Melco Resorts & Entertainment Limited (Nasdaq: MLCO) (“Melco” or the “Company”), a developer, owner, and operator of integrated resort facilities in Asia and Europe, today reported its unaudited financial results for the fourth quarter and full year ended December 31, 2021.
Total operating revenues for the fourth quarter of 2021 were US$480.6 million, representing a decrease of approximately 9% from US$528.0 million for the comparable period in 2020. The decrease in total operating revenues was primarily attributable to softer performance in the rolling chip segment.
Operating loss for the fourth quarter of 2021 was US$104.4 million, compared with operating loss of US$144.8 million in the fourth quarter of 2020.
Melco generated Adjusted Property EBITDA(1) of US$94.0 million in the fourth quarter of 2021, compared with Adjusted Property EBITDA of US$53.4 million in the fourth quarter of 2020.
Net loss attributable to Melco Resorts & Entertainment Limited for the fourth quarter of 2021 was US$159.9 million, or US$0.34 per ADS, compared with net loss attributable to Melco Resorts & Entertainment Limited of US$199.7 million, or US$0.42 per ADS, in the fourth quarter of 2020. The net loss attributable to noncontrolling interests was US$30.0 million and US$35.1 million during the fourth quarters of 2021 and 2020, respectively, all of which were related to Studio City, City of Dreams Manila, and the Cyprus Operations.
Mr. Lawrence Ho, our Chairman and Chief Executive Officer, commented, “COVID-related travel restrictions continued to impact our fourth quarter operating and financial performance. We have maintained strong cost discipline under these challenging times and are pleased to see improving EBITDA profitability across each of our geographies this quarter. We are confident that our customers will return in numbers once restrictions are eased.
“We are pleased to see Macau’s vaccination rate now at over 80% and, to play our part, Melco’s employee vaccination rate in Macau has reached 95%. We hope that increasing vaccination rates can facilitate an easing of travel restrictions within the Greater Bay Area.
“Our investment commitment remains unwavering. In Macau, Studio City announced fresh rounds of debt and equity financing in February and we continue our efforts to complete the construction of Studio City Phase 2 by the deadline set in the land concession of December 27, 2022. Furthermore, in December 2021, we announced our partnership with Marriott International to run one of our new hotel towers under the W Hotel brand. W Macau – Studio City will have 557 keys, 1,110 square meters of MICE space, renowned lobby lounges, a spa, a fitness center and an indoor swimming pool.
“In Europe, the City of Dreams Mediterranean integrated resort project is on track for completion in the second half of 2022.
“On January 14, the Macau government put forward to the Macau Legislative Assembly a proposed law to amend Macau’s gaming law, ‘Amendment to Law No. 16/2001’. We are grateful to the government for the opportunity to contribute our views during the public consultation process and for providing a clear framework. We are committed to participating in the public tender for the award of a gaming concession and will continue to promote economic diversification in Macau. Our actions to date reflect our confidence in the pent-up demand for leisure and in the long-term growth and stability of Macau.
“Lastly, we remain steadfast in our efforts in3 sustainability with a focus on energy and waste reduction. Our ongoing efficiency measures have accumulated annual savings of 53,579 MWh in Macau alone, equivalent to the electricity consumption of 6,897 households per year. Through Winnow, an artificial Intelligence (AI)-driven technology in food waste installed in our kitchens and employee dining rooms, we are saving approximately 316.5 tonnes of food waste per year. Our commitment to the Global Tourism Plastics Initiative led by the UN Environment Programme and the World Tourism Organization in collaboration with the Ellen MacArthur Foundation has seen us replace single use plastic bottles in guest rooms and restaurants with the NORDAQ water filtration and bottling system. We will gradually eliminate 14.8 million plastic bottles annually in Macau alone. By replacing F&B containers with biodegradable and sustainable alternatives, we can avoid the use and wastage of 9.5 tons of single-use plastic per year.”
City of Dreams Fourth Quarter Results
For the quarter ended December 31, 2021, total operating revenues at City of Dreams were US$244.8 million, compared to US$321.2 million in the fourth quarter of 2020. City of Dreams generated Adjusted EBITDA of US$49.7 million in the fourth quarter of 2021, compared with Adjusted EBITDA of US$57.3 million in the fourth quarter of 2020. The year-over-year decrease in Adjusted EBITDA was primarily a result of softer performance in the rolling chip and mass market table games segments, partially offset by reversal of bonus and bad debt provisions.
