Las Vegas Sands Corp. (LVS) Q3 2012 Earnings Report, Transcript and Summary

Daniel J. Briggs - Vice President of Investor Relations Sheldon Gary Adelson - Chairman, Chief Executive Officer, Treasurer, Chairman of Las Vegas Sands Llc, Chairman of Sands China Ltd and Chief Executive Officer of Las Vegas Sands Llc 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 Kenneth J. Kay - Chief Financial Officer and Executive Vice President Robert G. Goldstein - Executive Vice President and President of Global Gaming Operations

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 Steven E. Kent - Goldman Sachs Group Inc., Research Division Carlo Santarelli - Deutsche Bank AG, Research Division

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

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. We also want to let you know that we have posted supplementary earnings slides on our Investor Relations website for your use. With that, let me please introduce our Chairman, Mr. Sheldon G. Adelson.

Thank you, Dan. Good afternoon, everyone, and thank you for joining us today. By now, you should've seen our press release and the related earnings materials, which are available on our website. Joining me in the call today are Mike, Rob, Chris and Ken. As the Founding Chairman and CEO of Las Vegas Sands and the company's chief strategist, I am focused on delivering growth and maximizing shareholder value. I think about our company assume these goals in 4 key areas: One, organic growth in existing properties; two, development of growth that's within our reach today; three, development of integrated resort locations new to Las Vegas Sands; and four, return of capital to shareholders through growing annual dividends. To address point 1, our organic growth at our existing properties, I would like to go through some highlights for the quarter in Macau, where our industry-leading scale and infrastructure investments are creating impressive results in the largest and most profitable gaming market in the world. Our quarterly results in Macau reflect company records in virtually every category, and we expect our operating momentum to continue in the quarters ahead. For the quarter, our market share of gross Gaming revenue on Macau was 19.3%, up from 14.3% last year. That is a 35% growth in market share. I just -- well, I'd also like to mention that our EBITDA numbers surpass any one of our competitors at any market share. I just want to mention that in reports that we saw this morning, our market share Gaming win in October in Macau was in excess of 20%, again, demonstrating that we're growing faster than the market as our investments and strategies produce results. Our rolling book on the third -- I'm sorry, our rolling volume was up 45.5% this quarter to a record USD 36 billion. That represents pip market share of approximately 17% of rolling volume for the quarter compared to just 11.4% one year ago. If you remember, at that time, I said we were getting back into the good graces of the junket reps, and this 49.1% increase in market share of rolling volume attests to that. Our rolling volume was up 54% during the quarter, while the general Macau market was down 1% for the same period. That is really spectacular. While everyone else is experiencing declining margins in their VIP business, we're delivering strong growth. Equally impressive is our strong organic growth and momentum in the mass table [ph] in Macau. Due to its higher margin structure, this segment is even more important to our future cash flow and bottom line results. Our non-rolling table win in Macau for the quarter was up 36.4% to more than $658.4 million, another company record. Our table productivity also improved meaningfully this quarter with win per mass table across our portfolio of properties expanding year-over-year by 26% to reach nearly USD 8,700 per table. Remember that we have the largest footprint in Macau. That's because we took -- our original strategy called for us to take certain risks and the risks worked out far beyond our expectations, except for Sheldon Adelson's expectations. I thought it was going to be a grand slam home run, and I was wrong. It was a grand slam home run, the World Series of tennis, not to mention the ping-pong and the Super Bowl. Probably [indiscernible] all of that. Our table productivity has also improved meaningfully this quarter, with win per mass table across that portfolio to $8,700. Now I'm turning to Singapore. We had a very light this quarter with Singapore at just 1.79%. That was really a low hold. And it cost us about $105 million in EBITDA during the quarter. So on a whole adjusted basis, we would have produced EBITDA at just over $365 million this quarter from Singapore, but who's counting. As Singapore continues to progress as a destination for business and leisure travel and entertainment and our marketing programs in the Asian region mature, our business at Marina Bay Sands will continue to grow. We're implementing new marketing programs to both the premium mass market and VIP markets, beefing up our sales force and investing in aircraft. The customers we are targeting with these efforts will come from the areas surrounding Singapore: Indonesia, Malaysia, Thailand and the wider Southeast Asian region, as well as from Hong Kong, Taiwan, China, Japan and Korea. I think I missed Vietnam, meaning we didn't get a significant amount of business from Vietnam. [Indiscernible] development growth that is within reach today. We will generate substantial growth on our resorts in Macau at Sands Cotai Central [indiscernible] and as we are able to develop the Parisian on site fully. Turning to Sands Cotai Central, mass table and slot business -- shut my phone off, sorry. Turning to Sands Cotai Central, mass table and slot business reflected meaningful growth this quarter. Total mass win per day increased by 15% compared to the partial quarter ended June 30, and reached $1.56 million per day. We see strong operating momentum continuing in the quarters ahead, particularly as the addition of hotel, dining, shopping and entertainment amenities of Phase 2 of Sands Cotai Central begin to make their contributions. Because those amenities will open only for 11 days during the quarter, they'll had minimal impact for this quarter's revenues. As a reminder, since April of 2012, we have opened more than 3,660 new hotel rooms and 2 new casinos in Macau. In addition, we will open 2,000 new hotel rooms in January 2013. That's great. I'd also like to say that our concept of bringing in international brands is paying off handsomely. We're running at very high occupancy rates in the hotel. We're bringing in business. The people have questioned Holiday Inn, but Holiday Inn is running at extremely high rates. The Conrad has more demand than it has supplies, and the Sheridan just opened recently, last month, and we're doing splendidly at the Sheraton. We still have one more hotel to go, which will open, I suspect, within the next 90 days. The strategic advantages of the scale and critical mass of our portfolio products on the Cotai Strip, including the air-condition [ph] and people mover pedestrian bridge, which will open in December, connecting Cotai Central with the Four Seasons and The Venetian on the west side of the strip, will benefit all of our properties on Cotai and strengthen our retail mall business. As the Macau market continues to grow, we continue to plan for the not too distant future, when Sands Cotai Central will have the opportunity to produce financial results that rival those of The Venetian hotel. The Parisian Macau will add another integrated resort property to our portfolio in the Cotai Strip. We're targeting it in late '15 or earlier. We've already submitted our design plans to the Macau government and, pending government approval, we hope to begin time [ph] at work in the very near future. Point 3, development of integrated resort locations new to Las Vegas Sands. We're committed to identifying and executing our new development opportunities in Asia. We have teams working every day in these locations to pursue this goal in Japan, Korea and Vietnam. Traveling behind a little bit is Taiwan, which will take a much longer time, and we still don't have target out of those sites. We also have been investigating opportunity sets around the globe including in Europe, North America and South America. During this quarter, we advised the government of Madrid that we have selected the city of Madrid as our Euro Vegas development location as opposed to choosing Barcelona. As I have said on numerous occasions before, we will only pursue projects with returns in excess of 20%. As the company's largest shareholder, I have a divested interest in going ahead to owning the highest value projects that would maximize shareholder returns. Point 4, return of capital to shareholders through growing annual dividends. It gives me great pleasure to announce that our Board of Directors has approved an increase of our recurring quarterly dividend for 2013 by 40% to $0.35 per share per quarter or $1.40 per year. Let me add that we have every intention of increasing the dividend in the years ahead as our business and cash flows continue to grow. I can only say one thing about that, go dividends. Lastly, I wanted to point out an asset that the company has with great value for the people in the community, may not have been focusing on all the time, our retail mall business. It generated over $100 million in revenue with 84% margin in this quarter alone. That's a 16.9% increase, 16.9% increase over the result of a year ago. We believe that our retail assets are among the most valuable in the world and that cap rates for similar assets in Asia could be easily approached with 29%, million dollars [ph] in value, and that's not including additional retail we're going to put in, in Lot 3, mall retail that we put in, in Cotai Central, and as I said in my previous call, that we're approaching the government to turn the Tropical Garden into the Tropical Garden Mall of, our designs indicate, potential of 800,000. So that's a trigger we could pull at any time to fill our coffers and an important part of the fundamental business strategy. With these proceeds, we could easily work out all of our debt, easily, without building any new retail than what we have today. In closing, our financial stand and cash flow are evident in our results. As we have said in the past, our cash flows and balance sheet strength will allow us to both increase our return of cash to shareholders and retain ample liquidity to invest in future growth opportunities, both in our current markets and in other emerging jurisdictions around the globe. With our strategic positioning and a strongly experienced leadership team we have in place to execute our strategy, I couldn't be more optimistic about the future. I hope I've made my point [indiscernible] our 4 components of future growth, but let me be crystal clear. We will always be a growth company. So, Mike -- let me turn the call over to Mike.

