拉斯維加斯金沙集團 (LVS) 2013 Q1 法說會逐字稿

Good afternoon.

My name is Thea and I will be the conference operator today.

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

first-quarter 2013 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question and answer session.

(Operator Instructions)

Thank you.

I will now turn the conference over to Mr. Daniel Briggs, Vice President of Investor Relations.

Sir, you may begin.

Thank you.

Before I turn the call over to Mr. Adelson, let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor Provisions of central securities laws.

The Company's actual results could differ materially from the anticipated results in these 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 earnings per share, adjusted property EBITDA, hold-adjusted adjusted property EBITDA, and hold-adjusted adjusted earnings per share, which are non-GAAP measures.

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

Please note that this presentation is being recorded.

We also want to inform you that we have posted supplementary earnings materials on our Investor Relations website, for your use.

With that, let me please introduce our Chairman, Mr. Sheldon G. Adelson.

Thanks, Dan.

Good afternoon, everyone, and thank you for joining us today.

We look forward to answering your questions in just a few minutes.

We're obviously pleased with the all-time record quarterly financial results.

Those results reflect strong revenue and cash flow growth, and as I have mentioned in our previous calls, the continued execution of our four strategic objectives to maximize shareholder value.

I would like to provide a progress report on those objectives now.

One, maximize organic growth from our property portfolio.

Two, deliver additional growth by making new investments in our current markets to enhance growth.

Three, identify new IR development opportunities in geographic areas outside of our current markets.

And four, this is a good one, increase the return of capital to shareholders.

First, organic growth.

I will highlight our all-time record performance in Macao, where our industry-leading investments and the unrivaled scale of our properties have again enabled us to deliver robust market-leading growth in the world's largest and most profitable gaming market.

Our Mass table win in Macao for the quarter was up a whopping 63.2% to a record $863 million US.

A $9 billion of capital investments in Macao were targeted toward and designed to serve the mass segment from the very beginning, and it allowed us to lead the Macao market in EBITDA generations since we entered the market way back in 2004.

Our market-leading hotel, retail, convention, group meeting, and entertainment offerings will allow us to continue to lead the Macao market in both revenues for mass gaming and in EBITDA generation for the foreseeable future.

Also impressive is our rolling budget growth in Macao, which was up 24.9% this quarter to a record $41 billion US dollars.

That represents VIP market share of approximately 17.4% of Macao-market rolling volume, compared to just 12.6% one year ago.

That's a 38% increase in market share of rolling volume.

Sands Cotai Central continues its steady ramp, with both the mass table and slot businesses reflecting meaningful growth this quarter.

We welcomed a record 14 million visits to our Macao properties in the quarter.

If you annualize that, that means we are bringing in almost two visits for every official visit to Macao.

So if you get approximately 68 million -- if we get 60 million visits in our properties, that means that we're getting two visits for each assuming 28 to 30 million visitors to Macao.

So each Macao visit is, -- we are experiencing two visits.

A fully enclosed pedestrian walkway with escalators and moving sidewalks has successfully inter-connected our Cotai Strip properties, enabling customers to more comfortably move between our properties and allowing them to enjoy the full array of amenities on our properties, throughout our entire Cotai Strip property portfolio.

That means you can go between almost 9000 rooms without stepping outside.

It's probably the only pedestrian bridge with moving sidewalks and air conditioning anywhere.

The inter-connection of our properties is contributing to enhanced financial performance today.

And as the hotel inventory of Sands Cotai Central becomes more productive, and our Cotai Strip offerings continue to evolve, that inter-connectivity should contribute meaningfully to our financial performance.

Now, returning to Marina Bay Sands in Singapore, organic growth was again on display in our results.

The record $18.2 billion US in rolling volume was up over 42% compared to last year and was the highest quarterly volume in the history of the Singapore market.

If we had held 2.85% against that rolling volume, we would have produced EBITDA of $451 million this quarter at Marina Bay Sands.

That is the strongest total adjusted performance in the history of the Company.

Organic growth was also on display in our mass table win, which was up 7% as growth from visitors to Singapore continued to expand.

Growth was also on display in our hotel revenues, which were up 10% and our retail revenues, which expanded 7%.

