拉斯維加斯金沙集團 (LVS) 2010 Q2 法說會逐字稿

Good morning.

My name is Marianne, and I will be your conference operator today.

At this time I would like to welcome everyone to the Las Vegas Sands Corp.

quarter-two earnings conference call.

(Operator Instructions).

Thank you.

At this time I would like to turn the call over to Daniel Briggs, Vice President of Investor Relations.

Sir, you may begin.

Thank you, operator, and good afternoon, everyone, and thank you for joining us today.

Good morning to those of you in the United States.

On the call with me today are Mike Leven, our President and Chief Operating Officer; Rob Goldstein joining us from Las Vegas; our Executive Vice President (technical difficulty) in the Palazzo Las Vegas; Ken Kay, our Chief Financial Officer; and Gayle Hyman, our General Counsel.

Mr.

Sheldon Adelson, our Chairman and Chief Executive Officer, will be joining us for the Q&A portion of this call.

Before we begin, let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provisions of federal securities laws.

The Company's actual results could differ materially from the anticipated results in those forward-looking statements.

Please see today's press release under the caption, Forward-looking Statements, for a discussion of risks that may affect our results.

In addition, we may discuss adjusted net income, adjusted diluted EPS and adjusted property EBITDA, which are non-GAAP measures.

A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release.

Please note that this presentation is being recorded.

I will now turn the call over to Mike Leven.

Good morning, everybody.

Sheldon Adelson has just arrived into the hotel.

His plane -- he had to get off his plane, which was canceled because of the weather.

And in about five minutes, he should be here.

So I will start by reading some of his portion, and then he will pick it up when he gets in.

Good morning to those of you in the United States, and good evening to those of you in Asia.

Thank you all for joining us today.

I will begin today's call with some comments on this quarter's results, including our results from Marina Bay Sands in Singapore, which opened its doors on April 27.

I will then hand the call over to Mike Leven and the team to provide some additional detail.

Big picture, we are very pleased with our results.

Our business in Macau was quite strong and is generating record revenue and EBITDA.

Marina Bay Sands in Singapore, which was open for only 65 days during the quarter, has received a wonderful reception from the people of Singapore and the wider region.

The property is experiencing strong visitation and gaming volumes and is off to an outstanding start.

In Las Vegas operating conditions are showing some signs of improvement, particularly on weekends, and occupancy has been strong even throughout the summer period.

Our record results in Macau during the quarter included a strong contribution from each of our three properties there.

Let me provide the details for the second quarter of 2010 compared to the second quarter of 2009.

At the Venetian Macao, net revenue increased 31% to $581 million.

Adjusted EBITDA increased 75% to $193 million, and adjusted EBITDA margin increased 840 basis points to 33.2%.

At the Sands Macao, net revenue increased 29% to $302 million.

Adjusted EBITDA increased 33% to $81 million, and adjusted EBITDA margin increased 80 basis points to 26.9%.

At the Four Seasons Hotel Macao and Plaza Casino, net revenue increased 196% to $144 million, adjusted EBITDA increased 493% to $33 million, and adjusted EBITDA margin increased 1150 basis points to 22.9%.

And for our Macau properties in total, net revenue increased 41% to $1.03 billion.

Adjusted EBITDA increased 74% to $307 million, and adjusted EBITDA margin increased 560 basis points to 29.9%.

We continue to lead the Macau market with revenue growth flowing through to market-leading EBITDA and EBITDA margin.

This performance reflects strong revenue growth, coupled with the benefits from our cost containment and efficiency strategies.

Construction activity on the Shangri-La Traders Sheraton complex, our latest integrated resort development on Parcels 5 and 6 on the Cotai Strip in Macau, is progressing.

We recently closed the credit facility for the development, and we thank our lending partners for their support on this project.

We continue to work with the Macau authorities to ramp up construction workers necessary to complete the project.

Mr.

Adelson just walked in.

He will pick it up from here.

In Singapore Marina Bay Sands generated $94 million in EBITDA in its first 65 days of operation and EBITDA margin of 43.7%.

Load table games hold on our rolling business in Marina Bay Sands prevented us from generating even stronger EBITDA and EBITDA margin for the period.

After opening 963 rooms on April 27 and most of the remaining rooms and suites on June 23, Marina Bay Sands has experienced strong visitation and healthy volumes in all three segments of the property's gaming business.

We have seen increases in volumes in both our mass and rolling businesses since we opened the property and are pleased with both our volumes to date and the ramping up of daily play.

We are confident that as the property and its marketing programs continue to mature and its full complement of amenities, including additional [IM] suites, retail and entertainment offerings come online, Marina Bay Sands will be an ideal platform for the Company's growth.

Let me spend a moment on Las Vegas.

Gaming volumes were healthy during the quarter, but we experienced lower table games hold.

Hotel revenues improved compared to the second quarter of '09.

Occupancy is up, and group business is returning, although pricing remains competitive -- pricing on groups remain competitive.

Forward bookings are increasing for both the remainder of 2010 and 2011, which is encouraging.

We are also seeing stronger pricing trends that may affect a portion of our business, particularly on weekends.

I look forward to addressing your questions later, but will turn it over to Mike and the team for a quick update first.

Mike?

Thanks, Sheldon.

I will add just a couple of thoughts.

First, let me cover our leadership change in Macau.

The board of Sands China made the decision that a leadership change was in the best interest of the Company, its employees and shareholders.

