| Quarter | Q4 FY24 |
|---|---|
| Call date | 2025-01-29 |
| Results reported | 2025-01-29 |
| Length | 46 minutes |
| Speakers | Daniel Briggs, SVP Investor Relations; Robert G. Goldstein, Chairman & CEO; Patrick Dumont, President & CEO |
Results, guidance and Q&A analysis for this call
Daniel Briggs (SVP Investor Relations)
Good day, ladies and gentlemen, and welcome to the SANS Fourth Quarter 2024 Earnings Call. At this time, all participants have been placed on a listen only mode. We'll open the floor for your questions and comments following the presentation. It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at SANS. Sir, the floor is yours. Thank you very much. Joining the call today are Rob Goldstein, our Chairman and CEO, back of DuMont, our President and CEO, Doctor Wilfred Wong, Executive Vice Chairman of Sands China and Grant Chung, 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 same perfect harbor provision of federal securities laws. The companies actually both may differ materially from these local subjects forward statements. In addition, we will discuss non GAAP measures. Reconciliations to the most comparable GAAP measures are included in our press release. We have posted an earnings presentation on our website. We'll refer to that presentation during the call. Finally for the Q&A, 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.
Robert G. Goldstein (Chairman & CEO)
Thanks, Dan, and thank you for joining us today. We'll begin with Cal. The Macau market is to grow. Gaining revenue for the market grew 6% in Q4 of 2024 when compared to the fourth quarter of 2023. Mass gaining revenue grew 5% in the quarter compared to one year ago. We believe the Chinese economy will grow and Macau market will grow as well. Gross gaining revenue in Macau should exceed $30 billion in 2025 and continue to grow. The scale and quality of the assets we've built are second to none and our active position enables us to grow faster than the cow market in every segment. Our business strategy remains clear and constant. We're investing high quality assets that also have scale. We're designing our capital investment programs to ensure that we will be the market leader in the years ahead. Our approach will enable us to grow faster in the long term, grow our share of EBITDA in the cow market and generate industry leading returns for invested capital. Why are we so confident on future success? In a competitive market like Macau, our assets give us a strong advantage. The scale and quality of the room of inventory coupled with our retail guiding entertainment enables us to tailor our offerings to attract the most profitable customer service. Turning to our results in the calendar with a solid EBITDA for the quarter, despite having 20% fewer rooms available in code tie that we will have once the London is completed by the second quarter of 2025. We opened the London Grand Casino in the last week of September and operating 315 London Grand suites during the quarter. We will introduce more London suites during the next two quarters. Today as the Lunar New Year begins, we have approximately 1000 London suites and rooms in service. The full component of 1500 suites in 905 years will be in service by May of 2025. Finally, SCL continues to lead the market in gaming and non gaming revenue and market share of EBITDA. Our objective is to capture high value, high margin tourism. We have a unique competitive advantage in terms of the scale, quality and diversity of product offerings. Upon completion of the London in May, our product advantage will be more perhaps than ever. Moving on to Singapore, another strong quarter, $537,000,000 in adjusted property EBITDA mass gaining a slot would reach $746,000,000 a quarter, reflecting a 71% growth in the fourth quarter of 2019 and 28% growth in just one quarter of a year ago. Results of raised based standards reflect the positive impact on our capital investment program and the growth of high value tourism. The growing appeal of Singapore as a destination is enhanced by the robust entertainment and lifestyle and calendar. As you complete the balance of our investment programs in the first half of 2025, there will be considerable runway for growth. And thanks for joining the call and through to Patrick before we go to Q&A. Patrick.
Patrick Dumont (President & CEO)
Thanks, Rob. There's something I want to mention before we get started the details of the quarter. The fourth quarter of tourism to the Macau market was impacted by the celebration and events in December that marked the 25th anniversary of the special administrative region about reunification with China. Macau EBITDA was 571,000,000 for the quarter. If we had held as expected in our rolling program, our EBITDA would have been higher by 22 million when adjusted for lower than expected to hold in the rolling segment. Our EBITDA margin for the Macau portfolio properties excluding the London would have been 35.1% or down 230 basis points compared to the fourth quarter of 2023. Our turnover rents in Macau were 27,000,000 lower in the fourth quarter of 2024 than the prior year fourth quarter. Our margins at the London were directly impacted by the reduction in elder room inventory during the quarter. We will have approximately 20% of rooms and suites on Cotai by May of this year and approximately 47% more rooms at the Londoner as we complete the Londoner Grand renovation. Margin at the Venetian was 36.7%, while margin at the Plaza and Four Seasons was 37.2%. We continue to expect margin improvement as our revenues grow, as we use our scale advantages to better address the unrated play in the market and as we focused on managing our costs, including refining our reinvestment optimized cash flow. As Rob mentioned, we are nearing the completion of our Lunar Grand Revation program. Upon completion, our competitive position will be stronger than ever. We expect meaningful EBITDA growth and margin expansion in the future. Turning to Singapore, MB s s EBITDA came in 537,000,000. Assuming expected hold our rolling play, our EBITDA would have been approximately 2 million lower. The strong financial results reflect the impact of high quality investment in market leading product and growth in high value tourism. Had we held as expected in our rolling play segment, MBSS EBITDA margin would have been 47.2%. We will have substantially completed our 1.75 billion reversement program at MBS by May of this year. We are still in the initial stages of realizing the benefits of these new products. We expect growth in the future as we continue to attract high value tourism to Singapore with our enhanced product offering. Turning to our program to return capital to shareholders, we repurchased 450 million of pounds stock during the quarter and paid our recurring quarterly dividend of $0.20 per share. Our annual dividend will increase to $1.00 per share or $0.25 per quarter for the 2025 calendar year. In addition, we purchased approximately 250 million of Sands China stock during the quarter and in January of 2025, bringing LVS equity and trust in Sands China to approximately 72.3%. We look forward to continuing to utilize the company's capital return program to increase returns to shareholders in the future. Thanks for joining the call today. Now let's make questions.
