Melco Resorts and Entertainment Ltd Shs Sponsored American Deposit Receipt Repr 3 Shs Aktie

Ladies and gentlemen, thank you for participating in the Second Quarter 2026 Earnings Conference Call of Melco Resorts & Entertainment Limited. [Operator Instructions] 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.

Thank you, operator. Thank you, everybody, for joining us today for our second quarter 2026 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 provisions of federal securities laws. Our actual results could differ from our anticipated results.

In addition, we may discuss non-GAAP measures. Definitions and reconciliations 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 now turn the call over to Mr. Lawrence Ho.

Thank you, Jeanny, and thank you all for joining us today. We're confident in the long-term strength of our business and our outlook for the remainder of 2026 in Macau. Despite near-term headwinds that are reflected in our second quarter results, our priorities remain unchanged: to deepen customer engagement, attract high-quality visitation, and continue investing in our properties to anticipate the changing needs and preferences of our guests.

The opening of REM marked an important milestone in the continued evolution of City of Dreams, delivering a distinctive new experience for our guests, which we believe is not available anywhere else in Macau. We continue to take steps to operate more efficiently and strengthen our business. Together with the phased opening of REM, these initiatives position us well to capture the growth in demand.

We continue to enhance the gaming experience across our portfolio. We opened a new gaming area with 18 tables at City of Dreams near the Southwest entrance at the end of July. Its convenient location along the main Cotai Strip with easy accessibility is expected to attract incremental visitation, particularly from walk-in patrons.

The benefits of the convenient access to games has been a proven success with our 15-table gaming area near the Grand Hyatt entrance, which we opened in October 2025. We're also commencing a revamp of the retail areas at City of Dreams in Macau. The redesign area will create a seamless loop across the property, introducing a more carefully curated mix of luxury offerings with differentiated elements. The completion of this retail revamp will allow us to deliver the full integrated resort experience at City of Dreams that will be uniquely Melco.

Competition remains elevated, resulting in a demanding cost environment. We're focused on being disciplined as we align our resources with the highest return opportunities and protect the guest experience. Outside of Macau, our diversified portfolio continued to demonstrate resilience and growth potential.

In the Philippines, City of Dreams Manila delivered property EBITDA of $31 million in the second quarter of 2026, representing a 9% year-over-year growth. In Cyprus, despite the disruption associated with the complex in the Middle East, property EBITDA at City of Dream Mediterranean and our satellite casinos rose 60% year-over-year in the second quarter of 2026.

In Sri Lanka, our casino operations continue to ramp, recording positive EBITDA of $3.5 million in the second quarter of 2026. We remain focused on executing a disciplined ramp-up strategy and driving further operational progress throughout the remainder of the year.

With that, I turn the call over to Geoff.

Thank you, Lawrence. Our group-wide adjusted property EBITDA for the second quarter of 2026 was approximately $304 million. Adjusted for VIP hold, our property EBITDA was approximately $312 million. An unfavorable win rate at COD Macau had a negative impact on our property EBITDA by approximately $9 million. The VIP win rate at COD Macau declined from 3.9% in the second quarter of 2025 to 2.7% in the second quarter of 2026. We continue to be disciplined in our cost management with total daily OpEx in Macau for the second quarter of 2026, remaining steady at approximately $3.4 million per day, inclusive of House of Dancing Water and in line with our prior guidance.

Lower-than-expected visitation and lower hold relative to prior quarters placed pressure on margins in the second quarter of 2026. We are actively evaluating opportunities to incorporate greater flexibility across our operations to better align our cost base with evolving demand and business volumes.

Turning to our balance sheet. Our liquidity position remains robust. We had available liquidity of approximately $2.8 billion with consolidated cash on hand of approximately $1 billion as of the end of the second quarter of 2026.

Melco Resorts, excluding its operations at Studio City, the Philippines, Cyprus and Sri Lanka accounted for approximately $492 million of the consolidated cash on hand.

Our strong liquidity position reflects the extension and upsize of Melco's revolving credit facilities, which was announced in June. The maturity date of the RCF was 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. This provides us with added financial flexibility as we think about our upcoming maturities.

Additionally, in May, Studio City issued $300 million in senior secured bonds. The net proceeds from the issuance together with a $15 million drawdown from Studio City's revolver and cash on hand, was utilized to early redeem the Studio City senior secured notes due 2027.

In July, 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, allowing for a reduction in interest expense. After cancellation of the redeemed notes, an aggregate principal amount of $335 million of the 2028 notes remain outstanding.

From April 1 to August 12, 2026, we repurchased approximately 22.4 million of our ADSs for a consideration of approximately $121 million. This brings the total repurchases in 2026 to approximately 25 million ADSs for an aggregate consideration of approximately $134 million. We continue to take a disciplined approach to capital allocation thoughtfully balancing share repurchases, cash availability, prevailing market conditions and the long-term needs of the business. Share repurchases have been opportunistic when the market price of our ADSs falls far below levels that in our judgment, appropriately reflect the underlying value of our company.

Having spent approximately $134 million on share repurchases in 2026, we currently expect to recommence dividends in 2027. As we normally do, we'll give you some guidance on non-operating line items for the upcoming third quarter of 2026.

Total depreciation and amortization expense is expected to be approximately $140 million to $145 million. Corporate expense is expected to come in at approximately $20 million to $25 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.

[Operator Instructions] Your first question comes from George Choi with Citi.

My first one, perhaps for Lawrence. Glad to learn that REM is on schedule to open in the third quarter. In your view, how different this REM versus your existing non-gaming product offerings at City of Dreams? And my second question is perhaps for Geoff. On dividends, how should we think about your dividend policy?

George, so we've actually soft open REM already. We're easing into it. The grand opening is set for after Golden Week in October. And I think so far, the reception has been great. Macau has some of the nicest hotels in the world. So there's already an oversaturation in the luxury market. And I think we -- in the prepared remarks, we said REM is unlike anything in Macau. It's actually more like -- it's unlike anything in Asia, probably in the world. So it's a very unique product. It's a lot of fun.