Thank you, Sheldon. In the interest of time, I'll take a few minutes to add some specific additional color on our developments, the situation in Singapore, Las Vegas and Bethlehem markets. Rob will cover Macau and Ken will cover the earnings and balance sheet. Let's talk about a little more details of our development strategies and where we are as we continue to fill the pipeline with promising development opportunities around the globe. The Parisian Macau, the structure has been submitted to the Macau government. The designs are practically finished and we're ready to go, just awaiting government approval. As soon as government approval comes, we will put piles on the ground and begin the construction period, which should last a little bit more than 30 months, and hope to be opened in that property by the end of '15. We will also reveal to the public all the designs and the plans when government approval comes. In Asia, outside of Macau, in Japan, we are awaiting legislation which is supposed to be submitted in April to the Diet. After that, there will be an approval process for a year or maybe 2 as it goes through the Japanese procedures. We are looking at sites in both Osaka and Tokyo, and we continue that investigation and have people hired on the ground, working on our behalf. In Korea, we have met with government officials at the federal government level, as well as the city levels in Seoul and Busan, Korea, where we're interested in attractive sites for our business. I want to emphasize in Korea that we have not negotiated tax rates, that it's also a must that we have some kind of local play available to us in order to pursue our Korean activities, and we expect to have a situation where we have presented a Singapore type of restriction in local play so that we can, in fact, get into the Korean market. In Vietnam, we have looked at numerous sites in Vietnam, we continue to work with the government there. Our eyes are on Ho Chi Minh City and Hanoi. Progress is being made, however, there's a longer way to go there at the present time than in the other areas. We've also been on the ground in Taiwan. We are not interested in islands offshore, we are interested in the mainland in Taiwan. We haven't made much progress there, but there is some interest going forward. In Europe, our operation in Madrid for the Euro Vegas Strip continues. We continue to meet with the government. There continues to be activity in the area of grants and incentives, in the areas of the tender, the land acquisition, as well as the financing. We are expected by the government to present our plans in some detail in early January and, at that time, we will also have more information on what the legislation is that will be passed in our favor. In North America, we are working with the Ontario Gaming Commission as far as a potential downtown site in Toronto. We have decided on the location. There are lots of things in the way at this point, including the approval of the Toronto City Council. We don't know where that project is going to go at the moment, but we're ready to pursue it as soon as the project is released and our conditions are met. As Sheldon mentioned, the return on investment is critical, particularly in the North American locations. At the present time, there's lots of talk in New York, particularly in Queens. Ron Goldstein and I have had numerous meetings in that market already and we are continuing this week -- I'm sorry, next week, to go back to see if that -- we can pursue an opportunity in that particular area, once again, subject to tax rates, subject to all the other conditions that would make our products successful. In South America, we have had people on the ground in Brazil, in both São Paulo and Rio de Janeiro, looking at opportunities there. And we are -- have started initial investigations in Argentina. So we're very busy. We have a full development department working in these areas, and we expect that over the next year or 2, many of these situations will come to fruition, either fit our model or will not. And once again, I should emphasize, as Sheldon said, if it doesn't meet -- if any of these don't meet our return hurdles, we certainly will not pursue it. Let me turn to Singapore for a moment. After an unusually rapid ramp-up period, our VIP volumes and mass table business have now been stable for all of the last 4 quarters. VIP volumes had been between $11 billion at the low and $13 billion at the high in the roll in each of the last 4 quarters. Mass table revenue has also been steady at between $260 million and $280 million over the last 5 quarters. Slot revenue has decreased by 8% this quarter compared to the same quarter last year because of a decrease in local play. This concerns us and we are putting strategies in place, you'll hear some of this from Rob, in terms of how we can replace that business with additional business that we're after. Our hotel room and MICE business have performed exceptionally and are operating at near capacity. There is rarely an empty room in the Marina Bay Sands these days. Retail has also grown meaningfully and we are in the process of developing additional dining and entertainment offerings in our mall. Looking ahead, our greatest opportunity for growth lies in attracting new premium mass and VIP customers from outside Singapore. These visitors from around the region, including from Indonesia, Malaysia, Thailand, Mainland China, Hong Kong, as well as Japan and Korea, will provide the growth. In Las Vegas, our business has been stable. We held very well this quarter and the bright spot in Las Vegas continues to be strong growth in play from Asian visitors to Las Vegas. And we have the air capacity to continue that business. We had some group cancellations this last quarter, but the volume of group bookings for 2013 looks quite a bit stronger. Sands Bethlehem, a simple comment there, continues to grow effectively and we're quite pleased with Sands Bethlehem. As a matter of fact, during the recent storms, Sands Bethlehem's electronic capability was still on board because of the generators that we had in place, and we actually sold out in the hotel to the last 4 nights and one of the few places in Bethlehem that had power. Before I turn it over to Ken, I want to give a special thanks to Ed Tracy and his team at Sands China. In the last few months, we have opened 4,000 rooms, 3 hotels, 2 casinos, numerous food and beverage and retail facilities and meeting facilities in a situation where employment is full. Macau runs a 2% employment rate. And I want to commend those people for the great job they've done in getting us to date. Plenty of growth to come, but the openings have been superb. With that, I'd like to turn it over to Ken to take you through some of the financial situations, and look forward to your questions.

