NEW YORK, Feb. 9, 2012 (GLOBE NEWSWIRE) — Melco Crown Entertainment Limited (SEHK: 6883) (Nasdaq: MPEL), a developer and owner of casino gaming and entertainment resort facilities focused on the Macau market, today reported its unaudited financial results for the fourth quarter of 2011.
Net revenue for the fourth quarter of 2011 was US$1,008.3 million, representing an increase of approximately 30% from US$773.7 million for the comparable period in 2010. The year-over-year increase in net revenue was primarily driven by a group-wide increase in gaming volumes and significant improvements in mass table games hold percentages, as well as increasing contributions from hotel, food & beverage and entertainment segments.
Adjusted EBITDA<1> was US$231.6 million for the fourth quarter of 2011, an increase of 73% from US$133.8 million of Adjusted EBITDA in the fourth quarter of 2010. The significant improvement in profitability was primarily a result of the ongoing increase in contribution from our mass market operations, particularly the mass table games segment at City of Dreams, together with strong group-wide rolling chip volumes.
Cameron McKnight, Senior Analyst at Wells Fargo in New York, said in a note that MPEL’s fourth quarter EBITDA was slightly ahead of the finance house’s estimate and 11.3% ahead of market consensus. He indicated it was due to better than normal house hold on baccarat during the period. Mr McKnight added that MPEL’s own figure for adjusted quarterly EBITDA—taking account of normalised baccarat hold—came in at US$200 million. This was actually 5.4% below Wells Fargo’s US$211 million estimate for normalised EBITDA.
“Results were largely driven by City of Dreams, where adjusted EBITDA was 4.9% ahead of our estimate and 14.5% ahead of consensus with better than expected margins,” stated Mr McKnight.
“EPS [earnings per share] of $0.20 beat our estimate of $0.18. While normalized results were below our estimates, we are maintaining our Outperform rating on MPEL on positive fundamentals, the market share story at City of Dreams, long term growth trajectory and an attractive valuation.
“City of Dreams’s net revenue of $696mm was in line with our estimates, while adjusted EBITDA of $186.6mm was 14.5% ahead of our estimate. Adjusted EBITDA margin of 26.8% was 111bp ahead of our estimate. Altira net revenue of $268mm was slightly below our estimate, while adjusted EBITDA of $53.2mm was 5.8% below our estimate. Adjusted EBITDA margin of 19.9% was 76bp below our estimate. Adjusted EBITDA at Mocha Clubs was $10.2mm vs. our $13.5mm estimate. Studio City design plans are effectively complete, and MPEL is awaiting approvals to commence construction. MPEL is working on financing for the project which could include a bank loan and other debt financing,” added Mr McKnight.
The company’s earnings statement continued (figures in US dollars unless stated):
On a U.S. GAAP basis, net income attributable to Melco Crown Entertainment for the fourth quarter of 2011 was US$107.5 million, or US$0.20 per ADS, compared with net income attributable to Melco Crown Entertainment of US$16.3 million, or US$0.03 per ADS, in the fourth quarter of 2010. The 560% increase in net income for the fourth quarter of 2011 was primarily driven by substantially improved operating performance across all major segments, partially offset by increased amortization relating to the Studio City Project, as well as transaction costs attributable to our Hong Kong listing by introduction. The net loss attributable to non-controlling interests during the fourth quarter of 2011 of US$3.7 million was related to Studio City.
Mr. Lawrence Ho, Co-Chairman and Chief Executive Officer of Melco Crown Entertainment, commented, “I am pleased to report our results for the fourth quarter of 2011, completing a remarkable year for the Company where we delivered full year net revenue and EBITDA growth of 45% and 88%, respectively, demonstrating strong top line growth together with impressive operating leverage. Our strong results in the fourth quarter of 2011 further demonstrate our ability to build on the meaningful improvements made earlier in the year, while at the same time executing on a range of strategically important milestones.
