Daniel Briggs:

Thank you, Matthew. Joining the call today are Rob Goldstein, Patrick Dumont, Dr. Wolford Wong and Grant Chum. Today's conference call will contain forward-looking statements. We'll be making these statements under the safe harbor provision of federal securities laws. The company's actual results may materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP measure are included in our press release. We've also posted an earnings presentation on our website. We will refer to that presentation during the call. Timing for the Q&A, we ask those of interest to please pose one question and one follow-up, so we might allow everyone within the opportunity to participate. The presentation is being recorded. I'll now turn the call over to Rob.

Patrick Dumont:

Thanks, Rob. Macao EBITDA was $561 million. We had held as expected in our rolling program, our EBITDA would have been higher by $4 million. When adjusted for lower-than-expected hold in the rolling segment, our EBITDA margin for the Macau portfolio of properties would have been 32.1% or down 80 basis points when compared to the second quarter of 2023. Context here is important. Our margins at London were directly impacted by the disruption of the London grand renovation. We closed the casino at 1,500 keys out during the quarter. Margin at The Venetian was 38.2%, and we expect margin improvement as The Venetian Cotai Arena comes back online later this year and as visitation to the market and growth in unrated play in the market both increased in the future. Margin at The Plaza and Four Seasons was 40%. We are now deep into our land grand renovation program. We plan the completion of the first tower by year-end 2024 and of the second tower by May of 2025. The [ Londoner Grand ] Casino has been closed since May and is scheduled to reopen in December. As these products come online, between the end of 2024 and the first half of 2025, our competitive position will be stronger than ever. We expect meaningful EBITDA growth and margin expansion in the future. Now turning to Singapore. MBS' EBITDA came in at $512 million. Our strong results reflect the impact of high-quality investments in market-leading products and growth in high value tourism. Had we held as expected at our roll-in Play segment, EBITDA would have been $64 million lower. Had we held as expected in our rolling play segment, MBS margin would have been 48% or 220 basis points higher than the second quarter of 2023. While we have substantially completed the original $1 billion refurbishment program at MBS, we are still in the initial stages of realizing the benefits of these new products. Tower gaming at Marina Bay Sands will be offered for the first time at the property in the third quarter of 2024. The next phase of our capital investment program at Radio-based Sands is scheduled to be completed during the second quarter of '25. This will further support growth in 2025 and beyond. Turning to our program to return capital to state to shareholders. We repurchased $400 million of LVS stock during the quarter. We also paid our recurring quarterly dividend. We look forward to continuing to utilize the company's capital return program to increase returns to shareholders in the future. Thanks again for joining the call today. Now let's take some questions.

Joe Greff:

I'd like to start off on Singapore, if we could. I was hoping, can you give us a sense of maybe how players and visitors geographically, how they are performing? I guess more specifically, are you seeing any kind of slowdown from Mainland Chinese visitation or mainland Chinese spend into MBS? And was there any more material trend change towards the end of the 2Q versus maybe what you've seen over the last couple of quarters as that's been sort of a growing segment?

Joe Greff:

Great. And then people have not really asked me a question about Macau -- is Macao self-sufficient or speaks for itself. But Rob, Patrick, maybe you can give us an update on any development opportunities, specifically Thailand, and I'm not sure there's much to add to what's going on in New York.

Operator:

Your next question is coming from Stephen Grambling from Morgan Stanley.

Patrick Dumont:

So a couple of things. And I think this is really important to note, the Macau market has always been super competitive from day one, it's been a very competitive market. And we've been very effective in the way that we compete because we have an investment-driven model. So if you go back pre-pandemic, if you go back in 2010, it was a very competitive market. And in fact, I remember when the premium mass segment didn't exist. And when it started, people -- Rob can reference this as well some other people in the room can as well. When there was no pre-VMF segment. It was really rolling volume and mass play. And the market has always evolved over time. But the one thing that's been consistent is that our company has driven success through investment and through leading and nongaming amenities. And to be fair, innovating on the gaming side as well. And so when you look at our performance, if you go to Page 14 of the slide deck, you can kind of see what happened in the quarter. So The Venetian Macau did $262 million of EBITDA in the quarter at a 38.2% margin. And it's missing about half its volume of unrated play. So just with the arena out, which is also a very valuable amenity to drive premium mass performance, look at the strength of the performance of The Venetian. Same thing is true in The Plaza. Look at what the Four Seasons did. 40% margin, $100 million of EBITDA. So when we look at the Londoner, we basically took out an equivalent property like [ Melco ] or an equivalent property to win Palace. We took that capacity out of the market for ourselves to renovate it. So for us to put up $550 million in the quarter, in my mind, this is a great result because we know that we have a limiter in place. We're missing one of a significant portion of what is ultimately going to be one of the best properties in Macau, if not the best property. And if you look at the success of the Londoner right now, if you look at the win fee per day on the table side, the Londoner is the second best in our system. So in Macau -- so when you think about that, the model has been proven and the investment has been validated. Now we're going to open up the better half, hopefully, by the end of the year in major [ part ], suddenly, the limiters are going to come off. So in my mind, this is a very positive investment for us. And we'll get to the margins. We're already doing it in other properties. It's just a function of renovation because we're carrying all the costs now associated with the shuttered casino and 1,500 rooms. So the Londoner or impact is really, one half of it is working. You see the performance, you see the slot win, you see the slot performance win per unit. You see the table win performance, you look at the hotel performance and the nongaming and the performance. And then you look at the side that's shut and you realize that's the better side, but we're carrying all the cost. The potential of the future is really there. We feel very strong about the potential for the margins to reach where we need to go. And just remember, pre-pandemic we were at 35% to 36% EBITDA margin on a whole normalized basis business in aggregate. So we're -- we'd like to believe we're in a good spot. We're competing effectively. We have great assets. We're investing for the future. And when we're done, we're going to have the newest and best products in the market. So we feel very strongly about the path that we're on. It's just going to take a little bit of time to get that.

Stephen Grambling:

So maybe as a quick follow-up. On capital allocation, you noted being consistent with capital return. And it sounds like you're confident in a ramp from here in Macau and really growing in MBS, yet the stock is near the lows during the pandemic. So what's the tolerance to be maybe not as consistent and actually being more aggressive with capital allocation or even rethinking about the leverage profile at least in the near term?

Robert Goldstein:

And also, if we do invest in new opportunities, that's not in the near future, so [indiscernible] that New York, Texas, Thailand is years ahead. You can find lots of room to invest money to complete the [indiscernible].

Robin Farley:

Two questions. One is, can you share some thoughts on -- there's a lot of concern about tariff impact on the Chinese economy next year. Just any way to help us think about that broadly how you're thinking about? You have a lot of CapEx going being up and running in the market next year, which should certainly position you well. But just sort of thinking about broader impact there?

Robin Farley:

Okay. Fair enough. And then I had a question, and you already commented on your interest in continuing share repurchase. Looking at the rate that you did this quarter, you've been mostly through your remaining authorization at the end of this quarter. Is that -- when we think about like your appetite for continuing beyond that, is that -- if you could just sort of comment on that.

Operator:

Your next question is coming from Carlo Santarelli from Deutsche Bank.

Robert Goldstein:

Then don't ask.

Robert Goldstein:

Right. Before I get this question, Mr. Chum, we woke up [indiscernible] this call in the middle of night in Macao, I want to also reference the fact that the disruption aside the carrying labor, we've been these buildings for when buildings are construction impacts both Londoner [indiscernible] and to want to be clear that the disruption isn't just limited to our current Londoner [indiscernible], which is a beautiful building, also feels the [indiscernible]. Grant, will you answer the question about the rooms and the delta and how you see that?

Carlo Santarelli:

Great. That's helpful. And if I could, just one quick follow-up. Sorry, go ahead, Rob.

Kwan Chum:

I'm sorry Rob.

Kwan Chum:

It -- if you look at the actual reduction in cash revenue for -- versus Q1, then you're probably looking at the range of around $15 million, $20 million impact. Although you can't simply add that back because you've also got to consider that's a net impact of shifting more rooms into some customer segments and then having fewer rooms to sell. So it's a net impact that's probably not as high as that. But if you're looking at pure cash revenues, then that's the range of impact.

Carlo Santarelli:

Yes. The second question was just more of a technical question. And I get it, lot could go both ways, but this is the fourth quarter in a row where hold in Singapore has -- on the VIP side has been very strong. And I think when you look at the last 4 quarters, to $30 billion of volume at an almost 4.4% win percentage. It feels a little bit more structural. And I know in your add-back map, you guys are obviously dinging yourselves for a much lower hold structurally. Is there any thought of perhaps changing what that metric is as the normalized hold for that property going forward?

Patrick Dumont:

Yes, sure. It's the right question to ask. We've been following this for a while. Some of it depends on what Rob said or it depends on what Rob said, which is the additional wagers that are available on the game mix that we have on the floor at the time. But it's also -- you have to understand propensity. And so you have to observe empirically what people are going to do before you could make that decision. So you'd argue that our theoretical is higher than this. But we're going to continue to look at it, and we'll make adjustments as necessary when we think the statistics warrant it. But you're right, it is a very significant adjustment and one that we're going to continue to look at. But our game mix has changed. The availability for, as Rob calls, and prop bets, but really high-vol bets are on the floor now in a very different way than they have been previously, both pre-pandemic and even a year ago. And there -- the patron uptake is very high. And so that is adjusting the way that mix the floor is being exhibited through gaming win. And so we're going to continue to take a look at it, and we'll make adjustments when we feel that it's appropriate. But it's a very good question to ask. There's more there.

Shaun Kelley:

For Grant or the team, I just wanted to ask, can we get a little bit more color on just what you think is happening in sort of underlying visitation to the market? I think you captured it well in your Slide 19. But we saw our noted a bigger sequential deceleration than we typically see in the second quarter. And my question for you is twofold. Just, one, what's driving that? Is it macro? Is it something you're seeing or hearing out there? And I guess, just as importantly, is it continuing at all into Q3? Or what's your expectation for this pattern to possibly continue?

Grant Chum:

Yes. I think you're right. The visitation recovery rate has actually reduced. So that's actually taking account of seasonality when you when you compare the visitation recovery versus second quarter of 2019, we're about 79%, but we were as high as 90%. 85% to 90% in the past 6 months in the past 2 quarters. So clearly, there has been, I think, more than just a seasonal slowdown. And that's particularly prominent in the visitation outside of Guangzhou. So that does impact, I think Rob referenced it earlier. It does impact, I think, the base mass business, especially that I'm ready to play. We don't know exactly why, but I think that is a clear feature of this quarter, and it does feed into, as we said, the base mass segment.

Patrick Dumont:

One thing, I just want to say one thing, and then I'll turn it over to Grant. So just note that the visitation is very important. And you referenced Slide 19 and the fact that there's 2 million visitors missing, that were pre-pandemic. We are geared for scale. And that scale is very hard margin for us because of the volumes. And so our mix looks different and our margins look different and our reinvestment looks different because of the shift of business between nonrated and rated play. That's a very important thing when you look at our results and you consider what we're doing today, the mix of business has changed for us pre-pandemic, post-paneic. So that's one thing. The other thing is I would also like to highlight that if you look at the margins of our overall operations, they're consistent with prior performance. And when that unrated play returns and the volumes return of premium mass play, that our margins should improve. So yes, we look at reinvestment rates, but we also look at the total business. We like to understand how much money we're actually making on net. So when you look at the business overall, our margin performance and our competitive positioning is actually quite good given where things are. But I'll turn it over to Grant for some additional detail.

Operator:

Your next question is coming from Chad Beynon from Macquarie.

Patrick Dumont:

So a couple of things. So typically, 2Q is our trough quarter in the year. And so you saw that in Singapore this quarter. As a practical matter, we were also out keys because of the renovation in Tower 3. So across the back half of the year and into Q1 of next year, all of that stuff is going to come back. So the limiters are going to come off. And so if you look at the tower gaming that we're adding, you look at the additional salons that are coming back online, some of the renovated gaming areas that are coming back, we're finally going to hit full stride of that building. So even though we put up this quarter, and last quarter, which are, I think, the two highest of all time, we have more room to go. We're not operating with full capacity. And so right now, when we look at Singapore, we see strength in the market we've geared ourselves to focus on high-value tourism, which is coming into Singapore at a very high level. We are the premier place to visit from an amenity standpoint, entertainment, food and beverage, and we're benefiting from it. And our hospitality is now second to none, which we spent a lot of years working on, and we're finally there. So we're going to start to see this asset continue to grow and outpace. In terms of the calendar up and coming, I can't point to anything other than Formula One that would be sitting in the category you just laid out. Formula what happens every year. It's a great event. It's something that's good for Singapore. Our patrons really enjoy it, and we look forward to its success. But in terms of calendar, unless Grant has something in mind, I can't think of anything other than that right now that's worth mentioning.

Robert Goldstein:

This market is so powerful and getting better by the day. And in the past Q2 is one of the weakest quarter in seasonality. But still, what's happening in Singapore is almost unheard of in our industry. [indiscernible] that they -- and we're doing these numbers again with capacity constrained. When that goes away, and the market will continue to thrive, whether it's F1 or Taylor Swift or whosever coming next. They just those events are very additive, but that place as a market just becomes more and more designed by the day you see by the visitation and the quality of visitation. So [indiscernible] will come, but I think our ability will speak for itself.

Patrick Dumont:

So this is a fascinating question. One thing I'll tell you, this was the highest volumes we ever had in premium mass and slots in a quarter. So clearly, like something positive is happening. I think if you said that the economy was [indiscernible] and doing incredibly well that we'll be doing better. I think that might be a fair statement. You can say that. But in terms of timing or specific economic actions, there are so many different things that can happen that may influence it. We have no idea. I mean, this isn't anything that we can comment on or have a view on other than that we're hopeful that there will be further economic growth and further beneficial economic activity around the [indiscernible] area. And hopefully, we be beneficiaries of that. But in terms of specific comments around timing or things of that nature, it's not something we can really do.

Brandt Montour:

I just wanted to follow up maybe with Grant or anyone on Shaun's question about visitation. And maybe just thinking about what's going on there? I know that you don't have a crystal ball for the future. But in the 2Q, do you think Macro was the biggest factor? Is there still infrastructure friction there with flights to non-Guangdong, particularly? Or is there something else that you think is at play as well?

Brandt Montour:

Great. And then on the disruption, the renovation projects, if we were to try and gauge the level of disruption from these projects in the third quarter versus the second quarter, I know you lose the casino floor for a whole quarter versus half a quarter. Can you maybe give us some finer points on what else is going to be offline in the third quarter versus the second quarter room count, et cetera?

Kwan Chum:

Yes, the disruption will actually increase from a room perspective. So we're operating around 2,500 keys at [ Sheraton ] in the second quarter on average over the quarter, and we expect to be down to about 1,300 on average across the third quarter. Obviously, higher number of teams in the first half of the quarter and finishing up with fits. And as you said, we will have a full quarter of Pacifica casino closure versus 60% of the quarter in the second quarter. So yes, the disruption impact will actually increase during the third quarter.

David Katz:

I wanted to go back to the repurchases and just take a little bigger picture look, right? Just thinking about the factors, obviously, the stock and where it is, is one of them. But when we look at your capabilities, there are some maturities out there. In the future, there's obviously the issue of the float at the current run rate that shrinks the float and that's a consideration that some companies think about. If you could just sort of walk us through how you're thinking about those other issues in view of all of them, that would be helpful please.

Operator:

Your next question is coming from Dan Politzer from Wells Fargo.

Robert Goldstein:

Thank you. Yes, obviously, the money we put into the building thus far has done very well. You see results are -- when you look into a $2 billion-plus run rate, we're still under construction is more to do. Tower 3 is disrupted because we don't have the product from the room tower gaming isn't there. I mean, we're doing very well there. But again, I reference we have one hand tied behind our back and trying to get through it. So the road ahead still looks very positive to us. We think $500 million, $550 million, $600 million a quarter is in reach in the near future. And as we referenced earlier, once the entire building is complete in '25, I do see better numbers than ever on Singapore. It's a very rosy picture in Singapore. And yes, the CapEx we employed there is paying off very well. And we think it's going to continue to be even stronger in time. And as for EDR, while it's relevant, our cash sales are not the [indiscernible] is the drivers our casino business, especially our ongoing casino drop on the table side [indiscernible]. But it's a very positive picture. The disruption is real for the balance of the year into Q1 and Q2. But once that burns off and we had Tower game open the full complement of suites, I think you'll see Singapore just continue to be stronger and stronger.

