拉斯維加斯金沙集團 (LVS) 2014 Q1 法說會逐字稿

Good afternoon.

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

At this time, I would like to welcome everyone to the Las Vegas Sands Corp First-Quarter 2014 Earnings conference call.

(Operator Instructions)

Mr. Daniel Briggs, Senior Vice President of Investor Relations, you may begin your conference.

Thank you very much.

Before I turn the call over to Mr. Adelson, please 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 law.

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 the results.

In addition, we may discuss adjusted net income and hold-normalized adjusted net income; adjusted diluted earnings per share and hold-normalized adjusted diluted earnings per share; and adjusted property EBITDA and hold-normalized adjusted property EBITDA, all of which are non-GAAP measures.

By definition, a reconciliation of each of these measures to the most common notable GAAP financial measures are also noted in the press release.

Please note that this presentation is being recorded.

We also want to inform (technical difficulty) supplementary earning slides on our Investor Relations website for your use.

We may refer to those slides during the Q&A portion of the call.

Finally, for those who would like to participate in the question and answer session, we ask that you please limit yourself to one question and one follow up so we might allow everyone with interest to participate.

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

Thank you, Dan.

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

We couldn't be more pleased with our record financial results, which reflect continued execution of our principal strategic perspectives.

I would like to take you through some of the highlights of the quarter.

We delivered outstanding growth in revenue, cash flow, net income, and earnings per share again this quarter, with our adjusted diluted earnings per share producing 37%, to reach a record $0.97 per share.

We also meaningfully increased the return of capital to shareholders.

We produced another record quarter in Macao, where adjusted property EBITDA grew 49% to reach a record $940 million.

We continue to grow faster than the Macao market in mass table gains, the most important and profitable segment.

Our mass table win for the quarter increased (technical difficulty) to reach a record $1.34 billion.

Our growth rate was 40% faster than the Macao mass market as a whole.

We have consistently grown faster than the Macao market in mass table gains.

The first quarter of 2015, we generated approximately $867 million in mass table revenue.

And we grew that in each successive quarter to $930 million; $1.06 billion; $1.22 billion; and finally, $1.34 billion in the first quarter of 2014.

Our annualized departmental profit in this segment has increased to approximately $2.44 billion and approximately $1.56 billion over the last year.

That growth has allowed us to bring nearly $900 million additional dollars annually to our departmental profit and EBITDA.

We are confident about our growth in (technical difficulty) for three reasons.

First, we intend to increase the utilization of our market-leading 9,000 suite and hotel room inventory on the Cotai Strip, which represents 56 of room inventory owned by gaming operators -- 56% room inventory owned by gaming operators.

For our most valuable mass-gaming customers, that hotel inventory will expand to nearly 13,000 suites and rooms with the opening of the Parisian and the addition of the St.

Regis Tower at Sands Cotai Central, which are both targeted for opening in late 2015.

As our database of valuable gaming customers continues to grow, and our hotel suite and room inventory expands by over 36% with the St.

Regis and Parisian openings, our programs per gaming customers will allow us to further optimize our mass table productivity across our property portfolio.

Second, more people are visiting Macao and our property portfolio on the Cotai Strip.

During January and February of this year, robust visitation transfer, mainly in China, continued.

Chinese visitation from outside Guangdong province increased 19.2% in the first two months of 2014, compared to the first two months of 2013.

We believe future growth will be enhanced by governmental infrastructure investments in Macao, the special economic zone of Hengqin island, and throughout Eastern China.

These investments will enable more people to more easily reach Macao and will contribute to Macao's evolution as the leading business in leisure destination in Asia.

Third, as visitors come from further away, they stay longer and they spend more on dining, retail and entertainment.

The 2.1 night average length of stay for overnight visitors to Macao has increased, but it is still far below Hong Kong's average of 3.7 nights.

We believe increasing length of stay in the years ahead will also contribute to growth.

Also, when people travel from further away, they bring larger gaming budgets.

Turning to our VIP business in Macao, it is also exhibiting strong growth with our rolling win increasing 18.2% to reach a record $1.45 billion.

That represents rolling win per table in excess of $39,000 per day, which was another record for the Company and up 49.1% compared to the quarter one year ago.

In another first for the quarter, we were in the number one position in Macao gross gaming revenue, with a 23.2% revenue share.

Far more important to us, of course, is growth in EBITDA, which expanded 45% in the quarter.

The strong performances of the Venetian and Sands Cotai Central for the quarter demonstrate the positive impact of the substantially-increased critical mass of our Cotai Strip.

Our market-leading Cotai Strip investments, including over 9,000 hotel suites and rooms, together with our dining, retail, entertainment, convention and exhibition offerings, have elevated the overall tourism appeal of the Cotai Strip.

