拉斯維加斯金沙集團 (LVS) 2024 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Sands second-quarter 2024 earnings call.

(Operator instructions).

It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at Sands.

Sir, the floor is yours.

Thank you, Matthew.

Joining the call today are Rob Goldstein, Patrick Dumont, Dr. Wilfred Wong and Grant Chum.

Today's conference call will contain forward-looking statements.

We'll be making those statements under the safe harbor provision of federal securities laws.

The company's actual results may differ materially from the results reflected in those forward-looking statements.

In addition, we will discuss non-GAAP measures.

Reconciliations to the most comparable GAAP measure are included in our press release.

We've also posted an earnings presentation on our website.

We will refer to that presentation during the call.

Timing for the Q&A, we ask those of interest to please pose one question and one follow-up.

So we might allow everyone within the opportunity to participate. the presentation is being recorded.

I'll now turn the call over to Rob.

Thanks, Dan, and thanks for joining us today.

Macau market continues to grow.

Total gain revenues to the market grew 24% in the second quarter of 2024 when compared to the second quarter of 2023.

In addition, mass play revenue grew 29% compared to one year ago.

We remain confident in future growth in Macao market.

I believe Macao market gross gaming revenue will exceed $30 billion next year and continue to grow year-after-year.

Our business strategy is predicated or investing in high quality assets and also have scale.

Macao is and always has a deeper competitive market.

Our strategic approach has enabled us to compete very effectively.

We have designed our capital investment programs to assure that we will continue to be the market leader in the years ahead.

Our approach allows us to grow fast from a long term and larger EBITDA and generate industry-leading returns on invested capital.

Turning to our results in Macao, we delivered solid EBITDA for the quarter, despite material disruption at the

[Londoner]. SCL continues to lead the market in gaming and non-gaming revenue and in market share of EBITDA.

We will continue, we will capture high-value, high-margin tourism over the long term.

We have a unique competitive position in terms of scale, quality and diversity of product offerings.

Upon completion of the second phase of the Londoner, our Cotai Arena, our product advantage more pronounced than ever.

Another strong quarter in Singapore despite ongoing disruption from construction.

The financial result of data base stand reflect the positive impact of our capital investment program and the growth of high value tours.

Enrolling FPL Singapore as a destination was enhanced by the robust entertainment and lifestyle event calendars.

As we complete the balance of our investment programs, there will be considerable runway for growth.

Thanks for joining our call.

I'll turn it over to Patrick down, and then we'll go to Q&A.

Patrick?

Thanks, Rob.

Macau EBITDA was $561 million.

We had held as expected, our rolling program.

Our EBITDA would have been higher by $4 million.

When adjusted for lower than expected hold and the rolling segment, our EBITDA margin from the [Calpine] portfolio properties would have been 32.1% or down 80 basis points when compared to the second quarter of 2023.

Context here is important.

Our margins at Londoner were directly impacted by the disruption of the Londoner grand renovation.

We closed the casino at 1,500 keys out during the quarter.

Margin at the Venetian was 38.2%.

And we expect margin improvement as the Venetian Cotai Arena comes back online later this year.

And as visitation to the market and growth in unrated play in the market both increase in the future.

Margin at the Plaza Four Seasons was 40%.

We are now deep into our Londoner grand renovation program.

We plan to completion of the first tower by year end 2024 and of the second tower by May of 2025.

The Londoner Grand Casino has been closed since May and is scheduled to reopen in December.

As these products come online between the end of 2024 and the first half of 2025, our competitive position will be stronger than ever.

We expect meaningful EBITDA growth and margin expansion in the future.

Now turning to Singapore.

MBS EBITDA came in at $512 million.

Our strong results reflect the impact of high quality investments in market-leading product and growth in high-value tourism.

Had we held as expected and our role in place segments, EBITDA would have been $64 million low.

Had we held as expected, our rolling play segment, MBS margin would have been 48% or 220 basis points higher than the second quarter of 2023.

While we have substantially completed the original $1 billion refurbishment program at MBS, we are still in the initial stages of realizing the benefits of these new products.

Tower gaming at Marina Bay Sands will be offered for the first time at the property in the third quarter of 2024.

The next phase of our capital investment program at Radio based Sands is scheduled to be completed during the second quarter of '25.

This will further support growth in 2025 and beyond.

Turning to our program to return capital of state to shareholders, we repurchased $400 million of stock during the quarter.

We also paid our reoccurring quarterly dividend.

We look forward to continuing to utilize the company's capital return program to increase returns to shareholders in the future.

