Las Vegas Sands' (LVS) CEO Sheldon Adelson on Q4 2015 Results - Earnings Call Transcript

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Start Time: 16:30

End Time: 17:16

Las Vegas Sands Corp. (NYSE:LVS)

Q4 2015 Earnings Conference Call

January 27, 2016, 16:30 PM ET

Executives

Sheldon G. Adelson - Chairman and CEO

Robert G. Goldstein - President and COO

Patrick Dumont - SVP Finance and Strategy

Daniel Briggs - SVP of IR

Analysts

Joe Greff - JPMorgan

Felicia Hendrix - Barclays Capital

Chris Jones - Union Gaming Group

Shaun Kelley - Bank of America Merrill Lynch

Carlo Santarelli - Deutsche Bank

Robin Farley - UBS

Operator

Good afternoon. My name is Chris and I’ll be your conference operator today. At this time, I’d like to welcome everyone to the Las Vegas Sands Corporation’s Fourth Quarter 2015 Earnings Conference Call led by Mr. Daniel Briggs, Senior Vice President of Investor Relations. You may begin your conference, sir.

Daniel Briggs

Thank you, Chris. Joining me today on the call are Sheldon Adelson, our Chairman and Chief Executive Officer; Rob Goldstein, our President and Chief Operating Officer; and Patrick Dumont, our Senior Vice President of Finance and Strategy.

Before I turn the call over to Mr. Adelson, please let me remind you that today's conference call will contain forward-looking statements that we're making under the Safe Harbor provisions of Federal Security 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-normalized adjusted net income, adjusted diluted EPS and hold-normalized adjusted diluted EPS and adjusted property EBITDA and hold-normalized adjusted property EBITDA and constant currency results, all of which are 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 this presentation is being recorded. We also want to inform you that we have posted supplementary earnings slides on our Investor Relations Web site for your use. We may refer to those slides during the Q&A portion of the call.

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

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

Sheldon G. Adelson

Good afternoon, everyone, and thank you for joining us today and thank you for the introduction, Dan. I am pleased we continue to execute our strategic objectives during the quarter and despite the continuing challenges in the Macao market, we again delivered a strong set of financial results with companywide hold-normalized EBITDA reaching $1.70 billion.

For full year 2015 and against a backdrop of 34% decline in Macao’s gross gaming revenue, we generated companywide EBITDA of $4,200,000,000. This industry leading cash generation reflects both the strength of our business model and the geographic diversity of our cash flows, and underpins our balance sheet strength.

Accordingly, we continue to return excess cash to shareholders while maintaining our ability to invest in new development opportunities. Our unique MICE-based integrated resort business model positively differentiates us from our competitors, in terms of both financial performance and economic contribution to our host jurisdictions.

In Macao, our adjusted property EBITDA was up 7% quarter-on-quarter enabling us to finish 2015 with our best quarterly EBITDA for the year, despite the arrival of new competition. Our quarter four EBITDA margin in Macao improved both year-on-year and quarter-on-quarter.

In Singapore, Marina Bay Sands delivered another strong result on a constant currency basis and excluding the property tax refund. In the fourth quarter of 2014, Marina Bay Sands hold-normalized EBITDA was up 12% as mass win-per-day was up 6% and reached another quarterly record when measured in Singapore dollars.

The Venetian Macau is today the iconic, must-see integrated resort destination in Macau welcoming over 30 million visitors annually and when we calculate all the visitation to all our properties, we have an average of 2 to 1 visitations from 30 million visitors. So we last year welcomed 61 million or 62 million visitors. That’s an average of two visits to any one of our properties for each visitor.

Despite all the headwinds and challenges of 2015, the Venetian Macau produced $1.1 billion of EBITDA for the year and was the only Macau property to exceed 1 billion plus in EBITDA. Indeed, the only other integrated resort property in the world that earned more than $1 billion in EBITDA for 2015 is at our Marina Bay Sands.

I’ve not a shadow of doubt that the Parisian, which is to open later this year, will replicate the success in the Venetian as another theme iconic, must-see integrated resort destination for Macau’s visitors.

In Macau, our share of EBITDA in the six operated markets has continued to increase and around 37% in the first nine months of 2015, up from 34% in 2014. In fact, in quarter three, our EBITDA share climbed to 38%.

