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spk01: Good afternoon. My name is Faith and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Second Quarter 2021 Earnings Call. All lines have been closed to prevent any background noise. I will now turn it over to Mr. Daniel Briggs.
spk09: Thank you, operator. Joining me on the call today are Rob Goldstein, our chairman and chief executive officer, and Patrick Dumont, our president and chief operating officer. Also joining us on the call today are Dr. Wilford Wong, president of SANS China, and Grant Shaw, chief operating officer of SANS China. Before I turn the call over to Rob, please let me remind you that today's conference call will contain four looking statements that were made provision of federal securities law. The company's actual results could differ materially from the anticipated results in those four looking statements. In addition, you may discuss non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release. Please note that we have posted supplementary earnings slides on our Industrial Relations website. You may refer to those slides during the Q&A portion of the call. Those who would like to participate in the question and answer session, we ask that you please respect our request. So limit yourself to one question and one follow-up question so we might allow everyone with interest the opportunity to participate. Please note that this presentation is being recorded. With that, let me please turn the call over to Rob.
spk07: Thank you, Dan, and good afternoon and very good early morning to our colleagues in Asia. Just some brief comments, and we'll go right to Q&A. Our results continue to reflect the pandemic's impact. We did generate positive $244 million a quarter, about the same as the first quarter. The Cal performance reflected sequential improvement, but pandemic-related travel restrictions continue to impact our performance. We do remain confident in the eventual recovery in both Macau and Singapore, and we cannot define the timing of the full recovery, but it's underway and will continue in 2021. Singapore remains in the $500 million to $600 million range annually, although the second quarter was impacted by heightened pandemic-related restrictions for a portion of the quarter. We will also be subject to closures of portions of MBS from today to August 5th as part of COVID-19-related protocols. This will obviously have a negative impact on Q3 results. In addition, there remains no visibility as to when air traffic will return in Singapore. Unlike Macau, it is difficult to project additional EBITDA from MBS until the resumption of air travel. Our considerable investments in Macau continue to take shape as the market recovers, four seasons, and London will present growth opportunities, and we continue to have the largest footprint in this incredible market. China continues to demonstrate economic resilience. The spending in Macau is very strong at the premium mass level from both a gaming and retail perspective. You may want to reference page 29 and 30 in your deck. We do have great optimism about our ability to perform to pre-pandemic levels once sanitation returns. Our company is divided into three areas, the Asian portfolio in Macau and Singapore. While we believe Macau will accelerate in the second half of this year and lead to recovery, Singapore will follow up on the assumption of air travel. We are confident we will return to a $5 billion plus EBITDA from Asia in the future. The sale of the Las Vegas assets creates liquidity and vast optionality to explore large land-based destination resorts in the United States and Asia. And finally, in the early innings of building out our digital presence, we are exploring multiple opportunities at present. And we are eager to have this effort become a key of our company in the years ahead to update you at the appropriate time. Let's take some questions.
spk01: As a reminder, to ask a question, you'll need to press star one on your telephone. To withdraw a question, press the pound key. Please stand by while we compile the Q&A roster. Your first question is from Robin Farley from EBS. Your line is open.
spk05: Great. Thanks for taking the question. I wanted to follow up on your announcement about your online strategy and kind of pursuing B2B investments. And just if you could help us think about, you know, kind of how the – brand that you have you know would would help in the b2b effort or how you know just in terms of what that does for fans as well in a reciprocal way and then also is that um is that going to be the full extent or are you still looking also at b2c options in the online market thanks you want to take that sure happy to thanks robin
spk12: So a few points. I think our brand is very strong. I think we have decades of established brands and high-quality operations and a great relationship with customers. We think that's very powerful, to your point. One thing we're thinking about is we're really investing for the future. We take a very long-term approach. We're still evaluating a lot of different opportunities. I think B2B presents a very significant opportunity for us. Davis has a great history, and we're really looking forward to him getting started, and we're happy that he joined us. You know, I think we'll provide updates as we make progress until very early stages, but we're looking forward to being able to deploy capital over many years and really look at this from the long term and create a lot of long-term shareholder value. And I think in the future you'll see us looking at other things and other opportunities. As Rob said on other calls, we're going to be very patient, we're going to be prudent, and we're going to look for opportunities where we see ways to create real value in the long term. So I don't think this is the last thing you'll see from us, but I think it's really just the beginning, and we're looking forward to seeing this thing evolve over time. So as we make progress, we'll definitely provide more updates.
