Studio City International Holdings Limited Announces Unaudited Third Quarter 2021 Earnings

Central, HONG KONG


MACAU, Nov. 09, 2021 (GLOBE NEWSWIRE) -- Studio City International Holdings Limited (NYSE: MSC) (“Studio City” or the “Company”), a world-class integrated resort located in Cotai, Macau, today reported its unaudited financial results for the third quarter of 2021.

Total operating revenues for the third quarter of 2021 were US$18.7 million, compared to total operating revenues of US$0.9 million in the third quarter of 2020. The change was due to the increase in revenues from the provision of gaming related services and higher non-gaming revenues as a result of a year-over-year increase in inbound tourism in the third quarter of 2021.

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$85.0 million and US$23.4 million for the third quarters of 2021 and 2020, respectively.

Studio City’s rolling chip volume was US$472.4 million in the third quarter of 2021 versus US$148.8 million in the third quarter of 2020. The rolling chip win rate was 2.35% in the third quarter of 2021 versus 3.41% in the third quarter of 2020. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop increased to US$250.5 million in the third quarter of 2021, compared with US$49.7 million in the third quarter of 2020. The mass market table games hold percentage was 26.4% in the third quarter of 2021, compared to 31.5% in the third quarter of 2020.

Gaming machine handle for the third quarter of 2021 was US$271.5 million, compared with US$99.2 million in the third quarter of 2020. The gaming machine win rate was 2.9% in the third quarter of 2021, compared to 2.7% in the third quarter of 2020.

Total gaming taxes and the costs incurred in connection with the on-going operation of Studio City Casino deducted from gross gaming revenues were US$93.6 million and US$39.9 million in the third quarters of 2021 and 2020, respectively.

Revenues from the provision of gaming related services were negative US$8.6 million for the third quarter of 2021, compared with revenues from the provision of gaming related services of negative US$16.5 million for the third quarter of 2020. 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 2021 were US$27.3 million, compared with US$17.5 million for the third quarter of 2020.

Operating loss for the third quarter of 2021 was US$55.7 million, compared with operating loss of US$72.5 million in the third quarter of 2020.        

Studio City generated negative Adjusted EBITDA(1) of US$23.1 million in the third quarter of 2021, compared to negative Adjusted EBITDA of US$30.2 million in the third quarter of 2020. The change was mainly attributable to the increase in revenues from the provision of gaming related services and higher non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for the third quarter of 2021 was US$63.2 million, compared with net loss attributable to Studio City International Holdings Limited of US$98.2 million in the third quarter of 2020. The net loss attributable to participation interest was US$12.4 million and US$22.9 million in the third quarters of 2021 and 2020, respectively.   

Other Factors Affecting Earnings

Total net non-operating expenses for the third quarter of 2021 were US$20.3 million, which mainly included interest expenses of US$23.6 million, net of amounts capitalized.

Depreciation and amortization costs of US$32.3 million were recorded in the third quarter of 2021, of which US$0.8 million was related to the amortization expense for the land use right.

The negative Adjusted EBITDA for Studio City for the three months ended September 30, 2021 referred to in Melco’s earnings release dated November 9, 2021 (“Melco’s earnings release”) is US$9.1 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 intercompany costs related to the table games operations at Studio City Casino.

Financial Position and Capital Expenditures

Total cash and bank balances as of September 30, 2021 aggregated to US$651.1 million (December 31, 2020: US$575.4 million), including US$0.1 million of restricted cash (December 31, 2020: US$0.1 million). Total debt, net of unamortized deferred financing costs at the end of the third quarter of 2021, was US$2.09 billion (December 31, 2020: US$1.58 billion).

Capital expenditures for the third quarter of 2021 were US$142.3 million.

Recent Developments

COVID-19 outbreaks continue to have a material effect on our operations, financial position, and future prospects in the fourth quarter of 2021.

Our operations have been impacted by on-and-off travel restrictions and quarantine requirements as imposed by the governments of Macau, Hong Kong, and China in response to isolated cases.  The appearance of COVID-19 cases in early August 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. Similarly in late September 2021, the identification of additional COVID-19 cases again led to a repeat of testing, closure, and travel restrictions, which led to reduced turnout for October Golden Week holiday. 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 negative nucleic acid tests were extended from 24 hours to 48 hours or seven days. As a result, our visitation has been gradually recovering.

The construction of Studio Phase 2 is progressing on track for completion before December 27, 2022. This expansion will offer approximately 900 additional luxury hotel rooms and suites, an additional indoor/outdoor water park which is expected to be one of the largest in the world, a Cineplex, multiple fine-dining restaurants, and state-of-the-art MICE space.

