Studio City International Holdings Limited Announces Unaudited First Quarter 2022 Earnings

Central, HONG KONG


MACAU, May 05, 2022 (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 first quarter of 2022.

Total operating revenues for the first quarter of 2022 were US$12.0 million, compared to total operating revenues of US$28.6 million in the first quarter of 2021. The change was primarily attributable to heightened border restrictions in Macau related to COVID-19 which led to a decrease in revenues from the provision of gaming related services and lower non-gaming revenues.

Revenues from the provision of gaming related services are derived from the provision of facilities for the operations of the 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$75.0 million and US$98.5 million for the first quarters of 2022 and 2021, respectively.

Studio City’s rolling chip volume was US$439.3 million in the first quarter of 2022 versus US$505.0 million in the first quarter of 2021. The rolling chip win rate was 1.66% in the first quarter of 2022 versus 0.29% in the first quarter of 2021. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop decreased to US$191.8 million in the first quarter of 2022, compared with US$309.3 million in the first quarter of 2021. The mass market table games hold percentage was 31.6% in the first quarter of 2022, compared to 29.1% in the first quarter of 2021.

Gaming machine handle for the first quarter of 2022 was US$233.0 million, compared with US$278.3 million in the first quarter of 2021. The gaming machine win rate was 3.1% in the first quarter of 2022, compared to 2.5% in the first quarter of 2021.

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$83.6 million and US$97.3 million in the first quarters of 2022 and 2021, respectively.

Revenues from the provision of gaming related services were negative US$8.6 million for the first quarter of 2022, compared with revenues from the provision of gaming related services of US$1.2 million for the first quarter of 2021. Revenues from the provision of gaming related services are net of gaming taxes and the costs incurred in connection with the on-going 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 2022 were US$20.6 million, compared with US$27.3 million for the first quarter of 2021.

Operating loss for the first quarter of 2022 was US$61.9 million, compared with operating loss of US$45.1 million in the first quarter of 2021.        

Studio City generated negative Adjusted EBITDA(1) of US$26.7 million in the first quarter of 2022, compared to negative Adjusted EBITDA of US$13.4 million in the first quarter of 2021. The change 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 2022 was US$70.2 million, compared with net loss attributable to Studio City International Holdings Limited of US$75.8 million in the first quarter of 2021. The net loss attributable to participation interest was US$10.7 million and US$14.8 million in the first quarters of 2022 and 2021, respectively.   

Other Factors Affecting Earnings

Total net non-operating expenses for the first quarter of 2022 were US$18.5 million, which mainly included interest expenses of US$22.8 million, net of amounts capitalized, partially offset by net foreign exchange gains of US$4.1 million.

Depreciation and amortization costs of US$31.8 million were recorded in the first quarter of 2022, 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 March 31, 2022 referred to in Melco’s earnings release dated May 5, 2022 (“Melco’s earnings release”) is US$9.4 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 March 31, 2022 aggregated to US$926.1 million (December 31, 2021: US$499.4 million), including US$0.1 million of restricted cash (December 31, 2021: US$0.1 million). Total debt, net of unamortized deferred financing costs and original issue premiums, at the end of the first quarter of 2022 was US$2.43 billion (December 31, 2021: US$2.09 billion).

Capital expenditures for the first quarter of 2022 were US$108.8 million.

Recent Developments

Uncertainty around COVID-19 outbreaks and related restrictions continue to have a material effect on our operations, financial position, and future prospects into the second quarter of 2022.

Our operations remain impacted by travel restrictions and quarantine requirements. A stream of COVID-19 outbreaks in China in mid-January 2022 led to a tightening of border controls for entry from Guangdong province and a reduction in the validity period of a negative COVID test from 7 days to 48 hours. Shortly thereafter, the validity period was further reduced to 24 hours until the end of January. The validity period increased to 48 hours until mid-March when it was reduced back to 24 hours in response to increasing COVID-19 cases in China. This restriction remained until April 20, 2022, when the Macau government increased the negative COVID test validity period for entry from Guangdong province back up to 48 hours, and then to 72 hours on April 25, 2022.

Uncertainty around COVID-19 outbreaks will continue into 2022 with travel bans or restrictions, visa restrictions and quarantine requirements being key factors impacting 2022 performance. We remain confident in the pent-up demand for Macau as an international tourism destination and believe in a strong recovery once travel restrictions are relaxed.

The construction of Studio City Phase 2 continues to progress, and we continue our efforts to complete construction by the deadline set in the land concession of December 27, 2022. This project will complement our existing offering of ‘next-generation’ world-class entertainment and further enhance the Studio City brand. Designed by renowned international architecture firm Zaha Hadid Architects, Studio City Phase 2 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 a total of approximately 1,100 square meters of state-of-the-art MICE space. Furthermore, the expansion will also feature a hotel tower under the W Hotel brand in partnership with Marriott International.

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 COVID-19 outbreak, 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, (vii) proposed amendments to the gaming law in Macau, the extension of current gaming concessions and subconcessions and tender for new gaming concessions, and (viii) 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:
Jeanny Kim
Senior Vice President, Group Treasurer
Tel: +852 2598 3698
Email: jeannykim@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 
 March 31, 
 2022 2021 
       
Operating revenues:      
Provision of gaming related services$(8,639) $1,233  
Rooms 6,275   9,606  
Food and beverage 5,484   6,884  
Entertainment 99   294  
Services fee 5,719   6,799  
Mall 2,703   3,330  
Retail and other 351   418  
Total operating revenues 11,992   28,564  
       
