Las Vegas Sands Corp. (LVS) Q3 2011 Earnings Report, Transcript and Summary

K. J. Kay - Chief Financial Officer and Executive Vice President Michael Alan Leven - President, Chief Operating Officer, Secretary, Director, Chairman of Advisory Committee, Acting Chief Executive Officer of Sands China Ltd, President of Las Vegas Sands LLC and Chief Operating Officer of Las Vegas Sands LLC Robert G. Goldstein - Executive Vice President and President of Global Gaming Operations Sheldon Gary Adelson - Chairman, Chief Executive Officer, Treasurer, Member of Nominating & Governance Committee, Chairman of Las Vegas Sands LLC, Chairman of Sands China Ltd and Chief Executive Officer of Las Vegas Sands LLC Daniel Briggs - Investor Relations

Harry Curtis - Nomura Securities Co. Ltd., Research Division Janet Brashear - Sanford C. Bernstein & Co., LLC., Research Division Felicia R. Hendrix - Barclays Capital, Research Division Robin M. Farley - UBS Investment Bank, Research Division Steven Kent - Goldman Sachs Group Inc., Research Division Joseph Greff - JP Morgan Chase & Co, Research Division Carlo Santarelli - Deutsche Bank AG, Research Division Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division Mark Strawn - Morgan Stanley, Research Division Shaun C. Kelley - BofA Merrill Lynch, Research Division

Good afternoon. My name is Pia, and I will be the conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Third Quarter Conference Call. [Operator Instructions] I would now turn the conference over to Mr. Daniel Briggs, Vice President of Investor Relations. Sir, you may begin.

Thank you, Pia. And thank you, all, for joining us. Before I turn the call over to Mr. Adelson, let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provisions of Federal Securities laws. The company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for a discussion of risks that may affect our results. In addition, we may discuss adjusted net income, adjusted diluted EPS and adjusted property EBITDA, which are non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release. Please note that this presentation is being recorded. With that, let me please introduce our Chairman, Mr. Sheldon G. Adelson.

Thank you, Dan. Good afternoon, everyone. Thank you, all, for joining us today, and I would like to again thank those of you who were able to either personally attend our Investor Conference in New York on September 21 or joined us via the webcast. We sincerely appreciate your continued interest in our company. As you probably remember, one of the key things of our Investor Conference was centered on the predictability and reliability of our operating results. I describe "predictable" as something that follows trends and that those trends give you a road map for where you are likely to go in the future. In our case, the fact that the trends have occurred for so many quarters in a row, it makes them reliable. I also noted that as the scale of our business has increased, the predictability and reliability of our revenue and cash flow growth has also meaningfully increased. If our thesis regarding the predictability and reliability of our business needs any further validation for the third quarter of 2011, please step forward. The company record, $924 million of EBITDA during the quarter compared to $645 million in the same quarter one year ago, our growth curve has continued unabated. We have now reached 9 consecutive quarters in which our EBITDA has increased. While we are on the topic of EBITDA, let me also point out that based upon the results of this quarter, we now have 2 integrated resorts, each producing run rate EBITDA of more than $1 billion, or in the case of Marina Bay Sands, it is producing actual EBITDA substantially in excess of that. I would like to congratulate our management team and all of the team members who helped us become the first company in our industry to ever reach that milestone. In addition to the company record in EBITDA, which was a 43% increase from the third quarter of 2010, the company's net revenue increased 26% from the same quarter last year to a record $2.41 billion. Adjusted earnings per diluted share, which was $0.34 during the third quarter of 2010, rose to $0.55 per diluted share, a significant 62% increase. Let me repeat something I said during our last earnings call and again during our investor conference. We see absolutely no reason, again, no catalyst at hand, which would change the upward trend we have been experiencing. If anything, we see a variety of catalysts, which could see us maintain this trend line well into the future. Certainly, the most prominent catalyst is the opening of the first phase of Sands Cotai Central, which will happen roughly 5 short months from now. The opening phase will feature approximately 1,800 (sic) [5,800] hotel rooms and suites, significant MICE retail and restaurant space, and VIP and mass gaming facilities. Years ago, when I came up with a vision of the Cotai Strip, very few believed in its potential. Now everyone wants to be there. But for the next 3 or 4 years Sands Cotai Central will be the last significant development on a stretch of the most coveted real estate in our industry. In Macau, we remained uniquely positioned to succeed in an environment in which demand exceeds supply, or as our new development comes online, a market in which supply drives additional demand. Another positive catalyst for us is the progress we are making in regards to our VIP business in Macau. We remain extremely confident that the investments we are making today to expand our offerings in the VIP segment will pay meaningful benefits in the quarters ahead. So with that said, let me now spend a few minutes discussing the company's results by location. Let's start with Singapore where Marina Bay Sands delivered a property record $414 million in adjusted property EBITDA for the 52% EBITDA margin. For those of you with projections well below those numbers, please keep an eye out for one of our egg-wiping face towels, which you will be receiving shortly. As you can see -- and if anybody wants me to sign, please let me know. I'll be happy to sign my signature. As you can see in the press release, our whole percentage on Rolling Chip win was lower than normal at 2.69%. So if you adjust based on normal whole percentage, the property would have achieved EBITDA of approximately $438 million, and when combined with $6 million of nonrecurring expenses, an EBITDA margin of 54.1%. I like them apples. Let me point out that the whole adjusted EBITDA number brings you to an annual run rate of more than $1.75 billion. I'm sorry to those of you who I disappointed with my meager prediction that the property would produce $1 billion in EBITDA this year. At this stage, it looks like I was off by a pretty fair amount. So I guess one of those egg-wiping face towels will be finding its way to my office as well. But trust me, I will suffer through the indignity of being wronged by such a substantial amount. All facets of our business at Marina Bay Sands in Singapore. On the Gaming side, and all of these at property records, Rolling Chip volume, the VIP business, increased 63% from last year to $16.7 billion. Non-Rolling Chip drop, the mass market, was at 34% over last year to $1.2 billion, and slot handle increased 105% compared to the third quarter last year and reached $2.8 billion. Who said that the market was leveling off? Let me know who it is, we'll send another towel. Evidence of the property's continued ramp was also in display with large year-over-year increases in non-gaming revenue. Combined rooms, food and beverage and retail revenue increased by more than 95% from the third quarter of 2010. The increase on revenue was led by a 91% increase in RevPAR, moving from USD $168 last year to USD $321 this quarter. Compared to a year ago, hotel average daily rates increased 33% to USD $327, and occupancy was almost 30 points -- was up almost 30 points to 98%. Turning now to Macau, and the property is operated there by thereby a majority-owned subsidiary, Sands China Ltd., adjusted EBITDA for the Macau property operations was $388 million, an increase of 16% from last year's third quarter. If adjusted for a normalized hold percentage, adjusted EBITDA would have been $401 million to the quarter. And compared to the second quarter of 2011, when our hold adjusted EBITDA was approximately $365 million, we grew EBITDA sequentially by 10% on an hold adjusted basis. The Venetian Macao produced $253 million of EBITDA with a record EBITDA margin of 36.7%. Slot handle increased to $897 million during the quarter, and we saw double-digit percentage increases over last year in Non-Rolling Chip drop and Rolling Chip volume. As I pointed out last quarter, our non-gaming businesses in Macau continue to grow. Rooms, food and beverage and retail revenue at The Venetian Macao all saw significant percentage increases over the third quarter of 2010. This trend is particularly exciting as we close in on the opening of Cotai Central, which will obviously feature a wide variety of additional non-gaming components. The Plaza Casino at the Four Seasons increased its EBITDA to $60 million for the quarter, up 22% from the same quarter last year. As I mentioned in the opening, we have an aggressive plan for the Plaza moving forward, beginning with the addition of 2 new leading VIP operators opening there in the next couple of weeks. The Sands Macao had adjusted property EBITDA of $76 million. The Sands saw strong percentage increases over last year's third quarter. Non-Rolling Chip drop increased 11%. Rolling Chip volume increased 26%, and slot handle was up by more than 23% year-over-year. Turning to our operations here in the U.S. Our Las Vegas properties reported a third quarter record EBITDA of $94 million, an increase of 62% versus the same quarter a year ago. The power of our global presence is attracting new players here and enabled The Venetian Palazzo to record $536 million in table games drop, the second-largest quarter in terms of drop in the history of our Las Vegas properties. Stranded, group meeting and commensurate business at The Venetian Palazzo also contributed to a 33% increase in cash revenues from the sale of hotel rooms and a 21% increase in food and beverage revenues. Sands Bethlehem in Pennsylvania recorded adjusted property EBITDA of $25 million. The property's new outlet stores will begin previews early next week ahead of the February grand opening. We expect traffic from the retail stores, the 300-room hotel which opened in May, and the forthcoming events center to provide a continued increase in our Gaming revenue there. So that completes an overview of our operating results for the quarter. And at this time, along with Mike, Rob and Ken, who are all here with me, we would be happy to address your questions.

