Las Vegas Sands Corp. (LVS) Q4 2011 Earnings Report, Transcript and Summary

Daniel J. Briggs - Vice President of Investor Relations 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 Robert G. Goldstein - Executive Vice President and President of Global Gaming Operations 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

Mark Strawn - Morgan Stanley, Research Division Joseph Greff - JP Morgan Chase & Co, Research Division Shaun C. Kelley - BofA Merrill Lynch, Research Division Felicia R. Hendrix - Barclays Capital, Research Division Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division Carlo Santarelli - Deutsche Bank AG, Research Division Harry Curtis - Nomura Securities Co. Ltd., Research Division

Good afternoon, ladies and gentlemen. My name is Mo, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Corp. Fourth Quarter Earnings Conference Call. [Operator Instructions] Thank you. I would now like to turn this call over to Mr. Daniel Briggs, Vice President of Investor Relations. Mr. Briggs, the floor is yours.

Thank you very much. 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 those forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for a discussion of risks that may affect our results. In addition, we may discuss adjusted net income, 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. In addition, we have made some presentation slides available on our website. With that, let me please introduce the Chairman, Mr. Sheldon G. Adelson.

Thank you, Dan, and good afternoon, everyone. For our company, 2011 was a landmark year in which we broke company records and at the same time, we believe most industry records for revenue, EBITDA and earnings per share. I want to walk you through a more detailed look at the previous quarter which includes record results in Macau and Singapore, an incredible growth in our mass gaming, hotel and retail businesses. But first, let me provide some additional perspective on 2011 and share my thoughts on where the company is heading for 2012. Thanks to our financial strength and significant liquidity, we are happy to announce that the LVS Board of Directors has approved an annual dividend of $1 per share, which will be paid at $0.25 per quarter; that is $0.25 a quarter. A geographic diversity in the center of our operations and each of our business locations, or as I've said in the past, the reliability and predictability of our operating results and cash flow has put us in a unique and enviable position, one which allows us to offer much deserved dividend to our shareholders, while at the same time providing us ample resources to aggressively pursue new development opportunities around the world. As a testament to the work of our corporate executive team, led by Mike, Rob and Ken, our property management leadership teams and all of our team members worldwide, the company increased its net revenue from $6.9 billion in 2010 to a record $9.4 billion in 2011, an increase of 37%. Since gross revenue seems to be on people's minds, even though EBIDTA is still what you take to the bank, I'm happy to point out the all-time industry record, $11.5 billion in total gross revenue the company produced in 2011. Others report gross revenue figures as it is a measurement of overall growth, so we thought we would share the figure with you as well. While we're on the topic of gross revenue, let me also point out, since it seems to be grabbing some headlines today, that our gross gaming market share in Macau grows from 15% last January to 19% in January of 2012. Not that we run our business for market share, but a re-affiliation with Macau's most important gaming promoters can help drive our market share about 25% or even higher than the previous year [ph]. I remember discussing this on a previous telephone call that I expect to win new relationships with new junket reps would bring us back to the mid-20s. I'm now optimistic that moving so fast with so few new -- comparatively so few new junket reps that we moved up to 19.7%, I think it is. It depends who's report you read. Now let me get back to a topic a little closer to my heart, and that is EBITDA. Our 2011 company-wide EBITDA soared from $2.2 billion in 2010 to an industry record, an all-time industry record of $3.53 billion last year, a remarkable 58% increase. In addition, earnings per diluted share in 2011 increased a whopping 106% over the previous quarter. These over -- sorry, that should be year instead of quarter. Earnings per diluted share in 2011 increased a whopping 106% over the previous year. These overall results also reflect another substantial accomplishment. In another industry first, we had 2 properties in 2 different markets, Marina Bay Sands in Singapore and The Venetian Macao in Macau, that both produced EBITDA in excess of $1 billion. In fact, every single one of our properties saw meaningful percentage increases in EBITDA in 2011 compared to 2010. This past year truly showed the power of our Integrated Resort business model and its ability to generate tremendous revenue, but of course, EBITDA. Our company did not make its debut on the Fortune 500 until 2010, but since that time, we've been fortunate enough to surpass all of our industry competitors on that prestigious list. Although important to note -- also important to note, our growth is not just fueled by a single revenue source either. You could point this strong growth at retail, food and beverage, meetings and conventions or the $1 billion a room revenue the company did in 2011 as clear evidence that we are much better described as an international Integrated Resort developer rather than simply as a gaming company. We expect to build on our success in 2012, and that starts with the opening of Cotai Central, which will happen just about 2 months from now. Cotai Central represents an important next step to the maturation of Macau as a leisure and business destination. The additional room capacity provided by the nearly 6,000 rooms we will open over the course of the year, along with the wide variety of non-gaming attractions and amenities, will help Macau continue to build even further on its fast-growing tourism sector. We believe there are 3 important components to long-term growth in Macau: transportation and infrastructure development, which is being enhanced as we speak; hotel room inventory, which of course will be meaningfully contributing to -- with the opening of Cotai Central; and lastly, the continued growth of the Chinese urban population, who, equipped with sufficient disposable income, will visit Macau and significantly expand on the record 28 million tourist arrivals that occurred in 2011. So it goes without saying the opening of Sands Cotai Central is an important catalyst to what we expect to accomplish in 2012. I expect 2012 will also see us make significant progress on the development front, which is important because at our core, we will always be a growth company. Mike and I have made it our personal priority to aggressively pursue and ultimately secure new development opportunities for the company this year, and we have made recent trips to Asia to support these efforts. As we've mentioned before, we're highly interested in exploring opportunities specifically in Japan, Korea, Taiwan and Vietnam. And our efforts are clearly progressing as the most recent conversations have advanced to the point. The detail such as [indiscernible] have been discussed. Finally, before we get to a discussion of our fourth quarter results, let me specifically highlight a segment of our business that is particularly exciting. Together, tenant-related gross revenue from our retail malls in Macau and Singapore rose to $106 million in the fourth quarter of 2011, an increase of 47% compared to the same quarter a year ago. The combined operating profit margin from that segment, 83%. For the full year of 2011, sales per square foot at the Grand Canal Shoppes at The Venetian Macao was $1,087. I might add that, that is 280 -- not really. I'd say -- I might add that -- yes, it's almost 300 tenants. So we're averaging, that includes restaurants, which are typically lower for tenants [ph]. At the Four Seasons mall in Macau, it was $3,386. And in Singapore, Marina Bay Sands sales per square foot was $1,231. Just to put a little perspective on that, the largest mall in the United States -- the highest producing sales per square foot was the Corn Hotel [ph] here in Las Vegas across the street from us, that went up originally to like $1,200 a foot, and then we started our Grand Canal Shoppes here at The Venetian Las Vegas at $1,000 to $1,100 a foot. So when you talk about $3,386 average for about 100 tenants, the DFS high-end luxury tenant that we have on the first floor of the mall -- the shops at Four Seasons was $5,500 plus or minus sales per square foot for 2011. That is really a whopping percentage. No mall in the world, to the best of our knowledge and inquiries of other real estate to mall developers, ever been close to that figure. As we've mentioned before, being in the retail mall business and owning some of the largest properties I believe, will