GlobeNewswire Inc | Aug 20, 2020 07:55AM EDT

August 20, 2020

MACAU, Aug. 20, 2020 (GLOBE NEWSWIRE) -- Studio City International Holdings Limited (NYSE: MSC) (Studio City or the Company), a world-class integrated resort located in Cotai, Macau, today reported its unaudited financial results for the second quarter of 2020.

Total operating revenues for the second quarter of 2020 were negative US$12.5 million, as compared to total operating revenues of US$149.7 million in the second quarter of 2019. The decrease in total operating revenues was due to the decrease in revenues from the provision of gaming related services and lower non-gaming revenues as a result of the COVID-19 pandemic, which resulted in a significant decline in inbound tourism in the second quarter of 2020.

Revenues from the provision of gaming related services are derived from the provision of facilities for the operations of Studio City Casino by Melco Resorts (Macau) Limited (the Gaming Operator), a subsidiary of Melco Resorts & Entertainment Limited (Melco) and holder of a gaming subconcession, and services related thereto.

Studio City Casino generated gross gaming revenues of US$6.7 million and US$361.8 million for the second quarters of 2020 and 2019, respectively.

Studio Citys rolling chip volume was US$0.23 billion for the second quarter of 2020 versus US$3.10 billion in the second quarter of 2019. The rolling chip win rate was 0.17% in the second quarter of 2020 versus 2.76% in the second quarter of 2019. The expected rolling chip win rate range is 2.85% - 3.15%.

Mass market table games drop decreased to US$20.1 million in the second quarter of 2020 compared with US$877.0 million in the second quarter of 2019. The mass market table games hold percentage was 22.2% in the second quarter of 2020 compared to 29.2% in the second quarter of 2019.

Gaming machine handle for the second quarter of 2020 was US$67.6 million, compared with US$630.9 million in the second quarter of 2019. The gaming machine win rate was 2.7% in the second quarter of 2020 compared to 3.2% in the second quarter of 2019.

Total gaming taxes and the costs incurred in connection with the operation of Studio City Casino deducted from gross gaming revenues were US$34.7 million and US$260.7 million in the second quarters of 2020 and 2019, respectively.

Revenues from the provision of gaming related services were negative US$28.0 million for the second quarter of 2020, compared with revenuesfrom the provision of gaming related services of US$101.1 million for the second quarter of 2019. Revenues from the provision of gaming related services are net of gaming taxes and the costs incurred in connection with the operation of Studio City Casino deducted by the Gaming Operator pursuant to the Services and Right to Use Arrangements.

Total non-gaming revenues at Studio City for the second quarter of 2020 were US$15.4 million, compared with US$48.6 million for the second quarter of 2019.

Operating loss for the second quarter of 2020 was US$92.7 million, compared with operating income of US$29.7 million in the second quarter of 2019.

Studio City generated negative Adjusted EBITDA(1) of US$51.1 million in the second quarter of 2020, as compared to Adjusted EBITDA of US$82.5 million in the second quarter of 2019. The year-over-year decrease in Adjusted EBITDA was mainly attributable to the decrease in revenues from the provision of gaming related services and lower non-gaming revenues.

Net loss attributable to Studio City International Holdings Limited for the second quarter of 2020 was US$91.0 million, compared with US$4.4 million in the second quarter of 2019. The net loss attributable to participation interest during the second quarters of 2020 and 2019 were US$27.3 million and US$1.3 million, respectively.

Other Factors Affecting Earnings

Total net non-operating expenses for the second quarter of 2020 were US$25.6 million, which mainly included interest expenses, net of amounts capitalized, of US$25.3 million.

Depreciation and amortization costs of US$41.8 million were recorded in the second quarter of 2020, of which US$0.8 million was related to the amortization expense for the land use right.

