Q4 2023 Las Vegas Sands Corp Earnings Call
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Good day, ladies and gentlemen, and welcome to the <unk> fourth quarter 2020 earnings Conference call. At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments following the presentation.
My pleasure to turn the floor over to Mr. Daniel Briggs Senior Vice President of Investor Relations at fan.
Sir the floor is yours.
Speaker Change: Thank you joining the call today are Rob Goldstein, our chairman and CEO, Patrick Dumont, our President and Chief Operating Officer, Dr. Wilson Long Executive Vice Chairman of Sands, China, and grant Chubb, CEO and President of Sands, China in Edp, Nevada operations Today's conference call will contain forward looking statements will.
Speaker Change: I will be making those statements under the safe Harbor provision of federal Securities laws. The company's actual results may differ materially from the results reflected in those forward looking statements. In addition, we will discuss non-GAAP measures reconciliations to the most comparable GAAP financial measure are included in our press release, we have posted an earnings presentation on our website.
Speaker Change: Well, we started that presentation during the call finally for the Q&A session. We ask those of interest to please pose one question and one follow up.
Robert Glen Goldstein: But allow everyone with interest the opportunity to participate in this presentation is being recorded I will now turn the call over to Rob Thanks, Dan and thanks for joining US today <unk> delivered $654 million of EBITDA for the quarter. The number would have been $40 million higher if we had health is expected in the rolling segment.
Robert Glen Goldstein: It's only been one year since the Covid and the account will be.
Rob: Again in Q1 with $400 million EBIT in Q2, we did $540 million Q3, we did $630 million in the growth just keeps coming.
We look forward to continued growth in both gaming non gaming revenue, which will lift the entire market.
SCL: SCL continues to own the largest share of ongoing table win rolling table and slot <unk>. Most importantly, we have the largest share of EBITDA in Macao market by a wide margin.
SCL: We believe the completed Londoner will meet and perhaps even exceed the earning power of the nation.
SCL: Our future growth in Macao is tethered to these powerful assets, which will drive growth in the years ahead with its rooms gaming capacity retail entertainment and food and beverage we had stellar assets those assets will even get better as we complete the ongoing one 2 billion Londoner reinvestment program.
SCL: There is an ongoing speculation about the future growth of Mattel, Ken the Macau market grew to $30 35 billion $40 billion and beyond we believe that it will.
SCL: This underscores our confidence in the returns that we generate by capital investment programs in our portfolio we.
SCL: We're staunch believers in the growth of Macau market near and long term.
SCL: <unk> invested $15 billion in Macau to date Macao is the most important land based market in the world a few reference points to consider fourth quarter EBITA, assuming expected hold on rolling play represents considerable growth when compared to the previous quarters.
SCL: Our retail business in Macao has already far exceeded pre COVID-19 numbers I continue to expect the gaming portion of our business to follow the same path as Singapore and accelerate in 2024.
SCL: Let's pivot to the MBS in Singapore, seven quarters into our reopened MBS deliver these $544 million quarter. This is the largest EBITDA through one quarter of the history of the building. The power of this building is evident based on the results. Despite the disruptive impact of our ongoing $1 75 billion.
The nation.
Disruption notwithstanding MBS is hitting on all cylinders gaming lodging and retail perspective slots and <unk> MBS are approaching $1 billion annual run rate non rolling table as are exceeding $20 million of that drop per day.
SCL: Ours are escalating and the retail component is delivering far beyond pre COVID-19 numbers.
SCL: Mds validates the quality assets prevail and reinvesting in our assets will generate sustained returns MBS has it all and iconic building with superb decor and service levels to subtract the most desirable customers in every segment.
SCL: At the completion of both phases of the renovation program MBS will feature 770 suites. We previously had less than 200 suites. There is no denying this future how far can MBS go our future expectations towards the $2 billion and beyond and EBITDA per year.
Speaker Change: As you know we are bidding for a license in New York, We are receiving strong local support the cost of the building won't be in the $6 billion range, which enables us to develop a true five star resort with on many of the people.
Speaker Change: This is a massive opportunity we are very enthused about the prospects our business compelling. If we received a license we would be in the ground as quickly as possible. Thank.
Speaker Change: Thank you for joining us today, I'll turn the call over to Patrick before we move on to Q&A.
Patrick Dumont: Thanks, Rob we wanted to highlight some changes in the materials that we typically provide for the quarter.
Patrick Dumont: After discussions and review with the SEC, we will no longer be presenting hold normalized adjusted property EBITDA in our press releases SEC filings and supplemental earnings materials.
Patrick Dumont: These changes are being made to our materials for this quarter and for our reporting going forward.
Patrick Dumont: We believe that the analysis of our financial and operating results in any quarter will continue to benefit from an understanding of the impact of expected hold in our rolling volume segments for our reported results.
Patrick Dumont: We will continue to provide the impact of expected hold in our rolling volume segments for our earnings materials.
Patrick Dumont: Please see pages six and seven of our earnings presentation for an overview of the new presentation format.
Patrick Dumont: For this quarter the quarter ended December 31, 2023, we generated 654 million of adjusted property EBITDA in Macau, a very strong operating result.
It is important to note that we held to one 6% and a rolling segment in Macao.
Patrick Dumont: EBITDA would have been higher by 40 million in Macao had we held as expected and our loan segments.
Patrick Dumont: At Marina Bay Sands for the fourth quarter of 2023, we generated $544 million and adjusted property EBITDA. Another strong result.
We held $4 five 7% on a rolling segment in Singapore, EBITDA would've been lower by $71 million on DFS, but we held as expected and are rolling segment.
It is also important to address our margin structure, how do we held as expected in our rolling line segments in Macao and Singapore.
In Macau, our margins in the fourth quarter of 2023 would have been 35, 9%.
Patrick Dumont: Improvement of 100 basis points as compared to the third quarter of 2023 with our hold was as expected are willing buyer segment.
Patrick Dumont: At MBS had we hold as expected or rolling volume segment, our fourth quarter of 2023 margin would've been 48, 8% an increase of 170 basis points sequentially.
