Q1 2022 Las Vegas Sands Corp Earnings Call
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Good day, ladies and gentlemen, and welcome to the <unk> first quarter 2022 earnings Conference call.
At this time all participants have been placed on listen only mode. We will open the floor for your questions and comments. Following the presentation. It is now my pleasure to turn the floor over to Mr. Daniel Briggs Senior Vice President of Investor Relations, Sir the floor is yours.
Thank you Paul joining the call today are Rob Goldstein, our chairman and Chief Executive Officer, and Patrick Dumont, Our President and Chief operating Officer also joining the Doctor Wilfred Wong President, France, China, and Grant Cheung Chief operating officer of <unk>.
China Today's conference call will contain forward looking statements that we're making under the safe Harbor provision of federal Securities laws.
Company's actual results could differ materially from the anticipated results in those forward looking statements. In addition, we may discuss non-GAAP measures.
Definition and a reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release we.
We have posted supplementary earnings slides on our Investor Relations website, we may refer to those slides during the Q&A portion of the call finally for those who would like to participate in the Q&A session. We ask that you. Please limit yourself to one question and one follow up so we might allow everyone with interest the opportunity to participate. Please note that this presentation is being recorded with that I will turn the call over.
Rob Thanks, Dan and good afternoon, and good morning to our colleagues in Asia. Some brief comments and then we'll go to Q&A. Our results continue to reflect the pandemic impact the travel restrictions suppressed visitation financial results in both Macao and Singapore. This quarter, we did generate positive EBITDA for the quarter in Singapore and for the <unk>.
In total the good news is Singapore is the travel Carter's established last quarter had been replaced with an introduction of the vaccine traveler framework, which allows travelers to enter Singapore in much the same way it was prior to the pandemic.
In short terms, we are open for business in Singapore.
Our conviction in the long term opportunity in the Singapore market remains steadfast the $1 billion capital investments currently underway at MBS introduced luxurious new suite product and amenities that gives order.
In Macau, our considerable investments.
Nearing completion as the market recovers four seasons Londoner will provide growth opportunities in both the premium mass customer segments.
We can do to have the largest footprint in the Macau marketplace and we appreciate the opportunity to provide input and the public consultation process and we look forward to participating in the re tendering process as well.
While the current quarter results in Macau were impacted severely by the enhanced travel restrictions in China customer demand and spending Macau have proven resilient at premium mass level from both a gaming retail perspective in periods. When the restrictions have been relaxed. We remain confident that we returned to positive cash flow in both Macao and Singapore.
In the future as restrictions are eased in travel and tourism recover.
We consider our portfolio of resorts in Asia to be outstanding platform for growth for the years ahead.
In addition, we continue to pursue opportunities to develop large scale resorts in both United States and Asia. The sale of Las Vegas was completed this quarter, which creates additional liquidity and optionality.
Lastly, as we build out our digital presence and to explore multiple opportunities. We will provide additional color at the appropriate time lets go to your questions.
Questions Paul.
All ready to go to questions. Thank you, ladies and gentlemen, the floor is now open for questions. If you would like to enter the queue to ask a question. Please press star one on your telephone keypad now.
The thing I'll speak from today, please pick up your handset to provide optimum sand quality.
Also we ask each participants to limit yourself to one question and one follow up.
Please hold a moment, while we pull for questions.
And the first question is coming from Joe Greff from Jpmorgan.
Your line is live.
Hello, everyone and thank you for taking my question.
Robert.
To get a little bit more detail on the recent experience in Singapore.
With the detailed framework.
Can you tell us or share with us.
Signs visitation improvements.
In March and April to date, and then we kind of look at the first quarter and looking at the $121 million of hold.
Normalized EBITDA.
How much of that was sort of the law.
Last month of the quarter, given the benefit from more international inbound tourism.
Joe It's a fair question.
CT MBS was clearly driven moved upward as we went along started $17 million in January went to $46 million in February we had 58 million of EBITDA in March and that trajectory is continuing the momentum is going upward in April .
Singapore is back and it will experience the same post COVID-19 numbers, we've seen in the U S. In my opinion.
Question is how fast does it get there the demand is there it will continue assuming there's no more surprises from the Covid.
Situation.
We'd like to thank the Singapore returned $1 billion run rate in this year.