spk05: Okay. I don't know if it was just as a follow-up, just thinking about, you know, the B2B, many of the B2B providers out there kind of working with, you know, those that would technically be your competitors in land-based. And so I guess how would you think about framing that, how they would see SANS, you know, presence in the online business as, you know, somebody that they would partner with versus a competitor? Thanks.
spk12: You know, it's a very fair point. And I think, you know, interestingly, our company has seen a lot of changes in the last 12 months. And I think one of the things that we thought about when we considered this is that we really are conflicting. You know, the markets in which we operate going forward are going to be Singapore and Macau. And so from that standpoint, it's really a limited universe of people who are a true competitive set, particularly in some of the larger geographies where a B2B services model could really be productive. So I think from our standpoint, we are a little bit neutral. We believe we are from the sense that in a lot of the markets that we might look to target, we don't have any land-based operations and don't have any B2C operations where we could find customers from a B2B business model standpoint. So we feel pretty good about it.
spk05: Okay, great. Thank you very much.
spk01: Your next question is from Joe Graff from J.P. Morgan. Your line is open.
spk09: Good afternoon, guys. Nice to hear your voices. I kind of said it mostly just in terms of Macau's reliance on travel mobility enhancing measures. and timing there, so I'm not going to waste my time on that. But I think the last call, Wilfred, you know, gave a decent amount of detail and I would say a decent amount of optimism in terms of, you know, your license potentially in the markets getting extended, you know, sometime middle of this year, and that timeframe is sort of past or about now. I was hoping you'd give us an update on, you know, your conversations or your thinking about, renewal slash extension process in the CAF?
spk07: Robert, you there?
spk11: Yes. Thank you. I think the situation has not changed. Obviously, the extension is a very complicated issue. It's something that the Macau government and the Chinese government will have to look at very carefully. They also have their own preoccupation at this stage. For example, the Macau government, apart from still working very hard on making sure that Macau remains a safe city in all the precautionary measures against COVID, They are now preparing for the next legislative council election, which is due on the 12th of September. So the government is operating at a pace where they feel they want to launch the public consultation for the concession renewal towards the second half of this year, which we believe might mean that it will only happen after the Legislative Council election. Now, I don't think the government is in a rush to renew the license because they want to do things right. And as we all know, there are many legal issues they have to attend to, such as the concession and sub-concession issue. and they can only go to the legislative council when the new council is in place. And so at this stage we are really focusing on doing our best, aligning our interests with the government, such as focusing on investment and reinvestment opportunities, building our properties, improving our operational efficiencies, maintaining a stable workforce, which is very important during this pandemic. And I think things will pan itself out eventually because as we move closer to the expiry of the concession, Naturally, the extension of the concession is an option which the government will have to look at. But at this stage, there is nothing official and we have no previous information.
spk07: I'd like to follow up, Joe, on Rupert's comments. We remain very comfortable with our position. We have to be patient, but there will be resolution. As you know, we've said numerous times, we've led the efforts in Macau for a diversified approach to development. We've gone above and beyond. Sheldon was the guy behind the COTAI development. We invested $15,000 plus in U.S. dollars, and we continue to follow the government's advice and direction. So we remain very confident and very patient waiting for the government's decision. But no real change, nothing new. But we've not altered our belief that we're in a very good position, very comfortable.
spk09: Appreciate the thoughts. Thank you, guys.
spk01: Your next question is from Carlos Santorelli from Deutsche Bank. Your line is open.