Patrick Dumont: It's important to note that both in Macau and are willing to pay sands and Singapore, we are generating revenue growth.
Patrick Dumont: EBITDA growth on when considering expected hold for rolling volume segments margin expansion.
Patrick Dumont: We are very focused on the quality of our offerings on further investment to drive high value visitation to our properties.
Patrick Dumont: The resulting revenue growth and on margin expansion over time.
Patrick Dumont: Looking ahead, we are excited about our progress in our markets and we are focused on growth for the long term.
Patrick Dumont: Let's move to the Q&A portion of our call.
Patrick Dumont: Thank you ladies and gentlemen, the floor is now open for questions. Thank.
Patrick Dumont: If you would like to enter the queue to ask a question. Please press star one on your telephone keypad now.
Patrick Dumont: With me on Speakerphone today, please pickup your handset to provide optimal sound quality awesome, we ask each participant to limit yourself to one question and one follow up please hold a moment, while we poll for questions.
Patrick Dumont: And your first question today is coming from Joe Greff from JP Morgan.
Joseph Greff: Your line is live please go ahead.
Joseph Greff: Good afternoon, guys. Thanks for taking my question.
Joseph Greff: Yes.
Joseph Greff: Yes.
Joseph Greff: Obviously the.
Joseph Greff: The premium Ness had.
Joseph Greff: Sequential growth.
Joseph Greff: <unk> exceeded the base mass I was just hoping can you talk about the progression of a base mass recovery throughout the fourth quarter and then clearly what we're seeing out of information for the Macau market as a whole in January month to date.
Joseph Greff: It's nice overall mass growth.
Joseph Greff: Pick up and.
Rob: And as you said before Rob.
Rob: Growth keeps coming I was hoping if you can talk about sort of the relative performance of base mass in January and if we're seeing.
Rob: Did it pick up in that segment.
Joseph Greff: Thanks, Joe as you know, we don't comment on the current quarter the numbers speak for themselves.
Market depreciation now in January thus far has been published and very encouraging government a continuation of December as for our performance in Q4, all turns the grant to talk about the acceleration is based on premium mass grant.
Ralph: Yes, Ralph Thank you.
Ralph: Jos a.
Ralph: Segment.
Ralph: Ratio of growth in the fourth quarter, we had 13% growth in premium mass.
Joseph Greff: And 8% growth sequentially on based on that so I think <unk> is progressing nicely through the quarter, it's just that premium mass.
Joseph Greff: Great.
Joseph Greff: <unk> that exceeded that if you look at the visitation trends during the fourth quarter.
Patrick Dumont: <unk> recovered almost 90% of 2019 levels on visitations. So I think the base mass is continuously progressing in building up transport transportation.
Patrick Dumont: Transportation infrastructure has been improving.
Patrick Dumont: I think the demand to come.
Patrick Dumont: The desire to take advantage of the non gaming events and coming on stream.
Speaker Change: Across all our properties, but across the whole industry.
Patrick Dumont: <unk> been very effective so I think you should expect that.
Joseph Greff: That growth pattern to continue.
Speaker Change: Granted patents <unk> also.
Speaker Change: Grants all I ask is it fair to say transportation and this is the whole lubricant that supplies the market into Macao is getting better.
Joseph Greff: Youre after COVID-19 it seems to me as if the ability to get the desire is there but also the ability if theres improving daily is that fair to say.
Patrick Dumont: Yes, the ability to get there has been improving.
Joseph Greff: But the desired desirability of the destination is even clearer.
Joseph Greff: You can see that.
Joseph Greff: Domestic flight too.
Joseph Greff: Mainland.
Joseph Greff: Key Greater Bay area airports has all been fully recovered.
Joseph Greff: And if you look at our ferry statistics.
Joseph Greff: Passengers that we carried in the fourth quarter recovered to 93%.
Joseph Greff: Pre COVID-19.
Joseph Greff: Only 52% of our selling capacity so clearly people.
Joseph Greff: MPC aspect about coming.
Joseph Greff: Even though the transportation capacity.
Joseph Greff: Recovering and that's also clear.
Joseph Greff: Gratifyingly the overseas thus far in visitation.
Joseph Greff: Recovered.
Joseph Greff: Romantically in fourth quarter, especially from Southeast Asia.
And thats, great to see from Macau and that's despite the direct flights from foreign countries into Macau.
Joseph Greff: It Hasnt hasnt recovered.
Even by 60% in the fourth quarter versus pre Covid, but visitation now is getting back up to 80% 90% of what it was before.
Joseph Greff: Despite the slight connectivity still still catching up.
Joe: Great and then my follow up Joe.
Joe: Hey, Joe before the follow up one thing important to note also it's been a wallet since we talked about this but we actually have capacity to absorb base mass business as it continues to come into the market. So when you think about the property portfolio that we have the investment that we've made in terms of amenities that tourism attraction for the base mass customer the ability to serve.
Joe: That customer in terms of food and beverage shopping entertainment, but also the fact that we have the capacity as that market continues to grow we will be the beneficiary of that and it's important to note because the market is not at capacity yet so as more visitors come in and just based on that segment will have the ability to absorb it sorry.
Joe: Sorry, what's your next question.
Patrick Dumont: My next question is for you Patrick.
Patrick Dumont: Obviously, it's nice to see $1 billion of buyback activity. This past quarter do you view that as a sustainable level unless there is some.
Patrick Dumont: Huge volatility in the share price level.
Patrick Dumont: I think there was.
Patrick Dumont: I think there was some activity during the quarter and to be fair I think we looked at the share price levels as an opportunity when we think about our future capital return.
Joseph Greff: As we said before we kind of expect our share repurchases will be more heavily weighted into the beds.
And so I think we fundamentally believe in the long term value of share repurchases the benefit of the compounding the benefit of share shrink tricking that denominator in terms of amount I think we will be measured across time.
If you sort of look at our balance sheet you look at the free cash flow, we generate we're going to look to be aggressive when we can and I think we're going to run a program, where we look to acquire shares consistently over time, but I think.
