Q3 2019 Earnings Call
Ladies and gentlemen, today's call is scheduled to begin momentarily until that time. Your line probably can be placed told me called thank you.
Good afternoon, My name is Nicole and I'll be a conference operator today.
This time I would like to welcome everyone to Las Vegas Sands third quarter 2019 earnings Conference call.
All lines have been placed on mute to prevent any background noise.
Ill now turn the call over to Mr. Daniel break.
Thank you and thank you for joining us on the call today with me on the call today, our Sheldon Adelson, our chairman and Chief Executive Officer, Rob Goldstein, Our President and Chief operating Officer, and Patrick Dumont.
Second the Vice President and Chief Financial Officer.
Before I turn the call over to Mr. Alan Please let me remind you that today's conference call will contain forward looking statements that we are making under the safe Harbor provision.
Federal Securities laws.
The company's actual results could differ materially from the anticipated results in those forward looking statements. In addition.
When they discuss non-GAAP measures a definition and a reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release.
Please note that we have posted supplementary earnings slides on our Investor Relations website, we may refer to slides during the Q and a portion of the call finally.
Those who would like to participate in the question and answer session. We ask that you. Please respect our request to limit yourself to one question and one follow up question.
So we might allow everyone with interest to the opportunity to participate. Please note that this presentation is being recorded with that let me. Please turn the call over to Mr. Adam.
Thank you Dan.
Good afternoon, everyone.
As you all know I've missed their earnings conference call. These last few quarters.
Let me begin by saying I feel good.
Very happy to be here with rub petrochem the team.
And I look forward to our discussion today.
Let me also say that I'm extremely touched by all the calls and emails have received over the past civil months.
It has been remarkable to hear from so many people, including many of you joining us today.
I deeply appreciate the well wishes and everyone who took the time to reach out to me. It's generally means a lot.
With that let me tell you about a strong financial results in a unique strategic position.
Companies today is strong as it is ever been.
The balance sheet is robust.
Evidenced by our investment grade credit ratings at both Las Vegas Sands.
In Shanghai, China.
I want to point out two years that.
It should be included us and he is 7500.
ER as of the till the third.
So we've been part of the S&P 500 [noise].
Uh huh.
About three weeks and well two things.
Oh, Okay loudly.
[noise] [noise] a cash flow generation.
Unmatched in our industry.
Annualized adjusted property EBITDA of over 5 billion U.S. dollars.
Good thing it's not.
Thanks.
[laughter].
Our development pipeline there both from a college, Singapore is exceptionally savings was over $5 billion of capital projects coming to fruition and Asia over the course of the next few years.
These investments will further strengthen our leading position in the premium mass mass monkeys.
It came in and other non gaming segments in Asia.
At the same time, we will continue to listeners yes ugly.
To the right development up a dual in Japan.
Now, let's turn to love financial results.
We had another strong quarter closer Alabama 'cause.
Companywide adjusted property EBITDA was 1.28, bringing new as those.
In Macau adjusted property EBITDA was $755 million.
System with the player.
Well overall MCO gross gaming revenues.
Client for the quarter the mass market continues to experience robust growth.
Well as gaming revenues by 9% over the prior year with strong growth in both mass tables and slots.
And they're both the premium mass and most segments.
Most importantly, a profitability continues Louisiana.
The adjusted property with a much in 65.7% up another 70 basis points compared to [noise].
[noise] they'll be more shuttered applaud our ongoing investment of 2.2 billion in U.S dollars.
Expand a critical mass of non gaming upswings in Macau.
Yeah, we used components of these projects already underway.
And we look forward to give you further updates in the coming months.
We remain steadfast and I believe that goes to benchmark it in the world with respect to the continued deployment of capital.
We look forward to making additional investments and let go as we would contribute to that goes diversification.
Then evolution in two ways shoes.
Well he is leading lesion business chosen business.
Well the opening of the Hong Kong's MCO bridge.
And the ongoing development.
They captives.
We believe let go as the potential to become the most capital of age.
We fully intend to contribute to that go.
Well to our existing assistant future investments.
In Singapore adjusted property widows will need a third inside me.
So it was up 4% or with employees.
Sure.
Well the volumes were strong and were above the level of the play.
That's one per day remains solid.
The hotel continues to enjoy near full occupancy and retail sales per square foot increase life and consent.
Las Vegas separations and another good quarter, when adjusted property EBITDA of 93 million news toes and inclusion of 22% over the play.
