Las Vegas Sands Corp

NYSE:LVS

Good day, ladies and gentlemen, and welcome to the Sands First Quarter 2024 Earnings Call. [Operator Instructions]

It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at Sands. Sir, the floor is yours.

Thank you, Paul. Joining the call today are Rob Goldstein, our Chairman and CEO; Patrick Dumont, our President and COO; Dr. Wilfred Wong, Executive Vice Chairman of Sands China; and Grant Chum, CEO and President of Sands China and EVP of Asia Operations.

Today's conference call will contain forward-looking statements. We will be making these statements under the safe harbor provision of federal securities laws. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measures are included in our press release. We have posted an earnings presentation on our website. We will refer to that presentation during the call. Finally, for the Q&A session, we ask those interested to please pose 1 question, 1 follow-up so we might allow everyone with interest the opportunity to participate. This presentation is being recorded.

I'll now turn the call over to Rob.

Thanks, Dan, and thanks for joining us today. The Macao market continues to grow as it has in each of the past 5 quarters. Since the reopening in early 2023, the annual run rate of the market has grown every quarter from $17 billion in Q1 of last year, to $22 billion, then $24 billion and $26 billion, now reaching $28 billion in annualized gaming revenue.

We remain confident, [ supremely ] confident in the future growth of the Macao market. I have said in the past, Macao market will grow to $30 billion, then $35 billion, then $40 million and beyond in the years ahead. [indiscernible].

We remain equally confident in our business strategy to invest in both the quality and the scale of our market-leading assets in Macao. Our capital investment programs ensure that we will continue to be the market leader in years ahead. Our investments position us to grow faster than the market over the long term to grow our share of EBITDA in the market and to generate industry-leading returns on invested capital.

Turning to our current financial results in Macao, we delivered a solid result for the quarter despite the disruption of our ongoing capital investment programs.

SCL continues to lead the market in gaming and non-gaming revenue and most importantly, in the market share of EBITDA. Because of our market-leading investments, we will capture high-value, high-margin tourism over the long run. We have a unique competitive position in terms of scale, quality and diversity of product offerings. Upon completion of the second phase of the Londoner and our Cotai Arena redevelopment program, our product advance will be more substantial than ever.

Turning to Singapore. We delivered a record quarter. We believe it's a record for the industry. The team has done an extraordinary job, and this is what happens when a superior product is located in the proper market. Our financial results in Singapore reflect the impact of our capital investment programs and our service capabilities. The appeal of Singapore as a tourism destination in the robust entertainment and lifestyle event calendar also contribute to the growth at [indiscernible]. As we complete the balance of our investment programs, there will be a lot more runway for growth in the future.

Thanks for joining us today. I'll turn it over to Patrick for more detail.

Thanks, Rob. Macao EBITDA was $610 million. If we had held as expected in our rolling program, our EBITDA would have been higher by $31 million. When adjusted for lower-than-expected hold in the rolling segment, our EBITDA margin would have been 34.4% or up 380 basis points compared to the first quarter of 2023. This highlights our focus on cost discipline and profitability. The ongoing capital investment programs at the Londoner and at the Cotai Arena had an impact on our results this quarter. The Cotai Arena was closed for renovation in January of this year. After the significant reinvestment and renovation, the arena is expected to reopen in November.

In terms of the second phase of the Londoner, we have now commenced the room renovation on the [indiscernible]. We plan the completion of the first tower by year-end and the second tower by Golden Week in May of 2025. The renovation of the casino on the Sheraton side of the Londoner will commence in May of this year with the reopening schedule for December of 2024.

While there will be ongoing disruption from these capital projects, as these products come online between the end of '24 and the first half of '25, our competitive position will be stronger than ever. The scale, quality and diversity of product will be better than we have ever offered before. They will be unmatched in the market. Turning to Singapore. MBS' EBITDA came in at $597 million, an all-time record for the property and for the industry. Our strong results reflect the impact of high-quality investment and market-leading products.

Had we held as expected in our Rolling Play segment, EBITDA would have been $77 million lower. Had we held as expected in the Rolling Play segment, MBS EBITDA margin would have been 49.1% or 180 basis points higher than in Q1 of 2023.

We have now completed both Tower 1 and Tower 2 of the Marina Bay Sands hotel refurbishment. While we have substantially completed the original $1 billion CapEx program, we are still in initial stages of realizing the benefits of these new products.

We have now commenced the next phase of our capital investment program at Marina Bay Sands, the $750 million renovation that includes Tower 3. Tower 3 is scheduled to be completed by the second quarter of next year. This will support further growth in 2025 and beyond. Turning to our program to return capital to shareholders. We repurchased $450 million of LVS stock during the quarter. We also paid our recurring quarterly dividend. In addition, LVS has completed the previously announced purchase of $250 million of SCL stock, which increases the parent company's ownership interest in SCL to approximately 71%. We continue to see value in both repurchasing LVS stock and increasing our ownership interest in SCL. We look forward to continuing to utilize the company's capital return program to increase return to shareholders in the future.