Thanks, Mike. Revenue expanded 12.5% despite low hold in Singapore. Hold adjusted property EBITDA was $950.7 million, down a little less than 1% compared to the quarter last year. Our strong growth in Macau was offset by a smaller contribution from the VIP business in Singapore compared to last year. Our hold adjusted EBITDA margin of 34% remains healthy and reflects our higher market share in Macau of lower margin VIP business. We expect hold adjusted EBITDA margin to expand as our mix of mass and non-gaming revenues in Macau grows with the ramp-up of Sands Cotai Central. Hold adjusted diluted earnings per share was $0.53, down $0.06 from last year's third quarter. The decrease in earnings per share was driven by increased depreciation and amortization expense related to the opening of Sands Cotai Central, higher minority interests and increased share count. Lower EBITDA had a $0.01 unfavorable impact, but was entirely offset by the favorable impact of lower interest expense, gaming taxes and other items. Our cash balance at September 30 was $3.75 billion. Our trailing 12-month EBITDA was also $3.75 billion. And our net debt is approximately $5.7 billion. Our debt outstanding is both long-dated and cost-effective, with only approximately $100 million coming due in the remainder of 2012 and 2013, and at an average borrowing rate of approximately 2.9% this quarter. Our net debt to EBITDA on a consolidated basis is approximately 1.5x. This is a very comfortable position for us and supports the decision to increase our recurring dividend by 40% for 2013, while retaining ample resources and liquidity to pursue future growth opportunities. Looking ahead, we would be very comfortable with a net leverage ratio of up to 3x to 3.5x if we were fortunate enough to have several integrated resort projects and developments simultaneously. As those projects come online and begin to generate cash flow, the ratio would naturally decrease. So again, our strong balance sheet gives us tremendous financial flexibility. We maintain the flexibility to utilize additional strategies to enhance shareholder returns in the future. The Board focused principally on increasing the recurring dividend at the last meeting. Share buybacks and special dividends will continue to be on the potential list of future alternatives, but will be weighed against the requirements for future investments in growth. And with that, I'll turn the call over to Rob.

