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 2022.

Total operating revenues for the third quarter of 2022 were negative US$2.8 million, compared to total operating revenues of US$18.7 million in the third quarter of 2021. The change was primarily attributable to the government mandated temporary casino closures in Macau in July and heightened travel restrictions in Macau and mainland China related to COVID-19 during the quarter which led to a decrease in revenue from casino contract and lower non-gaming revenues.

Studio City Casino generated gross gaming revenues of US$20.6 million and US$85.0 million for the third quarters of 2022 and 2021, respectively.

Studio City Casino’s rolling chip volume was US$42.1 million in the third quarter of 2022 versus US$472.4 million in the third quarter of 2021. The rolling chip win rate was 4.18% in the third quarter of 2022 versus 2.35% in the third quarter of 2021. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop decreased to US$61.9 million in the third quarter of 2022, compared with US$250.5 million in the third quarter of 2021. The mass market table games hold percentage was 25.6% in the third quarter of 2022, compared to 26.4% in the third quarter of 2021.

Gaming machine handle for the third quarter of 2022 was US$98.2 million, compared with US$271.5 million in the third quarter of 2021. The gaming machine win rate was 3.1% in the third quarter of 2022, compared to 2.9% in the third quarter of 2021.

Revenue from casino contract was negative US$18.2 million for the third quarter of 2022, compared with revenue from casino contract of negative US$8.6 million for the third quarter of 2021. Revenue from casino contract is net of gaming taxes and the costs incurred in connection with the on-going operation of the Studio City Casino which are deducted by the Gaming Operator.

Total gaming taxes and the costs incurred in connection with the on-going operation of the Studio City Casino deducted from gross gaming revenues were US$38.8 million and US$93.6 million in the third quarters of 2022 and 2021, respectively.

Total non-gaming revenues at Studio City for the third quarter of 2022 were US$15.4 million, compared with US$27.3 million for the third quarter of 2021.

Operating loss for the third quarter of 2022 was US$72.5 million, compared with operating loss of US$55.7 million in the third quarter of 2021.

Studio City generated negative Adjusted EBITDA(1) of US$39.5 million in the third quarter of 2022, compared to negative Adjusted EBITDA of US$23.1 million in the third quarter of 2021. The change was mainly attributable to the decrease in revenue from casino contract and lower non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for the third quarter of 2022 was US$85.2 million, compared with net loss attributable to Studio City International Holdings Limited of US$63.2 million in the third quarter of 2021. The net loss attributable to participation interest was US$8.0 million and US$12.4 million in the third quarters of 2022 and 2021, respectively.

Other Factors Affecting Earnings

Total net non-operating expenses for the third quarter of 2022 were US$20.7 million, which mainly included interest expenses of US$23.2 million, net of amounts capitalized, partially offset by interest income of US$2.5 million.

Depreciation and amortization costs of US$31.9 million were recorded in the third 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 September 30, 2022 referred to in Melco’s earnings release dated November 2, 2022 (“Melco’s earnings release”) is US$8.1 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, 2022 aggregated to US$620.7 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 third quarter of 2022 was US$2.43 billion (December 31, 2021: US$2.09 billion).

Capital expenditures for the third quarter of 2022 were US$132.4 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 fourth quarter of 2022.

On August 2, 2022, the validity of nucleic acid tests to enter Macau was set at 48 hours for entry from Zhuhai and was reduced to 24 hours from October 30, 2022. Since September 1, 2022, tourists became eligible to enter Macau without prior approval provided they held passports issued by the 41 countries specified by the Macau government or comply with certain conditions imposed by the Macau government, subject to valid nucleic acid tests, 7-day quarantine at a government designated facility and a 3-day self-monitoring period. On November 1, 2022, China’s National Immigration Administration commenced electronic processing of visa applications for individual or group travel to Macau.

Uncertainty around COVID-19 outbreaks is expected to continue for at least the remainder of 2022 with travel bans or restrictions, visa restrictions, and quarantine requirements being key factors impacting performance.

The construction of Studio City Phase 2 continues to progress on schedule with construction completion expected within 2022. We will monitor the market closely to determine the appropriate time to open and currently anticipate opening in stages, beginning in the second quarter of 2023.