Thanks again for joining the call today.

Now let's take some questions..

Thank you.

Ladies and gentlemen, the floor is now open for questions.

(Operator instructions)

Joe Greff, JPMorgan.

Good afternoon, guys.

Like to start off just on Singapore, If we could.

I was hoping, can you give us a sense of maybe how players and visitors for geographically, how they're performing?

I guess more specifically, are you seeing any kind of slowdown from Mainland Chinese visitation or Mainland Chinese spend into MBS?

And was there any more material trend change towards the end of the 2Q versus maybe what you've seen over the last couple of quarters as that's been sort of a growing segment?

Joe, as you know, in the past calls, we have a diverse customer base in Singapore.

We got them all on the region.

And certainly China is part of them, but we are all over the place Vietnam, Japan, Korea, Indonesia, Malaysia.

So I don't think we saw much different than past year, except where obviously your seasonality is in play in Q2.

But our business, looking forward, the only thing I would say latest impacted is we keep self-inflicting loans by facing our building.

And it's near the end, finally as it feels like after a long time.

But despite seasonality, despite the difficulties of construction Tower three, Tower gaming.

We continue to move forward towards $500-plus million quarters and diversity of business tours is very clear to be really the-- where they're coming from.

They're coming everywhere.

We have not seen a slowdown in China.

We just simply see the same visits in the last couple of quarters, which is solid.

There is also (inaudible)during the region.

So Singapore part is moving forward.

I think you'll see a real important transition probably in the early part of Q2 when the building is really full bore complete and tower gaming is intact, all the suites are intact.

We're really playing the game with one hand behind our back right now, still delivering $2 plus billion run rate.

So we feel very good about our prospects to single, probably the most, not probably, is the most the largest or the EBITDA building in the history of gaming.

So it continues to get stronger.

We think it's, we said before, we think that our goal is $2.5 billion out of Singapore.

I think you'll see it happen in the oncoming years.

Great.

And then a couple of not really a question about Macau, is Macau self-sufficient or speaks for itself.

But Rob, Patrick, maybe can you give us an update on any development opportunities, specifically Thailand and I'm not sure there's much to add to what's going on in New York?

So first off, I think the great news is, we're very ready to develop new ground of developments in new jurisdictions.

We're very excited about it.

Rob, the team, I spend a lot of time looking at opportunities for our company to expand and grow new jurisdictions.

As you know, we're spending a lot of time in New York.

We're spending a lot of time in Texas.

We've been looking at Thailand.

I think Thailand is a very interesting opportunity.

The market there is very strong for different types of tourism.

And I think depending on the way it's set up and the opportunity that's there in terms of structure, it could be very interesting for us.

We love the market as a place to source customers.

We think the tourism, our quality is quite high.

If you go and visit, you'll have a great experience there and we'd love to be part of it.

So if Thailand becomes available, we'd be very interested.

But I think it's early days yet.

I think we've been spending time there along with the rest of our industry, looking to see if we can be helpful to that process and we're waiting and seeing what happens.

Thank you, guys.

Stephen Grambling, Morgan Stanley.

Hey, thanks.

I appreciate the comments on the Londoner Grand renovation impacting margins in Macau, but can you get back to 2019 levels in the current environment as that comes through and ramps up?

Or do we need to see some change either in growth in the market or the competitive and promotional environment to get back there?

So a couple of things, and I think this is really important to note.

Macau market has always been super competitive.

From day one, it's been a very competitive market, and we've been very effective in the way that we compete because, we have an investment driven model.

So if you go back pre-pandemic, if you were back in 2010, it was a very competitive market.

And in fact, I remember when the premium mass segment didn't exist and when it started people, Rob can reference this as well as some other people in the room can as well.

When there was no pre-VMF segment, it was really rolling volume and mass play.

And the market has always evolved over time.

But the one thing that's been consistent is that our company has driven success through investment and through leading in non-gaming amenities.

And to be fair, innovating on the gaming side as well.

And so when you look at our performance, if you go to page 14, of the slide deck, you can kind of see what happened in the quarter.

So the Venetian Macau, the $262 million of EBITDA in the quarter at a 38.2% margin, and it's missing about half its volume of unrated play.

So just with the Arena out, which is also a very, valuable amenity to drive premium mass performance, look at the strength of the performance of The Venetian.

Same thing's true in the Plaza.

Look at what the Four Seasons at 40% margin $100 million of EBITDA.

So when we look at the Londoner, we basically took out an equivalent property like Melco or an equivalent property to Win Palace.