Daniel Briggs (SVP Investor Relations)
Thank you. Thank you, ladies and gentlemen. The floor is now open for questions. If you would like to enter the queue to ask a question, please press *1 on your telephone keypad. Now, if listening on speaker phone today, please pick up your handset to provide optimum sound quality. Also, we ask each participant to limit yourself to one question and one follow up. Please hold a moment while we pull for questions.
Daniel Briggs (SVP Investor Relations)
And the first question today is coming from Carlos Santarelli from Deutsche Bank. Carlo, your line is live. Hey guys. Thank you. Patrick. Obviously you guys have been active in in the Sands China stock and and when you look at kind of the valuation of that stock today coupled with the announcement of the of the dividend increase that is your thinking changed at all around the way you allocate capital perhaps maybe being more advantageous looking forward with respect to the SCL shares?
Patrick Dumont (President & CEO)
Look, I, I think we really believe in the SCL story. We've been being investors in growth in Macau for years. And if you look at our our investment program, it's designed to grow our business and our strategic advantages there. And we've been investing to create growth for 2025 and beyond in every segment. Look, our view is that we want to execute against our massive asset base there. And, and I think for us, the way we we show that is not only through growth, but also through acquiring more shares. We want to own more of SCL and you'll see us be active in the market over time to do that. We really believe in, in SCL, we think there's real value in the future and owning the shares there. And so we're going to, we're going to exercise against that thesis.
Daniel Briggs (SVP Investor Relations)
Very good. Thank you. And then if I could just follow up as it as it relates to MBS, there's clearly been, you know, a lot of change in the property. Yeah, all the the rumor models, all the things that you've been doing over much of 2024 and in the fourth quarter, you know, clearly across the mass side, whether it's it's drop revenue on the table side, drop revenue on the slot side, you guys saw a very nice acceleration of year over year growth when looked at relative to the three. Q How much of that do you think is, I don't know maybe exogenous or or maybe I don't want to say one time, but but a result of some other things going on in the market versus how much of that is?
Robert G. Goldstein (Chairman & CEO)
The successes of.
Daniel Briggs (SVP Investor Relations)
Of kind of the capital you put in and and and the fruits of that.
Robert G. Goldstein (Chairman & CEO)
One thing I would say, because it's not a one time event, it's an ongoing event that keeps accelerating. I think you're right, it's a good observation. I look at these numbers, non rolling wind and slot wind is is $3 billion run rate. It's pretty astounding. I think it's a few things, maybe 1 is a very strong market, but also a great assets are coming to the fruition. So when you invest handling something is that good a market, you get the right thing in the right place, right time, it all comes together. It's not a one time thing nor is it peak that the final Z, the final product will be there this summer. It's an amazing place. I think you've been there recently and I think it's ongoing. But you're right, the acceleration year on year is is truly exceptional. But I think we're just at the beginning of a a huge growth surge in Singapore. It's not going to end where the right place, right time with right product.
Patrick Dumont (President & CEO)
Hey, one thing I do want to say is the key thing about Singapore, and you've heard Rob and me and the rest of the team talk about this many quarter calls. The key thing about Singapore is about the quality of turf. It really is an unbelievable market in terms of the, the value of the tourists showing up there. And we've been very focused on investment in the highest quality of assets to match that high quality of tourism. You know, I, I think for us this, this, this quarter validates the investment thesis and, and the growth that's available to us in this market because of the strength of, of what's going on in the catchment area. And so when you look at Singapore as a market, it's incredibly strong and desirable. There's a growing high net worth population, there's growing high value visitation, there's a lot of business activity there and there's continued investment and strong tourism infrastructure. So from that standpoint, it's a very unique market and and we really believe it and we think the highest quality cash flow in our industry.
Daniel Briggs (SVP Investor Relations)
Thank you both very much.
Robert G. Goldstein (Chairman & CEO)
Thanks, Carlo. Thanks, Carlo.
Daniel Briggs (SVP Investor Relations)
Thank you. The next question will be from Robin Farley from UBS. Robin, your line is live.
