Melco Resorts & Entertainment's (NASDAQ:MLCO) Q2 2019 Earnings Conference Call July 24, 2019 8:30 AM ET

Company Participants

Richard Huang - Director, IR
Lawrence Ho - Chairman & CEO
Geoff Davis - EVP & CFO
David Sisk - Property President, City of Dreams, Macau
Kevin Benning - COO & SVP, Melco Resorts & Entertainment (Philippines) Corp.
Andrew Choy's - Property President, Altira Macau

Conference Call Participants

Joseph Greff - JP Morgan
Anil Daswani - Citigroup
Billy Ng - Bank of America Merrill Lynch
Harry Curtis - Instinet
Praveen Choudhary - Morgan Stanley
Edward Engel - Macquarie

Operator

Ladies and gentlemen, thank you for participating in the Second Quarter 2019 Earnings Conference Call of Melco Resorts & Entertainment's Limited. [Operator Instructions] And today's conference is being recorded. I would now like to turn the call over to Mr. Richard Huang, Director of Investor Relations of Melco Resorts & Entertainment Limited. Thank you.

Richard Huang

Thank you, operator. Thank you all for joining us today for our second quarter 2019 earnings call. On the call today are Lawrence Ho; Geoff Davis; and our Property Presidents in Macau and Manila. Before we get started, please note that today's discussion may contain forward-looking statements may under the Safe Harbor provision of Federal Securities Law. Our actual results could differ from anticipated results.

I'll now turn the call over to Lawrence.

Lawrence Ho

Thank you, Richard, and hello, everyone. During the second quarter, despite macroeconomic headwinds, Melco reported record property EBITDA of $442 million, which represents year-over-year growth of 24%. On Macau, integrated resorts have gone from strength to strength, with mass table gaming revenue growth having more than tripled from 3% to 9% in the first quarter to 29% in the second quarter. Also, despite market wide VIP softness, Melco still managed to deliver modest VIP revenue growth, which implies that the company took significant market share in both the math and the VIP gaming segments during the second quarter.

Our flagship property, City of Dreams Macau, has been firing on all cylinders, helped by the further ramp up of Morpheus and the opening of new VIP area on the second floor. VIP volumes and mass table gaming revenue, both saw meaningful expansion, which drove property EBITDA growth of 46% year-over-year. Studio City, a cinematically-themed integrated resort also delivered impressive results. Benefiting from unique targeted casino marketing program and the opening of a series of new non-gaming entertainment attractions in the first half of 2019. These programs help Studio City to deliver a second consecutive quarter of record mass table gaming revenue, which drove property EBITDA growth of 29% year-over-year.

Our luxury boutique casino resort Altira experienced the same mass gaming strength, with mass table gaming revenue extending close to 30% year-over-year. With growth in the mass gaming segment significantly outpacing that of VIP, Melco's earnings mix continues to improve with over 90% of our Macau EBITDA contributed by non-VIP segment. We remain highly confident in Macau's mass gaming driven growth buoyed by the growing Chinese middle class, new integrated resort opening and significant infrastructure upgrades, including the recently opened Hong Kong-Zhuhai-Macau Bridge and the upcoming extension of China's high-speed rail network that will make the Macau even more accessible.

Going forward, we will continue to invest heavily in Macau to further upgrade our resorts to expand our asset footprint into a system Macau government and further enhancing the SAR position as a world leading travel and entertainment destination. The City of Dreams Macau upgrade works are currently ongoing to expand our premium mass and VIP gaming spaces. Renovation of Nuwa is also expected to start in 2020.

Over at Studio City, the Flip Out Trampoline Park opened in May, while the 50,000 square feet Legend Heroes VR Park is expected to open soon. We expect these new entertainment attractions to further elevate the mass gaming and nongaming a few of the property. Our next major project in Macau will be the further expansion of Studio City. We have budgeted $1.35 billion to $1.4 billion for the Studio City expansion, which is expected to have two hotel towers, a Cineplex, one of the world's largest indoor water parks and additional gaming space.