We took that capacity out of the market for ourselves to renovated.

So for us to put up $50 million in the quarter, to in my mind, this is a great result because we know that we have a limiter in place.

We're missing one of a significant portion of what is ultimately going to be when the best properties in Macau, if not the best property.

And if you look at the success of the Londoner right now, if you look at the win per unit per day on the table side, the Londoner is the second best in our system.

So, you know, in Macau.

So when you think about that, the model has been proven and the investment has been validated.

Now we're going to open up the better half, hopefully by the end of the year in major part, certainly the limiters are going to come off.

So in my mind, this is a very positive investment for us and we'll get to the margins.

We're already doing it in other properties.

It's just a function of renovation because, we're carrying all the costs now associated with the shuttered casino and 1,500 rooms.

So the Londoner impact is really one half of it's working, you see the performance, you see the slot win, you see the slot performance win per unit.

You see the table win performance.

You look at the hotel performance and the non-gaming amenity performance.

And then you look at the side that shut and you realize that's the better side, but we're carrying all the costs.

The potential of the future is really there.

We feel very strong about the potential for the margins to reach where we need to go.

And just remember, pre pandemic, we were 35%, 36% EBITDA margin on a whole normalized basis business in aggregate.

So we'd like to believe we're in a good spot.

We're competing effectively.

We have great assets.

We're investing for the future.

And when we're done, we're going to have the newest and best products in the market.

So we feel very strongly about the path that we're on.

It's going to take a little bit of time to get that.

The only structural change do we need is

(inaudible).

The market is going $30- plus billion next year.

We are going to have the two most important assets in the market speaking with each other, I mean that strategic, we are going to have Londoner and the Nation over 7,400 keys between them.

The full power of the Cotai Arena, all the amenities between the two.

But I think those buildings will be very, very intertwined and gives us, by far $2 billion-plus dollar assets speak each other.

At Parisian and Four Seasons and Sands keep doing what they are doing.

We will be a $3billion-plus and say we'll give $2billion-pus.

I believe that sometime near future we'll have the highest EBITDA creation is company's history without Las Vegas.

So, I am pretty confident that Londoner will perform and outperformed the expectations, but also enhances the [relation] because the back and forth of those two buildings.

They are very similar, huge retails, huge suite capacity, entertainment, retail, F&B, biggest, they are much bigger and better than anything else in that market for making money.

And when those come online next year, these results today another $150 million out of Londoner of a sudden you're looking at $3billion-plus of annualized EBITDA.

That's how we view the market.

The margins being what they are, making EBITDA still the most important thing and we will get there.

We will get there.

Maybe as a quick follow-up on capital allocation.

You noted being consistent with capital return.

It sounds like you're confident in a ramp from here in Macau and really growing in MBS, yet the stock is near at the lows during the pandemic.

So what's the tolerance to be, maybe not as consistent and actually being more aggressive with capital allocation or even rethinking about the leverage profile in the near term.

So I think first off, we have said this before we see meaningful value in both equities, where these stock is trading doesn't make any sense to us, both on a historical basis and how we view the value of our company and how we look to invest and grow.

So we're going to continue to repurchase stock.

And you saw we did the last couple of quarters.

We feel fairly strongly about the value of our business, and we're going to continue to do it.

Look, I think for us, we're very focused on being shareholder friendly.

We were very shareholder friendly company in the past, where a shareholder friendly company today.

We'll continue to do that, that's our goal.

I think that the nice thing is that as we complete the Londoner two things are going to happen.

We're going to have less CapEx and more free cash flow and to be fair, a more productive asset base.

And so hopefully, we'll have the opportunity to use that capital to return it to shareholders.

So we're going to look to do that and continue what we've been doing.

But we agree with you think where the stock is today is not reflective of our long-term value.

And also if we do invest in new new opportunities, that's not in the near future.

So (inaudible) New York, Texas, Thailand is years ahead.

You can find lots of room to invest money to

(inaudible)

Thank you.

Robin Farley, UBS.

Great, thanks.

Two questions.

One is, can you kind of share some thoughts on there's a lot of concern about tariff impact on the Chinese economy next year, just to serve Seaway to help us think about that broadly, how you're thinking about, you have a lot of CapEx going, being help them running in the market next year, which should certainly position you well.

But just sort of thinking about broader impact there.

Thanks.

You take tariff impacts on the outside the US, the new President of ever, he or she may be, I see, I don't think we want to talk about the two reasons.

