Ladies and gentlemen, thank you for participating in the Third Quarter 2025 Earnings Conference Call of Melco Resorts & Entertainment Limited. Today's conference is being recorded. I would now like to turn the call over to Ms. Jeanny Kim, Senior Vice President, Group Treasurer of Melco Resorts & Entertainment Limited. Please go ahead.

Thank you, operator, and thank you all for joining us today for our third quarter 2025 earnings call. On the call are Lawrence Ho, Geoff Davis, Evan Winkler; and our Property Presidents in Macau, Manila and Cyprus. Before we get started, please note that today's discussion may contain forward-looking statements made under the safe harbor provision of federal securities laws. Our actual results could differ from our anticipated results. In addition, we may discuss non-GAAP measures. A definition and reconciliation of each of these measures to the most comparable GAAP financial measures are included in the earnings release. Finally, please note that our supplementary earnings slides are posted on our Investor Relations website. With that, I'll turn the call over to Mr. Lawrence Ho.

Thank you, Jeanny, and thank you all for joining us today. Our properties in Macau delivered solid growth in the third quarter of 2025, with property EBITDA growing by 21% year-over-year despite the negative impact of approximately $12 million due to the typhoon in September. Our momentum in Macau is continuing, and we did not see a slowdown in October following the holidays. In fact, our Macau GGR grew over 30% year-over-year post Golden Week, and COD recorded its highest monthly mass tables GGR ever in October. We continue to introduce new initiatives to enhance the quality of engagement with our customers across all segments of our customer base. In July, we opened the Signature Clubhouse at City of Dreams for our premium mass customers, which includes private gaming salons, hair services, a Formula One simulator and other exclusive amenities to provide a differentiated experience. In September, we reopened a gaming area featuring 15 gaming tables at City of Dreams near the Grand Hyatt across from MGM Cotai and Wynn Palace and just steps away from the Macau Light Rail Station. This new area has been designed to appeal to the walk-in crowd with lower table minimums, and we have seen this area utilized with a steady flow of new patrons. As we had announced previously, we closed Grand Dragon Casino and one of our Mochas in September. The 15 tables from Grand Dragon were allocated to the new gaming space at COD and 90 gaming machines from the Mocha closure were shifted to Studio City. We will close 2 more Mochas before the end of the year, and the gaming machines will be reallocated across our 3 properties in Macau. We have started the renovation of the Countdown Hotel, which we currently expect to open in the third quarter of 2026. After completion, this hotel will bring a one-of-a-kind experience to Macau and the region. We plan to simultaneously upgrade retail and food and beverage in this precinct of COD and continue to elevate the quality of our product offerings. At Studio City, we unveiled a newly expanded high-limit gaming area along with 4 new private gaming salons at Epic Tower to provide an even more refined experience for our premium mass customers. In October, we relaunched the new iRAD hospital at Studio City, designed to further enhance Macau's tourism infrastructure with top-tier health care and wellness services. In the Philippines, property EBITDA grew 45% quarter-over-quarter, and we have seen good momentum in October. City of Dreams Mediterranean and the satellite casinos in Cyprus had their best quarter yet, with property EBITDA growing 53% year-over-year to $23 million. Despite the escalation of hostilities in the region at the beginning of the quarter, we're now in the shoulder season, but the property is coming into its own and showing solid year-over-year growth so far. In Sri Lanka, we opened City of Dreams Sri Lanka on August 1 as the first integrated resort in Sri Lanka and in South Asia. It is early days as we solidify our footing and continue to ramp up our operations there.

