Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Las Vegas Sands Corp. First Quarter 2015 Earnings Conference Call. [Operator Instructions] Daniel Briggs, you may begin your conference.

Thank you. Before I turn the call over to Mr. Adelson, please 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 and hold-normalized adjusted net income, adjusted diluted EPS and hold-normalized adjusted diluted EPS and adjusted property EBITDA and hold-normalized adjusted property EBITDA, all of 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 inform you that we have posted supplementary earnings slides on our Investor Relations website for your use. We may refer to those slides during the Q&A portion of the call. [Operator Instructions] With that, let me please introduce our Chairman, Sheldon Adelson.

Thanks a lot, Dan. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report that we continued to execute our strategic objectives during the quarter. And despite the continuing challenges in the Macao market, we delivered a solid set of financial results, with company-wide adjusted property EBITDA reaching USD 1,051,000,000. At the same time, we continue to return excess capital to shareholders. I know you're waiting for me to predict whether we have reached the bottom in Macao and whether the next quarter will get better. But it's very hard to do so right now because we are sailing in uncharted territory, at least for the short term. It reminds me of a fellow that had a joke that said, "It's very difficult to make predictions, particularly about the future." Our job is to set the right strategy so that we can grow and prospect for the long term in spite of the current challenges, contiguous to the economic development of our host jurisdictions, and at the same time, ensure the company can weather any cyclical storm across the business cycle. But I want to tell you that I am today as confident as I've ever been in the long-term outlook for the Macao market. Our unmatched financial strength enables us to stay fully committed to our markets and our development plans while continuing to return significant amounts of capital to shareholders. To put it plainly, we will invest in our existing portfolio. We will search for new development opportunities very aggressively, and we will pay generous recurring dividends, which we have every intention of growing over the next several years as our business and cash flows continue to grow. I can say that we're targeting at least a 10% growth in each of the next…

Say it again, yes.

Today, our company is financially stronger than it has ever been. Remember, we're the pioneers and creators of the large-scale MICE-based Integrated Resort. As a result, we have the diversity of product offering and the scale and critical mass to cater to every type of business and leisure visitor. This clearly positions us well for future long-term growth. But these attitudes already allow us to out-earn our competitors, as we always have, where it means something, on the bottom line. Indeed, the gap between our company and our peers has been widening for 2014. We had a 35% EBITDA share in a 6-operator market in Macao, up from 32% in 2013, reflecting the strength of our MICE and retail-driven Integrated Resort model. In my quick calculation, it looks like we've doubled our fair market share. In Singapore, we have around 60% EBITDA share in a duopoly market. Not only are we unique in being licensed in the 2 largest gaming markets in Asia, we are also, by a very wide margin, the profit leader in both markets. In addition to bringing [ph] more profitable and enjoying superior diversity of earnings, our Integrated Resort business model also allows us to contribute more meaningfully to the long-term economic success of our host jurisdictions, something we are both eager and uniquely well positioned to replicate in new markets. Now let me take you through some of the highlights of our results in Macao for the quarter. For quarter 1, Sands China adjusted property EBITDA was USD 531 million. The significant year-over-year decline in gaming revenue, especially for VIP and premium mass segments, were obviously the primary driver of year-on-year decline in EBITDA. When compared to quarter 4 of 2014, the rate of sequential decline in our Non-Rolling win per day in Q1 has…

[Operator Instructions] Your first question comes from the line of Joe Greff from JPMorgan.

The margins -- I have a question for you on the margins in Macao, so it's a couple of one-part questions. If the margin in Macao were below what we were forecasting, and we completely get and understand that Macao is presently very challenging. Were there any onetime expenses such as a large bump in the provision for doubtful accounts or maybe expenses that you would describe as yield experimenting where you were trying to optimize revenue mix that maybe didn't work out that maybe aren't there going forward? In other words, do you think margins are sustainable for here -- from here? And what can you do to manage or reduce controllable expenses in this environment?