Thanks again for joining the call today. Now let's take some questions.

[Operator Instructions] And the first question today is coming from Stephen Grambling from Morgan Stanley.

You talked to the much higher for the market in Macao. But this quarter looks like the margin flow through and EBITDA actually went in the other direction. How should we be thinking about flow-through in Macao and operating expenses going forward in that market?

Yes. I just want to say one thing before we turn it over to Grant. I think some of this has to do with Macao with some of the disruption that we experienced during the quarter. So when we take the arena in January, we lose the benefit of our entertainment programs during a peak period. That did have an impact.

So when you look at our operation and compare to Q1 of last year, Q1 of last year where we're coming out of the pandemic, and it really took a while for visitation to get started again. This year, unfortunately, we did this to ourselves, we started renovating our arena. It's a very powerful asset. It has lots of entertainment, it went through the Chinese New Year period. And unfortunately, with some hotel rooms out and the arena out, we felt on the revenue side. So as we've said before, as the market continues to grow, we will do well. We have the best product. We've invested the most in non-gaming assets. We have the most amenities to offer to our patrons and they're very high quality [indiscernible] diversity of food and beverage, diversity in entertainment, which is very important. Unfortunately, we didn't have that tool this quarter in full swing. We only had the Londoner arena, which is good, but it can't compete with the Cotai Arena.

So I think for us, as the revenues continue to grow as you've seen in prior quarters, our margins will fall in line. And you see that in the Venetian as the revenues are where they need to be, the margins fall in line as well. So that's sort of the headline from the margin performance this quarter.

I do want to turn it over to Grant to see if he has any additional color.

Yes. Thanks, Patrick. Yes, I think the most important point is still the GGR is growing in the market. And I think if you look at our profitability, at this level of GGR I think we should be looking at low to mid-30s in operating margin -- EBITDA margin. And we're right at the high end of the range there.

Obviously, each quarter, the seasonality relating to different parts of the business, the revenue mix. So first quarter, I think, 34.4% in terms of the underlying margin is a really good number. I think 2024 is going to be one that is impacted by our capital works and the renovations that Patrick referenced also in his opening remarks. We have obviously started the hotel renovation in the first half of Sheraton. We're probably down about 500 -- 600 rooms in the first quarter on average in that hotel, but the number of keys that will be out of inventory will increase further in the second and third quarters.

And of course, Cotai Arena, as Patrick referenced, -- that's always been a core part of our content programming, content offering. And we were able to offer plenty of shows at the Londoner arena, but if you just compare just the share number shows that we had in the first quarter, we had 12 shows compared with the fourth quarter last year, we had 31 shows is a big difference. And obviously, in terms of capacity, there's a big difference. So the attendance per show, obviously, was much higher in the fourth quarter as well. So hopefully, that gives you some color in terms of the disruption that had on our business with the arena being closed for renovation. And as I said, the hotel renovation is ongoing, and you're going to see more keys out of inventory in the next couple of quarters.

Got it. And maybe one clarification. I guess, in the quarter, industry-wide, I'm not sure maybe I missed this in the presentation or I haven't seen the slides. But is -- do VIP actually grow faster than mass overall in the first quarter for the industry? And how are you thinking about base mass versus premium mass from here. I know you kind of touched on this a little bit, but would be curious about the industry-wide kind of thought process?

Rob, should I take that?

Yes, please [indiscernible].

Yes, you're right. I think if you look at our slides, the mass revenues sequentially around 4% -- and the overall GGR for the quarter grew at 6% sequentially. So yes, the VIP revenues in the market as a whole grew faster than the mass revenues Q-on-Q.

I think in terms of the premium mass versus base mass, again, I think you can see it from our slides, premium mass grew slightly faster for us in this quarter. But the difference is not material when you account for things that whole percentage and [indiscernible] so forth. So I wouldn't say there's a material divergence in the growth rates between premium mass and base mass, at least for our business for the quarter.

I think it's important to note that -- it's important to note that the visitation still is [indiscernible] we like it to be. Obviously, there's still millions of people have not come versus the 2019 visitation numbers. We believe long-term visitation GGRs [ did ] grow, whether it be base or premium will get more than our fair share. And I think we've seen, obviously, I'll say the obvious, the promotional situation on the market has changed, [indiscernible] doing things. And once everyone starts playing that game, I believe that will resolve itself. We believe that [ assets ] will prevail. We believe Londoner will be an extraordinary asset, much like is happening in Singapore. I think our results in Singapore reflect a fully developed program and the execution is Singapore, it shows what can be done we have the right kind of assets. [indiscernible] even done this in Singapore and the numbers are extraordinary. The same will happen in our business in Macao in time as GGRs accelerate and they will, visitations accelerate and it will. We'll continue to be a margin-focused, EBITDA focused and get our fair share and assets will prevail over promotions from our perspective.