Let's turn to strategic objective number 2. Development growth in our current markets, the Parisian Macao, our fourth integrated resort property in the Cotai Strip, and our fifth in Macao overall, is now under construction.

The Parisian will add another inter-connected, integrated resort property to our portfolio on the Cotai Strip.

The primary construction is now under way and the podium and hotel tower substructure work will commence shortly.

Based on our current construction schedule and subject to timely government approvals, we are still targeting the opening of the Parisian for late 2015.

We have also submitted plans to the Macao government for the development of a 2 million square foot Tropical Garden retail mall, just south of Sands Cotai Central on the east side of the Cotai Strip.

The mall would feature over 900,000 square feet of value-oriented destination shopping and dining.

Targeted specifically into mass markets is a different sell.

We commend the Macao government for the way they have encouraged the growth in the mass market and encouraged the development of mass market targeted non-gaming amenities, such as our proposed Tropical Garden retail mall.

Moving on to strategic objective number 3, the development of integrated resorts in new markets in geographic areas.

As you all know, we are committed to identifying new development opportunities in Asia and work in that region.

We have also been investigating opportunities in other parts of the world.

As we have previously discussed, in December of last year, the government of the region of Madrid passed legislation that outlined the regulatory framework to enable integrated resort development in Madrid.

There are a variety of steps left in the development process, which continues to move along.

Any investment would be subject to the receipt of government approvals and the finalization of a grants and incentive package that would enable investment, as well as success in the competitive process.

As the Company's largest shareholder, my interests are aligned with yours.

I have a vested interest in pursuing only the highest value projects that will maximize shareholder returns.

Now to strategic objective number 4, return of capital to shareholders.

We have now returned $4 billion of cash to our shareholders through dividends over the last five quarters, including nearly $3.4 billion to Las Vegas Sands shareholders and nearly $600 million to the non-LVS shareholders of Sands China.

It is gratifying that we have now built our businesses and expanded their cash flows to the degree that we are able to return such substantial sums to shareholders, while retaining both a strong balance sheet and sufficient liquidity to fund future growth opportunities.

We have every intention of increasing the return dividend at both Las Vegas Sands and Sands China in the quarters ahead, as the business and cash flows continue to consistently grow.

We will also consider, seriously consider, other avenues to return capital to shareholders in the future, including special dividends and the implementation of a stock repurchase program.

Before moving to your questions, I want to highlight that our retail mall business in Asia continues to build.

We expect that growth to continue this year until accelerating in the future as we re-merchandise the malls in to both Macao and Singapore.

Eventual sale of monetization of those assets will provide enhanced financial flexibility, including the potential to increase the return of capital to shareholders in the future.

With our outstanding strategic positioning and strong operating momentum and the disciplined, experienced leadership team we have in place to execute our strategy, I couldn't be more optimistic about the future.

Yea, return of capital.

With that, let me turn the call over to Mike to begin.

Q&A session.

Thank you, Sheldon.

Good afternoon, everybody.

Operator, may we please have the first question.

While the operator is compiling questions, let me just ask everyone to keep your questions to one question and one follow-up to allow everybody to have an opportunity to participate.

Thanks.

Joe Greff, JPMorgan.

Good afternoon, everybody.

Question for all of you, maybe specifically for Rob.

Singapore mass tables and slot volumes per day showed a nice sequential and year-on-year uptick.

I know you've been talking about getting the mass position correctly.

Can you talk about what the drivers were for that performance and whether it's the new hires that you put in that market?

Whether you are marketing differently with the health of the overall market?

What specifically are you doing and how sustainable is that?

Yes, Joe.

As you know Singapore that's the best quarter we've had.

It measures up to the first quarter of the previous year, we're back to a run rate of 4.6.

The answer is twofold.

On the slot segment, we continue to show weakness and that's because slots are primarily driven by the local market, which has not recovered.

On the table side, we're growing again and that's because of the programs in place, both to accelerate new customers for the building and also reactivate missing database.

So we're seeing a tale of two stories there.

I think we'll continue to see table growth.

We're hoping to see more growth in the slot side as well.

But clearly we're back in a positive place in Singapore and the most important segment, the non-rolling and slot and ETG segment, and we're seeing some results that come out of the database reactivation of the database, clearly we're seeing new customers as well.