I will be serving as acting Chief Executive Officer for Sands China, while the Committee of the Board of Directors of Sands China conducts the new search for the new Chief Executive offices.

For at least the last six months, we have had the objective of augmenting the leadership team in Macau with additional senior operating management.

We now have the opportunity to fulfill that goal, and I'm pleased to say that we have recruited two senior operating executives to join our management team in Macau on August 10.

Ed Tracy has joined us as President and Chief Operating Officer of Sands China.

David Sisk has joined Sands China as Executive Vice President and Chief Casino Officer.

Both gentlemen have extensive experience in the hospitality and gaming industry and have developed a track record of success during their careers.

We welcome them into the team and look forward to their contributions in the future.

We are quite pleased with both our current operating performance and our strategic positioning in Macau.

Our team members there have done an outstanding job during the last year, and we are very pleased with their hard work, dedication and performance.

I'm confident that Ed and David, together with the leadership team already in place in Macau, are well prepared to lead Sands China as it grows in the years ahead.

As strong as our results have been, these management changes are all about building on the solid foundation we have already established and making our properties work even better in the future.

Let me make a couple of comments on our current quarter results.

Our direct VIP play at the The Venetian Macao grew to $2.4 billion on approximately 24% of the approximately $10 billion of rolling volume during the quarter.

At the Four Seasons Hotel Macao and Plaza Casino, total rolling volume was $4.8 billion with direct VIP rolling business growing to $2.4 billion or about 49% of that total.

Retail is another bright spot with retail sales increasing nicely across our properties.

Retail sales at the Grand Canal Shoppes at The Venetian Macao, for example, were up 56% in the month of June compared to June of last year.

With respect to future development in Macau on Parcels 5 and 6, we remain confident that the introduction of additional destinations on the Cotai Strip will expand the Macau market, providing critical mass to drive greater visitation, mass table and slot play, hotel and retail revenues also to our current and future properties.

Let me spend a moment on Sands Bethlehem before Rob covers Las Vegas.

I'm pleased to share the news that Sands Bethlehem had its best quarter since we opened the property last May, generating -- May of '09, generating $12 million of EBITDA during the quarter.

The improving results reflect stronger slot revenues and the introduction of additional marketing programs, as well as a concerted effort on efficiency.

We continue to believe that Sands Bethlehem has potential.

We introduced 89 table games on July 18, which have broadened the property's appeal and should contribute to the greater profitability overall.

Table play is off to a good early start and has already positively impacted visitation and food and beverage revenue, as well as slot play and profitability.

In fact, last week we generated our highest gross slot win on record.

We have also seen a marked increase in our Player Club Card enrollments with a significant portion coming from New Jersey and New York.

We restarted the construction of our 300 room hotel and expect it to open in the spring of 2011.

The addition of the hotel will increase the length of stay at Sands Bethlehem, while adding higher-margin hotel revenues to the property's financial results.

With that, let's go to Rob to discuss Las Vegas.

Thanks, Mike.

Our Las Vegas properties drove EBITDA to $66 million in the second quarter of 2010 compared to $78 million in the second quarter of last year.

Gaming volumes remain healthy and were stronger during the quarter compared to last year; however, poor hold percentage negatively impacted table revenue by approximately $30 million.

RevPAR is up for the quarter, reflecting stronger occupancy, and rates are modestly lower when compared to the same quarter last year.

Looking ahead, we expect to realize more group rooms in 2010 than we did in 2009.

The pace of group bookings continues to improve, and 2011 should be stronger than 2010.

In 2009 we realized approximately 470,000 group room nights or about 18% of our total room nights.

Today we have about 550,000 in group rooms on the books for 2010, an increase of 19% of what was realized in 2009.

We expect our actual group rooms to exceed that number as we add additional business throughout the remainder of the year; however, rates are still under pressure in that segment.

We do expect that pricing will improve in the group segment over time as business expands.

Our direct competitors in Las Vegas raised prices, and the economic recovery continues.

So, in summary, in Las Vegas, our gaming business is healthy.

Our costs are down.

Given that backdrop, we are confident that our Las Vegas properties will exhibit significant operating leverage as pricing FIT segment (inaudible) group segment continues.

With that, I will turn it over to Ken Kay.

Thanks, Rob.

We made further progress this quarter on our deleveraging strategy.

Excluding our development financing in Singapore, we paid down or retired approximately $420 million of our debt during the quarter.

The repayments include $350 million on the Macau revolver and the purchase and retirement of approximately $27 million of face value of our senior notes, which were purchased for 96.1% of par.

As of June 30, we had approximately $3.8 billion of cash, cash equivalents, restricted cash, and short-term investments on our balance sheet.

That cash provides us with significant financial flexibility and will enable us to execute additional components of our deleveraging strategy in the future.

In addition to our cash balances at June 30, we had approximately $3.2 billion of availability under our undrawn credit facilities at current exchange rates, including amounts available through our US credit facility and our new credit facility related to Parcels 5 and 6 on the Cotai Strip in Macau.

So together we have approximately $7 billion of cash, cash equivalents, restricted cash and short-term investments and available sources of liquidity.

The principal uses for that $7 billion include approximately $750 million of capital expenditures, pre-opening, FF&E and construction period interest to spend on our Marina Bay Sands development in Singapore through the end of calendar 2010.

Although we expect as much as $450 million of that amount to be paid out of cash flow generated by Marina Bay Sands during the remainder of the year, an additional $430 million, principally retainage payments on the development, will be paid out of cash flow from operating the property in 2011.

