拉斯維加斯金沙集團 (LVS) 2014 Q4 法說會逐字稿

Good afternoon.

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

At this time, I would like to welcome everyone to the Las Vegas Sands Corporation fourth quarter 2014 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)

Daniel Briggs, sir, you may begin your conference.

Thank you, Lisa.

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're making under the Safe Harbor provisions of federal securities laws.

The Company's actually results could differ materially from 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 and hold-normalized adjusted net income, adjusted diluted earnings per share, hold-normalized adjusted diluted earnings per share, and adjusted property EBITDA, and hold-normalized adjusted property EBITDA, all of 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.

We also want to inform you that we have posted supplementary 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 question so we might allow everyone with interests to participate.

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

Thank you, Dan.

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

I'm pleased to report that we continued to execute our strategic objectives during the quarter.

Despite some obvious challenges in the Macao market, we delivered a strong set of financial results with Company-wide adjusted property EBITDA reaching $1.35 billion US, 11% higher than prior year and the fourth quarter record.

Did I hear anybody talk about things slowing down?

At the same time, we continue to return excess capital to shareholders.

It also gives me great pleasure to report to shareholders that 10 years after we listed as a public Company, we achieved an all-time fiscal year record of $5.42 billion US in adjusted property EBITDA, a metric that surely sets a new benchmark for our industry.

The foundation of our success is having the right strategy at the outset.

Today, I am as confident as I have ever been in the long-term prospects for our Company.

Before I go through the highlights for the quarter, allow me to highlight a few facts that support our Company's unique strategic position.

Fact one, mainland Chinese visitation to Macao is accelerating.

Visitation from mainland China reached 22.1 million visitors in 2014, an increase of 14%.

Mainland Chinese visitors from outside the neighboring Guangdong Province increased more than 17% for the year.

Mainland Chinese visitors to Macao were up over 20% in both October and November, while non-Guangdong mainland Chinese visitation was up 28% in October and just under 30% in November.

Fact two, these new visitors from outside Guangdong Province have traveled to reach Macao and need hotel rooms when they arrive.

We spent over $10 billion in investment to cater to the these arriving visitors.

That investment includes over 9,300 sleeping rooms which is 56% of the total inventory of hotel rooms developed by concessionaires or sub-concessionaires in Macao.

(multiple speakers) Pardon me?

Pardon me?

Operator, there's someone on our line.

No, sir.

Okay.

With the completion of the Parisian and the St.

Regis tower at Sands Cotai Central, we will have invested in excess of $13 billion, an investment that reflects our unrivaled commitment to Macao's diversification, and to its future success as the world's leading business and leisure tours in destinations.

Upon completion of the Parisian, our sleeping room supply will increase to nearly 13,000 rooms, which will represent approximately 45% of the total sleeping room inventory built by us and our competitors in Macao, and that's after five of our competitors put up new properties.

Macao's retail business is developing into a world-class shopping destination.

The investment that we've made in Macao includes over 1.4 million square feet of retail mall offerings on the Cotai Strip.

I'm not talking about gross.

I'm talking about net.

In the States, it's called GLA but should be NLA.

That represents over 70% of the total retail mall developments in Macao, so we naturally generate far more retail sales in Macao than others.

After the completion of the Parisian and additional retail expansion plans, we expect to virtually double our retail offerings in the years ahead.

Fact four, our investments in Macao include the development and operation of over 1.5 million square feet of MICEL: meetings, incentive, convention, and exhibition space; which is almost five times larger than the combined total MICE space of the other Macao operators; five times larger than the combined total MICE space.

We will increase our MICE capacity to nearly 2 million square feet as the Parisian and incremental capacity at Sands Cotai Central is completed.

That will continue to represent approximately 75% of the MICE capacity that will exist at the end of Macao's next stage of development.

The point here is that we made all these investments when others didn't.

Everything we have invested in Macao to date, the sleeping rooms, the retail shopping malls, the MICE space, the entertainment offerings, and the Cotai Arena.

Everything we will invest in the future is predicated on delivering on our promise to help Macao in its economic diversification and its evolution as the world's leading business and leisure tours in destinations.

One of our competitors said to me in 2007, said he wasn't going to build his building until he saw whether or not we were going to succeed or fail, that he didn't want to take the risk.

After we opened in 2007, they didn't start construction on their property until 2011.

In terms of entertainment, a showroom, which we also have, is good.

There is a good show at COD, the City of Dreams.

It's a very good show, and they get good attendance.

However, it doesn't bring back repeat customers.

Once they see a show, which is a good show; The Dancing Waters, they won't come back a second time to see the show.

Let's compare our arena, a 15,000-seat arena.

One week we can have an all martial arts exhibition.

The next week we can have Celine Dion.

The next week we can have a basketball game.

The next week we can have a cultural event like a ballet or whatever.

The unheralded arena is a major element to bringing back repeat customers.

There's enough diversity.

We had 54 events in the arena last year in 2014.

There's enough diversity in the arena to bring somebody back repeatedly, just over one month.

And we also have a show; an 1,800-seat showroom.

This is natural, as we are the pioneers and creators of the large scale, convention-based international resort.

As a result, we have diversity in product offering and the scale and critical mass to cater to every type of business and leisure visitor.

