Studio City International Holdings Limited Announces Unaudited First Quarter 2020 Earnings

Hong Kong, HONG KONG


MACAU, May 14, 2020 (GLOBE NEWSWIRE) -- Studio City International Holdings Limited (NYSE: MSC) (“Studio City” or the “Company”), a world-class gaming, retail and entertainment resort located in Cotai, Macau, today reported its unaudited financial results for the first quarter of 2020.

Total operating revenues for the first quarter of 2020 were US$37.1 million, as compared to US$151.1 million in the first quarter of 2019. The decrease in total operating revenues was due to the decrease in revenues from the provision of gaming related services and lower non-gaming revenues as a result of the temporary casino closure and enhanced quarantine and social distancing measures to mitigate the COVID-19 outbreak in the first quarter of 2020.

Revenues from the provision of gaming related services are derived from the provision of facilities for the operations of Studio City Casino by Melco Resorts (Macau) Limited (the “Gaming Operator”), a subsidiary of Melco Resorts & Entertainment Limited (“Melco”) and holder of a gaming subconcession, and services related thereto.

Studio City Casino generated gross gaming revenues of US$146.7 million and US$348.9 million for the first quarters of 2020 and 2019, respectively.

Studio City’s rolling chip volume was US$1.38 billion for the first quarter of 2020 versus US$2.66 billion in the first quarter of 2019. The rolling chip win rate was 3.31% in the first quarter of 2020 versus 3.34% in the first quarter of 2019. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop decreased to US$352.8 million in the first quarter of 2020 compared with US$851.4 million in the first quarter of 2019. The mass market table games hold percentage was 25.9% in the first quarter of 2020 compared to 28.4% in the first quarter of 2019.

Gaming machine handle for the first quarter of 2020 was US$311.1 million, compared with US$560.6 million in the first quarter of 2019. The gaming machine win rate was 3.2% in the first quarter of 2020 compared to 3.3% in the first quarter of 2019.

Total gaming taxes and the costs incurred in connection with the operation of Studio City Casino deducted from gross gaming revenues were US$141.2 million and US$258.5 million in the first quarters of 2020 and 2019, respectively.

Revenues from the provision of gaming related services were US$5.5 million and US$90.4 million for the first quarters of 2020 and 2019, respectively. Revenues from the provision of gaming related services are net of gaming taxes and the costs incurred in connection with the operation of Studio City Casino deducted by the Gaming Operator pursuant to the Services and Right to Use Arrangements.

Total non-gaming revenues at Studio City for the first quarter of 2020 was US$31.6 million, compared with US$60.7 million for the first quarter of 2019.

Operating loss for the first quarter of 2020 was US$63.4 million, compared with operating income of US$38.5 million in the first quarter of 2019.         

Studio City generated negative Adjusted EBITDA(1) of US$18.2 million in the first quarter of 2020, as compared to Adjusted EBITDA of US$84.2 million in the first quarter of 2019. The year-over-year decrease in Adjusted EBITDA was mainly attributable to the decrease in revenues from the provision of gaming related services and lower non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for the first quarter of 2020 was US$70.9 million, compared with net income attributable to Studio City International Holdings Limited of US$2.9 million in the first quarter of 2019. The net loss attributable to participation interest was US$21.3 million in the first quarter of 2020, compared with net income attributable to participation interest of US$0.9 million in the first quarter of 2019.  

Other Factors Affecting Earnings

Total net non-operating expenses for the first quarter of 2020 were US$29.0 million, which mainly included interest expenses, net of amounts capitalized, of US$25.8 million.

Depreciation and amortization costs of US$40.8 million were recorded in the first quarter of 2020 of which US$0.8 million related to the amortization expense for the land use right.

The negative Adjusted EBITDA for Studio City for the three months ended March 31, 2020 referred to in Melco’s earnings release dated May 14, 2020 (“Melco’s earnings release”) is US$8.7 million less than the negative Adjusted EBITDA of Studio City contained in this press release. The Adjusted EBITDA of Studio City contained in this press release includes certain intercompany charges that are not included in the Adjusted EBITDA for Studio City contained in Melco’s earnings release. Such intercompany charges include, among other items, fees and shared service charges billed between the Company and its subsidiaries and certain subsidiaries of Melco. Additionally, Adjusted EBITDA of Studio City included in Melco’s earnings release does not reflect certain costs related to the table games operations at Studio City Casino.