In Singapore, our share of EBITDA of the duopoly market increased to 68% in the first nine months of 2015, up from 65% in 2014. Because of industry leading investments in Macau and Singapore, we are unique in the absolute scale of our cash flow as well as our dominant share of the industry’s cash flow.

Scale, diversity and critical mass allows us to outperform our competitors. This was my plan when I conceived of the Cotai Strip. There was in one of the clippings I read this week, it said that the visitation or the GGR in Cotai, which is my baby, was 60% and the peninsula was 40% when it used to be virtually 100% to the peninsula.

A retail mall portfolio is another unique differentiator. For 2015, the operating profit of our malls in Macau and Singapore reached $0.5 billion. I’m pleased to highlight that despite the downturn in luxury retail in Greater China, our Macau mall revenue still grew by 4% in 2015.

We are also clearly differentiated by the strength of our balance sheet. The balance sheet strength at 1.7 times net debt to EBITDA at year end allows us to stay fully committed to our development plans while continuing to return excess capital to shareholders. Again, this is unique in our industry.

Now let me give you some additional highlights of our results in Macau for the quarter. For quarter four, Sands China EBITDA was $581 million, up 7% over the prior quarter. On a hold-normalized basis, EBITDA was $555 million, up 3% over prior quarter.

We do see stabilization in gaming revenue trends. In the mass gaming segment, our non-rolling drop was down just 1% over the prior quarter, despite new competition that has predominately focused on the mass market. Our VIP rolling volumes were actually up 5% over the prior quarter outperforming the 2% sequential increase in the Macau market.

We continue to benefit from the scale of our hotel room inventory. In a market with peak periods, the weekends and holidays matter more than ever before and where mass-market customers will generate the lion's share of future revenue and profit growth. We believe our capacity advantage will be further amplified. Weekends and public holidays, which represent about one-third of calendar days, generate almost half of our EBITDA.

I was in Macau in mid-December to officiate at the opening of the St. Regis hotel. Despite adding 400 keys to our portfolio, our hotels were running at virtually full occupancy during the entire Christmas and Western New Year period. More importantly, the impact on our premium mass gaming revenue in the Himalaya casino at Sands Cotai Central has been very positive.

Our win-per-unit in Dragon's Palace, the high limit area in Himalaya is running at about $16,000 since the St. Regis opening, an increase of over 60% when compared to the two months prior to the hotel opening. We will continue to make investments in Sands Cotai Central.

In addition to the opening of the St. Regis hotel, we will also be expanding the retail mall in the Northwest corner of Sands Cotai Central and will open both Planet J and the Monkey King Theatre Show during the course of 2016. When Planet J is launched, it will be a one-of-a-kind attraction drawing families from across the region and beyond.

We are also planning to connect a Parisian to Sands Cotai Central with an air-conditioned walkover bridge equipped with airport style moving sidewalks. In respect to cost efficiencies, we achieved approximately $250 million of savings in 2015 well in excess of our $200 million goal.

Hold-normalized EBITDA margin in Macau improved by 130 basis points to 34.7% primarily reflecting cost efficiencies. I’m pleased that since quarter one of 2015 we have been able to maintain high levels of market shares despite new competition while controlling costs and increasing labor productivity. We believe margin can continue to expand in the future and in particular as the Parisian opens. Rob will elaborate further in his discussion later.

With the completion of the Parisian, we will have almost 13,000 hotel rooms in four interconnected hotels, over 840 stores across four shopping malls with the potential to add several hundred more stores in future development phases subject to government approval, 2 million square feet of meeting and exhibition space and four performance and event venues including our Venetian CotaiArena, which can be utilized either for our MICE business or major entertainment events.

Business and leisure visitors to Macau will be able to enjoy all of this and more under one roof in one destination. In order to go to 13,000 hotel rooms, all these retail malls, all the individual stores, you won’t have to leave the building. You’ll be connected with air-conditioned pedestrian walkways, a one-of-a-kind in the world. I believe this will help to increase the length of stay in Macau as well as reduce overcrowding issues in the traditional tourism hotspots in Macau.

I’m encouraged that based on the latest government statistics, average length of stay for overnight visitors to Macau actually increased in 2015 from 1.9 nights to 2.1 nights. I believe this will further increase as we complete the next stage of our development on the Cotai Strip.