One, we don't know what's really going to happen, nor do we know the impact.

Obviously, the Chinese economy speaks for itself.

It's been a struggled this year.

And I think it hopefully just gets better.

We see more improvement.

But the big thing in our business is the 2 million plus visitors were lacking quarter-on-quarter.

They heard us, and that was just today.

I don't think we should comment on politics or what has to happen.

We actually don't know.

But obviously the biggest miss for our company, which is both for scale and quality, we used $8 million annualised business tools that (inaudible)us with everybody else.

So we'll leave that they are going in the politics going to do and what to do with and why.

Okay, fair enough, thanks.

And then I had a question, you already commented on your interest in continuing share repurchase.

Looking at the rate that you did this quarter, you did mostly through your remaining authorization at the end of this quarter.

Is that we think about like your appetite for continuing beyond that.

Is that?

If you could just sort of comment on that.

Thanks.

Yes, I think if you look at our prior practice, you can see that we've always been focused on return of capital, both through share repurchases and dividends.

And that our Board has been very supportive of trying to create shareholder value through return of capital.

So as our current authorization gets used up, we'll go back to the Board and we'll have a discussion about how we want to allocate capital.

But the Board has been very supportive of trying to enhance shareholder returns over time.

Thank you.

Thanks, Robin.

Thanks, Robin.

Carlo Santarelli, Deutsche Bank.

Hey, everyone, good evening.

Good afternoon.

I know this is probably a difficult question, but if you think about (multiple speakers) maybe it's not as difficult as I framed it to be.

But when you guys think about the rooms that are out of service at Londoner and those customers and recapture in your existing portfolio, whether you're able to recapture them the Venetian or [Asia] or elsewhere.

What do you think is actually the delta in what you're missing from those rooms being offline i.e., how much of that shortfall that's being generated there relative to historical periods that's there in the portfolio versus how much do you think is just exiting the system and maybe showing other competitors?

Right.

Before I get this question, Mr. Chum, we woke up to this call in the middle of night in Macau.

I went to also referenced the fact that the disruption aside the carrying labor.

We've seen these buildings are construction impacts both Londoner n went into and want to be clear that disruption isn't just limited to our current Londoner (inaudible) the one or two logs or one, which is a beautiful building also fuels the thing.

Grant, will you answer the question about the the rooms and the delta and how you see that?

Yes.

Thanks, Rob.

I think first of all, yes, the performance definitely was impacted by the Phase two renovation on the Sheraton side.

But actually, despite that, you referenced the fact that we obviously worked hard to shift the patronage to other properties in the portfolio.

And the team was actually incredibly successful at that.

We actually reached a record high in any quarter on non-rolling drop, as well as record high in any quarter on slot handle.

And also in terms of gaming volumes, I think we've managed to sustain the volumes overall.

However, within the mix, I think what you do lose is some of that base mass, which is where Pacifico casino was primarily positioned.

And also what you also can see in the numbers is the impact of the loss of the rooms impacting the cash hotel revenues because, obviously when you have fewer rooms, we are yielding accordingly.

And when you lose that cash revenues from the hotel side because, you have reduced inventory and we need to shift the customers to other properties on the casino side that clearly impacts, not just EBITDA, but it's a high flow through segment business segments.

So they obviously impacts the percentage margin as well.

Great.

Thank you.

That's helpful.

And if I could just one quick follow-up.

Do you have a dollar amount on the cash room sales loss in the quarter?

I'm sorry, Rob.

I was asking if you can give us a number.

The dollar [rally] was in cash room sales and the closure of London.

If you look at the actual reduction in cash revenue for versus Q1, then you're probably looking at the range of around $15, $20 million impact..

Although, you can't simply add that back because, you've also got to consider.

That's a net impact of shifting more rooms into some customer segments and then having fewer rooms to sell.

So, it's a net impact that that's probably not minimize that, but if you're looking at pure cash revenues then that's the range impact.

Sorry your second question?

Yes, The second question was just more of a technical question and I get it lot and could go both ways.

But this is the fourth quarter in a row where hold in Singapore has the NVIP side has been very strong.

And I think when you look at the last four quarters, it's close to $30 billion of volume at an almost 4.4% win percentage.

It feels a little bit more structural.

And I know in your add-backs map, you guys are obviously thinking yourselves for a much lower hold.

Structurally, is there any thought of perhaps changing what that metric is as the normalized hold for that property going forward?

It's a great question and one, we still have time on.