Finally, we continue to crews to return of capital [noise].
[noise] the Las Vegas Sands Board of Directors, just approved an increase in Iran annual dividend for the calendar year 2020.
The $3.16 appreciate it.
It was 79 cents per share per quarter.
Hey, dividends [laughter] I guess, you missed because that machine [laughter]. Thanks again for joining us on the goal today, it's really great to be back.
Now, let's take questions [noise].
[noise] I can find that you'd like to ask an audio question you may do so by pressing star in the number one on your telephone keypad [noise].
The first question comes for line of Carlo Santarelli with Deutsche Bank.
Hey, guys. Thank you and Mr. Adelson welcome back.
Maybe just a question is best for Rob.
Just in terms of obviously, what do you guys saw in Threeq, what looks like you saw some strange in both does the core mass segment or Basemat segment.
Well, there's a little bit of a pivot in the premium mass segment, which which also grew fairly well [laughter]. Just wondering if there's any dynamics that that you're seeing that are changing is obviously you know VIP remained a challenge throughout the Threeq you wouldn't you know I guess it was a little bit surprising to see the premium mass performed the way they did.
Nice approach.
So as you know probably Macau is the world's largest gain market in the current future growth of that Mark is predicated on the mass market.
Page 16, the deck you can see the continual you're up to your growth. This segment and this is this segment that matters, let's be honest and we're the market leader in those segments mass premium absent slots and that's segment depends on rooms and suites in gaming capacity.
Even though we lead the market rooms, and suites, the completion of the four seasons longer or put it to the more favorable position whenever its quality, it's quantity that will enable us to dominate this critical segment for years ahead, you couple that with our retail entertainment product or competitive positions kind of hard to beat and we're very fortunate.
As you referenced are rolling segment results were softer, but this segment represents less than 10% me, Dan said, seven or 8% or cumulative EBITDA composite.
90, plus percent is reliant on the mass segment into your comment that mass win for the quarter reached $1.6 billion base mass was it suddenly 62, I think that was all time high our premium mass grew to 674 million, which is 16000 plus per table and the slots went to 160 for the quarter because our future in the future.
Macau is mass and visitation continues to improve the quarter for us was very very positive except for the softness in the rolling segment.
But our game plan as you know, we said quarter after quarter year after year. Our game plan remote remains the same it's more product we're spending two plus billion dollars at London or four seasons.
Quality product quality were but do you foresee isn't lung there will surprise everybody strikes us actually it's been pretty spectacular and so we don't see a whole lot of changes this quarter. It's it's business as usual is reinvest in the product focus on the high margin mass business grow our fundamental advances, which is more retail show more rest.
Strong more entertainment emotion 40, more logic, so no real surprises, we're very pleased with results, especially as you referenced the come back of we're happy to mass segment in particular.
Thank you Robert just a quick follow up on the conversion right now and obviously, the VIP volumes and lower hold there is kind of making it harder to see straightforward in in the real results, but when you. When you think about the work that you're doing currently in kind of where you are in the transition how much disruption do you think is is that.
Leaving the system I know, it's probably not easy to handicap. It I'm sure you're capturing some of the disruption that your other properties do you feel like there's leakage outside of the system from some of the work that you guys are doing there.
I think just gonna be disruption, but your refers point is spot on I think we can capture is the team does their job capture some of that disruption old region, and four seasons and Indonesian I'd like to think weekend, having said that it's a massive project underway I mean 20 will be a disruptive your FCC, there's no denying it works.
Transformed me, a 10 year old product do something much more.
Desirable for the market. So there will be some disruption I'm, hoping that team and they claim they couldn't do it will move most that business over to four seasons Breeze and other products. Obviously, we can do it because we've got the room capacity lodging capacity the gaming capacity and frankly, we also have the ability to direct people who come to your team and product. So.
Big positive as you know that's a unique differentiator for us over there so hopefully when the premium mass come to tell almost every week, we've got to be a terrific show in there they can push that customer a wait and see if they so desire, but I think as we've said repeatedly the end result phase we will work that we're building. It lunder, we can't wait to show to you can't wait to finish.
Sure It and the same thing with the room product we sought a few months good at the four seasons, it's exemplary and every week.
Only time will tell we can't quantify level disruption, yes disruption how much we laid off another properties time will tell great. Thank you very much.
Thanks. The next question is from the line of Thomas Allen with Morgan Stanley .