I think it's a luxury, but then it's highly differentiated from anything that's in the market or even at City of Dreams. So I think that complements our 5-star hotel offering very well. And so we're quite excited about REM and also about the rest of the City of Dreams Macau retail revamp, which there's a lot of hoarding right now, and we're going to have to suffer through the pains over the next few months. But once it's all completed, we are very excited. And I think that will probably put City of Dreams to be the nicest property in all of Macau.

So George, on the dividend policy, as I said in the prepared remarks, we have pushed that from towards the end of this year to sometime in 2027. We have redirected. And as we've always said and as we've demonstrated, when there's opportunities to buy our shares at what we think are highly discounted prices, we'll take advantage of that. 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. So hopefully, that gives you some direction on when and how we're thinking about the dividend policy.

Your next question comes from David Bain with Texas Capital.

Awesome. Geoff and Lawrence, super excited to be back on these calls with you. And I guess my first question would be for you, Lawrence. Over the past few years, we've seen multiple go-privates and M&A transactions, just given intrinsic values, at least in RVs, exceeding public multiples. I think Melco is a clear example of that. I'm sure that opportunity, that type of transaction is not lost on you. You have a lot of corporate action optionality. Is there any kind of big picture thoughts on those type of opportunities? Is it fair to think about them when we look at shares and analyzing them?

Dave, good to talk to you again. We're always very open-minded. And I think if you look at our transactions over the years, we've been quite innovative. But I think at this point in time, our core focus is, I know it's been a few years since COVID, but we're still kind of digging out of the COVID hole that elevated our debt. And so I think the priority is still on debt repayment and really getting our -- improving the performance in Macau, and we opened Sri Lanka a year ago, learning the market there and really trying to crack the code on the Indian market. So there's still a lot of work -- a lot of stuff on our plates right now. But again, we're always very open-minded in watching the market and what other people are doing very closely.

Okay. Good enough. And then looking at the historical World Cups versus this one in 2Q '26, are there some reasons that this year may have been more impact than previous years? And maybe in reverse, are we seeing more event-oriented benefits in Macau? And if material, maybe you can discuss the entertainment calendar that could match up with the REM and the COD retail catalyst towards the end of the year and into next year?

Yes. Why don't you take, Evan?

Look, I mean, I think from our perspective, this year, World Cup probably had a larger impact relative to prior periods. It's a little bit hard to give you the exact as to why. Obviously, there are a lot more opportunities for customers to access different sports betting venues. And so I think this year, similar to the rest of the world, we experienced with a lot of our customers, pretty significant sports betting volumes with respect to the World Cup.

And I think in June and July, I would say that our experience is likely that it was, to some degree, a substitute to some of their gaming activity. So we did see some reduced volumes and with players that came on board, some reduced level of play relative to their historical activity, which, again, we won't know for sure, but I think it's likely that during the World Cup period that, that took some of the gaming wallet.

Interesting. Okay. And anything on the back half entertainment calendar that you think is material? Is that something that we should be monitoring more in Macau relative to in the past?

Look, I think all of us are looking at different entertainment opportunities. We had a concert at the end of July that we really like the results of. And so we've seen individually that certain entertainment events have driven good volumes. And so we continue to look at opportunities that can drive gaming volume and gaming activity within the market. And so I think us and others continue to look at that as an opportunity to continue to push the market, but I don't have an individual thing to point you to.

No. But I think also the concert and entertainment calendar has become much more rational this year compared to previous year where you might have 5 or 6 events happening on a weekend. And I think all competitors and ourselves have learned that not all events are profitable. And so I think even this year, you're seeing -- I think at Galaxy and Sands, there's a 50% drop-off in terms of concerts and events in the second half of 2026.

Your next question comes from Joe Stauff with Susquehanna.

Lawrence and Geoff, I guess to start with, could you update how to think about the outlook for Macau-based OpEx per day over the next couple of quarters, right, with your new suite product launch and just thinking about that number in particular?

And then wondering if you could comment just on, say, the post-World Cup trends that you're seeing in Macau and whether or not they -- you don't want to give numbers, I can appreciate, but are they in line, say, with pre-World Cup trends? Or have they strengthened? Just wondering how that level of demand is rebuilding after that World Cup impact?

Well, I guess, Evan and Geoff, do you guys want to talk about the OpEx one thing?

Sure. Look, I think from an OpEx perspective, obviously, we have REM opening and ramping up I think if we include REM and other activities, we're probably looking at something closer to $3.3 million to $3.4 million. If I look at activity on a post-World Cup basis, again, I think in the June, July period relative to other World Cup periods, I think, unfortunately, we were surprised that the impact probably was more significant this year than it has been in past years.

Coming out of that period, as we get into the late July, early August period, I think we've seen a reversion to our normality. So we're seeing our customers come back. We're seeing normal plane volumes. And so I think that it's been a sort of dip in terms of activity that we think has now returned back to normalcy as we move forward into the back half of 2026.

Understand. I appreciate that. And the $3.3 million to $3.4 million, is that all in, including House of Dancing Water?

Yes. Our guidance now, given that we've cycled through the opening of House of Dancing Water includes House of Dancing Water.

Your next question comes from John DeCree with CBRE.

Two from me. Geoff, maybe the first one to you or whoever wants to opine. I think in your prepared remarks discussing the margin in the quarter, you mentioned you guys are evaluating some opportunities to create better flexibility in the cost structure to align with business volumes. I was wondering if you could elaborate on that. Is that things you're looking at to kind of find opportunities and variable costs to adjust during periods like unusual shifts in demand? Just curious if you could give us some more color on some of those opportunities.

This is Geoff, I'll start and then hand over to Evan. But we are casting a pretty wide net when it comes to reviewing our cost base and finding areas for efficiency. And I think you see that with the opening of REM. And as that ramps up, we think we can keep our $3.4 million per day OpEx number consistent going into the third quarter as we find and execute on cost savings. Excuse me, as far as specific measures, maybe I'll hand it over to Evan.

No. And look, we've -- in the post-COVID period, I think we spent some time looking at enhancing all of our sort of products and services across the board throughout Macau. And so we've had a period where we have added in from a guest experience standpoint, sort of across the board in almost all aspects of the guest experience, meaning wet and dry amenities in the rooms, butler service, an enhanced number of people and enhanced offering on the gaming floor.