During the second quarter, the company has also made three important corporate announcements. First, Melco Resorts Philippines was delisted from the Philippine Stock Exchange effective June 11; Second, in May 2019, Melco entered into an agreement to acquire a 19.99% stake in Crown Resorts. The investment is an incredible opportunity to purchase a strategic stake in Australia's leading integrated resort operator; Third, Melco Resorts has in June entered into a definitive agreement to acquire from Melco International a 75% equity interest in ICR Cyprus, which is the developer of City of Dreams Mediterranean. City of Dreams Mediterranean is expected to be the largest integrated resort in Europe, targeted for opening in 2021 with over 100 gaming tables, over 1,000 slot machines and approximately 500 hotel rooms. We believe that delisting of Melco Philippines results in a simpler corporate structure, while the investment in Crown and in ICR Cyprus will allow for an expanded asset footprint in a significantly improved long-term growth trajectory.

Finally, we have been working diligently in Japan. At the first Japan IR expo in Osaka, we released images of our proposed Osaka IR, City of the Future, which should give relevant stakeholders a better idea of our vision for Japan. We have also participated in the Yokohama RFI, and will participate in the Osaka RFC process. We believe the license bidding process remains on track to start in 2020. All focus on the Asian premium segment, a portfolio of high-quality assets, devotion to craftsmanship, dedication to world-class entertainment offerings, market-leading social safeguards system, established track record of successful partnerships, culture of exceptional guest service and commitment to employee development will put Melco in a strong position to help Japan realize the vision of developing world leading IR with a unique Japanese touch.

With that, I'll turn the call over to Geoff to go through some of the numbers.

Geoff Davis

Thank you, Lawrence. I would like to start by highlighting a change in methodology used to compute our luck-adjusted EBITDA. As of the second quarter of 2019, our luck-adjusted EBITDA will be calculated by using a normalized VIP win rate of 3%. Prior to the revision, we used the normalized VIP win rate of 2.85%. The change was a result of a consistent increase in the VIP win rate that we have experienced over the past three years. Please refer to our earnings presentation made available on our Investor Relations website for the detailed impact resulting from this change.

Now, moving on to the highlights of our second quarter results, we reported group-wide property EBITDA of approximately $442 million in the second quarter of 2019 increasing by 24% from the second quarter of 2018, while luck-adjusted property EBITDA increased 8% year-over-year to $389 million. A favorable VIP win rate positively affected EBITDA at COD Manila and COD Macau by approximately $32 million and $26 million respectively. At Studio City, EBITDA was negatively affected by an unfavorable VIP win rate by approximately $5 million. In addition to the VIP win rate fluctuation, our performance was affected by an increase in the provision for a one-time special award to all eligible non-management employees to reflect the announced payment date. The provision increase has negatively affected EBITDA by approximately $8 million quarter-over-quarter and approximately $16 million year-over-year.

Last, to continuously improve the retail shopping experience at Studio City, we have offered one-time rent relief to some of our tenants, which resulted in a $12 million impairment charge for a deferred rent asset. Impairment charge negatively affected revenue and EBITDA by approximately $12 million, but it has an immaterial impact to the cash flow generated by Studio City during the quarter. Adjusting for luck and the aforementioned one-offs, the property EBITDA margin in Macau during the second quarter was approximately 29% off approximately 20 basis points, quarter-over-quarter and up approximately 270 basis points year-over-year. In the Philippines, COD Manila delivered luck-adjusted EBITDA of approximately $51 million representing a decline of 26% year-over-year. The luck-adjusted EBITDA margin at COD Manila declined by approximately 530 basis points, quarter-over-quarter and approximately 810 basis points year-over-year at 37%.

Moving on to capital management, the Board has increased the quarterly cash dividend by 6% to $0.165 per ADS. In June, the company announced that it had canceled 82 million treasury shares, which is equivalent to $27.3 million ADS. To provide more clarity regarding our capital structure within our core or wholly-owned group, we had cash of approximately $560 million and gross debt of approximately $2.9 billion at the end of the second quarter of 2019 excluding Studio City and the Philippines.

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 $160 to $165 million, corporate expense is expected to come in at approximately $32 to $34 million, and consolidated net interest expense is expected to be approximately $86 to $88 million, which includes financing interest of $10 million relating to City of Dreams Manila. For the upcoming quarter, we do not anticipate any capitalized interest payments. For those that follow City of Dreams Manila more closely, our building lease payments for the second quarter of 2019 was approximately $10 million.

That concludes our prepared remarks. Operator, back to you for the Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] The first question we have is from the line of Joe Greff from JP Morgan. Your line is now open.