Robert Goldstein:

Yes. Good point. Londoner will wrap up again in '25. We should note that we are going to undergo -- there was a misunderstanding perhaps the one call about what happens in [indiscernible]. We are going to rehab some of the [indiscernible] because we always do. But it's typical, you won't see it in the numbers of the building will be hidden from the public view by doing the 4x4 traditional way you approach these things in our industry. So we will undergo a renovation of the room product at Venetian next year at the closure of Londoner renovation. Four Seasons pretty much is done. And then we'll sit and see what we want to do it in those things in Parisian and perhaps some Sand, but nothing beyond the should think about for the time being.

Steve Wieczynski:

So Grant, you've been asked -- Grant, you've been asked a question on visitation twice now. I'm actually going to try to ask it a third time. So if we look at Slide 20, it shows that the group visitation was I think we've done about 1.3 million visitors in May and June so far. So I want to ask more about kind of what's going on with the group side? And just trying to figure out maybe has it -- do you think Macau has essentially gotten maybe too expensive? And is pricing certain groups out of the market. And I hope that kind of makes sense.

Ying Wai Wong:

Sure. I think the government, both at the Macau level and at the national level is monitoring the situation. And that's why you see the recent announcement that there's an additional 10 cities that people that qualify for IVS. And if you look at Macau traditionally, about 55%, 60% of the visitors use the IVS scheme. And this time, they added 10 cities, which has close to 60 million population. So you're increasing that catchment area. And I think the other measures such as a faster and nationwide application for business Visa will also benefit Macau. So it will take time for these policies to be promulgated, fully promulgated and known in these cities. So we are expecting some positive impact in the months to come.

Daniel Briggs:

Thank you, Paul. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, Executive Vice Chairman of Sands China; and Grant Chum, CEO and President of Sands China and EVP of Asia Operations. Today's conference call will contain forward-looking statements. We will be making these statements under the safe harbor provision of Federal Securities laws. The Company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We will refer to that presentation during the call. Finally, for the Q&A session, we ask those of interested to please pose one question and one follow-up so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Rob.

Patrick Dumont:

Thanks, Rob. Macao EBITDA was $610 million. If we had held as expected in our rolling program, our EBITDA would have been higher by $31 million. When adjusted for lower-than-expected holds in the rolling segment, our EBITDA margin would have been 34.4%, or up 380 basis points compared to the first quarter of 2023. This highlights our focus on cost discipline and profitability. The ongoing capital investment programs at The Londoner and at the Cotai Arena had an impact on our results this quarter. The Cotai Arena was closed for renovation in January this year. After the significant reinvestment and renovation, the arena is expected to reopen in November. In terms of the second phase of the Londoner, we have now commenced the room renovation on the first Sheraton. We plan the completion of the first tower by year-end and of the second tower by Golden Week in May of 2025. The renovation of the casino on the Sheraton side of London will commence in May of this year with the reopening scheduled for December of 2024. While there will be ongoing disruption from these capital projects, as these products come online between the end of '24 and the first half of '25, our competitive position will be stronger than ever. The scale, quality and diversity of product will be better than we have ever offered before. They will be unmatched in the market. Turning to Singapore, MBS and EBITDA came in at $597 million, an all-time record for the property and for the industry. Our strong results reflect the impact of high-quality investment and market-leading products. Had we held as expected in our Rolling Play segment, EBITDA would have been $77 million lower. Had we held as expected in the Rolling Play segment, MBS EBITDA margin would have been 49.1%, or 181 -- 180 basis points higher than in Q1 of 2023. We have now completed both Tower 1 and Tower 2 of the Marina Bay Sands hotel refurbishment. While we have substantially completed the original $1 billion CapEx program, we are still in initial stages of realizing the benefits of these new products. We have now commenced the next phase of our capital investment program at Marina Bay Sands. The $750 million renovation that includes Tower 3. Tower 3 is scheduled to be completed by the second quarter of next year. This will support further growth in 2025 and beyond. Turning to our program to return capital to shareholders. We repurchased $450 million of LVS stock during the quarter. We also paid our recurring quarterly dividend. In addition, LVS has completed the previously announced purchase of $250 million of SCL stock, which increases the parent company's ownership interest in SCL to approximately 71%. We continue to see value in both repurchasing LVS stock and increasing our ownership interest in SCL. We look forward to continuing to utilize the company's capital return program to increase return to shareholders in the future. Thanks again for joining the call today. Now, let's take some questions.

Stephen Grambling:

Hey, thanks so much. You talked to the March higher for the market in Macau, but this quarter looks like the margin flow through and EBITDA actually went in the other direction. How should we be thinking about flow through in Macau and operating expenses going forward in that market?

Grant Chum:

Yeah. Thanks, Patrick. I think the most important point is still the GGR is growing in the market, and I think if you look at our profitability, at this level of GGR, I think we should be looking at low to mid-30s in operating margin -- EBITDA margin, and we're right at the high end of the range there. Obviously, each quarter there's seasonality relating to different parts of the business, the revenue mix. So first quarter, I think 34.4% in terms of underlying margin is a really good number. I think 2024 is going to be one that is impacted by our capital works and the renovations that Patrick referenced also in his opening remarks. We have obviously, started the hotel renovation in the first half of Sheraton, and down -- we're probably down about 500, 600 rooms in the first quarter on average in that hotel. But the number of keys that will be out of inventory will increase further in the second and third quarters. And of course, Cotai Arena, as Patrick referenced, that's always been a core part of our content programming, our content offering, and we were able to offer plenty of shows at the London Arena. But if you just compare -- just the sheer number of shows that we had in the first quarter, we had 12 shows compared with the fourth quarter last year, we had 31 shows. It's a big difference. And obviously, in terms of capacity, there's a big difference. So the attendance per show obviously was much higher in the fourth quarter as well. So hopefully, that gives you some color in terms of the disruption that had on our business with the arena being closed for renovation. And as I said, the hotel renovation is ongoing and you're going to see more keys out of inventory in the next couple of quarters.

Patrick Dumont:

Rob, should I take that?

Patrick Dumont:

Yes, you're right. I think if you look at our slides, the mass revenues sequentially would be around 4%, and the overall GGR for the quarter grew at 6% sequentially. So yes, the VIP revenues in the market as a whole grew faster than the mass revenues Q-o-Q. I think in terms of the premium mass versus base mass, again, I think you can see it from our slides. Premium mass grew slightly faster for us in this quarter, but the difference is not material when you account for things like whole percentage and patron counts and so forth. So I wouldn't say, there's a material divergence in the growth rates between premium mass and base mass, and it's part of business for the quarter.

Stephen Grambling:

Got it, thanks. I'll jump back in the queue. Appreciate it.

Operator:

The next question is coming from Carlo Santarelli from Deutsche Bank. Carlo, your line is live.

Robert Goldstein:

Primarily you're correct. That's a fair statement to make. The term red does, as you know, as you know to occur in the fourth quarter, and it's material. Grant, do you want to add to that?

Carlo Santarelli:

Great. Thank you. And if I could, just one follow-up on capital allocation. Obviously, over $400 million of buyback in this quarter. As you guys think about the capital needs here going forward, the stuff that you've announced, the stuff that obviously, is being contemplated and looking for budgets around and whatnot. Do you feel like that this pace is adequate and where you want to be as you look throughout the balance of this year?

Carlo Santarelli:

Thanks for that, Patrick. Just one aside. Guys, I'm not sure the slides are actually posted yet. It certainly could be a user error, but it looks like that they haven't posted yet for the first quarter.

Carlo Santarelli:

Thank you.

Joe Greff:

Hey, everybody. I was hoping one of you could maybe help quantify the revenue and EBITDA impact from the renovations going on at Londoner and Cotai Arena. And then do you see that renovation disruption impact accelerating, and when do you start to see that decelerate? I know you kind of talked about the two towers and when they open up, but to kind of help understand that renovation impact in terms of how you're seeing it, and I think would be helpful for everybody.

Grant Chum:

I think you covered it perfectly. I think the only thing I supplement is Londoner phase one really gave us that elevation in the shared quality of product, as well as a very successful rebranding and repositioning of the entire property. But what phase two gives us is that scale of high-quality product and the diversity of it. And that's when I think the earnings power of this resort will be fundamentally transformed.

Robert Goldstein:

I believe what we think once Londoner -- we think once Londoner is done, Joe, we'll have the one and two -- number one and two assets in the GALP, by far. Not sure whether they'll be fully in front, but that company really gives us a unique positioning for '25 and the years ahead to dominate the market in terms of the largest resorts and those proper resorts, both one and two.

Grant Chum:

Thanks, Joe. For us, yes, our profitability, the structure of a margin in every segment actually, quarter-on-quarter very consistent. No significant changes there. And that obviously, fed through to the result that the earlier question described, which is that we had a very consistent margin quarter-on-quarter despite obviously, some inflation in the payroll costs due to holiday pay and salary increases.

Grant Chum:

Oh. Sorry. You're talking about the overall market now.

Robert Goldstein:

Direct investment invested to customers.

Joe Greff:

Thank you.

Operator:

Thank you. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is live.

Patrick Dumont:

So it's a very interesting question, and it's the right question to ask. So as these properties reach run rates so as they reach their full potential, the margin should be upper 30s [Technical Difficulty] Sorry. I think someone in Sands China put us on hold. Please excuse us. So we think about margins in the upper thirties. If you look at the performance of the Venetian, that's a good benchmark, right? It was impacted a little bit this quarter, again, also by the entertainment not being there in the Cotai Arena, but -- and mix-wise, to be fair, pre-pandemic, it had more mass play and that's a higher margin. And so as tourism returns, so as visitation increases, which has more mass play, and we have plenty of capacity for it. So if you look at our asset base, the scale of the assets, the food and beverage we have, the amenities we have, we can accommodate a lot of mass play, and we have the positions to do it. And so for us, as visitation shows up and continues to on an upward trend, our assets are ready to take that visitation, revenue will grow, margins will grow, and they will normalize back towards a more traditional mix. That being said, the Londoner has the opportunity to also bring a lot of high-value tourism. So we're carrying the expense base without the revenue, right? So we have the team members, we have the -- we have all the things going on that you have, that we're fully operating, but it's not fully operating at. So the margins naturally are not going to look right. So as the revenue comes in and as the visitation comes in, as the patrons come in, as the hotel is completed, and as the rest of the amenities are done, that will look more normal. The only problem is it's in '25. So we have a little bit of time that we have to get through with this investment. Are there some high-value things that are very high margin that we're missing because of entertainment or keys out, yes, that's true. But when you look at the asset base that we have, the experience that we have, the team that we have there, their ability to execute and how they've executed so far, and the asset base that we're creating with these investments, we're going to be in a great position. And the margins, we believe, will get there. So we need visitation to continue. That will be helpful for the Venetian. It'll be helpful for the mass to recover. We need to have all of our assets in line. So that's the Cotai Arena to be finished and the Sheraton to become fully Londonerized, that's a word, and get to our full key count. And then you'll see the true power of these assets and the margins will get there. We have a lifestyle program that we run with high-quality amenities. If you haven't been to Macau and you haven't seen what we've done, I would encourage you to do it. It's not simply one thing. It's not simply hospitality. It's not simply gaming. It's not simply retail. It's an ecosystem that allows our customers to travel around all of our assets and have an experience they can't get anyplace else. And that's really what we have on offer and it's unique, and it's been invested in and it will continue to get better. So for us, as Rob said, we're not chasing promotional activity. We're chasing asset development, and that will drive our success.

Robert Goldstein:

I think the first thing you should note is that the building is still under renovation. I think we believe $500 million a quarter annualized is very durable and more. And the most important thing you should note is two things. The growth in Singapore as a desirable destination is soaring. It's not just Taylor Swift. It's Bruno Mars. It's the Hamilton show. It's endless events, F1. It's a juggernaut. And really, it's become accelerated. This market has become very special in a very short order. And I think that's attributed to government there and the programs happening, entertainment, et cetera. So Singapore is highly desirable, and yes, that's very sustainable. And as good as Taylor Swift was, there's a lot more in the pipeline that will make that continue. Secondly, our building has less than 200 top tier suites. Upon completion, we'll have an excess of 700. The suite-spot on the market is the premium mass and super premium mass, rolling, non-rolling. We can't -- I think we're almost approaching a billion dollars a slot when we may be out of bullets there as we get more capacity. But this is a very special market. Our building is a special building. I don't think there's any reason to doubt that 520, 540, 600. Look, this may keep growing. This is a great place to be. We're lucky to be there. We're lucky that the government is very supportive and excellent team in place. But most importantly, the assets, it didn't happen by luck. We are doing -- spending a lot of money to make sure those assets are superb and the customers come back time and time again. The real question is what happens when the building has four wheels instead of three? That's going to happen later this year, in early 2025, when those suites are rolled out and they are great suites. They are phenomenal suites. Can that building go to two-two, two-four, two-five, it can and it will. And I think, again, what we're trying to tell you about Macau is we're frustrated by Macau. The operating environment is more difficult. We're under construction a self-inflicted wound. But once we emulate in Macau and we've done in Singapore, the same thing will prevail. Londoner I wish neck and neck to drive that market. And again, I think the government recently talked about a lot of things they're trying to do. Increase tourism and visas, et cetera. We see a real nice support system coming out of now, and we're grateful to the government for recognizing a session this week about increased tourism, increased entertainment. We're lucky to be in two very, very special places, and, yes, Singapore can do 500, they can do 550. It's not about Taylor Swift. It's about a great market, a great asset, and a team running it.

Operator:

Thank you. The next question is coming from Robin Farley from UBS. Robin, your line is live.

Patrick Dumont:

Grant, I think you should take that. Grant?

Patrick Dumont:

It's up now.

Patrick Dumont:

It's up, guys. Yes.

Robin Farley:

Okay, great. That's helpful. Thank you. And just any thoughts around New York timing and your expectations there? Sort of anything new to add there? Thanks.

Robin Farley:

Okay, great. Thank you.

Operator:

Thank you. The next question is coming from Vitaly Umansky from Seaport. Vitaly, your line is live.

Robert Goldstein:

It's a good question. I think unfortunately, it's probably an answer that we've seen that we never dreamed slots with a billion dollars on property that they're approaching that. We never dreamed that in this environment. So quickly after COVID, we reached the kind of epic levels we're seeing. The growth in the premium mass is powerful and I was enjoying Grant on the call last week telling us it's still a drop in the bucket. There's so much more to go. And so I think the growth will come out of this super premium mass, both rolling, non-rolling. I don't think ADR is all that impactful because hopefully someday we won't sell many rooms. This will be a product that is mostly gaming customers in the rooms. I hope the suites we're building are just exemplary. And I think that this product is only going to have more good days ahead. I used to do five as a goal for our Company as the decade progresses and it's very attainable. It reached $600 million almost this quarter in actual is very stimulating. It's very exciting. But the cash in capacity, it's already a problem for us in terms of slot machines. It will be a room problem. We wish you had more exposure to Singapore that's why we're building more products. This is a very, very special place that people gravitate to. And as Singapore does its job as a lifestyle, entertainment, exciting place to visit, demands have grown. So the only concern we have in Singapore is how quickly we get there. Once these fleets are unleashed in the market, they see it. I think we'll have some very bright days ahead. But obviously, it's a capacity constraint. You only have so many rooms, only have so many slot machines, and I don't worry about getting there. I just think we get there, we'll be disappointed can't have more exposure, and that's why we're building phase two.

Vitaly Umansky:

Thanks, Patrick and Rob. Maybe just a follow-up, switching gears to Macau. And Grant, you talked a little bit about kind of the base mass and the growth you've seen in the quarter is very similar to premium. But I think overall, if we kind of think about sands in Macau, obviously, you're very strong in the direct VIP business, you're very strong in the premium business, but where you have a massive competitive advantage? In my view, it's just your scale, which then talks about base mass and the higher margin available from base mass. If you look at the recovery in overall base mass, it has not been as strong as the more premium end of the market. Can you maybe give an explanation as to why you think that is, if you agree with that statement, and then how does the market maybe change, or need to change over the next couple of quarters in order to get some of that base mass back, which I think would benefit Sands relative to others in a much stronger way?

Patrick Dumont:

Grant, go ahead.

Vitaly Umansky:

Thanks, Grant. That's helpful.