[Operator Instructions] The first question will come from Joe Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: A question for you on Singapore. Obviously, the VIP volumes were significantly ahead of I think what most of us were expecting, which is great. I was hoping you can maybe just help us understand how you're thinking about reserving there, whether reserves as a percentage of asset and credit have changed at all your views on that? And then one thing we noticed in the quarter, too, and I think I understand this because it should tie in with the higher volumes is that it looks like the commissions there to the direct players on a percentage of role increased sequentially. If you can help us, explain that, please.

Yes, Joe. It's Ken. I'll take the receivables, and Rob will probably address the commissions. As we talked about before, we're reserving somewhere on a quarterly basis between 3% and 7% of our rolling win. And this quarter, we're right in the middle of that, about 5.4%. And as we've talked about before, we go account by account with regard to all of the players down there and take a look at where we are. And this quarter, based upon the higher volume, we decided to go through with that 5.4%, and we're adequately reserved at the end of the quarter.

Joe, it's Rob. Obviously, our Singapore business was terrific, as you referenced. And what's really happening is a concentration geographically, but also the type of customer we're getting, it's a very high-end customer, $1 million-plus driving most of that business. So commissions are trending up slightly because we pay more, based on higher roll we have bonuses based on higher return. So it is up a bit, and I think that trend -- as long as we can roll $17 billion, $16 billion a quarter, we're going to be in this range. Our business, I referenced, it's more -- it's coming from fewer people than in Macau. And clearly, you're going to pay more as people are rolling $1 million, $2 million, $10 million, whatever. So that is a consequence of having that kind of roll. Joseph Greff - JP Morgan Chase & Co, Research Division: And then so far...

I never thought we'd be sending Joe Greff a towel. But Dan, send him a towel. Joseph Greff - JP Morgan Chase & Co, Research Division: And then with regard to Las Vegas, I know we all tend to focus on Asia, but we saw some very good revenue growth and really good flow-through there. Is there anything that you're seeing now that would indicate to you that, at least directionally, these trends are not sustainable?

Well, I said that in what I talked about, is -- in my prepared remarks, there is nothing that we can see either short-term, intermediate-term, long-term that could be a catalyst to reverse that direction.

