Q2 2021 Las Vegas Sands Corp Earnings Call
Positive EBITDA of $244 million per quarter about the same as the first quarter.
<unk> performance reflected sequential improvement, but pandemic related travel restrictions continue to impact our performance.
We do remain confident the eventual recovery in both Macau and Singapore, and we cannot define the timing of the full recovery is underway and will continue in 2021.
<unk> remains in the $5 million to $600 million range annually, although the second quarter wasn't impacted by heightened pandemic related restrictions for a portion of the quarter. We will also be subject to closures of growth portions of MBS from today through August 6 as part of the COVID-19 related protocols.
Obviously, you have a negative impact on Q3 results.
In addition, there remains no visibility as to when air traffic will return in Singapore. Unlike Macau is difficult to project additional EBITDA from MBS until resumption of air travel.
Our considerable investments in Macau continue to take shape as the market recovers 4 seasons londoner represent growth opportunities and we continue to have the largest footprint in this incredible market China continues to be to demonstrate economic resilience the spending in the calendar year very strong with the premium mass level from both a gaming and retail perspective moving to.
References.
930 year debt.
We do have great optimism about our ability to form to pre pandemic levels. Once the invitation returns. The company is divided into 3 areas the Asia portfolio in Macau and Singapore.
Macau will accelerate from the second half of this year, a legal recovery, Singapore will follow upon the resumption of air travel. We are confident we will return to a $5 billion plus EBITDA from Asia in the future.
The sales of Las Vegas assets creates liquidity and debt.
Optionality to explore a large land based destination resorts, United States and Asia and finally, we are in the early innings of building out our digital presence we are exploring multiple opportunities present.
<unk>.
We are eager to have this effort would become material to our company in the years ahead, we will update you at the appropriate time, let's take some questions.
As a reminder to ask a question you will need to press star 1 on your telephone.
Question.
Please standby, while we compile the Q&A roster.
Your first question is from Robin Farley from UBS. Your line is open.
Great. Thanks for taking the question.
Wanted to follow up on your announcement about <unk>.
Online strategy and kind of pursuing.
<unk> investments and just if you could help us think about.
How the debt.
Brand.
With helping.
Helping the day to be effort or how you know just in terms of what that does for fans as well in a cynical way and then also is that.
Is that that was going to be the full extent or are you still looking also at a b to C option from the homeland market. Thanks.
Sure happy to thanks Robyn.
So a few points I think our brand is very strong I think we have a <unk>.
Decades of established brands and high quality operations and a great relationship with customers. So we think that's very powerful to your 0.1.
1 thing we're thinking about is we're really investing for the future. We take a very long term approach, we're still evaluating a lot of different opportunities I think <unk> presents a very significant opportunity for us Davis has.
Have a great history and will really from for Tim getting started and we're happy that he joined us.
We will provide updates as we make progress it's still very early stages, but we're looking forward to being able to deploy capital over many years and really look at it from the long term and create a lot of long term shareholder value and I think in the future you'll see us looking at other things and other opportunities as Rob said on other calls we're going to be very patient, we're going to be prudent and we look for opportunities, we see ways to create real value in the long term.
So I don't think this is the last thing you will see from us, but I think it's really just the be getting and we are looking forward to seeing this thing evolve over time, so as we make progress we'll definitely provide more updates.
Okay, and I don't know if it was just as a follow up just thinking about that.
B to B.
Many of the day to day providers out there kind of working with those it would technically be your competitors.
In land based.
I guess, how do you think about framing that how they would see.
No presence.
Online business.
Somebody that they would partner with versus the competitor.
It's a very fair point and I think interestingly our company has seen a lot of changes in the last 12 months and I think 1 other things that we thought about when we consider debt is that we really are just like the operation, which we the markets in which we operate going forward are going to be Singapore and Macau.
And so from that standpoint, it's really a limited universe of people, who are our true competitive set differently than some of the larger geographies, where <unk> services model.
It could really be productive so I think from our standpoint, we are a little bit neutral, but we believe we are from the sense that in a lot of the markets that we might look to target. We don't have any land based operations I don't have any DTC operations, where we could find customers from our <unk> business model standpoint, So we feel pretty good about it.
Okay, great. Thank you very much.
Thank you.
Your next question is from Joe Greff from Jpmorgan. Your line is open.
Good afternoon, guys nice share your voices.
And I've said it mostly.
Well just in terms of.
Macau is reliant on.
Travel mobility enhancing measures.
Timing, there, so I'm not going to spend time on that but.
