Studio City International Holdings Limited Announces Unaudited Fourth Quarter 2019 Earnings

Hong Kong, HONG KONG


MACAU, Feb. 20, 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 fourth quarter and full year ended December 31, 2019.

Total operating revenues for the fourth quarter of 2019 were US$167.8 million, as compared to US$145.2 million in the fourth 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$375.6 million and US$379.4 million for the fourth quarters of 2019 and 2018, respectively. Affected by the Macau market-wide VIP weakness, Studio City’s rolling chip volume was US$2.46 billion for the fourth quarter of 2019 versus US$3.46 billion in the fourth quarter of 2018. The rolling chip win rate was 3.60% in the fourth quarter of 2019 versus 3.82% in the fourth quarter of 2018. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop increased to US$879.8 million in the fourth quarter of 2019 compared with US$825.4 million in the fourth quarter of 2018. The mass market table games hold percentage was 30.2% in the fourth quarter of 2019 compared to 27.0% in the fourth quarter of 2018.

Gaming machine handle for the fourth quarter of 2019 was US$695.4 million, compared with US$641.8 million in the fourth quarter of 2018. The gaming machine win rate was 3.0% in the fourth quarter of 2019 compared to 3.6% in the fourth 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$270.3 million and US$290.1 million in the fourth quarters of 2019 and 2018, respectively.

Revenues from the provision of gaming related services were US$105.3 million and US$89.3 million for the fourth 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 fourth quarter of 2019 was US$62.5 million, compared with US$55.9 million for the fourth quarter of 2018.

Operating income for the fourth quarter of 2019 was US$62.2 million, compared with operating income of US$41.8 million in the fourth quarter of 2018, representing an increase of 49%. 

Adjusted EBITDA(1) was US$103.3 million for the fourth quarter of 2019, as compared to Adjusted EBITDA of US$85.9 million in the fourth quarter of 2018, representing an increase of 20%. 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 fourth quarter of 2019 was US$20.8 million, compared with net income attributable to Studio City International Holdings Limited of US$1.3 million in the fourth quarter of 2018. The net income attributable to participation interest was US$6.2 million and US$0.9 million in the fourth quarters of 2019 and 2018, respectively.  

Other Factors Affecting Earnings

Total net non-operating expenses for the fourth quarter of 2019 were US$35.2 million, which mainly included interest expenses of US$31.5 million.

Depreciation and amortization costs of US$40.6 million were recorded in the fourth 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 would cease VIP rolling chip operations at the Studio City Casino on January 15, 2020. In January 2020, we announced the Gaming Operator would continue VIP rolling chip operations at the Studio City Casino until January 15, 2021, subject to termination by 30-day notice. Revenues from provision of gaming related services in relation to the Studio City Casino VIP gaming operations amounted to US$6.7 million in the fourth quarter of 2019, compared with US$8.8 million in the fourth quarter of 2018.

The Adjusted EBITDA for Studio City for the three months ended December 31, 2019 referred to in Melco’s earnings release dated February 20, 2020 (“Melco’s earnings release”) is US$14.1 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 table games operations at Studio City Casino.

Financial Position and Capital Expenditures

Total cash and bank balances as of December 31, 2019 aggregated US$327.2 million (December 31, 2018: US$377.6 million), including US$27.9 million of restricted cash (December 31, 2018: US$31.7 million). Total debt, net of unamortized deferred financing costs at the end of the fourth quarter of 2019, was US$1.44 billion (December 31, 2018: US$1.61 billion).

Capital expenditures for the fourth quarter of 2019 were US$37.8 million.

Full Year Results

For the year ended December 31, 2019, Studio City International Holdings Limited reported total operating revenues of US$626.7 million versus US$571.2 million in the prior year. The increase in total operating revenues was mainly due to the increase in revenues from the provision of gaming related services.

Operating income for 2019 was US$178.0 million, compared with operating income of US$137.9 million for 2018, representing an increase of 29%.

Adjusted EBITDA was US$361.0 million for the year ended December 31, 2019, as compared to Adjusted EBITDA of US$314.8 million in 2018, representing an increase of 15%. 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 2019 was US$33.6 million, compared with net loss attributable to Studio City International Holdings Limited of US$21.6 million in 2018. The net income attributable to participation interest was US$10.1 million and US$0.9 million for 2019 and 2018, respectively.

Recent Developments

On February 4, 2020, the Macau government announced all casinos in Macau would be closed for a 15-day period commencing on February 5, 2020. On February 17, 2020, the Macau government announced, subject to the implementation of certain health-related precautionary measures, casinos in Macau may resume operations on February 20, 2020. Gaming operations at Studio City Casino resumed on February 20, 2020.