Oh, Thank you Ryan echoing cause words are hoping euro speedy recovery Mr. adelson.
So I'm just around I'm thinking wed Macau does it doesn't feel like the markets getting impacted by the Hong Kong Onrad Center and do you feel like your properties are feeling it. Thank you.
In Macau is your Thomas is the mass segment. They drives growth is that simple in this challenging macro environment. We just continue to grow grow and that business revolves around lodging retail entertainment and we continue as you see the numbers to grow in all these areas.
Mass keeps growing premium even with a large base or slots imprimis kept growing it with our capex position. It just gets better and better I also think you know with our 30 got Newsweek, London or four seasons. It just will get better next 18 months, plus especially for family travel length of stay a great non gaming product yes.
Maybe we should reference is the base mass the continued improvement in transportation infrastructure connecting the job will drive growth in visitation and we can capture a large sure that growth we are having iconic destinations theme resorts like London or.
But east et cetera. So you know in this challenging environment, we're really pleased with our results and I'm just to get getting better down the road.
Helpful. Thank you and then two more specific question it seemed like convention retail and other revenue would all your property was down a lot what was driving that and the second question is just I notice you been mix shifting your Macau tables away from base mass or premium asks just.
Sorry, I mean, recognizing that premium mass revenue was stronger this quarter. It has been more choppy. So just wanted to hear the rationale behind that thank you I'm sorry, I missed this is going to the shift I think where did you say the shifting away from base mass the premium I hope we are hoping yeah. Obviously, that's our goal our goal is to do that.
It was mehdi premium mass customers in there and move away from bases weekend, but that's a challenge if somebody tables.
Yeah, very very pleased with how that's happening and you saw the results in that number we came up with for the master quarter Nice recovery from Q2, we have a bounce wrong way I just think our structural advantages. There are so damn strong it's hard to refute where we're going I don't think a big argue with all our keys and not just haven't quantity over quality.
All the entertainment.
The retail as you saw numbers ideas on page 27, we referenced the retail numbers. It just our advantages here are good and they'll just get better with time you referenced one up one thing you mentioned the convention and other one thing to note is that I was also where we have very revenue and so there's been a decline in ferry revenue year over year stuff.
What's driving that the majority of that is related to Paris. Okay.
Hi, Joe, but well just Tom just a follow up on that slide is your reference that the growth from for 34 to 450, which is a company by an increase to six I'd say 4 billion total wind.
Team to predicable, yeah, it's a good trend the right direction and open continue that wed love to end up with a a double premium mass tables, if we got the demand to to make it happen.
Thank you.
Very much appreciate it.
Your next question comes from minus Stephen grappling with Goldman Sachs.
Thanks could you talk to the decision to walk away or I should say redirect your focus from a soc.
The other markets in Japan, and then maybe just talk to any other markets that you do have drives on for development.
I'm sure we looked at Soc and were very we think it's a wonderful market a wonderful city, we have great experience there, but in the Ed we felt hours strengths and our well we do for a living so well yeah. It was better represented in the opportunity in Tokyo be region, Yokohama and as you know, it's very competitive there.
It's a very.
In C market a lot of capital required a lot of thought process to make sure. The numbers work and we just thought yocum movies, just a better fit for our Oh skill set we are we're hard at work. The Governor's issue DRC were hard work is that right now and we'll see how it comes out it's I think there's some time a good to ponder.
How Japan plays out in the end and we hope the right in the middle of it and make the best decision for the our company our shareholders.
Can you just remind us of how to think about the amount of leverage that you'd be willing to kind of flex two should you pursue that and if you. If you don't still seems like you're running I figured out one and a half where could that move as you start to pursue the other development opportunities and where do you think about the right level level longer term.
So I think this goes back the original fundamental story of the company one thing our chairman has been expert at and the company has been very strongly supported by his allocation of capital and so if you look at the developments that our chairman has pursued they both large scale with very high returns and so that underpins any decision, we make about any new potential new jurisdiction.
Deviate lead also works hand in glove with our ability to return capital to shareholders over time as our Capex rolls off. So this is the framework that we use when you look at any jurisdiction. So to think about in terms of leverage you know is as the chairman mentioned in his opening remarks, we have an investment grade balance sheet and that's been a work in progress over many years, so very proud.
To achieve the levels of levers that we have today that prudent financial management that we've exhibited has produced results and gives us a lot of flexibility to pursue.
