Melco Resorts & Entertainment, Limited – the casino operator formerly known as Melco Crown Entertainment – continued Macau’s recent winning streak Thursday morning by reporting a 42 percent increase in adjusted EBITDA and smashing Wall Street estimates in the process.
Revenues surged 16 percent jump year-over-year from $1.1 billion to $1.3 billion for the quarter – $100 million more than Street estimates, while adjusted property EBITDA grew from $249 million to $353 million.
Net income was $113 million, or $0.23 per share, up significantly from $40 million – $0.07 per share- in the first quarter of 2016.
Total property EBITDA at Melco Resorts’s Macau properties was $292 million, beating the Wall Street consensus expectation of $270 million by 8 percent.
“In the first quarter of 2017, we delivered a strong set of results as highlighted by a 42% year-on-year increase in group-wide Adjusted property EBITDA, driven by expanding revenues across both Macau and the Philippines,” said Stanley Ho, chairman of Melco Resorts & Entertainment.
Other major Macau casino operators, including Las Vegas Sands, Wynn Resorts and MGM Resorts, also reported strong earnings in the Chinese territory during the quarter – suggesting that the nearly three year doldrums has passed.
“City of Dreams delivered Adjusted property EBITDA of approximately US$214 million, a sequential increase of over 13% compared to the prior quarter, despite an increase in supply in Macau,” Ho continued. “We recently announced a range of exciting enhancements to City of Dreams, our flagship integrated resort in Macau, which we believe will help us continue to be one of the leaders of the market in the premium segments in Macau.”
City of Dreams’ numbers were driven by an increase in non-gaming revenues and rolling chip turnover. Revenue from mass market table games and gaming machines were down from the first quarter of 2016, meaning the performance was propelled by heightened VIP play.
Grant Govertsen, an analyst with Union Gaming, said that City of Dreams is well-positioned to absorb a new influx of supply set to come online on the Cotai Peninsula in the coming 18 months.
“As the east side of Cotai comes online (MGM in late 2017, SJM in the second half of 2018), we would expect City of Dreams to enjoy the cluster effect and enjoy above-market growth rates, especially with Morpheus opening in 2018 and driving high-end play,” Govertsen wrote.
Ho also announced that the Hard Rock hotel at City of Dreams would be rebranded and replaced in the spring of 2018 by the Morpheus – a 780 room luxury hotel that he said “will change the landscape in Macau with what we believe is a truly iconic design.”
Studio City reported $68 million in EBITDA, 2 percent above consensus.and a more than 200 percent increase year-over-year as it continues to ramp up. The bump was driven by a 39 percent increase in mass table games revenue.
City of Dreams Manila posted $61 million of EBITDA – which was driven primarily from stronger casino revenues and registered well above the $41 million consensus.estimate, and net revenues of $157 million, up from $95 million during the prior year quarter. Rolling chip volume totaled $2.4 billion for the quarter, and revenues from mass market table games and gaming machine were up significantly.
“City of Dreams Manila delivered a fifth quarter of record Adjusted property EBITDA as a result of improvements across all gaming segments,” said Ho, adding that he remains bullihs on the Phlippines as a growing gaming jurisdiction.
“Our investment in the Philippines gaming market provides our company with ongoing diversification of earnings and has enabled us to participate in, and contribute to, one of the world’s fastest growing gaming and tourism markets,” he said. “Our entry into the Philippine gaming market highlights our dedication to investing in development opportunities that create long term value for our shareholders.”
Melco Resorts also officially changed its name from Melco Crown Entertainment in the first quarter.
“Early this year, we received shareholder approval to change our company’s name to Melco Resorts & Entertainment Limited, reflecting a corporate identity which is more closely aligned to our long term vision of building the world’s leading luxury gaming, entertainment and hospitality company,” said Ho, articulating the reason behind the change.
Additionally, the company announced that it would pay out a $0.09 dividend to shareholders on May 31, 2017.
On its balance sheet, Melco Resorts holds $1.5 billion in cash against $3.7 billion in total debt.