Patrick Dumont: I don't know that will necessarily buy the same amount that we bought in this quarter going forward every quarter.
Patrick Dumont: Okay, and then one final thing congratulations grants on on your promotion that's all for me. Thanks.
Patrick Dumont: Thank you Jeff Thank you very much.
Patrick Dumont: Thank you. Your next question is coming from Stephen Grambling from Morgan Stanley. Steven Your line is live. Please go ahead.
Stephen Grambling: Steven Your line is live. Please you May go ahead with your question now.
Stephen Grambling: Hi, there sorry can you hear me.
Stephen Grambling: Yes, yes.
Stephen Grambling: Sorry about that so.
Stephen Grambling: You may have touched on this a little bit, but as we think about the renovations coming up for the remainder of sands Cotai central slash the londoner.
Stephen Grambling: Maybe help contextualize.
Stephen Grambling: How that will compare to the first renovation both in terms of disruption and then contribution.
Stephen Grambling: Well, it's kind of a grant for that common grant londoner.
Stephen Grambling: Sure. Thanks, Rob Thanks for the question, Steve I mean I think.
Stephen Grambling: We can say in terms of the timeline we've already commenced.
Stephen Grambling: The renovation of the Sheraton hotel.
Stephen Grambling: And that will continue.
Stephen Grambling: Through the whole of 2024.
Stephen Grambling: And we will hopefully complete sometime in the first quarter of 2025.
Stephen Grambling: And yes, there could be some impact from construction disruption, especially as we go into the second half of the year.
Stephen Grambling: And that little bit depends on when the works.
Stephen Grambling: Approve to commence on the Sheraton side of the casino floor.
Stephen Grambling: And also as well as the number of keys.
That will be out at any given time at the Sheraton.
Stephen Grambling: That said I think we will be managing this whole.
Stephen Grambling: Process, just as we did in the first phase when we compared it to holiday Inn.
Stephen Grambling: Into the Londoner starting in 2019.
Stephen Grambling: So we'll be we'll be well used to.
Stephen Grambling: Yielding the rest of the portfolio.
Stephen Grambling: As you know.
Stephen Grambling: <unk>.
Stephen Grambling: The yields we're getting at the Sheraton side of the building.
Stephen Grambling: It is lower than the rest of the portfolio.
Stephen Grambling: So we will be trying to.
Stephen Grambling: Yeah.
Stephen Grambling: Not miss any opportunity.
Stephen Grambling: The yield the.
The rest of the portfolio, whilst the works going on.
Stephen Grambling: And this is something that we've been doing throughout these existing building renovations.
Stephen Grambling: Right now the schedule is still a little bit fluid just pending some statutory approvals.
Stephen Grambling: But at this point our expectation is.
Stephen Grambling: The first half will be relatively normal and then expect to see some disruption into the second half.
Stephen Grambling: And by 2025.
Stephen Grambling: We got to be.
Stephen Grambling: Dramatically.
Stephen Grambling: Elevated and different position.
Stephen Grambling: In terms of the entire lender now you asked about the phase one and phase two contribution.
Stephen Grambling: Well, we have we have done.
Stephen Grambling: The bulk of the work in the public areas Nick's Dinos facade.
Stephen Grambling: In the phase one in.
Stephen Grambling: A retail mall and one of the two casino floors.
Stephen Grambling: But we only touched.
Stephen Grambling: 1000 <unk>.
Stephen Grambling: <unk> out of the 6000 that we have so.
Stephen Grambling: The main difference is that phase two is going to address the majority of the hotel.
Patrick Dumont: Inventory in terms of renovation.
Patrick Dumont: Of course.
Patrick Dumont: The main gaming floor that we have on the Sheraton side.
Stephen Grambling: Steve just following brands comments I understand the market's concerned about London disruption. It's a valid point. However, two thoughts for you. One is that I think as the market continues to accelerate like we are seeing for January market numbers.
Stephen Grambling: Perhaps we can overcome that by using other assets in the portfolio.
Stephen Grambling: <unk> I think when you see the eventual transformation of Monday or it'll be in southern on par with Indonesia or beyond so it gives us two assets, we think can probably be $3 billion by themselves and while there is disruption in 'twenty four 'twenty five and beyond gives us something is unique in that market the number one asset.
So number one in one assets in that market for years to come. So there may be some disruption maybe market force can overcome that but.
Stephen Grambling: The end result is well worth the pain.
Stephen Grambling: That's all Super helpful. Maybe an unrelated follow up on Singapore looking at least at the visitation data.
Patrick Dumont: It seems like it was mixed at best but yet youre still seeing that market grow sequentially from an EBITDA standpoint revenue I guess, what are you seeing from China customers coming back to the market any initial read and how should we should be thinking about that building into next year.
Patrick Dumont: Yes.
Patrick Dumont: I think I'm happy to give it a.
Rob: Go ahead Rob.
Rob: I'll follow you go ahead.
Rob: Yes, so I think the key thing about Singapore, it's really about quality of tourism. So we've been very focused on investment if you heard us over the last couple of calls and what our investment thesis is that the higher quality assets, we have a higher quality tourism will attract and thats really on full display here. So it's not about quantity you talked about a full recovery and the fact that we are getting very high value tours.
Rob: If you look at Singapore as a market, it's incredibly attractive right.
Rob: <unk> high net worth.
Rob: Population there is a lot of family office is moving their business activity. There there's political stability there strong tourism infrastructure, it's got a strategic location all of those things are benefiting.
Rob: The Singaporean market overall, and helping drive the business that way and so for us.
Rob: There's been a ramp from China that's true.
Rob: But theres still a lot more to go.
Rob: Let's call it 50% on visitor arrivals you may have heard that at some point.
Rob: Go visa fleet. This year, we're hopeful that that actually occurs which there is no way to know exactly how that official that'll be but it can't hurt but I think the key thing is there's just a very attractive market, but it really the the results you've seen this quarter in a building that was really under construction didn't have its full suite complement and didn't really have a lot of the <unk>.
Rob: These that will have an halfway through 'twenty four 'twenty five.