And I think what you should realize and I think you do realise this, the world's changing and bulk opportunities slot, paper gives a better way of quantifying what the hold percentage should be, but also we put games the for, I'll call it prop bets or side bets that changed the whole percentage in baccarat.

And your comment's spot on.

We're debating how high we can take it.

The team there feels is understand and you're right, we keep digging ourselves quarter-to-quarter.

And perhaps in the near future, we'll go address that because, clearly something is happening here.

But again, the smart table opportunity, which we're deep into now, coupled with the game changes, they (inaudible)is pretty predictable game for many years.

Player and tie payer is changing dramatically.

We were there a few months ago and shocked to see how much money embeded on the prop bets.

No different than the Super Bowl.

We know just about the winning team, you have got every 3,000 side bets, which drives the per way up,.We

believe that's in flight in Singapore.

We're not ready today, but we're coming close to a decision this year for us to address that very issue because you're right.

The team would argue something in play.

It's not simply better fortune, it's just better mathematics

(inaudible).

Pat do you want to add it?

Yes, it's the right question to ask.

We've been following us for a while.

Some of it depends on what Rob said or it depends on what Rob said, which is the additional wafers that are available on the game mix that we have on the floor at the time.

But it's also, we have to understand propensity.

And so you have to observe empirically what people are going to do before you can make that decision.

So you'd argue that our theoretical is higher than this, but we're going to continue to look at it and we'll make adjustments as necessary when we think the statistics more to it.

But you're right.

It is a very significant adjustment and one that we're going to continue to look at.

But our game mix has changed.

The availability of first Rob calls and prop bets, but really have all bets are on the floor now in a very different way than they had been previously, both pre-pandemic and even a year ago.

And there the patron uptake is very high.

And so that is adjusting the way that mix on the floor is being exhibited through gaming win.

And so we're going to continue to take a look at it, and we'll make adjustments when we feel it's appropriate.

But it's a very good question asked.

There's more there.

Thanks, everybody.

Shaun Kelley, Bank of America.

Hi, good afternoon, everyone.

For grant or the team.

Just wanted to ask, can we get a little bit more color on just what you think is happening and sort of underlying visitation to the market.

I think you captured it well on your slide 19, but we saw I noted a bigger sequential deceleration that we typically see in the second quarter.

And my question for you is twofold.

Just one, what's driving that?

Is it macro?

Is it something you're seeing or hearing out there?

And I guess just as importantly, is it continuing at all in Q3?

Or what's your expectation for this pattern to possibly continue?

Thanks.

Grant, you want to take that one?

Yes, I think you're right.

The visitation recovery rate has actually reduced.

So that's essentially taking account seasonality when you compare the visitation recovery versus second quarter of 2019, were about 79%, but we were as high as 90%, 85% to 90% in the past six months, in the past two quarters.

So clearly, there has been, I think, more than just a seasonal slowdown, and that's particularly prominent in the visitation outside of Guangzhou.

So that does impact, I think Rob referenced it earlier, it does impact, I think the base mass business, especially the unrated play.

We don't know exactly why, but I think that is a feature of this quarter and it does feed into, as we said, the base mass segment.

Thanks, Grant.

And then just as a follow-up.

I think you also talked about I mean, obviously, I think you mentioned a number of times that the market is always competitive, always promotional.

Could you just talk about your own promotional allowance or cadence this quarter?

Was it a little higher.

Did you need to reinvest a little bit more?

I think on our math that was possibly the case, or is it all just mix, just kind of how did you see it play out and kind of what do you, how are you how much you're reacting to versus how much are you kind of leading kind of letting go on market share just because it's not your game?

One thing I just wanted to say one thing, and then I'll turn it over to Grant.

So just note that the visitation is very important.

And you referenced slide 19 and the fact that there's 2 million visitors missing that where you were pre-pandemic.

We are geared for scale.

And that scale is very high margin for us because of the volumes.

And so our mix looks different and our margins look different and our reinvestment looks different because, of the shift of business between non-rated and rated play.

That's a very important thing, when you look at our results and you consider what we're doing today, the mix of business has changed for us pre-pandemic, post-pandemic.

So that's one thing.

The other thing is, I would also like to highlight that if you look at the margins of our overall operations, they are consistent with prior performance.

And when that unrated play returns and the volumes return of premium escalate, their margins should improve.

So yes, we look at reinvestment rates, but we also look at the total business.

We'd like to understand how much money we're actually making on that.

So when you look at the business overall, our margin performance and our competitive positioning is actually quite good, given where things are.

But I'll turn it over to Grant for some additional detail.

