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 fourth quarter and full year ended December 31, 2021.

Total operating revenues for the fourth quarter of 2021 were US$28.4 million, compared to total operating revenues of US$23.7 million in the fourth quarter of 2020. The change was due to the increase in revenues from the provision of gaming related services, partially offset by 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$91.1 million and US$87.6 million for the fourth quarters of 2021 and 2020, respectively.

Studio City’s rolling chip volume was US$474.4 million in the fourth quarter of 2021 versus US$449.4 million in the fourth quarter of 2020. The rolling chip win rate was 1.84% in the fourth quarter of 2021 versus negative 0.13% in the fourth quarter of 2020. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop decreased to US$253.5 million in the fourth quarter of 2021, compared with US$305.6 million in the fourth quarter of 2020. The mass market table games hold percentage was 29.6% in the fourth quarter of 2021, compared to 27.0% in the fourth quarter of 2020.

Gaming machine handle for the fourth quarter of 2021 was US$262.4 million, compared with US$257.7 million in the fourth quarter of 2020. The gaming machine win rate was 2.8% in the fourth quarter of 2021, compared to 2.2% in the fourth 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$87.0 million and US$91.3 million in the fourth quarters of 2021 and 2020, respectively.

Revenues from the provision of gaming related services were US$4.1 million for the fourth quarter of 2021, compared with revenues from the provision of gaming related services of negative US$3.7 million for the fourth quarter of 2020. 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 fourth quarter of 2021 were US$24.3 million, compared with US$27.4 million for the fourth quarter of 2020.

Operating loss for the fourth quarter of 2021 was US$45.0 million, compared with operating loss of US$51.3 million in the fourth quarter of 2020.        

Studio City generated negative Adjusted EBITDA(1) of US$10.5 million in the fourth quarter of 2021, compared to negative Adjusted EBITDA of US$14.4 million in the fourth quarter of 2020. The change was mainly attributable to the increase in revenues from the provision of gaming related services, partially offset by lower non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for the fourth quarter of 2021 was US$53.9 million, compared with net loss attributable to Studio City International Holdings Limited of US$61.5 million in the fourth quarter of 2020. The net loss attributable to participation interest was US$10.6 million and US$12.0 million in the fourth quarters of 2021 and 2020, respectively.   

Other Factors Affecting Earnings

Total net non-operating expenses for the fourth quarter of 2021 were US$20.0 million, which mainly included interest expense of US$21.9 million, net of amounts capitalized.

Depreciation and amortization costs of US$31.8 million were recorded in the fourth 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 December 31, 2021 referred to in Melco’s earnings release dated March 1, 2022 (“Melco’s earnings release”) is US$10.4 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 December 31, 2021 aggregated to US$499.4 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 and original issue premiums at the end of the fourth quarter of 2021, was US$2.09 billion (December 31, 2020: US$1.58 billion).

Capital expenditures for the fourth quarter of 2021 were US$188.1 million.

Full Year Results

For the year ended December 31, 2021, Studio City International Holdings Limited reported total operating revenues of US$106.9 million, compared to US$49.2 million in the prior year. The increase in total operating revenues was primarily attributable to higher revenues from the provision of gaming related services and non-gaming revenues as a result of a year-over-year increase in inbound tourism in 2021.

Operating loss for 2021 was US$191.6 million, compared with operating loss of US$279.9 million for 2020.

Studio City generated negative Adjusted EBITDA of US$56.5 million for the year ended December 31, 2021, compared to negative Adjusted EBITDA of US$113.8 million in 2020. The change in Adjusted EBITDA was mainly attributable to higher revenues from the provision of gaming related services and non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for 2021 was US$252.6 million, compared with net loss attributable to Studio City International Holdings Limited of US$321.6 million for 2020. The net loss attributable to participation interest for 2021 was US$49.4 million and the net loss attributable to participation interest for 2020 was US$83.5 million.