Thanks, Ken. In Macau, we're generating exceptional growth momentum in every gaming segment, mass table, slot, ETGs, as well as VIP. We're earning $8,700 per table per day versus $6,900 in last year's numbers in the mass table segment. The additional hotel inventory of 1,800 Sheraton rooms came online in September and an additional 2,000 rooms will come on board early next year, and they should boost our growth as well. Slot and ETG volume is up 29.4% this quarter, rolling volumes are up 45.5%, while total VIP market in Macau was flat. Our mass table revenue, including stadium-style ETGs increased 48-plus percent in the quarter to reach a record $669 million. And that represents a market share of 26.4%, the most important segment in the Macau market from our perspective. When you look at mass tables, slot and ETG win, together we're winning $8.5 million a day in the third quarter across our property portfolio, which is up about 35% from a year ago. We are the market leader in mass win per day. So looking ahead, we expect the lion's share of market share growth to occur on Cotai, where the majority of the other markets, sleeping rooms, shopping, dining, entertainment amenities are located. We should be a primary beneficiary of that growth. The ramp at Sands Cotai Central is visible in our results today. Our mass table win -- our mass win per day increased 15% in this quarter compared to the April through June 30 period. Our rolling volume per day increased over 13% in the September quarter compared to the June quarter. Our hotel occupancy was also strong during the quarter, and has continued to ramp during the current fourth quarter. Operator, may we have the first question, please.

[Operator Instructions] Your first question comes from Mark Strawn from Morgan Stanley.

Rob, you mentioned some initiatives you're undertaking both in Macau and Singapore to reaccelerate same-store growth in those markets. How was -- with same-store growth in Macau flattish and turning negative in Singapore over the last 2 Qs, where do you think that -- those kind of same-store growth rates can go over the next couple quarters? And what are the real key initiatives you're putting in place that will drive those levels?

Yes. Mark, let's start with our strength. Our strength is in Macau. As we look at the portfolio now as opposed to individual properties, the way I view this, the market for us, our portfolio market versus Four Seasons versus Venetian versus Cotai, I think what's happened here is, as you know, the mass revenues are booming there in Macau. I mean, think about $8.5 million a day of 45% margin business. Pretty extraordinary. I think we'll continue to accelerate for the simple reason of capacity, hotel sleeping rooms and retail. And once that bridge is completed in December, I think we end up with a 9,000 room hotel in Cotai. I can’t imagine. We're not going to be able to do a whole lot more than continue what we're doing now, which is fill the hotel room, is fill the retail and watch the market share increase. I think David Sisk has to be singled out for his other junket segment. Where, as you know, a few short years ago, non-competitive in that segment, and now we're very comfortable with where we're going with that. But the real story in Macau, as everyone is aware of, is the mass table side and mass -- and ETGs and slots. We just see ourselves growing, gaining more share by the quarter and couldn't be more pleased we're heading there. Same-store sales, I'd rather speak to same portfolio sales, and I think they're going to be double-digit from our perspective on the mass side. Singapore is a different story. As you know, we are flat in the VIP segment the last 4 quarters. We had an exceptional year-on-year quarter last year. That business is no longer there. VIP is a challenge today versus -- or the growth story because we have seen ourselves softening up. We have increased our event side significantly starting this quarter. We'll see a very, very strong event last week and again this week. We're doing more special events to the high end, targeting the rolling customer. The obvious challenge here, as you can see it from the numbers, is on the mass slot and table side. Singapore has been a growth story at 4, 2 -- well, it started at 2, 3 a day and went as high as 4 or 5 a day since we opened. That is the challenge. I think Mike and Sheldon both referenced we have a very different approach there, and that's going to be targeting premium mass customers, not rolling customers, but $10,000, $20,000 customers from Jakarta, KL, Bangkok, Tokyo, Seoul, et cetera. We're putting a team on the ground, incentives on the ground to try to drive more of that premium mass customer into Singapore, more tourist-driven. And we think it's going to be very successful. We have started that a few months ago. We're willing to put a lot of boots on the ground and our belief is that's the growth in Singapore in the near future.

That was helpful. One follow-up on Macau. Any update on when you think you'll get the additional tables at Cotai Central? And if and when you get those, do you plan to move tables back to the existing properties there?

Mike just came back and we believes January is the right date for the additional tables on Cotai. What we can think of doing, I think Ed and Dave and that team is -- every day is examining the highest yield per table, be it Cotai or Venetian. We have a good problem. We have a lot of business over there and even downtown, even on the old Sands, continues to be some pretty good numbers. So our goal is to maximize yield per table, profitability per table regardless of the hotel it's in. And as you see Cotai ramping up, our dilemma, it's a wonderful dilemma, is can we get to $10 million, $11 million, $12 million a day with table ETG win. So our goal is not to identify a property, but whatever -- wherever that table performs best, that's where we'll go.

Your next question comes from Joe Greff from JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Just one follow-up question on Singapore. How much of the declines in rolling chip volume in Singapore would you say is intentional or by design just as a proactive way of maybe managing credit risk and being careful, with the extension of credit, versus it being more of a demand-related issue?

