Melco Resorts' (MLCO) Stock Falls Despite Q3 Earnings Beat
Zacks Investment Research | Nov 02, 2017 11:21PM ET
Melco Resorts & Entertainment Limited (NASDAQ:MLCO) posted better-than-expected third-quarter 2017 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. However, shares declined nearly 4% in yesterday’s trading session.
Earnings and Revenue Discussion
Adjusted earnings per share of 31 cents surpassed the Zacks Consensus Estimate of 23 cents by 34.8%. Also, the bottom line increased significantly from the prior-year quarter’s figure of 13 cents on higher revenues.
Quarterly net revenues of $1.38 billion surpassed the Zacks Consensus Estimate of $1.29 billion by nearly 4% and also increased 19.5% on a year-over-year basis. This improvement in the top line was primarily driven by higher rolling chip revenues at City of Dreams and the initiation of rolling chip operations at Studio City in November 2016.
Adjusted Property EBITDA (earnings before interest, taxes, and amortization) was $400.2 million in the quarter under review, up 38.4% year over year. The upside was prompted by improved performance in the group-wide rolling chip segment.
City of Dreams Macau
Net revenues at City of Dreams were $715.9 million, up 15.2% year over year. Moreover, adjusted EBITDA came in at $246.4 million, reflecting an increase of 44.6% year over year.
Rolling chip volumes totaled $11.2 billion, up 5.7% year over year. The rolling chip win rate was 3.5%, up 90 basis points (bps) year over year and above the projected range of 2.7% to 3%.
Mass market table games drop amounted to nearly $1.15 billion, up 4.4% year over year. However, mass market table games hold percentage was 32.3%, down 220 bps.
Total non-gaming revenues at City of Dreams in the quarter were $81.4 million, up 7.7% year over year.
Altira Macau
Net revenues at Altira Macau were $89.3 million, down 30.7% year over year. This segment generated adjusted EBITDA of negative $5.6 million in the reported quarter, as against the prior-year quarter’s figure of $14 million. The decline was primarily due to decreased casino revenues.
Additionally, Rolling chip volume was $4.2 billion, down 6.7% from the prior-year quarter. The rolling chip win rate was 2.6% down 60 bps and lower than the projected range of 2.7% to 3%.
Table drop in the mass market table games segment was $112.4 million, down 8.3% year over year. Moreover, mass market table games hold percentage was 15.7%, down 410 bps.
Meanwhile, total non-gaming revenues at Altira Macau were $6.8 million, down 6.8% year over year.
Mocha Clubs
Net revenues from Mocha Clubs were $30.2 million, down 5% year over year. Also, adjusted EBITDA of $6.5 million was down 7.1% year over year.
Studio City
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Studio City started operations on Oct 27, 2015. In the reported quarter, net revenues at this property were $384.5 million, up a whopping 67.5% year over year. Also, adjusted EBITDA of $95.6 million was up 81.4% on a year-over-year basis. The upside was backed by commencement of rolling chip operations in November 2016 and enhanced performance in mass market table games segment.
While rolling chip volume totaled $5.1 billion, the rolling chip win rate was 4% in the quarter (above the guided range of 2.7-3%).
Mass market table games drop was $747.1 million, up 13.6% year over year. However, the mass market table games hold percentage was 25%, down 50 bps year over year.
Total non-gaming revenues at Studio City in the quarter were $51.9 million, down 11.3% year over year.
City of Dreams Manila
In the third quarter, net revenues at City of Dreams Manila were $148.2 million, up 13.1% year over year. Adjusted EBITDA was $57.3 million, up 27.3% from the year-ago quarter, thanks to increased casino revenues.
Rolling chip volume totaled $3 billion, up 87.5% from the year-ago quarter figure. However, the rolling chip win rate was 2.5% down 150 bps on a year-over-year basis and below the projected range of 2.7% to 3%.
Mass market table games drop came in at $174.1 million, up 18.6% year over year. Moreover, the mass market table games hold percentage was 29.9% in the quarter, up 300 bps year over year.
Total non-gaming revenues at City of Dreams Manila were $29.2 million, up 11% year over year.
Melco Resorts carries a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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