And I think with Tim and with Kevin and Raymond at the property level, we're looking at each one of those and looking at the areas where we really think we have a high level of guests impact in areas where we think we're spending money where we may not be getting as much return on some of those dollars as we would like.

And so I think we're going through the entirety of where we're spending and looking at areas where we think we can trim without negatively impacting a guest experience certainly at the premium levels. And so, I think, throughout the back half of 2026, we're going to be going through an exercise where we're looking back at the last couple of years of data and seeing areas where we can strategically trim back without really negatively impacting that guest experience. It's not going to be seismic, but it would be significant in terms of areas that we think we can save some money and redeploy into other areas of our guest journey as they come to COD and SC.

Got it. That's helpful color. And then maybe on an unrelated topic, whoever wants to take it. We talk a lot about the competitive environment in Macau, particularly in the premium segments. I think an event like World Cup reminds us that there are external competition outside of Macau for customers. Curious if you're seeing or have a view on kind of regional gaming competition in the area. Lawrence, your exposure in Manila and other regional markets might position you kind of the best in your peers to answer this. But are you seeing a competitive environment increase from other regional gaming markets or not so much compared to maybe pre-pandemic levels?

I would say not so much, because the Macau serves a predominantly Mainland Chinese market. We are seeing more and more Southeast Asian tourists and more Korean showing up in Macau nowadays. But still, that's a small portion of it. Manila serves -- there's a huge domestic market in Manila along with a massive Korean market. And I think given the geopolitical tensions between Philippines and China, the Chinese tourist has disappeared for a while, but I think with some better visa schemes allowing the Chinese tourists to come. So I think so far in 2026, we've seen a little bit of uptick on that. So I think that each market serves its own kind of catchment of areas.

Next question comes from George Choi with Citi.

Just a couple of follow-ups. On City of Dreams, as you start your construction work on your retail area, the renovation work that is, how should we think about the disruption for your next couple of quarters?

And secondly, perhaps for Geoff, would you please provide us with your latest guidance on CapEx for this year and next year, please?

Yes, on COD Evan or...

Sure. Why don't I start, Tim can supplement. Look, I -- it's sort of a double-edged sword. I think we're very excited about what we've got in store and what we're putting together from a retail podium level standpoint. But we are going to be suffering through some pretty significant construction disruption between now and middle of next year. You're already seeing it in parts of the retail arc that abuts the Cotai Strip that we're going to be completing over the next couple of months that it's going to cycle through various areas of the property really going through summer of next year.

It's hard for me to put a dollar number or a dollar figure on that. Tim has done an amazing job, I think, in terms of porting and making the property feel better throughout the construction disruption. But at the same time, it is what it is. You can't hide the fact that activity is going on. So I do think that we are going to get some level of guests impact despite our best efforts between now and June of next year. But I would say the positive news is, as we go into June of 2027 and beyond, I think we're going to have one of the best feeling most innovative retail experiences that exist in Macau and really across Asia. But there will be, to some degree, an impact between now and then.

And on your second question, George, for the remainder of this year, we've got about $225 million of CapEx across the group. And for next year, that figure will drop down considerably to somewhere in the range of $275 million to $300 million.

Your next question comes from Peter McGuire with Vanguard.

Could you repeat or review the capital structure moves that you've made thus far and how you'll address the 2027? Or did you say that you had repurchased some of the 2027? I wasn't quite clear on that.

And second question is within the VIP business, is the softness relative to the competitive environment and Wynn, as an attractive offering there and a decent quarter in that segment?

So on the MLCO 2027, we haven't made any definitive plans on how to address that maturity, but I think we have a lot of options. And as always, we'll be monitoring all the various avenues for refinancing those notes. And as always, we'll be opportunistic. One position that we can always take is via the upsized RCF. We can take down those bonds with the RCF handling. But that's a decision we'll make later this year.

Yes. Sorry, what was the -- and apologies, the question with respect to VIP, could you repeat that?

Yes. Just in the VIP business, is that -- I know you had the World Cup in June, of course, in the mass segment perhaps impacted there. But -- just specifically in the VIP business year-over-year, what was the experience there? And what's the competitiveness in that market that for that rolling chip customer with respect to Wynn Macau has a nice product, and they had a decent quarter within that segment.

So from a premium direct VIP rolling chip business standpoint, I think we continue to be very strong. From a competitive standpoint, Wynn, although, again, has nice offerings in terms of stuff that they do is generally not our leading competitor within that business. In terms of where they're shifting their play, where they seem to be trying to go more towards premium direct versus VIP, if you look at their volumes over a period of time.

I think from our standpoint, we definitely did take a hit where some of those premium players during the World Cup. Again, I don't know where they went, but the assumption is that they probably did some level of sports activity, which impacted our business. They have now come back. I think we feel pretty good. And I think we feel pretty good about the rolling volume that's coming through in August and our own offerings.

So I think as we get to the back half of the year, we feel good about the VIP rolling chip business, and I wouldn't single out a single competitor is someone that we are particularly worried about. It's always been a business where I think we figured to get our fair share or more. And I don't think there's anything that I see on the horizon that would shift that reality.

And don't forget, our -- in Q2, our win rate in VIP was 2.7%, which is below our normal 3% and definitely way below where we were last year 2Q. I think we were 3.4%, 3.7%. So it's pretty significant in terms of the win rate being unfavorable this Q2.

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

Thank you, everybody, for participating in our call today, and we will speak to you again next quarter. Thank you.

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

Ladies and gentlemen, thank you for participating in the First Quarter 2026 Earnings Conference Call of Melco Resorts & Entertainment Limited. [Operator Instructions] 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.

Thank you, operator, and thank you, everybody, for joining us today for our first quarter 2026 earnings call. We apologize for the earnings release materials being later than usual. We had a bit of an IT issue, and we wanted to give all of you a little bit more time to review the materials that were released. As usual, 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 provisions 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. We delivered a strong first quarter with both group property EBITDA and Macau property EBITDA growing by 12% year-over-year. Our GGR in Macau increased by approximately 10% year-over-year with solid growth across all segments. In March, we officially announced the upcoming launch of REM, our new luxury hotel at COD. We remain on track to begin a phased opening early in the third quarter of 2026. We expect REM to represent a meaningful enhancement to the COD product portfolio and to redefine contemporary luxury across Macau.

