Las Vegas Sands Corp. (LVS) CEO Discusses Q2 2013 Results - Earnings Call Transcript

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Las Vegas Sands Corp. (NYSE:LVS)

Q2 2013 Earnings Call

Jul 24, 2013, 4:30 pm ET

Executives

Daniel Briggs - Vice President of Investor Relations

Sheldon Adelson - Chairman of the Board, Chief Executive Officer, Treasurer

Robert Goldstein - Executive Vice President, President - Global Gaming Operations

Michael Leven - President, Chief Operating Officer, Secretary, Director

Analysts

Shaun Kelley - Bank of America

Joe Greff - JPMorgan

Cameron McKnight - Wells Fargo

Felicia Hendrix - Barclays

Carlo Santarelli - Deutsche Bank

Steven Kent - Goldman Sachs

Thomas Allen - Morgan Stanley

Harry Curtis - Nomura Securities

Ian Weissman - ISI Group

Operator

Good afternoon and welcome to the Las Vegas Sands Corp second quarter 2013 conference call. I will now turn the conference over to Daniel Briggs.

Daniel Briggs

Thank you. Before I turn the call over to Mr. Adelson, let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provisions of federal securities laws. The company's actual results could differ materially from the anticipated results in those forward-looking statements. Please see today's press release under the caption, forward-looking statements, for a discussion of risks that may affect our results.

In addition, we may discuss adjusted net income and hold-adjusted adjusted net income, adjusted diluted EPS and hold-adjusted adjusted diluted EPS, adjusted property EBITDA and hold-adjusted adjusted property EBITDA, all 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 earnings slide in our investor relations website for your use. Finally, for those of you would like to participate in the Q&A session, we would ask that you keep one question and then one follow-up question.

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

Sheldon Adelson

Thank you, Dan. Good afternoon, everyone and thank you for joining us today. We are extremely pleased with our financial results, which continue to reflect our outstanding strategic positioning, strong execution and position of leadership in integrated resort development and operations. We delivered strong growth in revenue, cash flow and earnings per share, with hold-adjusted diluted earnings per share increasing 41.2% to reach $0.72 per share.

Our results continue to reflect strong execution against our core principal strategic objectives. We are more confidence than ever that successful execution against these strategic objectives will both extend our industry leadership and maximize shareholder value. I will provide a brief progress report on those four objectives before we move to your questions.

Our strategic objectives are, first, maximizing organic growth from our property portfolio. Second, deliver additional growth by making new investments in our current markets. Third, identify and nurture new integrated resort development opportunities in geographic areas outside our current markets. Fourth, continue to increase the return of capital to shareholders. I like that last one --It's a personal favorite of mine.

Focusing on organic growth, we again delivered an all time record performance in Macao where our industry leading investments and the unrivaled scale of our properties have again enabled us to deliver robust market leading growth in the world's largest and most profitable gaming market. We welcomed a record 14.6 million visits to our Macao properties in the quarter, an increase of 40% compared to the second quarter of 2012.

Adjusted EBITDA across our Macao property portfolio expanded 53.2% to reach a record $657.2 million. Our mass table win in Macao for the quarter was up a whoppy 61.1% to a record $930 million. Our growth in the quarter was twice as fast as the Macao market in the most important and most profitable segment in Macao. Also impressive is our growing volume growth in Macao, which is up 25.7% this quarter to a record $42 billion.

That represents VIP market share of approximately 17.4% of Macao market rolling value compared to just 14.8% one year ago. Our growth for the quarter was nearly 2.5 times faster in the Macao market in the VIP segment.

The Venetian Macao delivered the strongest quarter in the property's history. The Venetian Macao leads the Macao market in visitation, business and leisure tourism field, and last but not least the generation of EBITDA, which reached property record $361 million in the quarter. The Venetian's higher rolling chip drop increased 56.1% to reach a market leading property record of $1.59 billion for the quarter.

Sands Cotai Central continues it's steady growth with strong growth on display across the board. Our mass table, slot and ETG win per day increased over 158% this quarter compared to the period last year, reaching over $3.51 million per day. Visitation at Sands Cotai Central exceeded 40,000 visits per day during the quarter, an increase of over 142% compared to the year ago period.

EBITDA generation is also improving meaningfully and despite low hold reached $146 million for the quarter. Had we held normally at Sands Cotai Central, the property would have generated approximately $170 million in adjusted property EBITDA during the quarter.

Now turning to Marina Bay Sands in Singapore. Rolling volume was up over 24% compared to last year's second quarter, reaching $14.4 billion. On a hold-adjusted basis, we have reduced EBITDA $396 million this quarter and Marina Bay Sands which was up about 6% compared to the same quarter last year.

Turning to our U.S. operations. Hold-adjusted, adjusted property EBITDA was up nearly 8% in Las Vegas and grew nearly 10% in at Bethlehem. We are pleased to be generating growth in both the largest gaming market in the U.S., Las Vegas and the fastest selling gaming market in the U.S., Bethlehem.