Patrick Dumont (President & CEO)
Hi, thanks very much for taking my question. This is RP Net for Robin. I know you don't talk about the current quarter, but I was wondering if you could take a few minutes.
Robert G. Goldstein (Chairman & CEO)
You know, to give us your overall take on the Chinese consumer, what you are seeing in terms of bookings for the upcoming holiday and more importantly, do you feel there are macro indicators that the base consumer could return to pre COVID levels in Macau this year? How do you see that recovery? And then I have a quick follow up.
Patrick Dumont (President & CEO)
So I, I think First off, I think we're still talking about a $30 billion TGR market. It's the largest market in the world. It's been growing. It looks like it's going to continue to grow for the receivable future. We very strongly the strength of this market we've been investing into it. For that reason, I think it's very hard for us to point to a specific indicator of the Chinese consumer that is an indicator for our business since we represent such a small level of penetration into our core market, which is China. And so from our standpoint, we sort of look at the market, would we do better with a stronger Chinese economy? I think that's an easy thing to say yes to. But I think overall, we're very happy with the direction of our business, our investment. And hopefully as things progress over time, we'll be the beneficiary of a stronger Chinese economy and see our investments produce more cash flow. Grant or Wilford, do you guys have any other comments regarding this question?
Unknown (Executive Vice Chairman, Sands China)
I think, I think the GGR and you can see throughout last year in 2024 has been very resilient. And I think if you look at the premium side of the business, very strong throughout the year. And you saw October, we had the best month since the pandemic for GGR. Yes, there are other parts of the consumption universe which are much weaker than what gaming has been. And you see some of that reflected in our retail business where the retail sales were down against the prior year. Whereas for the Macau market, the Qiao was still up 6%, as Rob referenced in his opening remarks.
Robert G. Goldstein (Chairman & CEO)
Thank you. One thing I'll take is, is that our actions speak loud and we keep investing, investing and buying into Macau. We believe in Macau, we believe in China and we believe the the return of the base mass as well as the continued strength of premium mass will will grow. We're big believers. We wouldn't be putting billions of dollars in the ground we didn't believe. So yes, we do believe it's going to come back and we don't, we can't pinpoint A handicap a date or time. But I think as Patrick alluded to, it's still a $30 billion market in, in the face of a very difficult economic environment macro. So we believe in it. It's going to come back. We just don't know when. But our, our actions are going to be very loudly billions of dollars investment and we keep investing in it. So we believe in the in the terms around the bar and it will come. Thank you all. I just have a quick follow up, could you?
Patrick Dumont (President & CEO)
Share.
Robert G. Goldstein (Chairman & CEO)
Your latest thoughts on New York licenses, I Gaming, you know could be legalized there two years into construction, let's say as an assumption sort of yourself how that changes the return profile of a potential casino in in that market. You've asked and answered my concerns first. I believe in New York is a very strong market which is under consideration of this company for a long time. However, the I gaming possibility to me in any market that has land based gambling, it has sports betting, high gaming seems inevitable. And so I think you have to agree, I mean with your comment that sometime during the construction phase you could be faced with high gaming competitor which eludes the value of the of the product. So that's our conundrum and you said it well. The results coming out of neighboring states of New Jersey or Pennsylvania or as far away as Michigan_that concern. So you've asked and answered the question, great market, we'd like to be there. The caveat is how do you deal with the ongoing threat which appears to me to be inevitable in a lot of states, especially as it has land based properties coupled with sports betting. I don't know why you wouldn't have eye gain in some time in the future. So that's our concern as we look at that market. You're absolutely correct. Thank you very much. Sure.
Daniel Briggs (SVP Investor Relations)
Thank you. The next question will be from Sean Kelly from Bank of America. Sean, your line is live. Hi, good afternoon everyone. Thanks for taking my question. Robert, Patrick, I want to start with just the Londoner. Obviously some of the disruption timing probably came in a little bit differently than than maybe everybody thought, but could you just walk us through your thoughts about kind of ramp up from here and how we should think about it? It's a pretty big margin drag. I think it's pretty understandable given the impact of hotel rooms on margins, but just help us think about. So maybe your thought process behind how that that property should ramp in the next couple of quarters if you could?