In Macau approximately $400 million in additional equity contributions will be made toward the development of Parcels 5 and 6 on the Cotai Strip.

During the quarter, we closed the previously announced $1.75 billion credit facility to fund construction of Parcels 5 and 6 in Macau.

The remaining equity noted previously and the project financing together are sufficient to complete the first two phases of that development, which will feature approximately 6000 hotel rooms and all the major cash flow generating components of the development.

As of June 30, total debt was $10.4 billion, while our cost of borrowing remains low.

Our weighted average interest rate for the quarter was approximately 3.7%.

At our current levels of operating performance, our cash balances provided ample cushion for compliance with the financial covenants in our US credit facility.

At June 30, 2010, for the US restricted group covenant compliance purposes, our trailing 12-month EBITDA was $432 million, our total gross domestic debt was $4.3 billion, our cash balances within the US restricted group were $1.9 billion, and our calculated net debt was $2.4 billion.

Our leverage ratio was 5.47 times compared to a maximum leverage covenant under our US credit facility of six times.

For the The Venetian Macao restricted group at June 30, 2010, our trailing 12 months EBITDA for compliance purposes was $1.09 billion, total gross debt at The Venetian Macao restricted group was $2.27 billion, and our leverage ratio was 2.09 times compared to a maximum leverage covenant of 4.0 times.

We remain focused on maximizing operating profitability to enable debt reduction.

While our business will naturally generate a significant amount of free cash flow that will enable deleveraging in the future, we also expect to execute in due course the sale of non-core assets, which will enable additional debt repayments and enhanced returns.

As part of our long-term strategy to delever the Company and reduce our debt outstanding, later this week we will be launching an amend and extend transaction with respect to US credit facility.

The transaction contemplates a paydown of our term loans and a reduction of a revolving credit facility commitment in exchange for the extension of maturities and other modifications to the credit agreement intended to increase the Company's financial flexibility.

While we are opportunistically looking to pursue this transaction, our current and projected liquidity and financial resources provide us with the ability to leave our US credit facility in place without modification should terms not be acceptable to us.

If completed, this transaction will accelerate our deleveraging process, enhance our liquidity and improve the overall credit quality of the Company.

And with that, I will turn the call back over to Sheldon.

Thanks, Ken.

I guess it is my turn to sing and dance.

No, I'm not going to sing.

Before we go to Q&A, let me make a couple of final points.

I have complete confidence in Mike and our leadership team.

We just completed another outstanding quarter, contrary to what the shorts believed we would do.

Generating record revenues and EBITDA in Macau and for the Company overall, our operations are in outstanding shape, and we are making positive additions to our management team.

We have also reduced our debt levels, and our balance sheet has nearly $4 billion of cash -- but who is counting -- providing significant financial flexibility and enabling us to continue our industry-leading growth strategy.

With the opening of Marina Bay Sands in Singapore, we stand today at the beginning of our next major phase of growth.

We could not be more enthused about our business today and about our strong positioning for the future.

With that, we will move to your questions.

(Operator Instructions).

Joe Greff, JPMorgan.

Looking at the Singapore results, which were very strong, if I'm looking at gross gaming revenue per day, it is somewhere in the $3.6 million range in the casino.

Win per day is $2.94 million.

For the quarter I am presuming that there was improvement June versus May and May versus the stub in April.

Can you talk about the monthly progression of casino win or gaming win maybe on a per day basis and maybe talk about how that trend is going in July?

I think I would ask Ken to answer that, but my recollection having glanced over the numbers that it was a substantial ramp from May to June.

(multiple speakers).

The numbers are here?

Sorry about that -- there was a masterpiece and -- (multiple speakers).

Well, I see a line going from lower left to upper right.

That is the right direction.

That is the right direction, okay.

Maybe I will follow-up off line with you guys.

Just on the topic of Steve Jacobs' departure, I'm presuming he has a noncompete.

Can you confirm that, and how long does that noncompete last?

I don't believe he has a noncompete, Joe.

Actually he does not have an actual employment contract.

He had a signed term sheet.

We never got to contract with it, and I don't believe he has a noncompete in that term sheet.

Well, I would opt to have him go to work for a direct competitor.

Okay.

Mike, Sheldon, are you anticipating any other property management departures as a result of Steve Jacobs not being there, or are you aware of any that might be pending?

To the contrary, we have several people wanting to come back.

(multiple speakers)

We are reviewing staff now, Joe, and Stephen Weaver has come back as a consultant to help us through the transition period and maybe even longer depending upon his personal situation.

There were basically staff openings here over the last number of months.

I can tell you that I don't think there is any significant -- anyone of significance on the management team that is in a situation that could be contemplated as a change at this point.

(multiple speakers) -- been here for a week and have not seen any indication that the problem is in the layer of staff below Steve.

Okay.

And maybe you can just talk, Mike, a little bit, the two new guys that you announced yesterday.

One has Macau experience, and the other has more US regional experience.

Can you talk about what you think they bring to the table?

In the case of David Sisk, the casino individual, we have been looking for for months for someone to run or supervise the five casinos that we have that includes 5 and 6 as well.

He has many years of very strong casino experience combined with some significant Macau experience in -- (technical difficulty) marketplace.

So I think he brings a very senior management approach to the casino business.

This is a very complex business, multi-marketed, even though it is a significant amount of junket business, and we think that David Sisk's personality and skillset bringing into the table will provide some management daily attention to the full casino business.