Rolling chip volume was US$3.12 billion for the fourth quarter of 2021 versus US$3.16 billion in the fourth quarter of 2020. The rolling chip win rate was 1.68% in the fourth quarter of 2021 versus 3.76% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% – 3.15%.
Mass market table games drop decreased to US$690.9 million in the fourth quarter of 2021, compared with US$739.7 million in the fourth quarter of 2020. The mass market table games hold percentage was 29.7% in the fourth quarter of 2021, compared to 30.1% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$421.6 million, compared with US$469.1 million in the fourth quarter of 2020. The gaming machine win rate was 3.6% in the fourth quarter of 2021 versus 3.1% in the fourth quarter of 2020.
Total non-gaming revenue at City of Dreams in the fourth quarter of 2021 was US$41.6 million, compared with US$48.1 million in the fourth quarter of 2020.
Altira Macau Fourth Quarter Results
For the quarter ended December 31, 2021, total operating revenues at Altira Macau were US$13.3 million, compared to US$28.0 million in the fourth quarter of 2020. Altira Macau generated negative Adjusted EBITDA of US$0.1 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$13.4 million in the fourth quarter of 2020.
Starting in the third quarter of 2021, Altira Macau has strategically repositioned to cater to the premium mass segment and has shut down VIP operations. In the fourth quarter of 2020, rolling chip volume was US$950.8 million and the rolling chip win rate was 3.14%. The expected rolling chip win rate range is 2.85% – 3.15%.
In the mass market table games segment, drop was US$35.4 million in the fourth quarter of 2021 versus US$48.5 million in the fourth quarter of 2020. The mass market table games hold percentage was 28.1% in the fourth quarter of 2021, compared with 19.1% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$65.8 million, compared with US$56.4 million in the fourth quarter of 2020. The gaming machine win rate was 3.6% in the fourth quarter of 2021 versus 4.0% in the fourth quarter of 2020.
Total non-gaming revenue at Altira Macau in the fourth quarter of 2021 was US$2.3 million, compared with US$3.7 million in the fourth quarter of 2020.
Mocha Clubs Fourth Quarter Results
Total operating revenues from Mocha Clubs were US$20.8 million in the fourth quarter of 2021, compared to US$12.8 million in the fourth quarter of 2020. Mocha Clubs generated Adjusted EBITDA of US$4.8 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$0.5 million in the same period in 2020.
Gaming machine handle for the fourth quarter of 2021 was US$474.6 million, compared with US$299.3 million in the fourth quarter of 2020. The gaming machine win rate was 4.4% in the fourth quarter of 2021 versus 4.3% in the fourth quarter of 2020.
Studio City Fourth Quarter Results
Total operating revenues at Studio City were US$88.2 million in the fourth quarters of both 2021 and 2020. Studio City generated negative Adjusted EBITDA of US$0.1 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$5.5 million in the fourth quarter of 2020.
Studio City’s rolling chip volume was US$474.4 million in the fourth quarter of 2021 versus US$449.4 million in the fourth quarter of 2020. The rolling chip win rate was 1.84% in the fourth quarter of 2021 versus negative 0.13% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% – 3.15%.
Mass market table games drop decreased to US$253.5 million in the fourth quarter of 2021, compared with US$305.6 million in the fourth quarter of 2020. The mass market table games hold percentage was 29.6% in the fourth quarter of 2021, compared to 27.0% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$262.4 million, compared with US$257.7 million in the fourth quarter of 2020. The gaming machine win rate was 2.8% in the fourth quarter of 2021, compared to 2.2% in the fourth quarter of 2020.
Total non-gaming revenue at Studio City in the fourth quarter of 2021 was US$17.7 million, compared with US$19.8 million in the fourth quarter of 2020.
City of Dreams Fourth Quarter Results
For the quarter ended December 31, 2021, total operating revenues at City of Dreams were US$244.8 million, compared to US$321.2 million in the fourth quarter of 2020. City of Dreams generated Adjusted EBITDA of US$49.7 million in the fourth quarter of 2021, compared with Adjusted EBITDA of US$57.3 million in the fourth quarter of 2020. The year-over-year decrease in Adjusted EBITDA was primarily a result of softer performance in the rolling chip and mass market table games segments, partially offset by reversal of bonus and bad debt provisions.