provide meaningful value to us particularly as the retail market in Asia continues to grow. It doesn't take a big leap of faith to add another growth factor with just on today's number. And so take 106%, you can extrapolate that to a full -- you can annualized that and you could apply a 4% cap rate. In Asia, there was -- one of the top real estate guys had said -- no, in the United States, went to the malls, saw, came back and said, "I wouldn't argue with the possibility that you might get a 3.5% cap rate." But we're not looking at that. If you take a 4% to 5% cap rate, say 4%, and you multiply that by the hundreds of millions of dollars, so that's 25x, that amount of money. You're talking about huge amount of money that equals our debt, which means that if those malls were sold, we would be net cash debt-free. Let me now take a minute to summarize our fourth quarter results and then I would take a quick look at our operations by locations before we get to your questions. For the 10th straight quarter, the company increased its EBITDA from the previous quarter. Did I say something about reliability and predictability? We once again produced company records and EBITDA, $961 million for the quarter, and net revenue, which was $2.5 billion. And once again, applying the metric others use, our gross revenue was $3.1 billion. Our EBITDA margin increased 110 basis points to almost 38%, and adjusted EPS increased nearly 36% to $0.57 versus last year's fourth quarter. For a review of our operating results, let me start Macau with the properties operated by our majority-owned subsidiary, Sands China Ltd. Turned in as you can guess: record results. Our adjusted EBITDA for Macau property operations was $434 million for the quarter, an impressive 27% increase from last year's fourth quarter. At The Venetian Macao, EBITDA for the fourth quarter of 2011 was a record $283 million, an increase of 20% over last year's fourth quarter and EBITDA margin was a record 37.1%. On the gaming side of the business, Rolling Chip volume, VIP, was a record $13.6 billion, an increase of 15% compared to the same quarter last year. Non-Rolling Chip drop for the mass market also increased nearly 15% to record $1.1 billion, and slot handle increased 52% versus last year's fourth quarter and was a record $1.1 million -- $1.1 billion. The legend of The Venetian Macao continues to grow, and it clearly remains Macau's most visited destination. The growth in non-gaming revenues was significant during the fourth quarter of 2011. Food and beverage revenue increased 30%; room revenue increased 15%; mall revenue was up 35%; an additional non-gaming area, such as conventions revenue, were up 32% when compared to the fourth quarter of 2010. At the Sands Macao, adjusted property EBITDA was $88 million for the quarter. Non-Rolling Chip drop was $687 million, and Rolling Chip volume was $7.6 billion, both will increase versus the same quarter last year. Slot handle at the Sands increased 58% to a record $621 million. Finally, the initiatives we have undertaken over the past several months to improve our VIP business in Macau are now bearing significant fruit. Evidence of that success is reflected in this past quarter's results, where Rolling Chip volume at the Plaza Casino at the Four Seasons increased 64% over the fourth quarter of last year and was a record $7.5 billion. The property also had its best EBITDA quarter ever, recording $63 million over the 3-month period. Slot handle at the Plaza Casino reached $244 million, up 82% versus quarter 4 of last year. As with The Venetian Macao, non-gaming revenue sources all saw significant increases over last year, specifically the shops at the Four Seasons where mall revenue increased 54% over the same quarter last year and was a record $24.5 million. Let's move now to Singapore. And to give this section a little perspective, let me start by saying that when we opened our first Integrated Resort in 1999, The Venetian here in Las Vegas, it cost approximately $1.1 billion to build for the first 3,000 suites. Fast forward today and that figure turns out to be less than the $1.5 billion in EBITDA Marina Bay Sands generated in 2011 alone. Cost us a little more to build than the original Venetian, but with these results, you'll hardly hear any complain about that. And that is -- to give that a little perspective, I want to point out to some of you who know that there were competitors' device [ph] and some analysts perhaps that estimated in our first 12-month period, the one just ended, we will earn people made money wagers on the over and under number was $300 million EBITDA for the year. I'm happy to report, and when I said 2 years ago that I thought we could earn $1 billion in 2011, I'm sorry I was wrong. I'm very happy our competitors were wrong, and they lost their bets. We are only 5x what that bet was that we would make only $300 million. One has to wonder where the upside potential is for Singapore. If you were of the school of thought that says that we've already hit the top and we have no growth left, you have to make the assumption that we're the most phenomenal marketing people in the history of the casino industry because we found every VIP player that exists. Therefore, there are no more VIP players to exist, and there won't be any more players -- potential players that had made money and will make money and therefore, we can't grow. Now if you were the school of thought that we think we are, and you are more objectively and independently making the judgment about where Singapore is going to go, you have to consider the fact that nobody in the history of gaming ever saturated a market by bringing up -- saying that we've eaten up all the -- and we've identified and we have contacted and we have interacted with every single player that exists in the 1.3 billion population of China, 120 million of Japan, the 44 million of Korea, the 24 million of Taiwan, the 90 million of Vietnam, 75 million of Thailand, 240 million people in Indonesia and 28 million people in Malaysia. Did I miss a few countries? So add a few hundred million more. Glad to feel that we are the best, and we've accomplished things that nobody could ever dream of and let's be realistic. We have a long way to go, and there is nobody that believes that there's a threshold that we won't go beyond. The hurdles have fallen at every threshold, and we are of the belief that our growth -- actually my middle name my parents have named me, did not name me Gary, which they did. My middle initial in S.G.A. would stand for Sheldon Growth Adelson. The success of Marina Bay Sands continues to roll on as the property delivered record results for the fourth quarter of 2011. Property EBITDA was $427 million, a nearly 40% increase over the $306 million from the same quarter a year ago. Gaming volumes in Singapore were very strong during the quarter. The Rolling Chip volume up 32%, Non-Rolling Chip drop up 22% and slot handle increasing by nearly 50% compared to last year's quarter. And I think I did say something about growth? Total mass win per day compared to last year's fourth quarter. Total mass win per day during the quarter was $4.6 million, an increase of 44% from the same period a year ago. Talk about growth. The property saw huge percentage year-over-year increases in several revenue streams. Food and beverage revenue was up 41%; mall revenue was up 56%; and hotel room revenue increased by more than 50% with ADR, RevPAR, and occupancy all up significantly compared to last year. Back here in the U.S., let me just make a comment that I believe that the mall revenue is, on a stand-alone basis when we extrapolate and estimate what it's worth, will go up to -- will be very significant that we'll easily be able to sell the mall and pay off our financing and put some more money back in our pocket. So back here in the U.S., The Venetian and The Palazzo in Las Vegas delivered $81 million in EBITDA during the fourth quarter. Strong group meeting and convention business drove a 16% increase, and cash revenues from the sale of hotel rooms compared to last year's fourth quarter. And food and beverage revenue also increased 10% compared to the same quarter a year ago. Table games drop also increased during the fourth quarter. It was $532 million versus $463 million last year. In Pennsylvania, Sands Bethlehem turned an EBITDA of $22.5 million for the quarter, which was a 15% increase over last year's results. Table game drop was up 9% -- 91%, and slot handle increased 14% versus the same quarter last year. In addition, the hotel generated over $2 million revenue and will continue to grow as the property adds even more amenities, such as the events center, which will host its first show on May 16. The retail mall of the property will celebrate its grand opening on February 15, and new meeting rooms at the complex are expected to be completed by March 1. So that completes an overview of our operating results for the quarter and year end 2011. At this time, along with Mike, Rob and Ken who are all here with me, we'd be happy to answer your questions [ph]. Operator?