Rob: I think really speaks to the capability of the market and where this building can go you heard Rob in his remarks about our view of the trajectory of this business, we're very bullish on it but I think it's really just about high value tourism I wouldn't look at the absolute level of visitor arrivals and use the determining factor for the business can go.
Patrick Dumont: I think Patrick's comments is spot on Steve.
Patrick Dumont: Have limited capacity constrained building in Mds. Unfortunately, we only have so many rooms suites, which we got 10 times as much but we don't so the mass the mass market tourism is important to us as the right to us in the market. We look at this asset is a $2 billion asset today annualized EBITDA, but we believe in growing.
Patrick Dumont: 10% to 20% over the next three or four years, and then hopefully we can finalize our plans and the government wants the government blessing. Another building like we believe that that's going to open later this year and make us a $3 billion projected EBITDA by end of decade, Singapore. So we see ourselves now to go into 2223.
Joseph Greff: Two four and eventually stepping up to $3 billion, we see huge growth in this asset. It's just beginning we got obviously have hampered by COVID-19, but to watch your growing it's growing our only disappointment Singapore can you just don't have more space because it's a very desirable market in that building probably the most valuable in hone.
Joseph Greff: They'll building ever built in the World and will just accelerate next 345 years until hopefully we can tell you with finality, we have a deal in phase two.
Joseph Greff: Makes sense, that's all helpful. Thanks, so much best of luck.
Joseph Greff: Thank you.
Joseph Greff: Steve.
Joseph Greff: Thank you. Your next question is coming from Carlo Santarelli from Deutsche Bank Carlo.
Joseph Greff: Carlos Your line is live please go ahead.
Joseph Greff: Alright, Thank you hey, guys.
Joseph Greff: Rob you touched on it a little bit just there, but I was wondering.
Speaker Change: Obviously, there's a ton of moving parts with Covid and everything else, but $1 billion in phase one at Marina Bay Sands returns on that product looks to be very favorable.
Rob: $750 million over 2024 and into 2025 I was wondering how you think about returns there and then to your point there at the end of your last comments when do you expect to kind of have an update around around the timing and perhaps the spend on the larger scale projects there.
Joseph Greff: I'll just reiterate how much we believe in Singapore as a market my comments about $3 billion, we actually believe is very attainable.
Patrick Dumont: Opened its new building late in the decade as to the update Patrick has been right in the middle of that so Apache. Please take it away in terms of phase II Singapore.
Patrick Dumont: Yes, I think.
Patrick Dumont: It's an interesting comment I think the key thing for US is that we are in an investment driven story right. So the more we invest in high quality assets with better service levels. We have the more we're going to have pricing that will really differentiate our product. The more we're going to have high value tourists and the more EBITDA margins will grow.
So youre seeing that happen in real time in Singapore, and so for US I think we will finish the third tower by Chinese new year next year.
Patrick Dumont: That was $50 million go in will soften the amenity that has to be done across parts of 'twenty five but by the mid part of 'twenty five we're basically going to have what is in effect a brand new building, it's going to be fully renovated and you'll get to see the full power of the suite products on a rolling side, you get to see the power of the premium mass and all the amenities that we have the shopping entertainment all the things.
Patrick Dumont: So were adding in terms of our premium mass lifestyle program that you can't get any place else. These are all very positive things in the quality of these amenities customers want to be repeat visitors and so for US. These investments will drive very high returns. So that's the reason why we are why we're willing to do that the reason why the board was supportive you can see the trajectory of EBITDA now we're not even done so we think.
Patrick Dumont: Tower, three will be very accretive in terms of investment and you heard the numbers Rob just mentioned, we're very confident in those numbers, we feel very strongly but thats, what we should be going and then in terms of the next building IR too we've been in very close discussions with the government over many months, there's a lot of moving parts here a lot of things we have to satisfy this is a project of national <unk>.
Patrick Dumont: Again, we want to make sure that everyone's comfortable with it and if we get all the proper approvals and we're hoping in the next quarter or two that will get everything that we've been making good progress we've been visiting Singapore, and we feel very confident where we are and hopefully we'll be able to get all the green lights, we need and we'll be able to get going soon.
Patrick Dumont: That's all I need thank you guys helpful.
Joseph Greff: Thank you I appreciate it.
Patrick Dumont: Okay.
Patrick Dumont: Thank you <unk>.
Patrick Dumont: Next question is coming from Shaun Kelley from Bank of America. John Your line is live. Please go ahead.
Patrick Dumont: Hi, good afternoon, everyone.
Patrick Dumont: I wanted to offer my congrats too to grant on the promotion as well.
Patrick Dumont: And maybe speaking of promotions.
Grant or whoever if you can comment a little bit just on the promotional environment. I mean, I think this is a big question or theme that came out of the quarter.
Patrick Dumont: Last quarter, and just sort of what you are seeing particularly at the upper end of the premium mass segment right now and in general our premium mass market margins consistent with your pre COVID-19 expected ranges or are they still a little bit below that and what would it take for them to recover.
Patrick Dumont: Grant.
Patrick Dumont: Sean.
Sean: Thank you.
Sean: Thank you Sean.
Sean: Ed.
Sean: Yes.
Sean: I think if you look at the competitive landscape.
Sean: Landscape of course, it is very intense at the premium mass.
Sean: Segment.
Sean: But if you look at also.
Sean: Our margin structure I think the way, we've driven our business.
Sean: No different from before which is.
Really drive and elevate the product.
Sean: And to drive the content.
Sean: Yes.
Sean: Rents that we've put on.
Sean: Across a whole range of.
Sean: Sectors.
Sean: To attract.
Sean: Visitors and patrons.
Patrick Dumont: And I do think that back to Patrick's opening comment.
Patrick Dumont: Look at that margin progression underlying margin grew another 100 basis points.
Patrick Dumont: We actually saw.
Patrick Dumont: A good improvement in <unk> margin sequentially.
Patrick Dumont: So.
Patrick Dumont: We are we are dealing with the competitive market as any competitor does.
Patrick Dumont: It is intense.
Speaker Change: But we believe strongly that in the end product wins.