The next question is coming from Carlo Santarelli from Deutsche Bank.

Just following up on the first quarter margin. If I look at the fourth quarter, for example, and then kind of extract the big element of turnover rent that comes in and obviously very high flow-through. It looks like margins are probably fairly similar. So it doesn't seem like a lot changed on that front. Is that accurate? Or am I missing something else seasonally there?

You -- primarily you're correct. Well, that's the first thing to me -- interpret -- as you know, it occurs for the fourth quarter, and it's material. Grant, do you want to add to that?

Yes, it's accurate. You're right.

Great. And if I could, just one follow-up on capital allocation. Obviously, over $400 million of buyback in this quarter. As you guys think about the capital needs here going forward, the stuff that you've announced, the stuff that obviously is being contemplated and looking at budgets around and whatnot. Do you feel like this pace is adequate and where you want to be as you look throughout the balance of this year?

Yes. So I think, first off, I just want to say we see value in both equities. And I think we have a very long-term bullish view given the market opportunity for growth, our market-leading investments in our assets and just how we feel about the opportunities in both markets that we have.

So as we said before, we're going to be overweight, share repurchases. As we think about future capital return, we are going to be more heavily weighted towards share repurchase and dividends. We think the repurchases are going to be more accretive than dividends over time, and we want to shrink that denominator.

And so I think we're going to look to make purchases that are consistent with our share authorization by the Board and with prior practice. And I think we'll look to be a little bit opportunistic. We may vary levels. But I think we're going to continue to be aggressive in the market. I mean I think you see it with the 450 million LVS shares, the SCL share repurchases. We think this represents an interesting opportunity just a moment in time. And so we're going to try to take advantage of it. We happen to have a very strong balance sheet. We have a lot of liquidity and we tend to put it to use.

So I think we're pretty happy with where the program has taken us so far, and we'll continue to use it. And we'll see how it goes across the year. But we're going to look to repurchase more shares.

Just one aside. Guys, I'm not sure the slides are actually posted yet. It certainly could be user error, but it looks like that they haven't posted yet for the first quarter.

Yes. We're working on it.

The next question is coming from Joe Greff from JPMorgan.

I was hoping one of you could maybe help quantify the revenue and EBITDA impact from the renovations going on at Londoner and the Cotai Arena? And then do you see that renovation disruption impact accelerating? And when do you start to see that decelerate? I know you kind of talked about the 2 Towers when they open up. But to kind of help understand that renovation impact in terms of how you're seeing it, I think, would be helpful for everybody.

Yes. I don't know that we can necessarily quantify accurately what the impact was because we can't know what we displaced. You heard Grant describes a number of missing shows and the number of people typically will go to the shows in the Cotai Arena. You get a sense of the type of high-quality patron that we bring in, when we have live entertainment. And it is impactful. I think Q1 typically is a very powerful quarter for us as is Q4, and you got to see the difference that the impact had for entertainment.

We made a decision that if we take the arena offline and do it and make it one of the highest quality arenas in Asia, then in the long run, we will benefit from the entertainment. And so we decided to do it as quickly as possible. And so that meant taking it offline in January this year and trying to get it done by October, November. And so once we do that, we're going to have an incredibly high-quality arena with amenities that we've never had before. So it will make us more competitive in the market and actually drive additional high-quality tourism from both traditional markets and other markets. It will also help drive high-quality tourism from our core customer base and allow for more repeat visits from our high-value customers. We're very excited about the opportunities this new entertainment asset will present to us. Unfortunately, we're going to take some pain while it's offline. And that really started in January of this year. I can't quantify the exact amount, but you hear the count from Grant and you realize that it is not immaterial.

And then the other side is we're taking the Sheraton out. And when we're done, it's going to be one of our best properties in Macao. The design will be a high level. The fundamentals of the Sheraton tower are quite good, both towers are quite good. They're actually a little bit better than the existing Londoner side, believe it or not. The layout of the casino will be very good. The additional food and beverage amenities that we could add. And I think the connectivity will be a very good driver of future results for that property. That's the reason why we're pretty confident that the results when it's done will be that or exceed that of the Venetian.

So I think for us, we're doing it now. It is going to be disruptive. The worst is going to be across the summer when we have the lowest key count that we've had since we really opened what was then in Sands Cotai Central because we're taking out -- we're going to take the Sheraton out. And so it's going to be more of this disruption across the summer, but then hopefully as keys come back online across the phasing. And as we get the arena back, let's call it, October, November, we'll have a much more powerful set of assets to drive tourism and create cash flow. So there will be disruption. I can't quantify it for you, but it's not going to be immaterial. Grant, I don't know if you have anything you'd like to add to that?