Patrick Dumont (President & CEO)
Yeah. So you know I, I think it's really interesting because I have to hand it to the the team in Macau, they did a phenomenal job this quarter being disciplined in our reinvestment and actually generating this much EBITDA with that many rooms out. You know, we are, we are an inventory, a room inventory driven reinvestment model. So we we base our reinvestment on the scale of our ecosystem, the diversity of amenities, the quality of room product, the quality of experiences. And so when you're down 20% of your inventory, there will be a meaningful impact into your your productivity because we carry the expense base, right. Our second largest expense is payroll and that doesn't change. And so we had less inventory to sell in the quarter. There wasn't disruption, there was just less inventory. So you know, credit to the team for creating the quarter that they did in this market given the competitive dynamics. But I think now that we start to get these rooms back across the corridor on these 2000 rooms, think about it, it's it's 2/3 of a Venetian. You know, when you think about the productivity of the Venetian resort, the Venetian Macau and the room count that it has and the number of tables and the scale that it has, imagine if 2/3 of the rooms were not available and that's the case with the London. And so they were able to create this performance without that inventory. The good news is it's coming online. Some of it's online now and the rest of it should be online by May, as we mentioned with our opening remarks. And that should position us well to get to our ultimate goal, which is to have two property that have an equivalent run rate. And maybe one day the weather does better than the Venetian because of the key count. But I think the opportunity is there for the productivity to really increase now that the rooms are becoming available and now that we've completed this renovation, which in our mind creates one of the best properties in the history of our business. And we're not just saying that because we did it, we think it's really good. So I think from our standpoint, we have the Venetian, we have the Londoner, we have The Four Seasons, we have the Parisian. We have this high quality portfolio. And getting these rooms back online will enhance our our competitive positioning, but also allow us to grow cash flow and EBITDA because we're carrying the expense anyway and now we'll have the inventory to sell. So I think it was pretty meaningful. But I do want to give credit to the team there for the quarter that they put up. Grant, do you have any comments?
Unknown (Executive Vice Chairman, Sands China)
Yeah, Patrick, like you said, the room inventory was at the low point during the fourth quarter. Like we said last quarter, it reached the lowest point around 8700 keys in November and December. And for the whole quarter, we, we continue to have the 315 London and Grand suites and then shortly after the year end, we got licensed for further 700 suites and keys. And so for this Lunar New Year, we have at a disposal just over 1000 keys to use from now on. We expect that the continued ramp up in rooms to continue throughout the first quarter and the first part of the second quarter. Yeah. Culminating. The goal is to have the full 2405 keys fully operational by May Golden Week and we believe we can achieve that. Construction wise, we're well on track. It's a matter of statutory licensing at this point.
Daniel Briggs (SVP Investor Relations)
Thank you both. And then maybe just as a quick follow up going back to New York, Rob, we did notice that you know, New York did not include the casino licenses or the downstate casino licenses in the state budget figures. So we were just kind of curious, does does this imply, you know as it may especially given the timing of the fiscal year that the downstate process is slipping further at least for I think the the third license that many of us are very focused on here for LDS? Thanks.
Robert G. Goldstein (Chairman & CEO)
Hard, hard to say. I could suspect that you are, but I don't know. You're right or wrong. I think it wasn't a budget. It wasn't a budget. I don't really know the answer to that, Sean, to be honest with you. It's hard to determine what I keep doing. It's going to be this June for the determination of a license by year end. Again, as you're saying, it's hard to know because it's they hadn't been clear about this. It's a long time. Have to wait and see with you. Don't.
Daniel Briggs (SVP Investor Relations)
Know thank you very much sure. And Sean, thank you. The next question will be from Brant Montour from Barclays. Brant, your line is live.
Patrick Dumont (President & CEO)
Good afternoon. Thanks for taking my question everybody. So follow up on Sean's question on the Londoner in the Pacifica casino floor, you know, especially which I know you owned and were you sorry you opened in September? But without a mini hotel rooms above it, I have to imagine it was hard to activate that casino floor in the fourth quarter. Can you give us a sense on how you activate the casino floor and if 1000 rooms would be enough natural foot flow to to actually create a buzz and get that asset almost sort of all the way up and sort of producing before you can get the last batch? Or is it specifically correlated with how many rooms are open?
Robert G. Goldstein (Chairman & CEO)
It's just laughing because the question to me is pretty simply where you in our industry, whether it's Macau or Las Vegas or Idaho or you have sleeping rooms above you is where you get gambling below you. So it correlates the more rooms, the more gambling. 1000 keys is still a lot of people. I think yes, it can create a buzz, but that buzz will obviously increase as you have more keys. So 2000 is better and 2400 is better than that is enough. Sure it's better than having 300. But again, to your point, it begins with only 300 this quarter and goes to 1000 during Lunar New Year and then she gets the spring to 2400 I believe. And then of course, the bathrooms adjacent to it on the same roof and and the other phase of lumber, plenty of rooms there, more than most hotels have been anyplace else. So I think the the results will speak to themselves. This has been a long hard process with team over there, but it's probably coming to a head. And we believe and we'll always believe that assets, Dr. results. This asset is extraordinary. And yes, we'll see some buzz in February, March, but you'll see it more in May. But we're in this for long haul and London will be a world class asset and take its place alongside some of the lesbian performers just like Maria Bay Santa did and Nvidation did.
Patrick Dumont (President & CEO)
OK. That's super helpful. And then a follow up question would be on the Thailand opportunity. I know it's really early, but I'm sure you guys have done a plenty of work so far on that market and maybe you could.
Daniel Briggs (SVP Investor Relations)
Just talk high level about that opportunity versus your large?