Financial Position and Capital Expenditures

Total cash and bank balances as of March 31, 2020 aggregated US$299.4 million (December 31, 2019: US$327.2 million), including US$43.4 million of restricted cash (December 31, 2019: US$27.9 million). Total debt, net of unamortized deferred financing costs at the end of the first quarter of 2020, was US$1.44 billion (December 31, 2019: US$1.44 billion).

Capital expenditures for the first quarter of 2020 were US$45.0 million.

Recent Developments

The COVID-19 outbreak continues to have a material effect on our operations, financial position and prospects during the second quarter of 2020.

Our operations continue to be impacted by significant travel bans, restrictions and quarantine requirements imposed by the governments in Macau, Hong Kong and certain provinces in China on nearly all visitors traveling to and from Macau. Additionally, health-related precautionary measures remain in place at our property, which could impact visitation and customer spending. In addition, we continue to monitor the impact of COVID-19 on the construction of Studio City Phase 2.  Prior to the COVID-19 outbreak, we estimated a construction period of approximately 32 months for Phase 2. With the disruptions from the COVID-19 outbreak, the construction period is likely to extend beyond the estimated approximately 32 months.

As the disruptions from the COVID-19 outbreak are ongoing, any recovery from such disruptions will depend on future developments, such as the duration of travel and visa restrictions and customer sentiment, including the length of time before customers will resume travelling and participating in entertainment and leisure activities at high-density venues, all of which are highly uncertain.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Studio City International Holdings Limited (the “Company”) may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) growth of the gaming market and visitations in Macau, (ii) capital and credit market volatility, (iii) local and global economic conditions, (iv) our anticipated growth strategies, (v) gaming authority and other governmental approvals and regulations, and (vi) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “target”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

  1. "Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, other non-operating income and expenses. We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results. This non-GAAP financial measure eliminates the impact of items that we do not consider indicative of the performance of our business. While we believe that this non-GAAP financial measure is useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared in accordance with U.S. GAAP. It should not be considered in isolation or construed as an alternative to net income/loss, cash flow or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. The use of Adjusted EBITDA has material limitations as an analytical tool, as Adjusted EBITDA does not include all items that impact our net income/loss. In addition, the Company’s calculation of Adjusted EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP financial measure. Reconciliations of Adjusted EBITDA with the most comparable financial measures calculated and presented in accordance with U.S. GAAP are provided herein immediately following the financial statements included in this press release.
     
  2. “Adjusted net income/loss” is net income/loss before pre-opening costs, property charges and other, loss on extinguishment of debt and costs associated with debt modification, net of participation interest. Adjusted net income/loss is presented as supplemental disclosure because management believes it provides useful information to investors and others in understanding and evaluating our performance, in addition to income/loss computed in accordance with U.S. GAAP. Adjusted net income/loss may be different from the calculation methods used by other companies and, therefore, comparability may be limited. Reconciliations of adjusted net income/loss with the most comparable financial measures calculated and presented in accordance with U.S. GAAP are provided herein immediately following the financial statements included in this press release. 

About Studio City International Holdings Limited

The Company, with its American depositary shares listed on the New York Stock Exchange (NYSE: MSC), is a world-class gaming, retail and entertainment resort located in Cotai, Macau. For more information about the Company, please visit www.studiocity-macau.com.

The Company is strongly supported by its single largest shareholder, Melco Resorts & Entertainment Limited, a company with its American depositary shares listed on the NASDAQ Global Select Market (NASDAQ: MLCO). 