I think the last call the Wilfred.
A decent amount of detail and I would say this.
This amount of optimism in terms of.
Your license.
Essentially that market is getting extended.
Sometime middle of this year in that timeframe and then a path towards that now I was hoping you could give us an update on your conversations or youre thinking.
Slash extension practice in Macau.
Well for either.
Yes.
Thank you.
Yeah.
I think the situation has not changed.
Obviously the extension is a very.
Very complicated issue.
It's something that the Macau government and the Chinese government will have to look at very carefully.
They also have their own.
Preoccupation at this stage for example.
Macau government apart from scale working very hard on making sure that Macau remain a safe city.
In all the precautionary measures.
Covid.
<unk>.
Now preparing for P mix, let's just speak to how so reelection.
Just 2 on the 12th September So the government is operating at a pace, where they feel they are they want to launch the public consultation.
For the concession renewal towards the second half of this year.
Which we believe might mean that it will only happen after.
Interest rates at house of what election.
Now.
Okay.
I don't think the government is in a rush.
To review the.
The license.
Because they want to do things right and as we.
No.
Many legal issues they have to attend to such as the.
Concession and some concession issue.
They can only go to the legislative accounts, so when the new accounts, so it's a price.
And so at.
At this stage, we are really focusing on.
Now back aligning our interest with the government such as focusing on.
Our investment and reinvestment opportunities are building out our properties.
Proving out operational efficiencies, maintaining a stable workforce, which is very important during this pandemic.
And and I think things will pan itself out.
And in Chile, because.
We've moved closer to the expiry of the concession.
Naturally there could be.
<unk>.
Pension because that is an option, which the government will have to look at but at this stage nothing operational and we have to do.
Inflammation.
Thank you Paul.
Okay.
Comments, we remain very comfortable with our position.
But there will be resolution as you know.
No. We've said numerous times, we led the effort from Macau for a diversified approach to development, we've gone above and beyond.
Sure.
Behind the Cotai development investment 15 Bucks.
And we can see with all the gummy device and direction. So we remain very confident in Vegas.
Patients are waiting for the other government decision, but no real change there will be new but we've not all day.
So we're very bullish very comfortable.
I appreciate it thank you guys.
Got it.
Your next question is from Carlo Santarelli from Deutsche Bank. Your line is open.
Hey, guys good afternoon, and good morning.
Rob could you talk a little bit about that.
The project that MBS, obviously 2025 is the deadline or sorry is the expected opening.
As you kind of have just bought a setbacks.
Our balance sheet, you guys kind of pushed it earlier given given COVID-19 back in 2020 does 25 still see kind of realistic as a target and what are kind of the goalposts for some of the construction work along the way.
Even the password reset the 1 I'll say this before back in terms of we remain very committed to Singapore to expanding our presence our footprint. Obviously COVID-19 has been thrown a monkey wrench in big Monkey wrench.
But this is an extraordinary market.
Moving to invest in Singapore, we've done very well there and the addition is going to happen I think the timeframe really depends on the ability to go back to work in the construction area and.
And getting things back in line I think we lost 21.22. So again we are committed.
Patrick go ahead, more color and deal with the government.
Thanks, Rob.
I think the key thing is what Rob just said, which is that a certain there is a certain amount of uncertainty around the timing and availability of when we can actually get things done a lot of the early parts of this project required us to work with certain government agencies to seek their approval and to work with them collaboratively to ensure that we fulfill the obligations and their desires as well as part of.
This project, it's a very.
Tight site.
It's 8 acres, there's a lot of programming a lot of density in a lot of things that have to be worked through a lot of things that have to be integrated into current environment to make it right and so we're starting to work through some of those things, but as a practical matter the nature of the construction project of this complexity and size.
It would be challenging in a normal environment. So I think we're just trying to be cautious and make sure that we understand all the different parameters around labor and non construction timelines.
We say that this is schedule that is not achievable. It's achievable I think a lot of it depends on the environment and how things go in terms of concession or excuse me.
Covid recovery over the next over the next couple of months well have a much better view at that time, but right now I think we're just we're cautiously optimistic we're going to continue working with the government and hopefully have an opportunity to get going sooner rather than later.
Great, Thanks, Rob and Patrick if I could just 1 quick 1.
Do you have any thoughts.
Given the sale of accretion Las Vegas.
And the proceeds that are on accounts for that to potentially revisiting.
The bidding process in Japan.
Not at this time.
Inquiries for a lot of parties there.