Our property portfolio is now attracting a more valuable set of customers who are staying longer and spending more, which in turn is driving growth for both properties.

This increase new returns across our entire property portfolio.

We couldn't be more pleased about the future benefits that the additional suites and hotel rooms, dining, retail and entertainment attractions of the Parisian will bring to the Venetian, Sands Cotai Central and our Cotai Strip.

Now turning to Marina Bay Sands in Singapore.

I want to say the hold finally came back.

We generated $435 million of EBITDA at Marina Bay Sands during the quarter.

Importantly, Marina Bay Sands' proven success in delivering the economic benefits of our convention-based integrated resort business model are allowing it to serve as the most important reference site for merging jurisdictions that are considering integrated resort development.

We are proud of our contributions to Singapore and look forward to future developments that leverage the convention-based IR business model.

Now turning to development investments in our current markets, construction continues at the Parisian Macao.

We remain both on budget and on schedule; and, of course, subject to timely government approvals that may be required, we continue to target a fourth-quarter 2015 opening.

In addition, we are continuing construction on the St.

Regis Tower, the fourth and last tower of Sands Cotai Central.

We are also targeting the fourth quarter of 2015 for the completion of that project, which will add over 700 additional hotel and a private hotel units to our portfolio in the Cotai Strip.

Now moving onto the pursuit of opportunities for integrated resource development in new markets and geographic areas.

In Asia, activity levels in Japan remain robust, and we are pursuing the potential for integrating resort development in this promising market with great enthusiasm and optimism.

Korea has also shown increased activity levels, and we are looking forward to the potential development opportunities there.

We created the convention-based integrated resort business model, a model that benefits host markets through increased employment, business and leisure tourism and visitor spending.

Combined with our track record of demonstrated results in Las Vegas, Singapore and Macao, where we have broadened and strengthened the business and leisure tourism appeal of each market, we feel we are exceptionally well-positioned to compete for these development opportunities.

One particular area of focus for our Company is our commitment to lead the industry in compliance.

We have invested meaningfully and made great efforts to create a culture of compliance throughout our organization.

It is important to all our constituencies, including our customers, suppliers, gaming promoter partners, regulators, lenders, investors and team members, that we lead the industry in compliance.

Compliance must be ingrained in the way we do business.

We are proud to lead the industry in this vital area.

Finally, let's address the return of capital of shareholders.

The confidence we have in the strength of our business and the reliability and predictability of our cash flows have allowed us to regularly increase the return of capital to shareholders.

As we have said in the past, as our EBITDA and free cash flow continued to grow, the cash not needed for capital expenditures and investments in new markets will be returned to shareholders through dividends and stock repurchases.

Because of the long development cycle for investments in new markets, there will not be a requirement for significant capital expenditures in new markets in the intermediate period.

Over the last nine quarters, through March 31, 2014, we have returned more than $7.3 billion to our shareholders through dividends and stock repurchases, including over $6 billion to Las Vegas Sands shareholders and nearly $1.3 billion to the non-LVS shareholders or Sands China.

During the first quarter 2014 we paid a recurring dividend of $406 million or $0.50 per share, an increase of 42.9% compared to the $0.35 per share we paid in the first quarter of 2013.

In addition to raising the LVS recurring dividend, we increased the Sands China limited interim dividend for 2014 by 30% to HKD0.87 per share.

SCL also paid a special dividend of HKD0.77 in February of 2014.

We have every intention of increasing the dividends at LVS and SCL in the years ahead as our business and cash flows continue to grow.

In addition to dividend growth, we returned $810 million of capital to LVS shareholders during this quarter through our stock repurchase program, leaving approximately $620 million remaining under our current LVS stock repurchase authorization at March 31st.

We expect to keep repurchasing at least $75 million of LVS stock per month.

We saw the opportunity in the first quarter of this year, on which we are reporting, to buy more shares; so we spent a total of $810 million.

We look forward to continuing to utilize the stock repurchase program to return capital to shareholders and to enhance long-term shareholder returns.

Regarding leverage, we remain comfortable with a gross leverage debt-to-EBITDA ratio of between two times where we are today and around three times before additional debt related to the future development of integrated resorts in new markets.

We do not have specific plans to issue additional debt.

We are just thinking that there is a possibility we could go up to three, but I don't think we would go more than three.

I don't want to guarantee that, but this is the way we are looking at it now.

We are pleased to have completed the refinancing of our Macao credit facility during the quarter and to have extended the tenure of that debt on favorable terms through the end of the decade.

We intend to maintain the strongest balance sheet in the industry, which we believe provides another competitive advantage as we pursue global growth opportunities.

In conclusion, we are successfully executing our business plan.

And I couldn't be more confident about our future success.

It's my job, together with our outstanding management team, to make sure we stay disciplined and continue to execute the strategies that will both extend our industry leadership in current and new markets and generate strong growth and outstanding returns for our shareholders in the year ahead.