George, it's Rob. I think, as you know, market changes in Macao have been sudden and dramatic. I mean, 6 months because this was a high-growth market, and now, obviously, it's down as much as 40%. And our business in Macao is not just the biggest in the market in terms of financial profit and number of employees but also the most complex and multidimensional. We are strong believers in the long-term outlook in Macao. We welcome some of the structural changes taking place that will help make it a more sustainable, healthier market over time. And we are going to stay invested in Macao for the long term, and therefore, make some adjustments to our business and there's a cost and efficiencies. We have to balance multiple constituencies, be fair to our employees, support to government of Macao and making Macao into a world-class destination, also satisfy the shareholders. Now we've invested so much in human resources and operating capability in many business lines, not just gaming but hotel, entertainment, retail, F&B, MICE. So we're trying not to have a quick short-term knee-jerk reaction and make a careful assessment of what's right for the business long term. So when you invest and develop all these non-gaming businesses on a large scale, you do incur more fixed costs than our competitors, and we believe this is the right thing to do in the long term. And that being said, we have to assume, for the time being, that we know we're covering gaming for the balance of this year and we have to make some tough decisions in the next 6 to 12 months to improve margins. That being said, there's nothing in particular for this quarter. We're somewhat hoping for a little more recovery in the top line. We continue to assess the opportunities on the cost side and to improve our business. We did, as you know -- we will single out on the junket situation. We don't -- we're the only people in town not doing phone betting, which did hurt us somewhat, I think, in the junket segment. Otherwise, it was business as usual, and we're trying to navigate our way towards a very different market than 6 months ago.

Okay. And then my second question -- go ahead, Sheldon.

It looks to me like in the first 3 months of the year, like the figure 39% sticks out. And if it's consistent over 3 months and it continues another couple of months, it would not be unreasonable for somebody to conclude that a bottom has been reached. Now I can't say that, that's the case because, as I said, we're sailing in unchartered waters. And I hope we don't sink like that boat off in the Mediterranean.

We're not sinking.

I just got a new boat. I don't want to...

The final -- the comment on that -- the margin...

It kind of looks to me like we've hit bottom. I mean, it's not so erratic that it goes like from 30% down to 50% down. It's staying within the 39%, 40% range. So it gives me a more comfortable feeling that this is -- this should be the turnaround point. But then again, I'm not the analyst.

And your mass business also, between the fourth quarter and the first quarter, had consistent margins just below 40%.

The quarter-on-quarter, George, just to clarify, had 2 big -- we have percentage rent, obviously, in the fourth quarter that was impactful [ph], about $40 million and [indiscernible] adjusts about $40 million. So Q-on-Q, we're down about 15%, 16% Q1 '15 to Q4 '14.

In EBITDA.

Yes.

Got it. And then my follow-up question relates to the dividend in the U.S. If we're at this level of quarterly Macao EBITDA generation of $530 million or something lower, do you have any qualms levering up your balance sheet because [indiscernible] outside Macao, obviously, to sustain [ph] the current U.S. dividend of $2.60? And what will be the next net leverage level that you would be comfortable living with for some period of time? And that's it for me.

It all depends on who you're asking.

I'm asking you, Sheldon.

My level of confidence tends to about 0.1%, but I know that, that's not according to all the financial engineers listening to me that I would probably feel comfortable at 2.5, 2.5x. But I think -- I just have a feeling that perhaps we might see an emerging market pop though the clouds and during a time of weather when we could use it. So I'd rather not go out and borrow money now because if in the near future, which could be 6 months, 12 months, 18 months, we could use a few billion dollars, I'd rather keep our powder dry for that. If, however, it seems that interest rates are going to jump through the roof, in one quantum leap, we may reconsider and do something before the rates go up too high. So it's -- that's an answer, and that's not an answer, but that's what's thinking in my mind.

Your next question comes from the line of Jon Oh from CLSA.

A question on the cost again and I guess the margins in Macao. As you think about this cost restrain or this curtailing effort that you guys are embarking on for the remainder of this year, could you help us understand the priority of cost that you'd be taking out, especially as it relates to fixed costs versus variable costs? And how should I be thinking and how should I be modeling the priorities of taking out player reinvestment? How much can you curtail that? How do we think about labor? And how do we think about just general OpEx? And what headroom have you got? Just for me to better understand how much cost can really be extracted to be in tandem with how fast revenue is going to fall in.