Yes, thanks, Patrick.

Yes, I think it's a mixture.

Firstly, the business mix point that Patrick referenced.

And secondly, because we were closing Pacifico Casino and getting ready for that.

Yes, there is for a period of time, a high level of reinvestment as we prepare for that shift, which, as I talked about earlier.

We did so very successfully, especially into that region, but also the other properties.

So those are the main factors affecting the reinvestments and the overall margin mix.

But I think, even though there are fluctuations from quarter-to-quarter, day-to-day in terms of tactical, I think we're very clear on our strategy, which is that we will compete on the quality and the scale of our asset base.

And of course, at this point in time, we're hampered because, we have a number of our key assets ou.

When those assets come back online, really from Q4 this year into 2025, we absolutely intend to be competing on that basis because, at that point, we, not only have, I think scale we always had, but the sheer quality of product that we'll have at that point at scale.

I think that will be the fundamental difference from what we had before, and we intend to make full use of that in terms of competing for the market.

Thank you, everyone.

Chad Beynon, Macquarie.

Afternoon.

Thanks for taking my question.

On Singapore, which has been consistently strong for several quarters.

It appears that there's still some quarterly volatility.

I think last quarter we talked about some big events in the first quarter that drove non-gaming and obviously VIP play.

As we think about the back half of the year, can you help us kind of square what seasonality should look like?

And if there are any big events that are booked on the calendar in Singapore that could drive additional non-gaming or VIP business?

Thanks.

So a couple of things.

So typically, 2Q is our is our trough quarter in the year.

And so you saw that in Singapore this quarter.

As a practical matter, we were also our keys because of the renovation in Tower three.

So across the back half of the year into Q1 of next year, all of that stuff is going to come back.

So the limiters are going to come off.

And so if you look at the tower gaming that we're adding, it looked additional salons that are coming back online.

So the renovated gaming areas are coming back.

We're finally going to hit full stride in that building.

So even though we put up this quarter and last quarter, which are, I think the two highest of all time.

We have more room to go.

We're not operating with full capacity.

And so right now when we look at Singapore, we see strength in the market.

We've geared ourselves to focus on high-value tourism, which is coming into Singapore at a very high level.

We are the premier place to visit from an amenity standpoint, entertainment, food and beverage, and we're benefiting from it.

And our hospitality is now second to none, which we spent a lot of years working on and we're finally there.

So we're going to start to see this asset continue to grow and outpace.

In terms of the calendar up-and-coming, I can't point to anything other than Formula one that would be sitting the category you just laid out.

Formula one happens every year.

It's a great event, it's something that's good for Singapore.

Our patrons really enjoy it.

And we look forward to it's success.

But in terms of calendar, unless Grant has something in mind, I can't think of anything other than that right now that's worth mentioning.

Yes, that's the main one.

Okay, great.

This market is so powerful and getting better by the day.

And in the past, Q2 is one of the weakest quarter in seasonality, but still what's happening in Singapore is almost unheard of in our industry (inaudible) and we are doing these numbers again with capacity-constrained.

When that goes away and the market will continue to thrive, whether it's F1 or Taylor Swift or whatever coming next.

They just those events are very additive, but that place as a market just becomes more and more designed by the day you see by the visitation and the quality of visitors.

So the advantage will come, but I think our ability to speak for itself.

Okay.

Appreciate it.

And then I'm going to ask you to put on your kind of your economist hat again, not looking out to future years, but this year, obviously, the RRR cut could bring some more money back into consumers' pockets in China.

Just wondering, in prior cycles, how long that usually takes for it to trickle down?

Obviously, you've seen a nice little improvement in some of the July foot traffic.

I don't think it would happen that fast.

But is this something if it's kind of working in terms of some stimulus, you could start to see it in the third or fourth quarter here.

Just in terms of spend per play, trends, just wondering if you could kind of opine on what we've seen in prior cycles.

Thanks.

This is a fascinating question.

One thing I'll tell you, this was the highest volumes we ever had in premium mass and slots in a quarter.

So clearly like something positive is happening.

I think if you said that the economy was frothy and do incredibly well, we will be doing better.

I think it might be a fair statement, if you could say that.

But in terms of timing or specific economic actions, there are so many different things that could happen that may influence it.

We have no idea.

But I mean, this is anything that we can comment on or have a view on other than that, we're hopeful that there will be further economic growth and further beneficial economic activity around the Greater Bay Area and hopefully will be the beneficiaries of that.

But in terms of specific comments around timing or things of that nature, it's not something we can really do.