Joe, on the Gaming side, we referenced it in Sheldon's opening remarks, we just saw a heavy, heavy amount of play in the Asian front. And that speaks to our belief that our presence globally assists us here in Las Vegas because customers do come here. It was a quarter that we've never seen, a third quarter, summer quarter, at those kind of drop numbers. And it evidences our strength in that segment. And I think that will continue to grow as Asia grows, and as our strength in the high-end Asian market grows. Joseph Greff - JP Morgan Chase & Co, Research Division: Great. And then my last question. In October so far in Singapore, are you seeing anything that would suggest that growth is plateauing?

I would say I've got to be careful about disclosing here. I would say just the opposite.

The next question will come from Mark Strawn with Morgan Stanley.

Two questions on Singapore. One, following up on Joe's question, could you give us some additional color on what drove the sequential increase in VIP volumes? Is that more play out of the China and North Asia region? Is it market share, a combination of both? And one follow-up after that.

Sure. Mark, it's a number of customers coming out of Mainland China. It continues to be more important than Singapore, so is Hong Kong. There is some play out of Singapore, itself, mostly PR play. Indonesia, Malaysia, Korea, Japan, all important. But clearly, the strength of that RIM business is residing in Mainland China, whether it be mainland Chinese themselves, living in mainland or having a second home in Singapore. So I think the strength of the growth we're seeing in Singapore is primarily driven by mainland Hong Kong. But Singapore, itself, there's some business there as well. And the other markets we mentioned, Indonesia, Japan, Korea, et cetera.

Is there anything that you're doing differently on the international marketing side to drive some of that play? Or is it really just more players are aware of the property, and it's as simple as that?

I think it's a combination of the properties now that have been opened in excess of a year. It's a great property. It's a great place to do business. People really enjoy going to Singapore. Mainland Chinese people in particular are seeing they have a cultural predisposition to go there. I think our marketing team in the field is extraordinarily strong. It gets better as we hire more people over time. And I think what we're seeing is a lot of years of being in that business, and trying to contemplate today, we have multiple properties in Asia, and it's paying off in dividends now. So it is a concentrated business, but we have people working in Asia at this every day and focus on it. And you're seeing some of the benefits. I think that's the best way. We've always said slow and steady wins the race. We weren't going to do anything we weren't comfortable with. We stay very, very consistent in our thinking. And I think you're seeing the results of that thinking at this point.

That doesn't include the attraction of our good looks and charm.

Okay. I have one final question. Can you give additional color on the onetime expenses you mentioned in Singapore as well? And also, if possible, do you have the bad debt expense number in Singapore for the quarter?

Yes, sure. With regard to kind of the nonrecurring expenses, it was composed of 2 items. We finally got the property tax assessment from the government. And as a result of that, part of what we had to accrue this quarter pertained to 2010. So it was about $3.6 million of it was prior year. And then there was about $2.4 million of kind of onetime or nonrecurring expenses associated with the entertainment program. And then with regard to the receivable reserves, based upon accruing at that kind of 5.4% of rolling win, it amounted to about $24 million of reserve provision.

That's not the total. That's -- it's the quarter.

Correct.

The next question will come from Steven Kent with Goldman Sachs.

A couple of questions. First, how far along are you -- and maybe this is for Rob -- on revamping the VIP offerings in Macau? I know you talked about that at the Analyst Day just a few weeks ago. But are we in the implementation stage? Are you starting to see some of those higher-quality junket operators coming through? So when do we start to see that? And in a similar tone, the marketing program for Cotai Central, what is the plan there in part to offset the cannibalization for the -- for the existing businesses there, a different strategy for Cotai Central that you can talk to.

Steve, it's Rob. We've talked about this now for the better part of the year. It actually kicks off -- I'm in Macau next week, we kick off our first -- Sheldon referenced to it in his opening remarks -- we kick off our first few junket groups taking over space in the Four Seasons Plaza. It continues throughout the balance of this year and throughout the first 2 quarters of 2012. We're very, very comfortable, very happy what's happened over there in terms of our 5 or 6 key junket groups that's not been heretofore part of our business mix. We feel very confident it will impact both the Cotai and the Four Seasons, but also The Venetian, and also the Sands. So the strategy always was to have literally hundreds of new customers, thousands of new opportunities to grow our business. It's in place. It kicks off next week. It's about another 7 months before we implement it. It goes throughout the first quarter and second quarter. But the answer is it's happening. We're very comfortable with our relationships. We're very comfortable with our deals. We're fully sold out on all of our 5, 6 opportunities. Now I'll let Mike address some of the marketing thinking for Sands Cotai.

I'll just clarify that. We're all sold out on all the VIP rooms, and we have a waiting list.

Right. Our VIP demand has outstripped our supply. It's a wonderful problem to have. We have -- I think the strength of what we did in Cotai enabled this company to do something unique. Unlike other people who have a property, we have all these different places to fill. And for the top junket people, we're a very desirable partner. That's paying off big-time in terms of our VIP business. And I think you'll see it next week, beginning phases of it. But it is still another 6, 7 months to go to finish the whole thing. But by the end of Q2, we feel very good about it.