For investment community, please contact:
Richard Huang
Director, Investor Relations
Tel: +852 2598 3619
Email: richardlshuang@melco-resorts.com

For media enquiries, please contact:
Chimmy Leung
Executive Director, Corporate Communications
Tel: +852 3151 3765
Email: chimmyleung@melco-resorts.com 

       
Studio City International Holdings Limited and Subsidiaries 
Condensed Consolidated Statements of Operations 
(In thousands of U.S. dollars, except share and per share data) 
       
 Three Months Ended 
 March 31, 
 2020  2019  
  (Unaudited)  (Unaudited) 
       
Operating revenues:      
Provision of gaming related services$5,506  $90,391  
Rooms 8,659   20,960  
Food and beverage 8,199   17,513  
Entertainment 868   6,172  
Services fee 8,757   9,052  
Mall 4,527   6,382  
Retail and other 557   633  
Total operating revenues 37,073   151,103  
       
Operating costs and expenses:
      
Provision of gaming related services (5,653)  (5,782) 
Rooms (4,414)  (5,638) 
Food and beverage (10,505)  (15,024) 
Entertainment (1,218)  (6,767) 
Mall (1,553)  (2,734) 
Retail and other (365)  (490) 
General and administrative (31,521)  (30,440) 
Pre-opening costs (28)  (2,489) 
Amortization of land use right (832)  (823) 
Depreciation and amortization (39,960)  (42,315) 
Property charges and other (4,405)  (129) 
Total operating costs and expenses (100,454)  (112,631) 
Operating (loss) income (63,381)  38,472  
Non-operating income (expenses):      
Interest income 391   1,504  
Interest expenses, net of amounts capitalized (25,779)  (34,054) 
Loan commitment fees (104)  (103) 
Foreign exchange (losses) gains, net (3,402)  913  
Other (expenses) income, net (88)  693  
Loss on extinguishment of debt -   (2,995) 
Costs associated with debt modification -   (579) 
Total non-operating expenses, net (28,982)  (34,621) 
(Loss) income before income tax (92,363)  3,851  
Income tax credit (expense) 210   (66) 
Net (loss) income (92,153)  3,785  
Net loss (income) attributable to participation interest 21,259   (873) 
Net (loss) income attributable to Studio City International Holdings Limited$(70,894) $2,912  
       
Net (loss) income attributable to Studio City International Holdings Limited per Class A ordinary share:      
Basic and diluted$(0.293) $0.012  
       
Net (loss) income attributable to Studio City International Holdings Limited per ADS:      
  Basic and diluted$(1.173) $0.048  
       
Weighted average Class A ordinary shares outstanding used in net (loss) income attributable to Studio City International Holdings Limited per Class A ordinary share calculation:      
  Basic and diluted 241,818,016   241,818,016  
       



       
Studio City International Holdings Limited and Subsidiaries 
Condensed Consolidated Balance Sheets 
(In thousands of U.S. dollars, except share and per share data) 
       
       
 March 31, December 31, 
 2020  2019  
  (Unaudited)  (Audited) 
       
ASSETS      
       
Current assets:      
Cash and cash equivalents$256,056  $299,367  
Restricted cash 43,260   27,735  
Accounts receivable, net 157   1,397  
Amounts due from affiliated companies 14,988   61,990  
Inventories 10,211   9,763  
Prepaid expenses and other current assets 11,016   14,188  
Total current assets 335,688   414,440  
       
Property and equipment, net 2,120,374   2,107,457  
Long-term prepayments, deposits and other assets 53,486   57,087  
Restricted cash 131   130  
Operating lease right-of-use assets 14,282   14,238  
Land use right, net 118,588   118,888  
Total assets$2,642,549  $2,712,240  
       
LIABILITIES, SHAREHOLDERS' EQUITY AND PARTICIPATION INTEREST      
       
Current liabilities:      
Accounts payable$3,194  $3,337  
Accrued expenses and other current liabilities 86,596   82,553  
Income tax payable 33   33  
Amounts due to affiliated companies 15,947   14,248  
Total current liabilities 105,770   100,171  
       
Long-term debt, net 1,436,377   1,435,088  
Other long-term liabilities 3,767   3,149  
Deferred tax liabilities, net 1,250   1,453  
Operating lease liabilities, non-current 14,024   13,720  
Total liabilities 1,561,188   1,553,581  
       
Shareholders’ equity and participation interest:      
Class A ordinary shares, par value $0.0001; 1,927,488,240 shares authorized; 241,818,016 shares issued and outstanding 24   24  
Class B ordinary shares, par value $0.0001; 72,511,760 shares authorized; 72,511,760 shares issued and outstanding 7   7  
Additional paid-in capital 1,655,602   1,655,602  
Accumulated other comprehensive income 11,697   269  
Accumulated losses (835,428)  (764,534) 
Total shareholders’ equity 831,902   891,368  
Participation interest 249,459   267,291  
Total shareholders’ equity and participation interest 1,081,361   1,158,659  
Total liabilities, shareholders' equity and participation interest$2,642,549  $2,712,240  
       