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) risks associated with the newly adopted gaming law in Macau and its implementation by the Macau government, (iii) growth of the gaming market and visitations in Macau, (iv) capital and credit market volatility, (v) local and global economic conditions, (vi) our anticipated growth strategies, (vii) gaming authority and other governmental approvals and regulations, 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 KimSenior Vice President, Group TreasurerTel: +852 2598 3698Email: jeannykim@melco-resorts.com

For media enquiries, please contact: Chimmy LeungExecutive Director, Corporate CommunicationsTel: +852 31513765Email: 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,  
  2022     2021     2022     2021    
                         
Operating revenues:                        
Revenue from casino contract(3) $ (18,166 )   $ (8,562 )   $ (44,171 )   $ (5,522 )  
Rooms   3,527       9,782       13,566       30,774    
Food and beverage   3,509       6,346       12,855       20,417    
Entertainment   871       1,383       1,175       2,428    
Services fee   5,033       6,330       16,215       19,493    
Mall   1,246       3,115       5,800       9,684    
Retail and other   1,187       329       1,871       1,213    
Total operating revenues   (2,793 )     18,723       7,311       78,487    
                           
Operating costs and expenses:                        
Costs related to casino contract(3)   (9,622 )     (7,334 )     (21,864 )     (18,934 )  
Rooms   (2,884 )     (3,217 )     (8,476 )     (9,328 )  
Food and beverage   (5,162 )     (6,864 )     (18,241 )     (20,939 )  
Entertainment   (536 )     (962 )     (1,704 )     (2,252 )  
Mall   (979 )     (929 )     (3,041 )     (2,907 )  
Retail and other   (273 )     (351 )     (904 )     (1,115 )  
General and administrative   (17,280 )     (22,147 )     (59,457 )     (68,949 )  
Pre-opening costs   (785 )     (6 )     (1,731 )     (739 )  
Amortization of land use right   (823 )     (831 )     (2,474 )     (2,496 )  
Depreciation and amortization   (31,029 )     (31,456 )     (92,854 )     (93,299 )  
Property charges and other   (369 )     (346 )     (3,790 )     (4,129 )  
Total operating costs and expenses   (69,742 )     (74,443 )     (214,536 )     (225,087 )  
Operating loss   (72,535 )     (55,720 )     (207,225 )     (146,600 )  
Non-operating income (expenses):                        
Interest income   2,458       841       4,187       2,350    
Interest expenses, net of amounts capitalized   (23,181 )     (23,564 )     (70,430 )     (69,073 )  
Other financing costs   (104 )     (106 )     (311 )     (314 )  
Foreign exchange gains, net   162       2,484       6,402       4,989    
Loss on extinguishment of debt   -       -       -       (28,817 )  
Total non-operating expenses, net   (20,665 )     (20,345 )     (60,152 )     (90,865 )  
Loss before income tax   (93,200 )     (76,065 )     (267,377 )     (237,465 )  
Income tax credit (expense)   9       531       (485 )     (29 )  
Net loss   (93,191 )     (75,534 )     (267,862 )     (237,494 )  
Net loss attributable to participation interest   8,016       12,367       26,817       38,885    
Net loss attributable to Studio City International Holdings Limited $ (85,175 )   $ (63,167 )   $ (241,045 )   $ (198,609 )  
                           
Net loss attributable to Studio City International Holdings Limited per Class A ordinary share:                        
Basic $ (0.111 )   $ (0.171 )   $ (0.349 )   $ (0.536 )  
Diluted $ (0.111 )   $ (0.171 )   $ (0.351 )   $ (0.536 )  
                           
Net loss attributable to Studio City International Holdings Limited per ADS:                        
Basic $ (0.442 )   $ (0.682 )   $ (1.396 )   $ (2.145 )  
Diluted $ (0.442 )   $ (0.682 )   $ (1.404 )   $ (2.145 )  
                           
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   770,352,700       370,352,700       690,440,759       370,352,700    
Diluted   770,352,700       370,352,700       762,952,519       370,352,700    
(3) As a result of the amendments made to the agreement for the operation of the Studio City Casino announced on June 23, 2022, certain revenues and operating costs of the Company were previously captioned as i) revenue from provision of gaming related services and are now captioned as revenue from casino contract; and ii) costs for provision of gaming related services and are now captioned as costs related to casino contract.
             
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,  
  2022     2021    
    (Unaudited)        
ASSETS            
             
Current assets:            
Cash and cash equivalents $ 620,558     $ 499,289    
Accounts receivable, net   2,435       247    
Amounts due from affiliated companies   245       15,697    
Inventories   5,308       5,828    
Prepaid expenses and other current assets   38,856       42,633    
Total current assets   667,402       563,694    
             
Property and equipment, net   2,817,355       2,556,040    
Contract acquisition costs, net   12,797       -    
Intangible assets, net   1,714       2,777    
Long-term prepayments, deposits and other assets   36,415       69,624    
Restricted cash   129       130    
Operating lease right-of-use assets   13,086       14,588    
Land use right, net   108,908       112,114    
Total assets $ 3,657,806     $ 3,318,967    
             