We're happy to see it.

We hope it continues and the team is adding people by the day.

We should be at 20 hires by the end of the year, and I think we'll see real growth in that segment in the quarters ahead.

Excellent.

And then as my follow-up, Dan, Sheldon, would love to get your thoughts and recent views on some of the goings-on in Japan with respect to IR legislation.

How real does it feel now versus some of the fits and starts that we've seen in the past?

Mike says he wants to answer that question.

Thank you, Sheldon.

There's a lot of noise about Japan, about 100 people in the legislature wanting to get legislation as early as November.

The most recent conversations we've had was that looks like when it might appear.

As of this morning, there was another article that said that if the legislation passes, it's a one- to two-year process to get it ready to go, in terms of selection of those particular companies.

And the news has been really us, and Genting as two of the leaders in terms of looking at that marketplace.

We hope it could move faster, but essentially Japan, it's a little more active than it has been, because of the November situation, although there was some talk from Osaka about the possibility of moving that legislation up to the summer.

But our best knowledge to date from the ground is November looks like the time for the first legislation.

Great.

Thank you.

Good work, guys.

Thank you.

Thomas Allen, Morgan Stanley.

On Sands Cotai Central, you continue to ramp that property.

Is there anything saying that you couldn't do closer to same EBITDA as you do at the Venetian?

On the margins, they were a little lighter than we had expected.

Can you talk about how those should ramp?

Thank you.

I think to answer your question, I think the Venetian obviously is the biggest performer in the market.

It's ramping to $1.5 billion.

I think that's a little bit ambitious for SCC today in this current situation.

However it, does have -- it's a different product.

You don't have the theming, the Venetian theming, nor the retail component, which I think are the primary drivers of foot traffic in Venetian.

Sheldon referenced in the opening remarks how important the visitation is and the Venetian gets a disproportionate share of visitation because of theming and fabulous retail and food offerings.

Having said that, obviously the biggest advantage that Cotai Central has is the room product and the diversity and size of rooms.

So I believe it will continue to ramp.

Two things have to happen.

The miss at Cotai against the Venetian comes from primarily mass tables.

And all three segments, both the super premium mass, the premium mass, and mass mass tables at Sands Cotai have not gotten the kind of numbers we do at the Venetian.

They will ramp as the rooms fill, as we get more promotion, we're aggressive on that.

But clearly, there's massive opportunity.

We've grown to a number that's respectable, but it could be a lot higher wins per unit per day.

The junket segment is the highest performer in our portfolio and slot ETG is getting close to Venetian numbers.

It gets better and the spread gets smaller per quarter.

The whole key of the Sands Cotai central story is going to be filling those rooms, taking advantage of that 6000-key opportunity, the cross-over bridge, et cetera.

I have every confidence that SCC's a $1 billion EBITDA property of the future.

I don't know if it could ever reach the kind of numbers that Venetian's going to get to because Venetian keeps growing.

Looks to me like it's going to grow to $1.4 billion, $1.5 billion, $1.6 billion.

It's a phenomenal property, and it hits on all cylinders.

SCC I do think is a $1 billion property, and the primary driver will be that mass table segment.

If we can get that thing to 11,000, 12,000 a day like Venetian does, we'll be at a $1 billion dollars.

That's the answer in a nutshell.

But there's another nutshell here.

Okay.

I'm the blind squirrel who found a nut on Wednesday.

But I can see ahead on my vision.

I can see it through the fog and the snow.

We're spending a few bucks on what was formerly expected to be a theater.

I think it's about a 40,000 square foot footprint that we're going to enlarge.

The premium mass has grown dramatically since we originally planned the property, Sands Cotai Central, because that was the one that we stopped, if you remember, in the middle of the, or at the end of the financial crisis.

And then we started up a couple of years later.

So there was no premium mass market identified as such, to that.

So we did leave enough room in the Ruby and the Diamond categories, what we call aspirational categories before we get to piles of cash and then the VIP rooms.

However, we're putting in another 80-some odd tables, pushing 100 tables.

We're taking underperforming -- we're not the only ones, our competitors, I'm sure, are doing the same thing.

They are putting their underperforming tables to better use and increased revenue.

So we're going to put in -- I've approved the expenditure.