You know my motto, yay dividends.

With that, let me turn the call over to the operator to begin the Q&A session.

(Operator Instructions)

Joseph Greff with JPMorgan.

Good afternoon, everybody.

Sheldon, your stock and other Macao operators' stock have been highly volatile over the last two months, over investor perceptions, investor concerns that the VIP player, VIP counter behavior may be different or less robust of late, whether it's related to China macro factors or geo-political ones.

I was hoping maybe you can share with us -- and Rob as well -- your observations of late into the VIP segment.

Are you seeing any change in behavior?

Obviously, the mass keeps coming and you're doing a great job in the segment outperforming the market, but if you can talk about the VIP, which I knows matters less for you than others, that would be great.

I'll give you a validation about this concept for Chinese people.

From the time of Confucius, which was 3,000 to 4,000 years ago -- I don't really know, I never met Confucius -- nobody has been able to suggest that Chinese and other Asian peoples don't want to challenge luck.

They have been wanting to challenge luck for 3,000 years and nothing, through thick or thin, tall or short, slim or fat, nothing has stopped them and I don't think anything will.

If there is a momentary blip in the road, it's like a speed bump in a private housing development where people don't want you to drive fast, so any -- look at the number that we increased VIP over last year.

I mean, that's a number that's more than what the market itself has grown.

I don't understand where people -- I wish somebody could tell me -- you know, beliefs that go on for 3,000 years are pretty hard to break.

I don't know if anybody has tried for 3,000 years, but the fact that it's sustained itself for such a long period -- I was talking to somebody yesterday about how long, where's the potential for supply and demand to cross?

I don't know and I think I'm a pretty smart guy.

I can't tell you, I don't think anybody could tell anybody with any degree of certainty where that line is going to cross.

In any event, I don't see even during the result of the last great recession that we had, the market essentially -- it didn't lose.

I think the worst that it got was even from year to year in one year and then it grew up again.

Rob, what do you want to say?

Joe, I think you referenced it well.

The geo-political issues and macroeconomic issues in China clearly are more impactful as it relates to VIP segment and as you referenced, we are not VIP dependent as much as other people are.

Our primary driver is going to be the 9,000 rooms and 1,500 non-rolling table games -- excuse me, 1,200 non-rolling table games we are moving towards.

My way of thinking, that's our future.

VIP will be what VIP will be.

We will participate in that segment.

I think we will do just fine competitively, but the real driver of our success, as you can see with these numbers, is our staggering advantage in the premium mass -- mass segments.

That has been the driver of almost $600 million of EBITDA this quarter, up from $394 million.

Amazing year-on-year returns and same-store sales so we believe that is less affected by those issues and that's our power house, that's our strength.

So we will watch the VIP and like everybody else hope it goes the right way, but the real driver for SCL is going to be in those segments and not so much in the VIP segment in the future.

Great.

Thank you, Rob.

And my follow-up question to you all, with regard to the buyback activity in one quarter, in 1Q, that was 1.2% of your market cap.

That's a sizable amount and you talked about being more opportunistic with the share price levels here, but the $80.80 average price in 1Q and April being well below that.

Have you -- can you talk about how much stock you repurchased thus far in the current quarter?

And that was my --

How much stock do we intend to purchase in the current quarter?

No.

What you bought quarter -- the April to date.

Joe, we are not going to unpack on a quarterly basis how much we are actually buying.

I think what's fair to say is that we see value in the stock and if we saw value at an average of $80.80, we still feel that -- see value in the stock.

You guys will hear how much we bought when we get to the next time we get together on the --

I don't think anybody was expecting us to buy over $800 million in one quarter, because we said we are going to buy at least $75 million a month.

It was an opportunity and I hope we don't get too many downtrend opportunities, but we are looking at the future, where our stock is going to go.

Another analyst just increased our price to $97 just before we started this call and I think, I haven't done a study.

But I think the majority of our 28 or 30 analysts covering the Company are all advised and I think mostly outperform and that -- that our growth, we have such confidence in the growth of the Company.

I, again, referring back to the conversation I had with a good friend yesterday, about where is this line going to cross of supply and demand?

I don't think, in my lifetime, it's going to cross.

The youngest guy sitting at our table is about 30 and -- am I correct, Ian, give or take?

28.

28.

Oh, wow.

I missed that.

(laughter) Well, that's all right.

Close enough.

You're rounding up.

You look 25.

In his lifetime.

And there's just not going to be a turnaround.

There has never been a turnaround in the behavioral practices of Asian people and I don't think there will ever be.

So, yes, one day supply and demand may cross.

I don't know.

I don't -- look, even when the other five concessionaires, the three basic and the other two sub-concessionaires, of which we are one of the three sub-concessionaires, when they open, we are still going to be dramatically ahead in Cotai Strip.