It is not possible to run all of the casino business here from the very top of the organization.

There is just too much going on on a daily basis.

So that is why we were looking for the individual, and I think David brings an unusual combination of understanding the VIP business, as well as having a real good organizational mind and experience for the rest of the casino businesses that we have.

In the case of Ed Tracy, Ed Tracy has some casino experience, but we have bifurcated the building into two pieces, the casino side and the operating side.

Ed actually began by washing dishes in a hotel, worked his way up through a series of properties all through his career, much of which people on this call probably would not have seen at low levels in the hotel business, built his way up through that business to various -- some senior positions, and I think he can take the operation of these properties to the next level.

The operations of the properties are doing well from a quality basis.

It needs a little bit of work on the service side.

Also, some substantial improvements can be made on the marketing and sales side, and I believe we will be able to accomplish that with Ed.

I think the combination of having a strong current operating situation, along with the gaming, will give the next CEO the ability to deal in the financial, legal, government affairs area.

So that is how we are structuring the business.

Okay, great.

And then back to my Singapore question, you mentioned there was a substantial ramp from May to June.

How would you characterize July versus June?

I'm not sure if you answered that.

It is Ken.

Just to give you an idea in terms of the May through June and then Mike can tell you where things are currently.

If you look at it from a rolling perspective, when we started out the property, we were probably hovering around, I would say, in the $300 million to $400 million range on a weekly basis.

But, as you have gotten past and gotten into the beginning of June, that number has ramped up significantly where it then got above the $600 million range, and then it is now in the $800 million to $900 million range on a weekly basis.

The other thing that I think is important with regard to the non-rolling and slot business, if you look at it on a win per day basis -- and those numbers that I gave you before were kind of per day during those weeks for the rolling business.

But on the non-rolling and slot per day, when you started off in May, were kind of in the $2 million plus range per day, and then when you have gotten in the beginning part of June, it started to get upwards pushing in the $2.5 million range.

And now as we have progressed into late June and into the early part of July, it is kind of pushed up above the $3 million per day.

So it has kind of ramped up quickly in that regard, and now Mike can probably give you an idea relative to the latest.

Well, I think the latest situation we are now seeing as we get to the latter part of June and through July so far, our rolling volume will probably hit in July a little over $3 billion enrolled.

US?

That is US now I'm saying, right.

And our ramp-up in mass-market and slots has continued in the month of July.

Our whole number on the VIP rolling situation has been lower than expected, but we are very consistent in our mass-market and slot wins, and what we are doing in the win per unit per days, as well as the whole percentages.

So there is no question that it continues to ramp, and we will continue to ramp, I think.

I cannot predict what is going to happen in August and September, but at this point when you look at our performance in the 65 days without any serious contribution from the hotel, which, by the way, is also ramping, we ended the quarter at 55% on the 65 days on 900 rooms.

We are doing that level of business now in 2500 rooms, which means that we are actually selling 1000 rooms a day more, I believe, than we were selling before.

So once we get into the 70s and 80s and percentage price, there will be a major contribution there as well.

So it would also help the casino numbers.

But the encouraging thing is that all three areas of volume in the casino are moving forward and particularly in the VIP now.

Great.

And then my final question, Mike, have you opened up the electronic slots?

I believe it is the -- (multiple speakers) Baccarat and up to roulette?

Yes.

We only opened the electronic Baccarat so far, which is about 90, 89 and 90 units.

By September 3 we will have a total -- we will have over 300 electronics, including Rapid Roulette and Rapid Sic Bo.

Some of that will come in in August, but the whole project will be completed by September 3.

And the early results on Baccarat were a little bit lower than expectation.

But they are also ramping up as people know they are there.

So we expect that's going to have a pretty good sized impact with that number of machines.

Janet Brashear, Sanford Bernstein.

As we are talking about Singapore and looking at the ramp versus the current trends versus the average levels of play and whatnot, could we look at the commission rates for a second?

It looks like you're doing about 1.2% for the quarter.

How is that trending?

I know you tried to start out at a lower commission rate, and there were competitive pressures that made you ramp up higher.

What do you think is sustainable over the next quarter?

First of all, the rate of hold has nothing to do with the ramp-up.

Right.

We could ramp up with or without a rate of hold.

We could over-hold or under-hold, it still is not going to affect the ramping up.

I think that 1.2% is about where it is going to be.

I have not seen any indication that it is going to go more than that, unless really big players that get some extra lift get in there.

But I cannot -- let me see if I can calculate this.

Yes, I would say 1.2% to 1.3%, something like that, is where it is going to be.

Okay.

And then from a share perspective, what would you estimate your market share to be now?

How do you expect that to change going forward?

We do not have [Stan Ho's] numbers.

We cannot say; it would be pure guesswork.

But I do think that -- well, it may sound like an optimistic statement, but we will get -- we will have more than our fair share given when we ramp up.

When we are in the market as long as Stan Ho has been in the market, we pick up that three months.

By the end of the summer, I would expect that we would have our fair share and perhaps a little greater.

But we cannot know until the numbers come out.

I looked at yesterday's -- this is Sheldon.

I looked at -- we show the country of origin of the player.

I looked at the top 20 players yesterday, and we have countries that I did not believe we would get them from.

Which we even get customers from Macau.

We have Hong Kong; China and Indonesia; Vietnam; Taiwan; Korea; of course, Malaysia and Indonesia; and Thailand.

