MLCO Melco Resorts and Entertainment Ltd

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 HuangDirector, Investor RelationsTel: +852 2598 3619Email: richardlshuang@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
(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