Joseph Greff

Hello, everyone. Good morning, good afternoon. My first question relates to the City of Dreams Macau and obviously that property outperforming meaningfully on both mass and enrolling chip volumes. When you look back at the 2Q, how even was this relative strength? Was it concentrated to May? And I know you mentioned in the last conference call that the May golden week was probably one of the best you've seen in the last few years here. And then related to the property and given this relative strength, and maybe you can talk, if David is on line, what are you specifically doing differently with Morpheus now? I know you talked about some of the things that have opened up there, but some of the things that you're doing now versus say, six months ago. And then lastly, related to this property, can you talk specifically what you're seeing so far in July with respect to mass and rolling chip behind? And that's all for me. Thanks.

David Sisk

Hi Joe, it's David. So, it's a variety of things that we've seen. And one of the things with the VIP is we've been seeing strengths ever since we opened up a new space, which occurred right around CNY. January was not such a great VIP month for us, but since we've opened up the new space and we've really started cranking up with Morpheus, we've seen really good growth within our VIP business. We're very optimistic about as we look out towards the future with that as well. We've not seen really much of a slowdown and to this point. So again, the space has been very well received; we just opened up two additional spaces this last week. We've got a few more spaces to go for the final renovation. But again, the space has been great; Morpheus is doing great for us. We've also had a really good experience with our employees and our relationships with the [indiscernible] continue to get better and better as they really love the space.

In relation to Morpheus and some of the things that we've done over the last six months, again, I just want to climb things. When we talk about this app, we haven't got Morpheus after the second quarter call. It takes time to wrap things up a bit. We thought we'd be hitting our stride as we got into the fourth quarter. I think you saw that in our numbers and revenue numbers for the four quarters. It continues to grow. We continue to get really good, good feedback on Morpheus. As we've gone forward, we really are looking to try to optimize where we can look more places, we've got our best possible customers in there. We're also trying to drive a better cash ADR in Morpheus as well, given the level of demand that we're seeing. And we were also kind of seeing that tray over quite a bit for our premium mass customers with our premium mass spaces as well.

Joseph Greff

And has this relative outperformance continued thus far in July?

David Sisk

We're pleased with what we're seeing in July and going forward, hopefully.

Operator

Thank you. The next question we have is from the line of Anil Daswani from Citi, your line is now open.

Anil Daswani

Thanks for taking my question. My first question is following on a little bit on Joe's with regards to COD. Could you comment a little bit about the mass gaming side? I mean there was a modest pickup in the old rate from 31.5 to 31.6. Do you see this being able to return to the sort of low 30s or 33 type level that we saw in the fourth quarter or is this kind of the run rate that we should be forecasting going forward and obviously some very good progress made so far in the table drop? Is that sustainable? That's my first question.

David Sisk

Yes, I think the low 30s, we're fairly comfortable in that. Let's say that 31 to 33, we're probably comfortable in that range. Again, a lot of it has been driven by the floor in terms of that we've opened up the floor, we've got Morpheus, which again, has been incredibly popular with our customers, but as we've opened up the floor, we've looked to optimize with our betting limits. We've really worked really hard with our marketing people. We've got great marketing people and what they've done in terms of building better relationships with our customers, which is kind of a reversal from when we first came in here in January of '18. So, we've got a much better relationship with those customers, which is increasing the level of play. The longer they played, it helps our whole percentage. So, like I said, we're very, very optimistic as we go forward here.

Anil Daswani

David, as a follow-on to that, when the high-speed rail connectivity opens, does that drive this mass market hold rate up for the whole market because obviously those players get to be in Macau for a longer period of time because of the efficiencies of that high-speed rail?

Lawrence Ho

Anil, it's Lawrence here. I think ultimately, with improved infrastructure, is only going to be better news from Macau. And we've already seen the impact of the Hong Kong–Zhuhai–Macau Bridge, the high-speed rail, both the Macau one and also linking it into the main Chinese rail system. Hopefully, in due course, it's going to be exciting because Macau is right in the middle of the greater the area and with all the development and emphasis from the national policies to develop the greater bay, Macau is the main beneficiary from a tourism standpoint. So, I would assume every little thing helps in terms of improving accessibility and I think we look forward to those coming online.

Anil Daswani

Okay. Just one for you; you mentioned funding cost of about $1.35 to $1.4 for Studio City phase two. Could you give us an idea of how you guys intend to fund that new CapEx that you have in Studio City?