[Operator Instructions] Your first question comes from the line of Mark Strawn with Morgan Stanley.

Two questions on Singapore. First, given the sequential declines you saw in the 4Q in both mass and VIP, can you comment on the trends you're seeing there overall? And is there a consistent seasonality to that business? And a follow-up to that is, what are you doing on a property level basis to drive that business forward in terms of whether it's international marketing or things in the local level on the mass side?

Mark, I think you know we have, obviously, a very intense marketing program in Singapore throughout the region, with regional offices, the Premium Direct. We are somewhat restricted by the government in terms of local marketing inside Singapore itself. But to answer your question, we're in this property about 20 months since we've opened it. And again, I think the success speaks for itself. We far exceeded our own expectations, the $1 billion in full year one. The seasonality issue is yet be determined, but I think it's clear that we're finding our way as we go and every quarter is a new one. Obviously, the year-on-year comparisons are terrific, the quarter-to-quarter not as strong. It's a highly concentrated market in terms of the VIP rolling direct. As you're aware, there's not a junket involvement there. So we deal directly with those customers from a credit marketing perspective. The team here, I think, is excellent. Larry Chiu and his guys are out there in the field. We're constantly looking for new customers, and I think we saw in the fourth quarter a lot of people in Asia gambled. Perhaps, they didn't gamble in Singapore as much as they came to both Macau and Las Vegas, and as you know, we're players in both those markets. And I think the shifting -- the concentration will create volatility as we've said in the past as it relates to the Rolling segment. We're convinced that segment's far from mature, as Sheldon referenced. If anything, it's still growing and I think will continue to move. As far as the mass side of the business, I don't know how we can be more honest than we're just thrilled with the success of that segment. What started as a $1.6 million day combined slot table income on the mass side, we see $4.6 million a day. I think it's astounding tribute to the team there, like Andrew McDonald and Eric Pearson and the guys they work with every day in the field done a terrific job, and I think that market -- we're moving towards $5 million in my opinion. When that happens, I don't know, but I think it's achievable with the $5 million per day. And I think there's a lot of factors that drive that. There's internal and external factors. I mean, on the external side, we're really happy to say that the new MRT station opened, the Botanical Gardens' opening, the eventual Cruise Ship Terminal and of course, the growing tourism of Singapore's bode well for the future of mass gaming in Singapore. But I really think those successes, the guys on the floor, the team there with Andrew and Eric, et cetera, really have done a great job, an exemplary job, moving machines around to maximize the value. And you're aware of our pressure in terms of weekend capacity issues, and we work to avoid that and I think we've done pretty successfully, so far a good job. But to Sheldon's point, I'm a firm believer we're going to get to $5 million a day on the mass side. I'm an even stronger believer that although it's concentrated, the premium business, the Premium Direct, will grow. And there's billions of Asians, and as their wealth increases and they have an oversized proclivity to gamble, I think we're going to see more and more business there. But on a more regional or more of a bigger picture, Las Vegas Sands is the only company that has presence in Macau, Singapore and Las Vegas. So wherever they gamble, we're capturing more and more of that database and getting more and more of that business. And Las Vegas was the recipient of huge amounts of play in December, which helped Las Vegas; it didn't help Singapore. So Mark, I think there's good news ahead.

Great. That's really helpful. One last thought for Ken perhaps. Can you quantify the impact of the Singapore exchange rate on the quarter's EBITDA results?

No. We typically don't get into that level of detail, so I'd pass on answering that.