Thank you, Lawrence. Our group-wide adjusted property EBITDA for the third quarter of 2025 grew 18% year-over-year to approximately $380 million. Adjusted for VIP hold, our property EBITDA was approximately $355 million. Favorable win rates at COD Macau and COD Manila had positive impacts on our property EBITDA by approximately $23 million and $2 million, respectively. We continue to remain focused on operational discipline and our OpEx in Macau remained stable this quarter at approximately $3 million per day, excluding House of Dancing Water and the Residency concerts. OpEx for House of Dancing Water was approximately $100,000 per day, as previously mentioned. Our Macau property EBITDA margin held steady at approximately 29% in the third quarter of 2025, which reflects our disciplined approach on costs as we drive sustained business growth. Turning to our balance sheet. Our liquidity position remains robust. We had available liquidity of $2.6 billion with consolidated cash on hand of approximately $1.6 billion as of the end of the third quarter of 2025. Melco, excluding its operations at Studio City, the Philippines, Cyprus and Sri Lanka, accounted for approximately $1.05 billion of the consolidated cash on hand. There was a quarter-over-quarter increase in Melco's cash balance of approximately $360 million, which was largely due to the timing of the $500 million in bonds that we issued in September. As of the end of September, we had approximately $358 million of the bond proceeds remaining, net of $142 million, which had been used to settle a tender offer on the senior notes due 2026. In October, the remaining proceeds of the new bond were utilized to early redeem all of the outstanding senior notes due 2026, which had not been tendered. Following this exercise, the group does not have any material amount of debt maturing in 2026. We continue to reduce debt in the third quarter with a total of $180 million being repaid, $70 million at Melco and $110 million at Studio City. We repaid a further $180 million at Melco in October and November. In October, we also canceled $18.5 million of the approximately 32 million ADSs that were repurchased earlier this year at an average price of $5.10 per ADS. As we normally do, we'll give you some guidance on nonoperating line items for the upcoming fourth quarter of 2025. Total depreciation and amortization expense is expected to be approximately $135 million to $140 million. Corporate expense is expected to come in at approximately $25 million to $30 million and consolidated net interest expense is expected to be approximately $115 million to $120 million. This includes finance liability interest of around $6 million relating to fees payable in relation to the Macau gaming concession and the Cyprus gaming license and finance lease interest of approximately $5 million relating to City of Dreams Manila. That concludes our prepared remarks. Operator, back to you for the Q&A.

Your first question comes from George Choi with Citi.

So you guys have introduced new side just like everyone else does in Macau to your operations over the last year or so. Would you say that they contributed positively to your recent EBITDA growth? And would you be raising your theoretical hold rate anytime soon? And that's my first question. My second question is a housekeeping one. Would you please remind me the CapEx required for the renovation of the Countdown Hotel?

Sorry, George, it's Lawrence. So your first question was on the fee hold rate for VIP?

Or perhaps mass hold rate trends that you are looking for?

Sure. So again, the only one that we sort of publish something on and we adjust to is obviously on the rolling business, where we have a target of 3%. Based on what we're looking at from a data standpoint, and again, we continue to watch it, that number sitting here today is still a good number in terms of that business constituency and in terms of sort of the betting mix of those players. And I understand this varies some market by market. So there's some noise in the market about other markets raising that up substantially. But yet today, we haven't yet seen a strong enough basis for us to adjust, but we're continuing to look at it. In terms of our mass business, obviously, as we've added more, it's been a positive uplift. I don't know that it's dramatic because we've gone from sort of the widely adopted on the Banker 6 to the 7 bets. We are seeing a lift up, but I'm not sure that that's a massive driver as we sit here today. But obviously, it is improving as we're giving more options to our players in terms of our overall percentages. And on the CapEx question for the countdown, that's about $125 million.

Our next question comes from the line of Luis Ricardo Chinchilla Vargas.

I wanted to start asking about the operating environment in terms of promotions. Have you guys seen any uptick or anything meaningful on that front?

Macau is consistently dynamic, and competition is a daily focus. I’m quite proud of our team for maintaining our reinvestment strategy throughout 2025. We monitor the market share shifts on a daily and weekly basis, and we have observed some changes. We've managed to stay steady throughout the year and will keep an eye on the situation. I’ll let Evan provide more details, but overall, the environment feels competitive yet stable.

I think that's fair. Again, you've probably seen some statements by some competitors talking about being more or less aggressive on certain programs. We sort of look by program, by player segment and are evaluating constantly in terms of what we're doing. In Q3, while we're always tweaking and trying to optimize, we didn't see a big shift upward. Again, there's probably, if you look program by program areas that we're going to look to tweak up and others that we're going to look to tweak down. We'll continue to monitor and respond to the competitive environment. But I think Lawrence said it well. It's very competitive. But at least right now, it's not irrationally competitive.

Fantastic. That's great color. For my second question, I was hoping if you guys could give us some CapEx guidance for next year, even though it might be early and you guys are still finalizing the budget.

You're right. We're in the midst of reviewing and finalizing and approving that budget. But as a placeholder for now, I think $400 million for 2026 is a good number.

Our next question comes from the line of John DeCree with CBRE Capital Advisors.

Lawrence, I apologize if I missed any prepared remarks, I dialed in a couple of minutes late. But did you provide any color on Golden Week? And if so I could get it offline, not make you repeat yourself, but interested in kind of what you guys see kind of pre and post around the seasonality in the shoulder periods, maybe relative to what you'd expect several years ago? Or how strong are the peaks? And how consistent is visitation on property kind of leading up into Golden Week, which I think could typically be a little slower? And then have you seen any signs of slowdown after?