So unfortunately or fortunate, depending on your perspective, we're not managing it to go down, but we'll try to manage it up. And we just -- the demand on the back edge, consumer demand was soft or has stayed in the $11 billion, $12 billion per quarter range. I'd love to see it go back to $16 billion. Obviously, we're managing our reserve more aggressively, looking at our aging of our accounts, but it wasn't by design that the demand was soft. It was by customer demand, or lack thereof. We'd love to go back to a $15 billion -- our goal is to get back to $15 billion, $16 billion all quarters and collect the money as well, but it wasn't -- it was consumer demand. Joseph Greff - JP Morgan Chase & Co, Research Division: When you look back at the third quarter by month and maybe what you've seen so far in the 4Q, would you say that year-over-year trend that's negative on a year-over-year basis, that it stabilized or has it bottomed? Are you seeing any degree of improvement or stabilization?

I think it stayed pretty flat. I mean, look at 2Q, 2 of '12, we get $11.5 billion, $11.8 billion this time. We had an exceptional third quarter '11 at $16.7 billion, but unfortunately or fortunately, depends on your perspective, Singapore, it looks like a $45 billion to $50 billion annualized roll market at this time. I mentioned earlier, we want to be much more aggressive on the event side, doing some very strong special events to drive that, but -- and be margin conscious as well. We don't fear the credit side. We just would like to see more demand with the right kinds of customers. So though our bigger challenge, very candidly, is to make sure that premium mass growth returns again. That's the margin 65-plus percent we'd like to get back to, and that's the segment where we're focusing on as far as we think there's short-term appreciation, I hope.

This is Sheldon, Joe. What I want to say is that the VIP market out of China is reputedly slowing down in Macau, although we're not experiencing that. But again, we have a pretty big footprint in Macau. I think the same thing is happening in Singapore, that the Chinese are averse to uncertainty. And they don't know what's going to happen when the new government comes in either this month or next month, but before the end of the year. And so their issue of uncertainty will be resolved and people will go back to their normal lives. I for one, having discussed this with the Chinese people and their behavior, everybody says -- everybody I talked to says the same thing, they lie low where there's uncertainty. And they become more high profile when the uncertainty is lifted. All right? And the only uncertainty that people can look at is from their own internal view points in the PRC [ph], how is the new government going to treat them. And once those issues have moved into the more certain column, I think we'll see a lot more VIP business coming back. Joseph Greff - JP Morgan Chase & Co, Research Division: Great. Sheldon, the last few conference calls, you've spoken more and more about retail mall profitability, and we've seen some improving trends there. What are your thoughts on -- I guess this will relate more to Macau, but what are your current thoughts on monetizing that, whether selling part of it or spinning out part of it via an equity spin? How do you look at monetizing? Because you do look at these very low cap rates and you're probably not getting that equity value currently. And if you were to monetize it, you certainly could demonstrate those low cap rates out there. That's all for me.

When I look at that, Joe, I do. It's a very drooling, enticing and stimulating matter. I mean, I've been saying that our business model is unlike any other business model in any portion of the hospitality or retail business, ever. Build these non-core assets, we sell them, we pay for the entire cost. We've got about $9 billion to $10 billion today, and I'm not going to sell Macau until we finish the bridge, which is next month, in December, and we let it -- the cross traffic. It's a unique bridge. It's not like the bridges in Las Vegas, where they're outdoors that are exposed to the weather. This is fully covered, fully enclosed, fully air-conditioned and fully equipped with people movers, moving sidewalks. People in Macau, they're just going to go up there just for the experience of going on -- over the bridge on moving sidewalks. So we'll see how that impacts. If it does impact it well, I think we could probably reach another billion or maybe more. But we're looking at whether or not we should turn that over now, or we -- I mean, in terms of monetizing it, or we should wait until we get the approval for the Tropical Mall, and we put the -- a new retail and luxury [ph]. So we're still in the midst of that. In any event, this is a good time, it is a good cap rate. I remember the time there wasn't a good cap rate. And we just haven't -- we haven't focused on that so much because, from my standpoint, I focus on development and strategy. And so I came up with the idea to do the 800,000 square-foot mall. That will add a couple or a few more billion in dollars. So it won't hurt to just keeping development. So all we know is that, that money is out there to be gotten without any interest, so it feels very good [indiscernible].

We also have 26 more stores opening in the Four Seasons, 43 more stores opening at 5 [ph] in Cotai Central and, as Sheldon said, the potential of an 800,000 square-foot, 300-store mall next to the Sheraton on the Tropical Garden space. So there's a lot more retail to mature for us to essentially maximize that retail facility. And the 20 -- the new stores in The Venetian -- or in the Four Seasons will open in November of this year, actually next month.

Your next question comes from Shaun Kelley from Bank of America.

I just wanted to ask a little bit more about the ramp-up at Cotai Central. It looks like obviously from the market share statistics, that some of us see that the debut so far, since September 20th, has been -- looks like it's starting to be a little bit more successful. Rob, could you give us a little bit of your thoughts in terms of how you guys are getting to utilize some of the hotel rooms? How you feel about the gaming side, is it mass or is it VIP that you're attracting into phase 2? And then lastly, what you think about margins at that property? Because they were down a little bit sequentially, but I imagine they can be a lot higher over time.