At the same time, we have commenced a refresh of the retail areas at COD and have plans underway to enhance our food and beverage offering, further elevating the guest experience and product quality. Moving on to the Philippines. Despite competitive pressures and broader industry headwinds that continued into 2026, property EBITDA for the first quarter of 2026 grew 24% year-over-year, while GGR increased 9% -- we continue to punch above our weight in the market and are expanding our marketing initiatives across Southeast Asia to drive additional growth.

City of Dreams Mediterranean and the satellite casinos in Cyprus were impacted by the conflict in the Middle East that escalated in late February. With the recent developments in the region, we've seen significant improvement in occupancy, visitation and play levels in April. We remain operationally flexible in preparation for a further recovery in travel demand.

Our casino operations in Sri Lanka recorded positive EBITDA in 1Q 2026. We remain focused on the progressive ramp of operations throughout the year. And finally, we announced today that we purchased the subsidiary of Melco International that owns the trademarks that were subject to the trademark license agreement. These trademarks are integral to Melco's business. This purchase gives us full control of the IP and allows us flexibility to expand our brand without any incremental cost.

With that, I turn the call over to Geoff.

Thank you, Lawrence. Our group-wide adjusted property EBITDA for the first quarter of 2026 grew 12% year-over-year to approximately $381 million. Adjusted for VIP hold, our property EBITDA was approximately $356 million. Favorable win rates at COD Macau and COD Manila had positive impacts on our property EBITDA by approximately $20 million and $5 million, respectively. Daily OpEx in Macau, excluding House of Dancing Water for the first quarter of 2026 was approximately $3.2 million per day, in line with our prior guidance. Total OpEx per day, including House of Dancing Water and residency concerts for the last 4 quarters has been relatively stable, and we were able to see the benefits of operating leverage this quarter with our Macau property EBITDA margin increasing to approximately 28%. We continue to be focused on managing our costs to increase flow-through and margins going forward.

Turning to our balance sheet. Our liquidity position remains robust. We had available liquidity of approximately $2.4 billion with consolidated cash on hand of approximately $1.1 billion as of the end of the first quarter of 2026. Melco Resorts, excluding its operations at Studio City, the Philippines, Cyprus and Sri Lanka accounted for approximately $543 million of the consolidated cash on hand. In the first quarter of 2026, we repaid $60 million in debt at Melco Resorts and $10 million in debt at Studio City. The group does not have any material debt maturities in 2026. As of April 29, 2026, we repurchased approximately $2.5 million of our ADSs for a total consideration of approximately $14 million year-to-date in 2026. We have been opportunistic in our share repurchases in the past, and we expect to continue to make opportunistic repurchases going forward. We believe our share price is meaningfully undervalued, especially when recent trading levels of our ADSs imply a free cash flow yield of over 20%.

We also announced today that the board approved a new $500 million share repurchase program. This is incremental to the existing program and increases our share repurchase authorization to $710 million. We remain focused on reducing debt and leverage, and we'll continue to evaluate our capital allocation strategy in a disciplined manner, considering cash availability, prevailing market conditions and our share price. As Lawrence mentioned, we announced today the purchase of key trademarks from Melco International for $375 million. The transaction was the result of arm's length negotiations between the independent members of the 2 audit committees and a professional valuation services firm who was engaged to assist in the evaluation.

Trademark license fee for the first quarter of 2026 was approximately $13.4 million, implying a purchase price of just under 7x the annualized first quarter fee. This is in line with Melco's current trading multiple and below the trading multiples of our Macau peers. The purchase of the trademarks provides MLCO with full ownership and control of the trademarks and eliminates any uncertainty with respect to potential increases in fees at the end of the prior royalty fee arrangements. As a result of the purchase, we have an immediate increase in EBITDA and cash flow. The purchase will be funded by a combination of a drawdown from our credit facility and internal funds, but the additional debt is immaterial to our credit profile. Debt-to-EBITDA post transaction is expected to increase by less than half a turn, and we expect to leverage our return back down to first quarter 2026 levels before the end of 2026. And finally, as we normally do, we'll give you some guidance on nonoperating line items for the upcoming second quarter of 2026.

Total depreciation and amortization expense is expected to be approximately $140 million to $145 million. Corporate expense is expected to come in at approximately $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.

[Operator Instructions] Your first question comes from George Choi with Citi.

I just want to say that we appreciate the purchase of the trademark license from Melco International. I think that's a very good deal. But 2 questions from me, if that's all right. Firstly, perhaps for Lawrence or Evan, how do you view your current OpEx level, in particular, player investments? And secondly, for the upcoming Labor Day holidays, which is a few hours away, if you can provide us with any color in terms of the upcoming holidays, that would be very much appreciated.

George, it's Lawrence. So maybe I'll take the second question first and then let Evan and Geoff elaborate a little bit on the OpEx question. For May Golden Week, if anything, I think with the conflict in the Middle East, we're seeing people travel shorter distance in China. So I see there's -- I read somewhere that there's 10% cancellation of flights from China to international markets. So if anything, that has really benefited us. So I think so far for May Golden Week, we're seeing both occupancy and player quality improve on a year-on-year basis. So we're quite happy about that and excited about tomorrow effectively starting. On OpEx, maybe I'll hand it off to Evan and Geoff to elaborate.

Sure. Why don't I start and Geoff can join in. I think from an OpEx perspective, we're fairly stable on where we are. Market remains very competitive. So we did see player reinvestment levels tick up. I think Lawrence has set the tone to begin with, which is we're not leading the market up. But when you go through periods of intense competition, we obviously react to the market. And so in an environment where it's very competitive, we have seen some increase in player reinvestment levels. I think they're stable for now. We don't see anything on the horizon that would make them increase, but we also don't see anything on the near-term horizon that would decrease those levels.