Patrick Dumont (President & CEO)
Coming second, build out investment in Singapore and sort of how you think about those two markets visa to each other and if they sort of are totally separate opportunities that that wouldn't have to be considered in relation to each other. So a couple of things here. So I think First off, Thailand is an unbelievable tourism destination. It has very desirable attributes, great culture, great food, you know, just beautiful scenery. It's it's a great place to visit and I think it has a great opportunity to add destination resorts and create a very large scale industry there. The great news is there's an enormous tourism base there already and it's separate and distinct from people who go to Singapore. Is there overlap? Sure. Do people go back and forth between Bangkok and Singapore all the time? Absolutely. Is there an argument that it actually just strengthens our ecosystem because people have more choice within our environment? There's an argument for that. Although I would say that, you know, I think they're both different offerings. I think if you look at what we have in Singapore, it's specifically tied to the highest level of high value tourism. It's rarefied air when you look who's in that environment and, and the type of consumption that's there and the type of both business and leisure tourism that takes place. I think in Thailand, it's a completely separate market. I think there will be some overlap inevitably because people are going to want to see it on both sides. But as a practical matter, given it's the population base, the visitation they have today and where people are coming from in terms of inbound tourism, it's a separate and distinct opportunity. And that's how we see it and we're excited about it. But there's a lot that has to be done and a lot that has to be learned before something that we can evaluate. That being said, it would be great for our industry to be fair, great for LVS if it's possible.
Robert G. Goldstein (Chairman & CEO)
Can I just say to you about one thing about your comment about the, the, the mix of those two markets? Think about this for a second. There's about four billion Asian people, which I think is about 3 and a billion more the entire United States. As I look out the window here in Las Vegas, there's more casinos in Las Vegas than there is in all of Asia. OK, So my point is there's awful lot of people in Asia, hyperfensive gamble. I wouldn't worry too much about Singapore doing very, very well. There's just not enough capacity shell now she used to say like to build a strip in every Asian country if possible. The point being, will do very well in Singapore for years and years to kind of we'll make all kinds of money there. But Thailand is an extraordinary market and it will do very well, very well. Again, Las Vegas must have, I don't know, 200 casinos. There's not 200 casinos in all of Asia. So the concern about it categorizing I think is is not necessarily even bound to think about 4 billion people in Asia looking for a place to go. Thailand will do very, very well, but still Singapore's silver count.
Patrick Dumont (President & CEO)
Excellent. Thanks, Patrick. Thanks, Rob.
Daniel Briggs (SVP Investor Relations)
Thank you. The next question will be from Dan Pulitzer from Wells Fargo. Dan, your line is live.
Patrick Dumont (President & CEO)
Hey, good afternoon everyone. Thanks for taking my question. First I wanted to touch on Venetian. Last couple quarters it looks like mass volumes have slowed a bit there. Can you maybe talk about a little bit what's going on with that property relative to some of your other properties in the market and also I think the arena recently opened there. So you know any kind of incremental, incremental details on, on on how that's been trending? One thing I, I do want to mention, I, I think the Venetian really is for us the benchmark in Macau and we're very focused on growing revenues in Venetian and maintaining margin there and generating a lot of cash flow and we think it has the capacity to do it. In the first half of the quarter, things were going great and things were accelerating. In the second-half of the quarter, there was some disruption to visitation because of what I mentioned earlier on in the prepared remarks, which is the 25th anniversary of the handover. And so there's there were a lot of things going on in this quarter and one of the things that went on is that base mass was impacted most meaningfully by that event and by that 30 day. And so I would not necessarily look at this quarter as representative of the base mass run rate associated with the Venetian going forward. Grant if you have anything else to add.
Unknown (Executive Vice Chairman, Sands China)
Yeah, that's right. And I think with the with the premium mass, I think the business continues to be very strong there. Also I think you you have to consider that most of the the largest in Venetian together with The Four Seasons, it plays as a complex for that segment. So you can see how strong The Four Seasons Plaza was in the non rolling segment this quarter up 26% against prior year. So I think you should look at it in a composite as patrons move around between the two properties. But the base mass as Patrick said was was affected during the quarter. We had a very strong first half of the quarter and then it softened thereafter. As a regards to the Venetian Arena, we launched a fully upgraded arena in late November. We've had a few events, some of them more like a warm up events. During fourth quarter, we had concerts and then we also hosted the NBA Legends game that accompanied our announcement of the strategic collaboration with the NBA over the next few years. So the facility gives us, I think, very strong scope to program content for our calendar, entertainment, sporting events, MICE groups. And at the same time, we'll continue to use London Arena. And really this is another example of the scale advantage and the product diversity that we have. We've learned how to program the London Arena successfully. We'll be hosting some major concerts in the Venetian Arena as well as the NBA games in October in 2025. So we'll have the full flexibility and benefit of having these two great venues for different types of programming and events, and we believe that it's going to support the growth of the business in 2025 and beyond.