This clearly positions us well for future long-term growth, but these attributes already allow us to out-earn our competitors.

I want to emphasize, as we always have, on the bottom line.

Indeed the gap between our Company and our peers has been widening for the first nine months of 2014.

We had a 35% EBITDA share in a six-operator market in Macao up from 32% for the same period in 2013.

That is more than double our fair share, and far in excess of our fair share of table capacity and gross gaming revenue.

In Singapore, we have around 60% EBITDA share in a duopoly market, 50% more than the other guy.

Not only are we unique in being licensed in the two largest gaming markets in Asia, but we are also by a very wide margin the profit leader in both markets.

Not only are we more profitable, revenue diversification means that our earnings are more defensive and predictable and of higher quality.

Today well over 80% of operating profit in both our Macao and Singapore operations comes from mass gaming and non-gaming segments, with less than 20% of profit coming from VIP gaming.

Our non-gaming profits continued to grow in scale.

Our combined retail mall operations in Asia achieved an operating profit just shy of half a billion in 2014.

That makes us one of the largest and most valuable mall developers and operators in the world.

In addition to being more profitable and enjoying superior diversity of earnings, our integrated resort business model also allows us to contribute more meaningfully to the longer term economic success of our host jurisdictions, something we are both eager and uniquely well positioned to replicate in new markets.

Far more than what our competitors say that they'll put up one of this and one of that, the one thing that's the gift that keeps giving beside the arena, is MICE business.

It's a feeder and a breeding ground for new tourism.

Not withstanding the prevailing skepticism at the time, I made the strategic decision to pursue opportunities in both Macao and Singapore concurrently.

As a result, I'm happy to say that the Company today can simultaneously reinvest capital in existing operations and future projects, pay growing and generous dividends; yay dividends, and continue with the judicious share buyback program.

Let me take you through some of the highlights of our results in Macao for the quarter and for the year 2014.

For quarter four, Macao adjusted property EBITDA was $711 million.

Our mass and non-gaming revenue streams which comprised more than 80% of our departmental profit in Macao naturally make our business far more defensive than the Macao gaming market as a whole.

It is also important to remember again that our business in Macao for the year produced $3.3 billion in EBITDA, an increase of 12% over 2013.

Again, did somebody say things have slowed down?

The important point is that our strategy remains unchanged.

Our business will continue to be anchored around the mass market and the long-term structural growth of tourism from China and the wider Asian region.

Even amidst all the headwinds in this quarter, we saw resilience in revenues in many of the core mass segments during the quarter.

Our ETG revenues were up 20%.

Our non-gaming revenues as a whole grew by 7% within which retail mall revenues expanded 10%.

In our most important segment, mass table games, base market segment revenues were down by only 2% year on year.

Visitation to Macao remains strong.

Hong Kong just announced its full year tourist numbers for 2014.

Mainland Chinese visitations to Hong Kong grew by 16% year on year to 47 million visitor arrivals.

That is more than twice what Macao receives.

In my view, there really is no reason to doubt the long-term growth potential in Macao's development as a tourism destination for China, especially as transportation infrastructure continues to improve over the next few years.

Just look at what has happened in the past few years.

The development of large scale resorts in Cotai fundamentally changed the profit composition of Macao.

Macao's VIP [junket] volumes in quarter four of 2014 are the lowest for any quarter since quarter four of 2010.

In other words, over the last four years the VIP component of GGR has hardly grown.

If I had told you that was going to happen four years ago, you probably would have predicted doom and gloom for the market.

Yet what's happened to our EBITDA over this period?

It has more than doubled.

It is more than doubled.

The reason, the power of our mass gaming and non-gaming revenues has produced outstanding growth.

We expect the market to continue to deliver growth in non-gaming and to naturally return to growth in mass gaming in the future.

I'm proud of the fact that we produced more non-gaming revenue than the other five gaming operators combined.

Again, we produce more non-gaming revenues than the other five gaming operators combined.

High margin non-gaming revenues increased by 18% to reach a record $1.6 billion this year, and our share of gross Macao-wide non-gaming revenue was over 55% for the first nine months of 2014.

While it has become fashionable for everyone to talk about Macao's diversification from gaming, we have consistently been delivering on all aspects of diversification over the past decade.

In summary, let me mention again that we have made pioneering contributions to Macao's diversification in MICE, retail, sleeping rooms, entertainment, and employment opportunities for Macao's residents.

We saw the opportunity for this significant contribution for the MICE industry to Macao, and we invested greatly to contribute to its future success.

In 2013, our facilities received 1.7 million MICE participants as we hosted 52 exhibitions and over 600 conferences and meetings.

According to published government statistics, our total MICE attendance represented over 80% of the total MICE attendance in Macao for 2013.

I believe with the future completion of the Hong Kong-Zhuhai-Macao Bridge and the additional 3,000 hotel rooms at the Parisian, the MICE industry in Macao will develop even more successfully in years to come.

In retail, our three retail malls generated $2.5 billion of retail sales in 2014, up 12% year on year, and more than three times what they were in 2010.

To put this amazing statistic in context, in 2007 the total retail sales at Macao were less than $1.8 billion.

We didn't just build for the high end luxury brands, although we do have one of the most successful, if not the most successful luxury retail malls in the world at the Four Seasons, as measured by sales per square foot.