Cotai Strip was our vision.

We did it, we are going to have 12,000 rooms all under one roof.

We are having -- we've got a pedestrian, air-conditioned moving sidewalk pedestrian walkway going, connecting the Cotai Central and the Venetian/Plaza casino and hotel -- at Four Seasons Hotel.

We are going to have everything under one roof and there will be nothing like it anywhere in the world.

So as Macao continues to grow, we still hold a dominant position.

Great.

Good enough.

Thank you, guys.

Good results.

Thanks, Joe.

Thanks, Joe.

Shaun Kelley with Bank of America.

Hey, good afternoon, guys.

Maybe to just stay on the buyback theme for a little bit longer because I certainly agree, Sheldon, that, that number was much higher than anyone we spoke with was expecting.

Could you just help us think a little bit about just how you are trying to kind of value your stock or think about future growth potential here?

I mean, I think what would be helpful is knowing, given there's only $600 million remaining on the authorization and the stock price is actually below where you bought back last quarter, just, how much more can there be?

You should have a lot of fire power and a lot of room ahead of you to increase this if you want to.

The cash flow -- the free cash flow that we will have in 2014 is significant; so significant that we could repeat our buyback program probably at another $2 billion.

We have, frankly, we haven't talked about it in a serious vain.

I'd like Mike to throw his two cents in on this issue but whatever is good.

I want to tell you that this is a very unique company.

There was an article the other day that said that we were the largest gaming -- we were the largest market cad company not to be in the S&P 500.

Why is that?

Because they have a habit of not bringing in a company that is controlled by one person or family, as is the case here with LVS.

That means that our interest, your interest and my interest, are aligned.

I want stock buyback, I want dividend.

I just jokingly gave you my -- repeated my motto, yay dividends, and that's what I want.

I am in this -- you noticed I haven't sold any shares and to -- unless one of my foundations had to sell some shares over the last five years, I haven't sold shares for eight years.

And it certainly expresses my optimism in the Company.

Look at the quarters that I have recited that we grew from first quarter 2013 to first quarter 2014.

What does that tell you?

It tells you that our growth is consistent, it's sustainable and we have the components that will keep it sustainable for years to come.

Shaun, it's Mike.

Sheldon asked me to comment.

I would just say, we've said before and we continue to say that our cash flow indicates that we can distribute to shareholders in both ways -- that's buying back stock and paying dividends.

We continue to do that.

And making the decision as to how much stock and how much dividend, we will make those decisions as the year goes on, based upon our capital needs.

But you can project, as you already have, what our cash flow is.

And we are going to use -- we use enough to keep our properties where they have to be and make reinvestments and then we pay more dividends and we buy back more stock and that combination will continue.

Thanks, guys.

And then I guess my follow-up question would be kind of just to return to fundamentals.

It's very clear that in Macao you guys have been shifting more and more tables to the mass market segment.

I was just wondering if you could talk a little bit about some of the initiatives you're taking to continue to drive not just the number of tables higher but the yield per table higher.

I think you guys have some good views on how to do that, how to use the rooms and possibly what you're doing on premium mass at Sands Cotai Central.

Could you talk a little bit more about that?

Sure.

As you well know, the Chinese population visitation to Macao just is under 2%, so as those infrastructural improvements continue to happen --

2% of the Chinese population.

Chinese population.

Right.

So as a result of that, the market there keeps growing.

That's our growth engine and what's that segment about?

It's about table and room capacity, as you well know.

We continue to drive more customers into our hotels who are high-value casino guests, EBITDA will grow, margins will follow.

Obviously, SCC and Venetian are the targeted places because of the room capacity there.

We are thrilled with $13,210 per table right now, Shaun, but we think we can get a lot stronger.

We grew 181 tables year on year and yet increased to $13,200.

Our target is $15,000, $16,000 per table in the future.

Our target is to keep converting as long as we can get those kind of numbers out of our non-rolling segment.

We think the key to our performance clearly resides in the amount of tables we have, the amount of rooms we have to put people in and that's an amazing competitive advantage that is deep root and structural and that's the key to our business.

I don't think it's that complicated to understand.

Coupled with a significant retail in F & B offerings, we have the most desirable property in Macao in the Venetian.

As well as it did this quarter, at $470 million, I believe as we keep converting higher value customers that property keeps running.

We think the SCC, although it performed well, has a long way to move.

As we get more, the Dragon palace opens up, we get more rooms occupied, that hotel is still not performing where it could get to, 5,600 rooms.

The basic fundamentals are there for us to improve dramatically at SCC and Venetian.

It's simply execution.

We are not saying we won't be in other business or segments, but obviously the big driver, Macao, the most unique thing about that market is the non-rolling market, and that is our focus.