We've got the CapEx approval from our Board of Directors meeting yesterday, and we're moving forward on that.

It's going to take about 10 months or so, maybe a little more, 10 or 12 months.

It will be ready, I think, next April.

Correct.

Is it next April?

Yes.

We've got about 10, 11 months yet to go.

The delay in that is that we never put in, because we didn't know where we were going to put in, we never put in pilings underneath that space.

So we got to get the piling machine in to an already built building and then put them -- get them to work and the excavation and piling machines, so that will take an extra period of time.

So there is a lot of potential upside, filling up the rooms, getting more mass market, creating the capacity and putting the tables to good use.

I don't know if it will get to where the Venetian is, but as he said, the Venetian is a very unique property.

But I think it could get to where the Venetian was before.

I agree.

And who knows what will happen over the long-term.

I think Sheldon's comments are great because they reflect the --

Of course they're great.

They're great.

Of course they are great.

(laughter) Right.

It's an obvious --

That's why I get the big bucks.

(laughter)

But I think you should realize the opportunities in the segment you referenced, super premium and premium, but also in the mass mass.

What makes us unique at our Company, is that other people don't have that capacity to grow.

Our mass mass tables at Venetian are just extraordinarily performers.

If we can get there at SCC, there's going to be very good days ahead for that property.

Okay, and then just a quick follow-up on the mass and premium mass in Macao.

One of your competitors talked about how in the mass side it was seeing more customers purchasing chips at the cage instead of at the table.

Are we seeing something similar?

I noticed high hold at the Venetian in the first quarter.

Was that driving that?

Thanks.

Well, interesting question you raised, because I heard the call, and I think the answer is simple.

Cage drop is the phenomenon you're experiencing in Macao.

In most jurisdictions you'll have cage drop.

It's about 25% of our drop and we certainly can give you those numbers, as well as a part of the entire drop program.

We hold about 25%, 26% since we opened SCL, about 23%, 24% on mass play at MBS.

Cage drop components, so we're clear about that, that mostly impacts the super premium and premium mass, because you can't buy [rem] and be back at the table.

You can't cash in [rem and D] at the table.

It's against foreign currency restrictions.

You have to buy at the cage.

That's why that phenomenon happens.

Also, you can't process the money easily because it's small denominations.

It's a cage function, logistically it works better that way.

Having said that, we're very confident that across the entire portfolio we handle about, probably this year it's about $14 billion, $15 billion consolidated, and we'll hold about 25%, 26% of that.

So we know the hold percentage.

We know where the customers buy the chips, be it cage or tables, only two sources.

What we can't be consistent about is if customers move money between a property or a segment.

Like what Steve was referencing, the difficulty is knowing which segment they are losing at and that affects that hold percentage.

But in the aggregate, we do know where that's at.

It's not a confusion for us nor anybody else in the marketplace.

The nice thing is, as we keep growing drop, we're getting to a point where we can hold 25%, 26%, 27%, again, so it appears to be growing to a business we could see ourselves getting $4 billion of top fund out of this next year.

So it's a phenomenon because of the foreign exchange situation and the size of the bills.

And we intend to continue ramping up in all properties, because they are going to wake up from sleeping and we're going to crack the whip on them.

(laughter) Right.

Good idea.

Who was that?

Does that answer your question?

Yes, that was great.

Thank you.

Thank you.

Shaun Kelly.

Good afternoon, guys.

My first question would be around the Parisian.

I think in the prepared remarks, Sheldon mentioned that you were still targeting a late 2015 opening.

But I noticed on the CapEx schedule you actually brought down your target CapEx for this year.

Can you give us an update on if you've broken ground?

Are you driving piles on the property and where the status of that project sits right now?

Well, I had a conversation with Mike Lentz, the head of development yesterday, who continues to be more and more impressive as time goes on.

And Ed Kukla, who is a descendent of Kukla, Fran and Ollie, he says he's related to them.

What was the question?

(laughter)

Parisian.

I get it, I get it.

He said yesterday that the piling caps, here we are on May 1. In June, we're going to start the piling caps, which is, really think of it as the foundation.

It's like a map foundation, like we did this Venetian here we did a map foundation in Vegas and that's where you, think of it as the foundation and that's where you start the structure.