Now let's turn to strategic objective number two, development growth in our current markets. The Parisian Macao, our fifth integrated reserve property at the Cotai Strip and our sixth in Macao overall is now under construction. Piling work is now well underway and the substructure work in the podium and hotel tower areas has commenced. Based on our current construction schedule, subject to timely government approvals, we are targeting the opening of The Parisian Macao for late 2015.

We are extremely enthusiastic about The Parisian which we would be themed, aspirational destination integrated resort, featuring replicas of iconic Parisian landmarks including a 50% scale replica of the Eiffel Tower. The Parisian's offering have been designed to appeal to a wide range of customers visits including the business and leisure traveler or families that is visiting the Macao's attraction for the very first time.

The dining, shopping and entertainment offerings of the Parisian reflects a seamlessly managed and work experience and our ten plus years of integrated resort development and operation in Macao. The Parisian Macao will be seamlessly integrated with our other Cotai Strip properties, the Venetian Macao, the Four Seasons Macao, Plaza Casino and Sands Cotai Central, increasing the property portfolio's clinical mass in business and - leisure tourist appeal, while enhancing the total return of our Cotai Strip portfolio.

We are also advancing our plans to sell shares in a coop fashion to prospective buyers of Four Seasons-branded Apartments in the Apart-hotel on the Cotai Strip. On June 5, 2013, the latest approval in the development process was published in Macao's official gazette. The eventual sale of Apart-hotel units has always been a fundamental component of our Cotai Strip development strategy of monetization of non-core assets.

Moving on a strategic objective number three. The development of integrated resorts in new markets and geographic areas. In Asia, activity levels in Japan have increased. We are pursuing the potential for Integrated Resort development with great enthusiasm and optimism. Korea has also shown increased activity and we are looking forward to the potential development of it. We have also been investigating opportunities in other parts of the world.

With respect to Madrid, there are a variety of steps left in development process. Any investment would be subject to receipt of government approvals and the finalization of any grants and incentive package that would enable investment as well as success in a competitive tender process.

High divested interest, and pursuing low and highest value projects that will maximize shareholder returns. As the company's largest shareholder, my interests are aligned with yours.

Finally, let's review to the strategic objective number four.

The return of capital to shareholders. We have now returned nearly $4.5 billion of cash to our shareholders through dividends and stock repurchases over the last 18 months, including over $3.7 billion to Las Vegas Sands shareholders and nearly $700 million to the non-LVS shareholders of Sands China.

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

We have every intention of increasing the returned dividend at both Las Vegas Sands and Sands China in the quarters ahead as our business and cash flows continue to grow. We are also pleased that the Board of Directors of Las Vegas Sands authorized on June 05, 2013 a $2 billion stock repurchase program.

The stock repurchase program will complement our previously established recurring dividend programs at Las Vegas Sands and Sands China. They will provide another avenue to the company to return capital to shareholders.

I am pleased to report that we are able to complete the establishment of the program during the quarter to repurchase 883,000 shares of stock at an average cost of $0.52 per share, returning nearly $47 million to shareholders. We believe the repurchase program will enable the company to enhance shareholder returns in the future. In summary, we are executing on all four of our strategic objectives.

I also wanted to point out that our leadership team is doing an outstanding job across the board. With our industry leading outstanding strategic position, strong operating momentum and a disciplined and experienced leadership team we have in place to execute our strategy. I couldn't be more confident about our continued success in the future.

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

Question-and-Answer Session

Operator

(Operator Instructions). Your first question is from Shaun Kelley with Bank of America. Please go ahead with your question.

Shaun Kelley - Bank of America

Just wondering if maybe you could start with either, Rob or Sheldon giving a little bit more color on the ramp up that you are seeing at Sands Cotai Central? It seems like the VIP side is very strong there. You saw some pretty big sequential growth in mass as well, but we did notice like the hotel occupancies dipped from last quarter. So how do you see the hotel side ramping up and what you are seeing kind of out of the player behavior there that would be really helpful?

Rob Goldstein

Sure, Shaun. It's Rob. I will just discuss the gaming issue for a second. We are really pleased where SCC is going. The big driver obviously was mass tables. We grew from $30 million Q2 of 2012 to $114 million this quarter, so a terrific growth there. We are seeing obviously the VIP segment is leading our portfolio, so very positive there.

Sheldon referenced in his opening remarks like a whole percentage which is actually evident across the whole group of segments in SCC. We actually hope to adjust with that $170 million. We have always felt this is $1 billion property. We think that run rate will reach you some point I am not sure this year, but certainly in '14, so very, very pleased what's going, the cross traffic between SCC Venetian continues to build.

And, I think SCC that we have always said, it's built for the best market segment in Macao, that's in the mass market. That mass market segment is fueled by sleeping rooms. We got 6,000 keys in Venetian, 9,000 keys to Venetian and SCC. Really bright days ahead in the gaining piece of this building.