So $58 million in March feels pretty good and that momentum is continuing.
Great that's helpful and.
I can't believe I'm not going to follow up on the calculated questions Michelle.
Can you talk about Thailand, and sort of that is integrated resort opportunity and what the latest is there I know there have been press reports.
With your efforts.
That is an opportunity.
Yes, I think it's premature Joe and we're looking a lot of different things in Asia, and that's certainly on our list of things, but I think it's premature to get ahead of ourselves there.
I'll pass on that great. Thank you guys sure.
Thank you and the next question is coming from Stephen Grambling from Goldman Sachs. Stephen Your line is nice.
Hey, Thank you maybe sticking with new development opportunities Theres, obviously been a lot of back and forth in New York.
Specifically, New York City different boroughs, even seeing some headlines around times square just curious what youre seeing there and how we should think about that as an opportunity.
Well, New York has been on our radar for a long time, we continue to be in the hunt there I don't want to get into specific borrowers locations, but I think thats proprietary but.
We remain interested I think it's a huge market for us we've been very clear about that in the past.
The process is.
There's quite a long way to go and we'll just keep you posted as we hear and learn things, but we're in the hunt and we'll see how it works out for us.
And then you did mention.
Youll discuss digital when the time is right and they obviously say patients as a virtue, which has clearly paid off looking at some of these stocks. So as you think about the opportunity set.
In front of you has anything changed in terms of your thinking of what areas of the industry might be more or less interesting to dig into even before considering where the investment might end up.
So it's Patrick Hey, Julien So I think nothing has really changed in our view, we take a very long term perspective on digital.
Our comments have been pretty consistent across the quarters, we're really in a growth in investment stage. So it's very early on and we have something to talk about we'll definitely start discussing it but at this point.
Early early stage, we are building a team and looking forward to the future.
Often with any one last if I can sneak it in then so since since the development opportunity you feel like there is still pushed out and you've got some proceeds in from Vegas.
I think you maybe you mentioned this in the remarks, but just remind us in terms of thinking about capital allocation priorities.
Is buyback something thats on the table that you would be thinking about with some of those proceeds or do you feel like there's enough other things to spend the money on the near term. Thank you.
No problem. This is a question that I think we get pretty often.
The answers that we gave on our last quarterly call, but I think the key thing to take away is we're very focused on new development.
Sales Las Vegas was really to reinvest capital in high growth opportunities that we think are unique to our company.
Very strongly about our development capabilities and our ability to execute large scale developments of new markets and we think theres a lot of them out there a lot of potential and so we're waiting to see what's going to come forward and as Rob said, where we can investigate the highest returns.
In terms of return of capital I think we've always said that the dividend is really the cornerstone of our return of capital program is something that we want to look at it in terms of really long term operational cash flow growth and then we will size. It accordingly, and look to that to recur before we actually start the dividend again.
In terms of share repurchases, we always have you been opportunity opportunistic to return capital that way as well if you look at our our past we've actually returned a fair amount of capital through share repurchases. When we felt that we had the excess liquidity. So anything at this point or our priority is to make sure we get out of the pandemic should we have ample liquidity and protect the balance sheet to ensure that we recover from our <unk>.
<unk> operations, we can support our local host markets support our team members as we go through that process and we're going to focus on new development and growth and investment in our existing markets, which we've been doing throughout the pandemic and then we will look to restart the dividend as operating cash flows recover and then lastly, I think we'll look at share repurchases when the opportunities when the opportunities arise.
Let's not forget that we are investing a $1 billion currently in Singapore, we're trying to invest more in Singapore, and we think Macau when things reopen might be opportunistic as well people forget how much capital we could put to work.
The marketplaces.
Fair enough makes sense. Thanks, so much.
Thank you.
The next question is coming from Shaun Kelley from Bank of America, Sean Your line of lives.
Hi, good afternoon, everyone.
Just maybe to actually touch on Macao for M&A.
Rob there had been some fits and starts as it relates to the reopening.
Hong Kong and I think some positive progress there is case counts come down any.
Any signposts, maybe out of that market and maybe reconnecting now with Macau that the local team could give us some color on sure Grant you recall.
Yes, good morning, good afternoon.
Thank you for the question.