“The meaningful ramp up in our mass market operations over the past year, which is evident in the sustained improvements in margins and group-wide profitability, is particularly pleasing.
“We have continued to execute on our premium strategy, both in the rolling chip and mass market gaming segments, as well as in our world-class entertainment and other non-gaming amenities. We believe our premium mass market focus at City of Dreams represents one of our key competitive advantages, giving us an ability to capture and leverage a loyal and more profitable customer base.
“Moreover, our current exposure to the fast growing Cotai region, as well as our future development pipeline with Studio City, means we are well positioned to take advantage of the shift of the gaming epicenter to Cotai, particularly in the mass market segments, driving long term profitability and shareholder value.
“Our design plans in relation to Studio City are effectively complete and we are undergoing the necessary Government processes to obtain the required approvals to commence construction. At the same time, we are working through our financing plans in relation to this project which will potentially include a bank loan and other debt financing.
“We continue to build out our Mocha Clubs network, opening Mocha Macau Tower in September 2011 and Mocha Golden Dragon in January 2012. With 300 gaming machines, the Golden Dragon facility has quickly become one of the best performing clubs in our Mocha portfolio.
“During the past twelve months, we completed the acquisition of a majority stake in the Studio City Project, successfully completed the listing of our shares on the Hong Kong Stock Exchange by way of introduction, while at the same time proactively managed our balance sheet through the issuance of our RMB bonds and the refinancing of our City of Dreams Project Facility, ensuring we are well positioned to take advantage of current and future growth opportunities.”
City of Dreams 4Q Results
For the fourth quarter of 2011, net revenue at City of Dreams was US$695.9 million compared to US$488.7 million in the comparable period in 2010, an increase of 42%. City of Dreams generated Adjusted EBITDA of US$186.6 million in the fourth quarter of 2011, an increase of 91% as compared to US$97.7 million in the fourth quarter of 2010.
The year-over-year improvements in revenue and Adjusted EBITDA were driven by record rolling chip and mass market table volumes, ongoing improvements in mass market table hold percentages, and with strong contributions from hotel sales and other non-gaming amenities.
Rolling chip volume for the fourth quarter of 2011 totalled US$20.4 billion, an increase of 32% from US$15.4 billion from the fourth quarter of 2010. The rolling chip win rate was 3.0% in the fourth quarter of 2011, slightly higher than the win rate in the comparable quarter in 2010 of 2.9% and in-line with the expected rolling chip win rate range of 2.7% – 3.0%.
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Mass market table games drop for the fourth quarter of 2011 totalled US$811.0 million, an increase of 42% from US$572.5 million for the comparable period in 2010. The mass market hold percentage was 25.7% in the fourth quarter of 2011, a significant increase from 22.0% in the fourth quarter of 2010. At City of Dreams, we expect our mass market table games hold percentage to range from 23%-26%.
Slot handle for the fourth quarter of 2011 was US$566.8 million, up 10% from US$513.5 million for the comparable period in 2010.
Total non-gaming revenue at City of Dreams in the fourth quarter of 2011 was US$58.1 million, an increase of 22% from US$47.6 million for the fourth quarter of 2010. Occupancy per available room in the fourth quarter of 2011 was 92% versus 87% in the fourth quarter of 2010. The average daily rate (ADR) in the fourth quarter of 2011 was US$176 per available room, as compared to US$166 in the comparable quarter of 2010.
Altira Macau 4Q Results
For the fourth quarter of 2011, net revenue at Altira Macau was US$268.0 million compared to US$245.1 million in the fourth quarter of 2010, an increase of 9%. Altira Macau generated Adjusted EBITDA of US$53.2 million in the fourth quarter of 2011, an increase of 15% as compared to Adjusted EBITDA of US$46.4 million in the fourth quarter of 2010. The improvements in Adjusted EBITDA were driven by increased rolling chip and mass market volumes, together with a stronger mass market table games hold percentage.
