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    Las Vegas Sands Corp (LVS)

    Q4 2023 Earnings Summary

    Reported on Jan 10, 2025 (After Market Close)
    Pre-Earnings Price$49.64Last close (Jan 24, 2024)
    Post-Earnings Price$51.55Open (Jan 25, 2024)
    Price Change
    $1.91(+3.85%)

    What went well

    • Strong EBITDA growth in key markets with continued upward trajectory: Macao delivered $654 million of EBITDA for the quarter, and the company looks forward to continued growth in both gaming and non-gaming revenue. Marina Bay Sands delivered $544 million in adjusted property EBITDA, the largest quarterly EBITDA in its history, despite ongoing renovations.
    • Aggressive shareholder returns through share repurchases and dividends: The company repurchased $1 billion of shares in the past quarter and plans to continue returning capital to shareholders through share repurchases and dividends, leveraging its strong free cash flow generation.
    • Strategic growth opportunities in new markets: Las Vegas Sands is actively pursuing development of integrated resorts in Texas, specifically in Dallas, viewing it as an unbelievable market opportunity. Additionally, the company is bidding for a license in New York, with strong local support for a project estimated at $6 billion, representing a massive opportunity for future growth.

    What went wrong

    • Uncertainty regarding expansion into New York: The company expressed uncertainty about securing a casino license in New York, stating they have "no great insight if that will happen" and cannot "give any guidance beyond that". This uncertainty could impact future growth prospects in the U.S. market.
    • Potential delays in Singapore expansion plans: The company's planned expansion in Singapore faces ongoing negotiations and approvals, acknowledging there are "a lot of moving parts here" and they are "hoping in the next quarter or two that we'll get everything done". Delays could impact anticipated revenue growth from this project.
    • Slower recovery in Macao's base mass market: While the premium mass segment grew by 13% sequentially, the base mass segment only increased by 8%, indicating an uneven recovery and potential challenges in fully restoring the mass market segment.

    Q&A Summary

    1. Singapore Growth and Investments
      Q: What's the outlook for Singapore's growth and investments?
      A: Management is very bullish on Singapore, seeing it as a $2 billion EBITDA asset today that can grow 10–20% over the next 3–4 years. They are completing a $750 million renovation in Tower 3 by Chinese New Year next year. They are in close discussions with the government on developing a new building, which could potentially make Singapore a $3 billion EBITDA market by the end of the decade.

    2. Macao Mass Market Recovery
      Q: How is the mass market recovery progressing in Macao?
      A: The fourth quarter saw 13% sequential growth in premium mass and 8% growth in base mass. Visitation recovered to almost 90% of 2019 levels. Transportation infrastructure is improving, with ferry passengers recovering to 93% of pre-COVID levels despite only 52% of sailing capacity.

    3. Promotional Environment and Margins in Macao
      Q: Are premium mass market margins in Macao sustainable?
      A: The competitive landscape is intense, but management believes that product quality wins. Margins are improving, with an underlying margin growth of 100 basis points sequentially. They expect margins to exceed 2019 levels as revenues continue to grow.

    4. Share Repurchase Activity
      Q: Will share buybacks continue at current levels?
      A: The company executed $1 billion of buybacks in the past quarter. While they see long-term value in share repurchases and plan to be aggressive when they can, they may not buy the same amount every quarter.

    5. Expansion Opportunities in Texas and New York
      Q: What is the status of potential expansions in Texas and New York?
      A: Management is actively pursuing integrated resort development in Texas, particularly in Dallas, seeing it as an "unbelievable market". Regarding New York, they are hopeful that a decision will happen this year following the governor's comments, and they have worked hard on a compelling bid.

    6. Retail Portfolio Performance
      Q: How is the retail portfolio performing?
      A: The retail segment is showing stellar numbers, with Marina Bay Sands achieving almost $3,000 per square foot in sales and the Four Seasons in Macao reaching $9,200 per square foot. The retail contributed $677 million and management feels very bullish about future prospects.

    7. Singapore Hold and Game Play
      Q: Is elevated gaming hold in Singapore sustainable?
      A: The recent high hold percentages are attributed to normal volatility and are expected to revert to the mean over time. There is no change in game play or betting patterns that would sustain elevated hold levels.

    8. Disruption from Macao Renovations
      Q: How will Londoner renovations impact operations?
      A: Renovations of the Sheraton Hotel have commenced and will continue through 2024, completing in Q1 2025. There may be some disruption, especially in the second half of the year, but management is experienced in managing such processes. They believe the end result will be worth the temporary impact.

    9. Dividends and Capital Allocation at Sands China
      Q: When will Sands China resume dividend payments?
      A: The primary focus is on investing for long-term growth in Macao. Management plans to decrease leverage and once achieved, they will look to begin dividends again at Sands China, which has been a strong dividend payer in prior years.

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