Yes, I mean at this stage there is no.
The new information or news in terms of.
Warranty pre travel from Hong Kong Macau.
I think Hong Kong.
Cases have been improved.
But we're not at the point where.
Is there is any change in the guarantee policy.
Great and maybe just to clarify is that specifically as it relates to interaction with Macau or what about for visitors coming from from overseas, possibly opening up a corridor to Singapore. So maybe help us think a little bit more broadly if you could.
I'm, sorry are you referring to overseas visitors from.
Yes.
Either.
Arriving in Hong Kong.
And then I guess coming from inbound places or leading Hong Kong go into places like Singapore.
So sorry.
Sorry, you're asking question about people going to Singapore, and Macau, well, specifically talking about.
Just is there any sign that Hong Kong is loosening up its overall visitation policy because it's been pretty closed from the external perspective, I guess, that's where I'm trying to go.
Sorry, you're asking about Hong Kong, yes, they have relaxed.
So non residents can now travel.
Two to Hong Kong.
From the past.
And that wasn't that hasnt been possible for some time.
You can go to Hong Kong.
From from next month.
Please.
The Hong Kong, but you would still have to be subject to the currency policy.
Hong Kong.
Understood. Thank you very much.
Okay.
Great. Thank you.
There's nothing more to say grant I would cut you off to be more to say.
No that's it.
Okay. Thank you next question please.
Thanks, John next question is coming from Robin Farley from UBS Robin Your line of lives.
Great. Thanks, I Wonder if you could talk a little bit more about Singapore and any change in the composition of business. There in terms of what's coming back is it is it more mass isn't one thing that is.
Is it.
Higher win per visitor than what you thought before or just more absolute number of visitors.
What are you seeing to come back first.
The answer is yes.
It's all coming back I mean, the demand over there for.
In the month of March we saw outsized demand from three independent travelers on the pure leisure side, we saw premium mass we saw high end players coming out of over the room I just think Singapore is unique position.
Obviously in Macau is a difficult place right now so people are going to gravitate to other opportunities. They want to travel there are no different than we've seen here in the U S. I think our MBS products in a very very unique opportunistic window here.
We're hoping Macau opens up obviously sooner, but until it does I think you'll see a lot more demand than typical I think its from all segments. The team. There is doing very good about what happened in the month of March and again, it's leisure travel casino VIP casino premium mass casino as mass casino, it's universal and it feels like renewals.
Very positive beginning and hopefully without COVID-19 interruption or change in policy I believe MBS has been a very productive 2002.
Great. Thanks, and then my follow up question is about.
So in a week or two ago about.
Probably a small investment and I think it was sort of an integrity related business for online sports betting and I Wonder if you could just talk about that because it seems like there are some <unk> online.
Companies that already sort of provide that kind of for free as part of their services between the wells.
The leagues in this fourth bucket. So just I wonder if you could talk about.
What interested you in that angle or what's different about that and kind of what's offered.
First three really by the other OSB BTB providers. Thanks.
Sure, It's Patrick and I think what Youll see over time is us make investments in smaller companies, where we think they have a competitive advantage in the <unk> space that has a lot of growth potential and also where we think over time, we may form to a larger platform. So from our standpoint, we're looking at a variety of from businesses that are in startup early stage.
In order to make sure that we stay in front of technological innovation in our industry and so this is part of a broader strategy. It is it is a relatively small investment relative to Las Vegas Sands, but we think over time this investment and others will help contribute to our overall digital efforts, so I'm not going to get into the exact thesis behind every investment that we do there is a long term plan for what.
We're approaching I think over time, you'll start to see how that evolves.
Okay. Thank you thanks.
Thanks Robyn.
Thank you and the next question is coming from Carlo Santarelli from Deutsche Bank.
Your line is live.
Hey, guys. Thank you.
I just have two kind of timeline related questions.
And I don't know, Rob maybe best to answer the first and then perhaps something on color on Macau in the timeline, there, but just in terms of MBS.
Obviously construction and things along those lines.
The environment is very hard to predict.
And I have not gotten a chance to get through the slides yet to see any changes to kind of your expectations for the timeline there, but what are some of the goalposts in terms of construction on that and then secondarily as it pertains to the tender process and whatnot in Macau.