We built an interconnected retail destination of more than 600 shops that would appeal to visitors across the whole spectrum of spending budgets.

In addition, our retail tenants collectively employ more than 6,000 people, comparable to the number of staff that the largest casino hotels in the Macao peninsula would employ.

Our retail mall sales accounted for 42% of total retail sales in Macao in quarter three of 2014 in the retail categories in which our malls have a presence.

With the rollout of more retail in Sands Cotai Central and a complementary portfolio of tenants at the Parisian which is now 95% leased, we look forward to further supporting the growth of Macao's retail industry as we drive more visitation by leveraging our unique portfolio of interconnected retail malls.

Sleeping room inventory, we discussed extensively a moment ago.

Entertainment is another key differentiator.

We have an ambitious events and entertainment strategy which uses our multiple performance venues including the Cotai Arena.

We now have an established track record of bringing world-class entertainment events to Macao, including performances by: The Rolling Stones, Rihanna, Justin Bieber, and Eason Chan, as well as boxing events including world championship fights by Manny Pacquiao, and Chinese Olympic champion and WBO flyweight world champion Zou Shiming.

For our employees, the breadth and scale of our non-gaming operations offer numerous opportunities for training, promotions, and career development.

In 2014, we conducted over 160,000 training hours for more than 22,000 employees.

We promoted just under 2,500 employees, 90% of whom were Macao locals.

As one of the largest employers in Macao, if not the largest, we take our responsibilities to the community very seriously.

Our integrated resort business model gives our employees a multitude of career advancement opportunities, and we'll continue to encourage them to take advantage of what we have to offer.

We have, unlike our competitors, built sort of a school within our property with several classrooms to teach and to encourage our employees to be able to learn enough to advance in their employment.

I don't believe any of these unique competitive advantage can be matched by our competition, even after the completion of the next phase of their developments.

I have every confidence in our ability to continue to grow over the long-term.

We have a still underpenetrated market.

We have improving transportation infrastructure, and we, Las Vegas Sands and Sands China, have a uniquely differentiated portfolio of properties and product offering in Macao.

Moving on to Marina Bay Sands in Singapore, we generated an all-time property record $518 million of EBITDA at Marina Bay Sands during the quarter, while hold-normalized EBITDA was $461 million.

Despite a 27% decline in rolling volumes, our hold-normalized EBITDA was up by 35.1% including the property tax refund and up by 9% if we eliminate the benefit of that refund.

I think this again demonstrates the quality and resilience of the cash flow generation in Marina Bay Sands.

I'm extremely pleased to say our strong financial results confirm that we have an outstanding business there.

To quote Mark Twain, the rumors of Singapore's demise as a world-class integrated resort destination are both premature and greatly exaggerated.

Mass win-per-day reached $4.8 million, up 4% year-on-year, principally driven by our successful efforts in bringing in foreign premium mass customers to Singapore.

In addition, we have maintained a prudent reserve ratio during the quarter, and we will continue to maintain the highest compliance standards in the industry, not only in Singapore, but globally.

Marina Bay Sands continues to serve as the most important reference site for emerging jurisdictions that are considering large-scale integrated resort developments.

The iconic appeal of Marina Bay Sands has driven strong growth in visitation from residents of China, Japan, Korea, the wider Asian region, and around the world to Marina Bay Sands in Singapore.

We remain focused on potential development opportunities in Japan, Korea, and Vietnam.

We believe our unique convention-based integrated resort development model could bring meaningful benefits to these countries in terms of business and leisure tourism, employment, and economic growth.

Before we address return of capital to shareholders, let me mention that after recent rating agency upgrades, both S&P and Fitch now have an investment grade rating on Las Vegas Sands.

We're happy to be recognized in this fashion, and we intend to continue to follow the financial policies that contribute to their view of our financial strength.

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

Ours remains a uniquely privileged business model.

We continue to return significant amounts of capital to shareholders through dividends and share buybacks, while retaining more than sufficient financial strength to pursue both organic growth and new development opportunities.

Over the last three years through December 31, 2014, we have returned over $9.6 billion to our shareholders through dividends and stock buybacks, including $8.1 billion to Las Vegas Sands shareholders and in Hong Kong dollars, the equivalent of over $1.5 billion to the shareholders of Sands China.

Also last year, we increased the annual dividend for LVS shareholders by 42.9% for the 2014 calendar year.

Yay, dividends.

For 2015, as previously announced, the Board of Directors has increased the LVS dividend by 30% to $2.60 per year or $0.65 per quarter.

The increase in the dividend will take place with the next quarterly dividend payment which will be made on March 31.

Yay, dividends.

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

In addition to dividend growth, we returned $235 million of capital to LVS shareholders this quarter through our stock buyback program.

We have approximately $1.76 billion remaining under our current stock buyback authorization.

We look forward to continuing to utilize the stock buyback program to return capital to shareholders on an opportunistic basis and to advance long-term shareholder returns.

In conclusion, we will continue to stay disciplined and execute our business plan.

With the right strategy and the right management team in place, I'm more confident than ever about our future success.

Now before I turn the call over to the operator to begin the Q&A session, I wanted to take the opportunity to thank Ed Tracy for his contributions to the Company and Sands China.