Really we are pleased especially about mass ramp there. And across the portfolio, our mass ramp grew, it went from 577 last year across all four properties to 920 this year, so I think the staggering growth in Macao continues and we are the leaders in the mass segment. We are approaching $4 billion of top line and so we are very pleased where SCC is going, very pleased with our future. I think the rooms drive it as more retail occupancy, that will help the gaming piece as well.

Shaun Kelley - Bank of America

Then I guess my follow up would be, to maybe switch gears, just on the strategic side. You did get another approval for moving ahead with the Four Seasons co-op sales. Could you just talk a little bit about possible milestones behind that? Then also what that might mean for development of the Sands or perhaps the last set of kind of the fourth tower over there at Sands Cotai Central, that would be really helpful?

Sheldon Adelson

That fourth tower is the St. Regis and that's of combination of a few hundred rooms, about 450 to 500 rooms, plus about 300 apartments. The government has informed us that once the precedent is set with the Apart-Hotel, by the way, the St. Regis we have been sitting with an approval to go forward with the St. Regis. But, since we didn't have the approval to sell the apartments on the co-op or any other scheme, we decided not to go, but we still have the building permit. So I don't know what you mean by milestones leading up to that.

Shaun Kelley - Bank of America

I guess what I am getting at is, kind of what's next can you guys begin to premarket condos at the Four Seasons right now, or do you need any additional approvals before you can do that?

Sheldon Adelson

No. We are all set. We are lining up the project management and the sales teams and we don't need any further approval in terms of line up. There were some minor things like to resolve such as how many apartments are going to be put in the rental pool or in the alternative how many apartments will be held aside to rent. Those are minor negotiating points that we have to finalize with the government. However as far as being able to sell them, we have that approval and it's been decided.

Operator

Your next question is from Joe Greff with JPMorgan. Please go ahead with your question.

Joe Greff - JPMorgan

Hello, everyone. Obviously a big topic of late for all of us on this call has been concerns about slowing macro picture Mainland China and whether or not that's going to have some sort of impact in Macao. It doesn't appear to have any impact on results in the 2Q in Macao or Singapore for that matter. Can you talk about what you are seeing more recently if there is any change in consumer behavior, any kind of impact, any changes in junket liquidity and I will keep this as broad as that and I have a follow up. Thank you.

Sheldon Adelson

Let me tell you the consumer behavior is going in the right direction as far as we are concerned. There were more people coming and spending more money. The macro view about China is not affecting the visitation to Macao. If anything, the visitation is increasing, but not if anything. I can't give you projection, but let me leave it at that. If anything, any there is impact, the visitation is increasing. But this has been going on since for nine years since 2004 since we started.

Every time some journalist decides to place something in the market writes an article typically without having the authority from the Central government to state about how many visits on an individual or how many individual IVS's, individual visit schemes. Everybody starts to scratch their head and wonder if there is anything to it. To our knowledge, if there is anything to a macro slowdown in China, it is not affecting Macao as far as we concerned. It's just the opposite of what people are suggesting.

Rob Goldstein

And to amplify Sheldon's comments, if you turn to page 11 in the investor deck. This slide illustrates SCL's year-on-year growth in the most important segment in Macao, mass table gains, SCL's growing 60% in the last year to $920 million from $577 million year a ago in this segment and the margin is still mid-40s, 45, 46, 47. It's just a staggering market and this segment is the growth engine. This segment has grown from $2 billion in 2005 to $13 billion this year in Macao.

We have 1,000 games on the floor currently, doing $10,200 per day. Upside in this segments coming from the organic growth of the Macao market, specifically in Cotai. Our ability to leverage our hotel and retail asset base in Macao and Cotai and particularly to drive much higher win per unit, we are just in a unique position to improve dramatically and see SCL's math table grow to $4 billion or $5 billion or $6 billion use ahead.

We are in a very fortunate place in a very strong market and I think the numbers speak for themselves. That slide, to me, is staggering and the profit margins equally staggering. So this is the story of Macao and the consumption on the math table just grows and grows and grows.

Shaun Kelley - Banc of America Securities - Merrill Lynch

Excellent, and then my follow up is you started buying back stock at the end of the 2Q. Have you bought anything since the quarter ended here in July? Also on this topic of share repurchase, can you review your strategy with regard repurchases? Is it more problematic consistent or is it more episodic depending on the valuation depending to movements in the stock price?

Sheldon Adelson

Fact of the matter, it's opportunistic buying. If we see the stock price down below where we think it should be, we are going to buy. But once we start to buy we don't know whether not people know we are buying or we don't know but the stock seems, as soon as we step in, the stock seems to go up. We can't state what we have done so far this quarter because that would be selected disclosure.

Operator

Your next question is from Cameron McKnight with Wells Fargo. Please go ahead with your question.