So we're going to do it on a gradual basis from one end to the other and as soon as we finish enough pilings, we're putting the pile caps on and soon as we finish enough pile caps, we're going to start the structure.

That was quite a big surprise to me yesterday.

And that's the process.

And I think there are two different types of pile cap.

There is poured concrete pile caps, like to put a big pipe in the ground, put a lot of concrete in it, and then there is the driven piles.

You've heard of driven snow.

We've got driven piles.

There's no is snow in Macao.

So they are moving along on the piles.

And the date to open in '15, I'm cracking the whip to get it done by the middle of '15.

We're not looking at always a delay, always a delay, like we've had in the past.

We're looking for always a shorter period, always a shorter period.

Great --

Every month, we don't open is the fruits of an investment.

We're losing whatever it is.

We could lose $50 million a month to start off with.

So if we spend an extra $50 million to accelerate the project, how many more months do we open faster and we get a big return on investment.

That's helpful.

And then my follow-up would be also in the prepared remarks, you talked a little bit about return of capital.

The question that comes to mind, we get from a lot of investors, once you compared yourselves to Apple, and I couldn't help but notice this week that Apple did a $17 billion bond offering to help return capital to shareholders.

How do you guys think about target leverage and would you be willing to put a time line around next steps on the return of capital initiatives?

I would like to tell you, Shaun, but you're too nice a guy that I would have to kill you if I told you.

(laughter) Because it's really selective disclosure.

I can be honest enough because I think this is not selective disclosure in this call.

We are very actively considering it.

It is on the table.

We had lengthy discussion at a Board meeting about it.

We have a very positive attitude toward doing this.

We're not at the finish line yet, but we're in our final stretch.

Sean, do you think we could get $17 billion at 1.9%?

(laughter) I'm not sure, but we can talk to our Capital Markets guy and get back to you.

(laughter) Former banker.

(laughter) Thanks a lot.

I think that we're at the point we're discovering should we have a fixed amount for 10 years or should we have a floating amount and buy off 50% of what we fix the rates?

So if we're at that point, we're getting close to them.

We lost him.

We need another.

Next question?

John Oh, CLSA.

Hello, guys.

Good afternoon.

Good afternoon, John.

All right, I'll start off with, in Macao, could you give us some anecdotal updates on visitation and spending trends from your customers, especially in the high end level, especially post the political position in China, in March.

What have we seen and what are you expecting in this golden week in May?

(laughter) You're going to know that all the week's numbers very shortly, I'm sure.

We're not looking for silver.

We're looking for gold.

(laughter)

I think, John, one of the things we -- all the noise from the government, it doesn't seem to be impacting what's happening to us.

You see that in the first quarter.

And I think, what's happened is the numbers from Macao come out I guess every week or so.

We haven't seen any impact whatsoever on any of the noise about the government.

I think visitation is published, it's public.

The amount of money that each person is spending seems to be more.

The rooms have helped us.

I think the Cotai Strip has helped everybody.

There's been no negative impact that we've seen so far, this year.

I don't see what the government's been saying that has really impacted us at all.

Rob may have other details on that.

But we have a big spread of market in all of our properties from the low limit to the high limit, and they all seem to be getting their appropriate share of the marketplace.

John, it's Rob.

I think the numbers speak for themselves in terms of the VIP demand or lack of demand in the marketplace.

You can see that for yourself.

I think our strength resides in the mass and the slot ETG market and I think those segments are growing like crazy.

And that coupled with the infrastructure is a very, very strong story for us.

So as we have a 1000 tables open and 5000 slot ETG units, I think our growth is tied for sure to the mass demand and that mass demand is staggering.

As for the VIP, time will tell, and we'll wait and see how it plays out.

Our opportunity, I think, is in the mass and slot ETG markets short-term and we'll ride the wave and see how the, what the government, how that works out.

But we're very, very pleased with our growth and the most important segment for us is in profitability.

Great.

That's helpful.

If I could just ask a follow-up on Singapore.

We've seen two sequential quarters now where rolling chip I believe is above $16 billion, but I can't help but noticing also that it's been four quarters in a row where you've been holding light in Singapore.

Could you give us some sense of what's actually going on in the VIP space?