As I look into the next quarter, we are seeing just our typical salary increase takes place on April 1. So we're going to see a tick up related to that. We have a little bit of enhancement in terms of some higher-level Butler and other service amenities around our suite product. As you know that within Macau, that's continued to be an area of customer focus. Some of our competitors have made some announcements of things that they're looking to do prospectively. I think luckily, a lot of ours were already from a hardware position better, but from a software position, we will have a slight tick up there.

And then the biggest jump up is going to be in Q3 as we start to open REM. REM, we've probably got another $30,000 to $40,000 a day in operating expenses. I think we view that as a big positive. We've got 149 keys opening, just walked the product today with Lawrence and Tim, and it looks spectacular. I think it's going to be highly differentiated in the market. We spent a lot of time on that property, making sure that we have the right mix. It's very heavily weighted towards the 1-bedroom suite product with some flexibility in terms of combining suites and combining rooms with lock-off rooms.

So I think we feel like we're going to be hitting the market with a very good product here going into Q3, and we'll have some slight expense from that, but should receive obviously a pretty big revenue uplift as that ramps.

And if I can ask a follow-up question. So given your purchase of the Tremont license, any change in your CapEx for this year at all?

So total CapEx for this year has come down from about $450 to approximately $425 -- and with the amount spent in the first quarter, we've got approximately $350 million to go for the remainder of this year.

[Operator Instructions] Our next question comes from Karl Choi with Bank of America.

Two questions here. Number one is, can you discuss a little bit about the timing of resuming your dividend, the trademark purchase? Does that mean that we may be pushing back the timing of a resumption towards 2027? And second part on competition, understanding that maybe the reinvestment rate for now, you expect it to be stable near term. But sort of how much -- one of your larger competitors has been quite vocal about stepping up service offerings and things like that. And so do you feel like you still need to respond further beyond what you have said on the call?

Karl, so maybe I'll -- it's Lawrence. So let me -- I think our goal is still to resume the dividend at the end of this year, but I think maybe we'll let Geoff elaborate on our capital priorities.

Yes. So all things being equal, we would definitely like to resume the dividend by year-end. That said, of course, we'll look at the opportunity set out there, and that would include our share price over the course of this year as well. As you know, we've been opportunistic over time and thus far this year in buying back the stock when we think it's on sale, and we think it's on sale at these levels. So it's all dependent on a variety of different variables, but we would like to recommence the dividend and think that the balance sheet should be in shape for that by the end of this year.

And Karl, on your reinvestment question, I'm sure you guys are super smart and you can back out the fact that Melco is the most disciplined in terms of our reinvestment. And it's a constant internal discussion as well, which is sort of an annoying one because we see our competitors keep picking it up. And as Evan mentioned earlier on, we don't want to lead that race. But I don't know, I'll let Evan elaborate on it further.

No. Look, I think we feel good on where we are on a relative basis sitting here today. I think as you remarked, a number of our competitors have done more aggressive things in the marketplace over the last few months and we've responded. I don't get the sense that they're going to double down on that because I think they've experienced that you sort of hit a point where the incremental benefit of that spend is very muted and you end up having dilution, obviously, in profitability.

So that's why I say I feel like we've hit a stable point. I don't see in the near term a need for us to ratchet up -- that being said, as Lawrence articulated, if one of our competitors did something relative to the status quo that was very, very aggressive and the market followed, we probably would reluctantly need to change our approach. But again, I think we are fighting to be disciplined and obviously are encouraging our other competitors to compete in a healthy way in the marketplace. So sitting here today, I think we feel like we're stable.

Yes. And we respect the fact that Macau being the biggest market in the world is always going to be very competitive. But I think we've always encouraged that we should compete based on product and service and not rebates and commissions and stuff like that. But it's unfortunate that we can't -- this is out of our control. But at the same time, I think on a product and service standpoint, we've talked -- Evan talked quite a bit about REM. We're very excited about the all-new suite product there. I think in due course, we're happy to show it off with our phase opening in Q3 because it's truly a unique product in -- not only in Macau, but Macau, Hong Kong and probably the entire Asia. It's probably something that's never been done before.

And at the same time, we're also redoing our retail at City of Dreams. If anything, we've always felt that with our partnership with DFS ending, that was always an area of weakness. So I think from a product offering standpoint, starting next year, we're going to have some exciting new brands that we're dealing directly with where we think will really complement the luxury proposition of City of Dreams.

Got it. That's good to hear. If I may ask a follow-up question. I just want to go back to the GGR trends for a second. Good to hear about the good color about the upcoming May holiday. But I just want to go back to April, there's some market chatter that I think for the sector overall win rate was low. But more specifically, there was some chatter that VIP volume was also weak. Just want to see if that's something you've seen? And also if that's the case, is that really more transitory, nothing to be worried about, especially as you look forward? Or that's something that you have to pay attention?

It's harder for us to answer that sort of market-wide. For us, it was probably not the strongest month. But to be fair, that is a business that we track almost player by player given the concentration that exists in some of the large VIP play. And so some of the players that had come in Q1 are due to be coming later in the quarter. So I don't know that April set the world on fire for VIP. At the same time, I don't think there was anything we saw that was concerning in terms of the future health of that business.

Your next question comes from D.S. Kim with JPMorgan.

And as George said earlier, I really appreciate also us purchasing trademark at a reasonable, if not attractive valuation, kudos to that. But just wanted to check on very high-level stuff, if I may, because we and the market came across news or government announcement last month that they want to establish, I think, a MOP 20 billion fund to support economic diversification. And they target to raise, if I'm not mistaken, up to MOP 9 billion from private capital private parties. So just wondering, has there been any discussion between -- with the government as to if we need to or if we want to participate in that fund? And if that's the case, is it going to come out of our previous commitment for the non-gaming commitment at the license signing? Or would there be additional burden or commitment that we need to do in the future?

D. S, and again, thank you for the question, and thank you for the comment on the trademark. On the Macau government fund, we really can't comment too much about it. But all I can say is that what we had committed as part of the license renewal back at the end of 2022 remains. So that amount is not going to increase. So -- and just to remind everybody, we're lucky to have the lowest commitment among the 6 concessionaires, and there will be no change to that amount.

Congrats again on a strong quarter.

Your next question comes from George Choi with Citi.

