Studio City International Holdings Limited Announces Unaudited Third Quarter 2019 Earnings

Hong Kong, HONG KONG


MACAU, Oct. 30, 2019 (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 third quarter of 2019.

Total operating revenues for the third quarter of 2019 were US$158.1 million, as compared to US$143.8 million in the third quarter of 2018. The increase in total operating revenues was mainly due to the increase in revenues from the provision of gaming related services.

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$345.6 million and US$397.9 million for the third quarters of 2019 and 2018, respectively. Affected by the Macau market-wide VIP weakness, Studio City’s rolling chip volume totaled US$2.77 billion for the third quarter of 2019 versus US$5.09 billion in the third quarter of 2018. The rolling chip win rate was 2.71% in the third quarter of 2019 versus 3.12% in the third quarter of 2018. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop increased to US$880.6 million in the third quarter of 2019 compared with US$807.9 million in the third quarter of 2018. The mass market table games hold percentage was 28.4% in the third quarter of 2019 compared to 27.2% in the third quarter of 2018.

Gaming machine handle for the third quarter of 2019 was US$711.2 million, compared with US$641.6 million in the third quarter of 2018. The gaming machine win rate was 2.8% in the third quarter of 2019 compared to 2.9% in the third quarter of 2018.

Total gaming taxes and the costs incurred in connection with the operation of Studio City Casino deducted from gross gaming revenues were US$248.9 million and US$315.9 million in the third quarters of 2019 and 2018, respectively.

Revenues from the provision of gaming related services were US$96.7 million and US$82.0 million for the third quarters of 2019 and 2018, 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 third quarter of 2019 was US$61.4 million, compared with US$61.8 million for the third quarter of 2018.

Operating income for the third quarter of 2019 was US$47.6 million, compared with operating income of US$31.4 million in the third quarter of 2018, representing an increase of 52%.

Adjusted EBITDA(1) was US$90.9 million for the third quarter of 2019, as compared to Adjusted EBITDA of US$75.2 million in the third quarter of 2018, representing an increase of 21%. The year-over-year increase in Adjusted EBITDA was mainly attributable to the increase in revenues from the provision of gaming related services.

Net income attributable to Studio City International Holdings Limited for the third quarter of 2019 was US$14.3 million, compared with net loss attributable to Studio City International Holdings Limited of US$8.1 million in the third quarter of 2018. The net income attributable to participation interest for the third quarter of 2019 was US$4.3 million.  

Other Factors Affecting Earnings

Total net non-operating expenses for the third quarter of 2019 were US$28.9 million, which mainly included interest expenses of US$33.4 million, partially offset by interest income of US$2.7 million.

Depreciation and amortization costs of US$43.6 million were recorded in the third quarter of 2019 of which US$0.8 million was related to the amortization expense for the land use right.

In January 2019, the Gaming Operator informed us via our subsidiary, Studio City Entertainment Limited, that it will cease VIP rolling chip operations at the Studio City Casino on January 15, 2020. Revenues from provision of gaming related services in relation to the Studio City Casino VIP gaming operations amounted to US$6.0 million in the third quarter of 2019, compared with US$12.3 million in the third quarter of 2018.

The Adjusted EBITDA for Studio City for the three months ended September 30, 2019 referred to in Melco’s earnings release dated October 30, 2019 (“Melco’s earnings release”) is US$15.5 million more than the 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 VIP operations at Studio City Casino.

Financial Position and Capital Expenditures

Total cash and bank balances as of September 30, 2019 aggregated US$671.1 million (December 31, 2018: US$377.6 million), including US$50.0 million of restricted cash (December 31, 2018: US$31.7 million). Total debt, net of unamortized deferred financing costs at the end of the third quarter of 2019, was US$1.78 billion (December 31, 2018: US$1.61 billion).

Capital expenditures for the third quarter of 2019 were US$14.8 million.

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 Nine Months Ended 
 September 30, September 30, 
 2019 2018 2019 2018 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
             
OPERATING REVENUES            
Provision of gaming related services$96,689  $82,028  $288,225  $250,623  
Rooms 21,872   22,653   63,822   66,236  
Food and beverage 17,180   17,419   51,970   48,878  
Entertainment 5,452   4,370   15,535   10,643  
Services fee 10,514   10,775   29,892   30,381  
Mall 5,827   5,668   7,753   16,366  
Retail and other 567   916   1,717   2,872  
Total operating revenues 158,101   143,829   458,914   425,999  
             