Those names are very difficult to pronounce.

I guess they figure Adelson is difficult to pronounce.

But clearly, as we are ramping up, we have no idea what they are doing.

But we have reason to be optimistic and encouraged about our ramping up following the last number of weeks since we have been open.

Though (multiple speakers) think we're going to have -- we are not at par with them.

They have had a better time ramping up, and they have had a lot of experience in bringing in buses from Malaysia.

They are doing very well at it.

Genting is doing a lot better than what I thought they might do, and I think they -- the rewards program are kind of very rich for the player and also for the IM.

There is a lot of rationale that everybody is throwing around as to why they are giving out at least 20 bps higher than we are giving on any one customer category.

So the biggest spread is on the last $10 million and over category.

Is that customer mix as you expected, and what would you say are the most profitable segments right now?

Listen, the mass is a margin that is always going to be very profitable, but on the difference in the tax rates.

So it comes out, even though it would figure out to about 11.5 to 12, it is coming in at about 10 because of the way that they do the calculation, and it is coming in about 20 instead of 22 on the mass side.

So theoretically the reward program is much richer for the high-end player, but then again, it is offset by the lower tax rate.

There are some days that we go by and we look at our contribution margin of 67%.

I mean some days we are doing upwards -- many days we are doing upwards of 50% on the cost of sales, the net after cost of -- what you would think of as cost of sales, I would call it contribution margin.

So the margins at 43.7% I think is probably a surprise to a number of people.

It is not to us because when we look at daily numbers -- and we get numbers every day -- it looks like we will have a substantially higher margin, probably industry-leading profit margins for both us and presumably for Genting.

But the fact that there are so many people that are coming from different countries in Asia -- I did not see any Japanese, but I did see some Koreans.

We have a group of Koreans flying in every week.

And they are very good players, fine people and good players.

So I think that the outer reaches of our radius, our marketing radius, is wider than what we thought before.

One final question -- (multiple speakers)

Anything else except continuing to grow.

Could you comment a little bit on what your worst-case fallback plan would be for Lots 5 and 6 in Macau if it does not get any easier to bring in labor?

We believe that the government is recognizing that as long as we have done a thorough job and all of our human resource efforts have been with the people from the human resources office of the Macau government, sitting next to our interviews of these people, I for one -- I don't have any official acknowledgment of this (inaudible) -- believe that we will get the people that we need.

The government of Macau is only responding to the need for us to try to put local people to work.

If they are faced with the choice of not having any growth, on the one hand, or on the other hand, allowing more foreign workers in, I believe very strongly that you are going to allow more foreign workers in.

Mark Strawn, Morgan Stanley.

Three quick -- three real quick questions by market.

First, in Macau I was hoping you could give a little bit of color on July trends to date.

In Singapore I was hoping you could talk a little bit about the margin ramp as you layer on the other hotel components and start to ramp there in the retail mall.

I think it would mean that margins have continued to ramp at current levels, and also in Vegas, a quick question for Rob about cash RevPAR trends.

Certainly RevPAR numbers looked impressive in the quarter, but I was hoping you could give us a sense of what the cash numbers look like.

He has been so quiet, I am wondering whether or not Rob is still alive.

I am alive and well, Sheldon.

Good.

Glad to hear it.

In July, July has been a terrific 27 days so far in Macau.

I think I cannot speak for everybody else on the peninsula in here, but basically we are doing extremely well at the EBITDA line for all properties.

So you never know until it is over in July, but my guess is July will continue the trends of the last quarter.

One more.

We are very optimistic about what is happening here from that standpoint.

The question on -- what was the second question?

The second question is about retail, Mike, retail in Marina Bay?

Yes, retail in Marina Bay you will have 161 -- I think 160 stores open at September 3, and there is a big opening party there for that, of the 280 stores.

So we expect that to begin contributing profitability, which, as you know, is high margin profitability in the retail area.

Just to give you an example of the 43.7 percentage, it really had no -- when you are opening a property, you are basically -- your staffing levels and your volume levels don't really come together.

For example, in the quarter, we averaged room contribution of about 70%.

Normally we would get somewhere between 78% and 82%.

As the hotel begins to fill up, we will get that margin.

That will be a higher level of contribution.

So I think the answer to your question is, there should be no reason that the contribution margin goes lower.

In fact, there should be every reason the contribution margin or the EBITDA margin level goes higher as we go forward.

Thank you.

As far as your question, you should focus in on casino comps as a percentage of the net segment versus the group rooms and wholesale in FIT, is that correct?

Yes, that is right.

I think throughout the market we are all pretty much aware that too many -- ourselves included -- are comping or discounting in the casino segment more aggressively than they would like to.

We prefer to use [720] as a percentage of our mix, like to see our group rooms get back into the mid-30s, even higher, and our FIT in the 40% to 50% and the balance to the casino.

Unfortunately in this environment we were down from last year.

We are comping less on a relative basis year on year, but it's still too high.

We are still in the mid-20s.

I think we are probably less guilty than our competitors, but we are still guilty of it.

And I think it is indicative of the market that we cannot in mid-week -- weekends is not the issue.

We can get FIT and others on the weekends.

The mid-week has been the challenge, and I think the market clearly can break out the cash RevPAR from the comp.

It is a (inaudible) question to ask, and I think across the market there is too much comping, but there is also too much supply in the market right now.

So until we see stronger group, stronger FIT, I think you will see that continue to be a problem for us and for the market in general.