Chad Beynon:

Afternoon. Thanks for taking my question and thanks for posting the slides. On Slide 44, the flags of interest remain the same as what we've seen in the past couple of decks, Macau, Singapore, New York, and you've talked through all these. There's been some recent discussions around Thailand and some even think that an integrated resort could open in Thailand, maybe even ahead of Japan. So wondering if you could opine on your views. I know early, but could this market be big enough? Could a resort generate the cash flow meaningful enough for you guys to look at the market? Any views there? Thanks.

Chad Beynon:

Thank you. And then on the P&L statement, investors are increasingly looking at EPS just given what you're generating and where the stock is trading. I believe there was a tax benefit in Q1. Could you talk to that potential benefit? And then any additional color in terms of will the tax rate start to look similar to what we saw in prior years, given your mix of Singapore and Macau? Thanks.

Chad Beynon:

Thanks, Patrick. Appreciate it, guys.

Operator:

Thank you. The next question is coming from David Katz from Jefferies. David, your line is live.

Robert Goldstein:

I'm just trying to understand your question. Will we dial back our investment programs because we're under renovation? Is that your question?

Robert Goldstein:

No, no. We're not going to -- we will not dial back. We just may not be as aggressive as some of, you know, the competitive pressures on the commercial front right now, it's been talked about quite a bit. We're not believers in that approach. We believe we make our buildings the best in class. We have the scale. We have a lifestyle product. We just believe long-term GGRs will grow. We'll participate in that. We'll be very, very here into good margins, and that's an important part of business. But no, we won't dial back our current reinvestment strategy. We won't necessarily dial it up either to compete in the market right now. So this will be a year of reinvestment, as Patrick and Grant alluded to, both the arena and the Londoner. But we're not going to pull back. If anything, we'll stay consistent.

Patrick Dumont:

Yeah. So, you know, we're going to look to deal with. So if you go to Page 32, which is the page I think you're referring to, and you look at the LVS maturities, we should deal with those in short order. That's kind of our intent. And then in August of '25, we have the $8 billion that you see at the SEL level, and we'll address those in due time. We mentioned that we wanted to bring down our total debt level in at SEL given that we borrowed during the pandemic so you'll see us reduce the quantum of debt there. And then as part of the MDS credit facility, we'll address that in course along with the IR2 start. So that's kind of how we'll deal with our capital structure. You'll see us turn that out as we've done previously.

Operator:

Thank you. Next question will be from Daniel Politzer from Wells Fargo. Daniel, you're line is live.

Patrick Dumont:

Yeah. I do want to point out before Grant answers this question, that when we have less revenue because of disruption, we'll have less market share. So I do want to point out that with the arena being out with less revenue and a slightly lower margin because of the impact, having some hotel rooms out, that our market share will be impacted because it's the same thing. So with that, I'll just turn it over to Grant.

Daniel Politzer:

Got it. And then just for the follow-up, I think you guys have gone up to 71% share of 1928 HK. I mean, can you talk about maybe where that goes over time? Is there an upper limit there and maybe some of the puts and takes to increasing that ownership stake?

Daniel Politzer:

Understood. Thank you.

Operator:

Thank you. The next question is coming from Colin Mansfield from CBRE Institutional Research. Colin, your line is live.

Patrick Dumont:

Sure. I think you'll see us deal with LBS maturities and the SEL 25s before you see any activity around the LVS [Indiscernible] term loan down to SEL. The one thing I'd like to point out is that it benefits SEL. It's a very favorable loan and allows them to have high-quality financing deeply subordinated at a favorable rate. So from that standpoint, the maturity is '28, and we'll see how it goes with SEL and what their needs are and kind of go from there. But I think we have ample liquidity up at parent co we believe to do what we need.

Patrick Dumont:

Thanks. So I think as we look back pre-pandemic, we spent five years working towards investment grade. We think it's very important for us to actually be investment grade. It gives us access to the largest most liquid debt market in the world, gives us a very efficient cost of capital, which in the long run provides us flexibility, but really drives returns on new projects. We have this investment rate balance sheet. It helps us in new jurisdictions. You heard Rob talk about several of them. We have the financial capability to execute on these projects. Our financial policy always been that we like gross leverage to be between 2 times and 3 times. You know, we've said this for many years. Nothing has really changed. It's our consistent view. I think over time, we're going to delever just because of EBITDA expansion. If you look what happened at MBS, it occurred, and our belief is that it will continue to occur at Sands China as well. So I think for us, the investment grade is very important. That gross leverage parameter of 2 times or 3 times is consistent with prior statement, prior practice. And I actually think, you know, we're very favorably levered on a net basis and on a gross basis, and we're looking forward to doing some new development. And I think that will fit within our leverage profile based on sort of the prior discussions that we've had about progression of funding and EBITDA development. So we're very focused on it. We think we can handle our new development, our investment, our existing assets, and have a very healthy return of capital program while balancing all these things and having investment grade balance sheet. That's our goal and that's our view.

Patrick Dumont:

Appreciate it. Thanks so much.

Daniel Briggs:

Thank you. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and Chief Operating Officer; Dr. Wilford Wong, Executive Vice Chairman of Sands China; and Grant Chum, CEO and President of Sands China and EVP of Asia Operations. Today's conference call will contain forward-looking statements. We'll be making those statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measures are included in our press release. We have posted an earnings presentation on our website. We will refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up, so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Rob.

Patrick Dumont:

Thanks, Rob. We wanted to highlight some changes in the materials that we typically provide for the quarter. After discussions and review with the SEC, we will no longer be presenting hold-normalized adjusted property EBITDA in our press releases, SEC filings and supplemental earnings materials. These changes are being made to our materials for this quarter and for our reporting going forward. We believe that the analysis of our financial and operating results in any quarter will continue to benefit from an understanding of the impact of expected hold in our rolling volume segments for our reported results. We will continue to provide the impact of expected hold in our rolling volume segments for our earnings materials. Please see Pages 6 and 7 in our earnings presentation for an overview of the new presentation format. For this quarter, the quarter ended December 31, 2023, we generated $654 million of adjusted property EBITDA in Macao, a very strong operating result. It is important to note that we held 2.16% in our rolling segment in Macao. EBITDA would have been higher by $40 million in Macao had we held as expected in our rolling segment. At Marina Bay Sands for the fourth quarter of 2023, we generated $544 million in adjusted property EBITDA, another strong result. We held 4.57% in our rolling segment in Singapore. EBITDA would have been lower by $71 million in MBS had we held as expected in our Rolling segment. It is also important to address our margin structure as we held as expected in our rolling line segments in Macao and Singapore. In Macao, our margins for the fourth quarter of 2023 would have been 35.9%, an improvement of 100 basis points as compared to the third quarter of 2023, if our hold was as expected in our rolling volume segment. At MBS, had we held as expected in our rolling volume segment, o ur fourth quarter 2023 margin would have been 48.8%, an increase of 170 basis points sequentially. It's important to note that both in Macao and in Marina Bay Sands in Singapore, we are generating revenue growth, EBITDA growth and when considering expected hold for rolling volume segments, margin expansion. We are very focused on the quality of our offerings on further investment to drive high-value visitation to our properties on the resulting revenue growth and our margin expansion over time. Looking ahead, we are excited about our progress in our markets, and we are focused on growth for the long term. Let's move to the Q&A portion of our call. Thanks.

Joe Greff:

Good afternoon, guys. Thanks for taking my question.

Joe Greff:

Obviously, the premium mass had significant sequential growth and exceeded the base mass. I was just hoping -- can you talk about the progression of base mass recovery throughout the fourth quarter? And then clearly, what we're seeing out of information for the Macao market as a whole, in January month-to-date is nice overall mass growth pickup. And as you said before, Rob, the growth keeps coming. I was hoping if you can talk about sort of the relative performance of base mass in January and if we're seeing this hopefully anticipated pickup in that mass segment?

Grant Chum:

Yes, Rob. Thank you. Yes, Joe, the segment differential growth in the fourth quarter, we had 13% growth in premium mass and 8% growth sequentially on base mass. So I think base mass was progressing nicely through the quarter. It's just that premium mass had a great performance that exceeded that. If you look at the visitation trends during the fourth quarter, Macao actually recovered to almost 90% of 2019 levels on visitations. So I think the base mass is continuously progressing and building up. Transportation infrastructure has been improving. I think the demand to come, I think the desire to take advantage of the non-gaming events that have been coming on stream across our properties, but across the whole industry, have been very effective. So I think you should expect that growth pattern to continue.

Grant Chum:

Yes. The ability to get there has been improving, but the desirability of the destination is even clearer. You can see that the domestic flight to mainland key Greater Bay Area airports has all but fully recovered. And if you look at our ferry statistics, passengers that we carried in the fourth quarter recovered to 93% of pre-COVID, but only 52% of our sailing capacity. So clearly, people are enthusiastic about coming even though the transportation capacity is still recovering. And that's also clear, very gratifyingly the overseas, the foreign visitation recovered dramatically in fourth quarter, especially from Southeast Asia, and that's great to see from Macao. And that's despite the direct flights from foreign countries into Macao, haven't recovered even by, I think, 60% in the fourth quarter versus pre-COVID. But the visitation now is getting back up to 80%, 90% of what it was before despite the flight connectivity still catching up.

Patrick Dumont:

Hey, Joe, it’s a -- Joe, before the follow-up, one thing important to note also, it's been a while since we talked about this. But we actually have capacity to absorb base mass business as it continues to come into the market. So when you think about the property portfolio that we have, the investment that we've made in terms of amenities, the tourism attraction for the base mass customer, the ability to service that customer in terms of food and beverage, shopping, entertainment, but also the fact that we have the capacity as that market continues to grow, we'll be the beneficiary of that. And it's important to note, because the market is not at capacity yet. So as more visitors come in this base mass segment, we'll have the ability to absorb it. Sorry, what's your next question?

Patrick Dumont:

I think there was -- I think there was some activity during the quarter, and to be fair, I think we looked at the share price levels as an opportunity. When we think about our future capital return, as we said before, we kind of expect our share repurchase will be more heavily weighted into that. And so I think we fundamentally believe in the long-term value of share repurchases, the benefit of the compounding, the benefit of the share shrink, trigging that denominator. In terms of amount, I think we'll be measured across time. If you sort of look at our balance sheet, you look at the free cash flow we generate, we're going to look to be aggressive when we can. And I think we're going to run a program where we look to acquire shares consistently over time. But I think -- I don't know that we'll necessarily buy the same amount that we bought in this quarter going forward every quarter.

Rob Goldstein:

Thank you, Joe. Thank you very much.

Stephen Grambling:

Hey, there. Sorry, can you hear me?

Patrick Dumont:

Yes.

Rob Goldstein:

Yes. I think we'll turn over to Grant for that comment. Grant, Londoner?

Rob Goldstein:

Stephen, just to follow on Grant's comments. I understand the market is concerned about London disruption. It's a valid point. However, two thoughts for you. One is that I think if the market continues to accelerate like we're seeing January market numbers, perhaps we can overcome that by using other assets in the portfolio. But secondly, to Grant's comment, I think when you see the eventual transformation of Londoner, it will be a juggernaut on par with the -- or beyond. So it gives us two assets we think can probably make $3 billion by themselves. And while there's disruption 2024, 2025 in Beyond gives us something that's unique in that market. The number one and two assets are number one in on assets in that market for years to come. So, there may be some disruption but maybe market force can overcome that, but I think the end result is well worth the pain.

Patrick Dumont:

I think I'm happy to give -- go ahead, Rob. Go ahead.

Patrick Dumont:

Yes. So, I think the key thing about Singapore is it's really about quality of tourism. So, we've been very focused on investment. If you heard us over the last couple of calls and what our investment thesis is, that the higher-quality assets we have, the higher-quality tourism will attract, and that's really on full display here. So, it's not about quantity. It's not about the full recovery. It's the fact that we're getting very high-value tourists if you look at Singapore as a market, it's incredibly attractive, right? It has a growing high net worth population. There's a lot of family offices moving there. There's a lot of business activity there. There's political stability, there's strong tourism infrastructure, it's got a strategic location, all of those things are benefiting the Singapore market overall and helping drive the business that we're in. And so for us, there's been a ramp from China. That's true. But there's still a lot more to go. It's still, let's call it, 50% on visitor arrivals. You may have heard that at some point, they're going to go visa-free this year. We're hopeful that, that actually occurs, which there's no way to know exactly how that official that it will be, but it can't hurt. But I think the key thing is just a very attractive market, but it really -- the results you see in this quarter in a building that was really under construction, didn't have its full suite complement and didn't really have a lot of the amenities that we'll have in halfway through 2024 and 2025. I think really speaks to the capability of the market and where this building can go. You heard Rob in his remarks about our view of the trajectory of this business, we're very bullish on it. But I think it's really just about high-value tourism. I wouldn't look at the absolute number of visitor arrivals and use it as a determining factor for where the business can go.

Stephen Grambling:

Makes sense. It’s all helpful. Thanks so much. Best of luck.

Patrick Dumont:

Thanks, Stephen.

Carlo Santarelli:

Thank you. Hey, guys. Rob, you touched on it a little bit just there, but I was wondering, obviously, there's a ton of moving parts with COVID and everything else, but $1 billion in Phase I at Marina Bay Sands. Returns on that product look to be very favorable, $750 million over 2024 and into 2025. I was wondering how you think about returns there? And then to your point there at the end of your last comments, when do you expect to have an update around the timing and perhaps the spend on the larger scale projects there?

Patrick Dumont:

Yeah. I think it's an interesting comment. I think the key thing for us is that we are an investment-driven story, right? So the more we invest in high-quality assets, the better service levels we have, the more we're going to have pricing, the more we're going to differentiate our product, the more we're going to have high-value tourists and the more our EBITDA and margins will grow. And so you're seeing that happen real time in Singapore. And so for us, I think we'll finish the third tower by Chinese New Year next year, that $750 million will go in. We'll saw some amenities that have to be done across parts of 2025 -- but by the mid part of 2025, we're basically going to have what is, in effect, a brand-new building. It's going to be fully renovated, and you'll get to see the full power of the suite product on the rolling side. You get to see the power of the premium mass and all the amenities that we have, the shopping, the entertainment, all the things that we're adding in terms of our premium mass lifestyle program that you can't get any place else. These are all very positive things and the quality of these amenities base customers want to be repeat visitors. And so for us, these investments will drive very high returns. That's the reason why we were willing to do and that reason why the board was supportive. You can see the trajectory of EBITDA now, we're not even done. So we think Tower 3 will be very accretive in terms of investment. You heard the numbers Rob just mentioned. We're very confident in those numbers. We feel very strongly, but that's where we should be going. And then in terms of the next building, IR 2, we've been in very close discussions with the government over many months. There's a lot of moving parts here, a lot of things we have to satisfy. This is a project of national significance. We want to make sure that everyone is comfortable with it and that we get all the proper approvals, and we're hoping in the next quarter or two that we'll get everything done. We've been making good progress. We've been visiting Singapore, and we feel very confident where we are. And hopefully, we'll be able to get all the green lights we need and we'll be able to et going soon.

Rob Goldstein:

Thank you, Carlo. Appreciate it.

Shaun Kelley:

Hi. Good afternoon, everyone. I wanted to offer my congrats to Grant on the promotion as well. And maybe speaking of promotions, Grant or whoever, if you could comment a little bit just on the promotional environment. I mean, I think this is a big question or theme that came out of the quarter last quarter and just sort of what you're seeing, particularly at the upper end of the premium mass segment right now? And in general, our premium mass market margins consistent with your pre-COVID expected ranges, or are they still a little bit below that? And what would it take for them to recover? Thanks.

Grant Chum:

Thank you, Shaun for the question. I think if you look at the competitive landscape, of course, it is very intense at the premium mass segment. But if you look at also at our margin structure, I think the way we've driven our business is no different from before, which is to really drive and elevate the product and to drive the content and the events that we put on across a whole range of sectors to attract visitors and patrons. And I do think that back to Patrick's opening comment, if you look at that margin progression, underlying margin grew another 100 basis points. We actually saw a good improvement in our mass margin sequentially. So we are dealing with the competitive market as any competitor does. It is intense, but we believe strongly that in the end, product wins and Londoner and Grand Suisse at Four Seasons are true living evolving testaments of that argument, that good product wins. And there are going to be fluctuations in the competitive intensity in particular segments at different points in time. But to have a sustainable competitive advantage and sustainable profitable growth, product and service and the content we put into the resort calendar are still going to trump everything else. And you can see that through what we've done at Londoner is already at a run rate of close to $800 million as it was exiting the year. And you can see that the way this is going, we will end up with a margin structure as we already are in Q4 back to the same level as we were in 2019. And then as the revenues continue to grow, you should logically expect that margin to continue to improve and therefore, exceed where we were in 2019.