Patrick Dumont (President & CEO)
Got it. That's that's helpful color. And then just a follow up, you know, I think for the Londoner all in you'll be have invested around $8 billion. How do you think about I guess the the return on this, you know, is this consistent with some of your other properties in the midnight teens and and if not, you know, why would that be? And then how do you think about the timing in terms of the ramp and do you need to see that base mass business come back in the market given that you've you've certainly invested in making this property a more premium mass centric? Yeah. So I think the the key thing here to note is depends on how long your IRR measurement period is. And so I think for us when we first opened the property, it had a ramp up. Where if you sort of looked at it at peak, it was out of I think a billion one run rate of EBITDA. And so if you sort of drew your trend line off that, it would be an unbelievable investment. Then events overtook that measurement and we realized we need to reinvest and reposition, which we did. So if you think of this as a 30 year asset, which we do, and you look at the potential cash flow generation out of this asset given its positioning, its steaming, its amenities and its structure, which is not replicatable anymore in Macau, we feel like this is a very high return potential asset. And that's why we put the capital into it. If you look at its structure, you look at the room count, you look at the organization of the casino floors, of the retail and of the amenities around it to support the activity of our patrons, there's nothing like it, right? And so we feel like this asset will provide very high returns over time. Otherwise we would have done it. If the model didn't work, it wouldn't happen. But I think it depends on how you view the market and how long you do the asset to be running in this way. But we've done the major structural lift, so we think we're in good shape to carry this asset forward for years to come.
Robert G. Goldstein (Chairman & CEO)
Again, one, one additional comment to Patrick's and I think you made a comment. It's, it's being a mass centric, I would disagree. It's it's market segment is open to everything. What makes these buildings so powerful like the Londoner innovation successful buildings in the world get everybody. They get the basement, the grind, the pretty mess because they have all kinds of capacity. They got sleeping rooms, they've got retail, they've got entertainment and they've got just capacity. What makes it special versus some more competitors? They can't they don't have that scale capacity, lodging and and gaming. This blunder thing better have it on all segments to get the numbers I want to see to get to which is far beyond a billion dollars. And I think the answer is I think Patrick said well it's a time issue and how you do the market, how we not fix the Lunder, it wouldn't be competitive to stands. So Thai Central couldn't withstand the pressure at this market. Lungs will will now do well, do very well. They'll do well with not just premium mass, but base mass drawing everything. It's going to dominate just like the East. Easton didn't get there simply with high relative you get to all you walk in, there is all there's poker, there's base masks, there's all kinds of lodging, all kinds of retail, all kinds of food and beverage. That's how we model the lungs. That's why it's going to be a billion plus dollar building when it gets void operation.
Patrick Dumont (President & CEO)
All right. Thanks so much. That's really helpful.
Daniel Briggs (SVP Investor Relations)
Sure. Thanks, Dan. Thank you. The next question will be from Chad Bannon from Macquarie. Chad, your line is live.
Robert G. Goldstein (Chairman & CEO)
Hi, good afternoon. Thanks for taking my question. Rob, you mentioned your prepared remarks that there was a decline in the turnover rent. It looks like I believe pretty much all of that may have been at The Four Seasons. The other properties in Macau and in Singapore had some nice increases year over year. So firstly, just kind of wanted to ask about that if that was.
Patrick Dumont (President & CEO)
You know, something related to maybe some, some VIP business.
Robert G. Goldstein (Chairman & CEO)
That was there last year, anything structural in the property. And then secondly, I know the the market and everyone are expecting.
Patrick Dumont (President & CEO)
You know, visitation and GGR to be up next year. Is there anything in the model that would, you know, put a lid in terms of what's happening with with retail given where the base is right now? Thanks.
Robert G. Goldstein (Chairman & CEO)
Yeah, I'm going to defer a grant Shum who should answer this question. Grant.
Unknown (Executive Vice Chairman, Sands China)
Yeah. Thanks, Rob. Yes, the turn of a rent change is largely related to The Four Seasons Mall last year or I should say 2023. That was a record year. That was an all time high for The Four Seasons mall in terms of retail sales coming out of that post COVID spend. So when you look at year on year comparison, 24 against 23, the turn of the rent is heavily impacted by the sales at The Four Seasons being down year on year. And it there's nothing structural, there's nothing one off about the 23. I think it's just the way the sales evolved straight after the pandemic and of course the the softening macro environment thereafter. I think we're strategically very well positioned for, for the retail sector over the next 1824 months. We are opening a number of very significant flagship stores across a number of the major brands. You've seen the first of these opening in November and Four Seasons with the Automa PK AP House, the largest in Asia. That will continue in 2025 with some other major flagships and also significant store openings. So we fill that between now and end of 25, you're going to see a further strengthening in the tenant mix and the product offering in the mall and hopefully that position us very well for the eventual recovery in the macro and the retail cells that will come with it.
Robert G. Goldstein (Chairman & CEO)
Great. Thank you very much. And then back to the USI know we talked about a few potential legislation positives or opportunities, anything change in terms of?
Patrick Dumont (President & CEO)
Your view on Texas, the timing of that and kind of where things stand down there. So as we said before, we think Texas has a great potential as a market for our business, but there's really nothing to report at this point. The session just began and we'll see how it goes.