[Aaron Fisher], CLSA.

Good evening, guys, from Hong Kong.

Just a couple of questions on Singapore as well.

Just first of all, can you provide any guidance in terms of the breakdown of casino visitors between the local market and the foreign market?

And then the second question is just, as Mike mentioned on the margins, it seems like the margins are probably slightly depressed given the 65 days.

Sheldon, do you still think that you can deliver more than $1 billion in EBITDA in Singapore over the next 12 months?

Can you repeat that?

Your accent has got a little -- with my Boston accent hearing.

The first question was just a simple one in terms of providing a breakdown between the split of customers between the local market in Singapore and the foreign market and then just on the EBITDA guidance.

It is about 35%, slightly more than a third.

Does that answer that question?

Yes, sure.

And what is the second question?

The terms have been very -- pretty steady since we started.

So pretty studied trends from the beginning.

And we talked about a 35% or so Singapore coming into the casino when we first opened for seven or eight days, and it has really stayed pretty much the same all the way through.

I'm looking at the chart, and there are essentially two parallel lines right across the chart.

I think it's about 35%, 37%, somewhere in the mid-30s.

And the last part was?

On the EBITDA do you think you can still deliver more than $1 billion in EBITDA next year?

I did not say more than $1 billion.

I said $1 billion.

Do I still hold by that?

Yes.

I know I may get myself in trouble if we don't hit it.

I should tell you we are looking at the numbers and the trends, and I'm looking at a wider reach of high-end customers than I thought we would get at this stage of the game.

Shaun Kelley, Banc of America Securities.

Just one question, first of all, on Singapore.

Mike, you gave a little bit of color on the where you thought the contribution margin could stabilize on the hotel side.

I was wondering if you could tell us just in the quarter what the contribution margins were for the hotel and for the casino?

And then secondarily, I just wanted to ask a question or a follow-up for Rob on Las Vegas.

You know, I don't really have that.

I can tell you the contribution margin from the hotel itself was pretty minimal in the first quarter in Singapore.

(multiple speakers) It is so early, and, as you know, you sort of overstaff and overthink in order to get the service levels up.

Plus, you have openings in all those expenses going in there.

I can say the casino margin is over 50%.

It varies by 52% to 55% depending upon the day.

But they also -- you can see that the overall margin of 43.7% is probably dragged by the hotel and the various expenses that go on there because -- that is why the margin is below 50% on an EBITDA basis.

We are carrying operating costs, energy costs and operating costs that run a significant amount on a daily basis that don't get amortized when the hotel is not filled up and when all the food and beverage and everything is not open.

So the best I can say to answer that question is that north of 50% would be where I think we ought to be when the hotel is ramping.

(multiple speakers) -- ramped up.

00 PM at night to 7:00 AM in the morning.

We can't work on it today because we have too much MICE business.

It is a great problem to have.

But I don't know how big the MICE business is, but if there is any MICE business, you cannot be doing any drilling or nailing or whatever.

So that was very encouraging to hear.

And I guess one more follow-up on Singapore would just be any update on the status for junkets in the market there?

There has been some chatter about maybe some players acting as junkets for small groups of theirs in for some local trade press.

But I was just wondering what you guys are seeing there, and do you have any application in for junkets under Marina Bay?

Not to my knowledge.

I have not heard or seen a junket application.

About a month or two ago, there was some noise that there had been some junket applications into the CRA at Singapore, but nothing has come out to us at this particular point in time.

There has been a lot of local gossip about how Genting is working with junket reps.

We have no basis on which to make an accurate statement about whether they are or not.

My inclination is to say that if Japan 1.4 to 1.5, it is certainly an indication they may have to be working with some sort of intermediary.

What was the other part of his question?

The last question was just for Rob, just on Vegas real quickly.

I think you had said that you were at 18% of your business being group business, I believe that was for '09.

Can you talk about where you think that is going to stabilize in 2010, and what you think it can be in 2011?

Well, in 2010, we are hoping to get into the mid-20s.

I think we will see a lot more -- hopefully it will exceed 30, but we are not there yet.

The real issue is really demand is there.

The question is rates.

If you go up to the market and look at the rates, there is just not -- the buyers are a lot tougher.

The market both in Las Vegas and beyond Las Vegas is very rate-sensitive, and I think that has been a challenge.

We would like to exceed 30 in 2011, but I think we will be in the high 20s probably is more accurate.

Just one comment, if you don't mind, the Singapore issue you mentioned before to Mike and Sheldon, is just from the junket reps, from my perspective, I don't think we need -- this was an issue that a lot of people are concerned about.

But demand on this high-end premium segment is so good that I just don't know why you need to worry about it either way.

I mean I think anything we are seeing in our premium guys keep seeing more and more demand, as Sheldon referenced, in multiple countries.

If anything, I think they become more of a non-event than ever because the demand on the premium side with the tables is extraordinary.

I don't see this (inaudible) credit problems.

So I think we have played this very well, and the market has proven to be very, very strong on the premium side without junkets.

I'm not sure I remember what I was going to say.

You know, I think that some of the press are talking about -- or some of the analysts are talking about, well, the junket reps are going to show themselves in the second half.

I can be quoted on this, I don't think so.

Because the property checks of the Singapore government is so comprehensive, I don't believe -- it has only been a couple of small number of months ago that they have accepted that was the cutoff date for -- I don't think it was the cutoff date.

It was since they receive junket rep applications.