Cameron McKnight - Wells Fargo

First question, can you talk to the whole percentage in Singapore. This has been the third quarter in a row where hold has been a little bit lower than expected. We have had number of questions from folks just asking about that. So if you could address that, that will be great? Then I have the follow up.

Rob Goldstein

Sure, you are right. This is actually the fifth quarter we have been under where we would like to be at but still like to be as we opened the property, whole percentage is about 2.65 and in the aggregate, if add our competitors, the market is about 2.9. No mysteries here. We have had a lot of amazing play. We are running at a run rate of $16 billion plus for the first time ever in this year. I am very encouraged by it.

I have no concerns whatsoever. We take very large bets there. The swings are dramatic. The market is very concentrated. I have no explanation, expect in the end, the math always wins out. Across our portfolio worldwide, when you add up what we do here in Las Vegas and Macao and Singapore, numbers are just where we are expect them to be, in north of 2.85 in the rolling segment. So a total confidence in our team, total confidence that nothing untoward, very confident that at the end, math will prevail. So no concerns there at all.

Sheldon Adelson

So just like the cards don't know how much money is being bet on them. The law of averages is not impacted by anybody who is questioning whether the average were above average or below average. It always stands that the law of averages, like the law of physics, doesn't change. Over the long-term, the numbers tend to be 2.85. That's why they call it a theoretical average. To reach the average you have to have some periods below and some periods above. Then all ends up at 2.85.

Rob Goldstein

We did have a couple of exceptionally strong quarters back in late '11, early '12. We held 3.5, 3.6, but it's been a disappointing run but one of these quarter it will breakout and hold 4.2 and then it will go back to 2.85s and no concern.

Cameron McKnight - Wells Fargo

Right, got it, and then another follow up, Rob. We are hearing on the ground in Macao that some operators have been increasing the amount of credit they are extending to junket operators. Can you talked to the overall credit environment in Macao and also the VIP market there and conditions there.

Rob Goldstein

Yes, in the VIP market, the numbers speaking for themselves. The market has not been the growth engine in the past. We continue to believe it's not driven by credit. It's driven by lack of back end demand by the consumer. We are happy to extend the credit because our credit track record in Macao has been excellent.

The fact is when demanded, they were will extend the credit. I don't think it's a credit driven issue in Macao. The operators will give credit. Its demand driven by the consumer. We would be really positive about it. We are happy to participate.

We are very happy we are growing in that segment in the last couple of years but from our purposes, the VIP issue is all about consumer demand. If demand is there, we will extend the credit. Our junket partners will extend the credit. But that story has been overwhelmed by the extreme growth in the mass side of the business.

So as much as we want to keep this thing growing our junket business, our year and this quarter is dictated by the ridiculously strong returns in mass tables.

Sheldon Adelson

Our junket business is better for us than the once time junket business. But the VIP business is better for us in Singapore. One, because of the tax rates. Number two, because the junket reps themselves don't limit the amounts of bets that the players can make.

So we can accept the very large bets from millions Singapore dollars but the junket reps in Macao have too many customers and they don't want to take that risk because if everybody bets a $1 million a hand and a hand, as you probably know, unless somebody twist the cards takes about 30 to 60 seconds. So we would rather see that high-end business and fortunately there is no bets.

We are paying high commissions to the players, but the tax rates help make up for that. So we would like to see more of that business, the $1 million hand business down in Singapore but we are not doing anything to push it down there. It just happens to go there.

Operator

Your next question is Felicia Hendrix with Barclays. Please go ahead with your question.

Felicia Hendrix - Barclays

Rob, I wanted to talk about your mass table yields in Macao a bit. You have been increasing the number of mass tables and your mass table win per day has been going up. In the quarter, it was flattish, which is pretty impressive. So I just wanted you to speak to what you are doing to drive those strong results? And then I have a follow up.

Rob Goldstein

It is flattish in the win per unit basis but in the aggregate it's growing up because obviously we have more tables on the floor. It's pretty simple. It's yield management. We are looking at our junket yield versus mass table yield. The story, as you know, Felicia, this industry just doesn't have any place where you can make $10,000, $11,000, $12,000 win per unit per day. It's beyond comprehension for me.

When I go to Macao, it's shockingly strong and growing across the entire market. So we are simply, as managers, looking to get the most yield we can at the table. There is always junket performance, in part will stay will junket. It's an important segment but the reason we are moving more tables to the mass floor is evident to you by looking at our numbers.

We increased over 1,000 mass tables. We may go 1,100 mass tables. We will just riding the wave. When you realize what's happening in mass tables, to think about the fact that wins per units in the market is growing to as high as $12,000, $13,000 at 45% margin. How do you not do or don't?

It's the only intelligent thing we do as managers is not to yield up. We do it in Pennsylvania. We try to do it Las Vegas where it's possible. But no place is like Macao. As you all know, it's just extraordinary and we are very fortunate. Because, we may be somewhat over represent one segment and we will adjust accordingly, so I am not concerned about our win per unit.