I'd like to just make an observation. I watch the exchange rate daily just out of curiosity. And generally, the quarter -- the fourth quarter exchange rate was relatively stable. It was between SGD $1.20, SGD $1.21 to SGD $1.30 to the U.S. dollar. It's fluctuating. So it's all within the same range, I think it average probably in the fourth quarter SGD $1.25, SGD $1.27. It's moving back up a little bit now, and I think really knocking on the door of USD $0.80 for SGD $1. But it doesn't have a significant impact. It does -- from the beginning of the development of this project, when the Singapore dollar was at SGD $1.65 to the U.S. dollar, that made a big difference over the years, but that only affects our projected income at the time.

Your next question comes from the line of Joe Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: I have a couple of buckets of questions here. First, on Singapore, if you mentioned it, I didn't catch it. But if you adjust for the above-average holding in Singapore, what would normalized EBITDA and normalized margins be in the quarter?

The -- yes, hold on one second.

You should note, Joe, that the adjustment for the year, if you look at the entire year, Singapore came in at I think $2.85 million, exactly where it was supposed be for the year. So in the last quarter, we had a negative adjustment, and that was $3.80 million. The Rolling moving average was $2.85 million for the entire year.

So the impact in the fourth quarter from a revenue standpoint was probably between $45 million, $50 million. And when you adjust for that, plus if you add back some of the impact of the bad debt reserve, which was higher in the fourth quarter, you get to a margin that's kind of in the middle of the range that we talked about before for Singapore, which was, remember we talked about a 50%, 55% margin approximately. We end up probably in the middle of that range.

The other consideration, Joe, obviously there along with the reserve is the mix of business. Obviously, the mass accelerates. The mass slot is going to help that margin because the mix changes. This time, the mix was not as favorable as it been in previous quarters. That, coupled with the bad debt reserves, drove the margin down. Joseph Greff - JP Morgan Chase & Co, Research Division: And then sticking on Singapore and just to pin a little bit more about the sequential declines on mass and slots, do you think that implies that you're plateau-ing or hitting a saturation point and yielding more on the floor? And then with respect to the VIP...

No. Joseph Greff - JP Morgan Chase & Co, Research Division: Okay. And then with respect to the VIP segment in Singapore, how do you view seasonality? I know it's hard. We struggle with it on this side of the fence, and we often think 1Q and 3Q should be about 50% of the roll, 40% in 2Q and 4Q. If you can share any kind of data points maybe with January to date volumes of Rolling, maybe that kind of helps understand it as well and then I'll wait for those answers and ask one additional question.

Joe, it's Mike. The reason you can't look sequentially is exactly what you said about January. January is a Chinese New Year month. Last year, it wasn't a Chinese New Year month. So therefore, if you compared January to December, you're going to have very significant differences in the sequential roll that goes on for January to the quarter. So I think you got to look year-over-year to see whether in fact you're continuing to gain in both the mass floor and the roll. When it comes to the roll also, it can be 3 or 4 players in the course of a quarter that can make a very significant difference if they show up 2 weeks after the quarter or in the previous quarter. So you're going to get potential variances because of the nature of that business. But I think if you compare quarter-to-quarter, year-over-year, you've got the best way of looking at seasonality. Plus, we need still at least another year of Singapore's operation to get to a relative maturity in terms of looking at the historical consequences of each month, so December versus December, et cetera, and so forth, and that will give you a lot more help as we get a little older in that business.

This is Sheldon. Last time, we had dinner with some important people from Singapore, and the discussion was what percentage of the people are foreigners. The number continues to grow every day of visitation, and the foreigner percentage has increased to about 80%, which is very good because the foreigners come in with more money than the local Singaporeans. I believe we haven't done a study of that, but I think it's common sense that somebody that comes in from a foreign territory will carry more money with them. Why? Because they're here less frequently, or they're there less frequently. One issue is that we are running at such a tremendous occupancy rate in the high 90s. In the hotel, we are talking to the government about possibly getting some more land to build more hotel rooms because we've turned away a lot of reservations. We're trying to fine-tune the segments of the hotel occupancy so we can maximize the return. But I don't think we mentioned the ADR. Did I mention ADR? It was very high and in the mid-3s. So that just tells us, if you put another 1,000 or 1,500 in the rooms in, it will significantly increase the quarter. Joseph Greff - JP Morgan Chase & Co, Research Division: Okay. And then one final question, Venetian Macao margins were 37.1%, much higher than we were expecting, even with a greater VIP revenue skew than we're forecasting. Was there anything within the VIP segment with either direct or junket in terms of adverse or favorable hold that skewed the overall margin? I guess I'm trying to get to the sustainability of a 37% margin going forward from here.

Joe, while our footprint of basis [ph] finding exact whole percentages, I just wanted to say to you that we haven't seen yet a real move in the junket side there that we're growing. But we have -- the concentration has been in Four Seasons. I think it's negligible in terms of the whole percentage. Do you guys have the hard number on the whole percentage?

Yes, there's really -- there no use [indiscernible]. Joseph Greff - JP Morgan Chase & Co, Research Division: My question is, did you hold lucky on the direct side that goosed up the margin exactly?

What you're seeing, Joe, is we're getting better. There's 4 wonderful segments to make money in Macau. We're doing better at junket segment. We have a lot of room to move there. So Direct Premium, we're getting much better at. But let's be honest, our strength in the niche and has always been and would hopefully will continue to be mass tables, slot ETG segment, and that segment gets better by the day. We want to dominate that segment and grow in that segment, which is obviously margin intense, but also improve our VIP, which hasn't really happened yet that much for The Venetian. So I don't think it's out of the ordinary what you saw this quarter. I think it's just stable, yes.

[indiscernible] gave me some figures. The hotel ADR increased 29.1% to $333, and occupancy increased to 98.3%. How is that apples? Joseph Greff - JP Morgan Chase & Co, Research Division: All right. And my final, final question here. If we adjust for the low hold at the Four Seasons Plaza Casino, where are you approximating normalized EBITDA there?

Hold percentage at the Four Seasons?

Well, you were saying what would the adjustment be to EBITDA in Macau for the...

