Geoffrey Davis - Chief Financial Officer Lawrence Ho - Co-Chairman and Chief Executive Officer Ted Chan - Chief Operating Officer Ross Dunwoody - Vice President, Investor Relations.

David Bain - Sterne Agee Anil Daswani - Citigroup Hong Kong Billy Ng - Bank of America Cameron McKnight - Wells Fargo Joe Greff - JP Morgan Chris Jones - Union Gaming.

Good evening and thank you for participating in the Q2 2015 Earnings Conference Call of Melco Crown Entertainment Limited. At this time all participants are in a listen-only mode. After the call, we will conduct a question-and-answer session. Today's conference is being recorded.

I would now like to turn the call over to Geoffrey Davis, Chief Financial Officer of Melco Crown Entertainment Limited. Thank you..

Thank you for joining us today for our second quarter 2014 earnings call. On the call with me today are Lawrence Ho, Ted Chan, and Ross Dunwoody. 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. I will now turn the call over to Lawrence..

Thank you, Geoff. Hello, everyone. Again say challenging backdrop in Macau, we delivered property EBITDA of approximately $205 million and property EBITDA margin of approximately 23% in the second quarter of 2015.

I'm pleased that in this difficult demand environment where we have also seen additional supply input high, we have maintained our share in the mass market table game segment during the quarter. Despite experiencing unusually a low hold in the premium mass segment at City of Dreams.

We believe this unusually low hold and the premium mass segment and City of Dreams during the second quarter 2015 reduced our EBITDA by approximately $20 million.

In July 2015 we have reverted back to historical levels in the premium mass table game segment at City of Dreams and we're witnessing a 15% to 20% increase in overall mass table use and City of Dreams compared to the second quarter.

As a result, our mass table revenues were down only single-digits on a year-over-year basis in July, which is significantly better than recent trends and the overall market.

Indicative of our leading premium position in Macau, our hotel occupancy levels have remained an almost a 100% in the second quarter of 2015, whereas market wide hotel occupancy has come down approximately 7% on a year-over-year basis.

During the second quarter, we continue our company-wide commitment on cost control, including managing player reinvestment, general marketing and payroll cost.

While cost control is important to us, this will not come at the expense of the long-term development of our employees, where we continue to invest in career and whole person development program.

We believe that our company's success is dependent on our employee as well as the development of the local community to ensure a sustainable long-term growth model for Macau. The imminent opening of Studio City has created new employment opportunities for the local community and our existing employees.

We expect a meaningful number of our experienced colleagues to choose to take on the new opportunity and prospects of working at Studio City. Studio City will benefit from the sharing of the Company's core values and community spirit and the industry expertise necessary to deliver market leading service upon its opening.

The lateral movement of employees facilitates the rationalization of our work force and is expected to allow us to realize potential cost savings across all the relevant businesses.

We as the majority shareholder of Studio City are also focused on working with the Studio City project team to ensure a smooth and successful opening scheduled to take place on October 27, 2015.

We're also very excited about the opening of Studio City and believe that the integrated resort will act as a much needed growth catalyst for Macau by delivering an amount of diversified world class entertainment never before seen in Macau.

The property is conveniently located adjacent to the Lotus Bridge the only access point from the rapidly growing Hengqin Island and linked directly to the Macau light rail system. The Lotus Bridge and Macau light rail system represents the most important infrastructure access points in Macau.

As a company, we have always taken an innovative approach to our gaming and non-gaming offerings in Macau. This approach is highlighted by our award winning the House of Dancing Water show. Macau is only Cabaret show, Taboo, Macau's largest family entertainment center at Kid City and SOHO it makes dining and entertainment increasing.

With Studio City, a Hollywood-inspired integrated resort, we aim to deliver the perfect complement to our existing portfolio of assets and meaningfully expand our view to a more diversified clientele from China and around the region.

With the opening of Studio City, we're more than doubling the world class entertainment attractions available to at leisure seekers at Macau.

The property will include Asia's highest and the world's first Figure-8 Ferris wheel, a Batman's theme digital ride, a DC Comics and Warner Brothers Family entertainment center, a 5,000 seat multi-purpose live entertainment center. The House Of Magic, a TV production studio and the world's largest night club brand Pacha.