You are right. It grew 10 to 10.1, but the aggregate win is up significantly. We keep adding more and we will keep doing it, because we believe that mass table business as long as it's 20% 30% growth, we are the biggest beneficiaries. The primary growth resides on Cotai. That's our biggest representation of tables. When you see the kind of numbers we are getting out of Venetian SCC, it's very, very gratifying, so that's our direction as managers want to yield up we will keep doing that.

Felicia Hendrix - Barclays

Great. Then just moving then to the slot side, kind of similar conversation for the numbers of the slots in ETGs have been declining and the slot win per day as well, so as long if could discuss that?

Rob Goldstein

Yes. Exactly. We keep changing the mix there and we are big fans of slot ETG. I mean, the margins are breathtaking, 50-plus percent. I would like to see that business grow across the board, not just for our company, but Macao is somewhat flattish and that growth is somewhat surprising to me. But I think, as you know, as you yield up on mass table games, you are pushing a segment of the market that a consumer can't participate in. I think the real value to our slot ETG program, especially ETG is that it offers a place for the customers, not betting 2,000 Hong Kong that were placed at the table so to speak.

So we are complete believers and we have. I think, one of the things we did very well, when Sheldon built, Indonesian people were shocked with the sheer size of the building. But in the end, it was a great trade, because that real estate now which I felt that was waste of space, can now deploy a massive ETG slot strategy enables us, to be honest with you, a lot of customers are pushed out of market and table yields are pushed up, the number is so high on the minimum bet that looking for alternative and that's what ETGs do.

I am surprised, they are not growing faster in our portfolio, but we have a lot of confidence. It's a great segment. I still believe that they will do $1 billion a slot ETG in the aggregate across our portfolio, so not as exciting as mass tables for this quarter, but still a very nice segment to be in and one we are very committed to.

Felicia Hendrix - Barclays

Great. Thanks a lot.

Operator

Your next question is from Carlo Santarelli with Deutsche Bank. Please go ahead with your question.

Carlo Santarelli - Deutsche Bank

Guys, good afternoon. Just as you look at kind of the cadence of share in the market, as the mass market continues to grow, obviously your presence in that market should be a net benefit with respect to share. But over the last few quarters here, as Sands Cotai Central ramped, we have kind of seen a flat line at about 21% and I know you guys are trying to optimize that. Is there anything here on the come in the future where you think there is some low-hanging fruit and opportunity to start to take a bigger share of the wallet over there?

Rob Goldstein

Yes, I do. I think we are in the whole position to just that. If you look at our ramp this quarter, you think about growing some five something, nine something year-on-year. In what business the wallet grows 60% or 45% margin? Yet, to your point Carlo, we are exactly positioned to do that, because we are on Cotai. I mean, we developed Cotai with the idea it's a mass market machine, hotel rooms, fabulous retail opportunities.

So, to your point, I think we have a lot of growth ahead of us. I think $4 billion, $5 billion, $6 billion. Who knows how high it goes, but we are positioned very well, because we have the tables, we have the sleeping rooms, we have the retail. We have the whole show and no reason why we think we can't keep yielding up materially.

I think SCC is going to be a big surprise while people as it goes beyond a $1 billion of annualized EBITDA. I think, Venetian has upside potential, we struggled at the Four Season to get there we are going to get there in terms of the right yield per table, but our story is about ridiculous growth in mass tables. It's primary a Cotai story. We are the biggest Cotai provider.

So I think our story is just beginning. We are in the infancy of this growth. This is not the story. It's just start to be told now. Cotai this never could have happened in our Cotai. You don't have the physical space to build these big places you are stalking the pencil. The vision here a decade ago to build Cotai is now really being fulfilled. The vision is really starting to occur where I think our properties are going to grow and grow in this critical segment.

Sheldon Adelson

Carlo, just to clarify what Rob said. You are talking about mass the whole way and we have gone a year from 24.3% of the mass market per table to 29.9%, so that's where we were focused on, not the revenue number that includes 10%, 11% to 12% margin business. We are always going to be focused on that piece.

Rob Goldstein

You got to remember that SJM, that maintains the leadership and gross gaming revenue has 19 what I have called sublicense casinos. 19! So, they are each picking up a piece of business and they are just sub licenses that have been there for many years that the government allowed Stanley Ho and now SJM to sublicense their license and their ability to operate casinos to 19, 20 of the people and yet they are owning 2 or 3 percentage points ahead of us. We are operating five casinos. If you separate 5 and 6, and the Plaza, the Venetian and the Sands, so there is only five. They are operating over 20 some odd casinos.