Are we going to be experiencing less volatility in rolling chip and should we at some point expect some normalization of hold?

I know it's a very theoretical question, but four quarters in a row, what's actually happening in there?

Customers keep winning.

That's our deep analysis.

Very candidly, it's frustrating for us because the volumes are terrific.

It's a mathematically driven mile, isn't it?

And in the end, we let people bet a $1 million a hand.

Some nights they get lucky.

Some nights we get lucky.

It's been disappointing, because you normalize it and we fully believe it'll normalize.

Our team has looked at it every which way you can over there and one of these quarters, or probably one of these years, we'll hold 3.2, 3.3.

We have absolutely no concern about that whatsoever.

We've been through this before.

Last year in Las Vegas we held abysmally during the Chinese New Years.

People said, oh, my God, the Chinese people are winning and something happened with the games.

Then we held something like 45% the next quarter.

So, you know, we're very pleased about our growth in Singapore.

Again, it's a very concentrated market.

One quarter shouldn't be a predictor of the next quarter, but we're very happy with getting $18.2 billion.

It's our best quarter ever.

So we're very pleased about that.

And we're also a complete believer in the mathematical indications in the game.

So no trepidation or concern whatsoever.

It will normalize and be what it should be by the end of the year.

I don't know, John, this is Sheldon, I don't know whether or not our overall strategic approach that the Singapore market has an effect on it.

Maybe you could figure it out.

We take bets up a $1 billion Singapore dollars.

We're crazy.

$1 billion.

No, million.

Singapore dollars.

Oh, okay.

If we also have change of $1 billion, we'll take that too.

(laughter)

That's what I say to everybody when I get solicitation calls for charities.

I say have you got change of a $1 billion?

(laughter) If you do, I'll contribute.

The point is, I don't know.

Since nobody has ever done this before, nobody's ever figured out the mathematics.

If we take a $1 billion -- a $1 million bet, a lot of $1 million bets, now certainly not everybody does it and not every better will bet a $1 million every hand, but it may have a direct impact on the percentage.

Nobody's figured that out yet.

We're holding 2.62 lifetime, John, and I think when it's all said and done, it will be over 2.8 at the end of this year or next.

It's going to turn around at some point.

Always does.

Las Vegas has been done this for a long time.

In Las Vegas, we've been doing it for about 13 years.

We hold 25%, 26% on the high-end [bach rot], I assume it's going to normalize and we'll be just fine in Singapore.

It is the most profitable building in the history of buildings.

Not even the Pyramids have made more money.

They had no rolling program.

They died and couldn't take hold inside the tomb.

Anything else, John?

All right, that's great.

Congratulations.

Thank you.

Felicia Hendrix, Barclays.

Hi, good afternoon.

Just staying on Singapore for a moment, on the VIP side, is there any way to tell what percentage of that strong roll was generated by newly acquired players?

And also wondering where they are from.

Are they still mainly Chinese?

The majority of our business comes out of Singaporean, Chinese, or mainland Chinese, yes.

The majority, over probably 70% is mainland or Chinese people who bought a second home and are PRs in Singapore.

However, we're getting a lot of play out of Indonesia.

Some very strong business out of Indonesia and some great business out of Malaysia, as well.

It's still predominantly mainland coupled with PRs out of Singapore, Felicia.

It's where the people are, China.

I recognize that.

I know you've been on a program to obviously to grow that base of players.

Wondering if you're seeing some more diversification.

We are seeing diversification, but primarily in the non-rolling segment.

The biggest growth of new customers has been in non-rolling segment.

We have seen new business out of Indonesia, mainland for sure.

But again, I caution you, it's still a very concentrated market, the rolling segment.

The diversification and growth of new customers primarily resides in the non-rolling segment.

Okay, and so I guess that gets to the predictability question of going forward in terms of still being a concentrated number on the VIP side, correct?

Yes.

Okay.

It remains concentrated.

Again, I always caution you that $18 million this quarter doesn't mean $22 million.

We did that a couple years ago and won't do it again because it's not an easy predictor.

We could see a $19 million quarter, but it could also be $13 million.

Chinese New Year's first quarter always is pretty strong.

I think that's as much as we can say about that.

Okay, thanks.

Then switching gears quickly to Macao, your gross in the mass table win yields has been impressive.