Thanks, Patrick.

Appreciate it.

Thanks, Chad.

Brandt Montour, Barclays.

I just wanted to follow up, maybe with Grant or anyone on Sean's question about visitation and maybe just thinking about what's going on there.

I know that we don't have a crystal ball for the future.

But in the 2Q, do you think macro was the biggest factor?

Is there's still infrastructure friction there with flights to non Guangdong, particularly?

Or is there something else that you think is at play as well?

Thanks, Brandt, for the question.

Yes, I don't have specific reasons why we have a of a slowdown in the recovery rate for non Guangdong.

I think what you can say is, there is a segment bifurcation here where the premium segments are still doing incredibly well.

And you can see, I think it's on slide 18 on

(inaudible).

Actually, this is the highest spend per visitor arrival since the COVID recovery began of any quarter.

So clearly at the premium end, the strength of spending is very high.

But at the same time, I think the lower price points in terms of say, the slot performance is also incredibly strong.

So those two, those two factors drove record high volumes in our non-rolling drop and slot handle.

But in the middle, especially the base mass tables, especially unrated, that is highly correlated to the strength of visitation.

And it just wasn't as strong this quarter, even if you adjust for seasonality.

So I think we can explain how the segments have performed.

But we don't know exactly why on the visitation base isn't recovering as fast in the middle in terms of that base mass hesitation.

Great.

Thanks for that, Grant.

And then on the disruption, the renovation projects, if we were to try and engage the level of disruption from these projects in the third quarter versus the second quarter.

I know you lose the casino floor for a whole quarter versus a half a quarter.

Can you, maybe give us some finer points on what else is going to be offline in the third quarter versus the second quarter, room count, et cetera?

(multiple speakers) Yes, the disruption will, actually increase from a room perspective.

So we're operating around 2,500 keys at Sheraton in second quarter on average over the quarter, and we expect to be down to about 1,300 on average across the third quarter.

Obviously a higher number of keys in the first half of the quarter and finishing up with fewer keys.

And as you said, we will have a full quarter of Pacifico casino closure versus 60%, 65% of the quarter in the second quarter.

So yes, the disruption impact will actually increase during the third quarter.

Perfect.

Thanks, everyone.

.

David Katz, Jefferies.

Afternoon, everyone.

Thanks for taking my question.

I wanted to go back to the repurchases and just take a little bigger picture, right?

Just thinking about the factors.

Obviously, the stock and where it is one of them.

But when we look at your capabilities, there are some maturities out there in the future.

There's obviously the issue of the float with the current run rate that shrinks the float, and that's a consideration that some companies think about.

If you could just sort of walk us through, how you're thinking about those other issues in view of all of them.

That would be helpful, please.

So all very good question is all things we talk about all the time, consider with the Board and we think about frequently, I think the key thing for us is, we always look to invest for growth.

So when you think about capital allocation, our primary conversation is how do we grow this business?

We had a question earlier about new jurisdictions.

We're looking at them.

If you look at our Las Vegas sale, the fundamental driver of that was our ability to reallocate capital to faster-growing markets and new growth opportunities.

And I think our investments in Macau and Singapore will prove out and that will ultimately allow us to grow those businesses, create additional cash flow, which ultimately will be used for either new growth or shareholder return.

And so, right, when you look at our balance sheet, we think being investment grade is incredibly important.

We think it provides us with a strategic advantage.

It reduces our cost of debt capital, which impacts our overall cost of capital and makes the financing of the project more efficient and create better returns for equity.

And also to be fair, we think when we go to new jurisdictions, it puts us in a more competitive position because, we have the financial capability to execute projects we're proposing.

And so all of these things are very helpful for us as we grow our business.

When it comes to capital return, I think the idea of shrinking the share count us on we've talked about previously, where we think there's a benefit in doing so.

We think there's positive gearing toward share repurchases.

We've been very aggressively the last couple of quarters.

We'd like to continue to shrink the share count over time.

And to be fair, we're also a dividend payer.

We think that's helpful to shareholder returns as an S&P 500 member, we think it's good to have a dividend as well.

So I think we have the free cash flow to continue return of capital.

We're very happy about that, given our investment opportunities.

We have the balance sheet strength to be able to develop a new jurisdictions.

And so I think you're going to see a balance between growth and our ability to return capital over time.

I think the nice thing is, when we're done with the Londoner and we're done with somebody else or with these major renovation projects in Singapore, given the growth that we're seeing will have the ability hopefully to return more capital.