Subsequent Events

On February 7, 2022, Studio City Company Limited (“Studio City Company”), a subsidiary of the Company, announced an offering of senior secured notes and, concurrently, the Company announced that it had entered into subscription agreements with certain existing institutional holders of its ordinary shares and American Depositary Shares, each representing four Class A ordinary shares (“ADSs”), which hold, in aggregate, over 99% of the Company’s outstanding shares, for total proceeds of US$300 million. The Company is in the process of closing the private placement.

The senior secured notes were issued on February 16, 2022, with an aggregate principal amount of US$350 million, 7.00% coupon and 5 year tenor (the “Notes”). Net proceeds from the issuance of the Notes will be used to partially fund the capital expenditures of the remaining project for Studio City and for general corporate purposes.

Recent Developments

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

Our operations remain impacted by travel restrictions and quarantine requirements. The appearance of COVID-19 cases in Macau in late September 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. Since October 19, 2021, authorities have eased pandemic prevention measures such that travelers no longer require 14-day quarantine on arrival in Zhuhai, and the validity of nucleic acid tests to enter Zhuhai was extended from 24 hours to 7 days. However, health-related precautionary measures remain in place and non-Macau resident individuals who are not residents of Taiwan, Hong Kong, or the PRC continue to be unable to enter Macau, except if they have been in Hong Kong or mainland PRC in the preceding 21 days and are eligible for an exemption application.

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 optimistic on the long-term growth prospects for both Macau and Studio City. We expect both Macau and Studio City to benefit from the continued economic growth in China, infrastructure developments in the Greater Bay Area and new property openings in Cotai.

We continue our efforts to complete the construction of Studio City Phase 2 by the deadline set in the land concession of December 27, 2022. This expansion designed by renowned international architecture firm Zaha Hadid Architects 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 1,100 square meters of state-of-the-art MICE space. Furthermore, Studio City Phase 2 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 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, (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, share-based compensation 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 KimSenior Vice President, Group TreasurerTel: +852 2598 3698Email: JeannyKim@melco-resorts.com

For media enquiries, please contact:Chimmy LeungExecutive Director, Corporate CommunicationsTel: +852 3151 3765Email: 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   Year Ended  
  December 31,   December 31,  
  2021     2020     2021     2020    
                         
Operating revenues:                        
Provision of gaming related services $ 4,067     $ (3,696 )   $ (1,455 )   $ (42,682 )  
Rooms   7,975       9,667       38,749       21,997    
Food and beverage   6,317       7,040       26,734       22,653    
Entertainment   221       364       2,649       1,389    
Services fee   5,413       6,445       24,906       26,151    
Mall   3,999       2,270       13,683       17,008    
Retail and other   389       1,615       1,602       2,692    
Total operating revenues   28,381       23,705       106,868       49,208    
                         
