Melco Resorts (MLCO) Misses On Q2 Earnings, Stock Falls

Melco Resorts & Entertainment Limited (NASDAQ:MLCO) posted mixed second-quarter 2017 results, wherein though earnings lagged the Zacks Consensus Estimate, revenues beat the same. Consequently, shares were down more than 2% in yesterday’s trading session.

Earnings and Revenue Discussion

Adjusted earnings per share of 16 cents missed the Zacks Consensus Estimate of 20 cents by 20%. However, earnings increased significantly from the prior-year quarter figure of 5 cents on higher revenues.

Notably, quarterly net revenue of $1.30 billion surpassed the Zacks Consensus Estimate of $1.21 billion by over 7% and also increased 21.3% on a year-over-year basis. This improvement in the top line was primarily driven by better group-wide rolling chip revenues.

Adjusted Property EBITDA (earnings before interest, taxes, and amortization) was $329.5 million in the quarter under review, up 34% year over year. The upside was prompted by improved performance in the group-wide rolling chip segment.

City of Dreams Macau

Net revenue at City of Dreams was $644.6 million, up 2.3% year over year. Adjusted EBITDA was however $175.3 million, reflecting a decrease of 1.4% year over year.

Rolling chip volumes totaled $12.2 billion, up 23.2% year over year. The rolling chip win rate was 2.9%, down 10 basis points (bps) year over year and within the projected range of 2.7% to 3%.

Table drop in the mass market table games segment amounted to $1.07 billion, up 4.4% year over year. However, mass hold percentage was 32.4%, down 330 bps.

Total non-gaming revenue at City of Dreams in the quarter was $74.6 million, up 18.8% year over year.

Altira Macau

Net revenue at Altira Macau was $107.6 million, up 9% year over year. Altira Macau generated adjusted EBITDA of $5.1 million in the reported quarter, up significantly from the prior-year quarter’s figure of $1.7 million. The improvement came on the back of higher rolling chip revenues, offset to an extent by lower mass market table games revenues.

Conversely, Rolling chip volume was $4 billion, down 4.8% from the prior-year quarter. The rolling chip win rate was 3.3% up 60 bps and higher than the projected range of 2.7% to 3%.

Table drop in the mass market table games segment was $91.9 million, down 26% year over year. Moreover, mass market table games hold percentage was 15.2%, down 330 bps.

Meanwhile, total non-gaming revenue at Altira Macau was $6.1 million, down 18.8% year over year.

Mocha Clubs

Net revenue from Mocha Clubs was $29.3 million, up 4.6% year over year. Moreover, adjusted EBITDA of $5.6 million was up 16.7% year over year.

Studio City

Studio City started operations on Oct 27, 2015. In the reported quarter, net revenue at this property was $332.1 million, up a whopping 80.7% year over year. Also, adjusted EBITDA of $80.7 million was up significantly on a year-over-year basis. The upside was backed by commencement of rolling chip operations in Nov 2016 and enhanced performance in mass market table games segment.

Rolling chip volume totaled $4.7 billion, while the rolling chip win rate was 3.3% in the quarter (above the guided range of 2.7—3%).

Mass market table games drop was $661.4 million, up 11.7% year over year. Meanwhile, the mass market table games hold percentage was 26.8%, up a significant 400 bps year over year.

However, total non-gaming revenue at Studio City in the quarter was $48.6 million, down 4.9% year over year.

City of Dreams Manila

In the second quarter, net revenue at City of Dreams Manila was $176.2 million, up 46.6% year over year. Adjusted EBITDA was $62.8 million, up 72.1% from the year-ago quarter, thanks to increased casino revenues.

Rolling chip volume totaled $3.2 billion, up 88.2% from the year-ago quarter figure. The rolling chip win rate was 3.5% up 10 bps on a year-over-year basis and above the projected range of 2.7% to 3%.

Mass market table games drop came in at $169.8 million, up 26.4% year over year. However, the mass market table games hold percentage was 28.5% in the quarter, down 140 bps year over year.

Total non-gaming revenue at City of Dreams Manila was $28.1 million, up 7.3% year over year.

Melco Resorts currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

MGM Resorts International (NYSE:MGM) reported second-quarter adjusted earnings per share of 31 cents, beating the Zacks Consensus Estimate of 28 cents by 10.7%. Also, earnings came above the year-ago quarter figure of 26 cents by 19.2% on account of higher revenues.

Las Vegas Sands Corp.’s (NYSE:LVS) second-quarter 2017 adjusted earnings of 73 cents per share surpassed the Zacks Consensus Estimate of 61 cents by 19.7% and soared 37.7% year over year owing to higher revenues.

In second-quarter 2017, Wynn Resorts Ltd. (NASDAQ:WYNN) posted adjusted earnings of $1.18 per share that outpaced the Zacks Consensus Estimate of $1.09 by 8.3%. Further, earnings increased 10.3% from the year-ago figure of $1.07, mainly backed by higher revenues.

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