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    MLCO
    Earnings call· Jun 2026(Q2 FY26)

    Melco Resorts & Entertainment Q2 FY26 earnings call MLCO

    Aug 13, 2026 Source

    Executive summary

    Melco Resorts & Entertainment Limited Q2 FY26 — Regional Strength Amidst Macau Headwinds and Strategic Investments

    Melco Resorts reported a mixed Q2 FY26, with strong performance from its diversified regional portfolio offsetting near-term headwinds in Macau. The company is focused on strategic investments in Macau properties, including the REM opening and retail revamp, alongside disciplined cost management. Capital allocation priorities include opportunistic share repurchases and debt reduction, with an aim to recommence substantive dividends in 2027.

    Highlights

    5

    • City of Dreams Manila delivered property EBITDA of $31 million, representing a 9% year-over-year growth.

    • City of Dream Mediterranean and satellite casinos property EBITDA rose 60% year-over-year.

    • Sri Lanka casino operations recorded positive EBITDA of $3.5 million in the second quarter.

    • Repurchased approximately 22.4 million ADSs for $121 million between April 1 and August 12, 2026.

    • Melco's revolving credit facilities were extended to June 2031 and upsized by $821 million to a total of $2.8 billion.

    Concerns

    4

    • Group-wide adjusted property EBITDA was negatively impacted by approximately $9 million due to an unfavorable VIP win rate of 2.7% at COD Macau.

    • Lower-than-expected visitation and lower hold placed pressure on margins in the second quarter of 2026.

    • The World Cup likely caused a significant impact on gaming wallet, leading to reduced volumes and play levels in June and July.

    • The retail revamp at City of Dreams Macau is expected to cause significant construction disruption until mid-2027.

    Guidance & targets

    7
    CategoryTargetConfidence
    Total depreciation and amortization expense
    $140 million to $145 million
    medium materiality
    High
    Corporate expense
    $20 million to $25 million
    medium materiality
    High
    Consolidated net interest expense
    $115 million to $120 million
    medium materiality
    High
    Macau daily OpEx
    $3.3 million to $3.4 million
    medium materiality
    Medium
    Capital expenditure
    $225 million
    high materiality
    High
    Capital expenditure
    $275 million to $300 million
    high materiality
    High
    Dividend recommencement
    Recommence dividends
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    City of Dreams Manila
    Delivered strong property EBITDA growth year-over-year.
    Property EBITDA: $31 million
    		—9%—$31 million
    City of Dream Mediterranean and satellite casinos
    Experienced significant property EBITDA growth despite regional disruption.
    Property EBITDA growth: 60%
    		—60%——
    Sri Lanka casino operations
    Recorded positive EBITDA as operations continue to ramp up.
    EBITDA: $3.5 million
    		———$3.5 million
    COD Macau
    Experienced an unfavorable VIP win rate and lower visitation, impacting property EBITDA and margins.
    VIP win rate: 2.7% (Q2 FY26)VIP win rate: 3.9% (Q2 FY25)Negative impact on property EBITDA: $9 million
    		————

    Operational metrics

    15
    Adjusted property EBITDA
    $304 million
    Q2 FY26

    Group-wide adjusted property EBITDA for the second quarter.

    Adjusted property EBITDA (adjusted for VIP hold)
    $312 million
    Q2 FY26

    Group-wide adjusted property EBITDA after adjusting for VIP hold.

    VIP hold impact on property EBITDA
    -$9 million
    Q2 FY26

    Negative impact due to unfavorable win rate at COD Macau.

    VIP win rate
    2.7%vs 3.9% in Q2 FY25
    Q2 FY26

    Decline in VIP win rate compared to the prior year.

    Total daily OpEx
    $3.4 millionsteady
    Q2 FY26

    Daily operating expenses in Macau, remaining steady and in line with prior guidance.

    Available liquidity
    $2.8 billion
    end Q2 FY26

    Robust liquidity position at the end of the second quarter.

    Consolidated cash on hand
    $1 billion
    end Q2 FY26

    Consolidated cash balance at the end of the second quarter.

    Cash on hand (excluding specific operations)
    $492 million
    end Q2 FY26

    Cash on hand for Melco Resorts, excluding certain regional operations.

    RCF facility size increase
    $821 million
    June 2026

    Increase in the size of Melco's revolving credit facilities.

    Total RCF size
    $2.8 billion
    June 2026

    Total size of the revolving credit facilities after the upsize.

    Studio City senior secured bonds issued
    $300 million
    May 2026

    Amount of senior secured bonds issued by Studio City.

    Studio City 2028 notes redeemed
    $165 million
    July 2026

    Aggregate principal amount of outstanding senior notes redeemed by Studio City.

    Studio City 2028 notes remaining outstanding
    $335 million
    July 2026

    Remaining aggregate principal amount of 2028 notes after redemption.

    ADS repurchased
    22.4 million
    April 1 - Aug 12, 2026

    Number of ADSs repurchased and the consideration paid during the specified period.

    Total ADS repurchased
    25 million
    2026

    Total ADSs repurchased and aggregate consideration for the year 2026 to date.

    Product announcements

    3
    ProductTypeDetails
    REMlaunch
    New Gaming Arealaunch
    Retail Areas Revampupdate

    Deals & partnerships

    3
    Studio CityIssuance of senior secured bonds$300 million

    Studio City issued $300 million in senior secured bonds in May 2026. Net proceeds, along with a $15 million drawdown from Studio City's revolver and cash on hand, were used to early redeem the Studio City senior secured notes due 2027.

    Studio CityRedemption of outstanding senior notes$165 million

    In July 2026, Studio City redeemed an aggregate principal amount of $165 million of its outstanding 6.5% senior notes due 2028. The redemption was funded with a $150 million drawdown from Studio City's revolver.

    MelcoExtension and upsize of revolving credit facilities (RCF)$2.8 billion totalextended from April 2027 to June 2031

    Melco's revolving credit facilities were extended from April 2027 to June 2031, and the facility size increased by approximately $821 million, resulting in a total RCF size of $2.8 billion.

    Risks & headwinds

    7
    Near-term headwinds in MacauQ2 FY26

    Reflected in Q2 FY26 results

    Mitigation: Deepening customer engagement, attracting high-quality visitation, investing in properties, operating more efficiently.

    Unfavorable VIP win rateQ2 FY26

    2.7% in Q2 FY26 vs 3.9% in Q2 FY25, negative impact of $9 million on property EBITDA

    Lower-than-expected visitation and lower holdQ2 FY26

    Placed pressure on margins in Q2 FY26

    Mitigation: Actively evaluating opportunities to incorporate greater flexibility across operations to better align cost base with evolving demand.

    Elevated competition and demanding cost environment

    Discussed_not_quantified

    Mitigation: Focused on disciplined resource alignment with highest return opportunities and protecting guest experience.

    World Cup impact on gaming walletJune and July 2026

    Likely substituted gaming activity, reduced volumes and play levels for customers

    Mitigation: Post-World Cup trends show a return to normalcy in late July/early August.

    Construction disruption from retail revampNow until middle of next year (mid-2027)

    Pretty significant construction disruption

    Mitigation: Tim has done an amazing job in terms of porting and making the property feel better throughout the construction disruption; positive long-term outlook for retail experience.

    Geopolitical tensions impacting Chinese tourists to ManilaPast period, improving in 2026

    Chinese tourist has disappeared for a while

    Mitigation: Better visa schemes allowing Chinese tourists to come, leading to a little bit of uptick.

    What to watch in Q3 FY26

    5

    Macau Daily OpEx

    next quarter
    Current$3.4 million
    TargetMaintain $3.3 million to $3.4 million

    Why it matters

    Verifying the company's ability to maintain cost discipline and operational efficiency despite the REM ramp-up and ongoing cost-saving initiatives.

    I think if we include REM and other activities, we're probably looking at something closer to $3.3 million to $3.4 million.

    Q&A highlights

    8

    How does REM differentiate from existing offerings, and what is the dividend policy outlook?

    REM is a unique, fun, and highly differentiated luxury product, unlike anything else in Asia, complementing existing 5-star hotels. The dividend recommencement is pushed to 2027, aiming for a substantive and meaningful dividend, not a nominal one, while prioritizing opportunistic share repurchases.

    “We think in 2027, we will be in a position to recommence the dividend without providing any specific target on that. The intention is to commence the dividend when it can be substantive and meaningful. We're not interested in a nominal dividend.”

    asked by George Choi · answered by Geoffrey Davis

    2 min read5 chapters

    Detailed Narrative

    01

    Macau Property Enhancements and Strategic Investments

    Melco Resorts is actively investing in its Macau properties to enhance guest experience and attract high-quality visitation. The REM at City of Dreams has soft-opened, with a grand opening scheduled for after Golden Week in October, offering a unique luxury experience. A new 18-table gaming area opened at City of Dreams in late July, strategically located for walk-in patrons. Additionally, a comprehensive retail revamp at City of Dreams is underway, aiming to create a seamless luxury offering, though it will cause construction disruption until mid-2027.

    02

    Diversified Regional Portfolio Resilience

    Outside of Macau, Melco's diversified portfolio demonstrated strong performance. City of Dreams Manila reported property EBITDA of $31 million, a 9% year-over-year increase. City of Dream Mediterranean and its satellite casinos saw property EBITDA rise 60% year-over-year, despite Middle East disruptions. Sri Lanka's casino operations achieved positive EBITDA of $3.5 million, indicating successful ramp-up and market penetration.

    03

    Cost Management and Operational Flexibility

    The company maintains a disciplined approach to cost management, with Macau's total daily OpEx holding steady at $3.4 million in Q2 FY26. Management is actively evaluating opportunities to incorporate greater flexibility into its operations, aiming to align the cost base with evolving demand and business volumes. This includes a strategic review of spending across all guest experience aspects to trim costs without negatively impacting premium service levels, with an expected daily OpEx of $3.3 million to $3.4 million going forward⏳.

    04

    Capital Allocation and Debt Management

    Melco continues its disciplined capital allocation strategy, balancing share repurchases, cash availability, and long-term business needs. The company repurchased 25 million ADSs for $134 million in 2026. Liquidity remains robust at $2.8 billion, supported by the extension and upsize of revolving credit facilities to $2.8 billion. Studio City also issued $300 million in senior secured bonds and redeemed $165 million of its 2028 notes, reducing interest expense and managing maturities.

    05

    World Cup Impact and Post-Event Recovery

    The World Cup in Q2 FY26 had a more significant impact than anticipated, leading to reduced gaming volumes and play levels in June and July as customers engaged in sports betting. However, management noted a return to normalcy in late July and early August, with customers coming back and normal play volumes resuming. The company expects this dip in activity to be temporary, with demand rebuilding in the second half of 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.