Really any jurisdiction that comes available from that standpoint, right. Now if you go to page eight Medac you can kind of see a snapshot of where our leverage is on a total consolidated basis were 2.3 times on a net basis 1.5 times.
So it really depends on the timing of cash flows you know weve built some development recently, the Parisian encouraged to see that development schedule. There we laid out in our last quarter's presentation. How we would handle Marina Bay Sands expansion I kind of gives you spent a sense of how we would look to spend capital as we create a new development, but as a practical matter given some of the growth that we anticipate from the Capex.
Yes that we hope to spend over the next three years, we hope to maintain leverage levels in our current context.
I think I, particularly when you get credit for pro forma EBITDA as the developments get closer to fruition. So when you look at what we're doing really this is our transformational story of our company. This is the second leg of a very large investments game, we're expanding our two best markets. We're deploying billions of dollars of capital into Singapore point billions of dollars of capital currently into Macau.
Oh and opening probably our most competitive at best prepare products. So we're very excited over the next couple of years and hopefully that will provide an additional natural deleveraging and facilitate additional capital return.
One very quick kind of a quantitative a follow up it can you just remind me what was the total room count year over year I guess in Macau.
We're trying to get back into it seems like it down but I don't know if you have that number handy.
So if you if you go to page 61, our debt.
Always its way into back.
Getting there.
Actually laying out although we actually loud all the hotel rooms, including new capacity, which we highlighted.
Hi.
Okay. Thanks, so much on I'll jump back into queue best of luck in a best best wishes Mr. Adelson.
Your next question comes on line of Joe Group with JP Morgan.
I'm good afternoon, everybody Sheldon good to hear avoid food you send 100%.
The last call so glad you're on.
Well I'm not my life, [laughter] I'd be glad because [laughter] just.
Rob or for anyone there in the room, if I'm doing my math right. It looks like in Macau and the Threeq you. Your math table hold percentage was a little bit higher than had been where it's been or where we would maybe deem it could be at a normalized level or we are we looking at that right and was there anything.
With people hold on on the math side, and obviously that maybe why premium mass grew the at the higher rate that it did and maybe you can kind of help us understand.
You do you what was going on there, whether it's mix or changing some of the tie backs or something else.
Well, there's been a long talked about lucky six in the market. All you guys have written about it I think there's sort of some impact in Macau market, where you didn't Singapore, yeah, we're touching above Joe HM due to its not material and we're actually.
<unk>, Yeah, a few points above in terms of the acute Q3 of its not material I wouldn't consider it a.
Important <unk> again, you know in our business a half a point or quarter point with all this volume is a it's a it's not relevant I do think as you know Bach rod like all of our businesses have been <unk> mathematical.
Equation as the customers off to play different to proposition beds be at Lucky six pairs ties with ever it plays the house advantage and I do think you're saying.
Blackrocks and changing the backlog I started with a long time ago, it's evolving to a different place and its helpful. The industry as these different that's a evolve as you know the flatbeds or the bank players not as advantageous to house as payers and ties no lucky sick. So hopefully, we'll see that trend up to.
20, 520, 630 to 67, but [laughter] truth of matters, we're delighted to see volume play we've got the whole percentage wasn't material, but I think it isn't you'll get your eye on what's happening in the backup business since that is the predominant game and the games diversification into more proposition beds is very healthy for the house not such as ours.
Yes, just so happens we have more house anybody else over there so the benefit slow to us.
But as far as it being materially different from the quarter before it's not it's pretty much the.
Same range.
Great and then switching over to Singapore as my follow up.
Rob do you think you're getting a lot of business.
From China go into Marina Bay Sands that otherwise for whatever reason right now.
Might be hesitant to go to Macau.
No I don't think that's an issue at all I think the customers we've gotten to a Singapore its foreign based as you know our growth proposition essentially as we look at that business. The Singapore, we built out when Sheldon really develop the 13 14 years ago, we sat in this room and and pencil Dot and one thing we did we couldn't have seen the dial.
Now I'm a growth Joe when the premium mass Super premium mass that comes from all the room as we built a typical very nice hotel, but with lots of suites for high rollers are rolling customers and lots of typical guest rooms for other the evolution of the premium mass, especially the superpremium asked from other places over the written notches China.
Has really changed the dynamic and that Miss on our part, which we couldn't have seen it. We just we're blind to it didnt exist, but that's why we're doing number for to make that tower really target specific high level focus on the premium mass customer that we don't get enough of them and that's where the growth option resides in in Singapore. The other.