Shaun Kelley:

Thank you, Rob for that. And then maybe just as a quick follow-up, last quarter, it was mentioned, Grant, I think in one of your comments or one of your responses, a little bit about a bit of an uneven recovery we were seeing coming out of some of the source markets from broader Mainland China, as some of the air travel reopening. Wondering if we're continuing to see that uneven recovery or just any other broader signs of the kind of where the macro situation sits in China? Because so far, and again, seems to be continuing through January. Seems like Macao is relatively unaffected there, but I wanted sort of an update on that trajectory, if you could give one.

Daniel J. Briggs:

Page 20.

Wilford Wong:

Yes, Shaun, China is still recovering from the tough COVID period. And –but what is evident is the company's quarterly performance has actually been trending well. We have seen as Grant alluded to, healthy growth in the number of visitors, especially from the non-confidential region. Now one observation is that when long-haul travels of Chinese travelers has not fully recovered, Macao is emerging as a top tourist destination for short-haul drivers from the Chinese mainland.

Rob Goldstein:

Thank you. Appreciate it.

Chad Beynon:

Afternoon. Thanks for taking my question. I wanted to ask one, just about the retail portfolio. We've been hearing and seeing a little bit of pressure just kind of in the luxury retail space, particularly in Asia based on the numbers that you put out and I guess, the turnover rent that you collected, you're not seeing that. But how are you thinking about the recovery in retail? Are you getting the right customers in there now? And do you think this could continue to improve as visitation and overall spend improves in 2025 or 2024? Thank you.

Chad Beynon:

Thanks. Rob. Makes sense. And then just in terms of the hold, understanding that it's kind of random here in terms of luck or unlucky. Has there been any difference in terms of game play or you talk about kind of the recovery from the Chinese consumer. And I'm speaking of Singapore, but hold has been high now for three quarters. So is there anything that could kind of lead to maybe an elevated hold in that market in the near term, or should we expect kind of the reversion to the mean that we've seen in prior quarters and years? Thanks.

Grant Chum:

That's exactly right, Rob. And people have relatively short memories. But in the fourth quarter of 2022, there is like $100 million plus adjustment on the downward impact from low hold at Marina Bay Sands. So I think one or two, three, four even five quarters is actually a relatively short period of time and sample size for you not to get potentially very random results that deviate from the expected normal hold. But I think it's fair to say, yeah, the mathematics always prevail. And given the scale of our business, over time over one year, two years, we should stay very much in the expected range. As you saw in Macao as well, we had the first three quarters holding significantly above the expected mean hold and then fourth quarter reversed. And for the whole year, we end up at about 3.3%, which is exactly where we expect it to be.

Chad Beynon:

Great. Thank you.

Operator:

Thank you. Your next question is coming from Robin Farley from UBS. Robin, your line is live. Please go ahead.

Rob Goldstein:

I'll take New York first, Robin. The governor, Governor Hochul, I think it was this week commented on seeing something happen this year. I hope that's true. We're -- as you know, are -- we've been working in New York for quite a long time. And we think we have a very compelling bid. But we don't have any great insight if that will happen. We sure hope the Governor is correct. And either way, win or lose we’ll get decision in calendar year 2024. That's our hope. But I think it'd be [indiscernible] any insight beyond the governor's comments. I think we just -- we worked very hard on this project. We believe we have a really good chance of getting one, but I don't give you -- I couldn't give you any guidance beyond that. Grant, Chinese New Year. Do you think he'll be any there for that? Will the year of the dragon bring anybody to the building?

Rob Goldstein:

Robin, I do think, Robin, I think December was really great tell what might happen in Chinese -- December numbers that closed were just terrific. And again, you see the market numbers for January. So we're very hopeful that the year of Dragon is a huge year for us into the market.

Grant Chum:

Thank you, Robin.

Brandt Montour:

Good evening everybody. Thanks for taking my question. So in Singapore on the Phase II, I was wondering if you could maybe remind us the total room count exiting the year and then specifically with regards to disruption cadence what is the quarter-to-quarter and overall year look like in terms of how that will flow through the P&L?

Patrick Dumont:

Yeah. So, yes, sure. So I think when we finished the year, we were around 2,200 keys available next year because of the construction in T3, Tower 3, we're going to get down to the mid 1,600 in Q3, it's probably going to be our peak of disruption. But those rooms are smallest right now and really have our lowest yield. So hopefully, the impact will be minimal, and we'll be able to yield because of the compression to higher-value customers. The performance today on Sands has been quite good, and you think we'll be able to yield up in the renovated portion of the building. Sorry, what was the rest of your question?

Patrick Dumont:

It's mid-1800s.

Rob Goldstein:

When you say non-gaming, can you be more specifically talking about retail, food and beverage, hotels?

Rob Goldstein:

Oh, I see. Okay. I'm going to let Grant handle that, but I would say we are a little bit different than the rest of our competitors in terms of we've been spending money aggressing Macao forever for 20 years on entertainment and other things. We believe it's a huge value add. I'll let Grant take the question specifically. But I think, again, it's important to note, we are a different animal than other people in terms of this concession. We welcome it. We've been doing it before the concession mandate. I think it's been very beneficial to our company. Grant?

Wilford Wong:

Yes. We have, in the past years, been investing heavily in the areas that Grant just described. And by a long way off, we are the leader in the MICE market. So we are still seeing a very strong presence of MICE activities in our properties. For non-gaming, apart from the shows, we've been helping to promote Macao as a destination, not just for gaming. Therefore, we have a lot of art exhibitions, cultural shows that really put us apart from the other competitors.

Grant Chum:

Thank you.

David Katz:

Hi. Good evening, everyone. Thanks for taking my questions. I'll ask to the both on one shot. If I could follow up on the share repurchases, Patrick, not asking about how much or when -- but just thinking about how the family stake takes a long-term view on where you'd like to be or how we might think about that evolving over time? And then second, since we last spoke on an earnings call, there's been an awful lot of activity and focus in Texas. And if you could share some of your views and thesis around what -- what the family's activities and how they might relate to the company and shareholders, that would be helpful as well. Thanks.

David Katz:

Thank you.

Dan Politzer:

Hey, good afternoon, everyone and thanks for taking my questions. I wanted to follow-up on Sands China and as it relates to capital allocation. Your net leverage there, I think, is around three times at this point. It should be much lower than that as you kind of make your way through 2024. How do you think about the subsidiary there resuming dividend payments up to the parent? And then obviously, your stake went up a little bit through the quarter through those debt repurchase. So maybe does that incentivize some of those dividends coming up sooner than later? Thanks.

Dan Politzer:

Got it. And then just for my follow-up, as you think about Macao, we've talked a bit about the margins and the improvement, more or less, it's been about 100 basis points quarter-over-quarter. As you think about kind of the trajectory from here, and I know you're on pace to get back to those 2019 levels how should we think about maybe the pacing of improvement? And do you think that operating expense structure is really in place at this point, you should benefit from scale here on out?

Grant Chum:

Yes, Patrick, I think you covered it well. I think it's dependent on revenue growth as the market continues to grow, and we will be more than a full participant in that market growth. The margins will have a positive trajectory. I think we obviously have a more efficient and more productive cost structure today than we did in 2018 and 2019. So, we will -- we are benefiting from that as revenues grow and you get the operating leverage on the fixed costs. We will continue to do so. And I think it is very much about how revenues grow from here. And as revenues grow, our margins will have further upside.

Grant Chum:

Thank you very much.

George Choi:

Thanks for taking my questions. My questions were answered earlier, but do have a housekeeping question. Would you please remind us how the overran mechanism works at the Macao properties? Should we expect a normal uptick in the quarter? That is when you guys received for rent? Thank you very much, I will come back to the queue.

George Choi:

Apologies. So, I just wonder how the turnover rent mechanism works in the Macao properties. Is it a fourth quarter event? Is that when you receive your term rate?

Grant Chum:

George, there are leases that are on monthly turnover rents and there are leases that are on annual turnover rents. So, historically, what happens is for those annual turnover rent leases as we get into the third quarter, the end of the third quarter and the fourth quarter, we will obviously be recognizing more of those turnover rents, as we hit the annual sales targets. So, historically, you should expect seasonally the second half of the retail rental revenues will be higher than the first half.

Rob Goldstein:

Before we finalize the call, I want to reach out and recognize the great contributions of Wilfred Wong, who is now Executive Vice Chair. Wilfred has been with us about eight years and made a great contribution. And Wilfred, congratulations on the elevation of Executive Vice Chair. Grant Chum, well deserved. We hired Grant many years ago, the big concern was, was he old enough to win the casino at that time? And over the years, he's aged insufficiently, so he did not win the casino. Congratulations to you Grant. Both of you guys have built a terrific team over there. We're very proud and grateful for your efforts and look forward to many more years working together. Thank you for your time today and interest in our company. We bid you adieu.

Daniel Briggs:

Thank you, Paul. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, the President of Sands China, and Grant Chum, EVP of Asia Operations and COO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measures are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up, so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Rob.

Patrick Dumont:

Thanks, Rob. I would like to cover two important topics before we get on to your questions. The first is the long-term margin structure we expect in our Macao business. As the Macao market revenues continue to recover, our margins will naturally benefit from an improved business mix. This quarter, our Macao EBITDA reached $631 million at a 35.3% margin, which is an increase of 210 basis points compared to the second quarter of '23. As revenues continue to grow, we expect our margin to exceed the 36% of Macao business in 2019. This quarter, the Malaysian Macao grew EBITDA to $290 million, with margins reaching 40.1%. This is an example of a property achieving strong revenue recovery with financial performance and margin that reflect the improved business mix. The Londoner Macao grew EBITDA to $167 million during the quarter, with EBITDA margin expanding 660 basis points sequentially to reach 32.2%. The strong flow-through of revenue to EBITDA reflects the operating leverage of our business, once the fixed costs have been covered. The transformation to Londoner has created a world-class product that is a must see for visitors for Macao. We will naturally have some construction disruption in 2024, but we expect future EBITDA growth and margin expansion over time, so that's Macao. The second item I wanted to cover is an update on our plans for the return of capital to shareholders. Our Board of Directors has authorized a $2 billion share repurchase through 2025, and we're looking forward to restarting our share repurchase program. In the nine-year period from 2012 to 2020, we returned over $22 billion of capital to [Technical Difficulty] shareholders in the form of dividends and repurchases, which was split roughly 80% dividends and 20% to share repurchases. As we consider our future capital return, we expect share repurchase will be more heavily weighted than dividends. We believe repurchases will be more accretive in dividends over time as they reduce the denominator. We fundamentally believe in the compounding long-term benefit of share repurchases. So that's the capital return update. [Technical Difficulty] again today, and let's move to Q&A.

Carlo Santarelli:

Hey, guys. Patrick, thank you for the additional color. Rob or anyone over in Macao maybe this one’s best for. But as you guys think about the base and the premium mass. It looks like in the quarter, you guys kind of converted some premium mass tables to base mass tables. And obviously, with the increases in visitation that makes sense. Is that something you expect to do going forward? Do you have what you need basically in terms of the premium mass footprint in terms of table count at this point?

Grant Chum:

Yeah. Thank you, Rob. Yeah. I think the repositioning this quarter for more towards base mass tables, that's just a natural part of our optimization between the segments and of course, as you rightly referenced, the summer saw a big increase in visitation and the base mass business. So that was just a natural repositioning to optimize the table count. As you can see, sequentially, a win per unit increased substantially in premium mass up 19% and base mass, even though we reorientated the table count towards base mass, we also increased the win per unit by 7% sequentially. So I think that you can see very clearly that we actually did optimize pretty well for the quarter between the two segments in terms of table capacity and these numbers will change again as the market evolves depending on which segment is growing faster.

Patrick Dumont:

So it's a great question. I think for us, the first thing is, this is what happens if you cover your fixed cost base. So when we were 70% recovered, we had to cover our fixed cost base in Macao. And as the market recovered and as tourism and visitation continue to grow, we will reach our run rate margin levels, which we always felt was in this context. So what do you see the Venetian is a result of a great product that has, is really an example of a property reaching a more run rate level of operation post-pandemic and the performance in margins that result. And we feel very strongly that the Venetian Macao is going to run as mass visitation continues to return to the market. Remember, Macao visitation is still about 20% less than it was pre-pandemic, we're down about 1 million visitors in the same period. So we feel very strongly about the margin potential. We're very proud about what's going on to The Londoner. We think the market is starting to understand that product operate it is, and we’re starting to see the results in terms of productivity in terms of margin. But again, in that product as well, we think there’s more room to run. So I think it’s a great testament to the team there, the work they’ve done to grow these businesses. But to be fair, we think there’s strength in margins to continue as revenue continues to come into the market through visitation.

Operator:

Thank you. The next question is coming from Joe Greff from JPMorgan. Joe, your line is live.

Patrick Dumont:

So I think for us, because of the mix of business and where we're investing, we sort of run the business in aggregate. So what we're looking at is the 40% margin that Venetian just put up in the quarter and the 660 basis point expansion in margin that The Londoner saw as the market discovered how great it was, and we started getting more visitation and more growth. So I think for us, that's really how we're looking at it. Departmentally, I think we manage the business overall. And as Rob said earlier, we're going to shift assets to the segment that is most productive and provides the best returns. So I think for us, we're not really looking at that as a guide. We're really looking at overall productivity of our asset base in total. I think one thing that's interesting to consider is, so in Macao, room occupancy was 96% versus 95% in the same period in '19. But the thing that's interesting is we're actually driving more daily casino nights at higher yields per room. And so in the premium mass segment, we're seeing a recovery, but our base mass segment is starting to recover strongly. And this is really what you see is, the businesses that used to support Macao mass tourism continue to come back online after what was basically a three-year hiatus. So this increased visitation will drive base mass revenue growth, and we'll start to see margin return to a more normal mix. So I wouldn't look at the departmental. I would look at the recovery in the aggregate margin of the operating asset. That's kind of how we're managing the business, and we're trying to manage segments throughout.

Patrick Dumont:

And then we look at EBITDA, which is the most important effect. Thank you, Rob.

Patrick Dumont:

I think we're going to be measured across time. I think we want to return capital through share repurchases in a meaningful way. We think there is a real benefit to reducing the denominator. We think it's accretive. We think there's a compounding effect in share repurchases. And so we're looking forward to do it on a regular basis. The amounts to be determined. But for us, you see the size of the authorization, you see our balance sheet strength. You see the amount of cash flow we're generating down in the business. And we're going to go out and be aggressive. I think for us, we fundamentally believe in the dividend. But if you look at that split that we had, let's call it, pre-pandemic of a return of capital story (ph), I think we're looking to be majority share repurchases and get that benefit. And so if you look at how we've returned capital historically in a regular and repeatable way, I think we're going to look to do that again.

Joe Greff:

Great. Thanks a lot. Thanks, Patrick. Thanks, Dan.

Robin Farley:

Great. Thank you. I wonder if you could give us some thoughts on kind of what is holding back that lower spending customer. It sounds like transportation bottlenecks are no longer really the issue in Macao, if it's the RMB depreciation? Is that something we have to kind of wait for that to anniversary next year or I guess what do you think will change that the kind of visitor levels for that lower spending segment? Thanks.

Robin Farley:

I guess I'm thinking that the air travel wouldn't necessarily be -- where the lower spending customer will be coming from there, and high-speed rail, I think is back to pre-COVID levels. So I just -- is there anything else that you think is impacting if that needs to change, whether it's policy in Mainland China or it’s kind of anything else outside of that transportation issue. Thanks.

Grant Chum:

Sure. Yeah. I think, Robin, the -- Patrick referenced 72% out of non-Guangdong, Actually, if you look at the regional differences between provinces, I mean there are some of the higher spending provinces are actually way above 2019 in terms of visitation and some are lower than 2019. So I think there are just some regional differences depending on the whole host of factors ranging from the transportation to the availability of hotel rooms and so on and so forth, and their propensity to go cross border in their trips. I mean this is the first set of summer holidays since COVID. And then, I think what you see is actually a very strong acceleration in that non- Guangdong visitation this quarter. So we're really up 22% over visitations, but within that Mainland China is up a lot more sequentially. And that is also reflected in the property visitations that we saw this quarter, the 17% increase in the base mass revenue that we saw. So it is picking up, but it just accelerated at a different pace from the premium mass, which as you know, came back right from the start in a stronger fashion than the base mass. So I think as more to inventory is actually opening up and the propensity improves. People know the Macao market is back with all the non-gaming investments and events that are driving the interest in the destination I think that base mass segment will naturally improve over time as it did already significantly this quarter.