I guess, from the way I look at the properties, first of all, we're very happy with the junket segment there. Couldn't be happier with what's happening at the junket side. The team there, that segment is cruising very, very well. And we -- to be blunt about it, we're surprised at how well it does, so quickly out of the box. We have growth opportunity. That's our weakest performer right now on the mass table side, and part of the reason why is The Venetian is so damn strong. And so is, of course, the Four Seasons, although much smaller offering at the tables. But I think our growth potential, both from a margin and EBITDA perspective, emanates from the ramp as we use more hotel rooms, the retail gets opened, as we get up to a $10,000 -- our goal is $10,000 win per unit per day like The Venetian did this quarter. When we get there, you're going to see the Sands Cotai Central, I believe it's the ultimate mass product, built for that market. What they've done there in the junket segment surprises me, how well it's doing. So if they get the mass table up to $10,000 a day, get all the ETGs pumped up, that's where the growth opportunities are for the Sands Cotai Central to start pushing up against The Venetian in '13 and '14. The margins will move with the mass. To be honest, a 10%, 11% junket segment is still challenging on the margin side. The ETGs in that building, along with the slots, it had a slow start. It's all coming together. And as we get the mass -- the premium mass side cranking, and we get all the rooms opened in early first quarter of next year and that bridge gets complete, I don't think there's any reason to doubt that this property should be a $1 billion property down the road. I feel wildly confident. It's the right property for the market in Macau today, lots of sleeping rooms, lots of retail, lots of food, a great gaming floor. I feel -- well, we always felt confident that the Sands Cotai Central will rival Venetian once it's fully operational.

That's really helpful, Rob. And then I guess secondarily, I'd just like to ask a little bit about the dividend announcement. So we've obviously gotten very good feedback, and it looks like, depending upon where the stock opens tomorrow, it'd be right around a 3% yield. Ken, could you talk a little bit about just what you'd be comfortable with in terms of a payout ratio over time? And just any additional color on how much we can think about potentially increasing that, would possible double-digit percentage increases be on the table in the future? That will be helpful for investors.

A little bit of a loaded question there, I appreciate that. So I think what I can tell you is when we went through the deliberations on the dividend, we were really trying to focus in on kind of rightsizing the dividend and getting it to around a 3% yield, which is what you articulated. And that's really where the lion's share of the discussion focused in on. I think, depending on what conditions are going forward, our focus is obviously on increasing that over time. As far as what the percentage of the increase is, it really is a function of what we feel is the rightsized dividend at that point in time that, that decision is made. But that's the way we look at it, more so than really on the payout ratio because we've also got to take into account kind of what the horizon looks like in investments and future growth. And so we have to factor that in and make sure we're in a balanced situation. But for right now, the right size of the dividend we felt was at 3%, and that's what we generated the increase of 40% to get to.

Your next question comes from Felicia Hendrix of Barclays.

Rob, you guys have given us a lot of detail, and we really appreciate that. And clearly, the quarter was affected by hold. And even adjusting for that, though, in the provision in Singapore, you did come in a little bit below our property EBITDA forecast. So I'm just wondering, on a hold-adjusted basis, were there any properties -- you talked about Sands Cotai, what's going on there, but were there any other properties where you might have expected to see better flow-through?

So you're talking, not in Singapore, but in Macau?

Well, just -- no, in general.

Obviously, I mean the Sands Cotai numbers are good but they can be better. Again, the margins are hurting a bit due to the premium mass or lack of premium mass, but I think The Venetian did very, very well. The Four Seasons, it's a junket-driven property, so it's always got that challenge. But, no, I think the Sands downtown was great. Obviously, the large reserve in MBS hurts, but that's just a recognition of the aging in some of the accounts. But no, overall, I think it's all there to see. We've laid it all out for you, so I can't add much color to that.

Okay. And then actually, you just touched on something else. What was the percentage of direct play at the Four Seasons in the quarter versus last year at this time, in the third quarter?

Direct play being defined as direct junket play or, I mean, as our direct business?

Your direct business.

Let's take a look here. We were -- let's see. We were down a bit. We were growing volume this quarter of 1.461 versus 1.507. We held light, 2.69 versus last year's -- excuse me, I'm looking at Q2. So Q3 '11, we were 1.570 versus 1.461 on the rolling volume. We held 4.39 last year versus 2.6...

She's looking for the difference between the junket business and the premium direct business.

Is that right? I'm trying to give you -- the premium direct or the junket?

Yes. What percentage of your overall VIP play was your direct-generated play?

The overall business? It's mostly 7.5 rolling on the VIP junket versus 1.461 on direct. So the lion's share obviously, the VIP market.

At the present. It's much higher at The Venetian.

I was just asking at the Four Seasons.

Yes. It's 7.5 versus 1.4, and we held last -- the hold is obviously in 3Q '11 we held 2 versus 2.56 this year.

It was about 16% in terms of the premium direct percentage.

And Ken, what was it last year?

Hold on a second, I'll tell you. 72 million versus -- 72 -- it won 52 million for third quarter '11.

Just about 37%.

Versus 69 million [indiscernible].

It was about 37%.

Our growth has been out of the junket segment.

Yes. That's correct. I've just been trying to figure out where the disparity was with our numbers. And then is it -- Sheldon, is it a little too early regarding The Parisian to talk about the incremental number of tables you think you might get there?