Our belief is we can dominate that market with our room supply, our table supply, a good management team and execution.

Great.

Thanks, Rob.

Appreciate it, guys.

Yes, Shaun, he better mean that this year's bonus is predicated upon projecting how much money we are going to make per table increased over the last quarter.

Okay.

There you have it.

(Laughter) We will hold you to it.

I believe in providing incentives.

(laughter) Besides that, he can access my frozen yogurt machine.

Thank you very much.

Jon Oh with CLSA.

Thank you for taking my question.

Thanks for correcting that, Sheldon.

How are you?

Good.

How are you, Jon?

I only have one question today and that relates to, I guess, Sands China.

When I look at your aggressive share buybacks at LVS, how do we think about buying back stock at Sands China?

And I guess the question I really want so know, is there a need to still have a listing status at Sands China?

Do you still need to have that listed?

Can you take that private?

Is that something you're technically considering in the long run given the free cash flows?

I have been trying to get free of being listed in Hong Kong for a long time.

We looked at it and it would have taken -- I don't know what today's price, $63.50 I think it is, that closed today --

(multiple speakers) $19 billion, $20 billion, cost you.

Somewhere between $15 billion and $20 billion.

Frankly, given my motto, I would rather take that cash and pay it out to shareholders, both in SCL and LVS, and continue to buy back shares because our bosses are the shareholders.

Now, I am pretty large shareholder but I got a boss too, called Dr. Miriam Adelson.

So I got to -- we all have bosses, but I consider all of our shareholders the boss.

So you guys are the guys that we are reporting to.

We hope -- we are trying hard to satisfy you and although I would like to buy back the -- what we went public with in 2009 of SCL and fold it back into LVS 100%, I think I would rather take that $15 billion or $20 billion and give it out and start buybacks and dividends.

Thanks, Jon.

Thank you.

Thanks, Jon.

Carlo Santarelli with Deutsche Bank.

Rob, maybe you can help here with some of the Macao stuff.

If I start to think about, obviously, your VIP rolling chip volume and, obviously, as you made a point, not really a focus.

But the mix between direct and junket in light of some of the comments that were made a few weeks ago about some of the junket relationships, et cetera, do you guys feel maybe you'll start to use the direct program a little bit more?

Not necessarily.

We have a good relationship with our junkets.

I think your referencing -- I'm not sure what you're referencing.

But we had a good relationship with our junket partners.

We do VIP, be it premium direct obviously as a part of business.

The only thing you recognize, Carlo, more than anybody we are just in a unique position vis-a-vis the premium mass, mass markets to perform because we have the sleeping rooms and the capacity.

We are not putting a back seat to the junket segment nor to VIP direct.

Now, we value those businesses and those segments and we will operate them aggressively and competitively.

It's just that the towering opportunity we see as the non-Guangdong visitation keeps evolving through the infrastructural improvements puts us in unique position.

Sheldon referenced how far they come.

They bring more money to gamble with.

They stay longer.

It's right in our power house and where we want to be.

So the opportunity there is so unique to grow from $600 million, $700 million, $1 billion dollars a quarter in that segment that we simply have to dedicate more resource to that mass segment.

We won't ignore the junkets nor will we be difficult partners.

We are very -- as long as we all have a way to make money together and it works from a compliance perspective, we are happy to participate in that segment.

I would point out that every one of our customers in Singapore, and they are big playing customers, are all premium direct.

Sure.

All of them.

We don't go through any middleman whatsoever.

Great.

And then if I may, just one follow up.

I know, obviously, given some of the rev par metrics out of Macao this is probably a strange time to ask.

But have you guys done any thinking as it pertains to your mass business and using that hotel room base a little bit more for the casino customer?

Unequivocally.

Our business plan, our team there is very focused on converting from more of a cash ADR to a high-value casino customer.

Clearly, that's the upside of the Venetian.

The Venetian has grown from -- Venetian was a nice performing property a year ago making, I think it was, $350 million or so for the quarter and now it's at $470 million.

$348 million versus $470 million, margin is about the same, 39.7% versus 40%, but the conversion there, the growth there, hasn't come out of necessarily junkets or slots ETG.

The driver of that property and the driver of our fundamental business is that mass conversion.

And to your point, using those hotel rooms to sleep the right kind of people that gamble.

I think we all know, we've got running room here to grow our business materially, first at SCC and Venetian.

I made a comment last year, somebody at the Venetian could be a $2 billion building and people thought I was kidding.

I think we realize that, that's the goal is to get the $2 billion and beyond.

The growth in Macao certainly has not been as strong in other segments.

The growth in Macao resides in that mass segment and that's our strength.

That's who we are.

And there's 9,000 rooms we built years ago, coupled with those 1,100, 1,200 gaming tables, just puts us in a very unique position to grow.