The pace of recovery from COVID-19 will depend on future events, including duration of travel and visa restrictions, the pace of vaccination progress, development of new medicine for COVID-19, the impact of potentially higher unemployment rates, declines in income levels, and loss of personal wealth resulting from the COVID-19 outbreak affecting discretionary spending and travel, all of which remain 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 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) the global pandemic of COVID-19, caused by a novel strain of the coronavirus, and the continued impact of its consequences on our business, our industry and the global economy, (ii) growth of the gaming market and visitations in Macau, (iii) capital and credit market volatility, (iv) local and global economic conditions, (v) our anticipated growth strategies, (vi) gaming authority and other governmental approvals and regulations, and (vii) 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 net income/loss before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other and 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 and loss on extinguishment of debt, 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 attributable to Studio City International Holdings Limited 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 integrated 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 the investment community, please contact:
Robin Yuen
Director, Investor Relations
Tel: +852 2598 3619
Email: robinyuen@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 (Unaudited)
(In thousands of U.S. dollars, except share and per share data)
            
            
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2021
 2020
 2021
 2020
            
Operating revenues:           
Provision of gaming related services$(8,562) $(16,534) $(5,522) $(38,986)
Rooms 9,782   2,567   30,774   12,330 
Food and beverage 6,346   4,596   20,417   15,613 
Entertainment 1,383   134   2,428   1,025 
Services fee 6,330   4,612   19,493   19,706 
Mall 3,115   5,246   9,684   14,738 
Retail and other 329   319   1,213   1,077 
Total operating revenues 18,723   940   78,487   25,503 
            
Operating costs and expenses:           
Provision of gaming related services (7,334)  (7,368)  (18,934)  (18,932)
Rooms (3,217)  (2,134)  (9,328)  (8,473)
Food and beverage (6,864)  (4,451)  (20,939)  (20,556)
Entertainment (962)  (682)  (2,252)  (2,676)
Mall (929)  (1,101)  (2,907)  (3,648)
Retail and other (351)  (239)  (1,115)  (880)
General and administrative (22,147)  (15,181)  (68,949)  (69,787)
Pre-opening costs (6)  (77)  (739)  (133)
Amortization of land use right (831)  (834)  (2,496)  (2,499)
Depreciation and amortization (31,456)  (41,517)  (93,299)  (122,406)
Property charges and other (346)  100   (4,129)  (4,101)
Total operating costs and expenses (74,443)  (73,484)  (225,087)  (254,091)
Operating loss (55,720)  (72,544)  (146,600)  (228,588)
Non-operating income (expenses):           
Interest income 841   423   2,350   1,175 
Interest expenses, net of amounts capitalized (23,564)  (29,982)  (69,073)  (81,081)
Other financing costs (106)  (106)  (314)  (315)
Foreign exchange gains (losses), net 2,484   (303)  4,989   (4,107)
Other expenses, net -   (78)  -   (255)
Loss on extinguishment of debt -   (18,497)  (28,817)  (18,497)
Total non-operating expenses, net (20,345)  (48,543)  (90,865)  (103,080)
Loss before income tax (76,065)  (121,087)  (237,465)  (331,668)
Income tax credit (expense) 531   (36)  (29)  106 
Net loss (75,534)  (121,123)  (237,494)  (331,562)
Net loss attributable to participation interest 12,367   22,880   38,885   71,427 
Net loss attributable to Studio City International Holdings Limited$(63,167) $(98,243) $(198,609) $(260,135)
            
Net loss attributable to Studio City International Holdings Limited           
per Class A ordinary share:           
Basic$(0.171) $(0.303) $(0.536) $(0.965)
Diluted$(0.171) $(0.305) $(0.536) $(0.969)
            
Net loss attributable to Studio City International Holdings Limited per ADS:          
Basic$(0.682) $(1.212) $(2.145) $(3.861)
Diluted$(0.682) $(1.221) $(2.145) $(3.878)
            
Weighted average Class A ordinary shares outstanding used in net loss           
attributable to Studio City International Holdings Limited per Class A           
ordinary share calculation:           
Basic 370,352,700   324,207,049   370,352,700   269,481,487 
Diluted 370,352,700   396,718,809   370,352,700   341,993,247 


Studio City International Holdings Limited and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share and per share data)
      
      
 September 30, December 31,
 2021
 2020
 (Unaudited)   
ASSETS     
      
Current assets:     
Cash and cash equivalents$650,941  $575,215 
Restricted cash -   13 
Accounts receivable, net 54   157 
Amounts due from affiliated companies 5,580   10,672 
Inventories 8,144   9,297 
Prepaid expenses and other current assets 47,838   12,467 
Total current assets 712,557   607,821 
      
Property and equipment, net 2,401,336   2,180,897 
Intangible assets, net 3,132   4,005 
Long-term prepayments, deposits and other assets 71,605   117,555 
Restricted cash 130   131 
Operating lease right-of-use assets 14,640   17,379 
Land use right, net 113,131   116,109 
Total assets$3,316,531  $3,043,897 
      