We remain fully committed to playing the pioneering role in Macau’s transformation into Asia’s leading business and leisure tourism destination. Our track record in being transformative pioneers in MICE, retail, and entertainment speaks for itself. And no less important is the decade-long effort we have made in developing to promoting the local talent that is necessary to operate and grow our business over the long term. In 2004, only 7% of 900 or so managerial staff were locals. Today, 86% of our 2,700 or so managerial staff are locals.

In summary, we regard it as a privilege to contribute to Macau’s success in realizing its objectives of diversifying its economy, supporting the growth of local businesses, providing meaningful career development opportunities for its citizens and reaching its full potential as Asia's leading business and leisure tourism destination. We have steadfast confidence in both our and Macau’s future success.

Now moving on to Marina Bay Sands in Singapore. We delivered another strong quarter at Marina Bay Sands, which despite the impact of the stronger U.S. dollar generated hold-normalized EBITDA of $375 million. As I mentioned earlier, on a constant currency basis and including the property tax refund, we received in last year’s fourth quarter a hold-normalized EBITDA increased 12%.

Mass win-per-day was $4.6 million. When adjusted for the currency effect, our mass win-per-day was up by 6% year-on-year resulting in our best-ever quarter in mass gaming revenues when measured in Singapore dollars. That strong performance was principally driven by the successful execution of our strategy to bring foreign premium mass customers to Singapore.

Now on to my favorite subject, the return of capital to shareholders, yay dividends. We announced last quarter that the Las Vegas Sands' Board of Directors has approved a 10.8% increase in our recurring dividend program for the 2016 calendar year to $2.88 for the year or $0.72 per quarter.

We remain committed to maintaining our recurring dividend programs at both Las Vegas and Sands China, and we remain committed to increasing those recurring dividends in the future as our cash flows grow. At the same time, we remain optimistic in returning excess capital via a share repurchase program.

We bought back $60 million of stock in the most recent quarter. We look forward to continuing to utilize the stock buyback program to return excess capital to shareholders and to enhance long-term shareholder returns.

Our industry-leading cash flows, geographic diversity and balance sheet strength enable us to continue these recurring dividend and stock repurchase programs while retaining ample financial flexibility to invest for future growth and pursue new development opportunities.

Thanks again for joining us on the call today, and now we’ll take questions.

Question-and-Answer Session

Operator

[Operator Instructions]. Your first question comes from the line of Joe Greff from JPMorgan. Your line is open.

Joe Greff

Good afternoon, everybody. Sheldon, in your prepared remarks you referenced that you do see stabilization in the mass segment. Can you talk about how you define stabilization, how you’re looking at or what specifically you’re looking at to gauge whether there’s stabilization or not in the fourth quarter and in the 1Q? And then I have a quick follow up. Thank you.

Sheldon G. Adelson

Well, if you – look, it’s just 70 years of experience that I have in business. So, after I made that verbal prognostication, which very hard to do prognostications particularly of the future. And I said to the inquirer, the personals not to the newspaper but to the person who was asking questions of me that I thought we had either hit bottom in the mass market or we are bottoming out. Ever since I said I’ve been reading the issues, I’m been reading from analyst reports and from other Sands China reports that I get daily, other clippings that people are starting to believe that and some of the numbers put out and experienced through December and January indicate to me that that’s the case. It’s not the case with every operator, every one of the six, it is the case with us.

Joe Greff

Okay, great. And then Rob, can you just talk about your outlook for Las Vegas? I know it means less to you than Singapore or Macau, but I guess our view on Las Vegas right now it’s a pretty good environment for room RevPAR growth and non-gaming spend. I guess maybe can you share with us what you’re seeing on the gaming side particularly given some of the recent turmoil in the equity markets?

Robert G. Goldstein

Running Las Vegas, Joe, is – I agree with you, the direction is positive. It’s an ADR RevPAR story more than a gaming story. We have 7,100 keys right now in this environment and we think we can do over $400 million here annually if the markets hold up. All the segments are performing well, the FIT wholesale and I think it’s been a strong year for the lodging side. Gaming is a mixed bag. We are very pleased with our mass slot and table business in the last quarter. We’re seeing softness in the high end premium because it emanates from China and Asia. My view is the market in Las Vegas feels good, feels favorable and it’s a RevPAR ADR lodging story more than anything else and visitation keeps climbing. I think Vegas is doing sale for too long and perhaps the market is responding favorably to the price – the price movement is in the right direction and good for everybody and we’re certainly participating. So we’re on line with you on that, we agree.