This is Sheldon. I want to point out that I've heard the word cannibalization over the last several years, but I have not seen a single instance of one property cannibalizing the other. Period. We were hoping to cannibalize, and I think we've cannibalized a lot of the properties on the peninsula, with my idea about the Cotai Strip and Asia's Las Vegas. And as I said in my prepared remarks, where was everybody when it was a swamp and a bay, and nobody wanted to take the land there? I had to go back to the government and say, "You send me out. You said our land is out here in Cotai," I said, "Where is it?" They said, "It's under the water," and "but you're going to have to bring it up." So at a time when nobody wanted it, now everybody talks about it. In fact, we are not cannibalizing any of our properties. We could tell you that. If anything, the critical mass, the fundamental rudimentary premise of Asia's Las Vegas, the Cotai Strip, is based upon supply. I don't want to use the trade old phrase that says, "Build and then they will come." But we're building it, and they're coming. I think the community has to recognize, both the analyst and investor community, should recognize that this is the supply-driven industry. There's nobody out there with picket signs and sleeping over in tents and saying, "We insist that our casino or an integrated resort be built here." We build it. They come.

Steve, let me mention a few things about Macau in terms of Cotai Central, also just to repeat what Sheldon said, we'll be opening the first 1,800 rooms, which is a 1,200 room Holiday Inn and a 600-room Conrad by Hilton, at the end of the first quarter. At the end of the third quarter, the first Sheraton Tower of 2,000 rooms will also open, in the end of third quarter '12. And then at the first quarter of '13, as we've said before in previous calls, we'll open the last 2,000 rooms at the Sheraton. Last week in Macau, there was a tour of the properties, checking on the opening, looking at the facilities. It's going to be beautiful. The casinos will be beautiful, as well as the room product, the MICE product, et cetera. We reviewed, for the brand launch, all of the people who are in the room. We went over all the marketing strategies. We're now capable on Cotai to have different price tiers, particularly for the mass market, as well as for the luxury market, going all the way from the Four Seasons down to the Holiday Inn. So essentially, our rate structure and rate packages have all been done for various segments, so there will not be any cannibalization. The sales team is out all over the area and all over Asia and in Mainland China doing tour packages. That's all in the program. We'll review the opening and -- opening operating budget, as well as the ongoing budgets, and had a rigorous review of all these marketing plans for The Venetian, The Palazzo, Four Seasons, Holiday Inn and for the Conrad in the early going. All of this, with substantial financial participation, will help us to fill that volume. Our expectations are very high. And we believe that with the VIP rooms done on the high-end VIP side, we're fine. And on the mass market, we will continue to dominate that. And that's what these plans are all doing. So I think you'll feel very comfortable that we have a very targeted and strategic marketing plan in place to be able to eliminate any cannibalization, and get the greatest share of not only the existing marketplace that's not in those buildings, but the ongoing growth of the Macau market, which should help dramatically with the high-speed rail that will be coming early next year as well. So we're in very good position that way.

And Ken or Rob, maybe just a separate question. The Marina Bay Sands hold percentage was 2.69% this quarter and year ago. I know you talked about a theoretical range of 2.7% to 3.0%. But over the past 1.5 years or so, it's been bouncing around anywhere from 2.5% to 3.1%. I was just wondering if there's anything driving it, customers moving, shorter time to the table, or do you simply need more players to smooth this out over the next couple of years? In other words, is that 2.7% the right range, or should we start to adjust and expect a wider range?

I wouldn't do a thing, Steve. I think our range is just where it should be. I think you'll see it be where it should be at the end of the year. It's a business that, to do these kind of numbers, say we did $50 billion, $60 billion, $70 billion, you're going to get there. And whether this quarter is 2.6%, next quarter is 3.5%, I think it's silly to think the range is going to change. We've been doing this for a lot of years in Las Vegas. There's billions of dollars of evidence. If anything, I think in Asia, if you follow the high-end business, you have a different -- different positive, and that is that the customers stay for weeks, not days. And they gamble for -- this is not an American customer. They sit there for hours and hours and hours. The product is extraordinary in Singapore. The product keeps the customers there. I wouldn't be the least be concerned to adjust your numbers. I think when it's all said and done, we'll hit and exceed our range. We have total -- Andrew and the team over there, and Mark Juliano, Andrew MacDonald, Jeremy Buck, watch these numbers daily. We're very comfortable with our forecast being 2.8% to 3%. I wouldn't be concerned at all. We see plenty of business and plenty of time on the...

It's the law of averages. It's always going to come out a moving average calculation. We'll show it at 2.85%. In different parts of the world, you may get depending upon how people play blackjack, on luck or by the rules, you might come up with a 2.93% or 2.95% over in Asia. But it's always going to be in between that number.

In Las Vegas, we've done this for 11 years now. Our hold percentage is roughly 10 points higher than the blackjack in the American business because of the Asians. I would give you every confidence that in Singapore, this is the right place to be for taking high-end business for -- sitting there for a huge amount of time. And we're not at the least a bit concerned.

Steve, you should now that looking at these numbers, year-to-date, our whole percentage is 2.82%. We track this every day. It's a little more disconcerting for us than you, because it does go up and down. But we know in the end, after all this time, it's coming out just where it should be.

The next question will come from Janet Brashear with Sanford Bernstein. Janet Brashear - Sanford C. Bernstein & Co., LLC., Research Division: Rob, I wanted to ask you about the VIP business at the Four Seasons. Are you using any of the unsold apartment space there for either junkets or VIP customers? And if so, how much of it are you using?

Are you talking about -- not the apartments. Are you talking about the mansions? Janet Brashear - Sanford C. Bernstein & Co., LLC., Research Division: No, I'm talking about the apartments that you ultimately wanted to sell.

What we're using is levels 2, 3 and 4, all approved by the government. The other things you referenced, I believe, are in discussion, but waiting. The government will make those decisions, not us. Janet Brashear - Sanford C. Bernstein & Co., LLC., Research Division: And then a follow-up on Sands Macao. Is it your understanding that the ferry terminal on the peninsula will close in 2013 when the Pac On Terminal is finished? And if so, how does that affect Sands Macao?