Speaker Change: And London and Grand suites at four seasons are true.
Patrick Dumont: Living evolving testaments of that argument that good product wins.
Patrick Dumont: And they are going to be fluctuations in the competitive intensity in particular segments different points in time, but to have a sustainable competitive advantage and sustainable profitable growth.
Patrick Dumont: Product and service and the content, we put into the resort talent.
Patrick Dumont: It'll go into trumps everything else.
Patrick Dumont: And you can see that through through what we've done at London is already at a run rate of close to 800 million as it was exiting the year.
Patrick Dumont: And you can see that.
Patrick Dumont: Hey, this is going.
Patrick Dumont: We'll end up with a margin structure.
Patrick Dumont: As we already are in Q4.
Patrick Dumont: Back to the same level as 2019, and then as the revenues continue to grow.
Patrick Dumont: Should logically.
Patrick Dumont: That margin to continue to improve and therefore exceed where we were in 2019.
Patrick Dumont: Sean can I just follow up on <unk> comments and my experience has always been the same.
Regardless of the market great buildings, and based variances always prevail, we have those in Macau. If you look at our EBITDA in Q3, I believe our EBITDA exceeded our next two competitors combined which is.
Patrick Dumont: Quite a statement to the power of our buildings there'll be promotional issues occasionally here and there.
Patrick Dumont: We have a structural advantage, which can't be undermined we have more capacity from a lodging food and beverage retail entertainment and gaming capacity anybody Macau by a bunch and that will enable us to avail, both a margin and EBITDA base and so yes, there'll be occasionally a promotional issue here and there but emulation.
Patrick Dumont: As far as our business our margins remain intact, our dominance remain intact and all segments in Macao.
Patrick Dumont: Thank you both for that and then maybe just as my quick follow up.
Patrick Dumont: Last quarter. It was mentioned grant I think one of your comments or one of your responses a little bit about a bit of an uneven recovery, we were seeing coming out of some of the source markets from broader mainland China as some of the air travels reopening wondering if we're continuing to see that uneven recovery or any other broader signs of that.
Patrick Dumont: Where the macro situation sits in China, because so far it again seems to be continuing through January it seems like Macao is relatively unaffected there, but I wanted to sort of an update on that on that trajectory. If you could give one.
Sure Sean I think if you look at fourth quarter. It didn't even know quite a bit I think if you look at Ben's visitation from non Guangdong.
Sean: As Guangdong slides.
Sean: Page 20 are catching up.
Sean: Yes, Thanks, Dan we're catching up significantly.
Daniel J. Briggs: On the recovery rate and non Guangdong.
Daniel J. Briggs: That said it is still uneven in the sense that if you look at the breakdown by province, some of the wealthier.
Daniel J. Briggs: <unk>.
Daniel J. Briggs: Have recovered Raytheon.
Daniel J. Briggs: Pre COVID-19 levels of visitations, particularly.
Daniel J. Briggs: Particularly in the.
Daniel J. Briggs: Nancy River Delta.
Daniel J. Briggs: Versus even even Guangdong.
Daniel J. Briggs: <unk> is actually much higher but overall I think you can see it.
Daniel J. Briggs: Evening out in terms of the recovery rate in Guangdong versus non Guangdong and then also I think the fourth quarter. The overseas foreign country visitation also started to accelerate and even now as well against the.
Daniel J. Briggs: By region sales market. So I think you are seeing.
Daniel J. Briggs: I think a progressive improvement across across all these source markets.
Daniel J. Briggs: Yes.
Daniel J. Briggs: I don't know that they will figure out anything to add.
Daniel J. Briggs: Add on the.
Daniel J. Briggs: On the China side in terms of.
Daniel J. Briggs: The economy.
Yeah.
Speaker Change: Sean that China is still recovering from the Covid period and.
Speaker Change: But what is evident is the company's quarterly performance has actually been trending well.
Speaker Change: We have seen.
Speaker Change: Grant alluded to.
Speaker Change: Healthy growth in the number of visitors, especially from the Nonconvertible region.
Speaker Change: One observation is that.
Speaker Change: When long haul travels of Chinese travelers has not fully recovered.
Speaker Change: <unk> is emerging as a top tourist destination for short haul travelers from the Chinese mainland.
Thanks.
Speaker Change: Yes.
Thank you everyone.
Speaker Change: Thank you appreciate it.
Speaker Change: Okay.
Speaker Change: Your next question is coming from Chad Beynon from Macquarie Chad. Your line is live. Please go ahead.
Speaker Change: Afternoon, Thanks for taking my question.
Speaker Change: Wanted to ask one just about the retail portfolio we have.
Chad Beynon: Been hearing and seeing a little bit of pressure just kind of in the luxury retail space, particularly in Asia based on the numbers that you put out and I guess the turnover rent that you collected.
Chad Beynon: We're not seeing that but how are you thinking about the recovery in retail.
Chad Beynon: Are you getting the right customers and Theyre now and do you think this could continue to improve as visitation and overall spend improves in 25 or 24. Thank you.
Chad Beynon: Looking at your deck I think it's page 28 2009. It gives you a pretty good.
Chad Beynon: Look at our retail portfolio in the Asian be blunt about it.
Chad Beynon: Be unhappy to these numbers almost $3000 a foot and a 600000, but more MBS benicia, almost 2000 800000 feet and of course $9200 towards the four seasons luxury and a mere 40 drugs.
Chad Beynon: Non luxury so the answer is we are seeing of our retail portfolio is approaching $700 million of contribution and growing.
Speaker Change: Of course, there is the discussions out there <unk> made about a slowdown globally.
Speaker Change: It looks to me that our best.
David: David has been a retail expert and it feels like we continue to see opportunity to remerchandise and get better and better at the retail segment.
David: We still believe that retail is a long way to go our buildings are a little different the other retail and that we attract a higher value customer in both Macao and Singapore as you referenced the lack of supply in Singapore. So I think that mall, just keeps appreciating and we keep re merchandising it to be more effective everyday more luxury.
David: Is a more upscale and Macau, we've got to work cut out for us in some of our buildings are not there yet.