Operating costs and expenses:                        
Provision of gaming related services   (9,151 )     (8,061 )     (28,085 )     (26,993 )  
Rooms   (2,848 )     (2,756 )     (12,176 )     (11,229 )  
Food and beverage   (6,914 )     (6,745 )     (27,853 )     (27,301 )  
Entertainment   (590 )     (733 )     (2,842 )     (3,409 )  
Mall   (878 )     (1,013 )     (3,785 )     (4,661 )  
Retail and other   (359 )     (324 )     (1,474 )     (1,204 )  
General and administrative   (18,628 )     (19,219 )     (87,577 )     (89,006 )  
Pre-opening costs   (245 )     (68 )     (984 )     (201 )  
Amortization of land use right   (829 )     (834 )     (3,325 )     (3,333 )  
Depreciation and amortization   (31,010 )     (34,595 )     (124,309 )     (157,001 )  
Property charges and other   (1,902 )     (697 )     (6,031 )     (4,798 )  
Total operating costs and expenses   (73,354 )     (75,045 )     (298,441 )     (329,136 )  
Operating loss   (44,973 )     (51,340 )     (191,573 )     (279,928 )  
Non-operating income (expenses):                        
Interest income   710       101       3,060       1,276    
Interest expenses, net of amounts capitalized   (21,894 )     (23,718 )     (90,967 )     (104,799 )  
Other financing costs   (105 )     (106 )     (419 )     (421 )  
Foreign exchange gains (losses), net   1,268       673       6,257       (3,434 )  
Other income (expenses), net   -       174       -       (81 )  
Loss on extinguishment of debt   -       (219 )     (28,817 )     (18,716 )  
Total non-operating expenses, net   (20,021 )     (23,095 )     (110,886 )     (126,175 )  
Loss before income tax   (64,994 )     (74,435 )     (302,459 )     (406,103 )  
Income tax credit   486       905       457       1,011    
Net loss   (64,508 )     (73,530 )     (302,002 )     (405,092 )  
Net loss attributable to participation interest   10,562       12,039       49,447       83,466    
Net loss attributable to Studio City International Holdings Limited $ (53,946 )   $ (61,491 )   $ (252,555 )   $ (321,626 )  
                         
Net loss attributable to Studio City International Holdings Limited                        
per Class A ordinary share:                        
Basic $ (0.146 )   $ (0.166 )   $ (0.682 )   $ (1.091 )  
Diluted $ (0.146 )   $ (0.166 )   $ (0.682 )   $ (1.103 )  
                         
Net loss attributable to Studio City International Holdings Limited per ADS:                      
Basic $ (0.583 )   $ (0.664 )   $ (2.728 )   $ (4.363 )  
Diluted $ (0.583 )   $ (0.664 )   $ (2.728 )   $ (4.411 )  
                         
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       370,352,700       370,352,700       294,837,092    
Diluted   370,352,700       370,352,700       370,352,700       367,348,852    
                         
Studio City International Holdings Limited and Subsidiaries  
Condensed Consolidated Balance Sheets  
(In thousands of U.S. dollars, except share and per share data)  
             
             
  December 31,   December 31,  
  2021     2020    
  (Unaudited)        
ASSETS            
             
Current assets:            
Cash and cash equivalents $ 499,289     $ 575,215    
Restricted cash   -       13    
Accounts receivable, net   247       157    
Amounts due from affiliated companies   15,697       10,672    
Inventories   5,828       9,297    
Prepaid expenses and other current assets   42,633       12,467    
Total current assets   563,694       607,821    
             
Property and equipment, net   2,556,040       2,180,897    
Intangible assets, net   2,777       4,005    
Long-term prepayments, deposits and other assets   69,624       117,555    
Restricted cash   130       131    
Operating lease right-of-use assets   14,588       17,379    
Land use right, net   112,114       116,109    
Total assets $ 3,318,967     $ 3,043,897    
             
LIABILITIES, SHAREHOLDERS’ EQUITY AND            
  PARTICIPATION INTEREST            
             
Current liabilities:            
Accounts payable $ 211     $ 206    
Accrued expenses and other current liabilities   201,405       118,946    
Income tax payable   21       33    
Amounts due to affiliated companies   53,093       42,966    
Total current liabilities   254,730       162,151    
             
Long-term debt, net   2,087,486       1,584,660    
Other long-term liabilities   17,771       11,778    
Deferred tax liabilities, net   -       448    
Operating lease liabilities, non-current   14,797       17,137    
Total liabilities   2,374,784       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   (6,136 )     11,876    
Accumulated losses   (1,338,715 )     (1,086,160 )  
Total shareholders’ equity   789,420       1,059,987    
Participation interest   154,763       207,736    
Total shareholders’ equity and participation interest   944,183       1,267,723    
Total liabilities, shareholders’ equity and participation interest $ 3,318,967     $ 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   Year Ended  
  December 31,   December 31,  
  2021     2020     2021     2020    
                         