The negative Adjusted EBITDA for Studio City for the three months ended June 30, 2020 referred to in Melcos earnings release dated August 20, 2020 (Melcos earnings release) is US$8.7 million less than the negative Adjusted EBITDA of Studio City contained in this press release. The Adjusted EBITDA of Studio City contained in this press release includes certain intercompany charges that are not included in the Adjusted EBITDA for Studio City contained in Melcos earnings release. Such intercompany charges include, among other items, fees and shared service charges billed between the Company and its subsidiaries and certain subsidiaries of Melco. Additionally, Adjusted EBITDA of Studio City included in Melcos earnings release does not reflect certain costs related to the table games operations at Studio City Casino.

Financial Position and Capital Expenditures

Total cash and bank balances as of June 30, 2020 aggregated to US$202.9 million (December 31, 2019: US$327.2 million), including US$15.8 million of restricted cash (December 31, 2019: US$27.9 million). Total debt, net of unamortized deferred financing costs at the end of the second quarter of 2020, was US$1.44 billion (December 31, 2019: US$1.44 billion).

Capital expenditures for the second quarter of 2020 were US$43.1 million.

Subsequent Events

Studio City Finance Limited, a wholly-owned subsidiary of the Company, issued US$500 million aggregate principal amount of 6.00% senior notes due 2025 and US$500 million aggregate principal amount of 6.50% senior notes due 2028 in July. In August, the Company also completed a series of private offers of its Class A ordinary shares and American depositary shares to certain existing shareholders and holders of its American depositary shares, including Melco, which resulted in gross proceeds to the Company of approximately US$500 million.

Recent Developments

The COVID-19 outbreak continues to have a material effect on our operations, financial position and prospects during the third quarter of 2020.

Commencing from July 15, 2020, certain travelers entering Guangdong from Macau were no longer subject to a mandatory quarantine. On August 12, 2020, the Chinese authorities resumed the issuance of IVS visas for Zhuhai residents. According to the National Immigration Administration, issuance of IVS visas for Guangdong residents will resume on August 26, 2020, while the nationwide resumption of IVS visa issuance will commence on September 23, 2020. Despite these developments, our operations continue to be impacted by significant travel bans, restrictions, and quarantine requirements imposed by the governments in Macau, Hong Kong, and certain provinces in China on visitors traveling to and from Macau. Additionally, health-related precautionary measures remain in place at our property, which could continue to impact visitation and customer spending. Furthermore, we continue to monitor the impact of COVID-19 on the construction of Studio City Phase 2. Prior to the COVID-19 outbreak, we estimated a construction period of approximately 32 months for Phase 2. With the disruptions from the COVID-19 outbreak, the construction period has been delayed and is expected to extend beyond the estimated 32 months and the current development period.

As the disruptions from the COVID-19 outbreak are ongoing, any recovery from such disruptions will depend on future developments, such as the duration of travel and visa restrictions and customer sentiment and behavior, including the length of time before customers resume traveling and participating in entertainment and leisure activities at high-density venues and the impact of potential higher unemployment rates, declines in income levels and loss of personal wealth resulting from the COVID-19 outbreak on consumer behavior related to discretionary spending and traveling, all of which are highly uncertain.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Studio City International Holdings Limited (the Company) may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the SEC), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Companys beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) the recent global pandemic of COVID-19, caused by a novel strain of the coronavirus, and the continued impact of its consequences on our business, our industry and the global economy, (ii) growth of the gaming market and visitations in Macau, (iii) capital and credit market volatility, (iv) local and global economic conditions, (v) our anticipated growth strategies, (vi) gaming authority and other governmental approvals and regulations, and (vii) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as may, will, expect, anticipate, target, aim, estimate, intend, plan, believe, potential, continue, is/are likely to or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Companys filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