We've tried very hard and below the money in a lot of human capital work day, less 10, 15 years, and we love to have a feeling that there is uncertainty for us.
It something based on change in circumstance, but.
At this point, we remain on the sidelines.
Understood.
Thank you.
Your next question is from Stephen Grambling from Goldman Sachs. Your line is that day.
Hey, thanks.
Could you just talk a little bit about some of the different expansion opportunities for land based resorts in the U S.
Even other broader markets that we haven't touched based on so far and how you prioritize and evaluate those different markets.
Or per year.
As you know of our efforts in New York, which we shut down because we did not resolve that issue. So that's.
Non available good fun test as we remain very committed to pursuing.
A couple of years away, but I think there's a real change down the road and back in Texas is doing something down there.
Total <unk> news or Florida.
We per foot in the order flow that we think thats a real opportunity.
There is a path in 'twenty 2.
It was successful in gathering signatures.
In the sold 22 per land based opportunity.
In the U S.
When we're looking at.
So obviously you discussed Japan, although previously.
Our best opportunities are to reinvest in Macau and Singapore.
Those items is proven.
<unk> successfully then I think we were fortunate we are to.
2.5.
<unk> plus $1 billion even growth.
The other ones, but we are running room in both Singapore and Macau frankly, they remain.
Our biggest focus because it's so.
So extraordinary and hard to duplicate anywhere in the world and I think that bodes well.
Focus right now is getting MBS.
And hopefully weighted to call and we can invest more in Macau.
<unk> completed.
Later this year early 'twenty 2 foreseen.
We love to deploy more capital in Asia.
I think that 1 opportunity is interesting to you.
We can get there, but it's hard to find things and extraordinary the 2 places we operate today.
Makes sense. Thanks, so much I'll jump back in the queue.
Thank you.
Your next question is from Shaun Kelley from Bank of America. Your line is open.
Hi, good afternoon, everyone maybe.
Maybe a question for for either grant or welfare debt I was wondering I think we have a pretty good sightline on the core.
Other premium mass market and how that's performing and how the spending behaviors going but I was wondering if theres any color insight you guys have gleaned just from what youre seeing them more of the base mass or the lower end mass market I am sure. The sample set is small just kind of curious on how the customer is behaving when they are in the market and what you've seen in some of your properties. If you could provide anything there.
Branch.
Yep.
Thanks, Shawn good morning.
I think the trends have been pretty consistent.
In the last 6 months.
I think very strong consumption propensity each.
Like strength in spending power for those who have returned to Macau for leisure trips.
And I think that applies across the different segments.
But obviously clearly the premium mass.
The segment has returned in greater volume greater number of patients.
Got you.
You go further down to mid level in the base mass.
The spending power is definitely prominent.
However.
You can see from the visitations.
They are still around.
With the low 20% of where we were before before the pandemic. So the base mass is clearly impacted budgets.
<unk> reduction.
Reduction in the number of people.
But the people who have coming actually staying longer.
And in most cases more.
And I think what was encouraging sequentially.
No.
2 months.
So more of a temporary income.
What was encouraging and last week, we saw the greatest amount of sequential growth.
In the face mask and the <unk>.
Segments versus Q1.
Other premium masterpiece from cover.
The biggest bounce back was actually the base mass.
So we hope.
Some of those.
Okay.
Encouraging trends continue into the summer from them.
Holidays and beyond.
Great and maybe change gears for a quick follow up on the online topic, if I could.
For Patrick or Rob just kind of want to get your quick sense on maybe the build versus buy equation right. So obviously.
Some of these technologies and things are out there, but they can be quite expensive.
How do you kind of weigh maybe some of the options that around acquisitions and sizing relative to possibly think that could be done.
Maybe more organically.
Patrick.
So it's a very interesting question and it's something that we've been looking at for a while and we continue to look at and.
It's an interesting comment about valuations I think theres been a lot of optimism in the market call. It the last 6 months to 12 months and valuations have definitely moved around a lot in the last few weeks I think the key thing for US is we're really doing from building from the long term and so when we look at things were really going to take a long term view of value and if we if we do acquire something thats going to be for.
The reason that it fits into a much larger broader strategy and some of them, where we see long term value creation by owning it.
I also think we're.
We're not necessarily looking to take big bites right away I think this is something we're going to look to develop it over time.
Prudent manner and sort of build more and then maybe buy where it makes sense I don't think youll see us go out and make a splash by using Las Vegas sale proceeds in any large transformational acquisition unless theres. Some really compelling reason why we have to do it but that's not our focus our focus is to build the products get the culture right get the opportunity right and then make acquisitions.