Studio City will also offer 1,600 rooms, world class gaming venues approximately 350,000 square feet of themes and distinctive retail space together with over 30 food and beverage venues and a digital theme food court experience.

And bring this center theme properties to life, we're delighted to have work with some of the most well known and respected Hollywood icon bring to Macau the short-film event The Audition, featuring Leonardo DiCaprio, Robert De Niro and Brad Pitt and directed by Academy Award winner Martin Scorsese, we're also honored that this film will be shown at the Venice Film Festival in September this year, which is further evidence of the company's strong commitment of promoting Macau to a wider and more global audience.

In Manila, City of Dreams Manila continues to expand across all segments, gaming and non-gaming revenues delivering robust growth in the second quarter.

At the same time the property leads the Philippines market and visitation rates despite being only open a few months which positions City of Dreams Manila to be a leading integrator resort in the Philippines in the future.

The Rolling Chips segment at City of Dreams Manila in July generated 2.5 times the gaming revenues from the previous month as our major junket relationships start to ramp up. We anticipate that this world class property will help transform Manila into a leading tourist destination in Asia.

With that I turn the call back to Geoff to go through some of the numbers..

Thanks Lawrence. We reported property EBITDA of 205 million in the second quarter of 2015 compared to 314 million in the second quarter of last year. Our property EBITDA margin in the second quarter of 2015 including City of Dreams Manila was 23% compared to 26% in the second quarter of 2014 and 24% in the first quarter of 2015.

During the second quarter of 2015 we were negatively impacted by approximately 5 million in EBITDA from an unfavorable win rate in our rolling chips business primarily in our Macau operations. The EBITDA contribution from our non VIP segments represents over 90% of luck adjusted EBITDA at City of Dreams and on a Macau wide basis.

As mentioned by Lawrence the impact of unusually low holds in the premium mass segments at the City of Dreams resulted in a negative impact on EBITDA of approximately 20 million. Our sequential margins would have been flat for pro forma for this adjustment.

As part of our wide ranging review of our cost across our -- our operating units and our corporate division we have identified over 50 million U.S. of annualized cost which we expect to realize over the remainder of the year.

We anticipate that our corporate expenses for the current quarter will remain broadly consistent with the second quarter of 2015 which in part reflects the various cost savings highlighted above.

Studio City remains on track to meet its design and construction budget of 2.3 billion which despite its incredible collection of amenities and attraction represents one of the lowest CapEx budgets out of all the major new Cotai properties highlighting the tremendous value for money this property represents.

As we normally do we'll give you some guidance on non-operating line items for the upcoming quarter. Total depreciation and amortization expense is expected to be approximately 110 million to 115 million.

Corporate expense is expected to come in at approximately 26 million to 28 million and consolidated net interest expense is expected to be approximately 40 million which includes finance lease interest of 11 million relating to City of Dreams Manila, net of approximately 38 million of total capitalized interest.

For those that follow City of Dreams Manila more closely our building lease payment for the second quarter of 2015 was approximately 7 million. That concludes our prepared remarks. Operator, back to you for the Q&A..

Thank you, we will now begin the question and answer session. [Operator Instructions] Our first question comes from the line of David Bain from Sterne Agee. Please go ahead..

I'll just really quickly Geoff, did you just mention as employees take the opportunity to work at Macau Studio City you're expecting savings of about 50 million for the portfolio in general..

That's a meaningful component Dave, but yes 50 million is the identified savings for this year..

And then, this is kind of a tough one to ask in a way, but I know the final table allocation of Macau Studio City is fluid but in building property scenarios we're using tables as a primary driver and win per day comps.

So you know tables are potentially reduced we take win up for higher utilization but there's got to be you know a general feeling level for weekends and holiday crowds and the crowds we're expecting MSC to draw. And I guess I'm struggling with how to think about utilization capacity with tables.

So when you run scenarios is there anything that we should be thinking about as we run our scenarios?.