I think you covered it perfectly. I think the only thing I'd supplement is Londoner Phase 1 really gave us that elevation in the share quality of product as well as a very successful rebranding and repositioning of the entire property. But what Phase 2 gives us is that scale of high-quality product and the diversity of it and that's when I think the earnings power of this resort will be fundamentally transformed.

I believe is -- we think once Londoner is done, Joe, we have the 1, 2 -- #1 and 2 assets in the [indiscernible] by far. I'm not sure [indiscernible] but that couple of arena gives us unique positioning for 25 years ahead to dominate the market in terms of the largest resorts and those [indiscernible] resorts both 1 and 2.

Great. You may have answered my follow-up question indirectly on your prior margin commentary. And maybe this is something Grant could talk about. But can you talk about the level of the market's premium mass reinvestment levels? Has that been pretty consistent in the first quarter and what you're seeing year-to-date versus how the end of the year finished? Or is there any kind of trend change on that front? That's all for me. .

Thanks, Joe. For us, yes, our profitability, the structure, of a margin in every segment, actually, quarter-on-quarter, very consistent. No significant changes there. And that obviously fed through to the result that the earlier question described, which is that we had a very consistent margin quarter-on-quarter despite obviously some inflation in the payroll costs due to holiday pay and salary increases.

My question, maybe I didn't explain it that clearly. The level of premium mass reinvestment from your competitors? How would you characterize that year-to-date versus the end of last year?

Sorry, you're talking about the overall market now.

Yes.

[indiscernible] customers.

I think the promotion activities levels are relatively intense right now. Is it higher than Q4? I don't think so. But it comes and goes and goes up -- has ups and downs. But I think over time, there really isn't any necessity in this market to be too aggressive on promotions. The demand and supply, supply constrained market, the quality of supply is exceptional. We are a big contributor to that. And as GGR rises, that becomes even less of an issue over time. And for us, it doesn't matter. We stick to our strategy, which is, as Rob referenced, product-based is driven off our asset base, the upgrades we're making, the quality of the assets and the services that go with that in addition to the programming, the content programming -- and like we talked about, we have very big beliefs in that entertainment being core offering. That's why we're investing this $200 million in the upgrade of Cotai Arena.

So yes, when it's all said and done, we believe that GGR continues to rise. Our asset base is going to be better than before and better than ever. And that's the way we're going to compete. And that's the only way we think we can compete on a sustainable and profitable basis is really based on the quality execution of our product and the service that go with that.

Joe, we're obviously keen on where most of the environment [indiscernible] referencing, we're certainly aware of what's happening in Macao promotions. We remain steadfast, I believe that our product, once completed, will be superior. The scale is greater. The market will grow and that's how we'll capture our fair share and remain focused on margins and keeping our EBITDA on one of the go to. We're not going to play the game of chasing $10 more for promotions. We don't think it's our business and who we are.

We're an asset-driven company with quality assets and scale. And again, we've proven that time and time again. And once Londoner is done, arena will be just want to be in [indiscernible] market leading, margin leading assets in Macao.

The next question is coming from Shaun Kelley from Bank of America.

Sorry if I'm beating the dead horse here, but I did want to just kind of stick with the margin commentary, but I'll give it a little bit of a longer-term view. My question is really just trying to get a sense of what would it take to get back to, let's call it, the mid- to high -- mid- to high 30s on margins here. Is what we're seeing today and now increasingly expecting for the balance of '24 more about customer mix? Or is it about sort of onetime call-outs around renovations and maybe some lost very high-margin non-gaming revenue?

So it's a very interesting question, and it's the right question to ask. So as these properties reach run rate, so as they reach their full potential, the margin should be upper 30s. [indiscernible]

Sorry, I think someone at Sand China put us on hold, please excuse us.

So we think about margins in the upper 30s. If you look at the performance of the Venetian, that's a good benchmark, right? It was impacted a little bit this quarter again, also by the entertainment not being there in the Cotai Arena, but -- and mix-wise, to be fair, pre-pandemic, it had more mass play and that's higher margin. And so as tourism returns, so as visitation increases, which has more mass play, and we have plenty of capacity for it. So if you look at our asset base, the scale of the assets, the food and beverage we have, the amenities we have, we can accommodate a lot of mass play. And we have the positions to do it.

And so for us, as visitation shows up and continues to -- on an upward trend, our assets are ready to take that visitation, revenue will grow, margins will grow and they will normalize back towards a more traditional mix.

That being said, the Londoner has the opportunity to also bring a lot of high-value tourism. So we're carrying the expense base without the revenue, right? So we have the team members. We have the -- we have all the things going on that you have that we're fully operating, but it's not fully operating yet. So the margins naturally are not going to look right.