Robert G. Goldstein (Chairman & CEO)
Great. Thank you very much.
Daniel Briggs (SVP Investor Relations)
Thanks, Chad. Thank you. The next question will be from Joe Staff from SIG. Joe, your line is live.
Patrick Dumont (President & CEO)
Thank you. Good afternoon, Rob. Patrick Grant, I had two questions on MBS please. One you know, where are you seeing the say the biggest early?
Robert G. Goldstein (Chairman & CEO)
Returns from your investments thus far.
Patrick Dumont (President & CEO)
I'm wondering if it's more heavily weighted towards a particular metric, you know, longer stays, new customers, higher spend. And then my second question really is on a longer term basis for MBS, you know for the three towers as we think about the ramp and EBITDA, Patrick, you had mentioned Singapore certainly is rarefied air, but could you comment on, you know, longer term what, what these new investments and where you think the biggest opportunity is you know for you to ramp EBITDA? So really appreciate the question. You know, I, I think for us Marina Bay Sands customer base is very diverse, diverse markets around Singapore who all want to do business in Singapore or all want to go there for, for leisure purposes. And the spending habits are very powerful. And I, I think the biggest growth that you'll see is you sort of look across our business, it's in every facet. You know, credit to the team there. They've done phenomenal work this quarter and utilizing the assets that were put into production and they still don't have everything in inventories. And so I think the key thing here is if you sort of look at our our gaming growth, it's been fantastic, particularly on the on the non rolling side, absolutely phenomenal and in, in, in both segments in terms of slots and and tables, but also on a on a rolling basis, it's been very strong. I think the other thing is if you look at the non gaming side, it's been extraordinary. If you look at the across the board things that perform incredibly well. We just had a question about retail in Macau. But if you look at the retail in, in Singapore, it's performed incredibly well and shown to be very resilient. So I, I think the, the, the offering there is, is quite strong, addresses the market properly. And, and I can't really point to one thing to say that it's, you know, it's the way to measure the investment. I think it's a very holistic approach. Rob earlier mentioned that, you know, we addressed all segments. I think in Singapore, the market is, is filled with high value tourists and we really address with a variety of amenities something that's very unique and that experience in our ecosystem is not replicatable. And, and so I think we, we get the benefit of, of, of that. And I think you see the results in our in our, in our EBITDA this quarter. And I think there's more to come. And I think when we get the, the rest of Tower three online and we get some of the other investments fully in the room, room's completely done. I think you'll see the power of this building as people start to figure it out.
Robert G. Goldstein (Chairman & CEO)
I think that building, if you've been there, have you seen that building?
Daniel Briggs (SVP Investor Relations)
And Joe is there with us.
Robert G. Goldstein (Chairman & CEO)
OK, if you've been the building, you see it. There's just nothing like it. And the epicenter of affluence in terms of it's got the room product, it's got the sweet fry, the food and beverage, it's got it all. And I think for people can afford the experience and want to gamble, it's just a lot of people in Asia. It's just a very unique product. It's like capture all those people. It's also got a wonderful place to be, which is Singapore itself. So I think we're, we're in the right place, right time to keep growing that and we're we're measuring obviously the profitability and the profitability of soaring. But I think you're just the best is yet to come. I mean Singapore is just the beginning of its run. As Patrick alluded to, the quality of asset and the finishes etcetera are extraordinary and it's hard to replicate. So I think we have every confidence we're just at the beginning of this thing, not the end. It's not aberrational, it's just the way it's going to be. Singapore is, is exceptional asset, a very strong market, lots of countries driving it. And also, it's the beneficiary of lots of great publicity and awareness of how people tell MD's, they see it on the newspapers, the Internet. It's very powerful. It's a real brand to us now. So I think you're at the beginning of an exceptional growth story in Singapore as the asset matures this summer. Again, I think the future is very, very strong.
Patrick Dumont (President & CEO)
Thanks very much. Thank.
Robert G. Goldstein (Chairman & CEO)
You.
Daniel Briggs (SVP Investor Relations)
Thank you. The next question will be from George Choi from Citigroup. George, your line is live. Well, thanks for taking my questions. First of all, you notice the introduction of some.
Patrick Dumont (President & CEO)
New background cyber since late September in Macau and which please comment on how popular they have become and is a potential impact on whole race longer term. And I have a follow up this. Thank you, George. I got to tell you they're very popular with me. I think they're great.
Robert G. Goldstein (Chairman & CEO)
Unfortunately, you had to bet that much. George, I think you know the story. I appreciate the question. It's a very, very powerful possibility. It's not a reality yet. But the side bets, as you know, are akin to parlay adventure, you know, wages on the sports betting. It's more of a profit, more of a a long shot type bet which people gravitate to. Some people like it, you know, the house advantages much higher than the flatbeds, the usual fanfare type pair. So for the industry and we're we're at the forefront of this. We want to offer those bets and hopefully the customers will come towards them. It's got great potential. It's early days yet, but as you know, this Bach run is our primary business. It could be very, very powerful in years to come if the customers decide to take, you know, higher long rod type bets because they do benefit the house. No surprise. There's an article recently in one that I think was a journal about sports betting and parlayed betting. It's akin to that. So we're hopeful that more people will partake in that and helps drive the tour and it'd be very advantageous for those companies. Bock rut century like Las Vegas stands.