Jon, if we're going to tell you how to do your figuring. I'm going to make a claim for your pay, including bonus.

All right, Jon. So Jon, obviously, we -- the biggest number in Macao which no one can impact these taxes paid on gaming revenues off the table, clearly. Second thing will be direct incentives paid to customers. That's where there's opportunity, I think, across the market, to be more judicious not just in our stores but across the market. As you know, they're -- we're very protective of our Macanese labor force and very respectful of our employees. We've built a great employee base, and we don't want to hurt that. If people leave us on their own volition, that's one thing, but we're going to work very hard to ensure our employees are well taken care of and well cared for. So that's off the table. What's on the table is our other costs, not direct against the employee but perhaps other structural costs as well as costs in the marketing side. As you know, we've been the leaders, and we've run more entertainment, more boxing, more everything than everyone else combined in Macao, everyone. As Sheldon alluded to, it's very popular to talk about the non-gaming spend. Well, this company has spent more than anybody and more than everybody combined. So we're reexamining that and trying to figure out how do we put our best foot forward, maintain the importance of having headline entertainment, having boxing, having all these important events we've spearheaded and we've led in the Cotai Strip, our CotaiArena, and balance that with the margins you allude to. We're very keen to do 2 things: run our business intelligently for the short and long term. So we're reexamining every nickel and dime we spend, both on direct incentives to customers, marketing incentives to the market itself. CapEx is on the table. We've actually pulled back…

Okay, that's helpful. And if I can follow up with a broader question and maybe something that is more positive. As you look at the policies that we've seen in China, this is a more broader macro point of view that I'd like to get from you guys. We've seen several key measures coming out of Beijing that kind of speaks to easing and one that is looking to stimulate China, both monetary and also fiscal policies. And we've seen that even as recent as a couple of weeks ago where the stock exchange restrictions in Hong Kong and China have been kind of eased. Do you think that with this sustained economic stimulus and also the fiscal stimulus that China is embarking, how do you think that plays out to your business? Are you sensing that perhaps there will be a translation effect? And how would you think about what it means to the outlook for maybe the rest of this year and also for next year?

He's Chinese, he ought to tell us? Last time I looked, Jon, you look Chinese. I'd looked at Goldstein, he looked like a Philadelphia [indiscernible].

Well, I'll tell you, Jon, we do believe there's a lot of demand -- pent-up demand that wants to come to Macao, once the external factors are decided by the government, that demand will resurrect. I'm a firm believer, being there last week and seeing the amount of people in The Venetian, the body count and visitation, there is pent-up demand. People want to gamble and come to Macao and shop and eat and sleep overnight. I just believe this market has demand. It has lots of demand. It just needs a few things to turn our way, to turn the faucet back on a bit. But that's beyond our control. And we support the government in their attitude, in their measures, and we'll wait respectfully for a better day.

I was there with Rob and Patrick last week, almost for the whole week. We left on Sunday. And I have to tell you, I started to walk through 2 quadrants of The Venetian casino, it was unbelievable. I'd never seen it so crowded since we built it in 2007, in 8 years. I haven't seen any of our properties crowded as it was. Frankly, I had to have my security guys push a way through, so that I could get through. It was the busiest and most crowded I've ever seen. Of course, that was in the mass market [ph].

Yes, pure mass, yes.

Pure mass.

Yes.

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

Maybe to build on the last question about policies. One thing that seems like popped up more recently was some discussion around a possible visitation cap. And I think, Sheldon, you referred to that in some of your prepared remarks. So I guess my question is twofold. First of all, do you think that Macao will actually look to cap visitors to the market overall? And how do you think that would be enforced? And second of all, why do you think that they would do this if it actually is going to be put in place or you thinking it might? Because we've had a lot of investor kind of curiosity as to why this would make sense with the backdrop of so much of supply coming online here.