Joe Greff

Great. Thanks, guys. Good job.

Operator

Your next question comes from the line of Felicia Hendrix from Barclays. Your line is open.

Felicia Hendrix

Hi. Good afternoon. Thanks for taking my question. Rob, hi.

Robert G. Goldstein

Hi, Felicia, how are you?

Felicia Hendrix

Great. On the Parisian, you’ve now seen two properties opened in the market, neither have moved the needle in terms of the impact to the market and you guys are obviously excited about the opening of your property. So I’m just wondering as you have observed the performance of both properties, what learnings if any can you apply to the Parisian? And also I think there’s been recent headlines that Win Palace might be delayed past June. Wondering if that could have any impact on your opening date for the Parisian?

Robert G. Goldstein

Sheldon will take that.

Sheldon G. Adelson

Yes. I’ve answered this question in previous earning calls that I don’t want to tell people what mistakes they’ve made because in case they expand, I don’t want my competitors to correct it. So all I could say is we think we’re doing it right and if they’re not going to expand like we will, then maybe they know something we don’t know or maybe they don’t know something that we do know.

Felicia Hendrix

Maybe I can rephrase. In your prepared remarks you said Rob was going to touch more upon some of the exciting things that you were thinking about the Parisian, so maybe Rob could touch on that.

Sheldon G. Adelson

Was it something I said?

Felicia Hendrix

You did. In your prepared remarks, you said – you were talking about the Parisian and then you said Rob will have more to touch upon that later.

Sheldon G. Adelson

I said that.

Felicia Hendrix

So, Rob?

Robert G. Goldstein

Yes, we see it pretty simple. I was there last week and without commenting on other properties, the Parisian is unique. It emulates the theme approach of the Venetian, which as Shell alluded to was a $1 billion property. The Venetian might be the greatest return on invested capital in this industry. And the fact is we think being on Cotai has a mass product with the kind of elements and attractions that I think will appeal to mass Chinese visitors. I think it is unique. I think when you walk on the floor as I did and you see the room product and the mass product we’ve created there, it’s pretty special. I’d be really surprised if the Parisian doesn’t do very, very well out of the gate. It’s also on Cotai, which is our big positive as the migration moves from the peninsula to Cotai, it’s got that built-in advantage of having that. And I just think we have the ability with a theme product, with our margin focus, with our ability to be on Cotai will be 13,000 sleeping rooms on Cotai. The Parisian is part of the family of success on Cotai that I think will be very strong. But again, I think the physical product, when you walk through it and you see that Parisian look and feel, it feels lot like another version of Venetian which I think is an inherent advantage. It can’t be copied. So we feel very bullish about it. And with the opening of Win and Parisian next year that migration of revenue from peninsula to Cotai continues. So, yes, we feel very good about it and that’s our take. You also mentioned the possible Win delay. I don’t know any more than you do about the timing of Win Palace, so I think you have to ask the folks at Win about that. I just don’t know any more than I’ve read in the clippings. It sounds like they’re still shooting for a summer opening but I don’t know --

Felicia Hendrix

No, I was wondering if they were delayed if it would affect your opening timing.

Robert G. Goldstein

No. We want to open as soon as we can. We believe the product will do very well, the sooner the better and it won’t delay our opening at all. We plan to be open as soon as we can. If that’s September, October, whenever it is, we’ll open the doors.

Felicia Hendrix

Okay. And then you saved more than you expected this year or last year in 2015. How should we think about cost savings in 2016?

Robert G. Goldstein

We’ll keep trying but I think the bulk of the cost savings are there for you to see. I’m not sure where else we can – we can continue to be judicious about spend, we can look at all the areas from marketing, entertainment, payroll, gaming reinvestment OpEx, non-gaming OpEx. And obviously everything is on the table but we did 250 all-in this year and we just want to keep moving in that direction. But we are hoping for a growth in gaming revenues to make it best challenging on the cost side. So we feel very good what the teams achieved this year and we’ll just keep looking for more. But again the lion’s share is there.

Felicia Hendrix

Okay, great. Thanks so much.

Robert G. Goldstein

Sure.

Operator

Your next question comes from the line of Chris Jones from Union Gaming. Your line is open.