Operating costs and expenses:      
Provision of gaming related services (6,024)  (5,699) 
Rooms (2,949)  (2,910) 
Food and beverage (7,174)  (7,148) 
Entertainment (557)  (569) 
Mall (956)  (983) 
Retail and other (375)  (361) 
General and administrative (20,630)  (24,299) 
Pre-opening costs (342)  (243) 
Amortization of land use right (827)  (833) 
Depreciation and amortization (30,989)  (30,756) 
Property charges and other (3,063)  142  
Total operating costs and expenses (73,886)  (73,659) 
Operating loss (61,894)  (45,095) 
Non-operating income (expenses):      
Interest income 304   940  
Interest expenses, net of amounts capitalized (22,806)  (23,168) 
Other financing costs (103)  (104) 
Foreign exchange gains, net 4,139   5,726  
Loss on extinguishment of debt -   (28,817) 
Total non-operating expenses, net (18,466)  (45,423) 
Loss before income tax (80,360)  (90,518) 
Income tax expense (613)  (83) 
Net loss (80,973)  (90,601) 
Net loss attributable to participation interest 10,740   14,834  
Net loss attributable to Studio City International Holdings Limited$(70,233) $(75,767) 
       
Net loss attributable to Studio City International Holdings Limited      
per Class A ordinary share:      
Basic$(0.133) $(0.205) 
Diluted$(0.135) $(0.205) 
       
Net loss attributable to Studio City International Holdings Limited per ADS:      
Basic$(0.532) $(0.818) 
Diluted$(0.539) $(0.818) 
       
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 527,953,145   370,352,700  
Diluted 600,464,905   370,352,700  
       



      
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,
 2022 2021
 (Unaudited)   
ASSETS     
      
Current assets:     
Cash and cash equivalents$925,974  $499,289 
Accounts receivable, net 61   247 
Amounts due from affiliated companies 1,191   15,697 
Inventories 5,569   5,828 
Prepaid expenses and other current assets 40,588   42,633 
Total current assets 973,383   563,694 
      
Property and equipment, net 2,627,059   2,556,040 
Intangible assets, net 2,417   2,777 
Long-term prepayments, deposits and other assets 65,917   69,624 
Restricted cash 129   130 
Operating lease right-of-use assets 14,511   14,588 
Land use right, net 110,873   112,114 
Total assets$3,794,289  $3,318,967 
      
LIABILITIES, SHAREHOLDERS’ EQUITY AND     
PARTICIPATION INTEREST     
      
Current liabilities:     
Accounts payable$43  $211 
Accrued expenses and other current liabilities 122,303   201,405 
Income tax payable 21   21 
Amounts due to affiliated companies 57,760   53,093 
Total current liabilities 180,127   254,730 
      
Long-term debt, net 2,431,348   2,087,486 
Other long-term liabilities 19,514   17,771 
Deferred tax liabilities, net 613   - 
Operating lease liabilities, non-current 14,976   14,797 
Total liabilities 2,646,578   2,374,784 
      
Shareholders’ equity and participation interest:     
Class A ordinary shares, par value $0.0001; 1,927,488,240 shares   
authorized; 770,352,700 and 370,352,700 shares issued     
and outstanding, respectively 77   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 2,477,359   2,134,227 
Accumulated other comprehensive loss (19,684)  (6,136)
Accumulated losses (1,408,948)  (1,338,715)
Total shareholders’ equity 1,048,811   789,420 
Participation interest 98,900   154,763 
Total shareholders’ equity and participation interest 1,147,711   944,183 
Total liabilities, shareholders’ equity and participation interest$3,794,289  $3,318,967 
      



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 
 March 31, 
 2022 2021 
       
Net loss attributable to Studio City International Holdings Limited$(70,233) $(75,767) 
 Pre-opening costs 342   243  
 Property charges and other 3,063   (142) 
 Loss on extinguishment of debt -   28,817  
 Participation interest impact on adjustments (530)  (4,735) 
Adjusted net loss attributable to      
Studio City International Holdings Limited$(67,358) $(51,584) 
       
Adjusted net loss attributable to Studio City International Holdings Limited      
per Class A ordinary share:      
Basic$(0.128) $(0.139) 
Diluted$(0.129) $(0.139) 
       
Adjusted net loss attributable to Studio City International Holdings Limited      
per ADS:      
Basic$(0.510) $(0.557) 
Diluted$(0.517) $(0.557) 
       
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 527,953,145   370,352,700  
Diluted 600,464,905   370,352,700  
       



Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating Loss to Adjusted EBITDA (Unaudited)
(In thousands of U.S. dollars)
      
      
 Three Months Ended
 March 31,
 2022 2021
    
Operating loss$(61,894) $(45,095)
Pre-opening costs 342   243 
Depreciation and amortization 31,816   31,589 
Property charges and other 3,063   (142)
Adjusted EBITDA$(26,673) $(13,405)
      



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
 March 31,
 2022 2021
    
Net loss attributable to Studio City International Holdings Limited$(70,233) $(75,767)
Net loss attributable to participation interest (10,740)  (14,834)
Net loss (80,973)  (90,601)
Income tax expense 613   83 
Interest and other non-operating expenses, net 18,466   45,423 
Property charges and other 3,063   (142)
Depreciation and amortization 31,816   31,589 
Pre-opening costs 342   243 
Adjusted EBITDA$(26,673) $(13,405)
      



      
Studio City International Holdings Limited and Subsidiaries
Supplemental Data Schedule
      
      
   Three Months Ended
   March 31,
    2022   2021 
Room Statistics(3):    
      
 Average daily rate (4) $127  $121 
 Occupancy per available room  33%  50%
 Revenue per available room (5) $41  $60 
      
Other Information(6):    
      
 Average number of table games  277   292 
 Average number of gaming machines  712   604 
 Table games win per unit per day (7) $2,725  $3,476 
 Gaming machines win per unit per day (8)$111  $130 
      
          
(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