So as the revenue comes in and as a visitation comes in, as the patrons come in, as the hotel is completed and as the rest of the amenities are done, that will look more normal. The only problem is it's in '25. So we have a little bit of time that we have to get through with this investment.

Are there some high-value things that are very high margin that we're missing because of entertainment or ease out, yes, that's true. But when you look at the asset base that we have, the experience that we have, the team that we have there, their ability to execute and how they've executed so far and the asset base that we're creating with these investments, we're going to be in a great position. And the margins we believe we'll get there. But we need visitation to continue. That will be helpful for the Venetian. It will be helpful for the mass to recover, we need to have all of our assets in line, so that's the Cotai Arena to be finished and the Sheraton to become fully [ Londonerized ] that's a word and get to our full key count. And then you'll see the true power of these assets and the margins will get there.

We have a lifestyle program that we run within high-quality amenities. If you haven't been to Macao, you haven't seen what we've done, I would encourage you to do it. It's not simply one thing. It's not simply hospitality. It's not simply gaming. It's not simply retail. It's an ecosystem that allows our customers to travel around all of our assets and have an experience they can't get any place else. And that's really what we have on offer and it's unique. And it's been invested in it and it will continue to get better.

So for us, as Rob said, we're not chasing promotional activity, we're chasing asset development, and that will drive our success.

Thanks, Patrick, and I appreciate the insight. As a quick follow-up for whoever is appropriate, just looking at Singapore, I mean, obviously, a breakout quarter with a run rate above $500 million. There were some onetime things in that market, Taylor Swift, I believe, being one and then [indiscernible] I think you called out event activity broadly speaking. But also, there was a change in, I think, Chinese visa policies that was probably potentially fruitful for the market. So just the big question here is what's the right run rate? And do you think, again, maybe event activity agnostic, we could sustain above the $500 million mark? And are we kind of off to the races here and notwithstanding the fact that even that number sounds like it included a little bit of Tower 3 disruption?

I think the first thing you should note is that the building is still under renovation. I think we believe $500 million a quarter annualized is very doable and more. And the most important thing you should note is 2 things. The growth in Singapore as a desirable destination [indiscernible], it's not just Taylor Swift, it's [indiscernible], the Hamilton Show. It's endless events, F1. It's a juggernaut. And it really it's become accelerated. This market has become very special in a very short order. And I think that's attributed to the government there and the program is happening, entertainment, et cetera. So Singapore is highly desirable. And yes, that's very sustainable. And as good as Taylor Swift was -- there's a lot more in the pipeline that will make that continue.

Secondly, our building has less than 20 top-tier suites. Upon completion, we'll have an excess of 700. The sweet spot of the market is in premium mass and super-premium mass rolling -- non-rolling. We can't -- I think we almost approaching $1 billion a slot when we may be out of bullets there as we get more capacity. But this is a very special market. Our building is a special building. I don't know if they're [indiscernible] a doubt [ 520, 540, 600 ]. Look, this is going to keep growing. This is a great place to be. We're lucky to be there. We're lucky that the government is very supportive and excellent team in place. But most importantly, the assets it didn't happen by luck. We are doing -- spend a lot of money to make sure those assets are superb and the customers come back time and time again.

The real question is what happens when the building has 4 [indiscernible]. That's going to happen later this year and early 2025. When those fleets are rolled out and they're great suites, they're phenomenal suites. And that building to [indiscernible], it can, and it would. And I think, again, what we're trying to tell you about Macao is -- we're frustrated by Macao. A couple of the operating environment is more difficult. We're under construction, a self-inflicted wound.

But once we emulate in Macao, we've done in Singapore, the same thing will prevail. Londoner and Venetian neck and neck to drive that market. And again, I think the government recently talked about a lot of things they're trying to increase tourism and [indiscernible] a real nice supports us to [indiscernible], and we're grateful to the government for recognizing a [indiscernible] about increased tourism, increase entertainment.

We're locking 2 very, very special places. And yes, Singapore can do 500, it can do 550. It's not about Taylor Swift. It's about a great market, a great asset and a team running it.

The next question is coming from Robin Farley from UBS.

I just wanted to circle back. You were commenting earlier in the slides were not up yet. So I haven't been able to go through them, but it sounded like you were saying that your sequential growth in mass and premium were both at a similar rate sequentially. I'm just wondering if there's anything to add any color around that since the market has generally speaking, been seeing better premium mass recovery. Just any color you'd add there?

Grant, I think you should take that. Grant?

Yes, Robin. I don't know if the deck is up.

It's up now, Grant.

It's up now.

It's up, guys.

Yes. So if you look at premium mass win we're up 2% quarter-on-quarter and base mass were down 3% quarter-on-quarter. But I think my point earlier, the difference is here and there. It could be related to any number of, I think, non-substantive factors. So I wouldn't describe this as a divergence in trend. But this quarter, we just did slightly better in premium mass versus base mass.