Chris Jones

Excellent. Thank you for taking my question. First, it’s been about kind of the 10-year mark on Marina Bay Sands. I was wondering if you could comment about what your plans are for the Marina Bay Sands mall at this point.

Robert G. Goldstein

You’re ahead of us, Chris. It was opened in '10, so we’re on our sixth year of operation there.

Chris Jones

Okay.

Sheldon G. Adelson

Are you talking about 10 years from the time the license was granted?

Chris Jones

Right, precisely.

Robert G. Goldstein

Well, we’re six years into operation and I think the mall numbers there just keep getting better. We’re very, very pleased with how it’s performed. On a currency adjustment basis, it’s up again and about 7% both in profit and sale. So feel really bullish. I was there last week and the mall has pretty much been re-merchandized by our retail team in a very favorable way. I think there’s some softness in the Singapore retail market but we’re not feeling it. Both our luxury and our mass sales are up and feel very good about it. And it just keeps getting better and that’s our take on Singapore retail.

Chris Jones

And then just my quick follow up as it relates to just development and given that Japan is delayed a little bit, are [indiscernible] what are you guys thinking about other development beyond that, whether it be South America, Brazil or back in the United States in New Jersey? Any comments there? Thank you.

Sheldon G. Adelson

Can I finish on what Rob said?

Chris Jones

Okay.

Sheldon G. Adelson

Orchard Road according to the clippings was down across the board and Marina Bay Sands – the shops at Marina Bay Sands was up, were 100% rented and notwithstanding that the most popular street in all of Asia, Orchard Road in Singapore went down, the shops at Marina Bay Sands went up.

Chris Jones

Thank you. As it relates to development opportunities outside of Macau, are there opportunities perhaps in Asia or rest of the world?

Sheldon G. Adelson

We continue to lobby in four countries; Japan, Korea, Vietnam, Thailand and the newly elected President or Prime Minister of Taiwan does not offer a lot of optimism for changing the previously approved Taiwan Strait legalizing gaming, enabling gaming in the Taiwanese Strait to the Mainland, which there was discussion of before. The current head of the government said – I don’t know which Prime Minister or President said that – at the clippings say that she is anti-gaming in our programming. So we’ll cross off Taiwan as a potential for the time being. But the Asians don’t move very fast. So we are watching if we have people in various places representing us and as soon as something happens there we’ll be right there paying attention to it. We are interested in Northern New Jersey but right now we don’t have though I’m interested in buying out a casino in Atlantic City. It looks like Atlantic City will – Atlantic City operators will have the first option to apply within 60 days with a plus – 1 billion or a plus program to open in Northern New Jersey. If that doesn’t work out or they don’t provide the components that non-Atlantic City operators can provide, it will be that the government will reach out outside of the Atlantic City operators. We feel that with a much focused – a convention focused marketing theme and development theme business model that we would be a prime candidate. You mentioned Brazil, we haven’t gone to Brazil but we’re contemplating doing that. We’re in touch with somebody down there who’s got a business going, some Americans and be knowing [ph] for many years. And so we’re going to look at that. But we have some concerns about inflation and about the currency and about the economy there. So we think it’s potentially a very good opportunity. And outside of that, we are interested in Atlanta. And I read a clipping recently last week that the state of Texas is interested in getting rid of the eight-liners, whatever they call them, of which there are tens if not hundreds of thousands of slots. They’re everywhere and the possibility if that exist that we would be a candidate for one of the main cities, maybe Dallas and Fort Worth or Houston which would be the leading candidates for us. So wherever there’s an opportunity, we’re looking at everything. We don’t miss one.

Robert G. Goldstein

One follow-up comment to Sheldon about New Jersey. We’d very much be interested if they weren’t real multibillion dollars worth to create bona fide tours and MICE opportunities and not just simply overtaxed slot bonds, we don’t do that. But if that opportunity is there, we’d be keenly interested.

Chris Jones

Perfect. Thank you.

Sheldon G. Adelson

You said the English phrase keen --

Robert G. Goldstein

Keen; excited.

Operator

Your next question comes from the line of Shaun Kelley from Bank of America. Your line is open.

Shaun Kelley

Hi. Good afternoon, everyone. Maybe a little bit more of a theoretical question but I think part of the economists out there currently are pretty focused on what’s going on in the currency markets. And I’m curious to get your thoughts a little bit on what do you see the impact of a weakening RMB being both sort of the fundamentals that you’ve kind of gone through so far in Macau? And more importantly I think if we’re to see a more material devaluation in the future, what do you think some of the fallout or potential implications for Macau and Singapore could be?