Reason there is some work to be done, but I don't have to argue with these kind of results $677 million of contribution.
David: And it just keeps accelerating.
David: It compares very favorably with 2019, so we feel very bullish about our retail prospects.
And again it takes work David Sylvester constantly remerchandise rethink reassess the portfolio. He is got a lot of working too, but the numbers I think are stellar and I think we'll continue to be stellar for years to come.
Thanks, Rob makes sense.
David: And then just in terms of the hold understanding that.
David: It's kind of random here in terms of luck or unlucky has there been any difference in terms of game play or you talk about kind of the recovery from the Chinese consumer.
David: And I am speaking of Singapore, but hold has been high now for three quarters.
David: So is there anything that could kind of lead to maybe an elevated hold in that market.
David: In the near term or should we expect kind of the the reversion to the mean that we've seen in prior quarters and years.
David: I think it's safe to say this business always runs on mathematics, the mathematics prevail and I wouldn't take three quarters is an ongoing trend forever there'll be a dark day in Singapore will miss by $70 million, because we take the highest volume players in the world people bet.
David: Lots of money and some days it goes lithium something doesn't this quarter, obviously in Singapore with us, but I would caution you that I don't think its the bettors are changing and in fact, if anything you see there's more of them more influence coming out of Asia, and we're fortunate to have the capacity to handle all of it but I don't think you can point to.
David: Embedding patterns in either jurisdiction that would elevate or.
David: Hurt the whole percentage it will be will revert to the mean always in Macau will come back next quarter, probably and do $70 million higher and Singapore may have a bad quarter Grant you have any comment on that that's how I see it.
Grant: That's exactly right, Rob and people have relatively short memories in the fourth quarter of 2022.
Grant: 100 million plus adjustment downward.
Grant: Impact from low hold at Marina Bay Sands, So I think one or 234, even five quarters is actually a relatively short period of time and sample size.
Grant: For you not to get potentially very random results that deviate from the expected normal hold.
Grant: But I think it's fair to say, yes, the mathematics always prevail and given the scale of our business.
Grant: Time for one year two years.
Grant: They very much.
Grant: The expected range.
Grant: And as you saw in Macau as well we had.
Grant: Three quarters holding.
Grant: NASA currently above the expected.
Grant: <unk>.
Grant: And then fourth quarter with us.
Grant: We ended up at about three 3%, which is exactly where we expect it to be.
Grant: Hey, Jonathan.
Grant: Yes.
Grant: Just for fun going back maybe 10 years ago, we had a horrific.
Jonathan: Number of quarters in a row due to a few players I think was Indonesia, Malaysia and lost we lost obscene amounts of money quarter after quarter to them and some people on board were concerned that they wanted to be sure. We talked we looked at everything and we're very comfortable one there was a belief there for about for a while that these people are magical it could be beaten.
Jonathan: Lost back the entire winnings and then some and it always goes that way I don't think you can ever get too emotional about this quarter is very interesting to see the Macau mis and the Singapore over achieving but in the end the games, they consistent pairs and ties versus straight best do matter, but the Asian gamblers special and he or she shows.
Jonathan: Up consistently and they're great customers I wouldnt lead to success in a few quarters change your views on the mathematics of backlog. We don't so thank you. Thank you.
Chad Beynon: Thanks, Chad.
Chad Beynon: Thank you. Your next question is coming from Robin Farley from UBS Robin. Your line is live. Please go ahead.
Great. Thank you.
Chad Beynon: Two questions if I could squeeze it in one is just any comments on <unk>.
Chad Beynon: Chinese new year upcoming anything with trend.
Chad Beynon: And then totally unrelated.
<unk> latest expectations for timing of a decision.
Thanks.
Chad Beynon: Oh, I'll take New York first Robyn.
Speaker Change: And the Governor Governor Hogle I think it was this week commented on.
Speaker Change: You're seeing something happened this year I hope that's true.
Speaker Change: As you know we've been working on New York for quite a long time.
Speaker Change: And we think we have a very compelling bid, but we don't have any great insight that will happen that we sure hope the governor's correct and either way win or lose we go decision in calendar year 2004, that's our hope, but I think it would be sort of the timing of any insight beyond the governor's comments.
Speaker Change: I think we just we work very hard in this project. We believe we have a really good chance of getting one but I don't give you I couldnt give you any guidance beyond that.
Speaker Change: Chinese new year is do you think they are going to be there for that will that be.
Speaker Change: Well the year of the Dragon bring anybody that building I hope so.
Speaker Change: Okay.
Robert: Hey, Robert.
Robert: Not really comment on the current quarter and obviously booking windows are sure.
Robert: But I think you can see.
Robert: From the December holidays.
Robert: These peak holiday periods, even though the end of December.
Robert: Take China holiday it.
Robert: It is in Hong Kong and in some other parts of the region.
Speaker Change: But the ramp up in <unk>.
Speaker Change: During those peak periods.
Speaker Change: Was tremendous so hopefully.
Speaker Change: That will be replicated through.
Speaker Change: To the Chinese new year as well so.
Speaker Change: There's a lot of optimism and expectations that this will be a strong one yes.
Speaker Change: Robert I do think this summer with Rob I think December was really great tell what might happen in Chinese December numbers are close, but just terrific and again you see the market numbers from January. So we're very hopeful that dragon is a huge year for us into the market.
Speaker Change: Great. Thank you and congratulations on the new role.
Speaker Change: Thank you Robert.
Speaker Change: Thank you. Your next question is coming from rent months, who are from Barclays.
Speaker Change: Good evening, everybody. Thanks for taking my question.
Speaker Change: In Singapore on the phase two.
Speaker Change: I was wondering if you could.
Speaker Change: Maybe remind us the total room count exiting the year and then specifically with regards to disruption cadence what is the quarter to quarter and overall year look like in terms of how that will flow through the.
Speaker Change: The P&L.
Speaker Change: Back to you agree with that yes.
Sure so.
Speaker Change: I think when we finished the year, we were around 2200 keys available.
Speaker Change: Next year, because the construction T three tower three.