Lawrence Ho

So, based on our outlook for profitability at Studio City, given the significant cash on hand, cash flow from operations and some additional borrowing, that's really the plan for funding phase two. Now, of course, if things were to change, we have the listings as other avenue for raising capital, but at the moment, our plan is definitively cash on hand, cash from operations, and additional borrowings. No plan to issue additional equity for phase two, at the moment.

Anil Daswani

Okay. And sorry, my last question, could Lawrence you comment a little bit about if there's any impact from Sun City's recent issues surrounding proxy betting in your Philippines operations?

Kevin Benning

At City of Dreams Manila, we've seized providing video feeds for marketing purposes. At this point, it's too hard to draw any conclusions on business trends, but we'll continue to monitor and assess, at the same time, our core business continues to be premium mass and floss, and that's where we continue to focus our efforts.

Operator

Thank you. And the next question we have is from the line of Billy Ng from Bank of America. You may now ask your question.

Billy Ng

Hi, good evening. Congratulations on a very good resort. I have two questions. The first question is just to follow-up on Anil and Joe questions on COD and the potential of further ramp-up. I think you guys mentioned about 20% RRC target. And since like the are almost there already, like in the next few quarters, what else can you guys do in terms of more capacity or improving, like in 1Q, you guys set up the a junk campaigns and then we see the results in 2Q. Anything you can highlight to kind of like push the ceiling of the potential of COD in the next few quarters?

Geoff Davis

This is Jeff. So, from a long-term perspective, nothing's changed in our long-term ROI expectation. But maybe I'll let David follow up with any additional color on trends.

David Sisk

Sure. And again, we're still in the early innings of the ramp-up for Morpheus. And again, it's not just Morpheus. We've also done a lot of work obviously in the VIP area and then gaining. We're getting ready to do work in the new account. We've got countdown, we're going to do work in [indiscernible]. So again, it's just kind of refreshing at the property. So, we think there's still a lot of ramp to go.

Billy Ng

Thanks. And the second question actually is going Lawrence. We saw interview that you mentioned about potential restructure of potential merger between 200 HK Melco International and MLCO. I know that you also mentioned, maybe we'll have to wait until the license renewal process complete, but can you share a little bit more about your thoughts and the oval thought process behind the potential if there's any instruction angles?

Lawrence Ho

I don't think we've ever publicly said anything about that. And to be honest, I really have no intention, and neither company in North Board have any intention of merging. And Melco International has a different mandate from Melco Resorts. But I think what we have done recently simplifying the corporate structure by delisting the Philippines, delisting the listing in the Philippines by buying Cyprus into Melco Resorts to clearly show shareholders that all gaming-related development and activities will be at Melco Resorts & Entertainment. Whereas Melco International will continue to have its own mandate and look at different things. So, there are absolutely zero intentions to merge the two entities at this stage.

Operator

Thank you. And the next question we have is from the line of Harry Curtis from Instinet. You may now ask your question.

Harry Curtis

Hey, good morning, everyone. Just a quick follow-up on the VIP lift in Macau. Has there been any meaningful change in the commission structure with the junkets or is that pretty much a business as usual?

David Sisk

It's David. No, it's business as usual. In fact, we're trying to obviously maintain our costs as much as we possibly can, which again, one of the reasons from what we're seeing it's a great product. We charge a higher comp rate for that than any of our other hotels. So, no, we're not messing with the structure at all.

Harry Curtis

And then the follow-up question for Lawrence, have you guys been working with the government on the timing of the expansion at Studio City? And have you submitted a construction drawings and gotten permitting at this point or is that still too early?

Lawrence Ho

No. We've been working on that. And we talked about it on various calls quite some time. But I think we have made some headways. A lot of the ground preparation, site preparation works have been done, and we're hopeful that we can commence piling mobilizations by the middle of September. And so, things are moving, finally.

Harry Curtis

And then that leads to my last brief question, which is, in your conversations with the government, has there been any indication or body language on what their expectations are from you as far as capital investment and the future and development in an effort to extend the gaming concessions?