spk09: Hey, guys. Good afternoon. Good morning. Rob, could you talk a little bit about the project at MBS? Obviously, 2025 is the expected opening. As you kind of have these modest setbacks and acknowledging that you guys kind of pushed it earlier, given COVID back in 2020, does 2025 still seem kind of realistic as a target? And what are kind of the goalposts for some of the construction work along the way?
spk07: I'm going to give it to Patrick, except for one. I'll say this before Patrick jumps in. We remain very committed to Singapore, to expanding our presence, our footprint. Obviously, COVID has thrown a monkey wrench, a big monkey wrench in this whole thing, but this is an extraordinary market. We're going to invest in Singapore. We've done very well there, and the addition is going to happen. I think the timeframe really depends on the ability to get people back to work in the construction area and getting things back in line. I think He's lost 21 when I had him at 22. So, again, we are committed, and I ask Patrick to provide more color than he's dealt with the government directly.
spk12: Thanks, Rob. You know, I think the key thing is what Rob just said, which is there's a certain amount of uncertainty around the timing and availability of when we can actually get things done. You know, a lot of the early parts of this project required us to work with certain government agencies to seek their approval and to work with them collaboratively to ensure that we fulfill the obligations and their desires as well as part of this project. You know, it's a very tight site. It's, you know, it's eight acres. There's a lot of programming, a lot of density, a lot of things that have to be worked through and a lot of things that have to be integrated into the current environment to make it right. And so, you know, we're starting to work through some of those things. But as a practical matter, the nature of a construction project of this complexity in size would always be challenging in a normal environment. So I think we're just trying to be cautious. and make sure that we understand all the different parameters around labor and our construction timelines before we say that this is a schedule that is not achievable. I think a lot of it depends on the environment and how things go in terms of COVID recovery over the next couple months. We'll have a much better view at that time. But right now, I think we're cautiously optimistic. We're going to continue working with the government and hopefully have an opportunity to get going sooner rather than later.
spk09: Great. Thanks, Rob and Patrick. If I could just one quick one. Has there been any thought, obviously, now given the sale of Venetian Las Vegas and the proceeds that are on the come for that to potentially revisiting the bidding process in Japan?
spk07: Not at this time, probably. We've had an inquiry from a lot of parties there and You know, we've tried very hard and a lot of money and a lot of human capital worked there over the last 10, 15 years. And we left with a feeling that there was just this uncertainty for us. You can always revisit something based on a change in circumstance. But at this point, we remain in the sidelines. Understood. Thanks a lot. Thank you.
spk01: Your next question is from Stephen Grambling from Goldman Sachs. Your line is open.
spk00: Hey, thanks. Could you just talk a little bit about some of the different expansion opportunities for land-based resorts in the U.S. or even other broader markets that we haven't touched base on so far and how you prioritize and evaluate those different markets?
spk07: Well, at the end of the U.S., you know of our efforts in New York, which we shut down because New York did not resolve that issue. So that's Not available at this time. Texas, we remain very committed to pursuing. I think it's a couple years away, but I think there's a real chance down the road and back in Texas doing something down there. There's recent news about our Florida. We put our foot in the water in Florida. We think that's a real opportunity. There's a path there in 2022. It was successful in gathering signatures to have a vote in the fall of 22 for a land-based opportunity. In the U.S., that's all we're looking at. You know, we've obviously discussed Japan, although previously our best opportunities are to reinvest in Macau and Singapore. because those places have proven huge successes. And I think when you're as fortunate as we are to have made, you know, $5-plus billion, we need to go back to who knows what. But there's a lot of running room in both Singapore and Macau. Frankly, they remain our biggest focus because they're so – So extraordinary and hard to duplicate anywhere in the world. And I think that's our focus right now is getting MBS Phase 2 up and hopefully waiting for fall we can invest more in Macau. The London will be completed later this year on 22, four seasons. We'd love to deploy more capital in Asia. I think the flood opportunity is interesting. We'll see if we can get there. But it's hard to find things as extraordinary as the two places we operate today.
spk00: Makes sense. Thanks so much. I'll jump back in the queue. Sure. Thank you.