Well, I'd like to give you my own personal opinion. I think the chances of that happening are that I wake up tomorrow morning and all my hair will be grown back by 9:00. There's no chance in my mind whatsoever. I've talked to various members of the government, and they have said that, that's the opinion of one man who sincerely and with very good intentions believed that something like that may be good. When I discussed with him and his staff about how it could be done, there is no indication that any of it could be done. For instance, I said, "You could do it very easily. Just put a time limit on the opening hours of the Gonbei gate and then refer everybody to the Lotus gate, the Lotus Bridge and Lotus gate coming in." In that way, you take them off of the Peninsula, where the vast majority of the local population is, and you shift them to the Adelson-created Cotai Strip that you put them in one hotel and they're -- I mean, they'll go with our soon-to-be 13,000 hotel rooms, they'll never -- and close to 1,000 retail shops, they'll never have to leave, with probably 100-plus restaurants and very good ones, too. The -- every time I come back, I got to go on a diet for the good food in Macao. There's no question. So everybody will go into -- if you leave them off in Cotai, they'll stay in Cotai, and that's the whole purpose. It will eliminate a lot of the buses. It'll eliminate a lot of the traffic, et cetera, et cetera, et cetera. And when the Hong Kong-Zhuhai-Macau Bridge opens, and I am told from my conversations with some people who know better than I do last…

That's very clear and appreciate that. And I guess, my follow-up on a slightly different subject would just be I think, Rob, you alluded to possibly some CapEx shifting and changing of priorities. It looked like in the schedule that you guys gave in the slide deck, that you had pushed out some of the timing around The Parisian CapEx. So can you just elaborate on that a little bit? Does that -- are you planning on changing the opening timeline there? Or what's just the latest update on when you think The Parisian is going to open.

Two things, Shaun. One is we are examining all our CapEx, non-Parisian, Parisian, just reconsider what makes sense in this environment, be it room renovations, what type of renovations, retail, restaurants. Everything is under consideration because we are trying to be more prudent and think about the market as it's changing. As far as The Parisian, we're still looking at that being late 2016, but it depends on labor and allocations. That could increase depending [indiscernible]. When we were there last week, we were under consideration for additional labor. And they could move up depending on the government's decision on labor allocation to us. I get the sense we may get a boost in terms of labor allocation. It hasn't been confirmed yet, but that would change. The date could move between late summer of '16 all the way to the Thanksgiving period in November of '16, depending on the government's decision on labor allocation.

It could be as early as late spring, early summer.

We requested more labor, and we seemed to get a favorable response. Though [ph] no final determination has been made as of today.

Your next question comes from the line of Thomas Allen with Morgan Stanley.

A couple of questions on occupancy. So it was down significantly in the quarter in Macao, and you highlighted that it was better than the market. But I noticed that I got some promotions for retail visitors to come. And depending on their spend at the mall, they could get a free room. Is that an opportunity that you guys can assess -- or access going forward? Is this something that occupancy has gone down for the past 2 quarters, but it could -- you could start to do more and get some traction there? And then also, just in Singapore, I noticed there was a significant decline in occupancy. Can you just talk about what was going on there, too?

Sure. I -- the -- I don't think that's a hotel promotion. It sounds to me like it's a promotion from the retail mall. We don't market the mall that way. We've never done it since we opened here in 1999. We don't say, "You buy a lot in the retail mall and we'll give you a free room." It doesn't -- that's like a bank getting frequent flyer points from somebody else and then -- other than airlines. So if you ride buses, you get frequent flyer points on one of the airlines. We don't do that, and I suspect that, as I said, that, that is a promotion from the mall itself.