Carlo Santarelli - Deutsche Bank

Yes. Sure. That's not forgotten. So, thank you guys. That's really helpful. Then just quickly on the Four Seasons. I know Rob you mentioned it a little bit there. Obviously the mass hold was lot lower this quarter than it has been running, but on better drop in volume. Is there anything structurally there that changed maybe that would make us think about it differently going forward?

Rob Goldstein

No. Nothing at all. Let's not go into the whole cage drop issue. It's not we are talking about, but the Four Season is work in progress. We are not happy where we are at right now, but we can do a lot better. We repositioned that. We are in transition period. I think, Carlo, I think we all know that. As we move more into this premium mass business, I think numbers will get better and whole percentage will be what's going to be and we know with that kind of volume whole percentage pretty much stays flattish when it's all said and done.

Carlo Santarelli - Deutsche Bank

Thanks guys. Thank you

Sheldon Adelson

I think it's 300 apartments at the four seasons. That will bring us a lot of direct premium or premium direct at the high end, because anybody spending several million dollars from it is going to play the Four Seasons. They will be direct play or they will be premium mass, so that's one element that's going to contribute to an increased growth and increased EBITDA number.

Carlo Santarelli - Deutsche Bank

Appreciate the color guys, thank you.

Sheldon Adelson

I would just like to emphasize, we have never been an aggregate of gross gaming revenue. Now, I know you have to start somewhere, but everybody is, you got to start off at the top line somewhere, but we went up with the bottom line is the most important thing. And, every single quarter since 2004, we have done more than anybody else in Macao, and we continue to do more and nobody is even close to us.

You could bring in a lot of these guys that are doing a lot of business, not only doing it because they are trying to be competitive with us and they are trying to increase their gross gaming revenue, so they think that that's the bottom line. I never saw anybody about to deposit in the bank, gross gaming revenue, only net profit. That teller doesn't take (Inaudible).

Operator

Your next question is from Steven Kent.

Sheldon Adelson

He didn't listen to me.

Rob Goldstein

Hey, Steve.

Sheldon Adelson

Carlo, I am going to get insulted.

Operator

Mr. Kent, your line is open.

Steven Kent - Goldman Sachs

Yes. So, two quick questions. One, as much as people focus on the whole percentage for Singapore, the volumes have been very, very strong especially at the high end. I was just wondering if you could give us some indications as to what's driving maybe some of that incremental volume, because at point there was a question about that.

Also, on that same, on Singapore, the slot play also volume was very, very high and whether there are some early thoughts from that that might be part of your strategy in other parts of the world? Then one final thing, CFO search, if you could just give us an update on that?

Sheldon Adelson

I will just tell you that the fact that we are taken up to a $1 million bet is exhibiting to a very good top line rolling number. That doesn't mean every bet is $1 million.. Some guys just want to have the right to bet them, if they want to bet. It's a matter of ego. They boast to their friends. Oh, I can play as many as hand if I want to. The CFO search, we have retained, I think an executive search firm and we are looking, so far as I know. Mike is involved with them. Mike?

Michael Leven

Yes, I am here. Can you hear me?

Sheldon Adelson

Yes, we can hear great. Did you hear the question?

Michael Leven

Can you explain please?

Sheldon Adelson

CFO?

Michael Leven

Yes, we are in the process of the final selection of search. We have done all our specifications where we are doing our alternatives and doing specific situations as to how the job should be really put together. In the meantime, our team is doing very well and as you Ken is still there. So we are in good shape there. We expect that we will have something happening in the next three or four months.

Steven Kent - Goldman Sachs

Sheldon, just on the Singapore, the amount of volume there. Besides the propensity for people to make big bets, what I guess I was asking was, were you seeing more people from different parts of the world because, again, that was one of the strategic focuses to going into deeper into Southeast Asia to bring more and more customers into Singapore. Are you starting to see that?

Rob Goldstein

Hi, Steve. It's Rob. Frankly, the answer is that it remains the same sources. That being, we have always said, it's concentrated. It's certainly mainly in China. It is the primary driver, Hong Kong, while still bringing PRs, primary residents in Singapore are important as well, Indonesia.

The region hasn't changed all that. We still see some business in Tokyo and Korea. But the principal drivers in the last two quarters have been a, Mainland China/Hong Kong, b, primary residents living in Singapore or maybe Chinese nationals and then c, Indonesia. Again this remains a highly concentrated market. I don't think you will see a whole lot of difference in terms of previous quarters and I think it will remain highly concentrated and hopefully we will growth it.

We are pleased to see ourselves getting into the $60 billion annualized run rate area. But the challenges remain the same. Sheldon referenced the high nature of the betting. We take the highest bets in the world there. Our team is committed to keep trying. But I can't tell you if something would change from the last year fundamentally in terms of that.

You referenced to slot ETG. I think you know the story there. Everyone knows that the government is more restrictive vis-à-vis Singaporean local play. We are outsourcing. I should say, we are growing our business outside of Singapore, both premium mass, primarily table, slot to a lesser degree. The slots have been challenging because primarily slot business in any market is regional. It depends on the region we are in.