John, during Golden Week, the market as a whole was somewhat let down due to a typhoon on day 4, followed closely by the mid-autumn festival on day 6. Most people return to their families for the mid-autumn festival, which impacted traffic negatively during the first week. However, the last 21 days of October saw extremely strong performance. It’s clear that traffic that may have skipped Golden Week or left early returned later. Overall, October was our best month post-COVID, and we've managed to sustain our growth pace on a year-on-year basis, which is quite satisfying. I’m not sure if Evan has anything more to add.

No, I think Lawrence is correct. Coming out of Golden Week, we felt it was a bit soft, and we were somewhat unlucky with the calendar and the weather. Normally, we would expect a drop-off, but it surprisingly remained strong, and we saw positive trends continuing through October. Now, reflecting back, October feels very good. We feel really positive about it. However, we didn't feel great immediately after Golden Week; it was soft. Unusually, as Lawrence mentioned, I can't confirm whether all the people who postponed their trips returned. We can't specify the exact reasons, but we experienced a significantly strong period afterward, much stronger than we typically anticipate.

Awesome everyone. And maybe a quick one for Geoff on kind of OpEx per day. I know kind of maintaining cost discipline has been core to the story. You have given us a little cover in the past. Any change in kind of OpEx per day assumptions that you could see or could share or kind of steady as it goes?

I'll take that. Geoff can add anything he wants. We have a few things happening in Q4. There's the China National Games, which will require significant support that will affect the profit and loss statement. We're also celebrating the 10th anniversary of Studio City, and we have some exciting promotional activities planned around that. These are unique events that will be important drivers in Q4. Additionally, we typically increase promotions during this season. With the concerts or residencies tapering off, we are implementing activities to ensure strong engagement. Overall, we expect a spike in Q3, likely around the 3-ish range, and there may be potential for a slight increase depending on promotional efforts, though we anticipate a decrease in the following quarters. It might be too early to specify exact figures, but we expect an uptick in Q4 based on these factors.

Our next question comes from the line of Joe Stauff with Susquehanna.

A couple of follow-ups just on that OpEx per day response that you had given. 3.3 all in, including the onetimes is the right way to interpret that comment, correct?

That is the baseline, and as we consider some promotional activity, it won't be lower than that. There are some aspects we are thinking about that might go a bit higher. But yes, that includes the onetime costs. For Q4, it will be the normal run rate.

I wanted to shift focus to Q4. Over the past year and a half, COD has shown a significant improvement in turnaround. In contemplating the strategic initiatives and investments you've made, could you rank what you consider the most important investments and strategic initiatives at COD that have contributed to this impressive turnaround in results, especially year-to-date?

Well, we're all looking around each other. That's sort of one that was unexpected. But I'll give you my take and then maybe Lawrence or Tim or others will chime in. I'm not sure it's one individual thing. I think over the last 18 months, Lawrence has set a mandate that to some degree, we need to kind of get our swagger and market leadership back at COD on product, service and what we're doing. And so we've really done a breakdown on the business from soup to nuts at every position on every way that we provide service, looking at the customer experience and then also sort of tying together what the customers experience on property. And so I don't have one big thing to point you to. It's literally been hundreds of items, and they're not on the call, but we have mid-level executives across the board that have contributed in big ways and small ways. So I've been really happy and proud on how many different people have contributed in different ways, but it's been a lot of small steps and then you kind of look back and you've climbed a pretty long way. But I don't know that there's one thing that's been the silver bullet.

No, I appreciate that. I know there are a lot of things going on. But just curious of how you think about it. There's always the market dynamic versus, say, the company-specific, say, initiatives. And so that's the question.

No, I think let me add to that as well. During COVID, we were barely surviving. City of Dreams has always been our flagship, where Morpheus represents a new lifestyle and where we have the most Michelin-starred restaurants. For a while during COVID, we were not living up to our brand promise and proposition. However, with the new team and Tim's leadership, we have revisited literally everything from the tiniest amenities to much larger attractions. Finally, post-COVID, we have emerged from that challenging period and rediscovered our confidence.

Okay. Just one quick one. Any update maybe on the process for strategic options for your Filipino asset? Any updates or reference points you can give us?

Sure. This is Geoff. We are nearing the conclusion of the process with our advisers and expect to have a clear assessment of our options by the end of this year. This has always been an opportunistic effort driven by the potential for a one-time debt reduction event, rather than any specific intention to exit the Manila market. We will remain focused on valuation in this process and will continue to take a disciplined approach when evaluating the offers we have for this business. We aim to provide a definitive answer by year-end.

Our next question comes from the line of Praveen Choudhary with Morgan Stanley.