So obviously SCC, Venetian we think have a lot of running room to grow and perform beyond the current levels.

As good as they are, they can get a whole lot better.

I just want to call to your attention, Carlos, I want to repeat my prepared remarks.

In the first quarter of 2013, we generated approximately $867 million in mass table revenue and we grew that in each successive quarter to $930 million, $1.06 billion, $1.22 billion and finally $1.34 billion.

I don't have my calculator in front of me.

Somebody took it.

Pretty good.

But it looks like at least, it looks like a very substantial growth in just four quarters.

Yes.

Very substantial.

And more to go.

The point is, as good as that is, Carlo, we think there's a lot more room to run.

It's 54.2%.

That's great.

Thank you very much, guys.

Very helpful.

Thank you.

That's where we look in the future.

Continue to grow that.

Thomas Allen with Morgan Stanley.

Hi, guys.

So congrats on winning the market share base this past quarter.

As we think about -- as we think longer term, as more Cotai properties open and your percentage of the room footprint shrinks below the current 56%, do you think your ability -- you have the ability to maintain your current market share?

Thanks.

I think we have --

What?

If we maintain our current market share --

What do we think about maintaining our current market share?

Referencing when the new properties happen.

We are not going to maintain it.

We are going to increase it.

We actually believe we can grow materially.

I think we -- with new properties coming on board and we welcome the competition, we will be one of those new properties.

So our current room count will grow to 12,000 tees, far beyond anybody else on Cotai, and Cotai is the growth engine of Macao.

If we continue our current performance and improve our use of rooms and our retail, we expect to grow significantly our share against the market.

And as good as this quarter is, we think there's a lot of room to grow as we keep our strategy going.

And again, I think next two years we are virtually alone until sometime in 2016 in this area.

With a mass market is ours to dominate next two years and I think beyond that.

12,000 keys will still be a dominate player on Cotai for a long time to come.

13,000.

Again, the Sand Ridge --

Excuse me.

I stand corrected.

13 --

In terms of all the expansion, we are the only one that's adding 3,000 rooms.

The others are adding less than 2,000 rooms each so we will maintain our over 50% of the overall room market.

So we are not going to lose our plus-50% room advantage.

Look, years -- I created -- it was my vision.

I created the Cotai Strip.

Now today, everybody will cut off their right arm to get a piece of land in Cotai when everybody thought in the past that it wasn't going to succeed.

Well, today I have a warehouse full of right arms.

There may be a few left arms in there and -- from the south paws.

And when -- so, it was my vision to create the footprint that I felt was necessary and achieve critical mass.

We have done that.

As everybody else is building property and under 2,000 rooms, we are building 3,000 rooms and we are looking for another one, another possibility of another 2,500 to 3,000 room property that will provide the room nights for -- to bring in the patrons that are traveling longer distances.

And in less than two years, hopefully less than two years, when the Hong Kong-Zhuhai-Macao bridge opens, we will be 20 minutes from the Hong Kong International Airport.

That is expected to significantly grow the MICE market, meetings incentives, conventions and exhibitions, and the FIT market and the individual visitor scheme additional cities, opening up those cities.

So Macao will end up with another airport besides the airport it has that services 100 carriers that service 180 cities.

So we are looking at another significant major infrastructure improvement that will essentially be part of Macao.

Thomas, wanted to add one thing that clarifies the numbers behind Mr. Adelson's comments.

We have a slide in our slide deck, in the appendix, it's slide 31 and I made the comment about market share of EBITDA.

We really do focus on that and if you look at the last year in 2013, we had 32% market share in EBITDA.

And if you look at where we were a year ago in 2012, it was 28%, so we actually gained four point up share of EBITDA in the market.

And our growth in EBITDA over the last couple of quarters, it's looking at the 40% -- at the TTM of the first quarter of 2014 we are growing it at 48%.

So clearly, if we are growing at 48%, we'd like to keep growing it.

The revenue thing is not the drivers.

Everything Rob's focused on is driving EBITDA per table and EBITDA per room and that's really where we are going to focus all the attention.

And Thomas, one more thing.

I think we should be clear.

We are obviously raging bulls on the Macao market in general.

And we believe that for our competitors as well.

Well-capitalized competitors with great business strategy will be coming to Cotai and, not to diminish their efforts or their capabilities are huge, but I think the good news is the market is huge.

Sheldon referenced the bridge, the trains, all the infrastructure improvements grow this market.

We believe is going to be a much more important market than it even is today, so there's plenty of room for everybody to make money.

The only difference is, we have a strategic initiative which is focused on rooms and our gaming opportunities.

So it's a little different in terms of our capacity ability to, especially during peek periods, you saw that during Chinese New Year's, you saw that during February.

We simply dominated that during those periods.

It's capacity constrained market a lot of time, and that's where our advantage, our competitive advantage kicks in there.