Sheldon G. Adelson

I’ll leave that up to Patrick to answer.

Patrick Dumont

So, it’s a very interesting discussion. I think the hardest part about it that we’ve seen in the last quarter is the change in our purchasing power in dollars so that as you noticed in our financials we actually show a currency-adjusted result from Marina Bay Sands. So that’s the near-term impact from the changing of the RMB in the devaluation. I think long term, it’s really hard to call. I think it’s hard for anyone to figure out exactly what the impact will be and how the currency may continue to devalue. The only thing is we’re looking at hedging programs, we’re speaking to economists and doing our best to evaluate the impact to the business. But in terms of long-term impact on our customers, it’s hard to say. A devaluation of currency could impact manufacturing economy there and drive further growth in the economy. Other people have different views. So now we’re just studying it and hopefully we’ll continue to grow our business in the face of any currency changes that may occur.

Shaun Kelley

That’s helpful, Patrick. Maybe just one follow up on it. Do you guys think you saw any impact just to the typical mass consumer due to a weaker RMB in the fourth quarter? I mean, putting it differentially, do you think actually numbers could have been a little bit stronger if you hadn’t had an RMB headwind or is it too difficult to tell?

Robert G. Goldstein

Shaun, it’s Rob. My sense is that – we really can’t discern that at this point. Our fourth quarter our mass revenues are fine, our retail spend was pretty good relative to the market. I think it’s early to tell. I think it’s more – my personal belief it’s more economic concerns if people who are gambling in Macau felt more comfortable or felt they’re going to do well financially. It’s like any place in the world. You gamble based on what you expect your earning ability to be. I think it’s too early to make that decision about RMB and customers. I think we are seeing Macau get stronger but I think it’s really the key thing for most of our customers is how – well, I heard more people in the last week is how is my job, how is my business, how is the economy doing? That seems to be the focal point.

Sheldon G. Adelson

When the mass market comes into Macau, they don’t know about the currency exchange. They too transfer the RMB and it’s not an issue with the mass market. They’re not foreign exchange fixated. Yes, there are people who [indiscernible] and absolutely are fixated with foreign exchange, but those guys are in the VIP category. But the mass market, they earn so many Renminbi, it’s the same rate of about eighth to the U.S. dollar and they could buy MOP, the Macau currency or they could buy the Hong Kong currency and play with that. So, I don’t think that it has a big impact on the mass market.

Shaun Kelley

Great. Thank you all very much.

Sheldon G. Adelson

You’re welcome.

Robert G. Goldstein

Thanks, Shaun.

Operator

Your next question comes from the line of Carlo Santarelli from Deutsche Bank. Your line is open.

Carlo Santarelli

Hi, guys. Thanks for taking my questions. Sheldon, bigger picture, if you think about that your balance sheet and your capital needs going forward, which obviously after the opening of the Parisian will lessen and you try and conceptualize that with some of the developments that you mentioned and the likelihood of them coming, what is a net leverage level that you feel comfortable running the business and obviously delivering the capital returns that you guys have and we expect you to continue to?

Sheldon G. Adelson

It’s higher than what it is today. If we’re at 1.7 – what did I say? 1.7 or 1.9.

Robert G. Goldstein

Yes.

Sheldon G. Adelson

1.7, you’re going to understand coming from a poor family that I come from to have tens of billions of dollars property with debt, which I’m fundamentally debt adverse, at 1.7 times it’s like a fantasy to me. If I were younger I could have dreamt that if I knew that I ever achieve this, I could have dreamt about that. But I never dreamt that I could be down to 1.7 and some of our debt is at sub-2%. And I think the highest of our debt of our first lien properties like 2.5, something like that. So I’m extremely happy. And so I think we’re far away – and I’d be comfortable in my minimum level of comfort, which is still large is somewhere between 2.5 and 3 personally. But I’m going to listen to the Board of Directors.

Carlo Santarelli

Great, thank you. And one follow up --

Sheldon G. Adelson

You may know they don’t listen to me.

