Las Vegas Sands Corp. (NYSE:LVS) Q4 2022 Earnings Call Transcript

Las Vegas Sands Corp. (NYSE:LVS) Q4 2022 Earnings Call Transcript January 27, 2023

Operator: Good day, ladies and gentlemen. And welcome to the Sands’ Fourth Quarter 2022 Earnings Conference Call. At this time, all participants have been placed on listen-only mode, but we will 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 Sands. Sir, the floor is yours.

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.

Rob Goldstein: Thank you, Dan, and thank you for joining our call today. A few brief comments, then we move to Q&A. Macao’s future is bright, remains the largest integrated resort market globally. Our commitment to investing in this incredible market is never wavered and with an unrivaled critical mass of world-class IRs as well as continued improvement in transportation infrastructure in the region. Macao will mature into a vibrant, diversified tourism market over the coming years. SCL’s positioning and scale are perfect to capture the opportunity. Our diversified IR model with continuous investment in non-gaming segments, including MICE, hotel suites, live entertainment, retail, food and beverage, positions us well to capture the growth opportunity.

Our diversity, scale and track record in non-gaming make us uniquely positioned to cater all segments of the market enable Macao to appeal to international tourists as well. The new concession is a win-win. We deeply appreciate the opportunity to operate one of those gaming concessions in the next 10 years. We are excited to deploy more capital to expand non-gaming offerings at SCL. The $3.8 billion commitment is just a baseline. We hope to invest more as the market continues to grow. The commitment to develop non-gaming is the core of our investment and operating strategy for the past two decades, whether it be MICE, entertainment themed attractions or destination sales and marketing in overseas markets. We view the investment commitments by SCL and the rest of the industry is positive for Macao.

Over the past few weeks, travel restrictions have been lifted. It is too hard to tell the true measure of the underlying pace of recovery, but indications are extremely positive. We have seen significant improvement on property visitation, gaming volumes, retail sales and hotel occupancy. We remain positive on investments in, The Londoner and Four Seasons. Our investments position us well as the market recovers. The quality of our new products will also help drive high-value tourism from the region, especially the overseas markets. Turning to Singapore, our normalized EBITDA and gaming volumes are back now to the 2019 levels. Normalized EBITDA reached $386 million for the quarter. Rolling volumes are approaching 2019 level and mass win per day is now exceeding the level of 2019.

We have also delivered strong performance in non-gaming across all segments, including retail, mall, hotel, F&B and MICE. Retail is especially noteworthy with a 26% increase in tenant sales per square foot versus 2019. Our casino renovation program is progressing. Renovated product will come online throughout the year. Looking ahead, Marina Bay Sands is poised for further growth as all of our markets recover and become free of travel restrictions and airline lift continues to recover. Let’s move to Q&A.

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Q&A Session

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

Joseph Greff : Hey, everybody, good afternoon. And good morning to those in Macao. My first question, obviously, is going to be on Macao, and Rob, Patrick, Dan, can you remind us what levels of mass GGR either on a dollar per day basis or as a percentage of 2019 levels, do you need to be at in order to be EBITDA breakeven? Obviously, the 4Q saw a narrowing relative to the 3Q. I’m presuming and would love for you to expand on it, I’m presuming what you’re seeing thus far early in January is either at EBITDA breakeven or maybe more recently generating some level of positive EBITDA.

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?

Patrick Dumont : Thanks, Rob. So a couple of things to note. Mix is important here. So as you know, we’re a mass and premium mass and really a large-scale tourism investment company. And I think the key thing to note is the market is open. Liquidity is in the market. This is going to be a premium led recovery. We invested significantly during the pandemic. And the benefit of that investment is on full display. We have new suite products. We probably have the — what we think is the best new property we’ve had in a long time, opened up in Macao. That investment is really showing power in the market right now today. There’s significant non-gaming scale and investment that we’ve made that is bearing fruit. And so it’s great to see the recovery.

It’s great to see the volumes coming back. It’s interesting, I think, Rob has talked a lot about pent-up demand over the years. He’s witnessed it in other places earlier in his career. We saw it here in Las Vegas, and we experienced it fully in Singapore and now we’re at a run rate that is really, really strong. And I think we’re seeing that in Macao. I think the key thing is this is going to be a premium led recovery. In terms of breakeven, I don’t think that’s really a consideration anymore. I think we’re way past it.

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?