-- "Adjusted EBITDA" is defined as earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, other non-operating income and expenses. We believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results. This non-GAAP financial measure eliminates the impact of items that we do not consider indicative of the performance of our business. While we believe that this non-GAAP financial measure is useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared in accordance with U.S. GAAP. It should not be considered in isolation or construed as an alternative to net income/loss, cash flow or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities. The use of Adjusted EBITDA has material limitations as an analytical tool, as Adjusted EBITDA does not include all items that impact our net income/loss. In addition, the Companys calculation of Adjusted EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measure to its most directly comparable GAAP financial measure. Reconciliations of Adjusted EBITDA with the most comparable financial measures calculated and presented in accordance with U.S. GAAP are provided herein immediately following the financial statements included in this press release. -- Adjusted net income/loss is net income/loss before pre-opening costs, property charges and other, loss on extinguishment of debt and costs associated with debt modification, net of participation interest. Adjusted net income/loss is presented as supplemental disclosure because management believes it provides useful information to investors and others in understanding and evaluating our performance, in addition to net income/loss computed in accordance with U.S. GAAP. Adjusted net income/loss may be different from the calculation methods used by other companies and, therefore, comparability may be limited. Reconciliations of adjusted net income/lossattributable to Studio City International Holdings Limited with the most comparable financial measures calculated and presented in accordance with U.S. GAAP are provided herein immediately following the financial statements included in this press release.

About Studio City International Holdings Limited

The Company, with its American depositary shares listed on the New York Stock Exchange (NYSE: MSC), is a world-class integrated resort located in Cotai, Macau. For more information about the Company, please visit www.studiocity-macau.com.

The Company is strongly supported by its single largest shareholder, Melco Resorts & Entertainment Limited, a company with its American depositary shares listed on the Nasdaq Global Select Market (Nasdaq: MLCO).

For the investment community, please contact: Richard HuangDirector, Investor RelationsTel: +852 2598 3619Email: richardlshuang@melco-resorts.com

For media enquiries, please contact:Chimmy LeungExecutive Director, Corporate CommunicationsTel: +852 3151 3765Email: chimmyleung@melco-resorts.com

Studio City International Holdings Limited and SubsidiariesCondensed Consolidated Statements of Operations (Unaudited)(In thousands of U.S. dollars, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating revenues:Provision ofgaming related $ (27,958 ) $ 101,145 $ (22,452 ) $ 191,536 servicesRooms 1,104 20,990 9,763 41,950 Food and beverage 2,818 17,277 11,017 34,790 Entertainment 23 3,911 891 10,083 Services fee 6,337 10,326 15,094 19,378 Mall 4,965 (4,456 ) 9,492 1,926 Retail and other 201 517 758 1,150 Total operating (12,510 ) 149,710 24,563 300,813 revenues Operating costs and expenses:Provision ofgaming related (5,911 ) (5,852 ) (11,564 ) (11,634 )servicesRooms (1,925 ) (5,095 ) (6,339 ) (10,733 )Food and beverage (5,600 ) (14,302 ) (16,105 ) (29,326 )Entertainment (776 ) (6,453 ) (1,994 ) (13,220 )Mall (994 ) (2,273 ) (2,547 ) (5,007 )Retail and other (276 ) (412 ) (641 ) (902 )General and (23,085 ) (32,819 ) (54,606 ) (63,259 )administrativePre-opening costs (28 ) (60 ) (56 ) (2,549 )Amortization of (833 ) (825 ) (1,665 ) (1,648 )land use rightDepreciation and (40,929 ) (43,762 ) (80,889 ) (86,077 )amortizationProperty charges 204 (8,196 ) (4,201 ) (8,325 )and otherTotal operating (80,153 ) (120,049 ) (180,607 ) (232,680 )costs and expensesOperating (loss) (92,663 ) 29,661 (156,044 ) 68,133 incomeNon-operating income (expenses):Interest income 361 457 752 1,961 Interest expenses,net of amounts (25,320 ) (33,354 ) (51,099 ) (67,408 )capitalizedLoan commitment (105 ) (104 ) (209 ) (207 )feesForeign exchange (402 ) (2,214 ) (3,804 ) (1,301 )losses, netOther (expenses) (89 ) (88 ) (177 ) 605 income, netLoss onextinguishment of - - - (2,995 )debtCosts associatedwith debt - - - (579 )modificationTotalnon-operating (25,555 ) (35,303 ) (54,537 ) (69,924 )expenses, netLoss before income (118,218 ) (5,642 ) (210,581 ) (1,791 )taxIncome tax (68 ) (77 ) 142 (143 )(expense) creditNet loss (118,286 ) (5,719 ) (210,439 ) (1,934 )Net lossattributable to 27,288 1,320 48,547 447 participationinterestNet lossattributable toStudio City $ (90,998 ) $ (4,399 ) $ (161,892 ) $ (1,487 )InternationalHoldings Limited Net lossattributable toStudio CityInternational HoldingsLimitedper ClassA ordinary share:Basic and diluted $ (0.376 ) $ (0.018 ) $ (0.669 ) $ (0.006 ) Net lossattributable toStudio City InternationalHoldings Limitedper ADS:Basic and diluted $ (1.505 ) $ (0.073 ) $ (2.678 ) $ (0.025 ) Weight averageClass A ordinaryshares outstandingused in netlossattributableto Studio City InternationalHoldings Limitedper ClassAordinary sharecalculation:Basic and diluted 241,818,016 241,818,016 241,818,016 241,818,016