Piece I think we are the Singapore discussion. This arena, we're building people don't quite understand the importance of that arena in Macau is breathtaking you look at our business week. After week month. After month, we just can't get enough arena business there because they the casino wants it so badly it drives customers decisions went to come where to stay.
It's a ridiculous advantage that we don't have in Singapore and that will correct, though if you couple of years, we opened for.
I think Singapore, it's not about.
It's about the more business coming from China or less it's about that property.
To achieve its toll potential taking the capex dollars weren't deployed and being laser focused on this segments to drive it and that's the Miss in Singapore in Brazil, we make a lot of money. They were very proud the operation, but there's so much more growth opportunity when we get the suites rooms right. The entertainment right. It's gonna be I think it's no surprise people how much.
Upside there is in Singapore, very desirable place to visit very safe.
User friendly enormous retail our mall. It just continues to we were there last month, it's shocking how good it looks and feels our new like flood business. There I. Just think we just have a lot of growth potential Singapore, and it's going to be the entire written wealthy people appfluent people, who want an exceptional resort experience will come to.
Before.
Great. Thank you.
Thanks.
Yes.
Your next question comes from White, Felicia Hendrix with Barclays.
Hi, there good afternoon and welcome back shall then it's it's Super Nice to hear you there and then comforting as well I'm just a nice to hear me too [laughter].
Felicia I think you haven't said yay dividends for a long time [laughter] nice to hear.
So just switching gears to Vegas, acknowledging it's not a big part of your business I'm in the chart in the back a chair that your table drop was down year over year in kind of both of those segments.
And for the market, we know that Bacharach drop was down quarter to date through August , but mass drop with flat. They're just wondering you know in the math I was September down in the market or is that do just more to the types of conventions are groups you had in your casino and I think in the past you've discussed that trying to improve that mix. So wondering where you are the prospects.
And honest specific answer for September , but I will tell you that are focusing on getting more of this mass and a lot premium mass business building.
Again with 7000, plus accommodations, we should be getting more but we're looking we obviously keep focusing on the room product suite product of more attractions more after the.
I'm very pleased right because he was going we've seen nice baccarat play throughout the year. It was it was a soft quarter, you're right relative to the previous but the mass imprimis growth properties are here, but I think as you know when you referenced earlier Felicia. It's a it's a it's a lodging dominant market and we'll continue to be Vegas is more from when I started and I guess it was whose game.
Being centric nails lodging centric and the Guy sitting next to me I love to do with that but I think the the best days Las Vegas are ahead of us in terms of as more by space because the market as more things happen here. We welcome the competition welcome all the wonderful things are happening all the town and so we're not going to I don't think <unk> you can.
Focus on Vegas gaming for a quarter for a weaker for a month and get to.
So I do the way, it's going to be a steady growing to the to a better place.
We're not going to see I do I don't think you'll see as much Asian play in Las Vegas, as you seem to pass because.
The options in Asia, or so damn good that it's hard to you know, we still see great players show up occasionally, but the days above dominating Asian play I think is over and the days veg is becoming probably the greatest lodging mark in the world are here.
We want to be part of that transitional shifts since Sheldon the author 20 years go with the convention based focus.
That's where I put my sense of I was looking at Las Vegas.
That makes sense, thanks, and just switching gears to Japan, and if you I think conventional wisdom and is that that an integrator restored there would cost about 10 billion. So I was just wondering if we can get a reality check on that.
And that like from two you're right.
It's a big number yeah might be light might be light type you like that but that's kind of what I'm. What I'm wondering yeah was there any way to do hard we've Patrick and I spend way too much time in Japan. The last six months. So they've got good everybody guidebook [laughter] and I'll say this about its extraordinary place we were.
We really enjoy doing there but to your point [laughter], sometimes I can back into play the pinch myself I think back the days, we developed the Venetian was Sheldon in Las Vegas, 20, plus years ago, and I remember, saying the myself my gut impart by a billion dollar development and it's just kind of comical thinking back on it today you can you can build a nightclub pay for 200 million this town.
So the reference point, though you make is very very well.
Well thought out 10 billion dollar $12 billion. It does give you pause and the matter.
I was just came back vote trip I said the showed we robin coffee as to think about it you could spend the equivalent of what Sheldon to spend in China for many casinos.