I'm sure we're going to continue to see that grow as you reconfigure the Four Seasons, you add space in Sands Cotai.

How competitive is the market right now in the mass table side?

Are you seeing any of your competitors getting more aggressive?

I think it's competitive, obviously you have three segments there.

Our strength resides in the pure mass, which is, because of out table size and capacity, I think we dominate that segment.

The premium mass and super premium mass are obviously very competitive.

I don't think it's become unreasonable or overly incentive to the point where we find it -- It's still a very high margin, 38%, 39% margin business for us.

So I don't think it's unreasonable.

Any time you see a business growing like that business is growing with those ridiculous year-on-year comparisons, you're going to see competitive nature.

Very smart people in Macao, working very hard.

I think the Melco people especially in Galaxy and Wynn, MGM, all competing for that segment.

However, we've not seen unreasonable incenting and we've not seen -- everyone's making a lot of money in that segment.

Let's be clear, it is a growth engine in Macao in terms of making large EBITDA.

So our goal is to re-segment the Four Seasons.

We did $14,200 per table in the Four Seasons.

We want to re-segment that, get a lot more aggressive in that mass table market, or I should say, premium mass table market.

We want to grow our business, especially at the SCC.

We're thrilled with the business out of Venetian, the number of tables.

We could win a billion dollars in the future out of the mass tables alone in the Venetian.

It's extraordinary.

Also we're pleased downtown.

The Sands, we take a new approach downtown.

To make $100 million in a place that's approaching its 10th anniversary is pretty extraordinary, too.

There is work ahead of us.

We're as happy as $10,200 per table appears to be.

I believe there is material offside to this Company in the years ahead in Macao at the mass table segment.

Great.

Thanks, guys.

Sure.

Carlo Santarelli, Deutsche Bank.

Hello, guys.

Good afternoon.

Sheldon, obviously you outlined a couple strategies for capital deployments in your remarks earlier.

But the one thing you didn't mention, and as I look through your release, for a couple quarters in a row, you guys have done a nice job breaking out the details of some of your Macao, obviously the retail opportunities, et cetera.

Has there been a lot of thought put into maybe some strategic decision-making around them as a source of capital?

Yes, there has been.

We don't fail to look at opportunities.

The problem with that is we keep growing more than what we expect.

We really haven't yet stabilized because we continue to enjoy robust growth, and we certainly don't want to sell if we can get 30% or 35% growth potential of what we expect for the following year.

It's just doing very well, and I'm not sure that we could ever stabilize and slow down the growth to the point where it stabilizes until we open all the retail that's there.

So we have the Parisian retail.

We have the Tropical Garden retail.

That stand-alone mall, which the government is very excited about, because they want non-gaming development, is almost three times the size of the Parisian mall.

So we'll have quite a bit of retail connected without leaving an air-conditioned space.

We just opened up, I heard 16 more retail shops on multiple levels in Sands Cotai Central.

It's still there.

We can convert that almost any day that we want, but there's no reason to sell it, one, if we don't need the money, and two, it continues to grow at a much greater rate than what we can expect in a shorter term after paying taxes and reinvesting the money.

I think there's, I haven't added it up lately, but there was $8 billion to $10 billion of profit coming out of the sale at the malls.

That is a very, very, very strong corroboration of the original business model I dreamt up a long time ago.

You know, the problem of some of our competitors, is somebody at Mandalay Bay tried to copy our business model on a connection-based market, but they never got the retail up to that.

The retail and the apartments, the retail itself could really pay the cost of our core assets of our hotel, casino and convention space, and entertainment.

So no use selling when we continue to grow more than what we could reinvest the money for.

That's very helpful.

Thank you.

You're welcome.

Steve Kent, Goldman Sachs.

Hello, good afternoon.

I'm just looking at your slide on 18 of 41 where it says -- our focus in Singapore, increasing visitation to Singapore, which will drive growth at MBS and then identifying high value customers new to the region and bringing them to MBS.

I want to be clear on the first point.

Increasing visitation to Singapore, is that just a broad tourism initiative that you're going to embrace?

And especially on the mass side, where are you seeing those customers coming from?

And are you putting your sales force into some of the east Asian countries to get that traction?