Operator:

Thank you. The next question is coming from Stephen Grambling from Morgan Stanley. Stephen, your line is live.

Robert Goldstein:

Steve, we traditionally don't talk about the current quarter. We'll keep that intact here as well. I think if you look at the numbers in the market as the print to see the strength of Golden Week’s [indiscernible] the numbers driven by the government and other sources. But we never comment inside the quarter.

Robert Goldstein:

Yeah. I'll turn to Grant, there will be some disruption, but we still feel as though the initial results, under are -- obviously, we're looking at it as a future hope that one of these prospects. Grant take it through '24, both [indiscernible] and Casino seeing that better and how we see it.

Patrick Dumont:

Just sort of one thing to think about -- yeah, one thing to think about, so we're very focused on return on invested capital and growth in Macao. And so our anticipation is that the returns on these investments will be commensurate with those that we have previously and will drive meaningful growth. And by the way, the initial market reaction to this product really to what's been brought online so far really helps us with his view. Given the customer response and the performance of the asset in the long run, we believe that the completed Londoner, when it's done will be on par with the Venetian. That's what our target is.

Stephen Grambling:

Thanks. I’ll jump back in the queue.

Operator:

Thank you. The next question is coming from Chad Beynon from Macquarie. Chad, your line is live.

Operator:

Chad, please check your mute button. Your line is live, if you wish to ask a question. Okay. We can come back to Chad later. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is live.

Patrick Dumont:

Thanks for that, and appreciate the question. I will tell you that there's a little bit of magic to it. It's called revenue increase 28.9%. So for us, it really is just more people showing up, spending money at the product, recognizing how great it is and increased demand. I mean it's a phenomenal product there last week. It really looks for the team, it’s really providing unbelievable customer service and it's a highlight for Macao. It's a great asset and will continue to grow. And for us, it was just covering the fixed cost base. We just had to get -- and it was not a known product in the market. People are starting to figure it out, and it's going to keep growing. And so for us, this was really just growth in revenue across all segments, that was really the secret to it.

Patrick Dumont:

So really appreciate the commentary of the question. I will tell you, so right now, we're sitting at about $5.6 billion worth of cash system-wide. Macao is starting to become very cash generative. Singapore is very cash generative. So the way we think about this is due to the timing of our development obligations and those cash flows, we will be able to do all. We'll be able to invest in our core markets and growth through organic growth and through redevelopment of key assets. We'll be able to do IR [Technical Difficulty] core. We'll be able to do our concession commitment to Macao and then we'll have excess capital and we'll pursue New York, and we're going to pursue other growth opportunities in new jurisdictions, and we'll be able to do it all because of the timing of the cash flow, the cash we have on hand and the cash tentative nature of our assets. So in terms of the payout ratio, as we addressed earlier in the call, we're not going to be as heavily weighted towards dividends as we were before. So if you look on Page 30, we sort of included a look on what were our prior return of capital programs looking like for both share repurchase and dividends. And on Page 30, what you'll see is historically, we were very dividend weighted. And to your point about payout ratio, we don't typically guide to payout ratio, but the point is well taken, we're looking really to flip it. So for us, the majority is actually going to end up being share repurchases, because we're very focused on growth. So we can grow the company's EPS through share shrink, we're going to do it. We can grow through capital allocations or high growth projects, we're going to do it. It's really an ROIC, and we're going to pursue it aggressively. And the good thing is we've got cash on the balance sheet. We've got cash center of assets and we have a historical program to provide you a good guide that we can launch off of and really hopefully drive real shareholder return in the future. So that's kind of how we're thinking about it.

Patrick Dumont:

Sorry, one thing. Thank you, Dan. You mentioned leverage, and this is a very important thing. So prior to the pandemic, we spent about five years transforming the company to be an investment grade name. We thought this was really important. It gives us access to the largest, most liquid debt market in the world. It gives us a very efficient cost of capital, which in the long run provides flexibility but also drives returns on our new projects. And so having this investment-grade balance sheet also helps us in new jurisdictions because we have the financial capability to execute on projects we propose. So for us, we like being leveraged 2 times to 3 times on a gross basis. We've said it before. You've heard it from us on prior calls, nothing's changed. We still believe that. We think we’ll delever over time through EBITDA expansion. But more importantly, I think for us, that’s a key metric so that we maintain our investment grade rating for all the benefits we just described. So that’s kind of how we’re thinking about it.

Daniel Briggs:

Thanks, Shaun.

Brandt Montour:

Great. Good evening, everybody. Thanks. So for Marina Bay Sands first, in your slide, you show flight capacity hovering around 80% recovered. Based on the momentum that you guys are seeing in that asset, do you still feel like you need that last 20% of China inbound to fully recover to hit that $2 billion run rate target. And can that happen actually while Tower 3 is under Reno?

Brandt Montour:

Great. That's super helpful. And then over on Macao, on Slide 14, it shows the win per visitor coming down quarter-over-quarter, it's the second quarter that's declined. Is that sort of wholly explainable by the reallocation of tables to base mass, which we talked about earlier in the call or is there any other constraints that you'd want to highlight why that sort of win per visitor is hovering around some of the quarters that we saw in 2019.

Grant Chum:

Yeah. Thanks, Patrick. No, I think what you're seeing is the evolution of premium mass coming back first. So for the first couple of quarters after the Board has reopened, you saw the revenue per Macao visit arrival, which is what this page shows, upon skyrocketed versus the historical levels. And you're now obviously getting more of the base mass, especially during the summer, so you are normalizing. But it's important to note that you are still getting a much higher quality mix of customers even with that when you compare to the same quarter in 2019. So I think from this slide, you can see is 610 per visits arrival in this quarter versus 557 in the same quarter in 2019. So the narrative continues that you are getting that higher quality across every segment, a higher spend per capita. But between the premium and base mass, you're now seeing the base mass starting to accelerate, especially during those July and August summer months.

Grant Chum:

No, this is actually showing you that the mass revenue per visit arrival is actually higher than the same quarter in 2019. So actually, you suggest that the higher spend per capita is actually prevalent in all segments of the market right now. And that also shows through in the gaming. I'm sorry, in the retail mall that Rob referenced as well.

Patrick Dumont:

Thanks, Brandt.

George Choi:

Thank you very much. While we do believe concerts can help to get incremental revenues in Macao. How should we think about the associated incremental expenses? And I guess more specifically, do you expect the [indiscernible] concerts at the Venetian this month to be both EBITDA accretive and margin enhancing at the same time?

Grant Chum:

Yeah. Thanks, Patrick. Yeah. I think we've always been pursuing the entertainment strategy to create a better, more attractive destination and that hasn't stopped since the Board has reopened. In fact, we have been redoubling our efforts, as Patrick said, with the opening of The Londoner arena in May and June. So if you look at the third quarter, we actually did around 15 different show events with about 19 performances across the two arenas and obviously, in some only 13 weekends in the quarter, so there were some weekends where we are doing both a show at The Londoner and also in the Venetian. And we believe this is critical to driving not just the diversification in Macao and the non-gaming, but also to enhance the attractiveness and the propensity to come to the destination, especially our properties, and we can see the impact on our business. The economics of this hasn't changed and we've done this for 15 years. So we know how to calibrate the investment in entertainment versus the return we get on the overall resource spending. And also, there are different types of partnerships that we do in entertainment events, and that can range from just pure any rental to us being the actual promoter. So it varies and it's a calibration. It's analysis between the revenue benefit that we get and the visitation benefit that we get versus the cost and also depends also potentially on the entertainment partner as well, whether they invest or they want us to co-invest or us to invest. So that really hasn't changed, and we've been doing it for more than a decade. But what has changed is that we are actually significantly increasing the content because we now have a new spectacular venue in The Londoner for live music, which is already getting great feedback in terms of quality as any both for the audience but also for the office.

George Choi:

That’s very good color. Thank you very much.

Operator:

Thank you. The next question is coming from Dan Politzer from Wells Fargo. Dan, your line is live.

Robert Goldstein:

Its commitment to Phase 1 because the product as good as it was externally architecturally, it lacked. Frankly, it was necessary that what happens in Phase 2. It's the best money we could spend to make that product successful and stronger. It's going to have enormous dividends in the future, the room product was lacking both from a size perspective, but also a finish perspective. Some of the casino space were just not very good. I always felt that MBS as good as was architecturally is lack of [indiscernible] inside the building. And in our business, great buildings, always prevail, and prevail for a decade and just grow and grow. So that money is money very well spent. It's not connected at all. It's meant to make MBS 1 a very powerful 2-plus billion product. We built in Singapore years ago, the speculation was that you'd never be more than $500 million, $600 million EBITDA. We're going to push through $2 billion and beyond. And I think it's a testament to reinvestment and spend money wisely. It doesn't have any association with Phase 2. Patrick, Phase 2.

Daniel Politzer:

Got it. Thanks. And then just moving to Macao. I think for the last two to three quarters, your non-rolling ship win has been kind of in that 22% to 23% range. Is this a function of just really premium mass being a bigger piece of the mix or -- and so we should think about this kind of edging up over time back to that 23% to 24% plus range or is there something different in this market? And I'm sorry to harp on 1%, but when we're talking $24 billion.

Grant Chum:

No, you're exactly right. We don't have a clear answer on that. There's -- in theory, actually, but just a point to make is, in theory, the premium mass being higher, higher mix in the drop actually should be positive for the whole facility. And it could also obviously add more volatility to the metric. But I think Rob is absolutely right that we don't have a clear answer and in truth, I mean this is only like eight, nine months into a recovery where the segments and the customers, I mean, all that is still evolving. So I think it's also premature to make specific pronouncements on what should be the non-rolling total percentage range. So right now, the numbers are what they are. But as you rightly referenced, as Rob also said 0.5 point of different, not even just 1 point, makes a tremendous difference to the numbers, the EBITDA, the margin, et cetera. So we're closely watching this, but there's no clear answer we can give on that in terms of why the whole percentage is where it is versus before.

Daniel Politzer:

Got it. I appreciate all the detail and the perspective. Thanks.

David Katz:

Hi. Good day, everyone. Thanks for taking my question. I just wanted to go back on one detail. I'm not sure if you discussed this, but I'm just looking at the historical margin levels in Singapore, which were north of 50. Could you just talk about the puts and takes of getting back to that level again or if there's some specific headwinds? And then I have one quick follow-up.

David Katz:

Understood. And as my follow-up, with the very, very good quarter that you had, and it's not just for your stuff, but many in our coverage, the market seems to expect some macro pressure in the future. And it's almost an obligatory question for all of our management teams. Are you seeing anything or providing anything that would validate any macro pressure at this point.

David Katz:

Got it. Thank you very much. Appreciate it.

Daniel Briggs:

Thank you and thanks for joining us today. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, the President of Sands China, and Grant Chum, EVP of Asia Operations and COO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the Safe Harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please post one question and one follow-up, so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Rob.

Operator:

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And the first question today is coming from Joe Greff from JPMorgan. Joe, your line is live.

Rob Goldstein:

Hi, Joe.

Rob Goldstein:

Yeah. Joe, I'll start and then turn over to Grant for the margin discussion. Obviously, we do believe that the market is starting to get stronger, and you saw that in our numbers. Our June results were the strongest, almost $200 million of EBITDA in June alone, so we had acceleration in the quarter. Our numbers, I think, speak for themselves, they speak loudly. Six months ago we were virtually closed, and in the month of June, again, we do $200 million EBITDA. And visitation increases in the town. I think the visitation issue is going to drive obviously the GGR escalation. I just do believe we will be the beneficiary because of our scale and $15 billion of investment will pay off quite well. We have adequate room to run because we have capacity in every segment of the gaming and nongaming. We have, I think, a very strong advantage in that regard. So, again, we think as the GGRs escalate from more visitation, we will be a major beneficiary. As to margin, Grant, I hope you're awake in Macao. Please answer that.

Joe Greff:

Great. Thank you.

Joe Greff:

Great. My follow-up question is, we've seen within Mainland China more mixed macroeconomic performance year-to-date. And yet at the same time in Macao, gross gaming revenues, visitation, retail sales, pretty much most metrics have steadily improved. How do you reconcile the disconnect between China macro and the fundamentals on the ground in Macao? And how do you see that relationship playing out going forward?

Joe Greff:

Thank you.

Operator:

Thank you. The next question is coming from Robin Farley from UBS. Robin, your line is live.

Rob Goldstein:

Grant?

Arpine Kocharian:

Great. Thank you, Grant. And just one quick follow-up. With your dividend restated here, I was wondering if you could update us on your overall kind of capital return strategy and how you think about buybacks. Thank you.

Arpine Kocharian:

Thank you. Very helpful.

Carlo Santarelli:

Hey, everybody. Thanks. Robert or maybe one of the guys in Macao, I was wondering, as kind of the market has shifted and you've seen a couple of quarters that at least look more normalized, as operators who may have been more VIP-focused in the past or certainly more mix towards VIP relative to you guys, have you seen any change in behavior as it pertains to kind of mass reinvestment levels across the market wide?

Grant Chum:

Sure. Yes. Thanks for the question. I think on the whole, we see a very stable competitive environment. I think all of the operators, the entire industry is continue to invest in non-gaming and diversification and bringing about, I think, a really stellar event programming into the market, which is helpful, I think, not just for growing the tourism economy, but also increasing the business volumes for all of the operators. So I think you're seeing the positive results from that investment in non-gaming and events programming, even in this past three months, not least in terms of our non-gaming programming that we put in place has been really driving business levels and visitation. In terms of reinvestments, yes, I think it's relatively similar to what we've seen in the recent quarters. Clearly, it's become -- continues to be actually, always been a very competitive market in premium mass and will continue to be. But I think there's very rational behavior amongst the operators in the industry in general, led by the larger players. But as I said, the focus of the industry has been to reinvest in the non-gaming programming, and that's been a tremendous driver to the recovery so far.

Patrick Dumont:

Sure. First off, we're -- we have very strong feelings about the future success of Singapore. If you look at the results from the quarter, look at the visitation that we have, the type of customer we have coming through the building and the fact that China has not fully recovered, and if you look at sort of the nature of where Singapore sits today in the confluence of events in terms of the growing economies in Southeast Asia, we have a very strong view that the future of Singapore is positive. And so we're very motivated to make an investment there and expand our capacity at Marina Bay Sands. Right now, we're in discussions with the government about what the final form of our project will look like. There's obviously been a lot of change to the market in terms of market potential, the government's goals around high-value tourism, and to be fair, the way we want to grow into that market. And so there's some adjustments that we're making. And hopefully, we'll have a better sense of what that will look like in the upcoming quarters. But right now, we're in discussions and hope we have a chance to continue with the final version of our project in the short-term. We're looking forward to getting started.

Operator:

Thank you. The next question is coming from Stephen Grambling from Morgan Stanley. Stephen, your line is live.

Rob Goldstein:

What was the second portion, the last part, last thing you said. Recover?

Rob Goldstein:

It should go up. I think that -- the reason we called that out is because obviously, a strong month, especially in light of the seasonality of June not being a great one. But look, our position is simple. We think Macao will just continue to get stronger. And the recoveries will be predicated on visitation in all segments. And again, our advantage is very structural and very different offers. We have capacity to grow, base mass, premium mass, ropes, retail, everything you think of these customers want, we have the product to service that, that does the business of our competitor. So I think June is the beginning, and hopefully the summer will be evidence of that. We'll see how July, August, September holds up. But our story is pretty simple, more visitation, especially more base mass, more penetration into China will yield bigger GGR and we'll be a huge recipient of that. And I think that's just what we believe in partly. I guess I take comfort in fact, again, six months ago, we weren't sure we'd open. We had basically a closed business in December '22. Here we are in summer of '23, looking at a $2.4 billion run rate. Just based on June, we believe that could accelerate. So we were firm believers in Macao. Always have been. We never vastly in our belief that that market is just special. And the recovery in China is slower, in general, for all segments and probably, but it's coming on now and the summer will be a great indicator how fast to get back to $26 billion, $30 billion, $32 billion. I don't know what the peak is, but just the acceleration will be evidenced this summer. And again, we are in just very, very good position on having target assets to put to work in Macao. Plenty of rooms, the rooms are all open. The retail is open and functioning, slots and tables. So as the market grows, we should be a pretty big beneficiary from that new demand is coming.

