Melco Resorts (MLCO) Q2 Earnings Upper Estimates, Revenue Lag

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Melco Resorts & Entertainment Limited MLCO released mixed results in the second quarter of 2022, in which the top line missed the Zacks consensus estimate, but the bottom line beat the same.

The company reported an adjusted loss per share of 51 cents, narrower than Zacks’ consensus estimate of a loss of 52 cents. Notably, the company had reported adjusted earnings per share of 35 cents in the prior year quarter.

Quarterly net revenue totaled $296.1 million, missing the consensus estimate of $384 million. Net revenue fell 48% year-over-year, due to tighter border restrictions in Macau as well as mainland China due to COVID-19.

Let’s take a closer look at the quarterly results.

Real estate performance

The city of Dreams

City of Dreams net revenues were $97.3 million, compared to $347.6 million in the same period a year earlier. Adjusted EBITDA was ($28.5) million compared to Adjusted EBITDA of $79.5 million in the prior year quarter. The deterioration is mainly due to the poor performance of all gaming segments and lower non-gaming revenue.

Rolling chip volumes totaled $748.1 million, compared to $4.55 billion in the prior year quarter. The rolling token success rate was 2.57% compared to 2.74% in the prior year quarter.

City of Dreams’ total non-game revenue in the quarter was $24.3 million, compared to $52.2 million in the prior year quarter.

Melco Resorts & Entertainment Limited Price, Consensus and EPS Surprise

Melco Resorts & Entertainment Limited price-consensus-eps-surprise-chart | Quotation Melco Resorts & Entertainment Limited

Altira Macau

Altira Macau’s net revenue was $7.2 million, compared to $18.3 million in the prior year quarter. This segment generated Adjusted EBITDA of ($11.3) million in the Reported Quarter compared to the prior year quarter ($17.3) million.

Additionally, the rolling token volume was $857.3 million. The rolling token win rate was 1.62%, below the company’s predicted rolling token win rate range of 2.85% to 3.15%.

Meanwhile, Altira Macau’s total non-gaming revenue totaled $1.9 million, up from $3 million at the end of Q2 2021.

mocha clubs

Moka Clubs net revenue was $17 million, down 29.5% year-over-year. Adjusted EBITDA of $2.5 million decreased 55.4% year over year.

The slot’s handle for the quarter under review was $406.8 million, down 26.3% year-over-year. The slots hit rate was 4.2% in the quarter, down 20 basis points from the prior year quarter.

city ​​of studios

In the reported quarter, net revenues from this property totaled $35.9 million, compared to $104.5 million in the prior year quarter. Adjusted EBITDA was ($31.1) million, compared to EBITDA of ($1.2) million at the end of the prior year quarter.

While rolling token volume totaled $104.1 million, rolling token hit rate was 5.33% in the quarter (above the guided range of 2.85-3.15% ).

Studio City’s total non-games revenue in the quarter under review was $8.3 million, down 62.3% year-over-year.

Manila City of Dreams

In the second quarter, City of Dreams Manila’s net revenue was $111.7 million, down from $52.7 million. Adjusted EBITDA was $49 million, compared to $13.3 million in the prior year quarter.

Rolling chip volume totaled $771.3 million, down 183.9% from the year-ago quarter. However, the rolling token success rate was 2.95% compared to 5.37% in the prior year quarter.

City of Dreams Manila’s total non-gaming revenue was $27.3 million, up from $6.9 million at the end of the second quarter of 2021.

Balance sheet

Total cash and bank balances as of June 30, 2022 were $1.65 billion, including $0.4 million of restricted cash, which was primarily related to Studio City.

Total debt, net of unamortized deferred financing costs at the end of the second quarter of 2022, was $7.33 billion. Second quarter capital expenditures totaled $167.7 million.

The company currently has a Zacks rank of #4 (sell).

Key Choices

Some higher ranked stocks in the consumer discretionary sector are Hyatt Hotels Corporation H, Marriott International, Inc. TUE and Choice Hotels International, Inc. CHH.

Hyatt currently carries a Zacks Rank #2 (Buy). The H stock is up 36.1% over the past year. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks consensus estimate for H’s current year sales and EPS indicates growth of 78.1% and 93.9%, respectively, over reported levels in the prior year period .

Marriott currently carries a No. 2 Zacks rank. MAR has a trailing four-quarter earnings surprise of 1.4% on average. The stock is up 25.9% over the past year.

Zacks consensus estimate for MAR’s current year sales and EPS indicate growth of 44.6% and 93.7%, respectively, over reported levels in the prior year period .

Choice Hotels carries a Zacks rank of #2, at present. CHH has a four-quarter earnings surprise of 20.4%, on average. The stock has risen 6.4% over the past year.

Zacks consensus estimate for CHH’s current year sales and EPS indicate growth of 13.6% and 17.7%, respectively, from reported levels in the prior year period .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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