A couple of thoughts on your comments. First of all, we agree that the occupancy has fallen a bit in Macao. And so when you think about Macao, we were the only people in that market selling cash rooms for the last couple of years. The rest of the market, basically comped off 90% because of the demand for casino guests who gave you a high enough return on that room. Now that's changed dramatically. The market's now selling rooms. A lot of people are selling rooms due to the junket, rate reduction, and obviously, the premium mass reduction. So -- whereas some companies were, including us, were comping aggressively to people with theoretical losses at 3x and 4x and 5x the price of the room, that's changed. So there's more competition for the cash dollar on the room side. Having said that, we still think structurally, our room advantage is huge. If we can get back in the 90s, which is our goal, we -- to your point about retail, we are trying to marry more of our retail advertising to the room customer. The thinking there is that we focused a lot on other parts of the resort, yet we find out that shopping ranks very, very high in the consumers' things they want to do when they reach Macao. We have, as Sheldon alluded to, hundreds and hundreds of stores of all price points, ranging from the lowest to the Chanels of the world. And so our range is huge. The shopping advantage, we think, under one roof with our food, our shopping, our gaming, and of course, our sleeping rooms, it's a unique opportunity to blend them all together and to promote -- get more occupancy. So one, the business has fallen in Macao because there's more people chasing the cash customer. We're not alone in that space anymore. Two, we think the opportunity to blend retail to the overall offering of the resort is wonderful because in -- we find that when people sleep in our hotel, they do shop more in our hotels, and of course, gamble more in our hotels.

And eat more.

And eat more, yes, stuff like that, well, especially us. I'm not sure of the customers. They look awful thin. We don't look so thin. On the Singapore side -- well, I'm feeling it. I'm feeling it. Singapore, you're right. Our occupancy fell a bit, and it's a combination of 2 things. One, there's a currency issue there. You'll note that we mentioned the $4.7 million a day casino win on the Non-Rolling slot ETG, our best quarter ever. But its currency effect is more like $5 million or $5 million a day. We had a really great quarter. Same thing happened, though, on the rooms side. We got hurt somewhat by the currency impact. That hurt us on the rate. As far as occupancy, we had fall off a bit. As you can tell about our diminished rolling numbers, Tom, as we were off in the rolling business, I think, 22%. And so our ADR is driven somewhat. Like all high-end casinos, we sell rooms to our casino at very high rates. The suites go for up to $10,000 a night in Singapore. They're massive suites. When that customer doesn't come, we lose some rate and some occupancy at the very top tier of the market. As you know, our hotel is still the exemplary hotel probably in all of Asia as far as iconic architecture, et cetera. The place still does tremendous well. We did have an off, I think, quarter in terms of occupancy and rate. I think that will resurrect in terms of the -- as things get healthier with the high-end Chinese business. But you're absolutely right in those comments, and that's an issue for us to deal with in Singapore, along with the currency issue that continues to be weak against the U.S. dollar.

[indiscernible] and because the Singapore dollar was up at $1.37 plus, almost $1.38, I just look at my calculator, my smartphone here, which is clearly smarter than I am. I just looked at it. It's at $1.34. So some of the articles in the business section of The Straits Times, and the local newspapers say that it's the -- some of the Malaysian and Indonesian visitors have slowed down a little bit because the Singapore dollar in relation to the Malaysian and Indonesian currency is a little discouraging for them. But I think it's going to turn around. Everything is cyclical. Everything is cyclical. And I never hedge because I'm quite certain. And it's been going that way for me most of my life, except when I was in grammar school, that currency, if it goes one way, it's going the other way. So we don't -- I don't take -- I don't get nervous or depressed or upset about currency volatility because -- and at least in Singapore, it's a very, very stable currency.

So [indiscernible], do we still have the highest ADR in the Singapore market, I think, by far.

Okay. And then just as my follow-up, just on capital returns. I mean, you have almost $2.5 billion of cash. I guess just bigger picture, why didn't you buy back any stock during the quarter? And in the past, you said you were going to do about $75 million a month. Is that -- has that gone away?

I think we're going to be opportunistic in the way that we repurchase shares in the future. I think we're looking to protect the dividend in such a way we view it as a permanent obligation. So it's something we want to be able to grow substantially in the future. You heard the Chairman earlier in the call saying that in his view we'll grow it at least 10% per annum for the next 3 years. So as a goal, we'd like to do more than that. I think we're accumulating cash and evaluating the market to make sure that we have the capital to do what we want to do. So I think we'll continue to use share repurchases as a way to return capital to shareholders in the future. This quarter, we chose not to.