Patrick Dumont:

So I think the key thing to note is that we've had these non-gaming what we call lifestyle programs, which includes entertainment and other activations for years. And they're very successful pre-pandemic because we were able to connect with their customers and bring in very high value tourists in those high frequent. And so we've started those programs again. And so the concept you just referred to is very popular. And I could let Grant comment on that or Wilfred comment on it. But I think the key thing for this is our non-gaming programs are working. That the investment in non-gaming, that the activations, that the driving customer visitation through social media is working. And so the visitation of high-value customers flows through with our results in that month. I think the interesting thing is, air traffic to Macao and to Hong Kong is like around 50% of where it was pre-pandemic. So our story is one of visitation. It was led by higher value customers on premium mass. But now as people can begin the trial of the Macao more easily and more frequently, they're starting to return. They're starting to consume all of our different amenities, not only the hotels, but the concerts, the food and beverage, the retail, all of it's working. And so we'd like to believe we can grow from that number materially as our base mass non rate of play returns as more premium mass customers show up. And as Grant said earlier in the call, more of our hotel rooms come online. So we think we've invested to the pandemic and very high-quality products. The customer response has been very strong. And we're little priced through it. So we'd like to believe that there is margin room there. We'd like to believe that as we activate our non-gaming activities that will draw more customers to concerts and other events, and then that will continue to grow overall the desirability and visitation of Macao. Grant, do you have anything to add?

Stephen Grambling:

It makes senses. Thanks so much. I'll leave the floor.

Operator:

Thank you. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is life.

Grant Chum:

Yes. Thanks, Shaun. Yes, I think you heard it right, averaged around 10,700 rooms a day in terms of our operable capacity from a labor standpoint during the quarter. We actually increased further towards the end of the quarter. So as we go into third quarter, we're roughly at that 12,000 rooms mark, which I said, plus or minus, typically, there's always a handful of rooms out of order for maintenance, regular maintenance. We're effectively back in full inventory now and ready for the peak summer season, which is getting underway later this month.

Patrick Dumont:

So I think what's important to note about Marina Bay Sands, as Robert said in his remarks earlier, the building is under a lot of change. It's changed for the better. We're investing a lot and we're creating what is arguably the best product we ever had. And the customer response is very strong, but we're mid-flight in that. And so I think -- a couple of things to consider. Our biggest suites, so our 200 multi-day suites are the last to come online. So that's what's going to come in this quarter and the next quarter. So the full earnings potential of the renovated Tower 1 and Tower 2 will not really be reached until those suites are online. So we've been operating without them. So we'll be able to price better. We'll have higher margin and we'll have like a larger quantum of cash flow from this high-value segment coming into the building because they didn't have any place to stay. And now we're adding 200 suites of the highest quality we've ever had. So that's going to be meaningful, and that will address, let's call it, some of the operating leverage we want to get out of our cost base. We had a significant number of rooms out of inventory. And so I think between some of the cost increases that we've seen in the market for inputs -- and to be fair, the gaming tax increase, there are some things we need to overcome through higher-value customers, through pricing and through volumes. And I think the one thing that's important to note, aside from the fact that we haven't had our most important room inventory available to us, our casino floor has also been in renovation, that's coming to a close. But most importantly, airlift from China is really back yet. And so when you look at play across the quarter from rated play from China, it's increased each month across the quarter. And so as China visitation comes back into the fold and our new multi-day suites come online, we will have an opportunity to price through some of the cost increases and improve margin.

Rob Goldstein:

I just want to say, I think we're going to the labor side more escalate because in every business, be it hospitality or retail, when you've got an exemplary product people want, you've got pricing power. And I think we're finished over there. It's taking a long time. It's a slog, but we get through this thing, the room product offer, the F&B, the retail, rethinking of retail. You see this all over the map in terms of why is Hermes and now Louis Vuitton get these ridiculously high-priced side margins. We want the product. They offer a superior product. Same thing happens in the watch world, same thing happens in the hospitality world. I think we're building something that people don't understand how good it is until you see it, understand it. It's going to be really special, and we'll be able to get pricing in every level, be it rooms, casino gaming, retail. When this building is done -- I'm amazed we're doing these kind of numbers with ripped-up buildings -- when this building is done, our pricing power is going to go to another level. I think that's where MBS takes some different here. The margin have always taken care of itself as long as you have the product people want and will pay for it. And I do believe when you guys have a chance to get over there and see MBS and experience what we're doing, you'll appreciate these comments. It's going to be a pricing power issue. We're not going to cut costs, we're adding cost to add more labor. We're going to have a really good product we want people want to be at. But that enables you to charge prices that are high. And I think that's our strategy, is not to, we're going to earn our way to success by offering a great product and people will pay up for it. It's just that simple. And margin reflects that in the daytime.

Operator:

Thank you. The next question is coming from David Katz from Jefferies. David, your line is live.

Rob Goldstein:

I want to get Grant take that question. But I do want to say, David, again, I think I'll use the words structural advantage. I think we're just a very different position than some people in that we were built for this market in terms of scale and size in every area of our business. Base mass, premium mass, we're still handicapped by the base mass hasn't fully recovered. But I think our reinvestment in the last 20 years is to make this product grow and grow relative to margin and demand. I think we're just built for this environment. So I'm highly confident margins will rise with our increased revenue. Grant, can you add some color?

David Katz:

Thank you. And as my follow-up, with respect to share repurchases, Patrick, which you touched on earlier, obviously not asking for specifics around when and where and how much. But any color on sort of boundaries or accomplishments or how we might think qualitatively as to when we get there and when we can start to think about that in a more tangible way?

David Katz:

Okay. Appreciate it. Thanks very much. Good-luck.

Brandt Montour:

Hey, good evening, everybody. Thanks for taking my questions. So on the VIP business, which grew nicely for you guys in the quarter, but wasn't as strong as the overall market. Could you just update us how important is this segment to you when you plan the next couple of years? And then can you just touch on the current dynamics of the VIP market overall away from you and how your strategy compares to the broader market?

Brandt Montour:

VIP quarter-over-quarter grew below market-wide VIP.

Grant Chum:

Yes. I think on the VIP, our strategy hasn't changed. And in fact, obviously, the way the market has evolved in Macao for VIP, it fits our strategy more than ever because we're focused on the -- we've always focused on the premium direct segment out of the VIP. And we've historically had a very strong sales network around the rest of Asia. So we're working very hard, bringing foreign top-tier players into Macao, and we're having I would say, initially great success in doing so. Our foreign rolling volumes are already back to 2019 levels in the second quarter. Obviously far ahead of the general tourism recovery from overseas markets for Macao. So I think -- I think it's anchored around premium direct, our very strong sales network around Asia and our continued effort -- intensifying the effort to bring more foreign top-tier patrons to Macao. As Rob said, it's a great destination for all of those markets, and we intend to make full use of our great product and destination to attract those foreigners.

Patrick Dumont:

So just a few points. We did take Singapore expansion off because until we finalize the program and have final approval from the government, we don't know exactly what it will cost. So we're going to hold off on that until we have a project decided upon. In terms of The Londoner under Phase II -- I think the great thing about The Londonder is when we first started, we actually did it pre-concession during the pandemic, and we built through the pandemic and into the concession renewal and came out of the other side. And the thesis was validated. It's incredibly well received by the market. It looks spectacular. Customer response has been very strong. And we're excited about the result, and that market validation was very important. And now we're going to roll into the second part of the building and really hopefully tap into the absolute earning power of that, let's call it, really well laid out, really thought through hotel offering and amenity offering. And so in our long-term view, that's something that we'll open one day, come close to the Mid-East in terms of its productivity. The potential is there. Very excited about that opportunity. In terms of return targets, I think it's not something that we talk about directly, but in our mind, there's a lot of potential growth in our deepest and most profitable segments, which is mass and premium mass. And so with the revised or renovated hotel suite -- hotel rooms and suites that we'll have there, we think we'll be able to address the market incredibly well, just like we did with the first phase of The Londonder. So I think that's kind of how we're thinking about it. And in terms of a new hotel tower, I don't think we can comment on rumors. I don't think that's something we're familiar with. I think for us, we're really focused on really delivering against our concession renewal requirements, investing in the non-gaming amenities that really help define our portfolio in Macao and really drive visitation. So Grant, do you have any other comments you'd like to add?

Brandt Montour:

Great. Thanks all.

Steven Wieczynski:

Hey. So Rob or whoever wants to take this -- and Patrick, you touched on this a little bit, so this might be you. But Slide 14, I think, is pretty interesting. Around visitation trends during the quarter, with Hong Kong back to actually above pre-COVID levels, Guangdong pretty much back. The rest of China, though, remains well below pre-COVID levels. So wondering how you guys are thinking about the recovery in that segment moving forward? And what you're watching. And I know, Patrick, you talked about air capacity. Is it really just air capacity? Or are there other factors out there that -- but might be holding that segment back?

Grant Chum:

Yes. I was going to point to that page as well. Patrick. Yes, Dan's famous Page 15 on the penetration. Actually, you can see from the Eastern China, Yanxi River Delta region, especially Shanghai and Zhejiang Province. In fact, the recovery rate is higher than Guangdong's because I think you have better airlift, better propensity to travel cross-border from those source markets. And we've already seen a very big upward shift in the recovery rate of non-Guangdong, relative to first quarter. So I think in the first quarter, when we're looking at that recovery rate, it was less than 30%, and now we're approaching 50%. So non-Guangdong visitation second quarter grew almost, I think, in the high 40s sequentially. So it is coming back, as we said, as airlift improves, transportation in general improves, and also our hotel room availability has been increasing. And actually, we'll be further increasing for Macao as a whole in the third quarter. We have some new hotel rooms coming online. So all of that, I think, is positive for the outlook for continued recovery in the visitation outside of Guangdong Province.

Steven Wieczynski:

Okay. Great. I'll leave it there, guys. I appreciate the color. Thanks.

Operator:

Thank you. And a final question today is coming from Daniel Politzer from Wells Fargo. Daniel, your line is live.

Rob Goldstein:

No, there's multiple variables at work here. And I wouldn't want pigeonhole, the economy, Visa, I don't think we really know the answer to that. It's an aggregate answer, it can't be unpacked really. I do think though, seasonality, summer has always been the time. This is the first time, post-COVID. I, for one, believe summer has improved very strong. Some business people boasting about what the joint numbers look like. I hope they're right. I believe some will be very indicative of new growth in this market. And look, again, I think you have to look back on how quickly we see this recovery. Six months ago, we were in dire straits. And now we're unpacking $200 million a month in June. So we're very bullish when we think long-term. And again, the trajectory may be uncertain but the end result's very clear. We're going to get there. We're going to make a lot of money in Macao, definitely. And we hope we have more good news in the near future to offer to you. So I'm hoping for a big summer for the market.

Patrick Dumont:

So I think we said a while ago that we were going to invest in ground up digital activities. So we're -- we're not buyers, we're builders. And I think for a while, we've been working on a couple of digital initiatives. And I think the key thing for us is, it's still early days yet. We don't really have much to talk about. We're very confident about it. We think long-term, there's real potential there. But our focus is going to be on highly regulated markets. So that would mean Europe and North America. Our goal is to make sure that we maintain our regulatory standards in the best possible way, only working with partners where that makes sense and being very selective. But in our mind, we're very focused on regulatory certainty and being in strong [Technical difficulty] I'm going to put this on hold. Sorry about that. So I think our view is that the digital issues have potential. We're going to continue to invest in them for the long-term. We are committed for the long-term. And I think our goal is going to be to focus on highly regulated markets.

Operator:

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.

Patrick Dumont:

Thank you.

Daniel Briggs:

Thanks, Paul. Thank you all for joining the call today. With me today are Rob Goldstein, our Chairman and Chief Executive Officer; Patrick Dumont, our President and Chief Operating Officer; Dr. Wilfred Wong, President of Sands China; and Grant Chum, EVP of Asia Operations and COO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. And finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up question, so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Rob.

Operator:

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And the first question today is coming from Joe Greff from J.P. Morgan. Joe, your line is live.

Rob Goldstein:

Thanks, Joe.

Rob Goldstein:

Joe, I'll ask Patrick to take it. But before I do, I'll just say, I think you have to realize, I think you do realize that Macao is in its infancy as far as a return to a more normal operating environment. It's not even -- I think we're -- it's still early days there. This first quarter is still not representation of what can happen in Macao or will happen. So, I wouldn't call it normal operating mode. And as you referenced, the acceleration in revenues is clearly there and that will accelerate margins. Patrick, you want to add some more color.

Grant Chum:

Sure. Yeah, thanks, Patrick. Yeah, maybe I can just give some color on the March trends. I think, Joe, you're right, the market experienced strong recovery through the quarter. So, pretty much across all operating metrics, March was better than January and February average. I mean, just as a starting point, in Macao, overall visitations city-wide were up 22% in March versus the first two months of the year. For our portfolio, the gaming volume, non-rolling drop and slot handle were both up 10% in March versus the first two months. Rolling volumes accelerated a lot more than that during that month, not least because we're starting to get some traction on the foreign VIPs coming to Macao, to our properties. Hotel occupancy improved. Occupied room nights increased by 8% in the month versus the first two months, as we were able to operate more hotel rooms with the additional manpower that's coming on board in the second half of the first quarter, and that will significantly increase further into the second quarter. So, overall, yes, I mean, March was a very pleasing month in terms of evolving trends. And as Patrick said, operating margin did recover and did recover more in March, but hopefully this is just the beginning.

Grant Chum:

Sure. Rob, shall I take that?

Grant Chum:

I mean, hotel room inventory, Joe, availability, the actual availability for the first quarter, yeah, was around 7,700 rooms for SCL portfolio-wide. So effectively, we were accommodating as many rooms as we could, given the manpower constraints during the quarter. As I just referenced, it did improve somewhat in March as the additional hiring of the labor came on board, and the Macao government and the labor bureau have been very supportive in helping us to bring on the labor that we need to operate, especially the hospitality side of the business, the hotel and restaurants. As we go into second quarter, we would expect that, on average, second quarter, we can reach 10,700 rooms in terms of operating capacity. So that's roughly 3,000 additional hotel rooms that we will be able to operate in the second quarter, and that, obviously, takes us up to the much close to our physical available inventory. And we will reach the 12,000 probably sometime in the third quarter, in time for the summer peak season, as additional hiring and training completes through the second quarter.

Grant Chum:

Yeah, Rob, I think for most of the market, for the second quarter, it's effectively a non-issue from a hotel operating capacity. Obviously, the size of our inventories is the biggest. We'll take a little bit time to get up to full capacity, but obviously, there is a big difference already that we can see between operating 10,700 rooms versus 7,700.

Joe Greff:

Thank you, guys.

Operator:

Thank you. The next question will be Carlo Santarelli from Deutsche Bank. Carlo, your line is live.

Rob Goldstein:

Carlo, one thing I thought I understood and I think I was wrong in that respect was the super high-end premium customer in Asia. I thought we would dominate completely in Singapore. We're seeing Singapore is doing very well. We've equalled our 2019 rolling volumes. But what surprised me to the upside is the international demand for Macao, and rolling volume in Macao has been very pleasant, much more than I thought, that we could be rolling in that market far in excess of $20 billion, $25 billion annually, this keeps going. So, there has been a pleasant surprise -- has not hurt us in Singapore if you look at the numbers, but of course, there's only so much money out there, so it might have some impact. Singapore, as you see, had record numbers on the -- the slot numbers are astounding, to be at 900-plus per unit. I've never seen that in any market I've worked in, on especially the scale of machines, the market plus our non-rolling win. To exceed 6 million a day, it's pretty extraordinary. And that's what the impediments and the big headwinds of our rooms being down, our casino being torn up and there is yet to be a recovery of the Chinese consumer into Singapore at the level I think it will get to. So, the pleasant surprise is, Macao is attracting a very strong international Asian high-end customer and yet we're doing fine in Singapore. We may be sharing a very large rolling business between Singapore and Macao for long time to come. I had that wrong pleasantly. I do think the slot business in Singapore and the non-rolling is just the beginning of a trend, a very strong trend. Once we get these rooms back and the casino and -- who knows where it goes. If we make $2.5 billion, $3 billion of those segments in the years to come, maybe. But clearly, we're very happy with the results. For Singapore to do this well this early [in the day] (ph) without a full blown China recovery, it's pretty impressive. I think, we can believe we can make $500 million a quarter in the near future when things get back to a stronger place. So, we're very pleased in both markets for different reasons.

