Melco Resorts & Entertainment Limited (NASDAQ:MLCO) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 03, 2018 • 12:30 pm ET

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Melco Resorts & Entertainment Limited (NASDAQ:MLCO) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for participating in the First Quarter 2018 Earnings Conference Call of Melco Resorts & Entertainment Limited. At this time all participants are in listen only mode, After the call we will conduct a question and answer session. Today's conference call is being recorded.

I would now like to turn the call over to Mr. Richard Huang, Director of Investor Relations, Melco Resorts & Entertainment Limited. Over to you, sir.

Executive
Richard Huang

Thank you for joining us today for our first quarter 2018 earnings call. On the call today are Lawrence Ho, Geoff Davis and our property presidents in Macau and Manila. Before we get started, please note that today's discussion may contain forward-looking statements made under the safe harbor provision of Federal Securities Laws. Our actual results could differ from our anticipated results.

I'll now turn the call over to Lawrence.

Executive
Lawrence Ho

Thank you, Richard, and hello, everyone. After several challenging quarters, we've started seeing encouraging trends at our flagship property, City of Dreams, which delivered over 8% sequential mass gaming revenue growth, driving group-wide property EBITDA to an all-time high of USD $402 million.

We anticipate these positive trends to accelerate in the second half of the year, driven by the improving demand environment, completion of the Hong Kong--Zhuhai--Macau Bridge and most importantly, the opening of Morpheus. We could not be more excited about our new opening, which will put an end to the first part of construction disruption at COD, especially on our main gaming floor.

It will also give COD the most spectacular offering Macau has ever seen to attract premium customers. Melco has always aspired to be a leader in everything innovative and luxury. Our leadership position in the premium market was recognized by the 2018 Michelin and Forbes Travel Guide, which rated us as the operator with the most Forbes Star awards and the most Michelin-starred restaurants in Asia.

The opening of Morpheus will allow City of Dreams to expand its dining and entertainment offerings, which should help widen its lead over the competition. The 70% increase in luxury hotel rooms from the opening of Morpheus will also enable City of Dreams to more aggressively acquire and retain gaming -- premium gaming patrons, which is key to driving future mass gaming revenue growth.

In addition to expanding our footprint, it is critical to continue to inject freshness into our resorts. That includes redeveloping the Countdown into a luxury hotel concept that better fits the overall positioning of COD. Additionally, and separate from the refurbishment of the Countdown, we have identified over USD100 million of targeted enhancement CapEx in the next 12 months to upgrade the gaming areas and the nongaming attractions at both COD and Studio City, which is aimed at maintaining the longer-term competitiveness of these 2 resorts.

Looking further out, we have received Macau government approval to extend the development deadline of Studio City Phase 2 to July 2021, enabling us to continue to develop our detailed designs for the Phase 2