Just a quick follow-up, on the aforementioned refresh on CODs retail. How should we think about disruption, if any?

Maybe I'll take that one and others can add. So if you've been by the property, we've already started. So if you go into sort of the front by the Cotai Strip in the luxury retail arc, the north section already hoarded. We're already underway in terms of the remodel. Tim and the team here have developed a very good phasing plan. So we're not going to have any period where we think the property is going to be massively impacted, but we are going to be going zone by zone in really creating a brand-new retail experience throughout that podium level. That's going to take place from now, and it's really going to go on for the next 10 to 12 months.

We're zoning it very carefully, but there is going to be construction in various zones throughout that period. We're also, again, going to go through a period with our tenants where we're keeping some old friends, but on a direct basis, we're making a lot of new friends with the new exciting names that we're glad are going to be joining us. And during this next 3 to 4 quarters, we're working with them and at various times as they're disrupted, obviously, providing relief to those tenants as they are committed to us and sticking with us during this transformational period. I guess what I would say is we're very excited about where we're going to end up.

I think there's going to be some work to do during the journey, but very proud of Tim and the construction team for really coming up with a really good phased plan with some good ideas around hoarding and property activations that should minimize the disruption during that period.

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

Thank you, everybody, for joining the call again today, and we'll see you next quarter. Thank you.

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

Ladies and gentlemen, thank you for participating in the Fourth Quarter 2025 Earnings Conference Call of Melco Resorts & Entertainment Limited. [Operator Instructions] Today's conference is being recorded.

I would now like to turn the call over to 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 fourth 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. 2025 was a year of growth and recovery, supported by disciplined cost management and margin expansion. We recorded $1.4 billion in group property EBITDA for the full year of 2025, growing by 17% compared to 2024. In Macau, our dedicated efforts to enhance the customer experience have proven to be a successful strategic focus with fourth quarter Macau property EBITDA growing 24% year-over-year and full year Macau property EBITDA growing 25% compared to 2024.

We've had a strong start to 2026 with Macau market GGR up by 24% year-over-year and our market share increasing so far in the first quarter of 2026. Chinese New Year looks strong with higher-yielding cash ADRs compared to 2025. We have a pipeline of new initiatives that we're planning to implement in 2026 to further differentiate our offerings with the largest project being the opening of the renovated Countdown hotel. We are on track to progressively start opening in the third quarter of 2026. The completed hotel is expected to introduce a truly distinctive experience and set a new benchmark in Macau.

We have also started on a revamp of the retail area at COD and have plans to upgrade our F&B offerings, continuing to further enhance our product quality. In the Philippines, competitive pressures and industry headwinds continue to impact our performance in the fourth quarter of 2025. However, we're encouraged by the positive developments in that market, including visa-free travel for Chinese nationals, upgrades to the Macau -- to the Manila Airport to facilitate increasing international tourism and rationalization of the online gaming market.

We have also concluded our evaluation of the strategic alternatives for COD Manila. Although we considered various alternatives, we did not feel that any of those options would allow the value and potential of the property to be fully realized. We're confident that business will rebound, and we may reevaluate the situation in the future.

Moving on to Cyprus. City of Dreams Mediterranean and the satellite casinos in Cyprus achieved 78% year-over-year growth in property EBITDA to $21 million for the fourth quarter of 2025, despite seasonality typically being slower in these months. And finally, in Sri Lanka, we continue to focus our efforts to progressively ramp up operations and have seen promising green shoots so far in 2026.

With that, I turn the call over to Geoff.

Thank you, Lawrence. Our group-wide adjusted property EBITDA for the fourth quarter of 2025 grew 12% year-over-year to approximately $331 million. Adjusted for VIP hold, our property EBITDA was approximately $323 million. Favorable win rates at COD Macau and COD Manila had positive impacts on our property EBITDA by approximately $7 million and $3 million, respectively. We had guided in the prior quarterly call -- as we had guided in the prior quarterly call, OpEx in Macau increased in the fourth quarter compared to the prior quarter, primarily due to events, including the China National Games, Studio City's 10th anniversary and the Macau Grand Prix.

Excluding these fourth quarter events as well as House of Dancing Water, Macau OpEx was approximately $3.1 million per day. EBITDA in the fourth quarter of 2025 was also impacted by additional bad debt provisions that were taken as a result of a settlement that we reached with one of the previous junket operators. Adjusting for these event-driven costs, Macau's property EBITDA margin for the fourth quarter of 2025 would have been over 27% on an actual basis. Looking forward to the first quarter of 2026, we expect Macau daily OpEx, excluding House of Dancing Water, to come in at approximately $3.2 million, given increased marketing activity around Chinese New Year and new brand campaigns across our Macau properties.

Turning to our balance sheet. Our liquidity position remains robust. We had available liquidity of approximately $2.4 billion with consolidated cash on hand of approximately $1.2 billion as of the end of 2025. Melco, excluding its operations at Studio City, the Philippines, Cyprus and Sri Lanka, accounted for approximately $550 million of the consolidated cash on hand. In the fourth quarter of 2025, Melco redeemed the remaining $358 million of the senior notes due 2026. In addition, we repaid $210 million in debt at Melco and $32 million at Studio City. In total, the Melco Group paid down approximately $400 million of debt over the course of 2025. And we continue to reduce debt in 2026. Melco has repaid $35 million in debt in January and will repay a further $25 million this month. The group does not have any material amount of debt maturing in 2026.

Before we move on to the nonoperating line items, we thought it would be helpful to take a few minutes to provide information on the trademarks license agreement with Melco International. Melco International owns and manages certain trademarks utilized by Melco Resorts and its operations. The terms of the trademark license agreement were negotiated on an arm's length basis, factoring in the ranges of fees typically observed in the industry. The agreement has an initial term of 10 years, which commenced on January 1, 2024, and thereafter is automatically renewed for consecutive periods of 12 months unless either party gives prior notice of nonrenewal.