They fit in with the overall strategy.
Thank you very much.
Your next question is from Thomas Allen from Morgan Stanley. Your line is that day.
Yes, Patrick just a follow up to that question.
And youre not going to do.
Transformational deals like how are you thinking about the size of the deals like anything here being kind of an incubator for startups are you thinking like hundreds of millions low bill and how you're thinking about the size of it.
It's a pretty broad range I will tell you that our goal is really I don't know that we provide a lot of value at the at the Angel stage.
We might be able to help some people, but I'm not really sure that that's where we provide sort of the most the most value.
From our standpoint, if we can get kind of earlier stage and mid stage, but again sitting into our larger strategy that that's where we'll look to be really effective I think.
Things that are much larger that would be transformational and $1 billion range, we'd have to have a really good reason to do it and I think we'd want to be operating for a while to understand why that would make sense for us right.
I don't think were going to buy our way into a business I think we're going to develop our way into the business and look to see how acquisitions help enhance that approach.
Helpful color there makes sense.
Then just on Macau and Singapore.
Respecting that the majority of your business. The majority of your future is really around the mass market.
VIP came in really right only $600 million of our rolling chip volumes in Singapore stood out.
Just can you talk about what's going on there and your expectations.
Moving to think.
Sales were exposed to which obviously right.
I think I used clinically.
How was down quarter over quarter to Rob So Singapore was what really stood out but just talk about VIP in general on caviar your expectations there.
Yes.
As you know it is right now to close market to the local only so you're trading moving on all exclusive and people who are living in Singapore and that maybe that maybe.
We believe we're doing the pandemic it might get announced.
So the push from some of the folks who moved to Singapore.
We aren't dependent further reason, but if you look at our numbers at this point to really make a whole other.
For the future because its so without having the slot business day, so outsized.
Comprising that's how we'll do in the Netherlands, the case that kind of performance that people. They can leave we're starting to do more with same way people can be considered for right now on the high end. So I think it's hard to make inferences working with future of appropriate trend. It's just it's an anomaly.
I think thats communications over to resolve in.
Air traffic, Singapore, you'll see the trends, both good and bad debt or confusing and I think in the case of.
Very difficult to look at Singapore numbers come up with a clear day rest of where we go in with strong performance can use all of those initially.
Your line is lumpy to travel outside sales are seeing an example, the same volume rose as shown on the high end or me.
During these nationally to be resigning from 4 during the pandemic. So I'm not sure you can make a whole lot of long term trend based solution to aid in Singapore.
There was 1 other there's 1 other comment that might be helpful, which is the way we're sort of thinking about it is that the investment in the products really matter and so if you look at what we've done during the pandemic. We spent a lot of time and deployed a lot of capital and sort of enhancing the offerings that we have so when there is a recovery we have better capacity and more competitive product. It is a.
From an industry.
So from our standpoint, the way we think about the long term is the level of investment that we put in during the pandemic. So we can position ourselves in a more strong way when the recovery happens.
So I wouldn't look at the rolling volumes now in the U S.
To indicate anything I think you should look at the fact that you've been able to deploy capital to create higher quality products with a higher quality experience for our customers and that way, we're stronger position on the other side and that's what we're really approaching it.
All helpful. Thank you.
Your next question is from Steve Wilkinson from Stifel. Your line is open.
Hey, guys good afternoon.
So probably going back to bill for this question, but.
I guess for Americans.
So we talked to it its tough for us to understand where China is with respect to their vaccination progress.
The case counts continued to look pretty promising, but China is still having issues, but is it China is still having issues with the lack of availability with a vaccine or is it.
The vaccine is being used hasnt been effective or is it just something else I'm just trying to get more color around that if all of that makes sense.
Thank you for the question.
Actually China is not lacking in.
In vaccines actually based export quite a lot of things.
The true if you look at these statistics.
China Today has already finished at 1.5 billion doses of vaccine.
What that really means that over 50%, 60% of the population has been vaccinated.
And.
If you assume.
Everyone has 2 doses.
It presents 53%.
Steel vaccinating at over 10 million doses a day. So what it means is every 25 days they can increase that vaccination rates by 10%.
Now that that is also to some extent true for Hong Kong and Macau, Hong Kong already of minutes debt 5 million doses.
And it's fractionation rate is already over 40% Macau administered.
<unk> hundred 60.