So I am still convinced that the Macau style junket reps will not submit to the probity checks and provide the information that the government will need to put them through the investigatory wringer.

And even if they do and even if there are some Macau style junket reps that will do that, I don't believe it is going to be done this year at all.

Just like I could tell my wife, I'm not perfect all the time.

So I don't -- she does not believe me.

I don't -- listen, I could be wrong.

I don't think there is going to be any junket reps coming into 2010.

Felicia Hendrix, Barclays Capital.

Just on getting to the hold, what was the impact in Singapore and Vegas?

You know, it was a little bit lower in both.

On Las Vegas we are 7 points lower (inaudible) $400 and some million, so it was about a $30 million revenue impact on Las Vegas.

Okay.

I am assuming Singapore really less significant, (inaudible)?

Singapore was from a revenue standpoint a little bit less than Las Vegas.

It was probably about $25 million, $26 million.

Okay.

Thank you.

And then just -- (multiple speakers)

It was in the mid to high 20s.

(multiple speakers) On normalizing debt, I guess would make it somewhat more attractive.

That is right.

Your direct play at the Venetian and Plaza increased nicely sequentially.

I'm just wondering, where should we expect those numbers to go?

What are your goals?

The sky is the limit.

Is it?

(multiple speakers).

Listen -- say again?

No, the question was about premium direct play.

Premium direct (multiple speakers)

4% --

We are in active discussion right now since we terminated Steve Jacobs about the wisdom of accentuating the effort for direct premium play.

We are certainly not going to eliminate it.

The question is, how aggressive we are going to be to try to get it.

We certainly have a lot of it -- I mean all that we have in Singapore is direct premium play.

And consistent with what I have been talking to Goldstein about in daily lunches, I believe that a credit default rate is going to be as low as that in Las Vegas.

Do you have anything to say about that, Rob?

Yes, I think it's a great comment in this sense that one thing I have been surprised about listening to our credit and premium casino people is how -- to put it bluntly -- how important Singapore is in that part of the world to customers from Indonesia and Thailand and Malaysia.

I have been taught a lesson just to how critical Singapore is politically, financially, in a lot of ways emotionally, it is a very important country, city, state.

And the customers have a lot of respect for it, and I have been pleased to find that people pay pretty quickly.

We have not had a credit issue yet.

In fact, I think it is better than Las Vegas in terms of people wanting to pay, and in that part of the world, they come more frequently because that is their region.

And they have a lot of respect for that country, and I think that has helped us a lot.

And direct credit has been a pleasant surprise thus far to me and I think to our team over there.

Sheldon referenced the amount of business and the diversity of countries we impact, we draw from.

It is growing daily.

Korea has been a surprise.

Taipei has been a surprise.

Indonesia/Malaysia less than a surprise.

But to me, the direct credit issue has been really, really feel good to our team, our credit team and the sales team, because it does not appear to be an issue.

And that, again, it diminishes the importance of the junket rep issue more and more.

And that segment honestly it's just to me it is an amazing segment.

So Sheldon has already commented the sky is the limit in that segment.

I think that segment could be extraordinary for both Genting and us.

Okay.

But my question was on Macau and what your plans are for going direct there.

So am I hearing that you are trying to grow it there?

Because I thought, Sheldon, you made a comment that you might pull back.

I am just confused.

We may.

We are in the process of discussing this amongst senior management.

Okay.

So the difference in what you are seeing in Macau versus Singapore is what?

Singapore is all direct play.

No, I understand that.

I guess what I'm hearing is that your direct play in Macau increased nicely sequentially, which is obviously beneficial to you.

So I was just wondering if that was going to keep increasing.

And you are saying that you are evaluating that now.

So I was just wondering why?

We take it all.

I mean the goal of the Company is to maximize value, which Sheldon and Mike referenced, and take all aspects of whether it is direct or to junket rep.

The only thing that is intriguing to us is that while the direct play has been very, very strong in showing growth, the real question is how much more we can get out of the junket side.

Because the growth has been phenomenal on the junket side.

So why not ride both horses if you can, why not anticipate manageable value of what makes the most sense, but in the end why look at both markets?

I think what Sheldon is referencing is that direct play is good, junket play is good.

If it is profitable, take it all.

Okay.

Great.

That was the crux of my question.

I appreciate that.

I can make an addendum to that.

The idea of getting junket play with the expectation of lower cost has not been completely met amongst the various strata of direct premium player.

Some of them are very high, and we may bifurcate part of the direct premium play, keep some and not keep others, because the cost of this is very high.

And well, in some cases, it is high.

So we are reconsidering as to whether or not it is going to be worth it to keep all strata of direct premium play because we don't want -- I have seen several analysts report that say, oh, well, the scuttlebutt is that as sale chases direct premium players, a lot of the players, a lot of the junket reps are bringing their business over to Wynn.

Now we don't know that is the case, but if it is the case, we certainly want to reverse that trend.

So I do admit that Wynn does a very good job on the junket reps.

Thank you.

That is really helpful.

And then just a final question, can you just give us an update on the candidate pool for the CEO for Sands China, how that is looking, and what you are looking at?

The candidate pool is a global search at this point.

And we will tomorrow -- we have interviewed two search firms.

We have gone through the specifications, and tomorrow the committee, Irwin Siegel, David Turnbull, and myself, will commit to a search firm to do it.

We are looking for an out-of-the-box candidate in many ways and someone that can manage the full asset base that we have, lead and manage that asset base.