Lawrence Ho

Well, to be honest, the message that they have given us over the years, and it's been very, very consistent for the last 15, 20 years, which is they want further diversification of [indiscernible]. And I think out of all of our competitors, we've probably done the most on that. And when they did a mid-term review back in 2015/2016, Melco came out on most of the categories. And as you know, this year, there's going to be a change in administration. There'll be a new chief executive, he's going to take office at the end of the year or part of the 20th anniversary of the handover Macau's China. And so, I think they're going to have to -- the new administration, the new ECU is going to have some time. They need some time to sort out the affairs, but I think based on the messaging that we've heard is really status quo and following on the same post of making Macau continue to make Macau's they're leading towards the man's entertainment center in the world and certainly within this region.

Harry Curtis

I guess what I'm trying to get at is do you think that the Studio City incremental investment gets you pretty far down the road in exhibiting that interest to diversify or do you think that there's going to be a more incremental investment that's going to be required? And that's my last question.

Lawrence Ho

I think, again, it's too early to say, I don't know what the Macau government would like us to do in terms of extending our confession when it comes through in 2022. But I think the issue of Macau is the lack of land. So, if there was an opportunity, we would love to invest even more in Macau if there was more sites, but we all know that that's not possible. So, I don't know what, at this stage, what the requirements will be.

Operator

Thank you. And the next question we have is from the line of Praveen Choudhary from Morgan Stanley. You may now ask your question.

Praveen Choudhary

Thank you very much for taking my question. Hi, Lawrence, hi Jeff, hey David; a couple of questions for me. One, would you be able to talk a little bit about the Cyprus business and when can we see EBITDA contribution from the business? Even the Satellite business, can that contribute in Q3 and going forward? Second question is related to the gearing level, for Jeff. Does the gearing level at the end of June include all the $1.2 billion that has been spent on Crown or just half of it so that we know whether we should add that in Q3 or not? And -- yes, that's it for me. Thank you.

Geoff Davis

Okay, so it's Geoff. On Crown, only the first traunch is closed, so the second traunch will happen sometime before the end of September. And when we think about financing that, we will -- we're exploring different options but -- you know, we intend to use the asset itself to help with the funding solution. On Cyprus, when that transaction closes, that will be fully consolidated into the Melco consolidated P&L, and it's already cash flow positive. So, we are on a run rate of somewhere between -- with just the temporary two satellites of $25 million to $30 million.

Praveen Choudhary

Great, thank you. And then, maybe I can add one more question. The CapEx number that you provided for this quarter, $173 million; would you be able to break down in terms of where is this going? I'm just trying to separate the maintenance versus other costs, please.

Geoff Davis

Well of that amount, a significant majority of that was related to the addition to our corporate fleet. And the remainder was primarily at City of Dreams.

Praveen Choudhary

Okay. Again, thank you very much and again, very, very good quarter; so, congratulations to the team.

Geoff Davis

Thank you. And just anticipating sort of looking forward CapEx question; for each of the third quarter and fourth quarter, we're looking for about $120 million of CapEx and that is prior to any spending for Studio City phase two.

Praveen Choudhary

Great, thank you.

Operator

Thank you. Our next question is from the line of Edward Engel - Macquarie. You may now ask your question.

Edward Engel

Hi, thanks for taking my question and congrats on a great quarter. Is there something structural going on driving that higher expected rolling chip win rate range?

Geoff Davis

It's our decision to move from 2.85% to 3%, it was really based on historical results. And we've seen, you know, while in the first 10 years or so -- 8, 9, 10 years; 2.85% seems -- the actual results supported that number. Over the last three years, we've seen something at 3% or greater at -- in Macau and even higher win rate in the Philippines. So, we felt after three years of historical results supporting that level it was time to make the change. So, nothing really structural to think of going forward, it's just the reflection of activity on the ground over the last few years.

Edward Engel

Great, thank you. And then at City of Dreams, did you play unlucky on mass tables again?

Geoff Davis

I'm sorry. I still got pretty good mass table win.

Edward Engel

Just last quarter where you said you -- so last quarter you said you played unlucky on premium mass table.

Geoff Davis

We played unlucky -- yes, and when I said last quarter, we played unlucky towards the end of March a little bit so we didn't quite close this well but now we're strong through the whole quarter and we continue to strive.

Edward Engel

Well, great. Thank you. And once again, congrats on a great quarter.

Operator

Thank you. The next question we have is from the line of Charles [ph] from Wolfe Research. Your line is open.