We wish him the very best as he returns to the United States to focus on his health and family.

As we conduct the search for a permanent President and Chief Operating Officer of Sands China, we have every confidence that we will continue to execute successfully, while continuing to support the Macao government and its efforts to maximize Macao's tourism opportunities through the development of additional non-gambling attractions and amenities.

We remain deeply committed to both the future of Macao and the future success of the more than 28,000 Sands China team members are an important part of the Sands family.

Now let's take questions.

(Operator instructions)

Your first question comes from the line of Joe Greff from JPMorgan.

Good afternoon, everybody.

My question, it's just easier to call out slide number 13 on your earnings slide presentation.

What I was surprised in this presentation is that given the relative performance of the base mass versus the premium mass, and given the relative margin profile, and I know these are average table count numbers, but that the base mass table count shrunk sequentially, and the premium mass average table count increased sequentially.

Why is that the case?

Why aren't you trying to devote more table game capacity to the relatively more stable and higher margin business, and is that an opportunity?

I have a quick follow-up related to Singapore.

Hi, Joe.

It's Rob.

I'll take that.

Obviously, this is a market in flux.

There's a lot of tables in the market that are underutilized.

At this point, it's an opportunity, but the market (inaudible) so rapidly and market where premium mass is in flux.

It's too early to tell where all these tables will land.

I don't consider it a huge opportunity at this point because we have so many tables in the market that a base mass versus a premium mass table isn't a major issue from my perspective.

The margins remain under pressure I think in Macao.

We're still doing very well relative to the market, I think.

We have sufficient tables to move to where the market shows the most growth and most opportunity.

Okay.

My follow up related to Singapore, you were just under that 5 million mass table and slot win-per-day metric, a little bit ahead of what we were estimating for the quarter.

What's driving that?

What geographies or what are you doing there for, at least relative to our forecast, nice little uptick?

Right.

We recognized two years ago the need to pursue premium mass outside of Singapore.

We've done that.

We've executed well.

The team there deserves a lot of respect for what they've accomplished.

We still are south of $5 million-a-day number we want to achieve.

I think the growth engine there is premium mass outside of Singaporeans.

We still have Singaporean business, but Indonesia, Malaysia, et cetera, have been huge contributors to that growth.

We're very proud that, as Sheldon referenced, to earn $1.7 billion in that building.

I remember years ago, we built that place, people scoffed at the notion of $1 billion EBITDA.

Now, we're at $1.7 billion, a spectacular year for us.

A little help at the end obviously with the tax issue, but we're very happy with our growth there.

As you identified, the beauty of Singapore remains, resides in the very powerful mass business, about $1.8 billion with a 63% margin, pretty strong results.

No place like it, those kind of numbers.

The focus there remains mass, premium mass, and doing the job correctly.

Great.

Thanks, Rob.

It's the most profitable building in the world, even bigger than the GM Building in New York.

Next question comes from Jon Oh from CLSA.

Thanks for taking my question.

If I could just start with maybe your cost structure and also in margins.

Could you give a sense of how much flexibility do you have as you think about your OpEx or your carrying costs in running both VIP and mass market in Macao today?

Can you give us a sense how you're coping with some of the flexibilities around the costs as we see business volumes, especially VIP, not as high as before?

What do you think margins are right now in VIP given that some of the cost structures are perhaps a lot more fixed?

Could you maybe give some comments on that please?

Jon, are you referencing VIP junket or VIP premium mass when you say VIP?

Let's talk about VIP junkets first, and then maybe you can also touch on premium mass too.

That would be great.

They haven't changed a lot.

VIP junket, what's changed is the volume.

The margins in VIP remain pretty much tied to hold percentage.

They've not vacillated that much.

The bigger move I think for the market obviously is in the mass, premium mass aggregation because whenever you have a decline in both base mass and premium mass as rapidly as you do in the fourth quarter, clear margin, you can't adjust quick enough on the payroll and the building cost, the operational cost do not adjust that quickly.

What does adjust is incentives and promotions against the customer.

We continue to examine those costs.

The labor issue is not what folks are now focused on.

We're focused incentives.

Our labor costs are not on the table at this point.

What is on the table though is overhead in general and the building, entertainment.

Also on the table is discussing our overhead corporately.

There's opportunity there.

We are charged with, it's been very clear, the direction [Mr.

Ellison] that we've charged with running our business more efficiently, examining all layers of cost against the customer promotionally, against the cost to run the business overall and make sure we're being efficient.

This has been a sea change, as you know, in a very short period of time.

We're still very please with our overall margin, but there's room to improve a lot of different places.

We're very focused on it.

The team there will be looking at those issues very closely in the months ahead.

Okay, and if I could follow up very quickly again on capacity.

I think you briefly mentioned earlier, Rob, that perhaps there's some underutilized capacity in Macao today.

As you assess the total market capacity that's available in the markets, do you think there's excess capacity today?

How does that change your perception on perhaps the number of tables that you guys have requested for the Parisian?

Do you still need the same number of tables going forward in order for you to meet some of the [seen] hurdles, given the assessment of how much capacity there is today?

Jon, let's keep in mind, this is the greatest gaming market in the world.

Although there's been a lot of talk in the last three, four months about the changing dynamic of the market, we still earn more money there than any place by far.