Dave, this is Ted here. I think in terms of utilizations in our portfolio looking at the mass and VIP currently I think in terms of mass performance in both Altira and COD if you look at the lowest 25 to 50 percentile of performance of those table, is already quite high compared to the market par level.

So I think in terms of looking at the increment to table for our next project I don't think it has a meaningful way that you should look at the utilization of our table to ship tables..

Dave, its Lawrence here.

I think we unveiled the opening day yesterday in an event and naturally, we are still having a lot of discussions and trying to appeal to the government that given our years of contribution in terms of helping Macau become a true world class tourism center and then it's really building out the non-gaming attractions that they've always wanted and I think just in my prepared remarks, I went through a list of them.

I think we're so actively -- we think we're different Studio City is really high Cotai 2.0s first standalone real integrated resort that has these amazing attractions.

And so, we're appealing to government but naturally we're extremely concerned about what -- if we get the low end of table allocations and I think it would have a drastic impact on our financial modeling if it's done and I think, we expect Studio City to have extremely high foot traffic, given its location, given its an attractions.

But I think, we are constrained by table and it's really the biggest factor..

And, would you say that you're still optimistic that the factual non-gaming attractions that you put out in the past and that you're putting out with Macau Studio City and it's a new property, do you think that's resonating with the government?.

Well, we certainly hope so. I think, all -- we have had a lot of dialogues with various levels of government and various departments and all we can say is, we've been the model citizen in Macau, in terms of investment and in terms of really sticking by their policy and so we'll hopefully, there is a reward at the end of the day for a model citizen..

Thank you. Next we have a question from the line of Anil Daswani from Citigroup Hong Kong. Please go ahead..

Two questions from me, the first one, this is just a little bit follow on from the previous question, taking an assumption that you get whatever number of tables, whatever that number maybe, how do you guys look at how you allocate those tables between VIP, mass and premium mass and will you adopted a similar strategy for premium mass at Studio City as you do with City of Dreams.

In other words will you use the sort of signatures class set up which allows the smoking because they're classified as VIP? So that's the first question..

Anil. Lawrence here.

I'll get Ted to elaborate on the details, but naturally the table numbers are going to drive many decisions but as you know Melco Crown Entertainment as a company and for a last 10 years, we've been talking about the structural shift between from VIP to mass and therefore and given that Studio City along as a very much mass focus property.

The ultimate number -- we have a very flexible gaming floor, it is designed in a way that it's been improved from even City of Dreams whereby we have that flexibility of having high limit areas, signature club areas or even VIP areas.

So, again the ultimate table grant number would determine what we're going to do, but again if we are on the low end of it, there is always a chance that we would just focus on that and premium mass as the property, I don't if you wanted to talk about so much details about in terms of the table split between mass and premium mass..

No, I mean, there will be -- that's little early….

Yes, it will be a little bit too early but in terms of the brand which is we have signature club here and City of Dreams, we definitely, we'll bring the brand over to Studio City as well, which is a very well received by those high end premium customers. So, I think in terms of the split, I think that is a little bit too early to talk at this stage..

And obviously now with over 90% of your EBITDA coming through from this mass segment, do you see anymore table shifting from VIP to mass COD Altira or are they now pretty much fully optimized?.

Anil, think -- we have a very systematic approach in terms of optimization of the Altira as you witness in the last two years time. Currently I think we have quite optimized level in terms of VIP positivity and also the mass positivity in COD.

As you know, Altira is all about the positioning of the property whereby we focus a lot more on the VIP or junket side and I think we optimize our mass table also in Altira as level one, already..

Sorry my last question. Lawrence I saw your interview yesterday where you said, Macau, you're starting to see signs of bottom.

Can you elaborate a little bit on that? Is there anything in particular that's leading into make that type of comment?.

I think naturally, again in our prepared remarks we talked about in July we are -- I think first of all the change in policy on the transit visa on July 1st was a, at least to us from a sentiment standpoint as a major change for the positive as you know the industry have had at least 12 to 15 months of just constant negative policies and so, transit visas increasing from five days to seven days, if you look at it practically is not that relevant because people don't really stay for five to seven days but it's just the sentiment that tells our customers that they're not unwelcome to Macau any longer.