[indiscernible] at Four Seasons Plaza. Joseph Greff - JP Morgan Chase & Co, Research Division: Yes, if we assume $2.85 million versus the $2.61 million?

Yes, it's probably $7 million, $8 million. Joseph Greff - JP Morgan Chase & Co, Research Division: I'm sorry. Say it again, please?

$7 million or $8 million.

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

First of all in Singapore, just to follow up on the bad debt comment, could you just give us 2 quick numbers, the bad debt reserve that was taken or maybe the percentage as it's compared to the prior quarters, as well as the receivable balance in Singapore at the end of the quarter?

Sure. The receivable balance at the end of the quarter was about $650 million, and against that, we had a reserve of about 18%. Now to answer the question with regard to the expense taken during the quarter, remember on previous calls we talked about kind of percentage of Rolling win as approximate reserve that would be -- we will be taking, and we talked about kind of a 3% to 7% range. This quarter, we were higher than that. We were at about a little bit over 10%. If you look at it on the annual basis for the year, for the entire year, we're at about 6% -- a little bit north of 6%. And so on an annual basis, we were right in the middle of the range, if you will. And from quarter-to-quarter, it's going to vary some. Sometimes it will be a little bit above that; sometimes, it will be a little bit below that. But we kind of ended the year really within the range that we expected to be at and feel that we're prudently reserved at the end of the year.

Great. That's helpful color. And then second question might be just a little bit broader outlook, but there's been a lot of discussion questions around kind of because of Chinese New Year shifting this year, kind of how to think about the outlook of, I think, both Macau and Singapore for the first quarter and really throughout the balance of the year in terms of what's the right growth rate to think about. So just directionally more than exact numbers, although we'll take the exact numbers if you give them to us, how are you guys thinking about the health of the consumer over there? And just what are you kind of seeing on the ground as far as traffic levels and kind of uptake at the property? I think we've heard about some solid visitation statistics out of Sands China, but just kind of wanted to get your broader thoughts on the macro.

Shaun, let me talk about -- I think that in spite of the fact that a lot of the press is talking about slowdowns in China and all of these kinds of situation, we are essentially seeing nothing that would indicate that Macau and Singapore will not continue on their present paths upward. And our planning is, on that basis with our staffing and all of our marketing models, to go against those kinds of growth numbers. There's nothing that we have seen over the last number of months or see today that indicates that there isn't a positive outlook for all of our properties at this point.

That's helpful. And I guess last question would be, there's a lot of discussion obviously around the return of capital to shareholders on the dividend front. Could you maybe just give us a sense? And specifically, I'd love Sheldon's thoughts on how you guys balance the idea of a dividend versus a buyback and how you think about that going forward.

Your next question comes from the line of Felicia Hendrix with Barclays Capital.

Hold on a second, Felicia.

That was a question we still have to answer. Well, this is a board decision. I try to stay out of it because of my substantial interest in the company. And I don't want to create any appearance of conflict. But we don't see that our stock -- we see tremendous upside for our shares, and we don't -- the share price is we think -- I believe the board has thought that we would be better off, in the best interest of shareholders, to distribute the dividend as opposed to buying back shares. And this dividend will cost us on a fully diluted basis about $800-plus million a year. And we can't guess -- we can't have a tremendous buyback impact for $800 million a year. It doesn't help us in appealing to those investors that are mandated by their regulations or the composition of their funds to only invest in companies that pay dividend. We thought that would be the first thing to do. What I think about because -- in order to make any kind of impact on stock buyback, it would take many billions of dollars. And I think that money is better put to use for expansion, holding enough money for expansion because it probably is not going to be too long, as each month goes by, that we end up with one of those Asian countries or more than one location. We're shooting for 2 locations in each of those countries, the top 2 cities essentially. But who knows what we'll get. Everybody believes that we're the winning candidates because of our fundamental business model and our fundamental marketing strategy that's convention-based. And the whole world knows about that, and the whole world knows that we are the originators of the Integrated Resort model, notwithstand what some of our competitors say about themselves. I mean you can't compare a competitor with 17 meeting rooms and no exhibition space to us with between 300 and 350 meeting rooms per property and exhibition space, plus huge ballroom space for exhibitions. So we're just in a different class from the rest of the market, but we want to make sure that we have enough money. To buy back stock will take many billions of dollars to have a substantive impact. But the dividends -- it still takes a few bucks. But $1 billion here, $1 billion there, we all know the rest. But that's good. It's good. It makes more people happy. It -- thanks to shareholders for their level of confidence in us, and we become more attractive to those who have a mandate to invest only in dividend paying stocks.

Felicia?

While we're on that topic of your balance sheet, I have a few questions there and then I have some operations questions. Obviously, dividend is a nice positive. And if you look at the current yield kind of relative to the gaming, lodging and leisure area, our area, it's a nice yield. But as you generate more cash flow, I'm just -- you should be able to increase that yield. So I'm wondering if -- or the dividends rather, I'm wondering if you've discussed an optimal level?

Have we discussed an optimum level of dividend paying?

Like about payout ratio basically.

How high is the sky?

Well, that's actually my question. I mean, do you guys have a limit or as you grow your cash flow and your -- I mean, do you have a limit in mind? Or is this something that can just grow with your cash flow?

I think you've said it, Felicia. Basically, as the cash flow increases, we have to balance the needs to pay out dividends with the needs for development. We felt that this was a very adequate start to paying dividend, that it would satisfy our shareholders. And as we go forward in the year, we'd like to be able to increase dividends as we go, but it has to be balanced as I need to develop because the earnings will grow substantially if we had more development as well. So it's going to be a decision the board will make on an annual basis based on performance and what the opportunities for using cash. I think we're in a great position. Most companies aren't there, particularly in our sector. And we'll have the opportunity, hopefully, to both raise dividends and do the kind of developments that will continue to increase the earnings per share of the company.