And retail malls, you spend that one building one IR in Japan no matter. How good you are at this business that must give you pause and stop and think is that prudent can you really deploy can you get the return and we've had those discussions and we thought it went through the Japanese government and so our chairman.
Our board will make that decision ultimately, but we and Patrick and I, we've learned a lot, but that's a very fair question to ask if any operated not just US you know we have the balance sheet the capability and the skill set to do it. The question is can we get a return that you know the guy that my left is gonna endorsed and his board and.
We're working to as issues right now I think 10 billion is the starting 0.0 I gave you can do for less than 10, unless you're gonna do something sub sub par.
So reading so it's a fair question to ask Oh, it just to be clear that at the 10 billion is likely the prime city locations are being discussed yeah right. There may be other locations in smaller cities. Besides the main cities of Japan, where the investment entry cost would be lower but we're not in that business, we're not going to ocado, we're not going to we're going to be the be isn't it top tier city, which would.
Mandate 10 billion and that May that maybe like I mean, the cost of building in Japan is a big issue.
And the way this the deals with structured it's it's a challenge and where the guys who you know we spent 6 billion years ago, and we spent 13 or 14 15, we were used to writing big checks, but all that money. One IR does make just a pinch yourself in say can you get the returns that youre shareholders deserve.
So it's kind of a captain obvious follow up to that it seems like there could be scenario, where you guys. Just say you know overall, we're not going to get the kind of returns and well, let someone else to participate in Japan, but.
But we're not there yet.
It's it's voice bear any we look at we look at the end, it's really Sheldon and the board to make that decision, but everything we look at is predicated on on return on invested capital we have a great balance sheet. The reason why we'll do things just to do them, we do them because they make great sense for the company and I think that kept by the way it's hard to beat the opportunities be facing the calendar.
Singapore, those two growth opportunities, we're spending you know.
Billions and go but it's money. This so well spent artwork pharma cat results I hope I I can't wait a couple of years now see the the results were doing in Macau, both in the London or and the four seasons I can't wait to the result of all the infrastructure with the government's doing there is exceptionally good for for the market it's been a great.
Very enjoyable watched raquel from a.
Infrastructural development, the new trains coming through Bombay, the new all the infrastructure improvements there are really helpful. So the market and as we have tip our hat the government for doing that same thing in Singapore, where were building there was that the theater and those new rooms is going to be a very very good thing for this company into invested capital returns Japan.
A little more thought process, we're certainly not writing off we're deep into it it we'd like to be there, but to your point, we've got to make sure. It ended day, it's prudent and the returns you know Shelton's Shelton's always had 20, so it's got to be a big number to make it work.
Okay. Thank you.
Thanks Felicia.
Your next question comes from line of Shaun Kelley with makes America.
Hi, Good afternoon, everyone and that's one of my best wishes T. Mr. adelson as well.
Yes, you wanted to touch on it a couple of things one was just in a in the detail around on the expansion at your planning for the Cotai strip it looked like perhaps the on the timing or for the opening on the on the four seasons.
Slipped a little bit on <unk> I think we've heard a plenty about construction challenges in the market there, but can you just given out together give us an update on just general construction progress and timeline for a person I think there that are scheduled to open in any chance that the four seasons or you do have some rooms available for Chinese new year.
Sean Dusting as a reference page 19 ongoing strategic reinvestment a page 19 gives you a great snapshot of our timing on this thing.
Yeah, right, we had a little delayed some of the issues in Macau, but I think we're going to get these timelines that we feel pretty confident.
That four seasons pretty much there's gaming happening as we speak today in the four seasons Macau. There is a a new gaming is long thought the 13 tables open. We are you know we're working through the room issues. The rules by the way. There was 290 them. These are immense you know 2000 to 4700 square foot. So these are mind blowing suites relative.
Mark of zero today, the London or again is under the rooms open about a 150 open currently are ready.
The gaming salons has not started nor the facades that will happen in 2000 into 21, there's been some slippage due to the process. There but is moving ahead well we have rooms open in the four seasons, yes, we will buy trays news that's rooms open but fully complete it probably unfortunately, it'll be second quarter of 20.
My Mommy's to tell me all good things are worth waiting for it we worth waiting for it it's going to be a game changer foresee. This is a whole new place the whole new world that will be the best product in Macau and given the size and quality and I think lumber there will be a very strong SR to the Venetian so that's that page is very it says.
