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At least Bethlehem produced a beat

"While our quarterly results did not meet my expectations, and were impacted by lower hold on table games play compared to last year's second quarter, higher provisions for accounts receivable at Marina Bay Sands in Singapore, and elevated legal expenses, our financial results reflected solid revenue growth overall and significant cash flow in both Macao and Singapore, as well as the continued steady execution of our Cotai Strip development plan in Macao."

Mr. Sheldon G. Adelson, chairman and chief executive officer


  • According to LVS, they would have made $107.5MM more of net revenue if they held normally across the board and EBITDA would have been $932.6MM on a hold-adjusted basis ($88MM of an add back)
    • They only adjusted if the hold fell outside of 2.7%-3% range
    • We obviously got a much lower adjustment when we adjusted to historical hold for each property
  • $29MM impact from larger accounts receiveable charge at MBS
  • SCC has performed well and has been well received by customers. 
  • Investments in Cotai are allowing them to exceed market growth rate
    • Obviously
  • SCC won't truly hit its stride until next year when all the phases are open
  • Given the lack of new supply for at least 3 more years and the new infrastructure coming online, they remain optimistic
  • Hope to start with pilings on Site 3 in November
  • SCC early performance statistics: 
    • Hotel occupancy: 61% in April, 74% in May and 85% in June 
    • Holiday Inn is getting great reviews
    • Win per mass table per day is great
    • Win per slot/ETG is also great
  • LV:  they are renovating 1000 rooms. They are seeing a pick up in bookings for 2013.
  • Macau VIP segment represents about $500MM of their revenue and 25% of their EBITDA.  Feel like that Mass growth is the big opportunity for them.  Has a 45% margin vs. the 12-20% margin of VIP.
  • Singapore's VIP segment didn't grow last quarter but are confident in the future of that property
  • Prepaid $400MM of debt on the US bank facility and pre-paid the Macau ferry financing.  $9.374BN of debt at 6/30 at 3%. Have no sizeable maturities until 2014.
  • Net Debt/EBITDA: 1.5x
  • Cash: $3,529.6MM
  • Expect to spend $500MM at SCC in 2H12 and $500MM thereafter
  • $350MM of maintenance capex in 2012 and $500MM for FY2012. Expect a similar amount for 2013.


  • Will have 1,000 Mass tables when SCC is fully open and 9,000 rooms.  Visitation may be slowing but the better customers keep on coming. They do believe that VIP will continue to grow.  Have an ability to go to ETG's and slots, especially with higher table minimums at competitors' properteis. Have 7,000 slot and ETG positions.
  • Use of cash: they are considering all of the possibilities
  • Receivables overview:  Think that they are in good shape in MBS.  Since inception, they've had $10.4BN of credit extended.  Collected 91% of credit extended.  Have another 1.9% of the total credit drop in reserve and 29% of receivables reserved.  From a Macau perspective, the growth in receivables is more from junket accounts.  $680MM of receivable over $510MM is related to junkets. They continue to collect from junkets without issue.
  • Expect that they will get 400 new tables from the government by the time they open the last 2,000 rooms in January. There will be some table movement though at September 20th when they open Ph2 since they won't have all of the additional 400 tables. 
  • Their margin is impacted by the mix of VIP play, since Mass takes a while to build at SCC.  The properties are also less efficient when a property opens. Once the property is fully opened, it should have the best margins in the group. 
  • They are not seeing any heightened competition on the VIP side in Macau.  Wouldn't be surprised if people get more aggressive on the slot/ETG side.
  • What is the credit appetite in Macau?  They haven't seen a big change in credit pull back but rather a pullback in customer demand.
  • Any seasonality issues in Singapore?  It's a very chunky market and the play is less seasonable. Its just driven by a few very large players and highly concentrated.
  • There is no indication that the gaming habits of Asian players is going to change
  • Connecting SCC and Venetian through a walkway will be very impactful when its opened by year end
  • There is no reason why SCC won't have great margins.  The real upside is on the Mass side for this property.
  • Only half of the non-gaming amenities at SCC are open at this point. On September 20th, they will open a lot more of the amenities.
  • If they can earn the type of mass win per table at SCC that they have at Venetian and FS that's another $1.4BN and at a 45% margin that would solve their own problems.
  • They have another piece of land called "The Tropical Garden" where they want to develop into 500-800k of shopping mall there which they plan to connect with a covered walkway. They also have more space to add more hotel towers at Venetian.
  • They still don't have a handle on seasonality in Singapore. On the VIP side, they don't have a sense for seasonality.
  • Market share for MBS - Sheldon thinks that share has been moving up. They just have a better property.
  • At these prices, Sheldon would like to buy back more stock.  All the other shareholders want dividends so they will likely do more of that in the future.
  • Comment on the process of Singaporeans to further restrict local visitation to casinos. The government wants to protect the vulnerable people in society against getting into gambling debt.  LVS doesn't think it's an issue if the government restricts visitation from people who can't afford to gamble in the first place. Think that the mass market can continue to grow even with more restrictions.  25% of their visitors are Singaporeans. 
  • They had the extra $29MM charge in MBS because they thought that some of the receivables won't be collected. It's not reflective of a change in their reserve policy.   
  • Unfortunately, Singapore is much more dependent on a small number of high rollers and their visitation is not that predictable. They will try to host more events for their VIPs to come more often. 


  • Macau EBITDA: $429MM vs. consensus of $492MM
    • Region wide stats:
      • RC volume: +36.3%  YoY
      • Non-rolling drop: +20.9% YoY
      • Slot handle: +72.5% YoY
    • Our overall market share of gross gaming revenue in Macao also increased to 17.7% frpm 16.0% in 2Q11
    • Venetian net revenue and EBITDA of $649MM and $229MM, respectively
      • RC hold of 2.68%
    • FS net revenue of $266MM and EBITDA of $76.6MM
      • RC hold of 3.05%
    • SCC EBITDA of $52MM on net revenue of $266MM
      • RC hold of 3.12%
    • Sands net revenue of $272MM and EBITDA of $71MM
      • RC hold of 2.58%
  • MBS EBITDA: $330MM vs. consensus of $419MM
    • "Marina Bay Sands in Singapore delivered a steady financial performance, including good growth in its hotel and retail segments, although lower rolling volume, low hold on rolling table games play and higher provisions for accounts receivable negatively impacted our results this quarter"
    • RC drop:  -5.9%
    • Mass drop: +8.2%
    • Slot handle: +15.1%
  • LV EBITDA: $64MM vs. consensus of $95MM
    • Hold was lower this quarter compared to the quarter last year, which negatively impacted our results. Baccarat play was up, but other table games play was down, reflecting overall market conditions in Las Vegas. Slot handle was up 8.2%.
  • Bethlehem EBITDA: $27MM vs. consensus of $26MM