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 Year Ended  
 December 31, December 31,  
 2019  2018  2019  2018   
 (Unaudited) (Unaudited) (Unaudited) (Audited)  
              
OPERATING REVENUES             
Provision of gaming related services$105,287  $89,301  $393,512  $339,924   
Rooms 22,153   22,081   85,975   88,317   
Food and beverage 16,736   17,026   68,706   65,904   
Entertainment 6,280   1,430   21,815   12,073   
Services fee 9,578   8,745   39,470   39,126   
Mall 7,091   5,932   14,844   22,298   
Retail and other 694   699   2,411   3,571   
Total operating revenues 167,819   145,214   626,733   571,213   
              
OPERATING COSTS AND EXPENSES             
Provision of gaming related services (6,826)  (4,434)  (24,179)  (20,263)  
Rooms (5,536)  (5,340)  (21,766)  (21,855)  
Food and beverage (14,229)  (14,572)  (57,718)  (56,342)  
Entertainment (5,448)  (1,455)  (22,719)  (11,978)  
Mall (1,582)  (2,634)  (8,658)  (10,960)  
Retail and other (390)  (528)  (1,735)  (2,411)  
General and administrative (30,461)  (30,347)  (128,931)  (132,637)  
Pre-opening costs (12)  (4,140)  (2,567)  (4,550)  
Amortization of land use right (827)  (806)  (3,300)  (3,298)  
Depreciation and amortization (39,822)  (38,787)  (168,643)  (164,593)  
Property charges and other (452)  (377)  (8,521)  (4,464)  
Total operating costs and expenses (105,585)  (103,420)  (448,737)  (433,351)  
OPERATING INCOME 62,234   41,794   177,996   137,862   
NON-OPERATING INCOME (EXPENSES)             
Interest income 1,209   1,162   5,861   3,578   
Interest expenses (31,491)  (40,174)  (132,291)  (160,508)  
Loan commitment fees (105)  (105)  (416)  (419)  
Foreign exchange (losses) gains, net (4,677)  2,269   (3,975)  1,972   
Other (expenses) income, net (88)  (87)  430   (197)  
Loss on extinguishment of debt -   (2,489)  (2,995)  (2,489)  
Costs associated with debt modification -   -   (579)  -   
Total non-operating expenses, net (35,152)  (39,424)  (133,965)  (158,063)  
INCOME (LOSS) BEFORE INCOME TAX 27,082   2,370   44,031   (20,201)  
INCOME TAX EXPENSE (58)  (178)  (402)  (544)  
NET INCOME (LOSS) 27,024   2,192   43,629   (20,745)  
NET INCOME ATTRIBUTABLE TO                 
PARTICIPATION INTEREST (6,234)  (853)  (10,065)  (853)  
NET INCOME (LOSS) ATTRIBUTABLE TO             
STUDIO CITY INTERNATIONAL HOLDINGS LIMITED$20,790  $1,339  $33,564  $(21,598)  
              
NET INCOME (LOSS) ATTRIBUTABLE TO             
STUDIO CITY INTERNATIONAL HOLDINGS             
LIMITED PER CLASS A ORDINARY SHARE:             
  Basic and diluted$0.086  $0.006  $0.139  $(0.113)  
              
NET INCOME (LOSS) ATTRIBUTABLE TO             
STUDIO CITY INTERNATIONAL HOLDINGS             
LIMITED PER ADS:                 
  Basic and diluted$0.344  $0.024  $0.555  $(0.451)  
              
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   221,961,248   241,818,016   191,533,455   
              
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) 
       
       
 December 31, December 31, 
 2019  2018  
 (Unaudited) (Audited) 
       
ASSETS      
       
CURRENT ASSETS      
Cash and cash equivalents$299,367  $345,854  
Restricted cash 27,735   31,582  
Accounts receivable, net 1,397   1,712  
Amounts due from affiliated companies 61,990   42,339  
Inventories 9,763   9,904  
Prepaid expenses and other current assets 14,188   27,650  
Total current assets 414,440   459,041  
       
PROPERTY AND EQUIPMENT, NET 2,107,457   2,175,858  
LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS 57,087   45,766  
RESTRICTED CASH 130   129  
OPERATING LEASE RIGHT-OF-USE ASSETS 14,238   -  
LAND USE RIGHT, NET 118,888   121,544  
TOTAL ASSETS$2,712,240  $2,802,338  
       