Well, I can only quote what the government has said publicly. I don't want to talk about what they say privately. We've asked for the minimum that we think we need to open La Paris [ph] but then I see other people are getting them all. The government has said that they -- they've indicated publicly that they will give more tables to the people who are building more non-gaming. They're not going to allow the total space to -- the matrix to come down to 25% casino and 75% non-gaming. They want it down to 10% or less, which means that the guys who were going to build casino and hotel and a couple of restaurants, they're not going to get very many tables. They only have like 2,000 tables to give out. I don't think it would be surprising for them to say, the guys who build 25% or more of casino will get the same number of tables as people who build 10% or less. Our business model says that we build -- actually we have the largest casino in the world in the Venetian Macau, and it's only 4.5% of the total amount of space. And all of our plans for all of the lots on the Cotai Strip would have amounted to, if we were able to build them all, 2.5% of total. So we're setting the precedent on how they're going to do it. So in our case, I'm pretty sure that if the government follows what it said publicly, that we'll get at least the number of tables we ask for. I've since increased that, because -- publicly, I've increased it to 500 but we can live with 450, because the other guy is saying, "Oh, Sands says they only want 600 and NPL says they want 500," but they're not going to build the entertainment, the shopping, the MICE space in particular. And as you know, we focus a lot on MICE space. So they want people that -- they're going to give the tables to the people, they say, that are contributing more to the leisure business travel objectives.

Your next question comes from the line of Jon Oh from CLSA. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: Rob, if you could just give us a quick sense of your strategy in Macau in the premium mass market segment. Could you quantify for us how big is your opportunity today? Maybe give us a sense of how much of your mass market today would you classify as premium mass market? And maybe give us a roadmap as to how much bigger you think you could be, specifically for Cotai Central?

I think -- let's be honest.

The objective is to make money.

Yes. That's a simple one. Jon, the way we view this is we're in a different place than anybody else because we have 3 distinct segments. We've got super premium, which tables winning $20,000 plus a day, probably that's less than 5% of the portfolio; 15% would probably be devoted to, what I call, premium mass; and the lion's share, the bulk, would be in the pure mass business. But we're in a unique place. To be frank, we've got more capacity than anybody else by a lot. We've got more sleeping rooms, more retail, more food. So the way I view this is it's probably the single greatest opportunity I've ever seen in any market anywhere. I can see a day when, if we're able to do this 8.5, how big does it get? Depends on obviously -- we're going to grow faster than anybody because we've got the capacity and the sleeping rooms to grow. Our buildings are built for mass, premium mass, super mass. We're very focused on it. We think we've done a terrific job of upping the junket segment, but our focus and our profit margins obviously reside in this segment. I think one of the unique things in our buildings is that we can talk to the customer who's not betting just HKD 1,000 a day, we can talk to people betting less, we can offer them things no one else can offer. So we've got a multifaceted strategy to all 3 segments, but our biggest single opportunity obviously is in those tables that we can drop minimums down and get that customer. We think ETGs are a very important part of that. How big can it get? Jon, I don't know. I read your reports and I believe you, we can get very, very big, and I think you're right. I think the growth opportunities are enormous for us because we're in the sweetest part of the market where the margins are 45%, 48%. I don't -- I see a day when we can -- on the ETG slots side, surpass $1 billion not too far down the road. I think mass tables can be staggering, I really do. I mean, the market in the mass tables all are as dumbstruck at how well it's done. But the biggest beneficiary is this company, and that's where our focus is. And how big can it be, I don't know. I like to believe that you're right and it'll grow double-digit for the foreseeable next 2 years, and we're the biggest beneficiary. That's our biggest opportunity by far. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: Do you currently have any space allocated within Cotai Central for you to allocate specifically for premium mass, or is that just jumbled within the whole overall mass floor?

No, we have -- we're reallocating space now, Jon, up on the top floor, as well as rethinking the floor. Ed and David are very adept in the strategy to rethink Cotai and Sands Cotai with additional new rooms and spaces. We are rethinking as we speak. Because that's where the opportunity for Cotai to be a $1 billion property resides. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: All right. And just last one for me, for Ken, I guess...

Jon, hang on. Sheldon wants to make a comment.

That's a very big space that we want to reallocate [indiscernible]. We've got plenty of room, I think it's 70,000.

Theater box. Sheldon is referencing a theater box 5 in Sands Cotai Central. It's over 80,000...

We have the same box in what was lot 6, which is now the Sheraton lot. We could turn that into mass gaming, mass premium.

We're rethinking the floor, Jon, every which way we can including the 39th floor of the current building, including Sheldon referenced the theater spaces. We have -- yes, we have opportunity, and we recognize it's got to be the right physical space to make it really sing to $10,000, $15,000 per table per day. And I do think with the bridge connecting 9,000 keys, all that retail, I don't think $10,000 a day across the portfolio is that ambitious. I think it's very achievable for us.

Well, one marketing move we're going to make is Poretta [ph]. The situation is fluid, it's dynamic. We'll try out new things, what used to be our limit is now our limit, diamond, ruby and is now being retitled premium mass.

If you look at our space in The Venetian, that's -- what Sheldon is referencing, that premium, that mass play in The Venetian, ruby, diamond has been exemplary from the day we opened it. It is an extraordinary success story. Look at The Venetian doing $10,000-plus per table per day currently. Where does it go? I don't know. It could be $11,000, $12,000 a day. Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: Okay, great. A question for Ken, the $1.40 of dividends from LVS, that's a 40% increase in pay out, but you have not really made any commitments with -- on Sands China dividends of 58% Hong Kong for every 6 months. How should we go about thinking about that? How are you sourcing that incremental $0.40 per share payout? Are you taking that from Singapore? And if you are, could you help us think about how should we model the tax implications of that?