Patrick Dumont (President & CEO)
And just to sort of increase the thought, yeah, I think the key thing here is it's early days yet. And so I think our goal is to continue to evaluate how the market is, is adopting and and actually choosing to to utilize those bets. But we'll see.
Unknown (Executive Vice Chairman, Sands China)
Thank you very much and.
Daniel Briggs (SVP Investor Relations)
Obviously very encouraging to to learn that you have 700 more suites at London Grand Open after the year end. I'm just wondering.
Patrick Dumont (President & CEO)
If you have opened a new premium mass capacity.
Daniel Briggs (SVP Investor Relations)
At the London Grand.
Robert G. Goldstein (Chairman & CEO)
On the gaming floor, yes.
Unknown (Executive Vice Chairman, Sands China)
Yes, yes, we did. We, we just opened, yeah, just around the time the Lunar New Year, we opened a new premium mass salon on Level 1 of London a grand. So we're we're obviously ramping up on the gaming side In Sync with the room inventory.
Daniel Briggs (SVP Investor Relations)
Thanks for the comments.
Robert G. Goldstein (Chairman & CEO)
Thanks George, as always, appreciate it.
Daniel Briggs (SVP Investor Relations)
Thank you. And the next question will be from Steve Wychinski from Stifel. Steve, your line is live.
Patrick Dumont (President & CEO)
Yeah. Hey guys, good afternoon. So, so Patrick or Robert, maybe even Grant, if we go back to the London, you know, obviously you have that coming back online over the next couple of months and obviously your competitors in the market know you know that property is coming back online as well. So, you know, the question is, have you seen any changes in the promotional activity, you know, from your competitors in the market in anticipation of, you know, that property coming back online? You know, I, I think First off, I, you know, I think we mentioned this in the prior quarter's call. Macau has always been incredibly competitive and very promotional. And I think to the team's credit there, they've been very disciplined. You know, when we closed the, the P6 casino, there was some, some promo in there to move people around and we talked about that. But I think it's a practical matter. We're very focused on leveraging the assets that we invest in for the long term to drive customer visitation and patron experience. And you know, I, I think for us, the, the goal is to be disciplined in the face of this market, which by the way is ever evolving. You know, if you go back more than a decade, there were different segments that are in favor different ways that people thought about those segments and invested against the opportunity. And I think that's what we have today. I think we have a very competitive market as we, as we've always had. I think people are investing against the segments the way they think that will create the most profit for them. And I think for us, we're doing the same thing, but our model has been pretty consistent, which is about investment and product investment in a great team, great service levels and focusing on the way that we can drive margin and cash flow. Grant you have any other comments you'd like to add?
Unknown (Executive Vice Chairman, Sands China)
I think, I think you said it well. I think we remain focused on EBITDA generation and the profit share. And if you look at the third quarter results, when all the results came out from all of the operators, I think those who gained revenue share didn't necessarily see that translate into profit share gain. And I think we, we continue with our strategy. I think it remains competitive regardless of whether we're bringing London or Grand Suites online or not. I don't think that that changes. I think that's a constant. And so our constant is that, yeah, we, our strategy remains leveraging our core products, leveraging the quality and scale of what we have and the the coming online of the rooms in London. The grand is the perfect opportunity for us to really drive home that strategy. And we really look forward to having the full inventory in place. And then from May, Golden Week into the summer and for the rest of the year, we hope to see that that really delivered for us.
Patrick Dumont (President & CEO)
OK. Thanks for that guys. And then and then real quick, Patrick, you, you, you obviously.
Daniel Briggs (SVP Investor Relations)
Brought up the President's, you know, visit in December. I'm not sure if you're going to be able to do this or not, but just just wondering if you guys have some sort of, you know, estimate.
Patrick Dumont (President & CEO)
You know what the the potential impact you know from his visit was on your on your properties, you know, during that time frame. You know, unfortunately I really can't give you an estimate. All I can tell you is that there was a noticeable change. But the important thing is that we're looking forward to a grade 25. We're excited about the opportunity. We feel really good about where our assets are positioned. We have a great team, we have great service levels and we're excited about what we can do now that we're finally getting all of our assets back in inventory. We're looking forward to it. OK, thanks guys. Appreciate it. Take care. Thank you.
Daniel Briggs (SVP Investor Relations)
Thank you. If there were no other questions at this time. 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. Thank you for your participation.
Other transcripts: Q2 FY26 transcript · Q4 FY25 transcript · Q3 FY25 transcript · Q2 FY25 transcript · Q3 FY24 transcript · Q2 FY24 transcript
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