The timeline for that shaping up as we move through the rest of 2022.
Yes, and Singapore as you know we're underway in a rather extensive.
Renovation of $1 billion plus renovation in Singapore, that's underway as we speak and it's going to take a while it won't complete until the end of 'twenty three.
But it's going to be a very on Congress thing we've had.
As everyone knows where the world has been impacted by Covid, both getting supplies and labor is an issue, but it's happening is underway, we're still working through our issues with IR too.
We're not ready to talk about that today, because we're still working through issues. There same issues supplies labor costs et cetera, we intend.
The IR one again 23 <unk> two is to open for interpretation.
Macau timelines in the re tendering I'm going to turn it over to two wheel for a grant to take that question Amit.
Wilford best suited.
Yes.
Thank you.
<unk>.
The timeline for re tendering of the concession is progressing according to the timeline announced by the Macau government.
Currently a few things at play too.
Two bills relating to the gaming law.
As has been approved by the Legislative Assembly.
And it will be.
Approved.
In full after that.
No discussion.
Before the end of this.
<unk> in.
In August .
We are hearing okay. So a suggestion that it will be earlier.
That in August .
At this stage.
Going to be granted an extension of the current concession until the end of 2022.
And that is the time that we expect the re tendering exercise will be completed.
And so after the amendment of the law.
The re tendering procedure will stop a lot of information about the re tender will come out we are in the process of preparing for that re tendering exercise.
Hopefully everything will be done before the end of 2022.
Thank you that's helpful. So just unclear in August youre more or less have everything you need from from the gaming law perspective, and then that period from say <unk>.
August if not maybe earlier through December will be the formal tendering process when everything is more or less buttoned up is that the right interpretation.
That's right.
Great. Thank you very much.
Okay.
Thank you.
The next question is coming from George Choi from Citigroup George Your line is live.
Thank you very much a couple of questions from me Firstly in Macau. The Macau core has recently grew with that in a couple of your competitors have joined me and separately liable for some illegal participant chunk is how do you see the likelihood that you guys will also be found liable for this potential liability after the recent close.
After major changes there.
Yes grant to handle that.
Sure. Thanks, George for the question.
I think that as you know the.
<unk> of operations.
All of these fixed room junket promoters.
Obviously happened.
Recently.
And the last year.
And as a result of that obviously.
Yes.
New court cases being raised.
But whether its stakeholders.
In that in that system.
Currently there is nothing material.
A report from China perspective, there.
There are a few cases ongoing.
But none of them are material and we will continue to monitor situation and.
We report back to you.
Yes.
Thanks, guys and my second question is on your balance sheet now clearly the first quarter was was it quite difficult for you on the kind of operations.
Is putting a lot of stress on your balance sheet SME, China, when it gets to a point where thanks Shannon.
To raise funds would you guys consider equity assumption or is the cost of debt still cheap enough that you would continue to look to response from the debt capital market.
Patrick.
Hi, Patrick how are you doing so a couple of thoughts here I think we're very optimistic about a launch for future of Macau, we understand theres articles out about concerns around liquidity I think we have a very strong balance sheet. Yes. We've received some stress over the last few years under the Pandemics tough operating conditions I think we all have.
The good news is that our company as a group has a lot of liquidity, we have a lot of.
A lot of different options I think the good news is also that we were an investment grade company during the pandemic, which says a lot about the market's view about our ability to raise additional capital. So from our standpoint, I think we have a lot of flexibility our balance sheet was designed to withstand.
<unk> and a lot of variability in our respective operating markets I think we've proven that and I think where we are today is we will look to see how the operations continue coming out of the pandemic, which hopefully soon look at our liquidity and make decisions based on our available options. So I don't think we're stuck in one particular view I think we have cash at the parent we have cash around the system, we have an investment grade credit ratings.
Access to credit markets.
I think the good news as we position ourselves well to benefit from the recovery on the other side. So I think we have a lot of flexibility and we'll use it as needed.
Sure.
That's very good color. Thank you very much.
Yes George.
Thank you next question is coming from Chad Beynon from Macquarie.
Macquarie Chad your line is live.
Hi, Good afternoon. Thanks for taking my question wanted to ask about inflation I know, it's obviously something that people are a little bit more focused on here in North America, and it's different in different regions of the world, but wondering if you could kind of talk about the labor inflationary environment employment situation in your key markets, Singapore and Macau.