Speaker Change: We're going to get down into the mid six hundreds in Q3 is probably going to be our peak of disruption.
Speaker Change: But those rooms are our smallest right now and really have our lowest yield so hopefully the impact will be minimal and we'll be able to yield because of the compression.
Speaker Change: Higher value customers the performance and we're gonna be sands has been quite good and I think we'll be able to yield up and the renovated portion of the building.
Speaker Change: Sorry, what was the rest of your question I'm sorry. So then the ending the ending key count when all is said and done with suites and normal rooms.
Speaker Change: It's.
Speaker Change: Mid <unk> hundreds.
Speaker Change: The ATM is perfect. Okay, and then as a quick follow up just a broader question. We haven't really talked about non gaming spending I was just curious if you could give us update on your efforts on that front and maybe.
Speaker Change: How youre outlook has evolved for the return profile as we sort of go into 'twenty four.
Chad Beynon: Non gaming spend.
Chad Beynon: When you say non gaming can you be more specific retail food and beverage hotel you of course, sorry about that yeah with regards to the concession agreements.
Chad Beynon: Oh, I see okay, I'm going to handle that but I would say we were a little bit different the rest of our competitors in terms of we've been spending money aggressively Macau forever 20 years on entertainment and other things. We believe it is a huge value add I'll, let grant take the question, specifically, but I think.
Chad Beynon: Again, it's important to note we are a different animal than other people and because those concessions we welcome it and we've been doing it before the concession mandate I think it's been very beneficial to our company grant.
Grant: Yes. Thank you for the question Yeah, I think in 2023, we we win.
Grant: Very intensely on investing across all of their non gaming.
Grant: Categories that we committed to in the concession.
Grant: As Rob said.
Grant: Many of these categories.
Rob: Categories that we have been investing in and are involved in for a very long time. So I think whether you look across entertainment.
Rob: <unk>.
Rob: Yes.
Rob: Of those 80 shows that we put on.
Rob: During 2023.
Speaker Change: With some amazing record runs attend.
Speaker Change: Attendance.
Speaker Change: Firstly with the Jackie Chan concert in Cotai Arena, and then towards the end of the year.
Speaker Change: Gotcha.
Speaker Change: In Hong Kong.
Speaker Change: Had a great 2014 show run at the Londoner.
Speaker Change: Probably.
Speaker Change: Our new standards.
Speaker Change: Precedent for many residencies.
Speaker Change: Macau and then across other categories in mice in on coach.
Speaker Change: In in themed attractions.
Speaker Change: And gastronomy across the board we've been investing heavily.
Speaker Change: I should also give a chance.
Speaker Change: We'll speak to some of those.
Events and projects that we've been heavily.
Speaker Change: Investing in as well.
Speaker Change: Suffice to say versus our original forecast for what we would invest in the first year after 10 years.
Speaker Change: We greatly exceeded that.
During during 2023.
Speaker Change: And we're looking to do so again.
Speaker Change: In 2024.
We're Friday night.
Speaker Change: Do you want to add to the non gaming.
Speaker Change: Session and investments we're making.
Speaker Change: Yeah, we have.
Speaker Change: Past years been investing heavily in the areas that Greg just described.
Speaker Change: And by a long way off we are the leader in the mice market. So we are still seeing a very strong presence of mice activities in our properties.
Speaker Change: For non gaming platform the shows.
Speaker Change: In helping too.
Speaker Change: To promote Macao as a destination.
Speaker Change: Not just for gaming.
Speaker Change: Therefore, we have a lot of art exhibitions caucho shows.
Speaker Change: <unk> really put.
Speaker Change: US apart from the other competitors.
Speaker Change: Great very helpful. Thanks Al.
Speaker Change: Thank you.
Speaker Change: Thank you. Your next question is coming from David Katz from Jefferies. David Your line is live. Please go ahead.
David Katz: Hi, everyone. Thanks for taking my questions.
David Katz: Both of them one shot if I could follow up on the.
Patrick Dumont: Share repurchases, Patrick not asking about how much or when but just thinking about how.
David Katz: The sort of family stake.
David Katz: It takes a long term view on where you'd like to be or how we might think about that evolving.
David Katz: Over time, and then second.
David Katz: Since we last.
On an earnings call Theres been an awful lot of activity and focus in Texas, and if you could share some of your views and pieces around.
David Katz: <unk>.
David Katz: What what the families activities and how that might relate to the company and our shareholders.
That would be helpful as well thanks.
David Katz: Sure so.
David Katz: I think first off I think we see value in both equities.
David Katz: So we are really long term bullish.
David Katz: From a company standpoint, we're going to continue to be aggressive as you said before.
David Katz: Focusing on investment for growth.
David Katz: <unk> seen the success of our.
David Katz: Capital allocation programs, both in Macau as Grant just described then in Singapore and driving growth in high value tourism.
David Katz: Diversifying our amenities and by creating margin and revenue expansion. So we're very focused on investment for growth that being said, we generate a lot of free cash flow and we anticipate to generate free cash flow in the future that we'll be able to use to return capital to shareholders. So I think the company will look to be aggressive and measured over time as we return capital.
David Katz: Sure.
David Katz: Through share repurchases to shareholders I think we've always had a dividend.
David Katz: Aside from the pandemic and I think we like having a dividend we think it's helpful for shareholder returns.
David Katz: I think it's an important component of our overall.
David Katz: Shareholder value strategy, but that being said, we are going to be overweight to share repurchases.
In terms of in terms of Texas I think the most important thing is that Las Vegas Sands is actively.
Trying to facilitate the development of integrated resorts in the state of Texas, Antigua legalization of gaming and so we're very excited about it we think it's an unbelievable market.
David Katz: Over time, we hope that it happens I can't tell you when it's going to be.
David Katz: But we're very focused on it as a company.
David Katz: And we like the opportunity to develop some very unique tourism assets specifically in Dallas.
David Katz: We think thats a great market.
David Katz: We're very focused on it and we think the opportunity there would be a great one.
David Katz: In terms of the families activities in Texas, I think we like the state we're very obviously happy with our investment there. We're very excited about it and we'll look to be a part of the business community there, but in terms of Lvs, we're very focused on bringing.