But I think there's plenty of room for the entire group to do very, very well the next three, four years.

And Rob, just thinking about yielding out the rooms better, if your average ADR at Venetian is around $250 and average stay is two nights, how much more valuable -- can you quantity at all how much more value those casino customers are?

Sure.

The range is as low as $1,500, as high as $5,000-plus a night, so you do the math.

I mean, people at the Venetian comment about success in this quarter at $470 million.

I think it must be a record quarter for the Venetian and probably for gaming property, but if you do the math we are still under utilizing.

It's the most coveted room night in Cotai is to sleep at Venetian.

We have more people on the floor now talking to customers.

That is the number-one desired complimentary room on Cotai.

As we use that demand and convert to your reference of $250, eight cash ADR, the spread can be $1,500, $2,000, $3,000 a night, especially on weekends and peak periods.

So to me there's hundreds of millions of dollars of EBITDA that could be converted at the Venetian in particular.

SCC would be a second place behind that, but the beauty of our building is we can put people who are sold out at the Venetian over to SCC.

But you referenced it well.

The conversion is amazing and the spread there could be -- yield hundreds of millions of dollars.

The Venetian and SCC leading those properties are really in their infancy in terms of EBITDA creation.

The competitive advantage we have with sleeping rooms and table opportunities, places to gamble at capacity constrained market, especially during high peak demand periods, is where our star really shines.

So, yes, we see it loud and clear.

That's our charge over there and most of our time thinking about how to convert.

And as you know, it's the only market in the world where tables, mass tables, are the most important thing in the building.

It's the opposite in Las Vegas, where mass tables are very challenging.

So that's our advantage.

It's strong, it's loud and our direction, Management's direction, is very clear and focused on that opportunity.

Thank you.

Felicia Hendrix with Barclays.

Hi, good afternoon.

Thanks for taking my questions.

Sheldon, you gave some color in your prepared remarks on the Company's leverage.

When you talked about the debt ceiling, the level that you would go up to, you mentioned three times.

That's about half a turn lower than the 3.5 you mentioned on your last call, so I was wondering what, if anything, has changed?

And then also, since you do have the capacity and you've mentioned before that using leverage isn't something you prefer to do.

We still continually get asked by investors why you don't use your balance sheet more, so I was wondering if you could address that also.

You're right, I did mention 3.5, but there's nothing that made me change it to 3.0.

It's my natural aversion, my debt aversion.

It's not significant.

It just came out at 3, it could be 3.5.

But our earnings and our cash are so plentiful and it's going to be another several years before we need large amounts of money.

So the short-to-intermediate term outlook for stock repurchases and dividend increases is much more likely than the fact that we will need a significant amount of cash to build something else.

We are just in the cat bird seat here.

You know, I looked -- as Rob was answering the question a moment ago, I look at $867 million to $1.34 billion.

If it's over 50%, if we do that again between now and next year, I mean, just think of where we should be.

We would be good.

(Laughter)

We would be good.

Yes, we would be sweet, too.

And not to mention delicious.

So our -- just, you don't see that.

In all the years that I've been involved in this industry, which is 26 years, 27 years -- huh?

Never existed, Sheldon.

It's never happened before, never happened.

So you could -- in one year you go 50% when the growth rates are down in low-double digits.

And that's considered high in the current pace, in the current environment.

I remember when 55% was so low, somebody was projecting a 72% and the entire sector fell because we had only grown 50%-some odd.

Look what we are growing over here.

And it just shows that our multiple advantages with the rooms, the casino footprint, the number of games, the utilization of the rooms to house premium mass customers and on and on and all these advantages that we have, just results in this incredible growth line.

And I don't see anything, as I said in my conversation with a friend yesterday, I don't see anything that's going to bend that growth curve.

Thank you for that color.

You also have recently applied for land to expand your hotel capacity in Singapore, so I was wondering what the status of that is?

And then you also just mentioned that you're looking for land to build more hotel rooms in Macao, so I was wondering if you could talk about the most likely place those would go?

Thanks.

That -- okay, I'll answer the last -- first question first.

Singapore, they don't work as fast as other cities.

They go through a lot of -- they have a lot of different ministries and agencies participating in growth.

I don't see our getting an approval for expansion.

They are, however, they have come to us and say what can we do to help you maintain Singapore's competitive advantage throughout the Pacific region.

We just got another award yesterday, what, best hotel -- best leisure hotel in Singapore.

We came in ahead of our competitor, RWS.

Of course with a property like MBS, it's hard not to.

So in Macao, I mentioned this during our last call, we are looking at the land known as the tropical gardens.

I proposed a vehicle that we could share a piece of that land with our neighbor, provided we got compensated for some more of that land out of lot 7 and I don't know.