Rolling chip volume was US$3.12 billion for the fourth quarter of 2021 versus US$3.16 billion in the fourth quarter of 2020. The rolling chip win rate was 1.68% in the fourth quarter of 2021 versus 3.76% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% – 3.15%.
Mass market table games drop decreased to US$690.9 million in the fourth quarter of 2021, compared with US$739.7 million in the fourth quarter of 2020. The mass market table games hold percentage was 29.7% in the fourth quarter of 2021, compared to 30.1% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$421.6 million, compared with US$469.1 million in the fourth quarter of 2020. The gaming machine win rate was 3.6% in the fourth quarter of 2021 versus 3.1% in the fourth quarter of 2020.
Total non-gaming revenue at City of Dreams in the fourth quarter of 2021 was US$41.6 million, compared with US$48.1 million in the fourth quarter of 2020.
Altira Macau Fourth Quarter Results
For the quarter ended December 31, 2021, total operating revenues at Altira Macau were US$13.3 million, compared to US$28.0 million in the fourth quarter of 2020. Altira Macau generated negative Adjusted EBITDA of US$0.1 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$13.4 million in the fourth quarter of 2020.
Starting in the third quarter of 2021, Altira Macau has strategically repositioned to cater to the premium mass segment and has shut down VIP operations. In the fourth quarter of 2020, rolling chip volume was US$950.8 million and the rolling chip win rate was 3.14%. The expected rolling chip win rate range is 2.85% – 3.15%.
In the mass market table games segment, drop was US$35.4 million in the fourth quarter of 2021 versus US$48.5 million in the fourth quarter of 2020. The mass market table games hold percentage was 28.1% in the fourth quarter of 2021, compared with 19.1% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$65.8 million, compared with US$56.4 million in the fourth quarter of 2020. The gaming machine win rate was 3.6% in the fourth quarter of 2021 versus 4.0% in the fourth quarter of 2020.
Total non-gaming revenue at Altira Macau in the fourth quarter of 2021 was US$2.3 million, compared with US$3.7 million in the fourth quarter of 2020.
Mocha Clubs Fourth Quarter Results
Total operating revenues from Mocha Clubs were US$20.8 million in the fourth quarter of 2021, compared to US$12.8 million in the fourth quarter of 2020. Mocha Clubs generated Adjusted EBITDA of US$4.8 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$0.5 million in the same period in 2020.
Gaming machine handle for the fourth quarter of 2021 was US$474.6 million, compared with US$299.3 million in the fourth quarter of 2020. The gaming machine win rate was 4.4% in the fourth quarter of 2021 versus 4.3% in the fourth quarter of 2020.
Studio City Fourth Quarter Results
Total operating revenues at Studio City were US$88.2 million in the fourth quarters of both 2021 and 2020. Studio City generated negative Adjusted EBITDA of US$0.1 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$5.5 million in the fourth quarter of 2020.
Studio City’s rolling chip volume was US$474.4 million in the fourth quarter of 2021 versus US$449.4 million in the fourth quarter of 2020. The rolling chip win rate was 1.84% in the fourth quarter of 2021 versus negative 0.13% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% – 3.15%.
Mass market table games drop decreased to US$253.5 million in the fourth quarter of 2021, compared with US$305.6 million in the fourth quarter of 2020. The mass market table games hold percentage was 29.6% in the fourth quarter of 2021, compared to 27.0% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$262.4 million, compared with US$257.7 million in the fourth quarter of 2020. The gaming machine win rate was 2.8% in the fourth quarter of 2021, compared to 2.2% in the fourth quarter of 2020.
Total non-gaming revenue at Studio City in the fourth quarter of 2021 was US$17.7 million, compared with US$19.8 million in the fourth quarter of 2020.
City of Dreams Manila Fourth Quarter Results
For the quarter ended December 31, 2021, total operating revenues at City of Dreams Manila were US$83.9 million, compared to US$63.8 million in the fourth quarter of 2020. City of Dreams Manila generated Adjusted EBITDA of US$34.6 million in the fourth quarter of 2021, compared with Adjusted EBITDA of US$16.8 million in the comparable period of 2020. The year-over-year increase in Adjusted EBITDA was primarily due to improved performance in the mass market table games and gaming machine segments, partially offset by softer performance in the rolling chip segment.