And we'll have the ability to increase our program and benefit shareholders.

So you'll see us do that over time as our business continues to operate and growth.

And so I think the idea of shrinking the share count, I think we're in a good position to do it.

I think we have a lot of liquidity out there in the market.

We have a very strong ability to execute.

So I think we're in good shape in terms of our program and the way that we approach it.

Thank you.

Appreciate it.

Dan Politzer, Wells Fargo.

Hey, good morning, everyone or good afternoon, everyone, and thanks for taking my questions.

The first one on Singapore.

The ADR was very impressive, trends there seem overall pretty good despite subdued visitation.

Can you talk about are you starting to see the benefits of the existing CapEx that you've put into the ground so far?

And should we think about any disruption as it relates to Tower three that have leading up to the completion next year?

Thank you.

Yes, obviously at the money we put into the building thus far has done very well in the results we..

You see results are, when you look into a $2 billion-plus dollar run rate, we're still under construction is more to do.

Tower Three is disrupted because, you don't have the product from a room tower gaming isn't there.

I mean, we're doing very well there.

But again, I reference, we have one hand tied behind our back and trying to get through it.

So the road ahead looks very positive to us.

We think $500 million, $550 million, $600 million a quarter is in reach in the near future.

And as we referenced earlier, once the entire buildings complete in '25, I do see better numbers than ever on the Singapore,

And yes, the CapEx, we employed there is paying off very well and we think it's going to continue to be even stronger in time.

And as for EDR, while it's relevant, our cash sales are not the (inaudible)is the drivers or the Casino drop on the table side (inaudible) but it's a very positive picture.

The disruption is real for the balance of the year and into Q1 into Q2.

But once that burns off and we had Tower game open the full complement of suites.

I think you'll see Singapore just continue to be stronger and stronger.

Thanks.

And then as far as it relates to the Macau property portfolio, obviously there's a lot of CapEx going in the Londoner.

As it relates to the other properties there, is there anything that we should be thinking about as you start to wrap up Londoner toward later this year?

Or should we expect 2025 to be pretty much disruption free there?

Yes, good point.

Londoner will wrap up again in '25.

We should note that we are going to undergo.

There was a misunderstanding perhaps one call about what happens in

[Indonesia].

We are going to rehab some of those innovations because, we always do, but it's typical.

You won't see numbers of the building will be hidden from the public view by doing the four-by-four traditional way.

You approach these things in our industry.

So we will undergo a renovation of the room product at Venetian next year at the closure of Londoner renovation.

Four Seasons pretty much is done.

And then we'll sit and see what we want to do it in those things in Parisian and perhaps some Sand, but nothing beyond the should think about for the time being.

Got it.

Thanks so much.

Steve Wieczynski, Stifel.

Hey, guys.

Good afternoon.

So Grant, you've been asked question on visitation twice now.

I'm actually going to try and ask it third time.

So if we look at slide 20, it shows that the group visitation was down about 1.3 million visitors in May and June so far.

So I wanted to ask more about kind of what's going on with the group side and just trying to figure out maybe has it, do you think Macau has essentially gotten, maybe too expensive and is pricing certain groups out of the market?

And I hope that kind of makes sense.

Yes.

Thanks for the question.

I think the two groups is a broader supply chain issue and the changing consumer, habits not just applicable to the Macau market, but to all the key markets that was significant to group markets prior to COVID.

I think the aspect that I should have mentioned and perhaps I could get (inaudible) perspective as well as actually, during this period, we also have a series of significant announcements on policies that would boost visitation over time, even though in this current quarter, the impact may not prominent, ranging from individual visits scheme, expansion to other types of Visa relaxation.

So I think we need to bear that in mind that things are actually being extremely positive on the policy side to support future growth in visitation.

Wilfred, maybe you want to add to that?

Sure.

I think that the government, both at the Macau level and at the national level is monitoring the situation.

And that's why you see the recent announcement that there's an additional 10 cities are people that qualify for IVF.

And if you look at Macau, traditionally about 55%, 60% of the visitors used the IVS scheme.

And this time they added 10 cities, which has close to 60 million population.

So you are increasing that catchment area.

And I think the other measures such as faster and nationwide application for business Visa will also benefit Macau.

So it will take time for these policies to be promulgated, fully promulgated and known in these cities.

So we are expecting some positive impact in the months to come.

Okay.

Great.

Thanks, guys.

That's all for me.

Appreciate it.

Thank you.

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

You may disconnect your phone lines at this time and have a wonderful day.

We thank you for your participation.