Net loss attributable to Studio City International Holdings Limited $ (53,946 )   $ (61,491 )   $ (252,555 )   $ (321,626 )  
Pre-opening costs   245       68       984       201    
Property charges and other   1,902       697       6,031       4,798    
Loss on extinguishment of debt   -       219       28,817       18,716    
Participation interest impact on adjustments   (352 )     (161 )     (5,867 )     (4,284 )  
Adjusted net loss attributable to                        
Studio City International Holdings Limited $ (52,151 )   $ (60,668 )   $ (222,590 )   $ (302,195 )  
                         
Adjusted net loss attributable to Studio City International Holdings Limited                      
per Class A ordinary share:                        
Basic $ (0.141 )   $ (0.164 )   $ (0.601 )   $ (1.025 )  
Diluted $ (0.141 )   $ (0.164 )   $ (0.601 )   $ (1.038 )  
                         
Adjusted net loss attributable to Studio City International Holdings Limited                      
per ADS:                        
Basic $ (0.563 )   $ (0.655 )   $ (2.404 )   $ (4.100 )  
Diluted $ (0.563 )   $ (0.655 )   $ (2.404 )   $ (4.153 )  
                         
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       370,352,700       370,352,700       294,837,092    
Diluted   370,352,700       370,352,700       370,352,700       367,348,852    
                         
Studio City International Holdings Limited and Subsidiaries
Reconciliation of Operating Loss to Adjusted EBITDA (Unaudited)
(In thousands of U.S. dollars)
                       
                       
  Three Months Ended   Year Ended
  December 31,   December 31,
  2021     2020     2021     2020    
               
Operating loss $ (44,973 )   $ (51,340 )   $ (191,573 )   $ (279,928 )  
Pre-opening costs   245       68       984       201    
Depreciation and amortization   31,839       35,429       127,634       160,334    
Share-based compensation   438       791       438       791    
Property charges and other   1,902       697       6,031       4,798    
Adjusted EBITDA $ (10,549 )   $ (14,355 )   $ (56,486 )   $ (113,804 )  
                       
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   Year Ended  
  December 31,   December 31,  
  2021     2020     2021     2020    
                 
Net loss attributable to Studio City International Holdings Limited $ (53,946 )   $ (61,491 )   $ (252,555 )   $ (321,626 )  
Net loss attributable to participation interest   (10,562 )     (12,039 )     (49,447 )     (83,466 )  
Net loss   (64,508 )     (73,530 )     (302,002 )     (405,092 )  
Income tax credit   (486 )     (905 )     (457 )     (1,011 )  
Interest and other non-operating expenses, net   20,021       23,095       110,886       126,175    
Property charges and other   1,902       697       6,031       4,798    
Share-based compensation   438       791       438       791    
Depreciation and amortization   31,839       35,429       127,634       160,334    
Pre-opening costs   245       68       984       201    
Adjusted EBITDA $ (10,549 )   $ (14,355 )   $ (56,486 )   $ (113,804 )  
                         
Studio City International Holdings Limited and Subsidiaries  
Supplemental Data Schedule  
                           
                           
            Three Months Ended   Year Ended  
            December 31,   December 31,  
              2021       2020       2021       2020    
Room Statistics(3):                      
                           
    Average daily rate (4)     $ 131     $ 121     $ 123     $ 128    
                           
    Occupancy per available room     39 %     49 %     51 %     28 %  
                           
    Revenue per available room (5)   $ 52     $ 59     $ 62     $ 36    
                           
                           
                           
Other Information(6):                      
                           
    Average number of table games     288       291       290       282    
                           
    Average number of gaming machines     710       606       645       586    
                           
    Table games win per unit per day (7)   $ 3,162     $ 3,057     $ 3,306     $ 2,456    
                           
    Gaming machines win per unit per day (8) $ 113     $ 103     $ 129     $ 98    
                           
                           
(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
                           
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