And how that could potentially.
Impact margins when the business is fully recovered on the revenue side. Thanks.
I don't want to say one thing about our business I mean, obviously margins in place.
The question, we are anticipating but I would say that I believe the revenue side of the equation, there's been more than take care of itself as far as margins were going to be really I'd be shocked if we don't see a big return in Singapore. This year and then hopefully a big return in Macau in 'twenty three hopefully maybe 'twenty two I don't know, we don't have any visibility more than you do about what's going to happen.
Let's be clear, but I do think just like here in the U S margins have gone.
Very powerfully positive because the demand is there I don't think Asia is a different equate.
The equation is going to be driven by excessive revenue I think in Singapore, we will see it this year I believe and hope to see in Macau This year or next.
As for the <unk>.
Operating entities granular discussed as you see as far as Macau for example, and wage inflation I don't know how to address that question.
Sure.
Right now.
Slightly different situation.
If you looked at.
Page 10.
<unk>.
He is very moderate.
No.
<unk>.
Wage inflation.
But obviously.
Okay.
At this time.
Because there is there is pressure on unemployment.
Tourism dependent economy.
And then interestingly.
In terms of construction works.
Again.
In line.
With prior years.
Not going down somewhat again because of the demand and supply.
Duration, that's specific to Macau.
As a large scale.
Moderate it will be completed.
So.
At this stage.
Right.
<unk>.
On the inflation front.
Yes.
Supplies.
Such as food and so on.
Experience inflation.
Obviously thoughtful for the totality of it.
It's not going to be material.
But I think the important point.
As Rob said I think you also have to consider.
The revenue side of the equation.
Which I think is going to be the.
Dominant driver.
We've obviously.
Prices paid call.
Thanks, Andrew.
Yes.
Sort of one other thought.
I think the important thing to note is where youll see the impact of inflation is really a construction costs.
And in materials that go into construction inputs for large scale projects you see that in the U S. You'll see it in Singapore and Youll start to see it in other markets in Asia as people come out of the pandemic and really there is a pent up demand pipeline of things that needed to get done as well as the shortage of labor and a shortage of labor.
Related to the pandemic restrictions so.
That is something that.
Is it likely to.
To be seeing you're already experiencing a little bit of it in certain markets I think the other thing is the good news is with inflation also comes pricing.
And so our business is not tied into any long term contracts, we have the ability to operate within the market.
<unk> has always been a very high quality place for labor has been an expensive labor market. It's always been very tight and we've always managed it so I see it as.
The team based on our execution capability to maintain margins through the cycle and I think thats really the nature of our business that we have pricing power, we have the ability to change rates as a hotel as a consumer products company and really work through the changing in inflation in <unk>.
That can make that part of the business margin.
Thanks, Patrick and then separately just on kind of back on the digital portfolio opportunities that you talked about just given the current valuation change that we've seen in a lot of the public companies does anything change just in terms of the total amount of money that you want to invest in this space.
That there might be some really good opportunities in the near term just because of a valuation disconnect or are you still kind of disciplined in terms of the total amount that you had put forward towards this effort. Thank you.
I believe we have to be disciplined and the reason I say that is our core business and let's be honest our balance sheet is what it is it's a pretty good place if our business returned to the Singapore like we anticipate and then behind that comes to Macau, we get back to $45 6 billion EBITDA.
<unk> investment portfolio approach may change as it relates to digital but at this time, we're going to stay with what we're doing now it's been very disciplined waiting for our core business return because theres no. Unlike us if the calculus back then I think it would be back hopefully sooner than later, Singapore is coming back we'll be in a very different place in six months or a year and that may change our thinking.
It's pretty simple, we want to get back to our core strength.
Other things at that time.
I think one of the thing that's important to note is we're very much focused on building rather than buying.
Want to make sure that we create a lot of long term value. Our company has a history of being a platform and develop it development and entrepreneurship.
That approach of our digital efforts in several different areas and we think over time that will provide the most reward for shareholders. So we're very patient we're thinking long term and yes, there are cycles and valuations across the digital space in our mind.
Execute against our long term strategy and take advantage, where we can.