I think the Macau market obviously is doing very well since May of this year. Q2 results, GGR being up 13%, October being up 16%. I guess investors are asking literally 2 questions. So I just wanted to ask you those 2 questions and see how you want to respond to it. One is obviously the margin, which has been talked about where the competitive dynamics remains intense. And the reinvestment cost is generally pretty high, which is why the margin could have been very high, but it's not. So any thoughts there that it is the bottom of that margin or peak of the reinvestment intensity. But the second question I had was on premium-driven business, meaning a very small number of people is driving a big chunk of the mass revenue and thus the profit for the Macau business. And that is similar to, let's say, VIP driven back in the days, which deserves lower multiple and so on. So the fact that grind mass has been missing or at least been less available than we would like, is there anything you can talk about? Or are you seeing any early signs of that changing? That will be great. Sorry for the long-winded question.

Praveen, it's Lawrence. I'll start and then pass it to Evan and see if Geoff wants to add anything. Clearly, when the VIP and junket business faded, we all expected margins to soar. Unfortunately, that hasn't materialized, and what some competitors have done is well known. As I mentioned earlier in the Q&A, I'm proud of the team for maintaining our reinvestment strategy throughout 2025. If all six concessionaires can improve their performance, there should be margin expansion, considering the market is growing. On one hand, as Evan noted, I believe we’ve moved past the peak competitiveness in terms of market intensity. However, everyone is still trying to seize business and increase their market share. Each time I read sell-side research, the focus is on market share, and I understand why competitors prioritize that over EBITDA. Overall, the market dynamics have been rational for the past 12 to 18 months, but I hope our competitors and analysts can shift some focus away from the weekly and monthly market shares to reduce the pressure to chase the market.

I understand your question about margins, and I agree with Lawrence that there is potential for improvement. However, given the current competitive landscape, I wouldn't count on it definitively. There could always be unexpected developments. For now, the market is quite competitive. Ideally, if all competitors acted rationally regarding products and services, there should be opportunities for growth in this market, and I hope we can capitalize on that. I'm optimistic that as we attract more mass business, the supply-demand balance will get better, contributing to this improvement. The departure of the junket business left some demand unmet, which has since been filled by those targeting the premium mass market. This shift has impacted overall competition in the market. I believe margins are stable, though I don't foresee any immediate catalysts for change; however, I view the long-term trend positively. Regarding the premium-driven business, I'm uncertain if we are focusing specifically on premium direct business, which typically involves large players. We are observing an increase in participation from various regions globally, and while this business model has its unique characteristics, it appears to be strong. If you meant premium mass, we always pursue those premium clients and are not intensely focused on lower-end markets, but we do see fresh competition entering the space. Overall, I wouldn't categorize the market as unhealthy. We are witnessing a solid upward trend in the mass business segment, although I may not have deep insights into the lower-end demographics. As new players enter our system, we feel optimistic about market growth.

That is very helpful. Can I just have a last follow-up question on Sri Lanka. It's early days. I totally appreciate that. But when you entered that market, you had a view that it will be a return accretive market and eventually, it will generate a certain kind of EBITDA. Is there anything you picked up in terms of either it's been too difficult or regulatory issues or visitation being weaker or you need to tweak business models slightly or you need to provide something? Anything you can share about that market? That will be very helpful.

Praveen, I think it's super early days. It's only been open for 3 months. And for us, it is a whole new market because it's mainly targeted at the Indian market. So there's a lot for us to learn along the way. I think we're very optimistic about the country and the tourism growth in that market. And I would say that we're learning every day, and there are new programs that we haven't really seen before. And anyway, I'm sure we'll have more to report in subsequent quarters.

No, no. I would just say, look, initially, when you go into a market that already has some incumbents, it's a little bit of a steel share market where you have incumbents protecting the existing customer base. we're lowering them with a better product and service, but you have promotional activity. And so we're kind of in the early days of that. I think our long-term strategy is we want to expand that market and change the kind of customer that's going into that market who expects more premium product. But that's not going to be done in a month or 2. That's going to be done here over subsequent quarters. So as Lawrence said, we're early days. We're focused on getting that very valuable high-end guest, and that's going to be a journey from here to there.

Our next follow-up question comes from the line of George Choi with Citi.

So you guys have made significant progress on deleveraging. And if there's any positive results from this COD Manila strategic review, your gearing is going to go down further, right? So I'm just wondering if you have any new thoughts on your cash allocation strategy.

Thanks, George. As you know, in the post-COVID period, we've been very laser-focused on debt reduction, and we've had some meaningful success in paying down some of the debt that we incurred during the 3 challenging years of COVID. However, going into next year, we plan to take a more balanced approach using our free cash. And while debt reduction will continue to be a primary mandate, we aim to potentially recommence the quarterly dividend by the end of next year.

There are no further questions at this time. I now hand back to Ms. Jeanny Kim for closing remarks.

Thank you, and thank you all for joining us again today. We will look forward to speaking to you next quarter. Thank you.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.