LIABILITIES, SHAREHOLDERS’ EQUITY AND      
PARTICIPATION INTEREST     
      
Current liabilities:     
Accounts payable$463  $206 
Accrued expenses and other current liabilities 131,824   118,946 
Income tax payable 12   33 
Amounts due to affiliated companies 40,702   42,966 
Total current liabilities 173,001   162,151 
      
Long-term debt, net 2,086,978   1,584,660 
Other long-term liabilities 26,980   11,778 
Deferred tax liabilities, net 495   448 
Operating lease liabilities, non-current 14,591   17,137 
Total liabilities 2,302,045   1,776,174 
      
Shareholders’ equity and participation interest:     
Class A ordinary shares, par value $0.0001; 1,927,488,240 shares   
authorized; 370,352,700 shares issued and outstanding 37   37 
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 2,134,227   2,134,227 
Accumulated other comprehensive (loss) income (1,290)  11,876 
Accumulated losses (1,284,769)  (1,086,160)
Total shareholders’ equity 848,212   1,059,987 
Participation interest 166,274   207,736 
Total shareholders’ equity and participation interest 1,014,486   1,267,723 
Total liabilities, shareholders’ equity and participation interest$3,316,531  $3,043,897 


Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net Loss Attributable to Studio City International Holdings Limited to
Adjusted Net Loss Attributable to Studio City International Holdings Limited (Unaudited)
(In thousands of U.S. dollars, except share and per share data)
            
            
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2021
 2020
 2021
 2020
            
Net loss attributable to Studio City International Holdings Limited$(63,167) $(98,243) $(198,609) $(260,135)
Pre-opening costs 6   77   739   133 
Property charges and other 346   (100)  4,129   4,101 
Loss on extinguishment of debt -   18,497   28,817   18,497 
Participation interest impact on adjustments (57)  (3,141)  (5,515)  (4,123)
Adjusted net loss attributable to           
Studio City International Holdings Limited$(62,872) $(82,910) $(170,439) $(241,527)
            
Adjusted net loss attributable to Studio City International Holdings Limited          
per Class A ordinary share:           
Basic$(0.170) $(0.256) $(0.460) $(0.896)
Diluted$(0.170) $(0.259) $(0.460) $(0.903)
            
Adjusted net loss attributable to Studio City International Holdings Limited          
per ADS:           
Basic$(0.679) $(1.023) $(1.841) $(3.585)
Diluted$(0.679) $(1.035) $(1.841) $(3.612)
            
Weighted average Class A ordinary shares outstanding used in adjusted           
net loss attributable to Studio City International Holdings Limited           
per Class A ordinary share calculation:           
Basic 370,352,700   324,207,049   370,352,700   269,481,487 
Diluted 370,352,700   396,718,809   370,352,700   341,993,247 


Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating Loss to Adjusted EBITDA (Unaudited)
(In thousands of U.S. dollars)
            
            
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2021
 2020
 2021
 2020
        
Operating loss$(55,720) $(72,544) $(146,600) $(228,588)
Pre-opening costs 6   77   739   133 
Depreciation and amortization 32,287   42,351   95,795   124,905 
Property charges and other 346   (100)  4,129   4,101 
Adjusted EBITDA$(23,081) $(30,216) $(45,937) $(99,449)



Studio City International Holdings Limited and Subsidiaries
Reconciliation of Net Loss Attributable to Studio City International Holdings Limited
 to Adjusted EBITDA (Unaudited)
(In thousands of U.S. dollars)
            
            
 Three Months Ended Nine Months Ended
 September 30, September 30,
 2021
 2020
 2021
 2020
        
Net loss attributable to Studio City International Holdings Limited$(63,167) $(98,243) $(198,609) $(260,135)
Net loss attributable to participation interest (12,367)  (22,880)  (38,885)  (71,427)
Net loss (75,534)  (121,123)  (237,494)  (331,562)
Income tax (credit) expense (531)  36   29   (106)
Interest and other non-operating expenses, net 20,345   48,543   90,865   103,080 
Property charges and other 346   (100)  4,129   4,101 
Depreciation and amortization 32,287   42,351   95,795   124,905 
Pre-opening costs 6   77   739   133 
Adjusted EBITDA$(23,081) $(30,216) $(45,937) $(99,449)
            


Studio City International Holdings Limited and Subsidiaries
Supplemental Data Schedule
          
          
   Three Months Ended Nine Months Ended
   September 30, September 30,
    2021   2020   2021   2020 
Room Statistics(3):       
          
  Average daily rate (4)$123  $119  $122  $134 
          
  Occupancy per available room 52%  13%  54%  20%
          
  Revenue per available room (5)$64  $16  $66  $27 
          
          
          
Other Information(6):       
          
  Average number of table games 291   291   291   279 
          
  Average number of gaming machines 656   595   623   579 
          
  Table games win per unit per day (7)$2,883  $774  $3,354  $2,234 
          
  Gaming machines win per unit per day (8)$131  $48  $135  $96 
          
          
(3)Room statistics exclude rooms that were temporarily closed or provided to staff members 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 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