spk01: Your next question is from Sean Kelly from Bank of America. Your line is open.
spk08: Hi, good afternoon, everyone. Maybe a question for either Grant or Wilford. But I was wondering, I think we have a pretty good sight line on the core, you know, on the premium mass market and how that's performing and how the spending behavior is going. But I was wondering if there's any color insights you guys have gleaned just from what you're seeing on more of the base mass or the lower end mass market. I'm sure the sample set is small. I'm just kind of curious on how the customer is behaving when they are in the market and what you've seen at some of your properties, if you could provide anything there. Please. Yep.
spk10: Hi, Sean. Good morning. I think the trends have been pretty consistent in the last six months. You see, I think, very strong consumption propensities, great strength in spending power. for those who have returned to Macau for leisure trips. And I think that applies across the different segments. But obviously, clearly, the premium mass, the segment has returned in greater volume, greater number of patrons. But you go further down to mid-level and the base mass, the spending power is definitely prominent. However, you can see from the visitations, they are still around, let's say, low 20% of where we were before the pandemic. So the base mass is clearly impacted by just the drastic reduction in the number of people visiting. But the people who are coming are actually staying longer and, in most cases, staying longer. And I think what was encouraging sequentially, although June was somewhat of a temporary hiccup, what was encouraging was we saw the greatest amount of sequential growth in the base mass in the FIT segments versus Q1, although premium mass continued to recover. The bigger bounce back was actually in the base mass. So we hope to see some of those encouraging trends continue into the summer, summer holidays and beyond.
spk08: Great. And maybe to change gears for a quick follow-up on the online topic, if I could, for Patrick or Rob, just kind of want to get your quick sense on maybe the build versus buy equation, right? So, you know, obviously, you know, some of these technologies and things are out there, but they can be, you know, quite expensive. You know, just how do you kind of weigh, you know, maybe some of the options that are around, you know, acquisitions and sizing relative to possibly things that could be done, you know, maybe more organically? Okay.
spk12: So it's a very interesting question. It's something that we've been looking ahead for a while and we continue to look at. And, you know, it's an interesting comment about valuations. I think there's been a lot of optimism in the market, call it the last six to 12 months. And, you know, valuations have definitely moved around a lot in the last few weeks. I think the key thing for us is we're really building for the long term. And so when we look at things, we're really going to take a long-term view of value. And if we do acquire something, it's going to be for the reason that it fits into a much larger, broader strategy and something where we see long-term value creation by owning it. I also think we're not necessarily looking to take big bites right away. I think this is something we're going to look to develop it over time. in a prudent manner and sort of build more and then maybe buy where it makes sense i don't think you'll see us go out and make a splash by using las vegas sale proceeds and any large transformational acquisition unless there's some really compelling reason why we have to do it but that's not our focus our focus is to build the product get the culture right get the opportunity right and then make acquisitions as they fit in with the overall strategy thank you very much
spk01: Your next question is from Thomas Allen from Morgan Stanley. Your line is open.
spk03: Yeah, Patrick, just a follow-up to that question. Respecting that you're not going to do a transformational deal, how are you thinking about the size of the deal? Are you thinking of being kind of an incubator for startups? Are you thinking like hundreds of millions, low billions? How are you thinking about the sizes?
spk12: It's a pretty broad range. I'll tell you the Our goal is really, you know, I don't know that we provide a lot of value at the angel stage. You know, we might be able to help some people, but I'm not really sure that that's where we provide sort of the most value. I think from our standpoint, if we can get kind of earlier stage and mid-stage, but again, fitting into a larger strategy, that's where we'll look to be really effective. I think, you know, things that are much larger that would be transformational in the billion-dollar range, We'd have to have a really good reason to do it, and I think we'd want to be operating for a while to understand why that would make sense for us. I don't think we're going to buy our way into a business. I think we're going to develop our way into a business and look to see how acquisitions help enhance that approach. Helpful call. That makes sense.