So I think that in July our mass results as we talked about being down low-digits on a year-on-year basis was very encouraging for us. We can't say the same about VIP, because I do think that VIP structurally will never be what it once was.

So I think, there is, does some like there's stabilization in final after months of probably positive, so I think hopefully this will with lower comps for the rest of the year and with Studio City potentially being a catalyst to increase the interest in the market again, we will finally start next year with a great year..

Thank you. Our next question comes from the line of Billy Ng from Bank of America. Please go ahead..

Thank you, I have two questions.

The first one actually just want to ask you guys, can you elaborate a bit more how -- what's your plan to ramp up Studio City in terms of like we notice a bit more mass focus that, will that be more on premium mass or fine mass or on the other hand just if you look at COD it's never a foot traffic property but Studio City as you mentioned there're quite a lot of attractions, so we focus more on foot traffic instead of like quality of customers or can you tell us just more on how you plan on ramping up Studio City..

Billy, this is Ted here. Let me elaborate a little bit on the plan, how do we ramp up the property in Studio City.

First of all I think we all know that it's so important in terms of word of mouth for gamers in Macau, so in the past you have a lot difficulties in terms of attracting the right sentiment the customer for each different properties and with this many amenities that we have, this gives us a lot more opportunity that the properties being promoted.

So we think that ramp up time in terms of market awareness is basically a tremendous, a better position now any other properties first. And then secondly I think it's all about the experience that we have in terms of ramping up the efficiency.

So I believe that a lot of our experienced dealers will be joining the new property whereby that will substantially reduce the time in terms of ramp up for the efficiency.

Normally Macau you know that the efficiency ramp up will probably last for almost like nine months or 12 months and we hope that that period could be quickly reduced with the experience that we have..

The second question is just follow up on the $50 million saving, potentially after Studio City opens on the existing companies.

Just want to clarify that $50 million is like, is that once Studio City opens we can, kind of like seeing that evenly distribute to the two properties in Macau and then also roughly talking about $12 million $13 million a quarter, is that how we should see that?.

Billy, its Geoff. The goal is on an annualized basis to reach 50 million by year-end. That'll be a combination of a number of initiatives from marketing to cost rationalization in aviation to salary related cost savings.

It will not be split equally across properties, I think you'll clearly see significantly more at City of Dreams than at Altira but you'll also see a meaningful piece of that at the corporate line as well which we've already seen being realized in the second quarter of this year..

Just to follow up on that very quickly. So like the run rate for each quarter can we say like Q3 it’s roughly 12 million, 13 million something like that or…..

Expected to be more backend loaded Billy, particularly now with opening date of Studio City in October of this year..

Thank you. Our next question comes from the line of Cameron McKnight from Wells Fargo. Please go ahead..

Question for Lawrence, I mean the market is -- the market is increasingly tending towards mass over VIP, generally speaking what do you think drives success in mass, is it having 12,000 hotel rooms, is it having a variety of non-gaming amenities, what do you see as the big driver of success in the mass segment?.

I think, they are both important but it depends on which segment as we know, Melco Crown has been a pioneer of the premium mass segment and I think we're premium mass segment, what's really important is the service and the products.

Of course having a lot of hotel rooms will work but that works more catering to the kind of the more general or growing mass segment.

So, I think, both strategies are direct -- I think the strategy that doesn't work as -- when you don't have the rooms and you don't have the product and you don't have the attractions and then furthermore you're not located in the main kind of Cotai area, that wouldn't work..

And then on the premium mass side, this came up tangentially on a competitive score, are you starting to see others in the market or in the market generally, are you starting to see premium mass players being granted credit or high rebates or comps for premium mass player or it seems relatively steady on that front?.

Tedd, do you want to….

This is Ted here; I think in the last -- at least in a last two quarters, we don't see any sign of that credit expansion on the mass side. In fact, if you look at our neighbors and also other properties that we -- I think we are all acting quite rationally in terms of the current demand environment.

And I think I can confirm that, we don't see really this become the end, a trend..