Studio City International Holdings Limited and SubsidiariesCondensed Consolidated Balance Sheets(In thousands of U.S. dollars, except share and per share data) June 30, December 31, 2020 2019 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 187,127 $ 299,367 Restricted cash 15,633 27,735 Accounts receivable, net 74 1,397 Amounts due from affiliated companies 231 61,990 Inventories 9,749 9,763 Prepaid expenses and other current assets 13,842 14,188 Total current assets 226,656 414,440 Property and equipment, net 2,127,670 2,107,457 Long-term prepayments, deposits and other assets 47,336 57,087 Restricted cash 131 130 Operating lease right-of-use assets 17,469 14,238 Land use right, net 117,808 118,888 Total assets $ 2,537,070 $ 2,712,240 LIABILITIES, SHAREHOLDERS? EQUITY ANDPARTICIPATION INTEREST Current liabilities: Accounts payable $ 1,312 $ 3,337 Accrued expenses and other current liabilities 84,797 82,553 Income tax payable 33 33 Amounts due to affiliated companies 24,766 14,248 Total current liabilities 110,908 100,171 Long-term debt, net 1,437,688 1,435,088 Other long-term liabilities 5,881 3,149 Deferred tax liabilities, net 1,318 1,453 Operating lease liabilities, non-current 16,698 13,720 Total liabilities 1,572,493 1,553,581 Shareholders? equity and participation interest: Class A ordinary shares, par value $0.0001;1,927,488,240 sharesauthorized; 241,818,016 24 24 shares issued and outstandingClass B ordinary shares, par value $0.0001;72,511,760 sharesauthorized; 72,511,760 shares 7 7 issued and outstandingAdditional paid-in capital 1,655,602 1,655,602 Accumulated other comprehensive income 12,852 269 Accumulated losses (926,426 ) (764,534 )Total shareholders? equity 742,059 891,368 Participation interest 222,518 267,291 Total shareholders? equity and participation 964,577 1,158,659 interestTotal liabilities, shareholders? equity and $ 2,537,070 $ 2,712,240 participation interest