Janet, we've heard about that. There's some conversation. You probably see the news as well as we do. I believe SJM has lodged some objections to that happening. We will be involved and participate in that situation. We'd still like that terminal to stay open as long as possible, but it will be a government decision. But I just saw it today, actually, that SJM has made some major commentary to the government. So they may -- I don't know what they're thinking, what the exact thinking or timing would be, but we are watching it.

The fact that I reported increases in all categories for the Sands, shows that the Sands still has the "Sands effect," and still is the first foreign operator casino on the peninsula. We are increasing and we'd obviously -- which I said earlier, we're not cannibalizing the Sands. We obviously seem to be doing a good job keeping the Sands patronage. The customers keep coming in there because our numbers keep increasing. Janet Brashear - Sanford C. Bernstein & Co., LLC., Research Division: And can I ask you another question? It's mostly Macau-related but really hits the whole company. As you look at next year's CapEx, what is your anticipated spend? I know most of that will be Cotai Central. But if you just look at your existing projects that you're aware of, what do you get to for next year?

If you take out Cotai Central, our existing capital spend annually is going to be in the vicinity of about $400 million. Janet Brashear - Sanford C. Bernstein & Co., LLC., Research Division: And then with Cotai Central?

You're referring to maintenance number, right?

The maintenance capital of the existing buildings.

Right. And then from a project standpoint, we're probably close to about $1.2 billion. Right. The bulk of that, obviously, is Sands Cotai Central. And then we've got some retainage payments, obviously, to make on Marina Bay Sands.

The next question will come from Shaun Kelley with Bank of America.

I just wanted to touch -- ask real quickly on Singapore. There's been a lot of questions on the VIP side, and obviously the roll numbers are huge. But I just wanted to ask about the mass market side, because you continue to show very solid sequential growth there. Maybe, Rob, if you could give us a little bit more color on what you guys are seeing on the slots, in particular, just what's driving, maybe breaking down that in terms of visitation, spend per visit, maybe where some of those customers are coming from.

Right. Well, we're obviously 2 very unique businesses there, and they're both extraordinary. Let's start -- let's deal with mass table. As we ramped up from Q4 last year, our drop just keeps growing, when we hit this year, we're anticipating $100 million a month in total Casino win out of that segment. And I think on the table side of that equation, it just gets better and better. We're holding in the 22, 23 range, which speaks to customers' willingness to gamble and stay at the table. And the drop is increasing considerably. The good news from our perspective is that's mostly a tourist customer. I would say majority of our business comes out of the non-rated side, which is the wonderful customer, both in terms of margin and consistency. We're fortunate in that think of us as having tens of thousands of hotel rooms in the neighborhood that feed that market. It's tourist-driven. And we believe that as we keep ramping, it just -- we have more and more ability to grow our table win, and our hold percentage stays consistent. So on the slot side of the equation, it's more rated customers. We believe that market -- you saw the increases, the wins keep going up every quarter, steady increases that we picked this quarter at 147 gross wins in the slot side, 271 in the table side, $4.6 million a day. Our goal is to, obviously, get to $5 million in the future. That would yield about $100 million a month of very, very sticky EBITDA. So this is an extraordinary business. I've worked in a lot of different markets, never seen anyplace like it in terms of both consistency, demand, margin. It's just a wonderful opportunity, Shaun, and I don't see how it gets worse. You've seen, everyone keeps talking about the leveling off, but for us, if you look at the drop and the wins in both mass tables and slots, they just keep improving quarter-after-quarter, never have declined. And the hold percentage is hold consistent. So people laugh when we said we could do $3 million a day, then we did $4 million a day. We're heading to $5 million a day. The focus in Singapore, obviously, a lot of people focus on the VIP section. The story that we should be talking about is hold, the consistency -- to Sheldon's comments, opening remarks, the consistency, predictability, stability of this mass table and slot businesses in Singapore is extraordinary, and it's driving great tourism for the building. The building is exceptional, our food and beverage and retail. So people want to see this place, and I think the evidence is in these numbers, which are just terrific. Our team there is, again, Jeremy and Andrew and Mark, and the team there have done a great job.

That's really helpful, Rob. And just to be clear, are you seeing visitation counts increase into the property at this point, I know they were kind of stable in the first 2 quarters?

Dan wants to take it.

Visitation is relatively flat, Shaun, between the second quarter and the third quarter into the casino. But visitation to the property continues to increase, and will continue to increase as you bring more folks into the area with the train that's coming first quarter next year.

We think, Shaun, to that point, the MRT stop, which is Q1 '12, and the cruise terminal Q2 '12, the Garden debate of 2012, events of the Singapore sports hub are unique opportunities to continue to grow this mass slot and table business. Unlike maybe in New York or the U.S., where people don't take mass transit, it is well-regarded in Singapore. It's safe. And I think it's going to be a very, very big boom both to the retail, but I also think this property will just get stronger because of how wonderful it is with architecturally, food and beverage, the retail. It's an exceptional property that everybody comes back from and talks about. So I think our growth here, I don't know how high is high. I don't know. I know one thing, we're not seeing a lack of demand. We keep wanting to open more tables and more slot machines on the weekends, and it looks very steady and very strong.