Less visitation by Singaporeans has been more than offset by increased visitation by non-Singaporeans, Indonesians, Malaysians, Chinese, et cetera have helped our business there. We remain confident that there is growth ahead of us in the win unit per days and the mass table non-rolling as well as slot ETG. But we are kind of flattish this quarter.

Overall the blends around 4 to 5 remain unchanged. We would love to get back to a our ambition two years ago was to approach 5 million a day we haven't seen growth Q-on-Q. But we are lacking last year's second quarter of 12 to pull back by the government. So we grow our business outside of Singapore, remain confident there is some growth there as well.

Operator

Your next question is from Thomas Allen with Morgan Stanley.

Thomas Allen - Morgan Stanley

You talked earlier about the improvement in visitation to Macao that's played out past few months. What's your view on what's diving the increase and do you think it's sustainable? There appears to have been a number of infrastructure improvements. For the past couple of months, it also had easy comps. So just want to hear your thoughts on it. Thank you.

Sheldon Adelson

I will start off with the comments on infrastructure. There are more high speed trains coming from Guangzhou and there is more and more trains that are coming from the North from Fujian Province. The further out the tactical reach with the high-speed rails, the more visitation, again, and there is more and more infrastructure coming in.

They will be able to move around with the light rail system a lot faster. I understand that, well, we were talking at length about this yesterday. Once the bridge, the Hong Kong–Zhuhai–Macao Bridge opens in three years, hopefully earlier, it's going to be Katie bar the door.

It's going to be incredible numbers of visitation, because instead of having just the Macao airport, you get the Hong Kong airport that's already handling 50 million, give or take, passengers a year, you are getting. So if somebody says, okay, I can either go to Hong Kong Island which takes 45 minutes or I go to Macao which takes 20 to 25 minutes.

So once I leave the Airport, I go to the right, I am going to Macao. I go left, I am going to Hong Kong. When that opens, its like I said, Katie bar the door. It's going to be incredible. It's the infrastructure that is holding up a significant increase in potential new tenants.

Thomas Allen - Morgan Stanley

Then, I mean, last year there were around 28 million visitors to the market and you said the past two quarters you had around 14 million visitors to your Cotai properties. Do you have numbers around where you think that will go maybe in 2016 when the new supply opens? Thanks.

Sheldon Adelson

I don't think that anybody could say. It depends how many trains they put on the high speed rails. How far out they are going to go. The people can travel what used to be eight hours is now two or three hours. And people go for one night stays in Macao, instead of going eight hours in each direction and take quite a while to travel.

I don't think anybody could read that crystal ball. But one thing I feel very confident and that's why we are building another luxury. We are building The Parisian to over 3,000 homes. Because I don't see any reason to limit the number of people that are visiting.

We are talking about Macao having two airports. The Macao Airport and the Hong Kong Airport. As a matter of fact, it would be just as quicker to get into Macao than Hong Kong. They say that they are talking about 45 million visitors, I think, to Hong Kong and we had 28 million visitors last year. But based upon our comps and our properties, on a same store basis, we are looking at significant increases in attendance. I can't get into much further but when I said significant, it's more than 5% or 10%. A lot more.

Operator

Your next question is from Harry Curtis with Nomura Securities. Please go ahead with your question.

Harry Curtis - Nomura Securities

Can you give us any updated thoughts on development in Japan or casino legislation in Japan given the LDP's recent victory.

Sheldon Adelson

Listen, we have been lobbing there for five years. We have had a very strong presence there. We know everything that's going on. The restoration party headed up by Hashimoto in Osaka who was ultimately Governor of the State of Osaka and Mayor of the city of Osaka, going back and forth and Ishihara the former Mayor of the Tokyo Metropolitan Government and/or just Tokyo. It's kind of like the city and the states, like New York, New York.

They wanted to submit the bill in June but they didn't have the clout. They didn't have the number of votes to carry it. Right now it appears as though November is the anticipated date that the bill will be submitted. The problem with the bill was good news or bad news. The good news is, they are finally going to submit the bill to legalize focusing on gaming. Secondly, the bad news is, it is going to take a couple of years. The other guys wanted to do it but didn't have women on it. Now it looks as though two years is the outside limit. It could get done a lot sooner. It's not that the various candidate cities have to wait two years, but it has to be done within two years, so we don't have any more inside information.

Harry Curtis - Nomura Securities

Okay. Then let's move onto the second, which is kind of the genesis of LVS Vegas. Most of the metrics there were better. Slot table and RevPAR. Is there a better tone there, or do you think it's a head fake?

Rob Goldstein

Good quarter, bud.

Sheldon Adelson

I don't know. Listen, as long as President Obama doesn't say, you can't take taxypayer’s money and go to the Super Bowl, to Las Vegas. We stand a chance of going back up again. I don't know if that if anybody could say that's had a significant turn for the better or significant turn for the worst. I think it's just noted.

