, extending the maturity date to April 29, 2027, with a total commitment of$1.92 billion[3] - Total long-term indebtedness as of December 31, 2023 is $5,152.643 million, including$1,000 million for 2025 Senior Notes, $500 million for 2026 Senior Notes,$600 million for 2027 Senior Notes, $850 million for 2028 Senior Notes, and$1,150 million for 2029 Senior Notes[100] - MCO Nominee One repaid $820 million and HK$206 million (equivalent to $29.6 million) under the 2020 Credit Facilities during 2023[102] - The 2020 Credit Facilities were amended on June 29, 2023, with interest rates now based on Term SOFR plus a spread of 0.06$1.17 billion (equivalent to $149.5 million) under the 2020 Credit Facilities on March 28, 2024, and the maturity date was extended to April 29, 2027[104] - The company repaid US$850 million of credit facilities in 2023 and an additional US$149.5 million in Q1 2024, extending the maturity date of the 2020 Credit Facilities from April 2025 to April 2027[127] Macau Market and Tourism - Visitor arrivals to Macau increased by 395$22.8 billion, a 334% increase year-over-year from $5.2 billion in 2022[168] - Visitation to Macau totaled 28.2 million in 2023, a 394.9$645.56 million in 2023 from $1.04 billion in 2022[15] - Total assets decreased to$5.97 billion in 2023 from $6.70 billion in 2022[15] - The company recognized an intangible asset and financial liability of MOP1.93 billion (US$239.6 million) related to gaming concessions in Macau[15] - Asset impairments of $207.6 million were recorded for Altira Macau in 2023[29] - Altira Macau recognized an impairment of long-lived assets totaling$207.6 million, including $110.0 million for property and equipment,$30.4 million for finite-lived intangible assets, $65.2 million for land use rights, and$2.0 million for operating lease right-of-use assets[49] - Cash and cash equivalents stood at $645.6 million, with restricted cash at$124.6 million as of December 31, 2023[91] - Deferred tax assets valuation allowances were $127.3 million as of December 31, 2023, compared to$120.3 million in 2022[68] Capital Expenditures and Investments - Total capital expenditures for 2023 were $46.7 million, compared to$31.0 million in 2022[47] - Studio City Phase 2 investment totaled $1.2 billion, including Epic Tower, W Macau, and an indoor waterpark[146] - Capital commitments for City of Dreams property and equipment acquisition totaled$24.8 million as of December 31, 2023[108] - Melco Resorts Macau committed to an overall investment of MOP11,823.7 million (equivalent to $1.47 billion) and an additional MOP2,003.0 million (equivalent to$248.9 million) due to the Incremental Investment Trigger being reached in 2023[114] Operating Costs and Expenses - Total operating costs and expenses rose to $3.22 billion in 2023 from$1.43 billion in 2022, with casino expenses increasing by $1.21 billion (166.8$1.94 billion[80] - The company's allowances for casino credit losses were 63.9% of gross casino accounts receivable as of December 31, 2023, compared to 84.0% in 2022[67] Cash Flow - Net cash provided by operating activities was $332.1 million in 2023, compared to a net cash used in operating activities of$597.4 million in 2022[95] - Net cash provided by investing activities was $75.7 million in 2023, compared to a net cash used in investing activities of$566.5 million in 2022[96] - Net cash used in financing activities was $857.6 million in 2023, primarily due to repayments of the revolving credit facility under the 2020 Credit Facilities[98] Regulatory and Concession Details - The company's gaming concession in Macau is effective until December 31, 2032, under the Concession Contract[4] - The current cap of gaming tables and gaming machines in Macau are 6,000 and 12,000 respectively[176] - The registered share capital of each concessionaire shall be at least MOP5.0 billion (equivalent to approximately US$621.4 million)[178] - The term of the concessions may be up to ten years, subject to extension(s) of up to three years in total[178] - The managing director of each concessionaire must be a Macau permanent resident and hold at least 15% of the concessionaire's registered share capital[178] - Melco Resorts Macau operates Studio City Casino under the Studio City Casino Agreement, managing day-to-day operations, including gaming tables and machines[200] - Melco Resorts Macau is allocated 750 gaming tables by the Macau government, with costs deductible for tables exceeding 198 at Studio City Casino[200] - Studio City Entertainment receives residual gross gaming revenues from Studio City Casino, recognized as revenue under the agreement[200] - The Studio City Casino Agreement allows Melco Resorts Macau to adjust the number of gaming tables and machines as needed[200] - The agreement includes customary events of default, such as payment failures or actions causing Melco Resorts Macau to breach its concession[201] - Termination of the Studio City Casino Agreement is possible due to default or regulatory review, except when Studio City Entertainment is under Melco's control[201] Foreign Exchange and Risk Management - The majority of revenues are denominated in H.K. dollars, while a significant portion of indebtedness and expenses are denominated in U.S. dollars, exposing the company to foreign exchange risk[121] - A 1% change in exchange rates between non-US dollar currencies and the US dollar would cause a maximum foreign transaction gain or loss of approximately US$7.6 million based on cash and bank balances as of December 31, 2023[124] - A 1$10.5 million based on indebtedness balances as of December 31, 2023[124] - Approximately 80% of the company's total gross indebtedness is based on fixed rates as of December 31, 2023, with a 100 basis point change in HIBOR estimated to impact annual interest costs by $10.5 million[120] Workforce and Employment - The company had 14,595 employees as of December 31, 2023, up from 12,044 in 2022[184] - City of Dreams accounted for 50.8$6,510.3 million, including $3,001 million due within 1-3 years and$1,754.1 million due within 3-5 years[111]