The reaction of foreigners, government officials, ministers that come in, tourism people, and they come in and say -- the first thing they do is point at the building and say, "Can you build one of those for me, or something like it?" It's the greatest reference site in the history of buildings. And clearly it's, a lot of people call it, not at our urging, but thankfully, the eighth wonder of the world. And too bad, we couldn't reproduce it. We certainly won't do that to the architect or to the City of Singapore, it's got to be a one-of-a-kind. But if we could, we would. But we can't. We'll come up with other great designs. And that's why people want to come there. Remember that the non-gaming profitability is at a very high percentage level. So beside the gaming, we're making -- the rooms, as I said, continue to rise. Mike said yesterday, a couple of days ago, that after looking at the month's numbers, he said he's never known of a property to achieve this RevPAR in 50 years of being in the hotel business.

That's really helpful. And I guess I just had one about Macau and I'll yield the floor. Just the margins at the Venetian this quarter were exceptional. I mean, it may have been a record at 36.7. I'm just trying to understand, as you guys go forward and you get a little bit of mix shift back towards junket-based VIP, we'd expect that those probably actually come down, but your volume and your dollars probably keep going up. Any sense of kind of your thoughts behind how that mix shift is going to play out or if this margin level is a little bit more sustainable than we might think?

I think it's sustainable in our current business model in the casino, but hopefully it'll go down significantly as we grow a lot more junket business which, as you know, is much slimmer margins. But I think when you look at some of the numbers that Galaxy and Wynn, our competitors, have thrown off in that segment, I'd rather have more EBITDA than less margin because we've left behind some dollars there. And I think, yes, you know the answer, Shaun, we do our job right, we're right about the VIP segment, we may contribute a lower margin but a much higher EBITDA. Last time I checked, EBITDA was more important than margins. So I'm very excited to drop the margin down and get the EBITDA up to...

Hey, that's my line, Rob.

So yes, I think you know if we do our job right, margin will come down. The Venetian is extraordinary. Ed and Dave and that team has done a great job of driving margin. But I think as they drive the next piece of that business, you're going to see a movement to more EBITDA, along with a very fat margin.

The next question will come from Jon Oh with CLSA. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: Just a couple of questions on Singapore. I'll start with just trying to understand, again, the VIP segment. I think that's the biggest surprise to everyone. I'm just trying to ascertain how much of this growth that we're seeing sequentially that's coming from an overall growth of the market, which has been pretty flat in the last few quarters of roughly, I think, around $24 billion of Rolling Chip per quarter. And how much of it is actually you cannibalizing Genting, in your estimate anyway? Any comments on that?

I don't know Genting's numbers so I have no idea how to say what the market's doing. I can only speak to our -- I know people keep telling me, I have this discussion regularly, people telling me how flat the market is. And I get confused, I guess, because I look at the last 4 quarters, our growth has been 8 to 10 to 12 now to 16. To me, that looks like pretty good growth. I can't speak to our friends at Genting. I hope they're doing great numbers because we hope the market grows together. But our rolling volume this last year has just gone very well. We're very proud of our success. I don't know, I hope it's not at their expense. I like to believe they're growing with us. That would be my desire, that a competitor/partner that grows the market together. But I can only speak to our numbers, and I think they are pretty damn good. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: And my other question is, the VIP segment is presumably very capital intensive. Have you allocated any incremental capital, for example, in growing your cage cash balance in the VIP from Marina Bay Sands? And if you can give us any color on how much capital are you actually allocating right now to grow that business to being roughly averaging around $5.5 billion of Rolling Chip per month?

I've got to tell you, I don't see it being capital intensive, Jon. I think of it as actually one of the -- we have some airplanes we use. We have some high-end talked-about areas and throw our high-end players in some nice suites. But on a return on invested capital basis, I venture to say it's incredibly efficient. Off the top of my head, I'm looking at Ken for advice here, but I don't think we're spending a whole lot of -- as far as the cage, no. The answer to that is no. As far as spending money, we're adding some suites next year. We're adding 7 or 8 suites on the -- subject to government approval. We continue to provide a high level of service. The good news is, this is a rather small market, and very honestly, as long as you provide excellent service, terrific food, good casino people to handle the business, it's not that capital intense, so I don't think it's a significant number to talk about. Our other businesses are more capital intensive, the hotel business and the mass table and slot business. But baccarat table is pretty reasonable, and VIP suites. And there's a labor, again, because we have VIP people that make sure the customers are comfortable and provide adequate service. But I don't think -- Ken, let me know if I'm missing something with the capital-intensive business from our perspective. We roll $50 billion or $60 billion or $70 billion, I don't think it changed a whole lot. It's capital intensive from the perspective of reinvestment on the commission piece, but that's about it.

You also have to pay that -- obviously, the gaming tax and the GST tax when you win the money on a monthly basis, which works out to about 8.5% or so. We'll pay 8.5% for the taxes and carry the receivable balance. As long as we're collecting that, it's a very efficient business.

The next question will come from Felicia Hendrix with Barclays Capital.

Rob, as we think about growth in Singapore, I was just wondering, could you talk about your capacity utilization there?

Sure. Are we talking VIP, Felicia? Are we talking mass?

I think we should talk about mass, because it's more relevant to mass, right?