Unidentified Analyst

Hi, everybody, good evening to you. Geoff, can you just expand on two of the items you called out, specifically the negative $8 million on the provision quarter-over-quarter; why did that get worse from first quarter? And then the one-time rent relief; what drove that decision? And then you said this hits EBITDA, but does it also hit property EBITDA?

Lawrence Ho

So, for the rental release, maybe I'll let my colleague Jeff discussion the commercial rationale behind that but it was to enhance our retail offering; and that hit both revenue and EBITDA.

Geoff Davis

So, on the rent relief issues; as you know, we're planning our phase 2 which is going to be pretty spectacular, and that's opening down the road. So, we needed to find a good win-win arrangement with our partners that kind of bridges between now and phase 2 and also gives us flexibility as we reimagine our retail with the phase 2 coming online. So, it's really about planning for the future.

Lawrence Ho

And on the provision for the one-time Special Award to non-management employees, as you know, we had been accruing for that award but we accelerated the payment date as we had announced previously. So, we needed to have effectively a catch-up accrual to put us on pace for that payment date, rather than a later date that we had previously assumed.

Unidentified Analyst

Right, okay. And I guess what I'm kind of getting at is I mean, the combined $20 million was from 1Q; is that sort of one-time or do you expect -- 3Q, you're still going to have this headwind again, or does it flip back $20 million in the 3Q? I'm sorry, I didn't understand you correctly; is this in the property EBITDA number or just in like your adjusted EBITDA?

Geoff Davis

So, it was a charge that impacted reported EBITDA. As supplementary information we're providing this information that within recorded EBITDA, we had the retail restructuring charge. And also wanted to highlight across both, Macau and Manila, the impact of the acceleration of the pay date for the one-time special gift. Now we'll have to make a decision at the appropriate time as to whether or not there will be an accrual beyond that one-time special gift, and that'll be a decision that we'll look out in due course. But we will still have at least two quarters of accrual at a normal rate for the one-time special gift for the first two months of the third quarter.

Unidentified Analyst

Got it. Okay, that's helpful. Thank you. And then shifting gears on Cyprus; is there any CapEx that's left to spin that COD Mediterranean or has that pretty much been absorbed by -- I guess, the prior owner? And can you just talk about why AML [ph] CEO decided to take on that stake? And maybe how you're thinking about the returns of that project; is that sort of in your 20% ROI kind of hurdle rate and should we be thinking about it like that?

Geoff Davis

Well, maybe I'll handle the numbers question and hand it over to Lawrence for the strategic answer. But you know, while we've been very happy with the initial results with the temporary facility in the satellite, today we've really only completed the foundation or piling work for the permanent. So, the vast majority of the CapEx related to that project still is pending.

Lawrence Ho

On the strategic rationale, the City of Dreams merged the Mediterranean project, it's going to be the largest integrated resort in Europe. And for Melco Resorts & Entertainment, our goal has always been to be more global and to give our guests more different unique experiences. So, I think with the positioning of where Cyprus is, it totally fits into our profile and where we want to take the company next.

Geoff Davis

And from our perspective, no need to alter our long-term ROI expectations for the Cyprus project. We think it's a terrific investment, a great opportunity and we're looking for very solid returns.

Unidentified Analyst

Great, thank you. And then just one last one, if I may; Studio City had had better volume sequentially from last quarter on both, VIP and mass, and the mass win rates were also better. I mean, obviously, really strong results. Is this entirely a function of some of the casino marketing that you called out or were there some other factors?

Andrew Choy

Charles, this is Andrew. It's not just one thing, it's a lot of factors. We continue to bring on additional amenities to Studio City. We've opened up three new restaurants this year; a Northern Dumpling Restaurant, a great new pizzeria where our Chairman had dinner tonight, [indiscernible] mass has been fantastic story for us. And to flip-out Trampoline Park we are starting to catch some traction, and really the place is just getting more and more activated and coming to life. And then you couple that with some really -- some very positive, good targeted casino marketing activities, and the team in the casino sales is doing a great job, and it just all came together and worked well for the second quarter.

Unidentified Analyst

All right, thank you very much.

Operator

Thank you. There are no further questions at this time. I would now like to hand the conference back to Mr. Richard Huang. Please continue.

Richard Huang

All right, thank you all for dialing-in tonight. And we look forward to speaking with you again next quarter.

Operator

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