Nobody ever accused me of being a shrinking violet. I've been accused of a lot of other things. But this company is a growth company. And Mike and I are fully focused on growth opportunities. I too in 2010 or '11, I forget, my chief pilot told me that I flew almost 700 hours. And I didn't fly that to go back and forth to Hawaii and sit on the beach. I went all around the world talking to heads of state and whoever I could talk to about putting up integrated resorts in a country and what we've done for other places and what we did Vegas, Macau and Singapore and even Bethlehem and what we think we could do for their country. So this is -- we are in a class by ourselves, and I don't think when you guys compare our EBITDA multiple or EPS multiple to the others, I mean, take a look at this: nobody in the history of this industry has ever reached $3 billion, never mind what owning a first 12-month period in 2011 that we reached $1.5-something billion in Singapore. Nobody ever estimated that the first year would ever be anything like that. How many years did it take before the first company with x amount of properties emanating out of Vegas or any other company made even the first billion? So it was decades of industry existence. We are in a class by itself. Now we have to be the sharp point at the edge of the spear and the arrow to lead the way into growth opportunities and to -- frankly, I think be priced at a much high-level than the other guys because our growth opportunities and our profitability in terms of EBITDA margin, thanks to our Integrated Resort model, is unprecedented.

You also -- you spent a lot of time on the call talking about the success of the Canal Shoppes -- at the Grand Canal Shoppes at The Venetian Macao. I was wondering -- I wouldn't think that it would be something that you'd want to sell today given the good statistics, given that Sands Cotai Central hasn't opened yet. But can you give us a sense of timing there for potential sale?

No, because it's very tempting not to sell it now because when you're talking about 30%, 40%, 50% and more percent growth year-to-year in retail, that and more and more of the almost 300 tenants in the Grand Canal Shoppes pass their basic rent and they're into 12.5% to 18% -- percentage of revenue rents. So we've got basic rent plus the percentage of revenue rents. The temptation is not to sell, but we're going to look at what the best value was to shareholders. If we're going to sell it, I don't think we'd reach maturity. Some can estimate it will do it in 2 years. And if by 2 years it just grew 50% from the year before, you'd say, "Is this the right year," the answer is no. So I don't know. If ever we start to level off that we'd become a value investment instead of a growth investment, or less growth but more value, or more growth but less value, we've got to give the buyers some opportunity for growth. But the point is, this is like a secret bank account, a secret savings account that we've saved up all this money and if we chose to tap that account, we'd be debt-free. That is a very, very significant and valuable savings account. The amount of cash -- I just saw an analyst report this morning said that next year we'll have free cash flow of an excess of $3 billion. Think about the 75- or 80-year history of Las Vegas that nobody has ever even approached that amount of money. So again, I think we deserve a significantly higher multiple because we have both growth and we have the solidity of reliability and predictability of earnings.

And Rob and Mike, obviously, the investment you've made in Macau is paying dividends. The numbers were spectacular. I just wanted to make sure I'm not reading too much into something you put in the release. Because it did say that in Macau, you'll continue investing in the VIP arena through 2012. And as you've talked about it before, you said that the program would be complete by the end of the second quarter. So are we looking at kind of the start of a Phase 2? And if we are, can you give us some details on that?

It's not a timing issue. It's more an issue of as we see -- look, we're going to control 1,500 tables and 6,000 slot ETG positions at the end of this year. The issue for us is how to maximize the growth and the opportunity to drive EBITDA regardless of segments. So if we can convert tables from mass, to we see the junkets over perform, we'll move in that direction; it's a never-ending process. We had a conference call this morning with David, talk about this very issue. David Sisk, who's just done a really good job in this area. And I think the question -- and we have a very unique advantage there. We've got all the space on Cotai, which where the junkets want to be. We're going to have 9,300 sleeping rooms in Macau once we complete the end of this year, which gives us a huge advantage on mass gaming side because the number one driver of mass gaming performance is sleeping rooms. So we have all these advantages. The problem we have is trying to manage where we can get the highest yield be it junket, VIP direct, mass gaming, slot ETG. And our goal is all of our managers over there thinking about what is the highest and best use of the real estate, how to drive EBITDA. So I guess when we started this junket thing we saw upside, but we see a much larger upside than we first anticipated. But we also see, I think, incredible growth in all the segments. So our goal as managers is to maximize that huge advantage we have with sleeping rooms, VIP, the Cotai performance and no matter where it comes from, this will be a never-ending process. It won't end in February of this year or the year after. It's a never-ending process, and that's our goal: to drive our performance mass and VIP at the highest levels in Macau.

Okay. So beyond the $125 million in CapEx that you allocated to that, is there anything else you're allocating to? Is it more of a, like, the strategic management that you're talking about?

We will go to the capital committee and request capital that we think there's opportunity, and yes, we think there's more opportunity.

Your next question comes from the line of Jon Oh with CLSA. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: I have a few questions. I'll start off with just on the point that Rob brought up about The Venetian margins at 37%, and you said that you think that's sustainable. To put a point that -- where do you see the most incremental uplift coming from The Venetian going forward? Is it the Rolling Chip business? Or is it still the mass or the premium mass market that will surprise us the most in the future? And how does that play with this whole margin, which right now is peaking at the 37% level going forward?

I'm going to let Rob answer that question after I say something that hasn't been discussed. We have applied to the government and submitted drawings for about a 4,000-room Lot 3 development. Now everybody, the analyst community, are giving points and value to MGM, to SJM, to Wynn, because they are in line to get lots and they don't have the lots yet. We own this lot; lock, stock and barrel. We paid for it years ago, and now we think that in consultation with the government, as to what they want, we're going to make a mass market plus a separate tower for VIP play on Lot 3. And so far, we're getting positive reaction on it'll be a thematic property, and we lead the path because we already own and paid for this lot. So we have the right to put the building up as soon as possible. The second item is that we have probably doubled the 38 VIP rooms with about 100 and some odd in the low hundreds tables. We've doubled that because of VIP demand in Cotai Central. I think the industry under appreciates the growth potential of Cotai Central because it's probably taken so long. People forgot what it was supposed to be all about. I walked through at a week or 2 ago, and it is magnificent, magnificent. We've taken some unusual steps to make it look -- there's a mountain style casino and a mountain theme and there's a Polynesian or Pacifica theme. They're absolutely gorgeous, particularly the sailing is a new step in the typical copper and exotic. So we've gotten away from that when we created a new step of a view on of the most beautiful casinos in the world. That's on the mass side. And we put the VIP -- there wasn't enough room to expand in the first level, so we put it in the third level and we had a lot more space than we thought. So fortunately, we have the room to expand this. So Rob, do you want to continue?

