Not one of LVS's finest. Even on a hold adjusted basis, Macau EBITDA was disappointing. Singapore estimates look like they are heading lower - the macro isn't good.
CONF CALL
- Pleased with quarter
- "Includes the impact of the initiation of a "14th month" special bonus accrual for non-management employees in Macao. Absent this accrual, Adjusted Property EBITDA would have been approximately $29 million higher both in Macao and on a consolidated basis, and Adjusted Earnings per Diluted Share would have been $0.03 higher."
MACAU
- VIP experiencing a slowdown
- 3 VIP headwinds mentioned by Adelson:
- Tightening liquidity conditions in Chinese economy and junket system
- Real estate market slowdown
- General uncertainty and caution in economy
- We also think disappearance of Huang Shan who owed ~$1.3 billion had an impact.
- LVS gaming revenue mix: 44% VIP/ 56% non-VIP
- Market gaming revenue mix: 60% VIP/ 40% non-VIP
- World Cup 'clearly' had an impact on June GGR
- June Macau Revenues were -20% relative to May similar to 2010
- Continue to invest in premium direct
- Experienced lower VIP decline than junket volume
- Reduced VIP capacity by 28%; increased mass table capacity by 14%
- Impacted by low hold in premium mass segment
- Competitors lag behind on the integrated resort model
- Four Seasons mall: highest grossing mall per sq ft in the world ($5,500); Bal Harbour Miami second place at $3,500
- Confident LVS will continue to grow
SINGAPORE
- Invest in premium mass
OTHER
- Interest in Japan/Korea
- Bought back $320m of stock in Q2
Q & A
- VIP only 17% of EBITDA
- Macau VIP: back end consumer demand is soft
- Have seen more VIP Chinese customers into Vegas
- Macau: Pulling back on VIP credit but not concerned from a risk perspective
- Have enough money for current stock repurchase program
- World Cup impacted mass business, especially in June; poor mass mix - premium mass (higher mass mix %) did fine but margins a little lower than pure mass
- Q3 will be better
- Premium mass demographics has some overlap with VIP demographics but ultimately, is a different audience
- Premium mass has 38% margins
- Want to increase more room comps
- Singapore relationship: the bigger the hold, the lower the rolling chip volume
- What about Q1 2012 where hold was 3.6% and volume grew 25%?
- What about Singapore macro? It's deteriorating.
- Singapore: cautious on lending credit
- Dragons Palace: will take 3 months to fully ramp
- Macau competitors can't focus on mass because they don't have enough tables
- Macau: no margin erosion
- Parisian: construction has stopped, pending govt approvals to be received shortly. Planned opening date unchanged at end of 2015.
- Smoking ban: 'VIP' definition still unclear. All VIP rooms will be allowed smoking. Believe public estimates 2-3% impact on revenues.
- St. Regis: will open in Summer 2015
- Four Seasons condo titles: licensing process with Macau govt
- Board approved construction to spend $33m to put smoking facilities in
- Four Seasons mall: Dont' need the money from selling Four Seasons right now. More focused on Parisian. No restrictions from government.
- Would love to build another hotel in Singapore
- CFO search: no external hire