David Katz: Integrated resorts are definitely resource in the state of Texas.
David Katz: And the development opportunity that would exist there.
Thank you.
Yeah.
David Katz: Thank you. Your next question is coming from Dan <unk> from Wells Fargo. Dan. Your line is live. Please go ahead.
Speaker Change: Hey, good afternoon, everyone and thanks for taking my questions.
Speaker Change: I wanted to follow up on China, and as it relates to capital allocation.
Daniel J. Briggs: Leverage there I think is is around three times at this point it should be much lower than that as you kind of make your way through 2024, how do you think about.
Daniel J. Briggs: The subsidiary there resuming dividend payments up to the parent and then obviously your stake went up a little bit through the quarter.
Daniel J. Briggs: Through those that repurchase so maybe does that incentivize some some some of those dividends coming up sooner than later.
Company Representative: Hey, if it's okay I'll take that one I think I think the key thing here as I just mentioned in the prior question and as Grant mentioned as Woolford mentioned, we're very committed to investing in the long term in Macau and so our primary focus is going to be deploying capital there for growth.
That being said, we are generating meaningful free cash flow there as we did in this last quarter.
Patrick Dumont: And I think what Youll look to see over time is that some of the leverage that we put on the balance sheet. During the pandemic will disease. So we have a maturity coming up in 'twenty five we'll look to see some of that.
Patrick Dumont: And in front of the refinancing and our goal is really to bring leverage down in terms of quantum but then also our leverage is going to come and naturally as our EBITDA expands over time.
Patrick Dumont: Which is our expectation so I think once that occurs we're going to start looking to begin the dividend again at the sands China level.
Patrick Dumont: Somebody is going to be determined by the board there, but I think overall, it's something that we'd like to see and I think the goal is to begin that dividend.
Patrick Dumont: Or is that it was a very strong dividend payer and prior year's pre pandemic and we'd like to become an investment grade name there keep that investment grade rating invest for the future in terms of scale and scope to grow our business there and then.
Patrick Dumont: Our return excess capital.
Through dividends.
Patrick Dumont: Shareholders now.
Patrick Dumont: The plan.
Got it thanks, and then just for my follow up as you think about Macau and we've talked a bit about the margins and the improvement is more or less has been about 100 basis points quarter over quarter. As you think about kind of the trajectory from here and I know youre on pace to get back to those 2019 levels.
Company Representative: Should we think about maybe the pacing of improvement do you think that operating expense structure is really in place at this point you should benefit from from scale here on out.
Company Representative: I have one quick comment that I'd like to turn it to grant.
<unk> mentioned this a few times in the past couple of quarters I think the story of our margin expansion in Macau is going to be based on revenue growth as the market continues to recover at tourism continues to recover as more high value tourists come online they see the types of <unk>.
High quality offerings, we have the experience the amenities in the entertainment. The grant referenced earlier, we're going to continue to grow and expand our customer base and that will lead to pricing that will be two expansion that will lead to revenue growth.
Grant: So from that standpoint, I think our long term margin view is expansion because of the investment in it because what we just described.
Grant: I'll turn it over to grant to give us some additional comments.
Grant: Yes, Patrick.
Patrick Dumont: You covered it well I think it is dependent on revenue growth as the market continues to grow and will be more than a full participant in that market growth.
Patrick Dumont: The margins will have a positive trajectory.
We obviously.
Patrick Dumont: A more efficient and more productive.
Patrick Dumont: <unk> cost structure.
Patrick Dumont: Today than we did in 2018 in 2019.
Company Representative: So we will.
<unk> been benefiting from that as revenues grow.
And you get the operating leverage on the fixed costs. We will continue to do so and I think it is very much about how revenues grow from here.
Company Representative: As revenues grow.
Company Representative: Margins will have further upside.
Company Representative: Got it thanks, and congratulations on the promotion grant.
Company Representative: Thank you very much.
Company Representative: Thank you. Your next question is coming from George Choi from City George Your line is live. Please go ahead.
George Choi: Thanks for taking my questions My questions were answered earlier, but do you have.
George Choi: Housekeeping question.
George Choi: Could you please remind us how can you talk a rate mechanism works at the Macao properties.
George Choi: Should we be expecting.
Normal uptick into that is when you guys received a telephone inc. Thank you very much I'll jump back in queue.
George Choi: I'm sorry, George I think we missed that could you repeat yourself when it was unclear there was some.
George Choi: Difficult language like that it yes, he tried to get in Georgia about Macau.
George Choi: Apologies.
George Choi: Just wonder how the turnover rent mechanism works in.
George Choi: In Macao properties.
George Choi: The fourth quarter event.
George Choi: Is that when you receive your temporary.
Granted fourth quarter turnover in retail.
George Choi: George.
George Choi: There are leases that are on monthly kind of rents and.
George Choi: Is that an annual kind of the rents. So historically what happens is for those annual ton of the rent basis.
George Choi: As we get into third quarter at the end of the third quarter and the fourth quarter.
George Choi: We will obviously be recognizing more of those type of rents.
George Choi: As we hit the <unk>.
George Choi: Annual sales targets. So historically, you should expect seasonally the second half.
George Choi: The retail rental revenues will be higher than that than the first half.
Okay understood. That's all I have thank you very much.
Speaker Change: Before we finalize the call I just want to.
Speaker Change: Reach out and recognize the great contributions of Wolfram long Who's now executive Vice Chair Wilpons Daunt us about eight years and made a great contribution to Wilfred congratulations on yellow based executive Vice chair.
Speaker Change: Sean.
Speaker Change: Well deserved we hired a grant many years ago. The big concern was old enough to win the casino at that time and over the eastern sufficiently so that you're not going to casino Congratulates Durant. Both of you guys have built a terrific team over there, we're very proud and grateful for your efforts and look forward to many more years working together. Thank you for your time today your interest in our company.
Did you want to.
Speaker Change: 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. Thank you for your participation.
Speaker Change: Yeah.
Have a wonderful day. Thank you for your participation.