Under the agreement, the trademark license fee payable is up to 1.5% of the gross revenues of City of Dreams Macau, excluding Grand Hyatt, unless agreed otherwise by the parties to the agreement. The trademark license fee was 1% in 2025 and will increase to 1.5% from the first quarter of 2026. The agreement does not include an annual cap, but the total fees for the full year of 2025 amounted to approximately $33 million, dramatically lower than those of our peers. The trademarks owned by Melco International are integral to the long-term strategy and brand identity of Melco Resorts and the formalized agreement facilitates a standard approach as we continue to grow and expand the portfolio.

And finally, as we normally do, we'll give you some guidance on nonoperating line items for the upcoming first quarter of 2026. Total depreciation and amortization expense is expected to be approximately $140 million to $145 million. Corporate expense is expected to come in at approximately $35 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.

[Operator Instructions] And today's first question comes from Joe Stauff at Susquehanna.

I wanted to ask about the additional traffic, obviously being generated by House of Dancing Water and kind of where you are with respect to being able to convert that additional daily visitation into both gaming and obviously, other parts of your business. What is the opportunity from here as we think about that?

Joe, it's Lawrence. So since we've opened House of Dancing Water in May -- reopened House of Dancing Water in May of last year, we've seen meaningful uptick in property's visitation. The show is open pretty much twice a day for 5 days of the week. And during those days that adds, each show is about 1,800, 1,900 people. So that drives additional headcount into the property. I think we're seeing meaningfully good spend across non-gaming during and after the show. And even on our mass drop, I think from pre-May to post-May, we had seen a decent uptick. I think that's kind of -- as with any non-gaming entertainment concerts attractions in Macau, how does that -- how can we directly track that scientifically. I don't think we have an answer for that. I'll maybe let Evan talk about it. But I think overall, we see it's driving traffic and energy into the building and...

It's a little more -- as Lawrence has pointed out, it's a little more difficult from a direct drive standpoint. It's very helpful in activating the property. We do see a big uptick, obviously, in food and beverage spending on property during the show. Generally, when people are coming from outside the property to the show for that initial event, sometimes they're coming with family and friends. So a very small percentage go from that directly to gaming. The benefit we have is it does introduce thousands of more people with each show to the property and to COD to our product, to food and beverage. And so I think over time, it's generating repeat visits back to the property, but it's hard to go from who exited the show that day to who comes back later on. So I think we drive, but we don't have a direct formula that we can give you because if you look at the individual people coming out of the show on the night that they go to show to see the show, that's not a high number. But overall, we're seeing uplift in the business.

And our next question today comes from Timothy Chau at Citigroup.

Can you hear me clearly, please?

Yes, we can hear you.

All right. So a question for me. What is your view on the competitive intensity in Macau? And more specifically, what are your expectations on your EBITDA margins, particularly in Macau this year, please?

Timothy, it's Lawrence. So maybe I'll start and then I'll hand it over to Evan and Geoff. I think the competition is still very intense in Macau, but can be expected. I would say that we anticipate this level of competition to be what we will expect for the rest of the year. In terms of -- mass is still growing. So I think we're comfortable with our margin. And I think we've been very, very disciplined throughout 2025 in terms of our reinvestment. And we've seen some of our competitors ratcheted up throughout the year. And so I think we're -- I don't know, unless there's anything you want to supplement, Evan...

No. Look, I think from where we're sitting coming out of Q4 and into this quarter, we're not seeing a ratchet up in terms of levels of spend directly on gaming programs from where we are now. Competition remains, as Lawrence said, intense within the marketplace. We're not looking at any catalysts that would immediately bring that down. The hope that we always have is as people look at things that you have easing up among players. So as Lawrence has said and I've said in the past, we don't ever drive up in the marketplace. We tend to be very disciplined. We'll make strategic moves at times when we need to look at market share or move around with individual segments, but we certainly would never leave the market up. Based on what we're seeing now, I think we're stable. I don't see anything that's going to bring us down in the near term, but I also don't see anything that's going to ratchet it up.

I think on margin, we've done a pretty good job in terms of managing our operating costs throughout 2025. That's part of the company philosophy as well. So I think that -- you'll see that ongoing throughout 2026.

[Operator Instructions] Our next question today comes from D. S. Kim at JPMorgan.

My first question is regarding the operating expense. As Geoff mentioned earlier, I think we had quite a bit of nonrecurring items this quarter, 10-year anniversary National Games and even junket-related bad debt. And can you help quantify each of this in dollar terms for us, if it's possible? And can I confirm the spending related to National Games and Grand Prix were included in OpEx operating expense above EBITDA line and not in the corporate expense?

Those expenses are in our property margins. The additional bad debt was approximately $5 million for the quarter, and we expect that to come back down to more normal levels going forward. And then we had about $6 million from the anniversary.

And our next question today comes from John DeCree of CBRE.

Maybe just one on CapEx, Geoff, I apologize if I missed it. Did you give us the CapEx number for the year? And could you break it out for major projects maybe by COD or Studio City at the property level, what we should expect?

Sure. So our total CapEx for this year, which reflects a little bit of carryforward from money we anticipated spending in '25 that's pushed into '26. The total is $450 million. The only material one that I would call out would be the Countdown hotel, which is approximately $100 million for 2026. Broken out by jurisdiction, the total CapEx in Macau is roughly $375 million, $35 million to $40 million in Manila, $35 million to $40 million in Cyprus.

And that concludes the question-and-answer session. I'd like to turn the conference back over to Jeanny Kim for any closing remarks.

Thank you, operator, and thank you all for joining. We will see you next quarter.

Thank you.

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

Ladies and gentlemen, thank you for participating in the Third Quarter 2025 Earnings Conference Call of Melco Resorts & Entertainment Limited. [Operator Instructions] 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 walk-in crowd with lower table minimums, and we have seen this area well 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 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.

With that, I turn the call over to Geoff.

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.

[Operator Instructions] 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 7s 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?

Well, Macau is always going to be very dynamic. And every day, you're looking at how to compete. But I think I can say that I'm very proud of the team because throughout 2025, we've really held the line on reinvestment -- and even this quarter, we keep track of the share shift on a daily basis, a weekly basis, and we're seeing some of that.