It doesn't even compare to Las Vegas.

It's an extraordinary market.

Even with the downturn, we're earning lots of money per table both mass and premium mass.

The answer is yes, we do hope the government will honor our request for the tables at the Parisian.

We're not earning like we were doing, as much as $13,000, $14,000 a table, but there's nothing wrong with $11,000, $12,000 a table, still very, very fat, huge margins.

Yes and yes, we want the tables, and we're hoping to get them.

I think Sheldon, when he opened the conversation, talked about his achievements there.

Clearly what we have done, while other people build the neighborhood, we're in the neighborhood.

We built it 10 years ago.

We built what I think the government expects to be the future of Macao.

I think the vision was started back in 2005 when the Venetian began being put together.

It's coming full circle now.

I believe based on that, we've had a darn good chance of getting our fair share of tables because we've delivered the promise and then some.

Yes, we want the tables, and yes, we believe we deserve the tables, and yes, they're still very, very profitable.

You earn more per table in Macao by double than what you gross in Las Vegas per table.

It's a pretty astounding market.

Even though it's under pressure, this is still the best gaming market in the world.

We want to be over-representative into the table dynamic.

Excellent.

Thank you.

Thanks, Jon.

The next question comes from Shaun Kelley from Bank of America.

Hi, good afternoon.

Thanks for taking my question.

A bit of a higher level question, but I guess as we look back at the fourth quarter, it seems like there were a lot of discussions around broader policies, be it anti-corruption or anti-money laundering in the market in Macao.

I'm curious as a concessionaire and obviously a huge player there, have you guys had any more concrete discussions with either the government in Macao or the government of China about what at a high level you think they're trying to accomplish with their message around diversifying the market?

I think any color for that would be helpful as people are trying to adjust to a new normal.

This is Sheldon.

We are the leaders in the non-gaming direction development.

The other guys say they're going to catch up to us.

When you look at the fact that we do 80% of all the non-gaming income, out of 35 casinos in Macao, it's clear that we're the ones that have set the pace on developing non-gaming amenities.

We think that our business model that is made up primarily of MICE is the one business model that is the gift that keeps giving.

The people come, it's a breeding ground for leisure tourism.

They're using our business, our accomplishments as a model for the other gaming operators to follow.

Thanks for that.

(Multiple speakers) we leave that.

I just want to make sure you understand.

We have, for the last number of years and currently agree with the direction of compliance.

We embrace compliance.

We think it's the future of our industry both in Nevada and Pennsylvania and Singapore and Macao.

There's no reason to fight against it.

We've not had conversations with the government.

We simply wait for the direction of the government and follow accordingly.

We're big believers in all the things they're doing in terms of the corruption issues and AML.

The new Macao is a little different than the old Macao, but it's still a wonderful Macao.

That's helpful.

Thanks, both.

As a follow-up, other big area we've gotten some questions on was the election or choice not to pay a special dividend at Sands China this quarter.

Could you talk a little bit about that decision?

Then it sounds like you're very committed to the recurring dividends at both the Sands China subsidiary and the parent, but how you might fund those between the different subsidiaries?

A little color on that would be useful.

Thanks.

When I read about that I thought it was curious.

A special dividend is a special dividend.

A special dividend is not a regular repeat dividend.

When somebody said, why didn't you give me a regular repeat dividend, another one in the form of a special dividend, I scratch my head, and I'm still scratching.

I just think that suggestion is kind of silly.

When there's an opportunity to pay a special dividend, we'd lean more in the direction of regular dividends because that's predictable and reliable, where special dividends are not.

As far as we're concerned, we'd rather assure our investors including LVS that there's going to be a reliable and predictable regular dividend.

If we do a special dividend for whatever reason, it will be because for a special reason, and it's not going to be regular.

Shaun, we actually added a page in the slide deck to specifically deal with SCL.

It's page 8 in that deck which emphasizes Mr. Adelson's point that the recurring dividend is paid in two pieces.

We expect that to grow over time and are committed to growing it over time, and the special is the special.

Perfect.

Thank you, both.

Next question comes from the line of Thomas Allen from Morgan Stanley.

Can you give us an update on the competitive environment in Macao, just both on the mass and the VIP side?

Thanks.

Competitive environment.

What's happening competitively?

Spend more money than they have.

Okay, well answered.

We think the environment there obviously, Thomas, is changing.

People are changing their priorities.

Again, we've very confident in our business model.

It lends itself to this.

It's called the new Macao which is mass-based, which is non-game-based.

We believe we have a lot of money in Macao.

We'll adjust our business plan accordingly.

We're not seeing promotional costs veer out of control.

What you're seeing is a downsizing of the base mass and premium mass business which of course will adversely impact margins.

That's a fact of any place, Macao or any place else you operate.

I don't see operators losing their sense of balance or prioritization of how they spend their money.

Their margins will come down a bit though because there's less top line obviously.

It's less frothy at the top.

I don't think we're in a situation where it's veering out of control or operators are being unrealistic or there's panic in the streets in Macao.

We had a reasonable quarter.

We expect to keep earning well in Macao.

A lot of disciplined, smart people, lots of capital in Macao.

At this point, we see an environment that mimics the better half of the year, the first half of the year, which was exceptional for all of us.