But I'm just trying to understand what those, that focus in Singapore, what you're really trying to do?

Is it mass?

Is it a broad tourism push?

Is it sending your own people out into some of the Southeast Asian countries to get people into your casinos?

Well, Steve, from the gaming side, it's clearly a very clear focus on the premium mass gaming customer.

The goal here from our respective is to build a team.

And we're building that team every day of people that go into JV, Malaysia, Indonesia, Jakarta, Tokyo, Thailand, Vietnam.

And find better premium customers and bring them to MBS to gamble.

It's pretty black and white.

The same way that we saw that business grow terrifically from the opening of Singapore and then it fell off as it there was some restraint by the government, so our goal is to build that business back up and that's why we're at $4.6 million a day and our goal is to get back to an even higher run rate.

Clearly, we want to go to the tourist side as opposed to Singaporians gambling and I think it's starting to pay off.

We hit a decent number for the quarter.

We think there's growth opportunity.

Our goal is to build a big sales team which is not focused on the rolling direct, but rather the premium customer.

So that's definitely the direction.

Robin Farley, UBS

Thanks.

Can you quantify the Venetian with the Paiza renovations, what percent of your VIP tables are out of service in Q1 and also in Q2, just to get a sense of that?

And is that what you attribute the slot declines at Venetian as well?

Do you think it was tied into the Paiza renovations?

I'm sorry, Robin.

Could you repeat the last, the second part?

We lost you the second part of that question.

Sure, do you think it was the disruption from the Paiza renovations that also impacted things on the slot side at the Venetian as well, the declines there?

Well, obviously any time you have renovations, it doesn't help.

But I still think when the Venetian, you're talking about Venetian Macao, for the quarter, we still did 320 win per unit per day, which I think is acceptable from our perspective.

We were at 357 the previous quarter, but we held a bit lighter.

So we're pleased overall where the slots are at and ETGs, and our entire mass table mix as well.

So we're happy with that.

As far as VIP tables, obviously we traded down a bit there in the volume.

The disruption in terms of the renovation, it's to some extent, yes, but still $38,000 win per table per day, we're happy with that.

Very happy with our normalized profit, which was very, very strong.

And again, overall take on the Venetian is, any time you have renovation, there's some disruption in visitation.

But overall, we just think the Venetian, again, VIP tables, the rolling volume was excellent.

I mean, $38,000 win per day, our mass tables incredibly strong with a lot of tables on the floor.

Land is very good.

I think we're very pleased where the Venetian is heading.

I think the Venetian's a $1.4 billion, $1.5 billion property, where it's going.

Yes, some disruption, but overall, not material.

Okay, great.

And I don't think you guys have commented about the auditor change that was announced.

I wonder if you could give any color on how quickly you think you'll have onboard as a new auditor?

Yes, it's Ken.

Really not much to talk about there.

It's pretty straightforward.

As we talked about before, no disagreements, no reportable events.

It's behind us and we're very engaged in the process of selecting a new firm and I would think within the next 30 days or so, we should be able to announce a new firm.

I'm sorry, you said in the next 30 days?

Approximately.

Okay, great.

And then lastly, is this the first write-off had you in Singapore?

I don't recall a previous one.

I just want a little color on that.

Yes.

Okay.

Any, any color around that?

No.

I think as we go through the typical aging in the collection process, we get to the point where some of them are uncollectible either as a bankruptcy situations or players being deceased and such.

And so when we get to the end of the road where there's actually no possibility of pursuit of collection for those reasons, we end up just writing off the balance.

So was this sort of a cumulative, or was it primarily just driven by one write-off?

No, it would be -- we go through all of the accounts and so it wouldn't have been one.

It would have just been those that had gotten to that point where we felt there was actually no possibility and somebody just charged that amount against the reserve.

It's pretty typical in any markets, same in Las Vegas, same in Macao.

At some point, people pass away or are bankrupt and are not going to pay you.

We write that off.

I don't think it's atypical.

As Singapore matures, you'll have more of this.

For those of you who have followed along, this on Page 28 of the debt that's on our website and the number is $11 million that was written off.

Great.

That's the $11 million I was asking about.

Okay.

Thank you.

Ladies and gentlemen, we've reached the end of the allotted time for the Q&A portion of today's call.

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