Rob Goldstein:

It is to me. I think if we go Page 14 of our deck to see the visitation [being like] (ph) 40% and yet see a recovery where it's at, it's very encouraging for future. The trajectory of Macao feels very good to us. And as Joe alluded to, the growth between January, February, March, it looks very [indiscernible] not be encouraged when you see. We made $400 million roughly without visitation really coming back very much, without hotel rooms being fully occupied, without a lot of impediments, a lot of headwinds and yet here we are. So, yeah, it's very encouraging for us and to the market. And of course, we're the biggest beneficiary of the recovery of base mass since we -- that's our dominant position. But I want also allude to the fact that we believe with our new Londoner and Four Seasons suite and physical product, we're going to compete very favorably, not just the base mass, not just retail, we're going for the very top-end of the market as well to dominate that, and we believe we can do it in both the rolling and non-rolling segments. We have both scale in terms of suite product, but also great aesthetic. When you see what we've done, we were there, and you see the new Londoner, you see the new Four Seasons, I promise you, you will be overwhelmed with the product of quality. What that team has done is exceptional work. So, for us, we see no segment in Macao to our competitors. We want to be first in every category. I believe it's possible with our new products.

Grant Chum:

Rob, maybe I can just add something on the...

Grant Chum:

Sorry. Okay. Just to add something to Rob's comment on the premium mass versus mass off the question, yes, it looks like from the deck that we recovered at a similar rate on the premium mass and mass win versus first quarter of 2019. But overall, in terms of volumes and headcount, it was definitely a premium mass led recovery and the quality of customer has been increasing and the spend per head. The win comparison with 2019 is more hold related issue on the premium mass segment for both 2019 and 2023. But overall, premium mass gaming volume, gaming drop and headcount recovery is faster than base mass. But I think to Rob's points, we've been essentially out competing in the premium segments in both VIP and premium mass as you can see from the market share in the first quarter. Our non-rolling drop recovered to two-thirds of the first quarter of 2019 level. That's in line with the overall market recovery in mass, despite a much bigger dependence on base mass. So, as the base mass, which has been lagging in the recovery, starts to ramp up, especially as more hotel rooms come online for city -- for the whole city and for our portfolio, and also that visitations pickup and transportation and logistics improve, we should obviously be the biggest beneficiary of that base mass recovery. And some of that you can already see in the way we've outperformed in a slot electronic gaming market. Slot handle recovering to over 73% of 2019. And that has a lot more exposure. I mean, Hong Kong base mass is a much bigger part of slot and tables, and obviously, Hong Kong base mass has recovered faster as you can see from the visitations where Hong Kong visitations are already 75% of where they were in 2019, and you can see that outperformance in electronic gaming has been strong, both in absolute terms and relative to the market.

Rob Goldstein:

Thanks, Carlo. Appreciate it.

Robin Farley:

Great, thank you. Grant, following on your comments about the strength of the recovery being that by the premium mass side, I'm curious if you're seeing any impact at all from visa policy that is sometimes turning down kind of frequent visitors or multiple visits in a period. Sounds like it's not impacting the recovery in your view. But I'm just curious if you're seeing any impacts from that.

Grant Chum:

Rob, shall I take that?

Grant Chum:

Yeah, Robin, I think for -- if you look at the visitation, overall, we are seeing a much faster recovery from Guangdong than from the non-Guangdong provinces. I think that's for obvious reasons, the proximity, the ease with which the visitors from the neighboring province can get to Macao. From my point of view, I think the biggest impediment to a higher rate of recovery in non-Guangdong visitation is actually the amount of hotel room inventory that was unavailable in the first quarter. I mean, we're the biggest repository of hotel rooms and we're with offline by 36%. And for the city as a whole, obviously, the percentage of out of rooms availability was also very significant. So, I think people have kind of high propensity to think about coming to Macao. I think the hotel room inventory issue has been a big impediment. But that's obviously easing dramatically as we get into the second quarter. And then, transportation is still only a fraction of what it was, especially in routes like from Hong Kong to Macao. Our ferries are only 20% of where they were in 2019 during the first quarter. And yeah, obviously, the visitation from Hong Kong has been so strong. So, I think overall, the visitation recovery is progressing very well, but you've got to bear in mind a couple of those pain points that are both, I think, I would say, easing quite significantly, and that's the hotel room inventory and the transportation.

Rob Goldstein:

Take it, Grant.

Robin Farley:

Great, thanks very much.

Shaun Kelley:

Hi, great. Thanks. Just, maybe to start, if we could go back to a couple of your comments, Rob, on that base mass versus some of the premium mass mix and the surprise there. I mean, is -- a healthy way to think about the mix that we're seeing in the market today, just kind of low double digit increase in spend per visit, is that -- if I look at the 62% base mass versus, let's call it, 48% overall visitation growth, is that reflective of market conditions, or is there some subtext or some difference that we should be thinking about, or did that change throughout the quarter at all? Just trying to kind of get a sense of what's pent-up demand and how much of this is just getting the bodies back into the property.

Grant Chum:

No, not a lot more to that, Rob. Yeah, I think you covered it well.

Rob Goldstein:

Great. I mean, the other question would be the follow-up and maybe a little bit indulgent, but I'll try. Just trying to get a sense of kind of...

Shaun Kelley:

Just trying to get a sense of market share as we, let's call, exited the quarter, be it March or some [amount] (ph) of run rate, as we look at it, some of the checks suggested that it was accelerating and you did very well. It probably depended a little bit of the timing on some of that base mass recovery, but for the quarter, we calculated you at around 27% share. And just kind of curious if that was level across the quarter? Did you kind of -- was it your exit rate meaningfully higher than that? I'm just kind of trying to, again, probably extract a little too much from where we are in the recovery, but we want try anyways.

Patrick Dumont:

Yeah, it's an interesting question. I think when we look at Macao, it's a story of investment. So, if you think about the growth in Macao and the asset base that we have and why we're able to get the visitation and the productivity out of the assets, it's because of our scale of investment in non-gaming. It's the rooms, it's the retail, it's the entertainment, it's the food and beverage, it's all the things that drive tourism value. And so, we invested $2.2 billion across the pandemic. So, from our standpoint, it's a new day. And we have probably one of the most important assets we have created in The Londoner, which was Sands Cotai Central. There's a lot of productivity that's available there. We have 650 new suite that we didn't have pre-pandemic. There's a lot of volume that we're going to be getting that we never had access to, now that the pandemic recovery is underway. And I think the other thing that's important to note is we've done this two other times. So, we were in the Las Vegas market during the recovery. And we saw the schedule and let's call it the slope of recovery related to pent-up demand in the marketplace and recovery of tourism. We went through that. We saw it in Singapore and the different stages of tourism access that occurred in a very controlled market in that recovery. And now we're seeing unfettered access to what is probably the best cluster tourism assets in all of Macao globally. And they've been continued to be invested in. There's a lot of depth to the market. And it is the beginning innings. It's early. So to call a market share now is a little tough, because it's not really comparable to pre-pandemic, because of the amount of investment and some of the dynamics changes that have happened to the market in the last three years. So, from our standpoint, I think we put up a good quarter. I think we're positioned well. As Grant mentioned, we're very excited about the additional inventory coming online as we get manpower into the buildings. And I think we're in a good place to continue to grow. So, we're not really looking at market share right now as much as we're looking at investment, visitation, access, customer service and then margin and outcome. And you saw the results of that in the quarter that we just had. So, March was really good. We're really excited about it. We're in a great trend. And we're going to keep pushing.

Rob Goldstein:

Thank you.

David Katz:

Hi, afternoon. Thanks for taking my questions. I wanted to just go back to the direct VIP business in both markets. And I know you made some commentary about sort of where Singapore is coming from and where some of the extra business is coming from. But can you help us understand the direct VIP opportunity in Macao? And are there any insights that we can learn from about where that could evolve to over time relative to what we saw in the past, understanding it's a completely different business today?

Grant Chum:

Sure. Yeah. I think Rob is absolutely right. The attraction of Macao to foreign VIP gamer is immense and I think the pleasant surprise, although we are obviously redoubling our assets post the concession tender in bringing international visitation to Macao and the VIP gaming was the first natural place to start, given that the general airlift, commercial air flights are still a fraction of where they were in 2019. So, I think this direct VIP performance that you referenced, it was very healthy during the quarter and kept growing and we don't know where it grows to, but there's no reason to believe that it wouldn't continue to grow, given the quality of the product. And you can see, not just the strong product appeal for the premium customer that we provide, but we provide such a diversity of -- such a clustering effect of so many world-class resorts and we already have four of them in our portfolio. But together with all of the other colleagues in the industry, it's an amazing clustering of world-class premium gaming destination that should appeal to the Asian regional players over time. And then, I think the other point that is, I think specifically for us, we've been doing this for a long, long time in terms of our international direct VIP around the Asia region. Las Vegas, Macao, Singapore, this is not a new structure to us. We've just got enormous ability to promote Macao now to the foreign countries, because we have the capacity, and to Patrick's point, we have the new product that we've never had before, the availability of the top-quality suites, the top-quality salons. So, we're going to be -- we have been and we're going to continue to use our international sales network that we have the biggest infrastructure across Asia in the industry and that's where we're going to combine the benefit of this premium product, Macao as a destination for these Asian gamers. With our sales infrastructure that will continue to expand. So, I think the future is very bright for foreign visitation and foreign VIP market into Macao.

Rob Goldstein:

We won't be, David, country-specific, we won't do that. But I would just say to you, the demand is in a number of countries. And I think Grant's last point was very interesting. I was juffling, because he's actually right. We've been doing this for decades. In Asia, we have a very strong sales force. A lot of same people have been with us for 20 years and represents in Las Vegas and of course Singapore, Macao. So, we are the beneficiaries of that sales system. But I think the high-end is probably built now in Singapore and Macao is going to drive that customer. Is this sustainable? Does it grow? I don't want to predict the future. I just don't know. But if it does, I think we will be the biggest beneficiary of it, because again, we have the biggest network and we have all these different places that we can take people within Macao, and of course to Singapore. So, it's hard to predict because again, it's early innings here. But I think if there's a strong rolling business in Macao, I think we'll get a big chunk of that. And time will tell how big it is, liquidity issues. But the MICE and the junket business clearly has a new day there. But if we can roll $20 billion, $30 billion, it would feel like a good place to be, if that's possible.

Rob Goldstein:

Oh, thank you. You saw it? We love people seeing it, because it's only halfway there, but what we've built so far is, we're just very proud of it. Thank you.

Operator:

Thank you. The next question is coming from Brandt Montour from Barclays. Brandt, your line is live.

Rob Goldstein:

Hey, Brandt.

Rob Goldstein:

I'll just make a few comments and I'll pass on to Grant. I think the key thing here is having seen this, as we said before, in several other markets. This is an impressive recovery. It's very strong. The people who can get there are consuming meaningfully in all segments, retail, food and beverage, on the gaming side, on the hospitality side. So, it's great to see. It's very exciting. I don't know that in any of our markets, we had a quarter with this amount of EBITDA recovery this quickly after opening. So that's a good indicator. And so, I think we're very excited about that. I think, it's hard to call these things are -- it's -- I wish we had a crystal ball, but I think at this point, we look at the recovery and it's very encouraging. I will turn it over to Grant to see if he has an additional remark.

Brandt Montour:

Great, thanks for that. And switching gears maybe to New York. Just curious if you're willing to give any updated thoughts on the RFP process there? If you think the timeline has shifted since we've talked about it three months ago? Any other comments on the factors for winning that third license? Thank you.

Rob Goldstein:

Thanks, Grant.

Operator:

Thank you. The next question is coming from Steve Wieczynski from Stifel. Steve, your line is live.

Rob Goldstein:

I think you asked it perfectly. It's a good question. Grant, do you want tackle that first?

Rob Goldstein:

Steve, I think we all agree that what Grant just said, we have total confidence that this market will look a lot like it did before. The only difference structurally is the junket situation. But maybe the more affluent have gotten better access earlier, but I'm a staunch believer that that market will come roaring back in the base mass. You walk around the Peninsula, you see already the base mass is booming down there, although it's just lower-quality spend than premium base mass. But I think the base mass market will come back, the question is how quickly it does come back. But this market will look fundamentally the same in 2023 and '24 as it did in '18 '19, I'm pretty confident of that.

Rob Goldstein:

Patrick?

Rob Goldstein:

I think we're going to be raging bulls on Macao, investing in the future. And they're fairly look-back to our past and further, you can see our future, which is going to be, we believe non-gaming assets are wildly profitable, but they also drive gaming assets. It's all in sync. So we build more hotels or we build more retail or anything, it drives the gaming win. We've got plenty of positions to fill and to grow those numbers. When you look at the slot number coming to Singapore and the win per unit and tables, you realize just how far Macao can get to. So, we never saw the investment in the concession being an ending point. We saw it the beginning point. We much believe that Macao in next 10 years will make a lot of money for us. We're very bullish on the market and we're thrilled to be there.

Rob Goldstein:

Sure.

Operator:

Thank you. And the last question today is coming from Dan Politzer from Wells Fargo. Dan, your line is live.

Rob Goldstein:

Thank you, Dan.

Rob Goldstein:

Grant, are you still awake? Grant, please take that.

Dan Politzer:

Got it, thanks. And then just turning to Singapore. Maybe if you could talk a little bit about the puts and takes the reopening of China? And I know inbound travel from China has been a little bit slower to recover, but, I guess how do you think about that recovering over the course of the year? And then, similarly, China customer base that had been in Singapore, are you still seeing that customer, or have those -- has that base gone back to China?

Patrick Dumont:

Thanks. It's a very interesting question. I think with the opening of China on January 8, there hasn't been a huge influx of Chinese visitation in the early part of the quarter. But there is an ongoing ramp of outbound tourism from China, that we will be the beneficiaries from. And that's something that we've been anticipating a long time. There is not the normal level of flights. There is not the, let's call, the normal airlift capacity that you would expect during a normal run rate period, which they're going to slowly ramp into. So across the year, our expectation is that, that visitation will recover. It's such a strong market for Singapore, has been historically, and yet we're able to execute these levels without that market really contributing. So we're very bullish on the opportunity of outbound tourism from China to support Marina Bay Sands and its ultimate growth to where Rob has mentioned earlier in the call and beyond. There is one other comment that I do want to make. We had a very interesting question from Steve just prior to yours about the level of investment that we're willing to make in Macao. And I think we're very optimistic about our investments there. It's a high return environment. We're very focused on continued investment there, not only through the fulfillment of our concession renewal, but also in general, to grow our non-gaming asset base. But the same thing was true in Singapore. I think we're very focused on growing Singapore as a market. The opportunity there is very unique. It's a really high-value tourism market that has a different catchment area than Macao. We're very excited about the Marina Bay Sands expansion. Although, just to sort of comment on it, kind of going down that vein, we have very high expectations for return on invested capital in both these markets. But when we first went into the Marina Bay Sands expansion in 2019 and we entered into a development agreement in April of 2019, a lot of things have changed. So it's probably going to be a lot more expensive. The pandemic brought additional costs. There has been material -- labor and material cost increases. There has been significant inflation globally, as everyone knows. It's just overall market conditions. But I think from what you see in this quarter, is that the strength in the market is on full display. We really believe that it's going to get stronger over-time. And particularly with investment in high-quality tourism assets, which is what the Marina Bay Sands expansion is. But I think it's really important to note that there's been significant inflation since we began discussions a year ago. So the cost at Marina Bay Sands expansion is going be a lot higher. The good news is, the market is so good. We think the opportunity is going to be a lot stronger or will do a lot better. So, I think to set expectations, the investments that we make, both in Macao, are going to be very strong return. We're very excited about them over the next concession periods. We're really looking forward to investing in Marina Bay Sands expansion. We think it's going to be a great asset. But both of these are going to be expensive. The good news is that we believe the returns are there or we wouldn't be doing them. So, I don't think our investment thesis has changed in either market with the cost inflation. We believe in our long-term success in these markets. We sort of have a very long-term thesis in both of them and going to deploy capital into both in scale. And we're going to look for high returns, and we feel very strongly about the opportunity in both of these markets. But I did want to say that it's going to be expensive and it's going to be worth it.

Dan Politzer:

Got it. Thanks so much.