That's helpful.

Then just following up on the previous question about capital returns.

I find that interesting that you bought back $1.7 billion of stock last year and you have a similar authorization today.

Do you think there's a chance that you'd buy back a similar level of stock this year?

If you're not doing the special dividends out of Macao, can you fund it out of US and Singapore without having to raise debt?

Thanks.

I didn't understand the question.

He talked too fast.

Rob, do you want to take it?

Yes, sure.

Hi.

I think where we are on the buyback is I think it's going to be something that the Board determines and the Management determines over time how we'd like to return capital opportunistically to the repurchase program.

That will come as the quarter progresses.

I don't know that we can answer that question now.

Without the special dividend, could we fund that amount without raising debt capital?

It depends on our trajectory through the year.

I can't really give you an answer because we're not there yet.

You can look at our current capital structure, our liquidity profile.

We have the means to fund return of capital more aggressively, increase dividends, or new development opportunities as we see fit.

A lot of it depends on how the year progresses and the view of management over time, but we've made no determination yet.

Helpful.

Thank you.

The next question comes [Lociello] Santelli from First Bank.

Carlo, that must be you.

Wow, that was a good one.

I actually forgot what I was going to ask after that introduction.

Really quickly, guys, I know it's not a huge for you, but I'm wondering if you did anything differently in Las Vegas as it pertains to your room strategy?

I noticed occupancy was a little different than expected which is not necessarily surprising.

Based on what we've seen from the Las Vegas Strip revPAR statistics, it stood out a little bit.

Is there anything in there that maybe we missed from a comp perspective or strategy change?

Not really.

Can you give us an insight?

What are you talking about -- why?

Just the Las Vegas revPAR down 2.5%.

Solid rate growth at 7% plus, but occupancy down almost 800 basis points.

No change in strategy.

No change in complimentary policy.

Dan, maybe you have more color on that?

I don't have any color.

We think we've the opportunity in Vegas.

We think we looked at our competitors, and hats off to some of the folks, our competitors said, can we do better?

We have programs in place to grow our EBITDA here in Las Vegas.

We continue to be a dominant player along with Wynn and Bellagio in the (inaudible) side, but we think we can do better.

With all of 7,000 keys and a first tier building, we'd like to do better both in room occupancy and rate and can grow our gaming business as well.

Having said that, there's been no change in strategy, no change in direction, remained pretty much constant in our approach.

Understood.

Rob, if I could, one follow-up, obviously there's been as of this morning, I read an article about some of the labor unions in Macao calling for a full smoking deck.

Could you guys talk a little bit now having digested that for a little over three months -- what you've seen?

What the experience has been, and where, if any, you think it's having a material impact if there is one?

It's not a positive.

I can't tell you the extent, Carlo, because very candidly (inaudible) knows how big smoking has been.

There's so many factors in Macao that are changing currently that it's hard to ascertain, is it smoking?

Is an anti-corruption?

It's just a lot of factors in play here.

Having said that, we remain behind the governor's direction, wherever it may be.

We've had recent meetings with the governor about the smoking issue.

They appear to be making their final decision.

Whatever it is, it is.

If it ends up being a ban or it ends up being smoking rooms, like the airport, we'll abide by it, and we'll move forward.

Obviously, no market has ever benefited, no gaming market, anywhere in the world, be it Europe or the US, has benefited from a smoking ban.

Having said that, we're of the belief that Macao is a unique destination, unique to mainland China and Hong Kong.

It will prosper in spite of a smoking ban or smoking restriction.

Is it better with smoking?

Sure, it is.

Is it going to happen where smoking's restricted?

Yes, we know that.

The extent of that restriction, we don't know.

We're waiting for government advice.

Whatever the government tells us to do, we will comply happily.

That's helpful, Rob.

Thank you very much.

The next question comes from Felicia Hendrix from Barclays.

Hi, thank you.

Hopefully you can hear me.

There's something wrong with my headset so I have to be on speaker.

Is that okay?

Sounds great.

Thank you.

First question, Sheldon or for Patrick, just going back to the subject of capital return, I did notice that the blurb regarding dividends in the deck no longer has that comment about increasing their current dividend 10% annually.

Certainly, the strong commitments are returning cash to shareholders and growing the dividends.

I'm trying to understand the change in the language.

Probably whoever wrote it didn't think of it.

There was nothing intentional about that.

You want us to say we intend to grow it at least 10%.

Ten percent forever is impossible.

That all depends how long your is forever is.

We intend to continue dividends.

It was nothing intentional, if that wasn't put in there.

Okay.

I was just checking because you guys have been pretty clear for a while saying that you're committed to growing 10%, so it sounds like that hasn't changed.

It has not changed.

Okay, great.

Then, Rob, some of your comments have underscored to this point.

You're a well-known uber bull on Macao, but looking near term, it does seem the sell side is forecasting Macao's gaming revenue to decline in 2015 anywhere from high-single digits to low-double digits.

Certainly it's anybody's best guess for sure.

I'm just wondering does that correlate with what your internal folks are projecting, and if so, strategically how are you approaching this year, particularly in the first half where most of the market declines are likely to occur?

Thanks for calling me an uber bull.

I like that.

We've seen the froth in the market generated by a concentrated group of super premium mass customers relent somewhat.