Is it all told the dates and times and answers all your questions.
Great. Thanks, actually detail and then on sort of a broader follow up and I. Appreciate that you have VIP remains a a smaller and smaller portion of the business, but yeah. Rob could you just give us your kind of color thoughts on on specifically some of the you know we know about some of the challenges around maybe specific junket.
And some of the kind of credit policies as it might relate to broader China, but your thoughts specifically on some of these frontier markets because we hear that come up from time to time in our conversations with investors as well about the Philippines in Cambodia, and some of the competitive offerings. There. So just kind of what's your take from all the time you spend on the ground in end market.
Well the numbers speak themselves in Macau, it's been challenging there and I think the government you know the government will deal with those issues in the Philippines et cetera, It's not my area to comment on I think whatever happens you can read about like I do enters the Chinese government take all that and we'll leave that to the government as far as Macau you know we've been doing.
As a long time, we've watched that market ebb and flow and we're certainly in a difficult time period.
I'd like to say it always resurrection I always seems to have in the past I believe will get better.
I just don't know when I don't know how as you referenced it's about 70% of our composite EBITDA, but yet it does have a value to us we love to pick up some more you know some more profitability. There I'm wondering we are doing by building the four seasons product.
And even the London or our portfolio is just tailor made now for that junket space with a junket resurrection, if and when it happens I really don't want to pretend to know.
How and when that comes back I've been wrong in the past thinking will be a difficult time and they were on some life support situations couple of years ago, and they climb back up the Hilde away I'm rooting form we once you get better.
But it's hard for me we spent a lot of time Macau list a lot of people there's lot divergent opinions.
I'd say, we're rooting for that segment, we believe that same will get better, but I just don't how to be give you insight as valuable as to when and how it resurrected so without avoiding the question that's an honest answer.
I appreciate it I've been wrong in that plenty to thanks, a lot [laughter], thanks very much.
Your next question comes from the line of Robin Farley with you've yes.
Great. Thank you Sheldon glad you're back nice to have you back [laughter] too [laughter] T two questions.
What is on Japan, there are some others that are you're talking about consortium's and partners in Japan to I'm just wondering what your latest thoughts are on that.
And I have a cash that question.
Sure So [laughter] in Japan.
You know we are we're very confident our ability to execute integrator resort there to the standards of all our other developments I think it would be helpful for us to look into Japan market and find partners that could be useful to assist in the overall.
Development and that could be partners that we trade with that could be partners that investment us. We're really on meeting with people now attempting to understand the dynamics of each individual market and looking develop relationships to see how we can be helpful and they could be helpful to us so much like some of the other potential concessionaires in the market, we're looking around to see if its viable.
How it might work on what the mechanics would be but it's something that could be very helpful. If we come to the right past structure and the right. So.
Okay, great. Thank you that sounds a little bit more open to partners, maybe then than what we've heard before so that's helpful. Thanks, and then my other question on its on share repurchase just looking at their amount of share repo in the quarter, it's like a bit lower than the run rate and the first half of this year and in 2018 just.
What are your thoughts on share repurchase what we should expect going forward. If there was something different about.
This quarter, just getting more cautious because the VIP business there.
Thanks, So you know I think.
When our board these quarterly and when our management piece of Santa talks with the Chairman, we really think about total capital allocation.
And one thing that's been a hallmark of our chairman's activities and the developments as I said before is really that capital allocation you can't just think of the share repurchase without considering our capex and our dividends.
If you get it go to page 29, and you look at the remarks or the chairman made beginning on the call you'll see that weve it affect committed to span north of $5 billion over the next couple of years.
And so we think reinvesting in the business is a much stronger indication of our view of the potential growth that we have versus a return of capital through share repurchases. We've always said that the cornerstone of our capital return policy is the dividend you see that the chairman raised the dividend eight cents.
For the upcoming year, which we're very excited about if it gets very shareholder friendly.
And if you look at the capital expenditures that we intend to make this year and if in the years coming up we feel very strongly as we very high return projects and we think that we think these projects will facilitate a much greater level of capital return over time.
So we're being very cautious with the way that we purchased shares and as we said before some of that we would modulation as our cash flows become available. So what you're really looking at is a holistic view.
Capital investment.
Dividend cornerstone program, and then excess cash being returned to shareholders that reverses.
Okay, great. Thank you very much.
Your next question comes from why did you choose radian with Wolfe research.