Yes, sure. A couple of questions in there. The Sands China Board will need to make a determination as far as what the dividend will be coming out of them for 2013, and that decision hasn't been made yet. But I think if you just look at it from a cash flow standpoint, I think the way that -- I'm kind of thinking about funding the LVS dividend, which is about $1.2 million, a little bit less -- I'm sorry, $1.2 billion. So it's probably close to about $1 billion coming out of Sands China Limited, and that would be net, right, of the minority interest fees that would get paid out. So that $1 billion would be flowing up approximately from them. And then the balance would be sourced from either cash from Marina Bay Sands or cash that we have either in the U.S. restricted group or at the parent level. So that's kind of the way we're thinking about it, although no final determination has been made relative to that. And then it's all, really, any money that we bring up from Sands China Limited or from Marina Bay Sands is very tax efficient because we would be offsetting any taxes that would be owed on the repatriation of dividends with foreign tax credits that are generated in our Asian activities. And so for all intents and purposes, that money comes up on a tax-free basis.

Jon, this is Sheldon. Obviously, we're going to have to get some money out of SCL, and we've got to share it proportionately. And so we've got -- to the extent that we upstream any amount of money -- we just got the okay from the Board day before yesterday, so we haven't talked with the SCL board, but obviously we're going to have to share the good fortune. And by the way, we're happy about that. We get 70.3% of that.

Your next question comes from the line of Steven Kent from Goldman Sachs.

Could you just discuss the new development opportunities? Maybe, Mike, you could speak to what you're envisioning in New York. And then when you talk about the opportunity in Madrid, I guess I'm intrigued because on your slides, you go through 6 steps that you're looking for, but the bottom one is that you'd need to see some changes in the economic conditions. And that almost seems secondary now when I'm looking at the slides versus just a few months ago when that seemed to be more paramount.

Well, I think, Steve, the economic conditions really during the course of these -- the meetings with the Spanish government and the course of our meetings here, if something were to deteriorate significantly in terms of the euro or what have you, that's just a caveat that we're watching that. This is a process that will go on for a number of months as we go through the process of legislations, final site selection, the tender, land acquisition, et cetera. But if something turns dramatically negative in the short term, that's simply something that we would look at, and we want everybody to know that we'll be making a judgment on that basis. So I think that's on the chart just to keep aware that something could happen. We feel good about looking at the investment at the present time and looking at the future. And basically, if all things come in order, they could all come in order, but if something dramatic happens in the economic environment that causes real concern, we just -- we would very much hesitate to go forward.

But if Spain stays the way it is right now, then you would go forward from an economic perspective?

I think if everything else worked according to our plan, yes.

You have to understand that one of the biggest triggers in the entire matrix is the fact that to build sensitivity analysis -- I don't want to say this publicly, but our gaming tax rate, [indiscernible] over there is going to be significantly lower. So if we can make significant adjustments, they end up with our EBITDA percentage by the tax rate. We make a 33% EBITDA rate in Macau with a tax rate at 40%. We make 50% to 55% EBITDA of revenue in Singapore with a much lower -- with a tax rate averaging about 15%. We get below that, which I'm confident we will significantly, and we have certain things to achieve there to get below that, then we don't need anywhere near as much money and, by any measure win [indiscernible] day by the tables or slots. So we might end up with the same amount of money with only 70% of the amount of business that it would take to do that in either of our other locations. So you can't compare apples-to-apples, they're 2 different calculations.

Okay. And then the commentary on New York?

In New York, basically, Steve, we have been having some conversations about Willard's Point [ph] in Queens. We previously have looked at Manhattan. Most of the noise we get in Manhattan is that it won't happen. We think there's a potential -- there's been some press about Willard's Point [ph]. We've looked at it, continue to look at it, we're testing that market and talking to the owners of that situation about that kind of development. And once again, that would very much depend upon what kind of arrangements we could make there, as well as what the tax rate would be. And there's lots of rumors and lots of things flying around, but we think that's a viable market, and we're under investigation there now.

And your last question comes from Carlo Santarelli from Deutsche Bank.

The question was for Rob. You talked a little bit earlier about your mass business, your premium versus your regular mass and obviously, the 45% margins in your regular mass business. Could you guys maybe quantify a little bit the differences between the margins of that premium mass customer and that regular mass customer to the extent that there are any in Singapore and Macau?

I think in Macau, it's not that material, Carlo. If you think about it, it blends out at 44 -- up to the high 40s. I don't think there's a lot of difference. We're not -- it's mostly, if it's complimentary, it's room comps, it's meals, but the spread is not great, it really isn't. Singapore, I'd say the same. It stays pretty consistent, high 60s. Slot, ETG, mass table. The margins grow, obviously, the win per table, in both markets, and the win per table is -- you're getting $20,000 per table out of The Venetian in some periods. It may ramp up, but frankly, there's not a whole lot of spread that I can tell.

Great. And then if I could just ask a follow-up. Were there any changes in your provisions this quarter that hampered specifically the Singapore results at all?

I'm sorry, I missed the first part.

Any changes in your provisions in this period.

Yes. [Indiscernible] We raised them.

Yes, quarter-over-quarter, so third quarter 2012 versus third quarter 2011, it was about a $15 million increase in receivable provision.

This concludes today's conference call. You may now disconnect.