OPERATING COSTS AND EXPENSES            
Provision of gaming related services (5,719)  (5,073)  (17,353)  (15,829) 
Rooms (5,497)  (5,561)  (16,230)  (16,515) 
Food and beverage (14,163)  (14,400)  (43,489)  (41,770) 
Entertainment (4,051)  (3,637)  (17,271)  (10,523) 
Mall (2,069)  (2,944)  (7,076)  (8,326) 
Retail and other (443)  (609)  (1,345)  (1,883) 
General and administrative (35,211)  (36,435)  (98,470)  (102,290) 
Pre-opening costs (6)  (357)  (2,555)  (410) 
Amortization of land use right (825)  (831)  (2,473)  (2,492) 
Depreciation and amortization (42,744)  (42,023)  (128,821)  (125,806) 
Property charges and other 256   (560)  (8,069)  (4,087) 
Total operating costs and expenses (110,472)  (112,430)  (343,152)  (329,931) 
OPERATING INCOME 47,629   31,399   115,762   96,068  
NON-OPERATING INCOME (EXPENSES)            
Interest income 2,691   977   4,652   2,416  
Interest expenses (33,392)  (40,150)  (100,800)  (120,334) 
Loan commitment fees (104)  (106)  (311)  (314) 
Foreign exchange gains (losses), net 2,003   (135)  702   (297) 
Other (expenses) income, net (87)  (88)  518   (110) 
Loss on extinguishment of debt -   -   (2,995)  -  
Costs associated with debt modification -   -   (579)  -  
Total non-operating expenses, net (28,889)  (39,502)  (98,813)  (118,639) 
INCOME (LOSS) BEFORE INCOME TAX 18,740   (8,103)  16,949   (22,571) 
INCOME TAX (EXPENSE) CREDIT (201)  9   (344)  (366) 
NET INCOME (LOSS) 18,539   (8,094)  16,605   (22,937) 
NET INCOME ATTRIBUTABLE TO PARTICIPATION INTEREST (4,278)  -   (3,831)  -  
NET INCOME (LOSS) ATTRIBUTABLE TO            
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED$14,261  $(8,094) $12,774  $(22,937) 
             
NET INCOME (LOSS) ATTRIBUTABLE TO            
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED            
PER CLASS A ORDINARY SHARE:            
Basic and diluted$0.059  $(0.045) $0.053  $(0.127) 
             
NET INCOME (LOSS) ATTRIBUTABLE TO            
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER ADS:            
Basic and diluted$0.236  $(0.179) $0.211  $(0.506) 
             
WEIGHTED AVERAGE CLASS A ORDINARY SHARES            
OUTSTANDING USED IN NET INCOME (LOSS) ATTRIBUTABLE TO STUDIO CITY INTERNATIONAL HOLDINGS LIMITED PER CLASS A ORDINARY SHARE CALCULATION:            
Basic and diluted 241,818,016   181,279,400   241,818,016   181,279,400  
             
Note:
In connection with the Company's initial public offering (the "IPO") on October 22, 2018, the Company underwent a series of organizational transactions. For the preparation of the accompanying unaudited condensed consolidated financial statements and the calculation of net income (loss) attributable to Studio City International Holdings Limited per Class A ordinary share for the periods prior to the IPO, the Company has retrospectively presented net income (loss) attributable to Studio City International Holdings Limited per Class A ordinary share and the share capital as if the organizational transactions had occurred at the beginning of the earliest period presented. Such retrospective presentation reflects the redesignation of the issued 18,127.94 ordinary shares of $1 par value each to 181,279,400 Class A ordinary shares of $0.0001 par value each. For the periods prior to the IPO date, the retrospective presentation does not include the exchange of 72,511,760 Class A ordinary shares into 72,511,760 Class B ordinary shares of $0.0001 par value each and the issuance of 115,000,000 Class A ordinary shares in the IPO.


Studio City International Holdings Limited and Subsidiaries 
Condensed Consolidated Balance Sheets 
(In thousands of U.S. dollars) 
       
       
 September 30, December 31, 
 2019 2018 
 (Unaudited) (Audited) 
       
ASSETS      
       
CURRENT ASSETS      
Cash and cash equivalents$621,091  $345,854  
Restricted cash 49,847   31,582  
Accounts receivable, net 946   1,712  
Amounts due from affiliated companies 53,402   42,339  
Inventories 9,606   9,904  
Prepaid expenses and other current assets 12,147   27,650  
Total current assets 747,039   459,041  
       
PROPERTY AND EQUIPMENT, NET 2,092,851   2,175,858  
LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS 38,602   45,766  
RESTRICTED CASH 129   129  
OPERATING LEASE RIGHT-OF-USE ASSETS 14,237   -  
LAND USE RIGHT, NET 118,924   121,544  
TOTAL ASSETS$3,011,782  $2,802,338  
       
LIABILITIES, SHAREHOLDERS' EQUITY AND       
PARTICIPATION INTEREST      
       
CURRENT LIABILITIES      
Accounts payable$5,239  $6,421  
Accrued expenses and other current liabilities 78,630   62,825  
Income tax payable 33   33  
Current portion of long-term debt, net 349,583   347,740  
Amounts due to affiliated companies 15,380   21,953  
Total current liabilities 448,865   438,972  
       