LIABILITIES, SHAREHOLDERS' EQUITY AND       
  PARTICIPATION INTEREST      
       
CURRENT LIABILITIES      
Accounts payable$3,337  $6,421  
Accrued expenses and other current liabilities 82,553   62,825  
Income tax payable 33   33  
Current portion of long-term debt, net -   347,740  
Amounts due to affiliated companies 14,248   21,953  
Total current liabilities 100,171   438,972  
       
LONG-TERM DEBT, NET 1,435,088   1,261,904  
OTHER LONG-TERM LIABILITIES 3,149   4,017  
DEFERRED TAX LIABILITIES 1,453   1,044  
OPERATING LEASE LIABILITIES, NON-CURRENT 13,720   -  
TOTAL LIABILITIES 1,553,581   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 income (loss) 269   (14,063) 
Accumulated losses (764,534)  (798,098) 
Total shareholders’ equity 891,368   843,472  
PARTICIPATION INTEREST 267,291   252,929  
Total shareholders’ equity and participation interest 1,158,659   1,096,401  
TOTAL LIABILITIES, SHAREHOLDERS' EQUITY      
  AND PARTICIPATION INTEREST$2,712,240  $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 Year Ended 
 December 31, December 31, 
 2019  2018  2019  2018  
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
             
Net Income (Loss) Attributable to            
  Studio City International Holdings Limited$20,790  $1,339  $33,564  $(21,598) 
 Pre-opening Costs 12   4,140   2,567   4,550  
 Property Charges and Other 452   377   8,521   4,464  
 Loss on Extinguishment of Debt -   2,489   2,995   2,489  
 Costs Associated with Debt Modification -   -   579   -  
 Participation Interest Impact on Adjustments (107)  (1,519)  (3,382)  (1,519) 
Adjusted Net Income (Loss) Attributable to            
  Studio City International Holdings Limited$21,147  $6,826  $44,844  $(11,614) 
             
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO            
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED            
  PER CLASS A ORDINARY SHARE:            
  Basic and diluted$0.087  $0.031  $0.185  $(0.061) 
             
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO            
  STUDIO CITY INTERNATIONAL HOLDINGS LIMITED            
  PER ADS:            
  Basic and diluted$0.350  $0.123  $0.742  $(0.243) 
             
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   221,961,248   241,818,016   191,533,455  
             



Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating Income to Adjusted EBITDA
(In thousands of U.S. dollars)
            
 Three Months Ended Year Ended
 December 31, December 31,
 2019 2018 2019 2018
 (Unaudited) (Unaudited) (Unaudited) (Unaudited)
            
Operating Income$62,234 $41,794 $177,996 $137,862
Pre-opening Costs 12  4,140  2,567  4,550
Depreciation and Amortization 40,649  39,593  171,943  167,891
Property Charges and Other 452  377  8,521  4,464
Adjusted EBITDA$103,347 $85,904 $361,027 $314,767
            



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 Year Ended 
 December 31, December 31, 
 2019 2018 2019 2018  
 (Unaudited) (Unaudited) (Unaudited) (Unaudited) 
             
Net Income (Loss) Attributable to            
  Studio City International Holdings Limited$20,790 $1,339 $33,564 $(21,598) 
Net Income Attributable to Participation Interest 6,234  853  10,065  853  
Net Income (Loss) 27,024  2,192  43,629  (20,745) 
  Income Tax Expense 58  178  402  544  
  Interest and Other Non-Operating Expenses, Net 35,152  39,424  133,965  158,063  
  Property Charges and Other 452  377  8,521  4,464  
  Depreciation and Amortization 40,649  39,593  171,943  167,891  
  Pre-opening Costs 12  4,140  2,567  4,550  
Adjusted EBITDA$103,347 $85,904 $361,027 $314,767  
             



               
Studio City International Holdings Limited and Subsidiaries  
Supplemental Data Schedule  
               
      Three Months Ended Year Ended  
      December 31, December 31,  
       2019   2018   2019   2018   
Room Statistics:            
               
  Average daily rate (3)  $138  $138  $135  $138   
               
  Occupancy per available room  100%  100%  100%  100%  
               
  Revenue per available room (4) $138  $138  $135  $138   
               
               
               
Other Information:            
               
  Average number of table games  292   293   293   292   
               
  Average number of gaming machines  935   987   947   957   
               
  Table games win per unit per day (5) $13,204  $13,233  $12,663  $14,076   
               
  Gaming machines win per unit per day (6)$242  $254  $230  $240   
               
               
(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