Not necessarily a casino person or a hospitality person, but a very strong business person.

And I think the pool will be very large actually.

We would like someone with Asian experience in particular and that has Asian cultural experience and can deal with the governments of both Beijing and Macau.

I have got Asian -- I have got cultural experience.

I eat a lot of Chinese food.

That is a qualification.

Yes, I will give you some Asian.

I do, too.

Should I give you my resume?

Hey, I will take it.

Do you like Chinese food, too?

I love it.

Okay.

Thanks, guys.

Robin Farley, UBS.

I had a couple of questions.

One is for sites 5 and 6.

You had talked about a key (inaudible) opening in 2011.

Is that looking more like Q4 now with some of the labor issues?

I wanted to get what the latest opening date for that is.

And then also, can you help quantify the impact of holds in Macau on the EBITDA line?

Because obviously we can do some math on revenues that you would know the commission structure on those revenues to be able to help us understand the EBITDA impact.

Which property?

In Macau across the street.

5 and 6 -- (multiple speakers).

It was a 15 basis points or something difference.

It was -- the number could be 3, 2.85, 3, 3.1.

It is all within a general range.

5 and 6.

It is too early for us to tell.

We are sending over some construction experts that have extraordinary experience in building properties very quickly.

And we are sending them over to see what we can do to make up for any lost time.

We are not sure that we have any lost time yet.

I did see a chart today, and the chart showed that within a very short period of time, just weeks, we could catch up to whatever lag we have.

Just goes smack on the original schedule.

It is too early for us to tell.

And then on the hold issue, is there -- it looks like revenues would have been above your range of normal hold, but I'm just wondering the EBITDA impact, if there is a way to quantify the commission structure so we can calculate based on what you released.

I think that the hold does not affect the commission structure because the role is the role.

Depending on whether (multiple speakers) --

-- you have the role (multiple speakers) --

-- (multiple speakers) through junket versus direct, right?

But if the direct -- we are not satisfied that direct is that much cheaper.

And if, in fact, we don't have enough experience in it to save us the credit issues which are different here in Macau than they are in Singapore, it is -- we don't know yet.

Okay.

But I could tell you that the percentage of drop -- sorry, the percentage of role and the commission that we pay is not impacted by whether we have a larger hold or lower hold.

We had that discussion this afternoon.

The role is the role, and if we hold more, it will be slightly less a role because somebody will have lost money faster and the opposite.

Okay and then a few other questions.

One is, is there any way to quantify in Las Vegas what the impact on group business or occupancy in general was consensus that shifted from Opryland with the flooding in May and what that may have added in May, June, July and anything going forward?

Is there any way to quantify the impact of that specifically on your group business?

I cannot speak to the market, but I think everyone participates somewhat in what happened down there.

We added a few significant groups.

I don't think it is that material at the end of the day, but it did help the summer.

Off the top of my head, I can recall three very decent groups probably representing 25,000 room nights in the summer.

Rob, I want to ask you, how do you start a flood?

Very carefully.

I think -- look, unfortunately I would have to admit it did help Las Vegas.

I think the whole town -- we lost some groups to low-rated other competitors in town.

I think the overall impact probably was significant for the town.

For us I think, if I'm not mistaken -- I don't have hard numbers, Robin -- but I think it was, like I say, a couple of three or four groups at maybe 25,000 room nights total for the summer.

It was good for us Las Vegas overall.

It was low-rated business.

It was not high-rated business.

It was not significant food and beverage, but it certainly added body count and cash resales, especially needed mid-week in summer.

Some of our competitors who were much weaker than we were dropped their rates more significantly than what we would have.

Right.

We bid on significant -- to Sheldon's point, we bid on a significant piece of the business and lost a number of them to people who just cut rates in the double digits.

We stayed triple digit, and my recollection it was good.

It was $150, $160 a night.

It was mid-week, but it was not monumental.

It was helpful.

Okay.

Great.

And just a last question, can you comment on in Singapore your occupancy trends in July, that was 2500 rooms just versus the 50% range occupancy for the June quarter, how that is trending now in July?

We basically ran about 55% in the quarter for the first 65 days on 900 -- well (multiple speakers) averaged around 1200 rooms, which means you are selling about 650, 660 rooms a night.

We are averaging a little over that percentage for the first 26 days of July.

And so we are selling considerably more rooms because we are open at 2600 rooms basically.

That is about 2400 keys.

So we have about twice the rooms running the same occupancy.

So we are selling about 1200 to 1300 rooms a night.

We are ramping up in our leisure business.

We started off at about 40 or 50 rooms a night.

We are now seeing 250 or 260 coming into that segment.

And we have been light on the corporate market, which we fully expected because our concierge lounge in that floor was not really done.

It will be done in September, and we expect some ramping up there.

As you know, the Singapore occupancy -- it came out today -- for June was up significantly, 88% in hotels, etc.

in spite of the increased room availability, and rate was up a considerable amount.

We fairly lifted the market in Singapore, and it should be only a few more months.

It is really growing every day, not in leaps and bounds, but it is growing every day.

The numbers just came out that tourism went up 24% in June.

24%, yes.

Singapore is ecstatic with what has been going on since the integrated resorts have opened.

Any further questions?

There are no further questions at this time.

Okay.

We would like to express our thanks to everybody who called into this call, and we look forward to our next call.

Hopefully we will do it just as good if not better.

Thank you.

Thank you for participating in today's conference.

You may now disconnect.