Right. Right. I think so. Well, it's not an issue at all on VIP, let's be clear. We have plenty of VIP space. We only have -- it's a very interesting market, but on the VIP side, there's absolutely no challenges, even Saturday night or New Year's Eve, plenty of space to gamble. On the slot machines, obviously, we're capped by government regulation. We run a very high utilization, probably the highest I've ever seen. On weekends and holidays, we get into the 80s. In my mind, that's pretty much -- you can't get a whole lot higher. So yes, the answer is we have -- we definitely have in the slot machines -- these machines that next year we'd do, let's say, $700 million, the highest numbers in the industry. So clearly, we have high capacity and high usage. It's an issue at times, but frankly I would say, if you have 21 shifts a week, it's probably an issue with 2 shifts. Maybe it's Saturday night, maybe it's Saturday morning or afternoon. It really isn't a problem beyond that. In fact, you walk into Singapore, I'll be there next week, and you walk in, when I usually arrive, in the middle of the night, and you get there on Tuesday, Wednesday night, there's plenty of room to gamble. On the table side, we are actually hiring more dealers and be more aggressive to maximize this wonderful market, and that is to open. I mean, Andrew and the team have strived, and George, to get more dealers on board so we can get more tables open and use every one of our table situations. Because on holidays and weekends, we do hit some awfully high utilization numbers. You can't make -- we think, if this market keeps going, you can't do $2 billion in that space without hitting some high utilization on weekends and holidays. But I would caution you that Sunday through Thursday it's not -- I look at the accounts, and we're not challenged at all 5.5 days a week. But clearly, you do these kind of numbers, you're going to have some fast usage at times, sure.

So with the shoulder periods kind of being weaker, are you trying to push or lobby for getting more capacity on the slot side in particular?

No, the government makes those decisions, not us. And we abide by government regulation, which is, clearly, we're capped, and we are where we are.

Okay. Great. And then just switching gears to Macau. I mean, clearly, you say it's a lot about as you integrate to the new junkets. But I'm just wondering, as you transition to the new relationships, do you foresee any kind of disruption or any kind of risk in that transition period, maybe perhaps from now until Chinese New Year where you could see your VIP revenues dip as you transition?

I don't understand when you say we...

Well, could you...

To be blunt, we've underperformed the market in that segment. We're extraordinarily strong in the mass, and we're great on our slot business. But let's be clear, we think we've underperformed and we think -- I mean, we all believe that there's such huge upside. I don't think that's going to hurt us at all. I think it's going to -- if anything, it's all upside. I can't think of it -- I'm going to be there next week. I can't think of a reason why we'd trade down. I think we're going to just -- it's all upside from here.

Okay. So there's not -- you can't make the case that, even though you are underperforming, that over the next few months you might dislocate the current -- I'm sorry, the junkets that are currently there might feel disenfranchised or dislocated or just that it could get a little worse before it gets better.

I really can't. I'm listening to you, I'm thinking to myself as you ask the question, but the answer is no. I think just the opposite. I think we're very -- everyone in this room, and Ed and David and the team in Macau, all of us are very, very excited about this new phase of LVS's experience in Macau. We're really excited to have ourselves get into that group of peer station, a very high end-of-roll business, and get with the right people in the room to drive it. I don't think there's any risk at all of that, no.

The next question will come from Harry Curtis with Nomura.

A quick question, Sheldon, on your growth opportunities. Can you just give sense of the status of your growth opportunities in Asia. And if new development opportunities take longer to gestate, what would you like to see done with the free cash flow?

What would I like to see done? First of all, there are development opportunities, but some of which we are enthused about, some of which -- I mean, that are not open yet, and some of which, a couple within the states, we're not that enthused about. There are some obstacles to the one in Massachusetts and in Florida. But in Asia, which would be our first choice, it appears as though Korea and Japan are making louder and more current and more urgent moves in the direction of legalizing casino gaming in integrated resorts. Since we're the leader in integrated resorts everybody feels that -- in the world -- everybody -- but we created the concept of integrated resorts. Everybody knows that we are the most probable winner of any competition out there. But it all depends where and when. We think that Korea and Japan -- and if one of those legalizes, the other one is going to in a heartbeat. There's a competition between the countries, who's going to get out there first. And both of them are concerned that the other one may get it done ahead of them, so they're accelerating their efforts. As far as the cash is concerned, I think my wife would like dividends, my children would like dividends, and so would I. But we happen to have a few shares to which the dividend may apply. And I may be able to get a new plane or maybe even something more than my 10-meter sports fisherman boat. I think, as I said at the Investor Day, Harry, and I think you were there, I said we are definitely going to consider it next year. So I could tell you that the subject matter is not gathering cobwebs. It's a topical subject for the Board of Directors with whom we had a meeting yesterday. And I think that we will keep our -- that is, I won't say commitment, but we'll keep our feelings about strong consideration for dividends in 2012.

Okay. That's great. And I had a follow-up question. I don't know if Ed's on the phone, but there's an awful lot of concern about, at least amongst the economists who follow China, about the state of the shadow banking system. And if someone could give us their view of if there's any linkage at all between the shadow banking system and the source of funding for your Macau junkets.

Harry, I was in Macau last week. We had these discussions. And everybody that I've spoken to does not see any significant problem in that particular area. But to be very candid, I'm not sure anybody that we speak to, including Ed -- who is on the phone, he can't speak to you, but I know he's on the phone from Macau. We don't see any indication or hear any indication about it. But in fairness to everybody, I don't think anybody really knows. That's probably why it's called shadow banking. But at this date, with all the conversations we've had with the people who are involved in that end of the business, they have not given us any indication. And in fact, just the opposite, in our conversations as of last week.

The clippings, the news clippings that I see say that the central government is not going to allow any banks or shadow banks or whatever they're called, they're not going to allow developers to get hurt because -- it's only in one province, Guangzhou, I'm not sure how I'd pronounce that. But I want to remind you, Harry, that the government in Beijing is just centrally -- the government of the society of China is a centrally controlled government. They could turn an aircraft carrier on a dime, and it would take this country with all the agencies and all the special interest we have to go through, it'd take us the Pacific Ocean to turn an aircraft carrier around. So they get things done. Never in my years of watching China, I've never heard of a macroeconomic crisis in China. So I think if people are talking about one or pointing to one in the making, I just think that they don't really understand how the country is run. And it's unlikely that, in my mind, that there will be any -- unless the government wants to tame money then there won't be any taming of money. If they do, there will be. But there's no indication that they're going to do that.

