Melco Crown’s 4Q14 adjusted property earnings declined

Adjusted property EBITDA

Adjusted property EBITDA (earnings before interest, tax, depreciation, and amortization) is one of the most important performance metrics to gauge how casino properties are performing.

Melco Crown’s 4Q14 adjusted property earnings declined

Melco Crown Entertainment’s (MPEL) adjusted property EBITDA fell by 29.4% year-over-year, or YoY, to $278.6 million in 4Q14. This was mainly attributed to lower group-wide rolling chip volumes and rolling chip win rate. There was also a lower contribution from the mass market table games segment. We’ll discuss this later in this series.

Adjusted property EBITDA for Las Vegas Sands (LVS) increased 10.9% YoY in 4Q14. The adjusted property EBITDA for Wynn Resorts (WYNN) decreased by 29.3% YoY.

Investors who want to avoid the risk of investing in a single leisure company, as mentioned above, may invest in ETFs like the VanEck Vectors Gaming ETF (BJK) and the Consumer Discretionary Select Sector SPDR Fund (XLY). BJK has ~20% exposure in the companies mentioned above.

Segment performance

City of Dreams generated adjusted EBITDA of $258 million. This was a decrease of 25.8%—compared to $347.7 million in the same period in 2013. The decline in adjusted EBITDA was primarily a result of lower rolling chip volume and rolling chip win rate. It was also due to a decrease in mass market table games revenue.

Altira Macau generated adjusted EBITDA of $14.2 million—down 60.6% YoY. The decrease was primarily a result of lower rolling chip revenue.

Mocha Clubs generated adjusted EBITDA of $6.5 million in 4Q14—compared to $10.8 million in the same period in 2013.

City of Dreams Manila in the Philippines started operations on December 14, 2014. On a fully consolidated basis, City of Dreams Manila generated adjusted EBITDA of $0.1 million in 4Q14.

Full-year operating performance

Adjusted property EBITDA for the year ending December 31, 2014, declined by 6.8% YoY to $1,285.5 million. The decline was mainly due to lower group-wide rolling chip volumes and rolling chip win rate. It was partially offset by improved group-wide mass market table games revenue.