Thanks I appreciate it.
Thank you.
The next question is coming from David Katz from Jefferies. David Your line is nice.
Hi afternoon, everyone. Thanks for taking my question.
Alright.
With respect to the U S land based opportunity set that's out there.
You sort of have your druthers or how your wishes come to pass what does the Lv.
Lvs U S land based.
Presence look like.
Overtime.
Any place there's very large scale buildings that can create large EBITDA, we're not looking to be a small regional player. Obviously, so that limits the opportunities doesn't it to Texas New York, We failed in Florida recently, but we're not done with Florida, we're still looking at that and.
There's very few places we can go and invest the kind of money one of investment the kind of returns we want.
Actually buying small businesses. So I think at this point as you talked to it today would have been Texas, New York and perhaps Florida.
Got it understood thanks very much.
Thanks, David.
Thank you and the next question is coming from Steve <unk> from Stifel. Steve Your line of lives.
Guys good afternoon.
Just one question for me.
You talked about getting to that.
<unk> 1 billion EBITDA run rate in Singapore, but potentially by the end of the year and I'm not sure you're going to answer this but.
Is it fair to say that March and maybe more so April on a monthly run rate basis is enough to get you to that $1 billion run rate level and I'm, just really trying to understand a little more how strong.
Recent trends have been.
I guess looking at March you were at about 700 million run rate. If you take if you annualized March and April looks better at this point. So I don't think it takes a lot to get there I mean, we honestly don't know why we wouldn't get there.
We won't get into specific numbers in April , but the trending with Singapore. The reference earlier Robyn someone asked a question about what's happening with outsized demand in all segments. So why wouldn't happen I mean, I think it's going to blow past $1 billion frankly, I think it should it just depends on if we see any pushback from COVID-19 restrictions.
We have an outsized opportunity Singapore is the best product in the market today Macao essentially is not available.
I think we compete very well anyway in Singapore, but its unique now and I think it's.
Sure the $1 billion in better.
The only negative there as you well know is China is still relatively close to it so that the market will miss but we feel very confident about our prospects in the last months things have gone from hesitancy to full bore excitement about what's happening in Singapore and I think the government.
I think I hope they share our enthusiasm.
Okay, great. Thanks, Robert I appreciate it.
Thank you and our final question is coming from Ben Chaiken from Credit Suisse. Your line is lives.
Hey, How's it going I guess, just a couple of two or three follow ups on Singapore, you mentioned $58 million in March can you remind me is that.
I believe there was some tax changes coming into coming into play I guess, simplistically VIP and mass. Each go up roughly 300 basis points is that was that in March already in the numbers yet.
Yes.
Which one that was and we were impacted as of March one led the change the reference yes.
Thank you and then two I think in the last few days there's been some.
Changes in Singapore regarding travel restrictions.
Can you remind us maybe just refresh us where we are today versus where we were in March.
But we arent today.
Our vaccine that you can get into Singapore, It pretty easily there are still restrictions you've gotta be if youre in the casino.
Smoking or drinking water or something to we'll take your mask, but pretty much. Its if youre a vaccinated you have full access to Singapore, It's a very different place. It was a month ago. So that's why we're still bullish on Singapore.
<unk> guarantee free entry rollbacks, there travelers and no quote a number of daily arrivals is no more restrictions. So we're back to where back in the business in Singapore, and a very positive way.
Got you and then just last quick one.
Get ahead of ourselves but.
You mentioned $1 billion, a few times, but why not renewed.
And one point.
7 billion pre COVID-19 .
The New Hotel company.
What is the building just a round number.
What would you say the trajectory or there is no. There is no new hotel coming building the hotel yet. So there is no new hotel there is a renovation of our current hotel.
$1 billion of base part, we think that's attainable, we're not trying to oversell it or over it get too excited ahead of ourselves, let's see where it goes we're looking at the results of the U S. We're very excited what's happened in the U S. The demand is there we see no reason why Asia should just keep ramping more positively and I guess you referenced that's a very unique asset a $1 billion.
The peak was the performance of MBS, we get back to something I think we will and then beyond that but it won't be this year.
Cool Thank you sure.
Thank you there are no other questions in queue. Thank you ladies and gentlemen. This does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day, we thank you for your participation.
Yes.