The next question is from Carlo Santarelli with Deutsche Bank.

Most of my questions have been answered, but if you would remind me, Rob, you'd commented a little bit on this. Some of the recent trends in Macau maybe post-Golden Week. And also if you could kind categorize the environment you're seeing amongst your competitors for VIP business in the market as it stands now. That'll be great.

I think our quarter -- obviously, Carlo, our quarter speaks to the numbers that I can speak to, I can't speak beyond them. But I think business in Macau -- everyone talks about the concerns, the economic concerns and the cannibalization, but I keep looking at the numbers and, from my perspective, it's still an extraordinary market, that the Galaxy guys delivered some terrific numbers that I think indicate the depth of that market. And I think our goal is simply to keep participating in the mass slot entailed business and increase our share of the VIP. I hate to sound redundant, but I think we have a lot of growth opportunity there. And I think Macau -- look, I started with Macau in 2004. We opened the Sands. And I remember people saying, "Gee, could you ever surpass Las Vegas in revenue?" At that time, they were neck and neck. And last time I checked, they're doing better than Las Vegas and Macau. I have a lot of...

4x better.

I have a lot of confidence that Macau is not going to be an issue. I think there's plenty of business there. To Sheldon's point, it's just an extraordinary growth market that I think the transportation issues, as they get more and more -- as the bridges and the trains, et cetera, the growth into the outer provinces are going to make that market grow and grow. The VIP speaks to itself. Those numbers are extraordinary. I mean, Galaxy proved it can be done, and they also didn't cannibalize their operations on the Peninsula. So I hope we can emulate that and grow our VIP. But that market just continues to surprise everybody and anybody -- anybody who's honest about it has been wrong about the market in Macau. And there's certainly more people who have yet to come to Macau, that we feel very bullish about it, in every way.

I think maybe part of my question more had to do with maybe what some of your competitors are doing around commissions, things like that, if you're seeing anybody acting more aggressive in the present environment than they were previously.

Well we've always tried to be conservative, and I think we continue. We think we're privileged in the sense we've got so much real estate to offer our junket partners that we can participate that way. I think what lacks -- look, let's be honest, let's be blunt on this call. What LVS has that no one else has is capacity. Five hotel casinos open next year. No one has that. No one of our major competitors. We're simply the biggest use of land in Cotai. We have what everybody wants, which is capacity and tables and slot machines. That's an extraordinary advantage to this company that we simply have to continue to do better at. And so as we open Cotai next year in 2012, and we'll just keep looking at our margins and doing the best job we can to maximize our revenues. I don't think people really -- I thought the Galaxy numbers were very strong, obviously on the high end, and they show the way in terms of what can be done. Are we more margin conscious than most? Yes, I think we are. Are we going to trade and be too aggressive and do things when we're forced? No, we're not. We'll remain conservative and focused and grow our business that way.

The final question will come from Robin Farley with UBS.

Such a great quarter in Singapore, I do not have a question there. On Macau...

Come on, Robin. Give us something.

No, I have one on Macau. Just I wonder if you can give the same color, because I think it sounds like the reserve percentage you were talking about as a percentage of rolling win, but that was Singapore. Can you give us a little color on Macau reserves and how that compares to previous quarters?

Yes. When you look at kind of what we recorded in reserves for the quarter, it's actually very consistent, both on a quarter-over-quarter basis, year-over-year, if we will, and then also on a sequential basis. So really not much change in that regard. And our percentages with regard to the reserves against the outstanding balances have stayed relatively flat, doing a great job collecting. And there's really been no need to kind of change what we have been doing. So it's kind of steady as she goes.

At this time, I would like to turn the conference back over to management for any closing remarks.

Yes, I'd like to just make one comment for those on the phone. I think that one of the things you begin to see now is a steady, more consistent management group that's now been in place, which is helping to produce the results and the EBITDA margins. Also, the restructuring of the casino organization, which took place about 11 months ago, which is really driving the international marketing piece, as well as some other situations on the slot side. And in general, I think we are very, very pleased and satisfied with the commitment that we've gotten from our people all over the company this year. And as the year is entering its last quarter, I want to just take this opportunity to publicly thank everybody for what they've done and for the contribution they're making. And I think to just echo what Sheldon has said before, to be predictable and reliable requires not only the products that we've put on the marketplace and continue to put on the marketplace and the demands we're getting from other countries for our kind of products, but having the human resources to be able to do continue to deliver the kind of earnings per share increases that you see in this quarter.

And this is Sheldon. I would like to publicly thank Mike Leven for joining us and for doing the fabulous job he is by bringing in other people and contributing to more efficient and profitable operations. And I want to thank Rob Goldstein for accepting the position of being the President of Global Gaming. And I think between Mike and Rob and all the people, and 30,000 employees below them, I want to thank everybody for bringing us to the point where we're the largest company in the history of Gaming in all categories, except number of units, which only validates our contention that we make more profitability in our dollar investment than our competitors can do. But we wish them well, as well as we do, because a rising tide carries all boats. So Mike, Rob and Ken, everybody else, thank you very much for all your contribution. And we look forward to another, hopefully, expect a very good quarter coming up. Thank you, all.

Ladies and gentlemen, thank you for participating in today's conference call. You may now disconnect.