But I think we've really held the line throughout 2025, and we will continue to observe it. And maybe I'll let Evan elaborate a bit more, but I think the environment is certainly, I would say, is competitive but 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 Lauren 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, I think on Golden Week, the whole market was a bit disappointed because we were unlucky with -- there was a typhoon on, I think, day 4 and then mid-autumn festival was effectively day 6. And for mid-autumn festival, most people go back to their families and stuff. And so I think the whole market was quite disappointed by the first 7 days.

But throughout October, the last 21 days of October were extremely strong. And so I think the traffic that went -- that skipped Golden Week or left early for Golden Week clearly came back. And so I think all in all, post-COVID, October was the best month. And I think for us as well, I think we've continued to on a year-on-year basis, kept up with the pace of growth in the market. So we're quite pleased.

I don't know. Maybe Evan has more.

No, I think Lawrence is spot on. We -- coming out of Golden Week, I think we all felt like it was a little soft, and we were a little unlucky on the calendar, and we were definitely unlucky on the weather. And then you normally get more of a dropoff and it just sort of continued to stay strong and there was good tails going through October.

So sitting here now, we look back and we're like actually October feels very good. I mean we feel really good. But we didn't feel great immediately coming out of Golden Week, it was soft. But unusually, and as Lawrence said, I can't tell you if all the people who put off trips came back. We can't give you the precise causality of it, but we had a very, very strong period following it, much stronger than we would normally expect.

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?

Maybe I'll take that. Geoff can add any color he wants. But -- so we have a few things going on in Q4. We've got the China National Games where there's a fairly big level of support that we're going to be providing that's going to hit the P&L. You have the 10th anniversary of Studio City, and we actually have some pretty exciting promotional activity around that.

So those are kind of one-offs that will be significant drivers in Q4. We also are entering a period where seasonally, we tend to do a bit more promotion. And then also as the concerts or the residencies have dropped off, which are normally excluded, we are having some backfill activity to make sure that we have strong activation. And so the net of all those is we're going to probably spike up here in Q3.

We're probably going to be more like in the 3-ish range. And we may, again, depending on some promotional and other activity that we're looking at, drift a little bit higher, but that should be coming down in the subsequent quarters. I think probably premature to talk about how much, but we are going to see an uptick here in Q4 based on those things.

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, again, as we're looking at some promotional activity, it's not going to be lower than that. There are some things we're contemplating that could drift a little bit higher. But yes, that's including the onetimes. For Q4 -- normal run rate.

Got it. I wanted to -- Q4, Understood. Understood. I wanted to zoom out COD has been just a significant improvement in turnaround here over the past 1.5 years.

And just kind of zooming out and thinking about the strategic initiatives and investments you've made, wondering if you could just maybe like rank what you think to be the most important investments and strategic initiatives that you've taken and made at COD to really kind of create 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. I think during COVID, we were barely surviving, right? So and City of Dreams was always our flagship, where Morpheus new lifestyle. -- and where we have the most Michelin to our restaurants. And I think for a while during COVID, we just weren't living up to the brand, the brand promise and the brand proposition.

And I think with the new team coming on board and Tim in the leadership, I think we've revisited -- like Evan said, we've revisited literally every single thing from like the tiniest amenities to much bigger attractions. And so I think we're -- finally, post-COVID, we've come out of that funk and we're -- we've rediscovered the swagger.

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 approaching the end of the process with our advisers and should have a definitive assessment of our alternatives by the end of this year. There's always -- this has always been an opportunistic exercise that's been driven by the potential for a one-off debt reduction event, not any specific desire to exit the Manila market.

So we have and will continue to be very valuation-driven on this exercise, and we'll continue to be disciplined in our approach to assessing the offers that we have for this business. But we hope to be back by year-end with a definitive answer.

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. So maybe why don't I start and I'll hand it off to Evan and see if Geoff wants to chime in as well. I think clearly, when the VIP and the junket business went away, we had all hoped that margins would just rocket just go sky high. And unfortunately, that hasn't happened. And I think it's well documented what some of our competitors have done.

And so I think as I mentioned earlier on in the Q&A, I'm very proud of the team because we've really held the line on reinvestment so far for the entirety of 2025. So theoretically, if all 6 concessionaires can kind of get their act together, there should be margin expansion, given that the market is growing.

And so on one hand, I think as mentioned -- as Evan mentioned earlier, I think we're past peak competitiveness in terms of the intensity in the market. But at the same time, I think everybody is still thinking of ways to try to steal business and grab share. And I would say as well, I think every time I read a sell-side research, everybody just talks about market share.

So I don't blame some of our competitors for constantly focusing on that rather than being more focused on EBITDA. So again, I think it's as rational as it has been in the last maybe 12, 18 months. But again, I'm seeing with our competitors and also sell-side research analysts to maybe place less emphasis on weekly, monthly market shares as well so that we don't feel like they are pressure to chase market. I don't know, maybe Evan, you want to add.

I guess, Praveen, on the 2 that you asked from a margin standpoint, I agree, obviously, with Lawrence, that there should be room to accrete upward. I'm not sure sitting here in the competitive market today that I bank on that one way or another. We could always be surprised. But look, right now, the market remains competitive.

I think the dream for everyone is if everyone competed in a very rational way on product and service, that there should be upside within this market that I hope we realize. And also, I think I have a hope that as we continue to get more and more mass business into the market and you get sort of just a better supply-demand dynamic in terms of what's available that, that will continue to improve.

When the junket business left, there's a lot of product and service that they were using that didn't get used, and that's sort of been backfilled by people going after that premium mass business. So you're seeing the effects of that from competition. So I think margins are stable, but I don't know that there's a near-term catalyst that will do that, but I think the overall long-term trend is healthy.

In terms of the premium-driven business, I'm not 100% sure if that was going after premium direct business where, yes, that business tends to be fairly clumpy driven by pretty large players. We are seeing more players from more geographies around the world. So while that is the nature of that business, it feels pretty healthy.

In terms of -- if you meant premium mass, yes, we're always going after those premium players, and we're not really going after a grind, grind mass, but we are, again, seeing new players coming into the market. So I don't know that, that's -- I wouldn't sort of signal that out as not healthy. I do think that we are getting a healthy drive on the mass business overall. We don't tend to be kind of a grind mass player.

So I probably have less insight into that market demographic. But in terms of players coming into our system, I think we feel good 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.