Macao is a lot faster than Singapore but it's still not a decision like -- it's not an entrepreneurial decision.

It's a government decision, bureaucratically involved, so I don't really know when we will get that.

But as soon as we get that, we will let you know.

It was voted the best full-service hotel by Asia One readers.

The Marina Bay Sands was yesterday.

Congratulations.

Thank you.

Thank you.

We have well over 100 awards like that.

The MBS is a very extraordinary, very unique building, not only physical -- physical building but service.

People love working there.

We have sent ex-pats down there.

Normally, we would keep ex-pats for two or three years until we've trained local people but none of them want to come home.

They want to keep staying there.

Steven Kent from Goldman Sachs.

Hi.

Good afternoon.

You know, I was struck, Rob and Sheldon and team, by slide 34 and slide 40 of your deck, which shows the improved productivity of the tables, mass versus VIP.

And then when you go to slide 40 and you see the profitability tables, just see what's going on there.

And I mean you mentioned a little bit of some of the things you are trying to do, but, Rob and Mike and team, is it as simple as just moving tables here and there?

Or what else are you doing to get the up into the ride?

It's so rare to see that in both metrics.

How are you doing that is, I guess, my question.

And how do you continue to do it over the next couple of years?

Steve, it's Rob.

It's not easy, as you referenced.

Nothing is that easy.

It's -- first it was recognizing the opportunity and the market's uniquely playing into our favor, very honestly.

They are coming from further, the non-Guangdong visitation has accelerated significantly.

That's the big positive.

That necessitates a sleeping room opportunity.

We have those rooms far beyond anybody else in the market.

We have the table capacity.

It's encouraging our team to sell those rooms to, or comp those rooms to, high-value casino customers.

It's -- but uniquely, you're correct, it's the only market.

Much different than the US, where mass tables are not as profitable as segment.

There it's the most profitable segment and so the goal is to recognize them, acknowledge them, convert them from other properties and to encourage and become SCL customers.

So that's the game.

It's not as simple as it sounds.

We are unique in that the Venetian gets mass visitation through the roof.

Because of the unique retail opportunity there, the sleeping opportunity, the retail mall, the theming of the property, it does attract huge visitation.

We were slow, and our neighbors were faster than us, to recognize the premium mass market, but the unique thing about us is we catch up very quickly.

We also, however, one advantage that no one else has, and that is the pure mass play.

On peak periods, we have a unique opportunity to either sell or comp rooms to people and we have a place to gamble.

So if you're sitting on Cotai with only a couple hundred game positions on the mass side, you cannot compete because you drive limits so high, you chase more of the pure mass play.

So it's a lot of things in play here to make this happen.

It's not simple.

Our team has done an exemplary job of recognizing, converting.

We have a lot of people on floor now.

We are very aggressive talking to the customer base.

And as you know, it's difficult because multiple dialects, et cetera.

But I think you're seeing in those slides you referenced, Steve, that our efforts are paying off.

We are converting both top and margin numbers that are extraordinary.

The thing we really believe, though, as good as they are, is how much stronger they can get if we continue to get a higher percentage of our hotel rooms occupied by high-value casino guests versus other segments.

And just a quick follow-up.

Sheldon, you talked so much else about capital allocation and the opportunities.

The one area you haven't mentioned is selling assets and in the past you have talked about your thought process, in particular on the malls.

I just wanted to know if you could give us an update on that.

Obviously, they are doing very well, but the market is also doing well for selling assets.

So I just wanted an update on how you're thinking about that.

It's the same as it's always been.

As long as we are growing in moderate double digits, 20%-some odd, we are not selling any assets because nobody is going to pay us what we think it's really worth.

When the growth curve ends up at give or take single digits up to 10%, then we would consider seriously selling.

It's good news and bad news.

The bad news is, we can't sell it right now.

The good news is, the reason is we are doing so well, we don't want to sell it because we could sell it into a 4% or better cap rate environment with significantly improved retail results.

And by the way, I'd like to say on our EBITDA number, the beginning of the year, you don't get -- our increase in rental revenue occurs because of percentage of sales.

That's standard in the industry.

But you don't add that percentage of sales until the last half of the year because the first half of the year is your basic rent.

So if we had taken a $50 million additional number that might come in the last half of last quarter into this quarter, we would be pushing somewhere between $950 million and $1 billion a quarter.

Now, because the income coming from percentage of sales isn't going to come until the second half of the year.

Thanks, Sheldon.

We have that laid out on page 32 in the appendix, though.

So you can see we had $57.4 million of percentage ramp revenue in the fourth quarter of 2013 versus only two, so it's another $55 million in revenue and $50 million in EBITDA.

Okay.

Thank you.

At this time we have reached the allotted time for Q&A.

Thank you for joining, ladies and gentlemen.

This now concludes today's conference call.

You may disconnect.