spk03: And then just on Macau and Singapore, respecting that the majority of your business and the majority of your future is really around the mass market, VIP came in really light. Only $600 million of rolling chip volumes in Singapore stood out. Can you talk about what's going on there and your expectations?
spk07: I think you're saying you're looking at Singapore as close to Macau, you say, right? Thomas?
spk03: I think Macau was down quarter over quarter too, Rob. So, I mean, Singapore was what really stood out, but just talk about VIP in general and kind of your expectations there.
spk07: Yeah, well, VIP, as you know, it's right now it's a closed market, just locals only. So you're trading mostly on – exclusively on people who are living in Singapore. And that may be people residing during the pandemic. It might get an extra push from some of the folks who have moved to Singapore to lay out the pandemic as part of the reason. But I don't think you can look at our numbers at this point and really make a whole lot of inference as the future because it's so – Without having – look at the slot business there. It's so outsized, and yet it's surprising us how well it's doing because that never was the case, that kind of performance. Yet people are – they can't leave. They're stuck in Singapore. The same way people can't leave, they're stuck in Singapore right now on the high end. So I think it's hard to make inferences about who's the future. It's probably a trend. It's just – it's an anomaly. I think that's going to be the case until this thing resolves and there's air traffic in and out of Singapore. You see these trends, both good and bad, that are confusing. And I think in the case of – it's very difficult to look at Singapore as numbers come up with a clear direction where it goes. I mean, the stock performance confused all of us initially, and now you realize a lot of people who travel outside Singapore are staying at a gamble. The same probably goes true on the high end on the Chinese nationals who will be resigning in Singapore during the pandemic. So I'm not sure you can make a whole lot of long-term trends based on what you're seeing today in Singapore.
spk12: There's one other comment that might be helpful, which is the way we're sort of thinking about it, is that the investment and the product really matter. And so if you look at what we've done during the pandemic, we spent a lot of time and deployed a lot of capital in sort of enhancing the offering that we have. So when there is a recovery, we have better capacity and more competitive product. It is a product of an industry. And so from our standpoint, the way we think about the long term is the level of investment that we've put in during the pandemic so we can position ourselves in a more strong way when the recovery happens. So I wouldn't look at the rolling volumes now and use that to indicate anything. I think you should look at the fact that we've been able to deploy capital, create higher quality products, create higher quality experience for our customers, and that way we're stronger positioned on the other side. And that's how we're really approaching it.
spk03: All helpful. Thank you.
spk01: Your next question is from Steve Wilkinson. Steve, your line is open.
spk02: Hey, guys. Good afternoon. So probably going back to Wilford with this question, but I guess for Americans and, you know, investors that we talk to, it's tough for us to understand where China is with, you know, respect to their vaccination progress. And, you know, case counts continue to look pretty promising, you know, but China is still having issues, you know, but is it China is still having issues with lack of availability with the vaccine or is it the the vaccine that's being used hasn't been effective, or is it just something else? I'm just trying to get more color around that, if all that makes sense.
spk11: Thank you for the question. Actually, China is not lacking in vaccines, actually. They export quite a lot of vaccines. But the truth is, if you look at the statistics, China today has already administered 1.5 billion doses of vaccine. Now that really means that over 50%, 60% of the population has been vaccinated. And if you assume everyone has two doses, that represents 53%. And they're still vaccinating at over 10 million doses a day. So what it means is every 25 days, they can increase that vaccination rate by 10%. Now that is also to some extent true for Hong Kong and Macau. Hong Kong already administered 5 million doses and its vaccination rate is already over 40%. Macau administered 460,000 doses. That's also over 40% of the population. So we're quite confident that if China continues in that rate, and with the increase of vaccination rate by about 10% per 25 days, when you come to winter, almost the whole population, like 90%, 80% would be vaccinated. Now, I think once we reach that level, that travel bubble within China, including Hong Kong and Macau, it's really possible. What you have seen in the news is that because China adopts a non-tolerance policy towards COVID, so whenever there's some outbreak in certain areas in the country, it's widely reported and they immediately go back to lockdown. And that's why I think the best scenario in the short term is a travel bubble between China, Hong Kong, and Macau, because they're so concerned about the importation of COVID cases, especially with the variant cases.