LONG-TERM DEBT, NET 1,433,826   1,261,904  
OTHER LONG-TERM LIABILITIES 4,652   4,017  
DEFERRED TAX LIABILITIES 1,386   1,044  
OPERATING LEASE LIABILITIES, NON-CURRENT 13,393   -  
TOTAL LIABILITIES 1,902,122   1,705,937  
       
SHAREHOLDERS’ EQUITY AND PARTICIPATION INTEREST      
Class A ordinary shares 24   24  
Class B ordinary shares 7   7  
Additional paid-in capital 1,655,602   1,655,602  
Accumulated other comprehensive losses (16,637)  (14,063) 
Accumulated losses (785,324)  (798,098) 
Total shareholders’ equity 853,672   843,472  
PARTICIPATION INTEREST 255,988   252,929  
Total shareholders’ equity and participation interest 1,109,660   1,096,401  
TOTAL LIABILITIES, SHAREHOLDERS' EQUITY      
AND PARTICIPATION INTEREST$3,011,782  $2,802,338  
       


Studio City International Holdings Limited and Subsidiaries 
Reconciliation of Net Income (Loss) Attributable to Studio City International Holdings Limited to 
Adjusted Net Income (Loss) Attributable to Studio City International Holdings Limited 
(In thousands of U.S. dollars, except share and per share data) 
             
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
 2019 2018 2019 2018 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
             
Net Income (Loss) Attributable to            
Studio City International Holdings Limited$14,261  $(8,094) $12,774  $(22,937) 
Pre-opening Costs 6   357   2,555   410  
Property Charges and Other (256)  560   8,069   4,087  
Loss on Extinguishment of Debt -   -   2,995   -  
Costs Associated with Debt Modification -   -   579   -  
Participation Interest Impact on Adjustments 58   -   (3,275)  -  
Adjusted Net Income (Loss) Attributable to            
Studio City International Holdings Limited$14,069  $(7,177) $23,697  $(18,440) 
             
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO            
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED            
PER CLASS A ORDINARY SHARE:            
Basic and diluted$0.058  $(0.040) $0.098  $(0.102) 
             
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO            
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED            
PER ADS:            
Basic and diluted$0.233  $(0.158) $0.392  $(0.407) 
             
WEIGHTED AVERAGE CLASS A ORDINARY SHARES            
OUTSTANDING USED IN ADJUSTED NET INCOME (LOSS)            
ATTRIBUTABLE TO            
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED            
PER CLASS A ORDINARY SHARE CALCULATION:            
Basic and diluted 241,818,016   181,279,400   241,818,016   181,279,400  
             


Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating Income to Adjusted EBITDA
(In thousands of U.S. dollars)
            
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2019 2018 2019 2018
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
            
Operating Income$47,629  $31,399 $115,762 $96,068
Pre-opening Costs 6   357  2,555  410
Depreciation and Amortization 43,569   42,854  131,294  128,298
Property Charges and Other (256)  560  8,069  4,087
Adjusted EBITDA$90,948  $75,170 $257,680 $228,863
            


Studio City International Holdings Limited and Subsidiaries 
Reconciliation of Net Income (Loss) Attributable to Studio City International Holdings Limited to Adjusted EBITDA 
(In thousands of U.S. dollars) 
             
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
 2019
 2018
 2019 2018
 
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
             
Net Income (Loss) Attributable to            
Studio City International Holdings Limited$14,261  $(8,094) $12,774 $(22,937) 
Net Income Attributable to Participation Interest 4,278   -   3,831  -  
Net Income (Loss) 18,539   (8,094)  16,605  (22,937) 
Income Tax Expense (Credit) 201   (9)  344  366  
Interest and Other Non-Operating Expenses, Net 28,889   39,502   98,813  118,639  
Property Charges and Other (256)  560   8,069  4,087  
Depreciation and Amortization 43,569   42,854   131,294  128,298  
Pre-opening Costs 6   357   2,555  410  
Adjusted EBITDA$90,948  $75,170  $257,680 $228,863  
             


Studio City International Holdings Limited and Subsidiaries 
Supplemental Data Schedule 
              
      Three Months Ended Nine Months Ended 
      September 30, September 30, 
       2019   2018   2019   2018  
Room Statistics:           
  Average daily rate (3)  $135  $141  $134  $138  
  Occupancy per available room  100%  100%  100%  100% 
  Revenue per available room (4) $135  $141  $134  $138  
              
              
Other Information:           
  Average number of table games  292   288   293   292  
  Average number of gaming machines  896   938   952   947  
  Table games win per unit per day (5) $12,126  $14,287  $12,481  $14,361  
  Gaming machines win per unit per day (6)$243  $219  $226  $235  
              
  (3) 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
  (4) Revenue per available room is calculated by dividing total room revenues including complimentary rooms (less service charges, if any) by total rooms available
  (5) 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
  (6) 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