Hi, good afternoon, everybody. Thanks for taking my questions and I'm, just echo everyone's comments Mr. Adelson really is a great to see doing better and teary on this call.
So just sticking with the VIP and mass trends here, if I look at slide 36, the VIP contraction has taken a step down obviously, it's getting worse, but if I go back to slide 16, the mass GDR is actually accelerating here sequentially.
So I'd love to just get your thoughts on why you think math says de coupled so significantly why why math says really remain insulated from a lot of the some of the macro weakness we've seen in China.
First of all if I can point that slide outs my favorite slide [laughter] you looked at all day long I.
I think we've seen as this become I mean, you're the <unk> that the investment proposition to Macau going back.
Beginning was always a billion or so people at your door stuff that was always the whole idea of Macau and all you're seeing now is the maturation that thought process. You know VIP has created all kinds of headlines and all kinds of stops and starts but the one thing. It's always been true is that one thing that we did Sheldon really did we built this thing yeah. We built all these casinos.
Back in a day people just didn't understand it felt well how many of you need while other people are thinking about it we were building them as people, they're talking about what they're going to build someday in 23 or 24. It's we're building. It now so we've never been reticent to spend money in Macau. We've always believed that the engine here would be and should be all those people crossed.
The border and so as we see this we've kind of makes us feel validated and that slide you point out indicates the steady March towards 2020 to 20 530, who knows when this stops my guess is it doesn't stop the only thing prisons, preventing more mass growth in Macau is infrastructure, which the government is not great job the trains.
Now going as soon as you ended the year more trains coming right.
Into into the city I mean, there bypassing July and things are going to be border crossing.
More avenues are opening up the.
The infrastructure the airport. So it's no big surprise that the the Chinese mass business is growing imprimis is growing it's a very different business than the than the junket and the rolling business always has been which is much more capital dependent and money moving dependent it has all kinds of issues with it so.
To my way of thinking this is the natural evolution this market.
I think it's got a back where we say gambling is local like giving them. The cow is the local markets called China. It's a is a big local market Bacterias like California, and as a growth market. This is a very simple story Chinese consumer Chinese March towards success in Middle class status is happy.
As we speak every day, that's why you know LVMH luxury companies can't wait to get there and have been getting there for years. That's our story the grow the reason, we're going to keep growing to 3 billion Threed had billion for billions because we're building products to address that market and as the government gives us the infrastructure and gives us the airport the trains we.
Build the rules and give them all the things they want there's no reason why shouldn't keep growing it is growing and that's why that's where we're focused the junket business and the growing business was always a wonderful aside business. That's always been helpful. We welcome it but you're not going to you know the margins. There just dictate that you can't invest too much capital expected Baker.
Great return our business as you see even with all the macro concerns in the market today, our business. He's marching forward eight 910, 12% growth quarter. After quarter. This slide you referenced indicative of a backyard cold China.
And the backyard people are getting richer by the day, they want to gamble and they by the way if you Didnt Macau recently, it's more from a a place that wasn't so terrific to an incredible place to visit now but people want to come because it's great that rooms are great. The food is great. The retail the shows it has it all and I think that's why it's happening it's not going to stop.
So we're right word the epicenter of that our investments what this board authorized a couple of years go to put a few billion dollars more into Macau, we want to invest more money in Macau were complete those on the growth of future Macau, That's why Sheldon and the board said do the London or do the four seasons keep building more we get the green light from the government we loved <unk>.
Were sleeping rooms, and more retail and more restaurants and more entertainment because that's the future Macau, it's not going to stuff I mean, Macau has proven to be very resilient and to your point. Despite the it's decouple, but as a stop growing is in fact, the decoupling is accelerating and also you should know that the the driver of that premium mass cost.
<unk> is a younger more fluid lifestyle driven person he or she is 30 540 550 years old they want the best things they want the rooms, they want their team that they want the food they want the retail that we offer it's not simply a gambling play and that customers not capital dependent.
On the junket side, they're very independent of the junket. So it's both a higher margin customer it's growing by the day and there's no reason, it's just stop in fact, just the opposite you'll keep growing and that's law is why that's the powerhouse in Macau you know the growth is just incredible. It's just it's just 15 million 17 million 20 million.
22 million why wouldn't stop it won't so we're very pleased to see it our products speak to it we keep investing there and we're very grateful to be there.
And with that we have received allotted time for questions. We thank you for your participation and ask that you. Please disconnect your line.