Clearly that's hurt the uber bull market.

No question about that.

I believe we will see a renewed new growth in base mass business because the underlining positive drivers are so compelling with visitation growth, transportation infrastructure improvements, and our unmatched inventory in rooms, game mix, retail, entertainment that speak to the mass segment.

Simply stated, yes, we believe very much in this market.

People seem to forget what this market means relative to the rest of the world because the last three months, four months have been unsettling, but this is the greatest game market in the world.

LVS is in the perfect place to take advantage of the new Macao environment.

Our assets are unique to this incredible market, and I believe as time will prove that the sustainable growth of our business in Macao will be evident to all.

We remain very focused on margins, remain focused on overhead.

We look at all the overhead, not just Macao but in the Company, and look to grow this Company's return to shareholders.

Yes, we're very much a believer.

Are we concerned with what happened the last three or four months?

Everyone is concerned what happened to junket space, the smoking issue.

There's so many issues, it doesn't need to be repeated there in the call.

They're conversant with those issues.

I think Sheldon, a decade ago, built the strategy that today is being talked about.

He built the Venetian.

He built the 3,000 rooms.

He built the MICE space.

He built the retail space, while everyone else was building vertical buildings on the peninsula, Sheldon over a decade ago called the shot.

I think that shot is happening today from both the competitor and government perspective.

We're just ahead of the curve by a mere 10 years.

Our business remains very steadfast as base mass resets and premium mass resets, we'll reset.

Margins will turn, and we'll remain uber bulls in Macao.

You increased your slot and ETG count combined by 5%.

Is that just tweaking, or is that to read in to you're gearing more towards the base mass?

We're gearing towards -- I guess the point is there's plenty of gaming capacity right now in Macao.

We believe very strongly the size of our buildings, size of our real estate, enables us to grow.

I'm a big believer.

ETGs will be a very happy place to be the next couple years.

We'll keep growing that business.

Slots have not been as bullish frankly, but love the ETG business, and we'll keep banging away at that.

That's a big advantage to us.

When you sleep in our room, you pay us $120 to sleep in the hotel, gamble a little bit, go on the retail shops, it's an amazing environment for us.

I was there a couple weeks ago and despite all the talk, that fellow Twain had it right.

This is a great market.

We're happy to be there.

We'll keep driving the ETG business as well as non-rolling business.

Great.

Thanks so much.

Next question comes from the line of Robin Farley from UBS.

Great, thanks.

I wanted to ask about, I was looking at the revPAR decline, a slight decline at Venetian Macao.

I was wondering if you could talk a little bit about your room strategy.

What percent are cash paying versus room comps, and how we should think about the hotel supply that's going to be entering the market?

I didn't see in the release or slides an opening date for the Parisian.

There's no reference to the opening date, and I don't know if you could address that as well.

I do have a follow-up question.

Thanks.

Robin, I'll take the Venetian Macao issue.

We're going through a change of thinking there how we use that product.

Obviously, the most desirable product in Cotai, 3,000 keys, et cetera.

The cash, we've always been very focused on a certain threshold gaming customer and the premium mass.

We're revisiting that strategy as we move forward.

We wanted to run a higher occupancy because we firmly believe that the more people sleep in the Venetian, the more people shop at the Venetian Mall which we own, eat in our restaurants, gamble in our facilities.

We think that asset has more growth potential to use those rooms more aggressively on the database.

As Macao morphs toward a more base mass segment as opposed to junket, as opposed to just premium mass, that facility has got to rethink its room strategy in my opinion to get more out of the rooms.

If the most desirable room comp there is in Cotai, the building continues to be a huge driver of visitation.

We think we've got to rethink and do better to drive more opportunity out of the room side of our Venetian product.

As for Parisian, Sheldon, do you want to address that issue?

The opening day?

The opening date for the Parisian.

We don't have an opening date yet.

It will be sometime in 2016.

The question also comes up as to whether or not there will be a partial opening, rooms and casino and some restaurants, and maybe entertainment.

But there's a new government that was just installed about a month ago.

I'm going over there this coming week to talk to the new government and find out what their intentions are, vis-a-vis the components that we need to open such as construction labor.

We're shuffling around our construction labor once we finish the St.

Regis building.

We'll move some labor over to the Parisian.

We're also looking where we could pick up other, delay other CapEx to existing properties, so we could use those blue cards, the equivalent of US green cards.

It's something different.

It's a temporary situation for foreign labor.

We're going to make every effort to get it done as soon as possible.

We don't have an exact date yet.

I'll have more information on our next call.

If we have any firm distributable information in between, I'll put it out.

There are people looking for more labor.

The government wants us open because we have the largest number of rooms.

I said we had 58% of all the concessionaires rooms.

That's a very big number.

We don't give out 100% of the rooms like our competitors do for the casino.

We leave them open for people who come in for other purposes, and they want to increase tourism.

They want MICE.

I'm going to point that out to them that we can't expand on those areas that they really want as opposed to the gaming, when we don't have enough labor.

We do have the permits to complete all the property.

We're going to do our best to finish it as quickly as possible.

Okay, great.

Thank you.

For my follow-up question, I wonder if you could just give us a little bit of your thinking around your taking the CEO role at Sands China.