City of Dreams Manila’s rolling chip volume was US$206.3 million in the fourth quarter of 2021 versus US$242.6 million in the fourth quarter of 2020. The rolling chip win rate was 1.20% in the fourth quarter of 2021 versus 2.98% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% – 3.15%.
Mass market table games drop increased to US$113.2 million in the fourth quarter of 2021, compared with US$99.6 million in the fourth quarter of 2020. The mass market table games hold percentage was 35.6% in the fourth quarter of 2021, compared to 35.7% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$815.1 million, compared with US$532.1 million in the fourth quarter of 2020. The gaming machine win rate was 5.4% in the fourth quarter of 2021 versus 4.8% in the fourth quarter of 2020.
Total non-gaming revenue at City of Dreams Manila in the fourth quarter of 2021 was US$26.5 million, compared with US$14.5 million in the fourth quarter of 2020.
Cyprus Operations Fourth Quarter Results
The Company is licensed to operate a temporary casino, the first casino in the Republic of Cyprus, and four satellite casinos. Upon the completion and opening of City of Dreams Mediterranean, the Company will continue to operate the satellite casinos while operation of the temporary casino will cease.
Our casinos remained open during the quarter ended December 31, 2021, with total operating revenues at Cyprus Casinos increasing to US$22.4 million from US$8.2 million in the fourth quarter of 2020. Cyprus Casinos generated Adjusted EBITDA of US$5.2 million in the fourth quarter of 2021, compared with negative Adjusted EBITDA of US$1.2 million in the fourth quarter of 2020.
Rolling chip volume was US$1.3 million for the fourth quarter of 2021 versus US$0.1 million in the fourth quarter of 2020. The rolling chip win rate was negative 1.92% in the fourth quarter of 2021 versus negative 17.43% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% – 3.15%.
Mass market table games drop was US$30.5 million in the fourth quarter of 2021, compared with US$10.5 million in the fourth quarter of 2020. The mass market table games hold percentage was 20.1% in the fourth quarter of 2021, compared to 16.2% in the fourth quarter of 2020.
Gaming machine handle for the fourth quarter of 2021 was US$328.6 million, compared with US$129.4 million in the fourth quarter of 2020. The gaming machine win rate was 5.1% in the fourth quarter of 2021 versus 5.2% in the fourth quarter of 2020.
Other Factors Affecting Earnings
Total net non-operating expenses for the fourth quarter of 2021 were US$82.8 million, which mainly included interest expense of US$85.4 million, net of amounts capitalized.
Depreciation and amortization costs of US$144.1 million were recorded in the fourth quarter of 2021, of which US$14.3 million related to the amortization expense for our gaming subconcession and US$5.7 million related to the amortization expense for the land use rights.
The negative Adjusted EBITDA for Studio City for the three months ended December 31, 2021 referred to above is US$10.4 million less than the negative Adjusted EBITDA of Studio City contained in the earnings release for Studio City International Holdings Limited (“SCIHL”) dated March 1, 2022 (the “Studio City Earnings Release”). The Adjusted EBITDA of Studio City contained in the Studio City Earnings Release includes certain intercompany charges that are not included in the Adjusted EBITDA for Studio City contained in this press release. Such intercompany charges include, among other items, fees and shared service charges billed between SCIHL and its subsidiaries and certain subsidiaries of Melco. Additionally, Adjusted EBITDA of Studio City included in this press release does not reflect certain intercompany costs related to the table games operations at Studio City Casino.
Financial Position and Capital Expenditures
Total cash and bank balances as of December 31, 2021 aggregated to US$1.65 billion, including US$0.4 million of restricted cash. Total debt, net of unamortized deferred financing costs and original issue premiums, was US$6.56 billion at the end of the fourth quarter of 2021.
Approximately 3.3 million ADSs were repurchased in the fourth quarter of 2021, for a total consideration of US$31 million.
Capital expenditures for the fourth quarter of 2021 were US$250.5 million, which primarily related to the construction projects at Studio City Phase 2 and City of Dreams Mediterranean.