Yes, Jon, first of all, somebody said something about raining cash in Macau and that's how we see The Venetian; it's a raining cash. Smart guy wrote that once, and I think it's appropriate we'll grow our profit. The Venetian has a couple of exceptional advantages, right? It's themed, which I think is appropriate for the Macau market. It's got a lot of sleeping rooms, which is incredibly important to the mass. It's probably the most attractive retail for everybody to come to in terms of the mass, which drives -- which ties back and help the gaming floor. I think Eric and the team over there and Tim have done an extraordinary job with the slot ETG. You read about a recent move on the slot side. I think that just bodes here well. But to be honest with you, I don't know where to concentrate. David believes the junkets have extraordinary upside in The Venetian. We believe so, as we fix the space and make it more appealing and get the right people in that segment working for us. But we underperformed in the junket segment dramatically prior to 2010. We're now going to over perform in that segment, I believe. But I wouldn't ignore the slot ETG market. It's been incredibly important to us. We're hitting numbers we never thought we'd see. When Sheldon first initiated slots in Macau, people kind of chuckled, and now we see growing -- we're exceeding monthly what the entire Wynn Macau was in 2003. And then lastly, our strength always will be mass tables because we've got tables and we've got lots of them. We've got lots of sleeping rooms. So I don't know how to identify what the most advantageous segment is to grow Venetian Macao, but I promise you that's going to grow and grow. And I think we're very focused on the huge advantage we have in Cotai, especially as the mass market gravitates towards Cotai. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: And the other question I have is on Singapore. When I look at the revenues and I compare that against the previous quarter, it seems to be quite flat. I mean, you grew by a little bit. But when I look at EBITDA, it was up about roughly 3% on an unadjusted level. Could you maybe just give us some color? How much of that strength of the EBITDA could potentially be coming from the non-gaming segment [ph] is? Are your rooms and F&B [food and beverage] and retail -- I mean retail, I know Sheldon gave us some color. But maybe on the rooms and F&B, how should we think about margins in that segment?

Well, I think, Jon, any business would like to have those margins. Our margins in rooms run about 83%. Our margins in food and beverage are close to 30%. The volumes continue to increase, and banquet margins are terrific. We have some pricing opportunities left there of course, and we are managing our rooms in a way to maximize our room rates all the time. So I mean Singapore is an amazing place. I've never seen a property in all my years ramped in the level of this property in every area. So -- and you've got the high -- you've got an 83% margin in retail as well. So all these non-gaming areas represent significant margin, and it will continue to operate at that level. Our costs continue to escalate in our buildings in Macau and Singapore because just they're inflating in both places. So we have pricing power in our facilities to be able to maintain those margins as we go forward even with the increased costs. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: Great. And just one final question on this raining cash theme on your dividends, which I like very much. Could you give us some color on the Sands China dividend? I know that your LVS dividend you're guiding for one quarter for every quarter. How should we think about Sands China's dividend, the HKD $0.58 that you declared? I mean is that a biannual number? Is that an annual number, or should we think of it as recurring or special? How should we go about forecasting that?

The anticipation is that the Sands China board will approve in June the same dividend as we gave out in the -- as was given out in the first quarter. Legally, the shareholders have to approve at the June meeting, but the anticipation is it will be an annual dividend given in 2 slots, one in February and one in, I think, July.

What those papers said, we were adhering to Feng Shui practice. So 5, the number 5 is a very good number in the year of the Dragon, and 8 is a perpetual good number, so that's always good. So 5, 8, sounds good, let's do it. It was intended to be semiannual regular dividend.

And your next question comes from the line of Carlo Santarelli with Deutsche Bank.

I don't want to beat the dead horse and I know this has been talked about a lot, but I've always heard the concept and it makes empirical sense that when hold is high, Rolling Chip tends to be depressed. And I'm wondering if you guys could maybe clarify if that was an issue at Marina Bay Sands, and then I just had one follow-up about Slides 5 and 6.

I don't believe that would be the case. It's nice, it's a convenient excuse, but I don't think that's the case. I think it's simply a case of where the players went to. And we experienced a great year-on-year growth, Carlo, as you saw. We didn't experience the third quarter's had more players bet more money, drive more roll. And I think it's a weak excuse to use and I wouldn't go there. I think you have to accept the numbers for what they are.

Understood. And then with respect to 5 and 6, could you guys maybe talk about what's left under the table cap and how you're planning to utilize that? And for my understanding, a lot of that will come from the Sands. Have you guys put any more thought into how that table ramp will play out here over -- as you open the property in stages?

You say 5 and 6 as you move tables around?

Yes.

Yes, I mean, what we're doing daily, and I think David and the guys over there are looking at each of different places, and it's a complicated equation. We'll move tables basically where we think demand is, not just in the properties, but also in mass and VIP. So it's a never-ending -- it won't ever end. If we see stronger performance out of we can move tables out of Sands, if we find that it's weaker vis-à-vis the Cotai Strip, and I think that's going to be the goal is keep moving tables. And then we're seeing -- what surprised us is the amount of junket demand we have for Cotai Central, and we'll address that as time gets nearer. But as long as we're inside the table cap and the government is aware of our moves, I think we'll move through the market, so to speak. Our performance in the Four Seasons has been very gratifying. As we move to the Venetian Sands and 5 and 6, we'll continue to drive the -- the goal is to get the best operators with the most tables and drive the highest win per unit per day. And wherever that falls, that's where we'll move the tables to.

By the way, if and when we do Lot 3, that will be an additional table. It's not going to be moving around the tables that we have. The tables that we have will be spread around most effectively between the Sands Macao, Venetian Macao, Plaza Casino at the Four Seasons and Cotai Central.