LIABILITIES, SHAREHOLDERS’ EQUITY AND            
PARTICIPATION INTEREST            
             
Current liabilities:            
Accounts payable $ 581     $ 211    
Accrued expenses and other current liabilities   163,762       201,405    
Income tax payable   21       21    
Amounts due to affiliated companies   74,205       53,093    
Total current liabilities   238,569       254,730    
             
Long-term debt, net   2,433,674       2,087,486    
Other long-term liabilities   21,464       17,771    
Deferred tax liabilities, net   483       -    
Operating lease liabilities, non-current   13,198       14,797    
Total liabilities   2,707,388       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 losses   (29,194 )     (6,136 )  
Accumulated losses   (1,579,760 )     (1,338,715 )  
Total shareholders’ equity   868,489       789,420    
Participation interest   81,929       154,763    
Total shareholders’ equity and participation interest   950,418       944,183    
Total liabilities, shareholders’ equity and participation interest $ 3,657,806     $ 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   Nine Months Ended  
  September 30,   September 30,  
  2022     2021     2022     2021    
                         
Net loss attributable to Studio City International Holdings Limited $ (85,175 )   $ (63,167 )   $ (241,045 )   $ (198,609 )  
Pre-opening costs   785       6       1,731       739    
Property charges and other   369       346       3,790       4,129    
Loss on extinguishment of debt   -       -       -       28,817    
Participation interest impact on adjustments   (99 )     (57 )     (712 )     (5,515 )  
Adjusted net loss attributable to Studio City International Holdings Limited $ (84,120 )   $ (62,872 )   $ (236,236 )   $ (170,439 )  
                         
Adjusted net loss attributable to Studio City International Holdings Limited per Class A ordinary share:                        
Basic $ (0.109 )   $ (0.170 )   $ (0.342 )   $ (0.460 )  
Diluted $ (0.109 )   $ (0.170 )   $ (0.344 )   $ (0.460 )  
                         
Adjusted net loss attributable to Studio City International Holdings Limited per ADS:                      
Basic $ (0.437 )   $ (0.679 )   $ (1.369 )   $ (1.841 )  
Diluted $ (0.437 )   $ (0.679 )   $ (1.375 )   $ (1.841 )  
                         
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   770,352,700       370,352,700       690,440,759       370,352,700    
Diluted   770,352,700       370,352,700       762,952,519       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   Nine Months Ended
  September 30,   September 30,
  2022     2021     2022     2021  
               
Operating loss $ (72,535 )   $ (55,720 )   $ (207,225 )   $ (146,600 )
Pre-opening costs   785       6       1,731       739  
Depreciation and amortization   31,852       32,287       95,328       95,795  
Property charges and other   369       346       3,790       4,129  
Adjusted EBITDA $ (39,529 )   $ (23,081 )   $ (106,376 )   $ (45,937 )
                       
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,  
  2022     2021     2022     2021    
                 
Net loss attributable to Studio City International Holdings Limited $ (85,175 )   $ (63,167 )   $ (241,045 )   $ (198,609 )  
Net loss attributable to participation interest   (8,016 )     (12,367 )     (26,817 )     (38,885 )  
Net loss   (93,191 )     (75,534 )     (267,862 )     (237,494 )  
    Income tax (credit) expense   (9 )     (531 )     485       29    
    Interest and other non-operating expenses, net   20,665       20,345       60,152       90,865    
    Property charges and other   369       346       3,790       4,129    
    Depreciation and amortization   31,852       32,287       95,328       95,795    
    Pre-opening costs   785       6       1,731       739    
Adjusted EBITDA $ (39,529 )   $ (23,081 )   $ (106,376 )   $ (45,937 )  
                         
Studio City International Holdings Limited and Subsidiaries
Supplemental Data Schedule
                           
                           
            Three Months Ended   Nine Months Ended  
            September 30,   September 30,  
              2022       2021       2022       2021    
Room Statistics(4):                      
    Average daily rate (5)     $ 107     $ 123     $ 114     $ 122    
    Occupancy per available room     25 %     52 %     27 %     54 %  
    Revenue per available room (6)   $ 27     $ 64     $ 31     $ 66    
                           
Other Information(7):                      
    Average number of table games     277       291       277       291    
    Average number of gaming machines     702       656       711       623    
    Table games win per unit per day (8)   $ 794     $ 2,883     $ 1,592     $ 3,354    
    Gaming machines win per unit per day (9) $ 54     $ 131     $ 82     $ 135    
                           
                           
(4) Room statistics exclude rooms that were temporarily closed or provided to staff members due to the COVID-19 outbreak
(5) 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
(6) Revenue per available room is calculated by dividing total room revenues including complimentary rooms (less service charges, if any) by total rooms available
(7) 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
(8) 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
(9) 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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