spk02: That's great, Keller. Appreciate it. Thanks, guys.
spk01: Your last question is from David Katz from Jeffries. Your line is open.
spk06: Hi, afternoon. Thanks for taking my question. You know, covered a lot of ground. What I wanted to ask was just kind of a broader, you know, question here, taking in everything about the U.S. and, you know, what you've said in Asia. If we were to think about what LVS looks like in, you know, say three to five years out or two to five years out, You know, what's, you know, that picture look like? What's the vision, you know, for that? What are the, you know, and obviously that can be as qualitative, you know, and high level as you're thinking about it. But, you know, I'd love to just hear your perspectives on that.
spk07: pretty simple market structure. We first and foremost see return to $5 billion, $6 billion EBITDA in our Macau and Singapore markets. We see a renewed investment in both Macau and Singapore to grow that from $5 billion to $6 billion and beyond. We certainly see a one or two van-based facilities in the United States, maybe Florida, Texas. And lastly, we have a strong visual presence. And reflecting our balance sheet, we have the ability to do all these things. You know, I think we're convinced in Asia that the most important thing in this company, you know, the timing is uncertain of the return to a more normal environment in Asia, but the outcome is not uncertain. It's going to happen. And I think it will reflect what's happened here in Las Vegas, which is people will flock these casinos, we'll make more money than pre-COVID, and our business will boom again. And we're not unclear about that. We're not unclear about timing, but not the outcome. I also think we're unclear we want to invest heavily in both those places because that's our best bet for $6, $7, $8 billion, either that. We've made very clear our belief in both Texas, Florida, and perhaps other large-scale jurisdictions in the U.S. will be we have the balance sheet the optionality to pursue those and as Patrick outlined very involved in digital strategy it's pretty slow to get there but in three to five years from now you'll see a real a positive outcome and that's That's where I think we end up. We feel pretty confident. We've been derailed the last 18 months by this horrific virus, this pandemic. But I think it's clear where we're heading. To me, it's very obvious that we have to be patient and stay the course. And I think when we're doing that, we have ample liquidity to do anything we want to do anywhere and in large scale. So that would be my thought three to five years from now. Patrick, your sentiments?
spk12: I couldn't agree with you more. I think the great thing about it is we have a lot of opportunity in front of us. I can't tell you which one of these options, hopefully all of them become available. And the great thing is that we've just invested $2.2 billion in Macau. We feel very strongly about the market and the potential to invest more post-concession renewal. We feel very strongly about the expansion in Singapore and our long-term commitment to Singapore as a very unique tourism destination and the high quality of earnings potential that we'll get from Singapore. And then looking to the U.S., these are just great locations. And looking at the digital opportunity, we feel very strongly about the returns and the potential growth that's in this area. So from a company standpoint, five years from now, we could be looking like a very different company in terms of our scale. And to Rob's point earlier, I think our balance sheet and the capability that the liquidity from the sale of Las Vegas presents allows us to pursue all of these opportunities. So we're very bullish about it.
spk06: If I may just follow it up quickly, and I appreciate all of that, with respect to the digital strategy, is the notion that it would be integrated with the company as it is today and branded as such, or is it more of a separate enterprise or potentially either still at this point? Thank you.
spk12: Rob, if you're okay, I'll grab that one.
spk04: Please do.
spk12: So I think the key thing to note is we have a very skilled team and a great platform. We have a very strong corporate culture. We have just the ability to execute on a variety of different things. And I think we have the capital to have patience and invest for the long term. And so I think this is going to be a business that will require separate people, separate infrastructure, and be distinct. That being said, it will benefit from being part of our larger organization. So, you know, much like Singapore and Macau are part of a global team, they have things that are specific to them that they have to deal with, and so will this business. But it will benefit from being part of the larger organization.
spk06: Thank you very much. Appreciate it. Thank you, David, as always.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect.
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