Yes, I think in the past we've heard like Grand Lisboa or Sands in the Macau province of doing something like that, but again we've been for a last two or three years we've talked about to really the characteristics of the premium mass player in many aspects there more aspirational and more sophisticated than most of the traditional VIP players.

And to them having the best hotel, the restaurants and the amenities and really the face factor is more important than some of our competitors are trying to buy business..

Thank you. Our next question comes from the line of Joe Greff from JP Morgan. Please go ahead. .

I'm all set, guys..

Thank you. And our next question comes from the line of Chris Jones from Union Gaming. Please go ahead..

Two quick questions, first just going out COD Manila, obviously I think you did better than the expectations, you talked about a good story in July.

How should we look at that obviously to VIP business and the junket business seems to be picking up but obviously the business is just getting ramped up now, I mean is the acceleration of the ramp really going to pick up at this point? How should we look at that, that's my first question.

The second one is just going back to I think what has been a topic on this call is given the table allocation or the rumors out there.

What is the terminal number of tables you can operate at Altira at this point, when I look at sort of the table -- the contribution from those tables this certainly seems a lot of lower than City of Dreams and may be you can just talk a little about that as well?.

Chris, this is Lawrence here. So, I think I'll hand over to Ted to talk about COD Manila and also the Altira VIP utilization..

Yes, in terms of the VIP business and then COD Manila there definitely we -- I think our focus is really finding the right junket operators and with experience in Macau here we have to be really careful in terms of identify the right one and also the big one. We don't really rush through a portfolio of junket operators that we might regret.

So, in terms of the performance I think, we started as you all know some cities have started their operation in May and it just slowly ramp up. And I think in July, you'll witness a good performance starting from July. And also the other big one is actually also ramping up in July.

Going forward, we will have one more significant big junket operator opening but in Manila in late August, this month early September and then we're continuing to receive great interest of that. So, I think our policy is really to identify the right one to ramp up the business in VIP in Manila there.

And just also important in the VIP business you have to be careful in terms of the credit expansion, so with the non-big operator in Macau, I think we have a great risk return scenario that we are skewed out our portfolio. I think that helped us understanding the situation in the Manila there..

And before you move onto back to Macau, if I could just follow up on Manila, I guess beyond the VIP and the junket side of the business how should we look at the rest of that business there in terms of gaming performance and how well maybe the domestic or the local mass market is doing as well and how much of a focus that remains for you guys?.

It's Lawrence here. We're extremely happy with the product that we built there, we think the City of Dreams Manila is really a world class and top notch integrated resort in Manila. In terms of visitation we are, by far in a way the market leader there out of all the other resorts. So I think the trick is the same.

Is to really grow our database and mine the database and really monetize some of that visitation. There are segments of this business that are doing very well, domestic gaming, local gaming is growing very nicely. But there are you know from a fair share standpoint we hope to be doing better and definitely at least add fair share soon.

So there's a lot of work to be done, but you know the attractions of the property are obviously unique which is why we've had since being open for over six months now, we continue to have very strong foot traffic.

And like Ted said earlier on in terms of VIP, I think group wide whether it's Macau or Manila we were very focused on controlling credit and given how, given the environment in the gaming world we tend to be more cautious on that front..

Great..

I think going to Macau and in terms of Altira currently I think we, over the last 12 months we definitely reduced the number of tables in Altira for VIP.

But if you look at the market being done significantly in terms of rolling chip volume, let's say per table basis I think Altira is a little bit more resilient in terms of the reduction in that perspective. I'll say currently Altira's positivity in terms of rolling volume is a little bit higher than the market par level.

What we've been doing is actually looking at the optimization of the smaller junket operator and I think the larger one are gradually ramping up quite well, since the beginning of the year such as Sun City's new rooms are opening in Altira. So I think the key is really more on the optimization of the smaller junket operators..

Thank you. And now we'll hand it back to Mr. Geoffrey Davis for closing remarks..

Thank you for participating in today's call and we look forward to speaking with you again next quarter, thank you..

Thank you, ladies and gentlemen this does conclude our conference for today. Thank you for participating, you may all disconnect..