Melco Resorts and Entertainment Ltd (MLCO) Q2 2025 Earnings Call Highlights: Strong Macau ...

Yahoo

4 days ago

Release Date: July 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Macau property EBITDA grew by 35% year over year and 13% quarter to quarter, indicating strong financial performance.
Gaming volumes and revenues reached all-time highs at City of Dreams and Studio City, showcasing robust market demand.
The reopening of House of Dancing Water with enhanced visuals contributed to a 98% theater occupancy, boosting non-gaming revenue.
Visitation to City of Dreams Macau increased by 31% year over year, reflecting successful customer engagement strategies.
The company maintained a robust liquidity position with $2.3 billion available, ensuring financial stability and flexibility.
Negative Points
The heightened competitive environment in the Philippines negatively impacted performance, necessitating cost reduction initiatives.
The Iran-Israel war in June affected operations in Cyprus, although recovery was faster than expected.
Unfavorable win rates at City of Dreams Manila negatively impacted property EBITDA by approximately $7 million.
The company recognized an impairment in goodwill of approximately $56 million due to the closure of Grand Dragon Casino and three MOCA clubs.
The strategic review in the Philippines is ongoing with no immediate resolution, creating uncertainty in that market.
Q & A Highlights
Warning! GuruFocus has detected 3 Warning Signs with MLCO.
Q: Are there any plans to remodel gaming areas at City of Dreams or Studio City in response to new supplies by competitors? A: Lawrence Ho, CEO, stated that over the last 18 months, Melco has been improving its product and reinvesting in the customer experience. The Countdown Hotel is being transformed into 150 luxury suites, and significant work is being done on the casino floor. Evan Winkler, President, added that new high-limit slot spaces and a clubhouse experience for premium players have been introduced, along with various enhancements to the gaming floor and food and beverage offerings.
Q: Given the momentum in July, do you expect your hold normalized to improve sequentially? A: Lawrence Ho, CEO, expressed optimism about the market's performance, noting that the strength seen in the first half of the year is continuing into the third quarter. The stabilization of the Chinese economy and increased consumer confidence are contributing factors.
Q: Have you noticed any significant changes in the competitive nature of the market? A: Lawrence Ho, CEO, acknowledged that Macau is always competitive, with competitors trying to grab market share. However, Melco focuses on competing through product and services rather than aggressive deals. The luxury experience at City of Dreams and family attractions at Studio City differentiate Melco's offerings.
Q: Is there an opportunity for further optimization of the expense base in Macau? A: Jeff Davis, CFO, indicated that the current operating expense target of $3 million per day is a good number going into the third quarter. Evan Winkler, President, added that while they are always looking for optimization opportunities, any increase in expenses would need to be justified by potential market share gains and EBITDA generation.
Q: Can you provide insights into the performance expectations for City of Dreams Sri Lanka? A: Lawrence Ho, CEO, expressed excitement about the opening of City of Dreams Sri Lanka, the first integrated resort in South Asia. While acknowledging a key ramp-up period, he is optimistic about creating a new market in India and expects it to grow similarly to the Cyprus market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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