Rolling chip volume totalled US$12.1 billion in the fourth quarter of 2011, an increase of 6% from US$11.4 billion for the fourth quarter of 2010. The rolling chip win rate was 2.9%, in-line with the same period in 2010 and within the expected rolling chip win rate range of 2.7%-3.0%.
Mass market table games drop totalled US$144.6 million in the fourth quarter of 2011, an increase of 9% from US$132.5 million generated for the comparable period in 2010. The mass market hold percentage was 17.5% in the fourth quarter of 2011 compared with 14.7% in the fourth quarter of last year. At Altira Macau, we expect our mass market table games hold percentage to range from 15.0%-17.0%.
Total non-gaming revenue at Altira Macau in the fourth quarter of 2011 was US$8.1 million, up slightly from the fourth quarter of 2010. Occupancy per available room in the fourth quarter of 2011 was 98% compared to 97% in the fourth quarter of 2010. ADR was US$196 per occupied room, compared to US$170 in the same period of 2010.
Mocha Clubs 4Q Results
Net revenue from Mocha Clubs totalled US$34.5 million in the fourth quarter of 2011, an increase of 13% from US$30.6 million in the comparable period of 2010. Mocha Clubs generated US$10.2 million of Adjusted EBITDA in the fourth quarter of 2011, an increase of 19% when compared to Adjusted EBITDA of US$8.6 million in the same period in 2010.
The number of gaming machines in operation at Mocha Clubs increased to an average of approximately 1,800 in the fourth quarter of 2011, compared to approximately 1,600 in the same period of 2010, with the increase driven primarily by the opening of the Mocha Macau Tower during the fourth quarter of 2011. The net win per gaming machine per day was US$200 in the fourth quarter of 2011, as compared with US$208 in the same period in 2010, a decrease of 4%.
Other Factors Affecting Earnings
Total non-operating expense for the fourth quarter of 2011 totalled US$31.0 million, which included US$25.0 million in net interest expense, other finance costs of US$3.5 million and transaction costs of US$4.8 million associated with the Hong Kong Stock Exchange listing. There was US$3.2 million of capitalized interest during the fourth quarter of 2011.
Depreciation and amortization totalled US$94.2 million in the fourth quarter of 2011, of which US$14.3 million was related to the amortization of our gaming sub concession and US$13.9 million was related to the amortization of land use rights. The year-over-year increase in depreciation and amortization costs is primarily related to the amortization of Studio City’s land use rights.
Financial Position and Capital Expenditure
Cash and cash equivalents as of December 31, 2011 totalled US$1.5 billion, including US$364.8 million of restricted cash. Total debt at the end of the fourth quarter of 2011 was US$2.3 billion, and total net debt to shareholders’ equity as of December 31, 2011 was 25%, compared to 49% as at the end of the fourth quarter of 2010.
Capital expenditures for the fourth quarter of 2011 totalled US$55.8 million, of which US$13.7 million related to design and preliminary costs associated with Studio City while the remaining capital expenditures primarily related to various projects at City of Dreams and Mocha Clubs.
Full Year Results
For the full year of 2011, Melco Crown Entertainment reported net revenue of US$3.8 billion, as compared with US$2.6 billion for 2010. Adjusted EBITDA for the full year of 2011 was US$809.4 million, an increase of 88% as compared with Adjusted EBITDA of US$430.4 million for 2010.
The year-over-year improvements in net revenue and Adjusted EBITDA were primarily driven by significantly improved gaming fundamentals, including strong rolling chip and mass market volumes, as well as improving mass market table hold percentages.
Net income attributable to Melco Crown Entertainment for the full year of 2011 was US$294.7 million, as compared with a net loss of US$10.5 million for 2010. The net income per ADS attributable to Melco Crown Entertainment for the full year of 2011 was US$0.55 compared to a net loss per ADS of US$0.02 for 2010.
