Melco Resorts’ Earnings Call Highlights Growth and Strategy

Melco Resorts & Entertainment ((MLCO)) has held its Q4 earnings call. Read on for the main highlights of the call.

Melco Resorts & Entertainment’s recent earnings call conveyed a generally positive sentiment, highlighting significant achievements in market share growth and a robust liquidity position. The company has made a solid start to 2025, despite facing challenges such as increased operating expenses and upcoming debt maturities. Strategic initiatives and an asset-light strategy are positioning Melco well for future growth.

Increased Market Share in Macau

Melco Resorts reported a notable increase in its market share in Macau, reaching approximately 15.6% in December. This growth was accompanied by property visitation exceeding pre-pandemic levels for the first time since the reopening of the borders, marking a significant milestone for the company.

Strong Financial Position and Liquidity

The company has bolstered its financial position by adding $250 million in liquidity through a revolving credit facility for Studio City. This move has increased Melco’s available liquidity to $3.3 billion, with consolidated cash on hand of approximately $1.3 billion, demonstrating a strong financial footing.

Asset-Light Strategy and Strategic Alternatives

As part of its asset-light strategy, Melco is exploring strategic alternatives for City of Dreams, Manila. This approach aims to enhance financial flexibility and support long-term growth, aligning with the company’s broader strategic objectives.

Positive Start to 2025

The year 2025 has begun on a high note for Melco, with total GGR excluding junkets surpassing both 2024 and 2019 figures. Property visitation increased by 17% compared to the previous year, with a single day during Chinese New Year ranking among the top 10 all-time highs.

Increased Operating Expenses

Operating expenses in Macau rose to $3.2 million per day during Q4 2024, driven in part by new activations and additional programming. While this presents a challenge, the company is taking steps to manage these costs effectively.

Debt Maturities in 2025

Melco faces approximately $1.2 billion in debt maturities in 2025. However, the company has assured stakeholders that these maturities are covered, reflecting a proactive approach to financial management.

Forward-Looking Guidance

Looking ahead, Melco Resorts provided strategic guidance during the earnings call. The company reported a group-wide adjusted property EBITDA of approximately $295 million, with an adjustment for VIP hold bringing it to $312 million, marking a 5% increase from the previous quarter. Operating expenses in Macau are expected to decrease to $3.0 million per day by the end of Q2 2025. The company plans to reduce its $1.2 billion debt due in 2025 and is exploring strategic alternatives for City of Dreams Manila. Future capital expenditures are projected at $415 million for 2025, with significant investments planned in Macau and Sri Lanka.

In summary, Melco Resorts & Entertainment’s earnings call highlighted a positive outlook, with strong market share growth and a solid financial position. Despite challenges such as increased operating expenses and debt maturities, the company’s strategic initiatives and asset-light strategy are paving the way for future growth. Investors and stakeholders can remain optimistic about Melco’s prospects as it continues to navigate the evolving market landscape.