Visitations [indiscernible] see the wider market growing, our property visitations actually grew sequentially as well. So nothing significant to remark on in terms of the segment divergence.

Okay. Great. That's helpful. And then just any thoughts around New York timing and your expectations there sort of anything new to add there?

Yes, we're very disappointed by New York. I mean we've been working there for a long time, and we thought it was going to happen in '24 that we'll see. Now they're saying '25 or '26, but I don't think we have any real clarity, and to be honest with you, it's confusing and disappointing because we've got a lot of work in New York and a lot of time into it. So I have no guidance, but I don't really know what to tell you with [indiscernible] insight. Just don't know about New York. And it's just -- we wish the -- figure it out and let us know. We just don't know. So we'll remain hopeful that things turn around there.

The next question is coming from Vitaly Umansky from Seaports.

I think maybe switching over to Singapore. If we think about kind of the quantifying the effect of what the renovations at that property have already done. And Rob, you talked about potentially this property getting up to about $2.4 billion, $2.5 billion in theory, once the renovations are done in the first phase of the property, where do we see kind of constraints being built in? Because if you look at kind of occupancy rates in the hotel rooms today and we look at ADRs, they continue to expand. At some point, we're going to reach a limit as to how many rooms can be filled and then we're talking about trying to fill rooms with higher value customers. So when we think about -- before we get to the expansion, where is that constraint and how quickly do you think we can get there?

It's a good question. I think, unfortunately, it's probably an answer that we've seen that -- we never dreamed slots of the $1 billion property that they're approaching that. We never dreamed that in this environment so quickly after COVID, we reached the kind of epic levels we're seeing the growth in the premium masses and powerful [indiscernible] on the call that as we tell us there's still a drop in the bucket. There's much more to go. And so I think the growth will come out of the super premium mass both rolling, non-rolling.

I don't think ADRs all that impactful because hopefully, someday, you won't sell many rooms. This will be a product that is mostly gaming customers. The rooms, I hope -- the suites we're building are just exemplary. And I think that this product is only going to have more good days ahead. [indiscernible] as a goal for our company as the decade progresses when [ we we're ] very tenable to reach $600 million almost this quarter and in actual -- is very stimulated. It's very exciting.

But the caps on the capacity. It's already a problem for us in terms of slot machines. We have room problem. We wish you had more exposure to Singapore as for building more product. This is a very, very special place that people gravitate to. And as Singapore does its job as a lifestyle, entertainment, exciting place to visit, demands on grow. So the only concern we have in Singapore is how quickly we get there. Once these fleets are unleashed in the market and you see it I think we'll have some very bright days ahead. But obviously, it's capacity constraint. [indiscernible] so many rooms, only have so many slot machines. And I don't want to gain there. I just think we get there, we'll be disciplined. We can't have more exposure. That's why we're building things too.

Vitaly, one thing and welcome back to the call. I think the key thing for us is we have a very strong view of the future success in Singapore, so strong that we're investing a couple of billion dollars in this property. And we're looking [indiscernible] as quickly as we can.

We think that this market is benefiting from a lot of the factors that make Singapore, Singapore, great infrastructure, strong, stable government, great investment, great policy. And to be fair, you're seeing the result of it. And it's only our business as many businesses in Singapore. And so I think that's a very helpful indicator. But more importantly, the more other investment that goes into Singapore will help drive further visitation.

So the infrastructure is already there. The real question is how many more hotels we'll go in. We feel very strongly that the more hotel rooms are added will help add to the critical mass of tourism that Singapore already has today.

If you look at the wealth creation going around in Southeast Asia, it's pretty substantial. The last 4 years, even during the pandemic have been pretty meaningful. And there are a lot of customers that are new to Singapore and new to Marina Bay Sands, and they're affluent and very successful, and they want to consume and they want to take advantage of Singapore -- the thing Singapore has on offer.

And so we feel very strongly about the future visitation in Singapore. It's an interesting question, where is the peak of demand. We don't really see it right now. What we see is a supply constraint, right? When you look at who's trying to come to Singapore and the activities that are going on, we feel very strongly about future investment. We think it's there.

Maybe just a follow-up, switching gears to Macao. And Grant, you talked a little bit about kind of the base mass and the growth you've seen in the quarter is very similar to premium. But I think overall, if you kind of think about Sands in Macao, obviously, you're very strong in the direct VIP business, you're very strong in the premium business. But where you have a massive competitive advantage, in my view, is just your scale, which then talks about base mass and the higher margin available from base mass. If you look at the recovery in overall base mass, it has not been as strong as the more premium end of the market. Can you maybe give an explanation as to why you think that is, if you agree with that statement? And then how does the market maybe change or need to change over the next couple of quarters in order to get some of that base mass back, which I think would benefit Sands relative to others in a much stronger way?

Grant, you want to go ahead?

Yes, sure, Patrick. Yes, I'll take it. I think first point is you -- I agree, we have a huge advantage with our scale. But I think the scale advantage speaks to all the segments. I think if you look at historically how the company has developed, absolutely, the base mass with our scale, that has been a core advantage, but in the sense of how we describe all of these capital investments that we're making, especially in the Londoner scale we have on the quality of the premium product is really unprecedented. So I think our scale advantage will apply to all segments, in my view. Specifically on base mass, if you look at our actual numbers, the way we break it out between premium mass and base mass through the recovery since the reopening after the COVID restrictions. Actually, they're not too dissimilar now in terms of rate of recovery from a volume and revenue perspective, but it is true that in terms of customer count, patron house, we're still missing more from the base mass. So really 2 things to tell you. One is the quality of patronage has risen significantly because the revenue per patron is higher than before COVID. And secondly, there is still room for that base mass revenue and visitation to further recover. And I think -- I think there are many reasons, and it's hard to specifically attribute to 1 or 2 factors. But I think over time, especially as the economy improves, and also, I think people -- the distribution of content on terms of the lifestyle, the destination attractions all of the events, all of the non-gaming products and assets and the events that are actually distributed out there, I think you'll see a progressive improvement in that base mass segment -- and obviously, we will be obviously best placed to capture that growth when that comes.

The next question is coming from Chad Beynon from Macquarie.

And thanks for posting the slides. On Slide 44, the flags of interest remain the same as what we've seen in the past couple of decks, Macao, Singapore, New York and you've talked through all these. There's been some recent discussions around Thailand and some even think that an integrated resort could open in Thailand, maybe even ahead of Japan. So wondering if you could opine on your views, I know early, but could this market be big enough, could a resort generate the cash flow meaningful enough for you guys to look at the market? Any views there?

Yes. We absolutely have interest in Thailand. To your point, it could happen quicker than Japan. I think it's receivable. It's early days though, we still have work to do in the numbers and understanding it. It's a very, very exciting market in a lot of levels, and just the sheer size of population, the accessibility and the worriness of people travel to Thailand is obviously, I think, [ #1 ] resort destination city in Asia. So we're very interested. But again, -- it's early days. I agree with your comments it could be faster than Japan, it's impossible.

Certainly, there's usually a lot of pent-up desire from both business and government to work towards this. So we're interested. We're listening. We're doing the work to find out what makes sense for us there, and we'll keep you posted.

And then on the P&L statement, investors are increasingly looking at EPS, just given what you're generating and kind of where the stock is trading. I believe there was a tax benefit in Q1. Could you talk to that potential benefit? And then any additional color in terms of will the tax rate start to look similar to what we saw in prior years given your mix of Singapore and Macao?

I'll answer this in reverse. Yes, it will look more normal. It was a onetime item. It was related to reverse for Macao, $57 million for the tax rate will look more normal going forward.

The next question is coming from David Katz from Jefferies.

When we look at the Macao strategy in view of the renovations that are going on this year, how we think about reinvestment credit referral programs that people are talking about, what's your philosophy on those this year? And do you sort of dial them back until next year? Or how should we think about it?

I'm not sure I understand the question, [indiscernible] thought back our investment programs because we're under renovation? Is that your question?

That's right. Level of conservatism versus aggressiveness and sort of how you're [indiscernible]

We're not going to do -- we were not dial back. We just may not be as aggressive as some of -- you know the competitive pressures on the promotional front right now, has been talked about quite a bit. We're not believers in that approach, we're believers in -- we make our building the best-in-class. We have the scale, we have the lifestyle. We just believe in long term GGRs will grow, we'll participate in that. We'll be very, very adherent to good margins, and that's an important part of our business.

But no, we won't dial back our current reinvestment strategy. We won't necessarily dial it up either to compete in the market right now. So this will be a year of reinvestment as Patrick and Grant alluded to both the arena and the Londoner, but we're not going to pull back, if anything, will stay consistent.

Perfect. And I wanted to just ask about one of the slides where you show your maturities forthcoming '25, '26. Any sort of updated thoughts about how or when you're approaching this, and that's a [indiscernible]?

So we're going to look to deal with -- so if you go to Page 32, I think you're referring to -- and if you look at the LVS maturities, we should deal with those in short order. That's kind of our intent. And then in August '25. We have the $1.8 billion that you see at the SCL level, we'll address those in due time. We mentioned that we wanted to bring down our total debt level at SCL given that we borrowed during the pandemic. So you'll see us reduce the quantum of that there.

And then as part of the MBS credit facility, we'll address that of course, along with the IR2 start. So that's kind of how we'll deal with our capital structure. You'll see us term that out as we've done previously.

Next question will be from Daniel Politzer from Wells Fargo.