Carlo Santarelli

Rob, and I think Sheldon mentioned in the prepared remarks you guys had already achieved 215 million. I think on the prior call you mentioned 175 million with upside to maybe 230 million or so. If you think about that 215 million and the buckets where it’s come from, could you kind of talk a little bit about how you’ve parse through that if it’s predominately labor, et cetera?

Robert G. Goldstein

The biggest number is payroll, Carlo, and the second biggest number would be marketing, entertainment costs. The third biggest number would be non-gaming OpEx, about 20%. And the smallest will be gaming reinvested in OpEx. So it’s kind of evenly divided among those four categories. As a reference to Felicia, I don’t know if we’ve got a whole lot more room to grow in those cost areas. At some point you start cutting into the muscle instead of the fat but we’re comfortable we can maintain it and we’re continuing to probe for more opportunities. A lot of people have taken on the entertainment and other issues. We used to run first in Macau. We’re happy to see control of those areas and be a ticket buyer versus an entertainment purchaser. So, we’re a little more conservative. I think we – again, the majority is out of the business now. So I wouldn’t look for whole lot more growth as far as cost cutting. And also I should reference that we’re carrying an awful lot of people and dollars being spent on payroll as we move into the Parisian. That will be a big shift away from the operating side, the overhead SCL once Parisian opens up in the fall.

Sheldon G. Adelson

We already got rid of a guy who used to have multimillion dollar losses on entertainment for major performers. We already got rid of him because he called those brand builders. We already have brand, so we don’t make those mistakes anymore.

Carlo Santarelli

Understood. Thank you both very much.

Robert G. Goldstein

Thanks, Carlo.

Operator

Your last question comes from the line of Robin Farley from UBS. Your line is open.

Robin Farley

Okay, great. Thank you. I have two questions. One is with Chinese New Year approaching, do you have any kind of observations about whether you feel like there was sufficient liquidity in the junket system to keep the number of junkets that are active there through that period? And then I have a question about the Parisian as well.

Robert G. Goldstein

Robin, I was there with a number of the junket groups last week. I do think there’s sufficient liquidity and I do think we’ve got sufficient gaming capacity because we’re going to increase our – I saw the count this morning. We feel like it’s a good run up as far as room bookings and reservations, lodging and casino for Chinese New Year and we do think the junkets – the ones that are still standing and we met with some of the top people the last week. We feel actually they’re in pretty good shape and there’s sufficient liquidity. Obviously, some have folded. I think more will fold later this year. But the people we’re doing business with, we’re very comfortable with and those who have stopped doing business are paying their bills and performing admirably, so feel good about that.

Robin Farley

Okay, great. Thanks. And then on the Parisian, I know you said you hope to open as soon as possible but can you just maybe clarify at this point are there any permits or anything – anything gating issues that are kind of not in your control, some kind of government approval or permit that could keep you from opening if you were the day that you’re ready to open whenever that may be, if there are other things outside of just the progress of you construction?

Sheldon G. Adelson

Instead of listing all of those we can list a handful of things that are in our control. The government wants – I believe the government wants us to open as soon as we can.

Robert G. Goldstein

That’s the indication.

Sheldon G. Adelson

That’s the indication that’s we’re getting but I think we will open – look, I haven’t discussed that in length with my staff but I’m personally thinking about the possibility of an early opening and partial opening. We just turned over 1,000 rooms to operations from the construction department to start installing furniture, fixtures and equipment, FF&E. It’s amazing that eight months before a scheduled opening, which we’re scheduling to September that we’re turning rooms over to the operations to provide the finishes and installing FF&E, it’s never happened before I don’t think in any property. And so our power in the rooms are going very well. So if we could finish a lot of those, maybe if the opportunity presents itself, maybe we could do a partial opening at summer time but our scheduled opening is mid-September. Now that could change because of weather, of our labor or the government. There’s no indication that there’s any major obstacle that the government is interested in putting in our place to prevent our opening. And I’ll just tell you that the reason we’re successful is because we’ve build something different and interesting. Beyond that, I won’t give anything because I once saw a movie about Houdini. It said that he didn’t disclose his secrets. So I’m taking a hint out of there.

Robin Farley

Okay. Thanks very much. Thank you.

Sheldon G. Adelson

No further questions?

Operator

No further questions at this time, sir.

Sheldon G. Adelson

Well, we can either stop or give you answers without questions?

Robert G. Goldstein

Thanks very much for your time.

Operator

This concludes today’s conference call. You may now disconnect.

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