Sheldon Adelson

Harry, I think you know it's a challenging place in terms of it's got to grow 80 RF to improve. Obviously, non-gaming side, that's going to be the challenge this time and that will come first out of the convention segment. We think that will look open for a turn there in '14.

On the gaming side, truth is we are very dependent on high end premium Asian players who come here. Although we participated, we have done very well in that segment. We are really happy doing it. The entire town doesn't share equally in that. On the gaming side, slot mass tables continue to be mediocre. The premium segment is very strong on the Asian side, but we have to tell Las Vegas today I wouldn't call the head fake as much as it's just a challenging market that will slowly get better, but I would look for rapid improvements next few quarters.

Sheldon Adelson

I think the issue, Harry, is that there are two companies that own about 20-some odd properties on the Strip on the strip or just off the Strip, and they really controlled the run rates. We had, during our growth here, so first decade. We had the highest grossing hotel room income for almost even for a small-to-medium size and the Venetian proved itself as the most profitable hotel ever.

Now, we have two major holding operating companies. Seasons and MGM, both of which have significant debt and they don't have a big way to pay them off. Season's just got $22 billion, $24 billion. I guess their income just barely pays their debt service, so maybe it (inaudible). So they are trying to fill up all their rooms and get all bodies in to play the slots and to play in their casino.

I don't necessarily blame them. I suppose if I were in that position, I might do the same thing. They need bodies in their casinos and they need bodies in their beds and the only way to get them is to buy the business by reducing the price and that brings down, my friend Steve and I wins and our a higher end properties, where they are either cutting us by large amounts. Of course, they don't have the quality. Well the Bellagio was good property.

They don't have the numbers of rooms that we have at the high end of the market, so obviously if people want to bit of property. They will pay more for us. But they are trying to the second, that that we hear is their room pricing and trying reduce fee, trying to fill up their properties, so they could do something, that will pay off their excessive debt and they don't have the business model, we do, to sell off non-core assets and pay down all our debt.

Vis-à-vis totally debt free, so that is the opportunity that we have and others don’t have and as long as they are in that position. They’re going to keep the run rates down. Hopefully they get out of it.

Daniel Briggs

Operator, we have time for one more question.

Operator

Yes, sir. Your final question today is from Ian Weissman with ISI Group. Please go ahead with your question.

Ian Weissman - ISI Group

Yes. Good afternoon. You guys gave timing on the opening of the Parisian. Was there any update on the table allocation and any concern about competing with four or five other projects going at the same time and labor shortages and getting those projects built on time?

Sheldon Adelson

Well, the government would not have given building permit to shift. They didn't think that they could allow the labor. And, right now there is been no change in our estimate. As a matter of fact, we moved a little fast because we are practicing to follow on trades practice like you do in building high rises. As soon you are finishd, the stroke, you come in with the MEP and you go through the flows et cetera, et cetera, and then you have one trade following the other, sequentially.

We are doing that in the pilings. We have both board pilings and driven pilings, and what we are doing is taking corner of the pilings and we are putting the piling caps on as each of the pilings are completed. So, we are starting off the server foundation. You put the pile caps on and then you start the structure on top of that, so we are taking advantage of the opportunities to keep the fire labor that we had and trying to get it done even quicker.

Ian Weissman - ISI Group

That's helpful.

Sheldon Adelson

There is no news on cable allocation. We have always been, every company I have ever run in my lifetime, I have always been competitive. And, I could touch wood except my table is not wooden. But it's now a stone.

Ian Weissman - ISI Group

That's helpful. One last question. Just given the enormous success of the mall at the Marina Bay Sands, and it's a sort of in the early stages of the cycle of the mall. Maybe you could talk a little bit about the re-leasing spreads as the leases are coming due or you are turning tenants over. What type of line up lift that you are you getting?

Sheldon Adelson

I don't think I can answer that. I am not sure. Last time I have talked to our Head of Leasing, he was optimistic that, because the people who wanted more space, they want multi-level space. Like she now started up with two or three floors and put large identification, large signage and there are other tenants doing that, prouder and the other tenants.

The Crystal Palace, or Crystal Pavilions was moving the ton is doing like over a $120 million sales, $120 million to $140 million. It's one of their best shops in the entire chain. So, our retail is going very well. I am certain that, look, we are gaining a base rent plus percentages and there are other developers that get base rent plus a 2 or 3 percentage on top of it, but they charge very high bets.

We charge up to 18 percentage rate, so whether we get it new or we get it by increasing upon when leases expire. It doesn't make an average, because we are getting the percentage. It's we are doing very well. I am very happy we could sell them off. Look, their tone was the entire cost not just the mortgage.

Ian Weissman - ISI Group

Okay, Thank you very much.

Operator

Ladies and gentlemen, that does conclude today's conference call. Thank you for your participation and you may now disconnect.

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