Allison doses, that's also over 40% of the population. So we're quite confident that if China continues in that range.
And with the increase of vaccination rate by about 10%.
5 days.
When you come to winter they almost the whole population like 90%.
80% would be vaccinated.
I think once we reached that level that travel bubble within.
China.
Including Hong Kong and Macau, it's really possible now what you have seen in the news is that because.
China adopts a non total returns.
Policy.
Covid, so whenever debt, but somehow.
Some outbreak in certain areas in the country, it's widely reported and they go back to Lockdown and Thats why I think the best scenario in the short term is a travel Buffalo between China Hong Kong.
And Macau.
Because they are so concerned about the importation of Covid cases, especially with the battery cases.
That's great color I appreciate it thanks guys.
Yeah.
Your last question is from David Katz from Jefferies. Your line is that day.
Hi afternoon, Thanks for taking my question.
Covered a lot of income.
A lot of ground.
What I wanted to ask was just kind of a broader.
Question, your checking and everything about the U S.
You said in Asia, if we were to think about what lvs looks like.
3 to 5 years out or 2 to 5 years out.
What's.
That picture look like what's the vision for that what are the.
And obviously that can be as qualitative.
In high level as you are thinking about it but.
I'd love to just hear your perspective on that.
Pretty simple more prospective reimbursement formulas he returned to <unk> 6.
$6 million EBITDA.
The accounts that were markets, we see a renewed investment in both Macau and Singapore to grow that from Pfizer.
Good day and beyond.
We see a 1 or 2 land based facilities in United States, Maybe Florida, Texas.
And lastly, other strong digital presence.
Reflecting our balance sheet.
I think we can.
In Asia, the most important thing in this company.
Timing is uncertain the return to a more normal environment in Asia, but the outcome is uncertain. It is going to happen and I think it will reflect what's happened here in Las Vegas, which is people philosophy casinos will make normally even pre COVID-19.
So moving again.
That's been cleared up until about timing from that.
The outcome and also the growth.
Clearly, we want to invest heavily in both of those places because that's our best path to 6.7 million.
$8 million EBITDA.
We've made very clear or belief in both Texas, and Florida, and perhaps other lower field jurisdiction. The U S. We do.
We have the balance sheet, the optionality to pursue those.
Thanks, Brian.
Brian <unk> digital said, we are pretty slow.
3 to 5 years from now Youll see a real.
A positive outcome.
That's what we think we ended up we feel pretty confident that we've been derail Bliss 18 months so terrific.
This pandemic, but I think it's true we're heading in.
To me, it's very obvious that net inflation will stay the course.
We have ample liquidity anything anywhere.
The large scale, so that would be my thoughts.
The same day.
It's.
I Couldnt agree with you more and I think the great thing about it is we have a lot of opportunity.
In front of US right I can't tell you, which 1 of these options hopefully all of them become available but.
Quality and the Great thing is that we've just invested $2.2 billion in Macau, we feel very strongly about the market and the potential invest more post concession renewal, we feel very strongly about the expansion in Singapore and our long term commitment Singapore is a very unique tourism destination in the high quality of earnings potential, but we'll get from Singapore, and then looking to the U S.
These are just great locations and looking at the digital opportunity, we feel really strongly about the returns and the potential growth in this area. So from a company standpoint 5 years from now we could be looking like.
A very different company in terms of our scale.
And to Rob's point earlier, I think our balance sheet and the capability that the liquidity from the sale of Las Vegas prevent presents allows us to pursue all these opportunities. So we're very bullish about it.
And if I may just followed up quickly and I appreciate all of that with respect to the digital strategy is.
It is.
<unk> that it would be.
Integrated with the company as it is today.
Branded as such or.
More of a sort of a separate enterprise or potentially either still at this point. Thank you.
Rob if you're okay, I'll grab that 1.
Please do.
So I think the key thing to note is we have a very skilled team and a great platform.
A very strong corporate culture, we have.
Just the ability to execute on a variety of things and I think we have the capital to have patients in industrial of long term growth and so I think this is going to be a business that will require separate people separate infrastructure I'd be distinct that being said it will benefit from being part of our larger organization. So much like Singapore and Macau are part of our global team they have.
Things that are specific to NAV, but they have to deal with and so so will this business, but it will benefit from being part of a larger organization.
Thank you very much I appreciate it.
Thank you David as always.
Okay.
Okay. Good.
Got it.
This concludes today's conference call. Thank you for participating you may now disconnect.
Thank you.
[noise].
Yeah.
Okay.