Full Year Results
For the year ended December 31, 2021, Melco Resorts & Entertainment Limited reported total operating
revenues of US$2.01 billion versus US$1.73 billion in the prior year. The increase in total operating revenues was primarily attributable to improved performances in the mass market table games and gaming machine segments as well as higher non-gaming revenues, partially offset by softer performance in the rolling chip segment.
The operating loss for 2021 was US$577.5 million, compared with an operating loss of US$940.6 million for 2020.
Melco generated Adjusted Property EBITDA of US$235.1 million for the year ended December 31, 2021, compared with negative Adjusted Property EBITDA of US$104.3 million in 2020.
Net loss attributable to Melco Resorts & Entertainment Limited for 2021 was US$811.8 million, or US$1.70 per ADS, compared with net loss attributable to Melco Resorts & Entertainment Limited of US$1.26 billion, or US$2.65 per ADS, for 2020. The net loss attributable to noncontrolling interests was US$144.7 million and US$191.1 million for 2021 and 2020, respectively, all of which were related to Studio City, City of Dreams Manila and the Cyprus Operations.
Subsequent Events
On February 7, 2022, Studio City Company Limited (“Studio City Company”), a subsidiary of the Company, announced an offering of senior secured notes and, concurrently, SCIHL announced that it had entered into subscription agreements with certain existing institutional holders of its ordinary shares and American Depositary Shares, each representing four Class A ordinary shares (“ADSs”), which hold, in aggregate, over 99% of SCIHL’s outstanding shares, for total proceeds of US$300 million. SCIHL is in the process of closing the private placement.
The senior secured notes were issued on February 16, 2022, with an aggregate principal amount of US$350 million, 7.0% coupon and a tenor of 5 years (the “Notes”). Net proceeds from the issuance of the Notes will be used to partially fund the capital expenditures of the remaining project for Studio City and for general corporate purposes.
Recent Developments
COVID-19 outbreaks continue to have a material effect on our operations, financial position, and future prospects into the first quarter of 2022.
In Macau, our operations remain impacted by travel restrictions and quarantine requirements. The appearance of COVID-19 cases in Macau in late September 2021 led to city-wide mandatory testing, mandatory closure of most entertainment and leisure venues (casinos and gaming areas excluded), and strict travel restrictions and requirements being implemented to enter and exit Macau. Since October 19, 2021, authorities have eased pandemic prevention measures such that travelers no longer require a 14-day quarantine on arrival in Zhuhai, and the validity of nucleic acid tests to enter Zhuhai was extended from 24 hours to 7 days. However, health-related precautionary measures remain in place and non-Macau resident individuals who are not residents of Taiwan, Hong Kong, or the PRC continue to be unable to enter Macau, except if they have been in Hong Kong or mainland PRC in the preceding 21 days and are eligible for an exemption application.
In the Philippines, the government announced a re-opening of the Philippines’ borders to fully vaccinated international tourists with a negative RT-PCR test taken within 48 hours of departure of their country of origin, effective February 10, 2022 and lowered COVID-19 restrictions to alert level 1 from March 1, 2022 which allows casinos to operate at 100% capacity, subject to certain guidelines. Separately, our online gaming offering – Live Shots – program which began on August 10, 2021 for live-dealer games and on September 15, 2021 for slot machines, was shutdown on December 1, 2021 for maintenance.
In Cyprus, with the surge in COVID-19 cases, authorities stepped up COVID-19 restrictions from the end of December 2021 by reducing the capacity at certain venues and increasing restrictions for unvaccinated people. However, such restrictions were eased from February 21, 2022 and our casinos remained open during the period.
Conference Call Information
Melco Resorts & Entertainment Limited will hold a conference call to discuss its fourth quarter 2021 financial results on Tuesday, March 1, 2022 at 8:30 a.m. Eastern Time (or 9:30 p.m. Hong Kong Time). To join the conference call, please use the dial-in details below:
US Toll Free 1 833 239 5575US Toll / International 1 332 208 9458HK Toll 852 3018 8307HK Toll Free 800 906 613Japan Toll 81 3 4577 4717Japan Toll Free 012 092 5482UK Toll Free 080 0279 8053Australia Toll 61 290 833 216Australia Toll Free 1 800 754 642Philippines Toll Free 63 288 917 925 Passcode 3556347
An audio webcast will also be available at http://www.melco-resorts.com.
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