And we have time for one last question. Your final question comes from the line of Harry Curtis with Nomura.

Let's go back to Macau for a quick sec. I've got a couple of questions there. The first question is, if your sense working with the junkets is whether or not they're having any collection issues that's been out there, and I'd like to put that to rest, if it's correct. The second question that I had was on the outperformance of your slot business. So it's really been terrific over the past 3 to 6 months and I'm wondering if that's more a function of marketing? Is it more a function of a change in equipment or a combination of the 2? And then the last question that I had is related to Sands Cotai and your expectation for how the pieces of the business are going to perform when you open. In other words, which pieces of the business might come out of the gate faster and which would you expect to have a slower ramp?

I'll take the first one. The junkets we're seeing no issues in the question side. It's been addressed previously. We remain steadfast in our belief that we've got the best people in the industry working with us, and we're very comfortable with the exposure there. Same thing on our direct business; we have no issues that we're concerned about whatsoever. We review it monthly. On the slot performance, we appreciate recognizing what the teams accomplished. I think we -- again, not to be redundant, but to be complimentary to extraordinary team of people who assembled on the slot side, and those people are going to -- you're going to see it continue. I predict that we'll outperform the market on the slot ETG. We get -- the equipment is absolutely an issue. The marketing is an issue, but the real driver is people walking on that floor and constantly looking as I -- I go back quite a bit. I was there a few weeks ago. The floor moves consistently with the market, and we also have one incredible advantage and that is the combination of the non-gaming amenities of -- we have many, many rooms. The #1 driver of gaming performance is where people sleep. We have more sleeping rooms than anybody in the market by far. As a result, we have a huge built-in advantage at The Venetian and soon to be at Cotai Central, coupled with great equipment, coupled with the best retail malls that drive more traffic. So I would be surprised if what you're seeing in the slot performance doesn't continue to grow and grow. A lot of confidence in that segment and a lot of pride to what we've accomplished there. I think Eric and his team, performance there is exemplary and appreciably recognized here. Cotai, I'll let Mike speak to Cotai because we're very excited about it in all segments.

Well, I think we mentioned the last time or we mentioned somewhere that all of our VIP rooms are sold out on Cotai Central. So they will start very quickly as we get to grand opening. They'll probably be in there the first day. So I expect that will ramp up very quickly. In the early going, we'll get a lot of trial in the main casinos on mass market. But I think VIP will start faster. These hotels are branded, as you know, Conrad and Holiday Inn as well as Sheraton coming in afterwards. We're already getting some significant inquiries to their systems on the reservation side. There's been a lot of press lately that there weren't enough rooms at the right price. For many Chinese tours, we're able to price more effectively to get that business. But I think I'd look for VIP to start faster than mass, but then mass will catch up over time.

I just want to pick up on Mike's comments that what's been really nice for us is to watch the demand on Cotai. It's by the junkets for this segment. And I think Cotai Central has that unique combination of many, many rooms, wonderful retail, a sister hotel for The Venetian and Four Seasons and lots of gaming space: so ETG slots, almost 2,600 games and growing. So I think it's -- I can't tell you which performs faster, but I can tell you again, all segments are going to perform at those buildings over the next 10, 12 months.

Well, just as a follow-up, how has the slot floor changed physically over the past 6 months? And then following up on the last comment, your pipeline of MICE business, is that still in, like, the third inning or thereabout on Cotai?

I'd say probably in the fourth inning now, Harry. It is moving. We had an increase this year, significantly better than last year in book and business that was in the properties, and I think you'll see it's a gradual growth, but it's going to continue to grow. The Macau itself, the country is very active in building their MICE business. In Singapore, of course, as we mentioned, we're pretty much sold out in '12 in the ballroom, the grand ballroom and other space. But in Macau, it's a little bit slow, but we're moving up inning by inning. There's not a quantum leap there. We have to grow, and we continue to grow, but it's better every year.

Slot floor, however, continues to move. It's radical and consistent changes really weekly. Our latest move, you saw with IGT. I just think our guys are looking at the best equipment and it moves all the time. We changed configurations, we changed everything about the slot floor. Every time I go there, there's radical changes, and I think that resulted in the kind of numbers you're seeing, coupled with the non-gaming amenities of rooms and shopping. And I think that advantages, the big LVS advantage, not just for that property, but all the properties in Cotai. So it's a radical change. It's a consistent change. It's a very, very good change. It produces very strong profitability at segment and again, that segment is one to watch at this company and in Macau in general.

Sir, there are no further questions.

No further questions. Thank you very much for your help. I just want reiterate that it's very gratifying to me as the CEO and Chairman of the company to have entered into a new category of entertainment, lodging, hospitality, resort development and gaming to a level that if you took the top 4 hotel companies that have a different business model of not making investments but just getting fee income, that we're -- that our EBITDA has equaled the top 4 -- or with almost 10,000 hotels, the top 4 hotels and we've equaled or exceeded Carnival Cruise Lines, which is the most profitable cruise line company in the world. So we're now in a totally different category. That was before the Concordia accident which hopefully comes out well for them. Actually, a company I was involved with sold the first 2 ships to the Arison family, Ted Arison, because he went for us in running the 2 ships and the company back in the '60s and '70s. And he took one ship called The Carnival and named the company Carnival Cruise Lines and became the biggest operator in the world. So anyway, we're in a totally different category, and it's very gratifying to me to have been involved with the company. And I want to thank not only the senior management, I want to thank all the management and all the team members of the company. And we simply have a lot to look forward to. I think nobody has sat about or mentioned Lot 3 in a long, long time. So we've applied for that. And everyone else is getting credit for saying, "Well, we're going to get something with Cotai." I remember the days where I want other people to join me in developing Cotai when it was a swamp and a Bay and other people said they didn't think it was right -- it would never work. So the way that worked, our other plans will work as well. So thank you all very much. We appreciate your confidence in us and continue to have that. Thank you. That's the end of our call.

And ladies and gentlemen, with this, we conclude today's conference call. We thank you for your participation. You may now disconnect.