  
Studio City International Holdings Limited and Subsidiaries 
Reconciliation of Net (Loss) Income Attributable to Studio City International Holdings Limited to 
Adjusted Net (Loss) Income Attributable to Studio City International Holdings Limited 
(In thousands of U.S. dollars, except share and per share data) 
       
 Three Months Ended 
 March 31, 
 2020  2019  
 (Unaudited) (Unaudited) 
       
Net (loss) income attributable to Studio City International Holdings Limited$(70,894) $2,912  
 Pre-opening costs 28   2,489  
 Property charges and other 4,405   129  
 Loss on extinguishment of debt -   2,995  
 Costs associated with debt modification -   579  
 Participation interest impact on adjustments (1,023)  (1,428) 
Adjusted net (loss) income attributable to Studio City International Holdings Limited$(67,484) $7,676  
       
Adjusted net (loss) income attributable to Studio City International Holdings Limited per       
Class A ordinary share:      
  Basic and diluted$(0.279) $0.032  
       
Adjusted net (loss) income attributable to Studio City International Holdings      
Limited per ADS:      
Basic and diluted$(1.116) $0.127  
       
Weighted average Class A ordinary shares outstanding used in adjusted net (loss)       
income attributable to Studio City International Holdings Limited per Class A ordinary share calculation:      
  Basic and diluted 241,818,016   241,818,016  
       



 
Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating (Loss) Income to Adjusted EBITDA
(In thousands of U.S. dollars)
       
 Three Months Ended
 March 31,
 2020  2019
 (Unaudited) (Unaudited)
       
Operating (loss) income$(63,381) $38,472 
Pre-opening costs 28   2,489 
Depreciation and amortization 40,792   43,138 
Property charges and other 4,405   129 
Adjusted EBITDA$(18,156) $84,228 
       



 
Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net (Loss) Income Attributable to Studio City International Holdings Limited
 to Adjusted EBITDA
(In thousands of U.S. dollars)
       
 Three Months Ended
 March 31,
 2020  2019
 (Unaudited) (Unaudited)
       
Net (loss) income attributable to Studio City International Holdings Limited$(70,894) $2,912 
Net (loss) income attributable to participation interest (21,259)  873 
Net (loss) income (92,153)  3,785 
  Income tax (credit) expense (210)  66 
  Interest and other non-operating expenses, net 28,982   34,621 
  Property charges and other 4,405   129 
  Depreciation and amortization 40,792   43,138 
  Pre-opening costs 28   2,489 
Adjusted EBITDA$(18,156) $84,228 
       



         
Studio City International Holdings Limited and Subsidiaries
Supplemental Data Schedule
         
         
      Three Months Ended
      March 31,
       2020   2019 
Room Statistics(3):      
         
 Average daily rate (4)  $137  $134 
 Occupancy per available room  43%  100%
 Revenue per available room (5) $58  $133 
         
         
         
Other Information(6):      
         
 Average number of table games  252   294 
 Average number of gaming machines  747   974 
 Table games win per unit per day (7) $7,051  $12,507 
 Gaming machines win per unit per day (8)$174  $211 
         
         
(3) Room statistics exclude rooms that were temporarily closed or provided to staff members during the three months ended March 31, 2020 due to the COVID-19 outbreak
(4) Average daily rate is calculated by dividing total room revenues including complimentary rooms (less service charges, if any) by total occupied rooms including complimentary rooms
(5) Revenue per available room is calculated by dividing total room revenues including complimentary rooms (less service charges, if any) by total rooms available
(6) Table games and gaming machines that were not in operation during the three months ended March 31, 2020 due to government-mandated closures or social distancing measures in relation to the COVID-19 outbreak have been excluded
(7) Table games win per unit per day is shown before discounts, commissions, non-discretionary incentives (including the point-loyalty programs) as administered by the Gaming Operator and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis
(8) Gaming machines win per unit per day is shown before non-discretionary incentives (including the point-loyalty programs) as administered by the Gaming Operator and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis