Another Macau company reports a disappointing quarter. Stock buyback announcement a positive but not enough.
- 2Q Luck-adjusted property EBITDA: $345m
- CoD: +$20m, brings margins to 31%
- Altira: +$10m, brings margins to 13-13.5%
- Expanded market share in mass segments in 2Q
- Started large development (luxury precinct) on CoD; will be ready in 2016
- MSC: will open in mid-2015; will top off the hotel in September
- CoD Manila: will open later in 2014
- Approved $500m stock repurchase program and will be able to pay out special dividends
- 2Q EBITDA margin: 26.4%
- CoD: Unfavorable revenue mix btw revenue and rc sharing programs.
- EBITDA margin impacted by $10m due to wage increases
- Additional labor expense in $10m in 3Q and 4Q 2014
- Draw down studio city term loan in July
- 3Q guidance: D&A: $95-100m; corp expense: $30m; consolidated net interest expense: $35m ($10m CoD Manila, $24m cap interest)
Q & A
- 2Q CoD: low hold and negative VIP mix. Utility/maintenance fees of $5m that was not capitalized.
- Mass slowdown: mass has held up relatively well; but perfect storm coming - harder comps
- Feel better about August - early August compared with early July, there is definitely an uptick - Hedgeye notes that August is a seasonally stronger month than July
- Blames July performance on World Cup
- No issues on filling up their rooms
- Premium mass: healthy business
- Volumes: not overly promotional but operate in highly competitive environment.
- $500m stock buyback: similar to how US companies have operated this type of program
- Investigation: Taiwan branch indicted for banking/foreign related offenses. Will defend vigorously.
- MSC: have received construction permits. Do not need any other construction permits. Firing at full speed.
- MSC tables: will get fair share, may find out table count 9 months ahead of opening; can accomodate 500 tables