Daniel Briggs :

Thank you, operator. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, President of Sands China; and Grant Chum, EVP of Asia Operations, Las Vegas Sands and COO of Sands China. Today's conference call will contain forward-looking statements. We will be making those statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In. addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We may refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up question, so we might allow everyone with interest the opportunity to participate. The presentation is being recorded. I'll now turn the call over to Rob.

Operator:

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] And the first question is coming from Joe Greff from JPMorgan. Joe, your line is live.

Rob Goldstein :

So pessimistic, Joe. We're more than breakeven. A lot more than breakeven, doing just fine. I'll ask Patrick to give us some color on those issues, but I think we're past the breakeven. We're now in the positive territory moving towards very positive territory. Patrick?

Rob Goldstein :

Yeah. Joe, I think we can be confident, be very honest and direct. We are in very positive territory and keep moving upside. I think the one thing I would say to you is that no one ever questions the power the base mass market. I would remind you I was looking at our numbers, base mass in Macao in our building costs about 1,500 Hong Kong per hand as an opening bet. So it's a couple of hundred bucks a hand USD. That's the base mass business. The problem we have right now is you can't get a seat in the games in our buildings. We're running 95%, 100% occupancy in those games. And the same applies to slot ETGs. The big question everyone's thinking about obviously is premium mass. And I think you'll be pleasantly surprised when you can see the numbers coming out of the premium mass. And you'll see the liquidity, you'll see resilience in that segment. And it's been a very pleasant surprise. Grant, can you add some color to that?

Joseph Greff :

Great color, guys. Thank you. And then maybe switching over to Singapore for my follow-up question. Obviously, your comments on mass gaming, Rob, obviously, very strong. Can you maybe talk a little bit about your comments that you believe on like forcing late December and thus far in January, there's been an inflection at least from the Mainland Chinese segment? Can you give us some perspective on the relative -- I don't know if you want to look at it on a revenue or EBITDA contribution looking at 2019 levels. And then where that was sort of more recently as a percentage of the total mix?

Patrick Dumont :

Yeah, sure. I think the important thing to note is that there was this pent-up demand story in Singapore and now it's blossomed into full on bonanza. And so what we're really seeing is every segment is working. And so we had a lot of noise in this quarter because of the hold. We rolled north of $7 billion, which is pretty unbelievable considering where we came from. And the mass play was very, very strong. And so while we were doing this, we had almost 20% of our room inventory out. And so when you look at that 477 win number in mass and you look at the rolling volumes and realize we're out 20% of our rooms, there's a lot of leg room here. There's a lot of room for us to go. And so I want to be careful when we talk about margins and contribution because we're going to adjust that as we change mix, as we get rooms online as we go through the innovation, as we change our suite product, as we price up, as we yield up, and as we have access to higher value tourism. So this is really a forward-looking thing more than it is what happened in this quarter because we're going to continue to sort of adjust while we get our mix right. So what I would look to in this business is margin expansion over time, more rooms coming online, better product, better service and, of course, being able to capture a very strong component of both VIP play and mass play.

Joseph Greff :

And Patrick, just back to your mix and yield comment. Do we interpret that, at least if we look back to 2019, that, that China MBS patron was a -- had a positive mix on spend per trip or spend per day or gaming revenue per day?

Joseph Greff :

Great. Thank you.

Carlo Santarelli :

Hey, everybody. Thanks, and good evening. Rob, or whoever wants to handle this, I was just wondering, in the brief time that China has more or less reopened, have you guys seen positive or negative, any change in behavior as it pertains to patronage at MBS?

Carlo Santarelli :

That makes sense, Rob. Thank you. And then just as a follow-up, and I understand kind of looking backwards at things that are Macao related is somewhat pointless in the environment that we're in right now. But it's just -- it does stand out a little bit when looking at your base and premium mass table revenues from the slide deck, your premium mass is representing, I think, 20% of 4Q '19 base mass kind of more like mid-teens, 16, something like that. However, the premium mass is down considerably year-over-year, whereas the base mass is reasonably steady year-over-year. Is that a whole dynamic on just lower than normal historical volumes? Or is there something else that's kind of made those 2 diverge more recently here, and then the fourth quarter specifically?

Carlo Santarelli :

Understood. And then, Rob, just quickly, if you could remind us, to the extent you guys are willing to share it, 2019, your direct VIP volume, your in-house VIP volume as a percentage of total, would you guys be able to share something like that?

Carlo Santarelli :

Understood. You could, but you won't.

Carlo Santarelli :

Thanks, guys. You as well. Take care.

Stephen Grambling :

Hi, everyone. Thanks. Can you hear me okay?

Stephen Grambling :

So the visitation data for Chinese near looks like Hong Kong has been the bigger driver in the recent uptick in visitation. Is there any way to parse out recovery between Hong Kong and Mainland China? And any reason why spending behavior and recovery may be different between these source markets?

Grant Chum :

Yes, you can see from the visitation numbers been published by the Tourism Bureau. The Mainland Chinese visitation is at about 30% recovery rate versus 2019 CNY. So obviously, with a 40% recovery for overall visitations, Hong Kong visitation recovery has been higher. Mainly, I think, as a result of just the ease with which they've been able to go. And obviously, Hong Kong has had a longer stabilized situation with, as it relates to the pandemic. So I think from a pure visitation point of view, it's just not unexpected. And bear in mind, the transportation support for the Hong Kong visitor only really opened up on the eighth of January. So this has been a very rapid increase in Hong Kong visitations. That said, I think we referenced back to the comments that Rob made earlier and I alluded to as well, I wouldn't get too stuck on the visitation recovery. I think in these types of reopening, we're going to see the premium customers come back first. The core customer coming back as a much bigger percentage than the overall visitation. So I think what we're seeing is the quality of revenues and the patronage from all regions that visit in Chinese New Year has been very, very high. So we are way outperforming the visitation recovery in terms of volumes and revenue. And indeed, I think if you look at our property visitations our recovery rate in visitations to our own property, is far outperforming the recovery in the overall visitation numbers in the market versus 2019.

Stephen Grambling :

Makes sense. And maybe as a related follow-up there, there's been a similar dynamic, stronger spend per visitor in the U.S. that ultimately drove much better margins. How are you thinking about the puts and takes to margins in Macao versus what we've seen in other markets?

Grant Chum :

Yeah. I think first of all, our cost structure is in good shape. It's been -- unfortunately, we've had to spend extra effort in optimizing the cost structure over the past two or three years. So we've got a very lean cost base right now. In terms of gross margins on the revenue, I think a couple of things. One is our mix, obviously, is more favorable going forward just from a gross margin mix perspective simply because a vast majority of our revenues will be coming from the non-rolling and slot segments. And then secondly, the non-gaming, we expect to be growing, and that's obviously a much higher margin. We expect to be growing retail, hotel, F&B, actually all the non-gaming segments. So that's the structural framework for the margin. But obviously, the actual flow-through in the percentage margin we ultimately deliver from this very positive structure is really dependent on the rate of volume recovery. So we still need the top line to recover to a certain level before you get the flow through. And then to go beyond that, obviously, we hope and we all are working towards that, is for this market to continue to grow and, hopefully, at least in the mass segments and non-gaming segments glad to go beyond where we were in 2019. So if that happens, obviously, our margin structure should be very positive. So hopefully, that gives you a sense of how we think about the structure of margins going forward.

Rob Goldstein :

Thanks, Stephen.

Robin Farley :

Great, thanks. I wanted to ask, you've obviously always been very focused on the mass business there. But some of your competitors that have been more VIP focused, are you seeing them do things differently now that there's not the VIP market to go after in the same way there had been? Is that -- is it too soon to be seeing what changes that might mean?

Grant Chum :

Yeah. I think, Robin, the competition for premium mass has always been very intense. And I think we'll continue to be, given the dynamics you just referenced. At the same time, I think as Rob says, we've got a footprint and scale advantage on our [Indiscernible 0:24:40] non-gaming asset facilities, I think really position us very well for all segments of mass. And then as Patrick referenced at the outset, the product that we've been developing for the last three years, especially, The London and the Grand Suites at Four Seasons, are really prime position to help us be more competitive the premium lifestyle segments up in market as well as, I think, hopefully, to drive overall high-value tourism to Macao over the coming years. And I do as to point about international tourism as well. I think our footprint to combine with our new products and our traditional strength in MICE, in international marketing network really position us very well to bring those high-value guests to Macao as well.

Patrick Dumont :

Yeah. Sure. I think one thing that would be helpful. If you turn to Page 22 in the presentation, you'll see some details on that. So it might be best to refer to those pages because we do break it out, and there are several pages behind it that explain what our concession renewal commitments actually are. So it's there in the presentation.

Patrick Dumont :

I apologize. I think the key thing here is that we're very committed to investing in the Macao market. We think this investment will drive additional long-term tourism value and diversification of Macao's economy. We're very excited to make these investments, and we think these are things that will really help achieve our goals in the goals of the government. So we're looking forward to it actually.

Operator:

Thank you. The next question is coming from Shaun Kelley from Bank of America. Shaun, your line is live.

Rob Goldstein :

I'd begin by saying, first of all, we're just thrilled to be open and making money and seeing demand like we're seeing. I don't think any of us have the aptitude or the insight to tell you what's going to happen -- they have post-change news. But I do think longer term, you have to have real strong confidence. And you see -- when you get to see these numbers that we are seeing that this is a market that's going to rebound. This market has a strong base mass, premium mass. And some of the fears be in the market about, it was liquidity like, what's resiliency, I think those fears will be pushed to the side. What's the trajectory and how fast it happens? I don't think any of us have the gumption to make venture a guess. I think it would be silly. We just feel fortunate we're open. We're operating. We think it keeps getting better, not worse. I don't believe COVID is going to be -- obviously, China has gone through a different trajectory than we did here in the U.S. But hopefully, that won't be a problem. Again, I don't want to speak anything that I can't speak for. But if things keep going like they're going, we'll all be in a very happy place in 2023, especially, I think, somewhere in the second half of the year. As normal travel patterns resume, Hong Kong gets back on speed, Mainland China. I think there's a lot of growth potential and a lot of good thoughts coming our way vis-a-vis the future. We are -- again, as I said earlier, we're not going to tell you that we don't believe in this -- we believe in this strongly very strongly. We believe in our assets very strongly. We believe in international tourism in Macao very strongly. So we're not going to predict when it happens, how it happens, how fast it happens. But we feel very positive about what's going to happen in Macao in the long term, very positive. And we're looking to investing money in there and getting back to where we were in the past in Macao. We couldn't be more positive on the can long term.

Grant Chum :

I think, Shaun, we've also become more productive and efficient through the past couple of years. So I think we'll have to rethink -- it wouldn't necessarily be referencing exactly back to 2019. And also a mix of product has also changed quite a bit through the Londoner. We do have more high-quality non-gaming asset base to operate as well. So to give you a bit more color, today, we are short of manpower relative to full operating capacity and relative to the demand that we're seeing. So we're not operating one of the Sheraton Towers as we speak. So we are minus 2,200 rooms from our operating capacity. And our newest hotel Londoner Court, which we soft opened in the past year, we're not at the full operating capacity for that high end all-suite hotel. We're still only about two thirds of the way through in terms of ability of manpower to operate the whole hotel. So both at the top end and at the mass end, we are still short of manpower to operate at full capacity. And we'll be progressively hiring to fill the gaps as we go through the recovery. And hopefully, within the next few months, we're going to be in a better place relative to our full operating potential because we clearly see the demand pattern, I think is going to urge the whole industry to staff up and to be able to operate, especially for these peak periods. And that's another part. We have no crystal ball as Rob says served on the post CNY. But clearly, the early indications of metrics like the demand for the hotels is telling you that, yes, the demand is staging a strong recovery. And obviously, we're going to have to [Indiscernible 0:32:50]. Thanks.

Operator:

Thank you. The next question is coming from Chad Beynon from Macquarie. Chad, your line is live.

Rob Goldstein :

Chad, let's revert your mind, I'll reverse it just. I think we all know that Thailand has been discussions there, and we're certainly looking at Thailand. And that's no secret has been in the press that Thailand is a possibility. So we're certainly looking hard at Thailand. I would love to be -- have a presence there in the future. Japan, as you referenced, is not there. And Korea is nothing viable to speak of today. So we'll jump to New York, which is an extraordinary and unique opportunity. And I think for the winning bidder or bidders, it's going to be an amazing opportunity because of a very simple dynamic of a huge market with limited capacity. There's only a few casinos there. It's probably the only place in the U.S. where you can have millions and millions of people, and yet there'll be probably just a handful of casinos total. The win per units there will be exceptional. The lucky winner is going to do very, very well. I think the evidence of the market is clear just by looking at the three operating properties under the table games. And we really don't have much of a -- it's not a great product right now in New York as far as room capacity. It's still doing approaching USD 2 billion with just slot machines. So our approach is very much in LVS, it's anchored by an LDH historical approach, which is scale and quality. We're not looking to build a casino, looking to build not a regional casino but rather a truly large hotel with spa convention space, dozens of restaurants, a new theater, a huge entertainment feature, a transformational product, which will positively impact the community and grow tourism a powerful statement. We're not looking to be in this thing in a limited way. We'll be all the way in. And we think if we do it, it will be transformational for the county we're working in, very good for the people in the county and something they can be very proud of. And it will drive tourism -- outsized tourism into Nassau. Our bid is very much traditional on the thinking of LVS large-scale with numerous non-gaming assets, lots of meeting space, probably 400,000 square per foot new space. So I view New York very much very unique to the rest of the United States. It's not -- it's a population in the many millions to just a couple of casinos, very different here in Las Vegas. We've got a huge local market but dozens and dozens and dozens of casinos. There you'll be basically alone. And so it's going to be very -- it's an exceptional opportunity. It won't come along again. I think this is one and done. So we're trying very hard. And we've been trying to do New York for a number of years, but it looks like this is finally someone's opportunity. Hopefully, it's ours.

Rob Goldstein :

Grant?

Rob Goldstein :

Yeah.

Chad Beynon :

Thank you very much. Appreciated.

Brandt Montour :

Hey, everybody. Good morning. Thanks for taking my questions. Starting on Singapore. I was curious if you could compare the spend per visitor that you're seeing there to what we saw in Las Vegas in 2020 and 2021. If that's sort of holding up in the same way, if it's -- if the curve looks different quarter-over-quarter. And then if you want to throw Macao early days into that comparison, that would also be helpful.

Brandt Montour :

Okay, that's great.

Brandt Montour :

Okay. Okay. Thanks for that. And then on Slide 22, the long-term commitments in Macao slide, on the capital, the left side of the slide, I was curious, looking at your plans for the next 10 years if you think you're going to be able to achieve return levels commensurate to recent projects that you've done in that market and you've enjoyed in that market?

Brandt Montour :

Excellent. Thanks so much, everyone.

Operator:

Thank you. The next question is coming from Ben Chaiken from Credit Suisse. Ben, your line is live.

Patrick Dumont :

Yeah. If Sheldon were here, he would say, yay [ph 0:42:49], dividends. I think someone put us on hold in Macao.

Rob Goldstein :

Brief commercial from Macao.

Ben Chaiken :

Got it. Thank you.

Steve Wieczynski :

Yeah, guys. Good afternoon. So Rob or whoever wants to take this, I mean, if we look at visitation in Macao over the last, let's call it, week or so around the start of Chinese New Year, it does seem like it has been pretty strong. And I guess, is there any commentary or color you could give us about the spending patterns of these folks that are coming to the market? Meaning, are these folks gambling as much as they did before? Or is that some of that spending being pushed more into the non-gaming side of the floor? And maybe it's just too early to tell. But I think with how high Chinese savings levels are right now. I'm just wondering if you can provide any color around that.

Grant Chum :

No, I think it's just as you said. The nature of these reopenings, it will attract the high-quality customers first, and that's what we're seeing. And I think we saw that in Singapore in April as well. We had much stronger recovery in the Southeast Asian overseas spend in Singapore versus the recovery in the tourist arrivals. And I think Macao has also following something similar, except for the fact Macao has a much bigger advantage in being able to support visitation, not just by international airlift, regional airlift, but also by land and sea as well and domestic airlift then connecting through the Southern China as well. So I think it's -- let's see how -- what the pace of visitation recoveries like versus the revenue recovery. But so far, I think the pattern that we've seen in CNY does support that pattern. Yes, you're getting a much stronger revenue. I think you are in visitation.

Steve Wieczynski :

That's great color. That's it for me, guys. Really appreciated.