Studio City International Holdings Limited and SubsidiariesReconciliation of Net Loss Attributable to Studio City International HoldingsLimited toAdjusted Net (Loss) Income Attributable to Studio City International HoldingsLimited (Unaudited)(In thousands of U.S. dollars, except share and per share data) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Net lossattributableto Studio City $ (90,998 ) $ (4,399 ) $ (161,892 ) $ (1,487 )InternationalHoldingsLimitedPre-opening 28 60 56 2,549 costsPropertycharges and (204 ) 8,196 4,201 8,325 otherLoss onextinguishment - - - 2,995 of debtCostsassociated - - - 579 with debtmodificationParticipationinterest 41 (1,905 ) (982 ) (3,333 )impact onadjustmentsAdjusted net(loss) incomeattributableto Studio City $ (91,133 ) $ 1,952 $ (158,617 ) $ 9,628 InternationalHoldingsLimited Adjusted net(loss) incomeattributabletoStudioCityInternational HoldingsLimited perClass Aordinaryshare:Basic and $ (0.377 ) $ 0.008 $ (0.656 ) $ 0.040 diluted Adjusted net(loss) incomeattributabletoStudioCity InternationalHoldingsLimited perADS:Basic and $ (1.507 ) $ 0.032 $ (2.624 ) $ 0.159 diluted Weightedaverage ClassA ordinarysharesoutstandingused inadjustednet(loss) income attributableto Studio CityInternationalHoldingsLimitedperClass Aordinary sharecalculation:Basic and 241,818,016 241,818,016 241,818,016 241,818,016 diluted

Studio City International Holdings Limited and SubsidiariesReconciliation of Operating (Loss) Income to Adjusted EBITDA (Unaudited)(In thousands of U.S. dollars) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Operating $ (92,663 ) $ 29,661 $ (156,044 ) $ 68,133 (loss) incomePre-opening 28 60 56 2,549 costsDepreciationand 41,762 44,587 82,554 87,725 amortizationPropertycharges and (204 ) 8,196 4,201 8,325 otherAdjusted $ (51,077 ) $ 82,504 $ (69,233 ) $ 166,732 EBITDA

Studio City International Holdings Limited and SubsidiariesReconciliation of Net Loss Attributable to Studio City International HoldingsLimitedto Adjusted EBITDA (Unaudited)(In thousands of U.S. dollars) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Net lossattributableto StudioCity $ (90,998 ) $ (4,399 ) $ (161,892 ) $ (1,487 )InternationalHoldingsLimitedNet lossattributableto (27,288 ) (1,320 ) (48,547 ) (447 )participationinterestNet loss (118,286 ) (5,719 ) (210,439 ) (1,934 )Income taxexpense 68 77 (142 ) 143 (credit)Interest andother 25,555 35,303 54,537 69,924 non-operatingexpenses, netPropertycharges and (204 ) 8,196 4,201 8,325 otherDepreciationand 41,762 44,587 82,554 87,725 amortizationPre-opening 28 60 56 2,549 costsAdjusted $ (51,077 ) $ 82,504 $ (69,233 ) $ 166,732 EBITDA

Studio City International Holdings Limited and SubsidiariesSupplemental Data Schedule Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019Room Statistics^(3): Average daily $ 160 $ 132 $ 139 $ 133 rate ^(4) Occupancy per 5 % 100 % 24 % 100 % available room Revenue per available room^ $ 8 $ 132 $ 34 $ 133 (5) Other Information^(6): Average number 291 293 273 293 of table games Average number of gaming 419 985 570 980 machines Table games win per unit per $ 183 $ 12,812 $ 3,086 $ 12,660 day^ (7) Gaming machines win per unit $ 48 $ 225 $ 124 $ 218 per day^ (8) ^ Room statistics exclude rooms that were temporarily closed or provided to(3) staff members during the three and six months ended June 30, 2020 due to the COVID-19 outbreak^ Average daily rate is calculated by dividing total room revenues including(4) complimentary rooms (less service charges, if any) by total occupied rooms including complimentary rooms^ Revenue per available room is calculated by dividing total room revenues(5) including complimentary rooms (less service charges, if any) by total rooms available Table games and gaming machines that were not in operation during the three^ and six months ended June 30, 2020 due to government-mandated closures or(6) social distancing measures in relation to the COVID-19 outbreak have been excluded Table games win per unit per day is shown before discounts, commissions,^ non-discretionary incentives (including the point-loyalty programs) as(7) administered by the Gaming Operator and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis Gaming machines win per unit per day is shown before non-discretionary^ incentives (including the point-loyalty programs) as administered by the(8) Gaming Operator and allocating casino revenues related to goods and services provided to gaming patrons on a complimentary basis