Summary of Melco Resorts & Entertainment Limited (MLCO) Q2 2026 Earnings Call

1Key Financial Results and Metrics

Adjusted Property EBITDA: Approximately $304 million for Q2 2026; adjusted for VIP hold, it was about $312 million.

VIP Win Rate: Declined to 2.7% from 3.9% in Q2 2025, negatively impacting EBITDA by approximately $9 million.

Operating Expenses: Daily OpEx in Macau remained steady at about $3.4 million.

Liquidity Position: Approximately $2.8 billion in available liquidity, with $1 billion in cash. The revolving credit facility was extended to June 2031 and increased by $821 million.

Share Repurchases: Approximately 25 million ADSs repurchased in 2026 for $134 million.

2Strategic Updates and Business Highlights

New Developments: The opening of the REM at City of Dreams is seen as a significant milestone, offering a unique experience in Macau.

Gaming Enhancements: A new gaming area with 18 tables was opened to attract more walk-in patrons.

Retail Revamp: A major redesign of retail areas at City of Dreams is underway, aiming to enhance the integrated resort experience.

Performance in Other Markets:

City of Dreams Manila reported $31 million in property EBITDA, up 9% year-over-year.

City of Dreams Mediterranean and satellite casinos in Cyprus saw a 60% year-over-year increase in EBITDA.

Sri Lanka's casino operations recorded positive EBITDA of $3.5 million.

3Forward Guidance and Outlook

OpEx Projections: Expected to be around $3.3 million to $3.4 million per day, including House of Dancing Water.

CapEx Guidance: Approximately $225 million for the remainder of 2026, with a decrease to $275 million to $300 million for 2027.

Dividend Policy: Expected to recommence in 2027, with a focus on meaningful dividends rather than nominal amounts.

4Bad News, Challenges, or Points of Concern

Competitive Pressures: Elevated competition in Macau is leading to a demanding cost environment.

Visitation and Hold Issues: Lower-than-expected visitation and a decline in VIP win rates are pressuring margins.

Construction Disruption: Ongoing retail renovations may impact guest experience and visitation through mid-2027.

Post-World Cup Trends: The World Cup had a significant impact on gaming activity, with a noted shift in customer spending towards sports betting during the event.

5Notable Q&A Insights

Differentiation of REM: The REM is positioned as a unique offering that complements existing luxury accommodations in Macau.

Debt Management: Focus remains on debt repayment and improving performance in Macau, with a cautious approach to corporate actions and M&A.

Entertainment Calendar: The entertainment calendar is becoming more rational, with fewer events planned, which may impact overall visitor engagement.

VIP Business Outlook: While the VIP segment faced challenges during the World Cup, there is optimism for recovery in the back half of the year. Overall, while MLCO faces several challenges, particularly in Macau, strategic initiatives and a robust liquidity position provide a foundation for future growth and recovery.