Why not use it as an opportunity to strengthen the bench by having -- I don't know if you looked at internal and external candidates and what led to that decision?

It's an internal political issue.

The CEO title has carried with it in a separation of Sands China from its major shareholder in the last several CEOs that we've had there.

Rather than risk that happening again, I'm taking the title of CEO.

I'll take the responsibility of the CEO, and we'll have a President and COO.

Listen, I haven't done too bad.

I think you're qualified.

In the last two years, like a lot of shareholders, I've done very well.

If I'm doing as good as Rob said, I'm going to go to the Board and ask for a raise.

Don't get carried away.

Thanks for that perspective.

Thanks, Robin.

The next question comes from the line of Steven Kent from Goldman Sachs.

Hi.

You underestimated us.

I read your report recently.

Welcome, Steve.

Let me ask a question then.

The $90 million tax rebate, I didn't have that in at all.

Could you explain that a little bit in Singapore?

We've been saying that for the last five years.

Patrick went in there and justified a return on that.

We got the $91 million back.

As we had to amortize it over the last five years, we took it in as income.

Now you could amortize the return of income over the next five years, but we're not going to go backwards and restate earnings.

Steve, with the $90 million amount, it relates to a five-year period.

It would have a $0.09 impact on EPS after tax if we were to pull that out.

It's something going forward we'll have a slightly smaller property tax expense, but it was over a five-year period.

Not a huge issue.

It was a property tax issue?

It was not any other type?

Correct.

Then the other thing is, again, only because capital allocation is so critical to your story, on share buyback, I think you noted you're going to be opportunistic.

Is that different from the $75 million per month that you've talked about before?

It goes to the other question about dividend and a 10% increase every year.

I think that's what people are trying to figure out.

Are you becoming more selective about some of these capital allocation issues, or is there some consistency here that maybe we're missing in the comments?

I think the ones that are more selective are you guys.

We're not more selective about this.

We're not changing any strategy to put in to the press release, to put in my prepared remarks for the earnings call, whether we're going to do 10% a year.

Don't look into that.

If we were going to have a significant change of policy, we would disclose it.

The fact that somebody else wrote it, and didn't pay attention to that issue, forget about it.

Whether or not we're opportunistic, when the stock goes down far more, it's down a lot more than what we think it deserves.

This earnings report gives us a little bit of indication that we're still doing well.

Can you imagine $5.44 billion?

I know I said $5.42 billion, but I'm told this morning it's $5.44 billion EBITDA.

How many companies in the world do that?

We're certainly in the top 100, of not in the world, at least in the United States.

We're very proud of making that kind of money.

Trying to guess whether we're going to be opportunistic or if we wake up one morning and somebody says the stock is down five points, maybe we ought to buy back two or three points.

Buy back some stock today.

Listen, all we know is I'm sending a message.

You want to get my message.

I haven't sold any stock.

I got 432 million shares, and I haven't sold one share of stock since 2006 when I did a secondary to create some diversification.

I haven't sold any.

I have no intention of selling any.

I believe in the long-term -- the long-term improvement of this Company.

We will one day, whether it's sooner or later, I can't tell you for sure, we hope it's sooner, that we're going to get additional emerging market opportunities.

Nobody can go out there and present the bona fides that we can do.

There's not a city in the world that doesn't want more MICE.

Everybody wants MICE.

I know one of our competitors, was it his third phase, the Galaxy, or fourth phase, or fifth phase, or sixth phase, or seventh phase, or eighth phase, or ninth phase, or tenth phase.

I don't know which one he said he's going to put some MICE space in, but I've got 40 years of experience in the MICE industry.

I sold my Company in 1995 for the largest amount of money ever in the 1,200-year history of agricultural and trade fairs.

I sold my Company for the largest amount of money.

Nobody understands or knows the MICE market better than this Company.

We have a lot of people in this Company that have been with me for over 20 years.

There are people that work with me in the interface group when I had COMDEX and other shows.

Nobody can compete with us on that score.

What we've done in Macao, 80% of all the MICE business in Macao, the other guys are just making noise.

We walk the walk.

Okay, thanks very much.

I got the message.

Thanks, Steve.

I hope so.

If not, I'll have stronger words tomorrow.

I look forward to that, Sheldon.

Next question comes from the line of Harry Curtis from Nomura.

Hi, guys.

We read what you said too, Harry.

I will continue.

Rob, you talk about the new Macao.

My question is given the various policy changes that we've seen come out of either Macao or Beijing, do you guys have any sense of whether or not the policy changes that Macao has really had to suffer through, is that it?

Or do you have any sense that others are being considered?

Harry, I think that's far beyond our ability to comment.

The government of Macao makes that decision.

Impossible to sit here and make a prediction about what may or may not happen.

I think six months ago, some of the things you've seen happen no one would have believed.

I think it's foolish to speculate, and I won't do that.

In that case, the only other question that I had was just a clarification on page 5 of the slide deck.

Maybe, Dan, you can answer it.

The hold-adjusted property EBITDA, the $1.273 billion, is that before the $90 million tax adjustment and corporate?

Yes.

Okay.

Just wanted to clarify.

Thanks a lot.

Okay.

Ladies and gentlemen, this does conclude today's conference call.

Thank you for your participation.

You may now disconnect.