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

Sheldon, you provided some color earlier in terms of what the floor looked like at Venetian. And now when looking at the industry data and seeing kind of the last 3 months of occupied room nights or hotel guests being down mid to high single digits, and obviously, some months are distorted given comps. But when you think about what was once a VIP issue trickling down and apparently showing up in the mass business a little bit more, how do you guys get comfortable with adding hotel room supply? And how do you kind of view the amount of hotel rooms that are coming to Cotai over the next several years?

Well, first, I'll say that none of the hotels are even approaching where we are. Most of the hotels are somewhere between 1,500 and 2,000. The 1,500 to 1,700 or 1,800, we're doing over 3,000. And we've asked the government, as you might have read some of the press clippings lately, I've asked the government for another 2,500 non-gaming hotel. Look, this has been my philosophy right from the beginning. If you build critical mass, they will come. You could take a spot in the middle of a desert or on the seashore, and you build a city and people are going to come. The validation of that belief is something called Cotai Strip. Everybody said, "You're crazy. All of the activity is on the Peninsula in Macao, and nobody's going to go out there." I'm of the conviction. Now look, everybody is building every -- each one of the concessionaires are building. And the small, sublicensed operators that were sublicenses from Stanley Ho and -- which is now operated under SJM, they're not building. They don't have any land, and they won't build in Cotai. And Cotai will be like I said right from the beginning. I compared the Las Vegas Strip to the downtown Las Vegas, and that's what it's turning out to be, the Cotai Strip versus The Peninsula. And so they're not going to move out to where we are. And our critical mass is going to carry the day. I don't know about it. I never heard people say, "It's a must-see to go to StarWorld, or to go to the Waldo, or to go to any one of our competitors." What I do hear everybody say, "When you go to Macao, you've got to go see The Venetian." And that [indiscernible] because it's the critical mass of hotel rooms, of tables, of restaurants, of MICE facilities, of shopping, et cetera, et cetera. If there are 2 words would ever apply to Sheldon Adelson, it won't be hey you. It'll be critical mass.

As we have reached the allotted time for today's call, we will be taking one final question, which comes from the line of Robin Farley with UBS.

Great. I know you commented a little bit on why you didn't do share repurchase in the quarter. But I wonder if you could just give a little bit more forward-looking color in terms of in your commitment to raise the dividend, does that mean we shouldn't expect share repurchase maybe for the next couple of quarters?

No, no. It has nothing to do with anything. We have an enormous amount of cash flow, probably, I don't know, as much as the other U.S. companies combined. And I think that in Macao, we bottomed out, as you've heard my own opinion. But I can't guarantee that, of course. And I just have a -- it's not a dream, but I just have a good feeling. I've got the vibes, let's say, that I think one of these emerging markets are going to open up soon. So I want to make sure that we have enough money. And as you've heard me say before, I'm risk averse. And I don't want to [indiscernible]. I'd rather keep our powder dry for the time being, but it may be opportunistic to go in tomorrow. We are not excluding any of this. It depends what signs we see. And my interests are in line with yours, and I own 54% of the company. Your interests are aligned with mine. I love dividends. That's my yay dividends statement. It's yay stock buyback as well. But we can't do all of it. We can't do special dividends, regular dividends constantly increasing and stock buybacks. And we could throw money out the window. We could do that. But I -- we'll try to do everything because when I'm sitting in the board meeting and having a discussion about it, although I don't take a vote, that's only from an ethical viewpoint, ethical and moral viewpoint. Everybody else knows how I feel. They're looking at me and say, "This guy at the end of the table owns 54% of the company. You think he wants an increased dividend or he wants us to buy some stock back." Okay. I think that it's been fun. It's been good to answer all of your questions and to talk to you and to think about where our company is going. I just want to point something out to you. I haven't sold a share, not since the last time I said that. And there is nothing in my thinking that has changed at all, and I have no intention of selling any shares in the foreseeable future. Okay. And at my age, I've got a long view forward.

Thanks, everyone.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.