First one on Macao. This is -- I think the second quarter in a row, your mass shares declined a little bit. Obviously, there was a lot of different factors this quarter. But if you could kind of maybe give us a little bit more color. Is this really just disruption, heightened promotional levels? Or is there a difference in the customer that you're seeing coming into the market or maybe something else altogether that's kind of driving the market share shifts that we're seeing on the mass side?

Yes. I do want to point out before Grant answers this question that when we have less revenue because of disruption, we'll have less market share. So I do want to point out that with the arena being out with less revenue and slightly lower margin because of the impact having some hotel rooms out that our market share will be impacted because it's the same thing. So with that, I'll just turn it over to Grant.

Yes. I think it's hard to say which factors, I mean, you have a promotion environment out there that people have been talking about and that Rob referenced. You have obviously the disruptions that we've encountered because of our own projects. But on the other hand, it's also just looking at a very short time period here and there. So yes, our mass revenues were flat for the quarter, and the market grew 3%, 4%. But there's also a lot of factors that could have swung our way during the quarter, and we would have been much closer to the market growth rate. So I wouldn't draw too big a conclusion from that. If you look at historically how we've sustained our share of EBITDA pre-pandemic. The market shares fluctuate, but we always end up back in that low to mid-30s range in terms of EBITDA share.

And to be fair, let's look at a longer time frame, let's look at the scorecard for 2023. We achieved 35% EBITDA share, against a GGR share of 26%. We were leaders in GGR yet, but we were a much bigger margin, the leader in EBITDA share as well as non-gaming revenues where we had 41% of the share of the market. So in aggregate, for the year, if you look at revenue, gaming, non-gaming EBITDA, I think our performance has been solid. But quarter-to-quarter, obviously, there will be fluctuations depending on those factors that we just discussed.

Got it. And then just for the follow-up. I think you guys have gone up to 71% share of 1928.HK, I mean, can you talk about maybe where that goes over time? Is there an upper limit there? And maybe some of the puts and takes to increasing that ownership stake?

So I think there's an upper limit of 75% by exchange rules, although they do give waivers based on the size of the equity depending on the name. For us, I think, as I said before, SCL is investing a lot for the future, has a bright future ahead of it, and we'd like to own more of it. So you'll see us be aggressive. And I think where we stand, we see value in the stock today meaningfully. So that sort of is a repeat of what we said before, but I think you understand our conviction.

The next question is coming from Colin Mansfield from CBRE Institutional Research.

Congratulations on getting the last rating up to investment grade during the quarter. Maybe following on to David's question about the refinancing, maybe just an updated thoughts on how you're thinking about the subordinated term loan down at Sands China. And I know there's a lot of liquidity up at the parent, but how are you guys thinking about timing of potentially taking that out of the capital structure down there? And then I have one follow-up on ratings.

Sure. I think you'll see us deal with LVS maturities and the SCL 25s before you see activity around the LVS [ Parenco ] term loan down SCL. One thing I'd like to point out is that it benefits SCL. It's a very favorable loan and allows them to have high-quality financing deeply subordinated at a favorable rate. So from that standpoint, the maturity is '28, and we'll see how it goes with SCL and what their needs are and kind of go from there. But I think we have ample liquidity up at [ Parenco ], we believe, to do what we need.

Great. And then just one follow-up on ratings. I mean, obviously, the company fully back on investment grade now. And I think with the development pipeline that you guys do have ahead of you, I'd just be curious how you're thinking about any sort of change the financial policy as it relates to target ratings. I think this is one of the companies that could eventually get to mid-BBB if you guys so desired. So I guess, how do you guys balance any sort of desire to have those level of ratings as it relates to cost of capital relative to, obviously, the development pipeline you have ahead of yourselves?

Thanks. So I think as we look back pre-pandemic, we spent 5 years working towards investment grade. We think it's very important for us to actually be investment grade. It gives us access to the largest, most liquid debt market in the world. It gives us a very efficient cost of capital, which in the long run provides us flexibility, but really drives returns on new projects. We have this investment rate balance sheet. It helps us in new jurisdictions. You heard Rob talk about several of them. We have the financial capability to execute on these projects.

Our financial policy has always been that we like gross leverage to be between 2 and 3x. We've said this for many years, nothing's really changed. It's our consistent view. I think over time, we're going to deleverage because of EBITDA expansion. If you look at having MBS, it occurred. And our belief is that it will continue to occur at Sands China as well. So I think for us, the investment grade is very important. That gross leverage parameter of 2 to 3x is consistent with prior statement, prior practice. And I actually think we're very favorably levered on a net basis and on a gross basis. And we're looking forward to doing some new development. I think that will fit within our leverage profile based on sort of the prior discussions that we've had about progression of funding and EBITDA development.

So we're very focused on it. We think we can handle our new developments, our investment in our existing assets and have a very healthy return on capital program, while balancing all these things and having an investment-grade balance sheet. That's our goal, and that's our view.

And this does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation.