Good afternoon. My name is Lisa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Corporation 4th Quarter 2014 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. Daniel Briggs, sir, you may begin your conference.
Thank you, Lisa. 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 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 earnings per share and hold normalized adjusted diluted earnings per share 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 posted supplemental slides on our Investor Relations website for your use. We may refer to those slides during the Q and A portion of the call.
Finally, for those who would like to participate in the question and answer session, we ask that you please limit yourself to one question and one follow-up question, so we might allow everyone with interest to participate. With that, let me please introduce our Chairman, Sheldon Adelson.
Thank you, Dan. Good afternoon, everybody, 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 some obvious challenges in the Macau market, we delivered a strong set of financial results with companywide adjusted property EBITDA reaching US1.35 billion dollars 11% higher than prior year and a 4th quarter record. Did I hear anybody talk about things slowing down?
At the same time, we continue to return excess capital to shareholders. It also gives me great pleasure to report that 10 years after we listed as a public company, we achieved an all time fiscal year record of 5.42 $1,000,000,000 in adjusted property EBITDA, a metric that surely sets a new benchmark for our industry. The foundation of our success is having the right strategy at the outset. Today, I am as confident as I have ever been in the long term prospects for our company. Before I go through the highlights for the quarter, allow me to highlight a few facts that support our company's unique strategic position.
Fact 1, Mainland Chinese visitation to Macau is accelerating. Visitation for Mainland China reached 21,200,000 visitors in 2014, an increase of 14%. Mainland Chinese visitors from outside the neighboring Guangdong province increased more than 17% for the year. Mainland Chinese visitors to Macau were up over 20% in both October November, while non Guangdong mainland Chinese visitation was up 28% in October and just under 30% in November. Fact 2.
These new visitors from outside Guangdong province have traveled to reach Macau and need hotel rooms when they arrive. We spent over $10,000,000,000 in investment to cater to these arriving visitors. That investment includes over 9,300 sleeping rooms, which is 56% of the total inventory of hotel rooms developed by concessionaires or sub concessionaires in Macau.
What time is the call? 9/15? Pardon me? Operator, is someone on our line?
No, sir.
Okay. And with the completion of the Parisian and the Saint Regis Tower at Sands Cotard Centro, We will have invested in excess of US13 $1,000,000,000 an investment that reflects our unrivaled commitment to Macao's diversification and to tourism destination. Upon completion of the Parisian, our sleeping room supply will increase to nearly 13,000 rooms, which will represent approximately 45% of the total sleeping room inventory built by us and our competitors in Macau and that's after 5 new competitors put up new property, 5 of our competitors put up new properties. Macao's retail business is developing into a world class shopping destination. The investment that we have made in Macao includes over 1.4 1,000,000 square feet of retail mall offerings on the Cotai Strip.
I'm not talking about gross, I'm talking about net. In the States, it's called GLA, but it should be NLA. That represents over 70 percent of the total retail mall developments in Macau. So we naturally generate far more retail sales in Macau than others. After the completion of the Parisian and additional retail expansion plans, we expect to virtually double our retail offerings in the years ahead.
Fact 4, our investments in McConnell include the development and operation of over 1,500,000 square feet of MICE, meetings incentive convention and exhibition space, which is almost 5 times larger than the combined total MySpace of the other Macao operators, 5 times larger than the combined total MICE space. We will increase our MICE capacity to nearly 2,000,000 square feet as the Parisian and incremental capacity at Sands Cove Di Central is completed. That will continue to represent approximately 75% of the mice capacity that will exist at the end of Macau's next stage of development. The point here is that we made all these investments when others didn't. Everything we have invested in Macau to date, the sleeping rooms, the retail shopping malls, the MySpace, the entertainment offerings and the Cotai Arena.
And everything we will invest in the future is predicated on delivering on our promise to help Macau in its economic diversification and its evolution as the world's leading business and leisure destination. 1 of our competitors said to me in 2019 sorry in 2,007 said he wasn't going to build his building until he saw whether or not we were going to succeed or fail that he didn't want to take the risk. And they didn't open they didn't start construction. And then after we opened in 2,007, they didn't start construction on their property till 20 11. And in terms of entertainment, a showroom, which we also have is good.
There is a good show in the city of at CLD, the City of Dreams. And it's a very good show and they get good attendance. However, it doesn't bring back repeat customers. Once they see a show, which is a good show, the Dancing Waters, they won't come back a second time to see the show. Now let's compare our arena a 15,000 seat arena.
1 week we can have an all martial arts exhibition. The next week we could have Celine Dion. The next week we could have a basketball game. The next week we could have a cultural event like a ballet or whatever. So the sort of unheralded arena is a major element to bringing back repeat customers.
There's enough diversity. We had 54 events in the arena last year in 2014. There's enough diversity in the arena to bring somebody back repeatedly just over 1 month. So the arena is and we also have a show in 1800 seat children. This is natural.
As we are the pioneers and creators of the large scale convention based international resort. As a result, we have diversity of product offering and the scale and critical mass to cater to every type of business in leisure visit. This clearly positions us well for future long term growth, but these attributes already allow us to out earn our competitors and I want to emphasize as we always have on the bottom line. Indeed, the gap between our company and our peers has been widening for the 1st 9 months of 2014. We had a 35% EBITDA share in a 6 operator market in Macau, up from 32% for the same period in 2013.
That is double more than double our fair share and far in excess of our fair share of cable capacity and gross gaming revenue. In Singapore, we have around 60% EBITDA share in a duopoly market 50% more than the other guy. Not only are we unique in being licensed in the 2 largest gaming markets in Asia, but we are also by a very wide margin the profit leader in both markets. But not only are we more profitable, revenue diversification means that our earnings are more defensive and predictable and of higher quality. Today, well over 80% of operating profit in both our Macau and Singapore operations comes from mass gaming and non gaming segments, with less than 20% of profit coming from VIP gaming.
Our non gaming profits continue to grow in scale. Our combined retail mall operations in Asia achieved an operating profit just shy of US0.5 billion dollars in 2014. That makes us one of the largest and most valuable mall developers and operators in the world. In addition to being more profitable and enjoying superior diversity of earnings, our integrated resort business model also allows us to contribute more meaningfully to the longer term economic success of our host jurisdictions, something we are both eager and uniquely well positioned to replicate in new markets, far more than what our competitors say that they'll put up one of this and one of that. The one thing that is a gift that keeps giving beside the arena is mice business.
It's a feeder and a breeding ground with new tourism. Notwithstanding the prevailing skepticism at the time, I made the strategic decision to pursue opportunities in both Macau and Singapore concurrently. As a result, I'm happy to say that the company today can simultaneously reinvest capital in existing operations and future projects, pay growing and generous dividends, Yay dividends and continue with the judiciary share buyback program. Now let me take you through some of the highlights of our results in Macau for the quarter and full year 2014. For quarter 4, Macao adjusted property EBITDA was 711 $1,000,000 Our mass and non gaming revenue streams which comprise more than 80% of our departmental profit in Macau naturally make our business far more defensive than the Macau gaming market as a whole.
It is also important to remember again that our business in Macao for the year produced 3.3 $1,000,000,000 in EBITDA, an increase of 12% over 2013. Again, did somebody say things have slowed down? The important point is that our strategy remains unchanged. Our business will continue to be anchored around the mass market and the long term structural growth of tourism from China and the wider Asian region. Even amidst all the headwinds in this quarter, we saw resilience in revenues in many of the core mass segments during the quarter.
Our ETG revenues were up 20%. Our non gaming revenues as a whole grew by 7%, within which retail mall revenues expanded 10%. And then our most important segment, mass table games, base market segment revenues were down by only 2% year on year. Visitation of Macau remained strong. Hong Kong just announced its full year tourist numbers for 2014.
Mainland Chinese visitations to Hong Kong grew by 16% year on year to 47,000,000 visitor arrivals. That is more than twice what Macau receives. In my view, there really is no reason to doubt the long term growth potential in Macao's development as a tourism destination for China, especially as transportation infrastructure continues to improve over the next few years. Just look at what has happened in the past few years. The development of large scale resorts in Cotai fundamentally changed the profit composition of Macau.
Macau's VIP junket volumes in Q4 4 of 2014 are the lowest for any quarter since quarter 4 of 2010. In other words, over the past 4 years, the VIP component of GGR is hardly grown. If I had told you that was going to happen 4 years ago, you probably would have predicted doom and gloom for the market. Yet what's happened to our EBITDA over this period, it has more than doubled. It has more than doubled.
The reason the power of our mass gaming and non gaming revenues has produced outstanding growth. We expect the market to continue to deliver growth in non gaming and to naturally return to growth in mass gaming in the future. I'm proud of the fact that we produce more non gaming revenue than the other 5 gaming operators combined. Again, we produced more non gaming revenues than the other 5 gaming operators combined. Our high margin non gaming revenues increased by 18% to reach a record US1.6 billion dollars this year and our share of gross Macau wide non gaming revenue was over 55% for the 1st 9 months of 2014.
While it has become fashionable for everyone to talk about Macao's diversification from gaming, we have summary, let me mention again that we have made pioneering contributions to Macau's diversification in mice, retail, sleeping rooms, entertainment and employment opportunities for Macau's residents. We saw the opportunity for the significant contribution for the mice industry to Macau and we invested greatly to contribute to its future success. In 2013, our facilities received 1,700,000 MICE participants as we hosted 52 exhibitions and over 600 conferences and meetings. According to published government statistics, our total MICE attendance represented over 80% of the total MICE attendance in Macau for 2013. I believe with the future completion of the Hong Kong Zhuhai Macau Bridge and the additional 3,000 hotel rooms at the Parisian, the MICE Industry Macao will develop even more successfully in the years to come.
In retail, our 3 retail malls generated US2.5 billion dollars of retail sales in 2014, up 12% year on year and more than 3 times what they were in 2010. To put this amazing statistic in context, in 2,007, the total retail sales of Magal were less than US1.8 billion dollars And we didn't just build for the high end luxury brands, although we do have one of the most successful, if not the most successful luxury retail malls in the world at the Four Seasons as measured by sales per square foot. We built an interconnected retail destination of more than 600 shops that would appeal to visitors across the whole spectrum of spending budgets. In addition, our retail tenants collectively employ more than 6,000 people comparable to the number of staff that the largest casino hotels in the Macau Peninsula would employ. Our retail mall sales accounted for 42% of total retail sales in Macau Macau in quarter 3 of 2014 in the retail categories in which our malls have a presence.
With the roll on of mall retail in Sands Cotard Central and a complementary portfolio of tenants at the Parisian, which is now 95% leased. We look forward to further supporting the growth of Macao's retail industry as we drive more visitation by leveraging our unique portfolio of interconnected retail malls. Sleeping room inventory we discussed extensively a moment ago. Entertainment is another key differentiator. We have an ambitious events and entertainment strategy which uses our multiple performance venues including the Kota Arena.
We now have an established track record of bringing world class entertainment events to Macau, including performances by the Rolling Stones, Rihanna, Justin Bieber and Ethan Chan, as well as boxing events including world championship fights by Manny Pacquiao and Chinese Olympic champion and WBO Flyweight World Champion, Xu Shiming. For our employees, the breadth and scale of our non gaming operations offer numerous opportunities for training promotions and career development. In 2014, we conducted over 160,000 training hours for more than 22,000 employees. We promoted just under 2,500 employees, 90% of whom were Macau locals. As one of the largest employers in Macau, if not the largest, we take our responsibilities to the community very seriously.
Our integrated resort business model gives our employees a multitude of career advancement opportunities and we'll continue to encourage them to take advantage of what we have to offer. We have unlike our competitors built sort of a school within our property with several classrooms to teach and to encourage our employees to be able to learn enough to advance in their employment. I don't believe any of these unique competitive advantage can be matched by our competition even after the completion of the next phase of their developments. I have every confidence in our ability to continue to grow over the long term. We have a still underpenetrated market.
We have improving transportation infrastructure and we, Las Vegas Sands and Sands China have a a uniquely differentiated portfolio of properties and product offering in Macau. Now moving on to Marina Bay Sands in Singapore. We generated an all time property record US518 $1,000,000 of EBITDA at Marina Bay Sands during the quarter. While whole normalized EBITDA was $461,000,000 Despite a 27% decline in rolling volumes, our whole normalized EBITDA was up by 35.1 percent including the property tax refund and up by 9% if we eliminate the benefit of that refund. I think this again demonstrates the quality and resilience of the cash flow generation in Marina Bay Sands.
I'm extremely pleased to say that our strong financial results confirm that we have an outstanding business there. To quote Mark Twain, the rumors of Singapore's demise as a world class integrated resort destination are both premature and greatly exaggerated. Mass win per day reached US4.8 million dollars up 4% year on year, principally driven by our successful efforts in bringing in foreign premium mass customers to Singapore. In addition, we have maintained a prudent reserve ratio during the quarter and we will continue to maintain the highest compliance standards in the industry not only in Singapore, but globally. Marina Bay Sands continues to serve as the most important reference site for emerging jurisdictions that are considering large scale integrated resort developments.
The iconic appeal of Marina Base Hands has driven strong growth in visitation from residents of China, Japan, Korea, the wider Asian region and around the world to Marina Bay Sands and Singapore. We remain focused on potential development opportunities in Japan, Korea and Vietnam. We believe our unique convention based integrated resort development model could bring meaningful benefits to these countries in terms of business and leisure tourism, employment and economic growth. Before we address return of capital to shareholders, let me that after recent rating agency upgrade, both S and P and Fitch now have an investment grade rating on Las Vegas Sands. We are happy to be recognized in this fashion and we intend to continue to follow the financial policies that contribute to their view of our financial strength.
The confidence we have in the strength of our business and the reliability and predictability of our cash flows have allowed us to progressively increase the return of capital to shareholders. Ours remains a uniquely privileged business model. We continue to return significant amounts of capital to shareholders through dividends and share buybacks, while retaining more than sufficient financial strength to pursue both organic growth and new development opportunities. Over the last 3 years through December 31, 2014, we have returned over US9.6 billion dollars to our shareholders through dividends and stock buybacks, including US8.1 billion dollars to Las Vegas Sands shareholders and in Hong Kong dollars the equivalent of over US1.5 billion dollars to the shareholders of Senus China. Also last year, we increased the annual dividend for LVS shareholders by 42.9% for the 2014 calendar year, Yay dividends.
For 2015, we previously as previously announced, the Board of Directors has increased the LVS dividend by 30% to $2.60 per year or 0.65 dollars per quarter. The increase in the dividend will take place with the next quarterly dividend payment, which will be made on March 31. Yay, dividends. We have every intention of increasing the dividends in the years ahead as our business and cash flows continue to grow. In addition to dividend growth, we returned US235 $1,000,000 of capital to our shareholders this quarter through our stock buyback program.
We have approximately US1.76 billion dollars remaining under our current stock buyback authorization. We look forward to continuing to utilize the stock buyback program to return capital to shareholders on an opportunistic basis and to enhance long term shareholder returns. In conclusion, we will continue to stay disciplined and execute our business plan. With the right strategy and the right management team in place, I am more confident than ever about our future success. Now before I turn the call over to the operator to begin the Q and A session, I wanted to thank take the opportunity to thank Ed Tracey for his contributions to the company and to Sands China.
We wish him the very best as he returns to the United States to focus on his health family. As we conduct a search for a permanent President and Chief Operating Officer of Sands China, we have every confidence that we will continue to execute successfully, while continuing to support the Macau government and its efforts to maximize Macau's tourism opportunities through the development of additional non gaming attractions and amenities. We remain deeply committed to both the future of Macau and the future success of the more than 28,000 Sands China team members are an important part of the Sands family. Now let's take questions.
And your first question comes from the line of Joe Greff from JPMorgan.
Good afternoon, everybody. My question maybe just easier to call out slide number 13 on your earnings slide presentation. What I was surprised in this presentation is that given the relative performance of the base mass versus the premium mass and given the relative margin profile and I know these are average table count numbers, but that the base mass table count shrunk sequentially and the premium mass table count average table count increased sequentially. And I guess why is that the case? Why aren't you trying to devote more table game capacity to the relatively more stable and higher margin business?
And is that an opportunity? And then I have a quick follow-up related to Singapore.
Hey, Joe, it's Rob. I'll take that. Obviously, this is a market in flux. There's a lot of tables in the market that are underutilized. And at this point, it's an opportunity, but a market where the junket declining so rapidly
and a
market where premium mass is in flux, I think it's too early to tell where all these tables land. I don't consider a huge opportunity at this point, because we have sufficient we have so many tables in the market that a base mass versus premium mass table isn't a major issue from my perspective. The margins remain under pressure. I think in Macau we're still doing very well relative to the market I think. And we have sufficient tables to move to every market that shows the most growth and most opportunity.
Okay. And then my follow-up related to Singapore. You were just under that $5,000,000 mass table and slot win per day metric a little bit ahead of what we were estimating for the quarter. What's driving that? What geographies or what are you doing there for at least relative to our forecast a nice little uptick.
Right. We recognize we mentioned a few years ago the need to pursue premium mass outside of Singapore. We've done that. We've executed well. The team there deserves a lot of respect and for what they've accomplished.
We still are south of the $5,000,000 date number we want to achieve. But I think the growth engine there is premium mass outside of Singaporeans. We still have Singaporean business, but Indonesia, Malaysia, etcetera have been huge contributors to that growth. And we're very proud that as Sheldon referenced to earn $1,700,000,000 in that building. I remember years ago we built that place.
People scoffed at the notion of $1,000,000,000 EBITDA. So now we're $1,700,000,000 a spectacular year for us. A little help at the end obviously with the tax issue, but we're very happy with our growth there. And as you correctly identified the beauty of Singapore remains resides in the very powerful mass business. We about $1,800,000,000 with a 63% margin, pretty strong results, no place like it, those kind of numbers.
So the focus there remains mass, premium mass and doing the job correctly.
Great. Thanks, Rob.
It's the most profitable building in the world, even bigger than the GM building in New York.
And your next question comes from John Oh from CLSA.
Hi. Thanks for taking my question. If I can just start with maybe your cost structure and also your margins. Could you give us a sense of how much flexibility do you have as you think about your OpEx or your carrying costs in running both VIP and mass market in Macao today? And can you give us a sense of how you're coping with some of the flexibilities around the cost as we see business volumes, especially in VIP, not as high as before.
What do you think margins are right now in VIP given that some of the cost structures are perhaps a lot more fixed? Could you maybe give us some comments on that, please?
John, are you referencing VIP junket or VIP premium mask when you say VIP?
Let's talk about VIP junkets first and then maybe you can also touch on premium mass too that would be great.
Yes. It hasn't changed a lot of VIP junket. What's changed is the volume. The margins in VIP remain pretty much tied to whole percentage and they've not vacillate that much. The bigger move I think for the market obviously is in the mass, premium mass aggregation because whenever you have a decline in both base mass and premium mass as rapidly as in the 4th quarter, clearly margins, you can't adjust quick enough on the payroll and the building cost, the operational cost of building you do not adjust that quickly.
What does adjust is incentives and promotions against the customer. We continue to examine those costs. The labor issue is not where we're focused right now. We're focused on incentives. Our labor costs are not on the table at this point.
What is on the table though is overhead in general in the building entertainment. Also on the table is discussing our overhead corporately. I think there's opportunity there. So we are charged with it's been very clear the direction for Mr. Allison that we're charged with running our business more efficiently examining all layers of cost against the customer promotionally against the cost to run the business overall and make sure we're being efficient.
But this has been a sea change as you know in a very short period of time. We're still very pleased with our overall margin, but there's room to improve a lot of different places. So we're very focused on it and the team there will be looking at those issues very closely in the months ahead.
Okay. And if I can follow-up very quickly again on capacity, I think you briefly mentioned earlier, Rob, that perhaps there's some underutilized capacity in Macau today. As you assess the total market capacity that's available in the market, do you think that there's excess capacity today? And how does that change your perception on perhaps the number of tables that you guys have requested for the Parisian? Do you still need the same number of tables going forward in order for you to meet some of the ROIC hurdles given the assessment of how much capacity there is today?
Well, John, let's keep
in mind, this is the greatest gaming market in the world. And although there's been a lot of talk in the last 3, 4 months about the changing dynamic of the market, we still earn more money there than any place by far. It doesn't even compare to Las Vegas or it's an extraordinary market. Even with the downturn, we're earning lots of money per table both mass, premium mass. So the answer is yes.
We do hope the government will honor our request for the tables at the region. We are not earning like we were doing as much $13,000,000 $14,000 table, but there's nothing wrong with $11,000 $12,000 a table still very, very fat, huge margins. So yes and yes, we want the tables and we're hoping to get them. I think Sheldon's when he opened the conversation, talked about his achievements there, clearly what we have done while other people are starting to build the neighborhood, we're in the neighborhood. We built it 10 years ago.
We built what I think the government respects to be the future of Macau. I think the vision was started back in 2,005 when the Venetian began being put together is coming full circle now. And so I believe based on that, we've got a darn good chance of getting our fair share of tables because we've delivered on the promise and then some. So yes, we want the tables and yes, we believe we deserve the tables and yes, they're still very, very profitable. You earn more per table in Macau by double than what you broached in Las Vegas per table.
So it's a pretty astounding market even though it's under pressure. This is still the best gaming market in the world. We want to be overrepresented into the table dynamic.
Excellent. Thank you.
Thanks, John. Thanks, John.
And your next question comes from Shaun Kelley from Bank of America.
Hi, good afternoon. Thanks for taking my question. Bit of a higher level question, but I guess as we look back at the Q4, it seems like there were a lot of discussions around broader policies, be it anti corruption or anti money laundering kind of in the market in Macau. And I'm just curious as a concessionaire and obviously a huge player there, have you guys had any, I guess, more concrete discussions with either the government of Macau or the government of China about sort of what at a high level you think they're trying to accomplish with their message around diversifying the market? Just I think any color for that would be helpful as people are trying to adjust to a new normal.
We are the this is Sheldon. We are the leaders in the non gaming direction development. The other guys say they're going to catch up to us. When you look at the fact that we do 80% of all the non gaming income out of 35 casinos in Macau, it's clear that we're the ones that have set the pace on developing non gaming amenities. And we think that our business model that is made up primarily of mice is the one business model that is a gift that keeps giving.
The people come, it's a breeding ground for leisure tourism. So they're using our business, our accomplishments as a model for the other theater gaming operators to follow.
Okay. Thanks for that. And then John, maybe So I'll
let color before you leave that. I just want to make sure you understand. We have for the last number of years and currently agree with the direction of compliance. We embrace compliance. We think it's the future of our industry both in Nevada and Pennsylvania and Singapore and Macau.
There's no reason to fight against it. So we've not had conversation with government. We simply wait for direction of the government to follow accordingly. But we're big believers in all the things they're doing in terms of the corruption issues and AML. And the new Macao is a little different than the old Macao, but still a wonderful
Macau. That's helpful. Thanks both. And then I guess as a follow-up, other big area we've gotten some questions on was the kind of election or choice not to pay a special dividend at Sands China this quarter. So could you talk a little bit about that decision?
And then your I guess, it sounds like you're very committed to the recurring dividends at both the Sands China subsidiary and the parent, but how you might fund those between the different subsidiaries? Just a little color on that would be useful. Thanks.
When I read about that, I thought it was kind of curious. A special dividend is a special dividend. A special dividend is not a regular repeat dividend. So when somebody said, why didn't you give me a regular repeat dividend, another one in the form of a special dividend, I scratch my head. And I'm still scratching.
I just think that suggestion is kind of silly. When there's an opportunity to pay a special dividend, we'd lean more in the direction of regular dividends, because that's predictable and reliable with special dividends are not. So as far as we're concerned, we'd rather assure our investors including LBS that there's going to be a predictable and reliable and predictable regular dividend. And if we do a special dividend for whatever reason, it will be because for a special reason. And it's not going to be regular.
Sean, we actually added a page in the slide deck to specifically deal with SCL as well, Page 8 in that deck, which emphasizes Mr. Adelson's point that the recurring dividend is paid in 2 pieces. We expect that to grow over time and are committed to growing it over time. Right. And the special a special.
Perfect. Thank you, both.
Next question comes from the line of Thomas Allen from Morgan Stanley.
Thanks. Good afternoon. Can you give us an update on the competitive environment in mechanicals both on the mass and the VIP side? Thanks.
Competitive environment, what's happening competitively. So we see the environment there We
had more money than
Okay. Well answered. We think the environment there obviously Thomas is changing. People are changing their priorities. Again, we're very confident our business model lends itself to this it's called the new Macau, which is mass based, which is non game based.
We continue to believe we can earn a lot of money in Macau. We'll adjust our business plan accordingly. We're not seeing promotional costs veer out of control. What you're seeing is a downsizing of the base mass and the premium mass business, which of course will adversely impact margins. That's a fact of any place Macau or any place else to operate.
I don't see operators losing their sense of balance or prioritization of how they spend their money. Their margins will come down a bit though because there's less top line obviously. It's less frothy at the top. But I don't think we're in a situation where it's veering out of control or operators are being unrealistic or there's panic in the streets in Macao. We had a reasonable quarter.
We expect to keep earning well in Macao, a lot of discipline, very smart people with lots of capital in Macao. So at this point, we see an environment that mimics the better half of the year, the first half of the year, which was exceptional for all of us.
That's helpful. And then just following up on the previous questions about capital returns. I find it interesting that you bought back $1,700,000,000 of stock last year and you have a similar authorization today. Do you think there's a chance that you would buy back a similar level of stock this year? And if you're not returning if you're not doing the special dividends out of Macau, can you fund it out of U.
S. And Singapore without having to raise debt? Thanks.
I understand the question. You talked to Chris. Okay.
Raj, do you want to take it?
Yes, sure. Hi. I think where we are in the buyback is I think it's going to be something that the Board ultimately determines and the management determines over time how we'd like to return capital opportunistically to the repurchase program. That will come as the quarter progresses. So I don't know if we can answer that question now.
Without the special dividend, could we fund that amount without raising debt capital? It depends on our trajectory for the year. So I can't really give you an answer because we're not there yet. But you can look at our current capital structure, our liquidity profile and we have the means to fund return of capital more aggressively, increase dividends or new development opportunities as we see fit. So a lot of it depends on how the year progresses and the views of management over time.
But we've made no determination yet. Helpful. Thank you.
Your next question comes from Luccello Santelli from First Bank.
Carlo, that must be you. Wow, that was
a good one. I actually forgot what I was going to ask after that introduction. But just really quickly, guys, I know it's not a huge issue for you guys, but wondering if you did anything differently in Las Vegas as it pertains to your room strategy. Notice the occupancy was a little different than expected, which isn't necessarily surprising. But based on what we've seen from the Las Vegas Strip RevPAR statistics, it kind of stood out a little bit.
Is there anything in there that maybe we missed from a comp perspective or a strategy change?
Sorry, Roy. Can you give us some insight what are you talking about? Why are
you Just the Las Vegas RevPAR down 2.5 percent solid rate growth at +7 percent, but the occupancy down almost 800 basis points?
No change in strategy. No change in complementary policy. Dan, maybe you have more color on that. I don't have any color. We think we've opportunity probably in Las Vegas.
We think we've looked at our competitors and hats off to some of the folks on our competitive set. We think we do better. We have some programs in place to grow our EBITDA here in Las Vegas. We continue to be a dominant player along with Wynn and Bellagio and the Baccarat side, but we think we can do better. We would all but 7,000 keys and a 1st tier building, we'd like to do better both in room lock and the CNRE and can you grow our game business as well.
But having said, there's been no change in strategy, no change in direction, remain pretty much constant in our approach.
Understood. And then Rob, if I just could one follow-up. Obviously, there's been, I think, as of this morning, I read an article about some of the labor unions in Macau calling for a full smoking ban. Could you guys talk a little bit now having digested that for a little over 3 months, what you've seen? What kind of the experience has been?
And where if any you think it's having a material impact if there is 1?
Well, it's not a positive that's true. I can't tell you the extent Carlo because very candidly, I mean, anyone really knows how big smoking has been. There's so many factors in Macao that are changing currently. It's hard to ascertain is it smoking, is it anti corruption. There's just a lot of factors in play here.
Having said that, we remain behind the government's direction wherever it may be. We've had recent meetings with the government about the smoking issue. They appear to be making their final decision. And whatever it is, it is. It ends up being a ban or it ends up being smoking rooms vis a vis like the airport.
We'll abide by it and we'll move forward. I don't think it's obviously no market has ever benefited, no gaming market anywhere in the world be it Europe or the U. S. Has benefited from a smoking ban. Having said that, we're complete of the belief that Macao is unique destination, unique to Mainland China and Hong Kong.
It will prosper in spite of a smoking ban or a smoking restriction. Is it better with smoking? Sure it is. Is it going to happen where smoking is restricted? Yes, we know that.
The extent of that restriction we don't know if it's for government advice. Whatever the government tells us to do we will comply happily.
That's helpful, Rob. Thank you very much.
Thanks. And your next question comes from Felicia Hendrix from Barclays.
Hi, thank you. Hopefully, you can hear me that there's something wrong with my headset, so I have to be on speaker. Is that okay?
Yes. You're done.
Okay, great. Thank you. First question, Sheldon or for Patrick, just going back to the subject of capital return, I did notice that the blurb regarding dividends in the deck no longer has that comment about increasing the recurring dividend 10% annually. Certainly, you have a strong commitment to returning cash to shareholders and growing the dividend. So I'm just trying to understand the change in the language.
Probably whoever wrote it. Whoever wrote it didn't think of it. There was nothing intentional about that.
Okay. So you
You want us to say we intend to grow at least 10% 10% forever. I'll repeat. 10% forever is impossible. Well, it all depends on how long is forever. I'm free forever.
We intend to continue dividends. There was nothing intentional if that wasn't put in there.
Okay. Because I was just checking because you guys have been pretty clear for a while saying that you're committed to growing 10%. So it sounds like that hasn't changed.
That has. It has not changed.
Okay, great. And then Rob, you some of your comments have underscored at this point, you're a well known Uber bull on Macau. But looking longer looking near term, it does seem that the sell side is forecasting the cow gross gaming revenue to decline in 2015 anywhere from high single digits to low double digits and certainly it's anybody's best guess for sure. But I'm just wondering does that correlate with what your internal folks are projecting? And if so strategically, how are you approaching this year, particularly in the first half where most of the market declines are likely to occur?
Right. Well, thanks for calling
me Uber Bull. I like that. We've seen the froth in the market generated by a concentrated group of super premium mass customers relent somewhat and clearly that's hurt the Uber bull market. No question about that. But I believe we will see a renewed growth in base mass business because the underlying positive drivers are so compelling with visitation growth, transportation infrastructure improvements and our unmatched inventory in rooms, game mix, retail entertainment that speak to that mass segment.
Simply stated, yes, we believe very much in this market. It is still people seem to forget what this market means relative to the rest of the world because the last 3 months, 4 months have been unsettling. But this is the greatest game market in the world and LVS is in the perfect place to take advantage of the new Macao environment. Our assets are unique to this incredible market and I believe this time will prove that the sustainable growth of our business Macao will be evident to all. We remain very focused on margins, we remain focused on overhead.
We look at all of our overhead not just in McAlb, but in the company and look to grow this company's return to shareholders. So, yes, we're very much a believer. Are we concerned what happened in the last 3 or 4 months? Everyone is concerned what happened to the junket space, the smoking issue. There's so many issues.
It doesn't need to be repeated there when in the call they're conversing with those issues. But I think Sheldon a decade ago built the strategy that is today being talked about. He built The Venetian. He built the 3,000 rooms. He built the MICE space.
He built the retail space. While everybody else is building vertical buildings on the peninsula Sheldon over a decade ago called the shot. And I think that shot is happening today from both a competitor and government perspective. We're just ahead of the curve by a mere 10 years. So our business remains very steadfast.
As base mass resets and pre mass resets, we will reset margins return and we'll remain uber bulls on the cow.
You increased your flat and ETG count combined by 5%. Is that just tweaking or is that like to read into that you're gearing more towards the base math?
No, we're gearing towards I guess the point is there's plenty of gaming capacity right now in Macau and we believe very strongly the size of our building, the size of our real estate enables us to grow. I'm a big believer ETGs will be very, very happy place to be in the next couple of years. We'll keep growing that business. Lots have not been as bullish frankly, but love the ETG business and we'll keep banging away at that. That's a big advantage to us.
When you sleep in our room, you pay us $120 to sleep in the hotel and gamble a little bit, go on to retail shops. It's an amazing environment for us to I was there a couple of weeks ago and despite all the talk, that's all Twain had it right. This is a great market. We're happy to be there. We'll keep driving ETG business as well as non rolling business.
Great. Thanks so much.
Okay. Next question comes from the line of Robin Farley from UBS.
Great. Thanks. I wanted to ask about, I was looking at the RevPAR decline, a slight decline at Venetian Macau. And I wonder if you could talk to us a little bit about your room strategy, kind of what percent are cash paying versus room comps and kind of how we should think about the hotel supply that's going to be entering the market? And I didn't see in the release or slides an opening date for the Parisian.
There's no reference to the opening dates. And I don't know if you have any to address that as well. And I do have a follow-up question. Thanks.
Okay. Rob, I'll take the Venetian Macao issue. We're going through a change of thinking there how we use that product. Obviously, it's the most desirable product on Co Tie, 3,000 keys etcetera. The cash we've always been very focused on a certain threshold gaming customer and the premium mass mass.
And we're revisiting that strategy as we move forward. We want to run a high occupancy because we firmly believe that the more people sleep in The Venetian, the more people shop at The Venetian Mall which we own, eat in our restaurants of course gamble in our facility. So we think that asset has more growth potential to use those rooms more aggressively on the database. And as Macao morphs towards a more base mass segment as opposed to junket as opposed to just premium mass that facility has got to rethink its room strategy in my opinion to get more out of the rooms. It's the most desirable room comp there is in Cotai.
The building continues to be a huge driver visitation. And we think we've got to rethink and do better to drive more opportunity out of the room side of our Venetian product. As for the Parisian, Sheldon, you want to address that issue?
The Parisian The opening
date for the Parisian.
We don't have an opening date yet. It will be sometime in 2016. The question also comes up as to whether or not there will be a partial opening, rooms and casino and some restaurants and maybe entertainment. But there's a new government that was just installed about a month ago. And I'm going over there this coming week to talk to the new government and find out what their intentions are visavis the components that we need to open such as construction labor.
And we're shuffling around our construction labor Once we finish the St. Regis building, we'll move some labor over to the Parisian. And we're also looking where we could pick up other delay other CapEx to existing properties, so we could use those blue cards, the equivalent of the U. S. Green cards.
Well, it's something different. It's a temporary situation for carbon labor. We are going to have every we're going to make every effort to get it done as soon as possible if we don't have the exact date yet. I'll have more information on our next call. But if we have any firm distributable information in between, we'll put it out.
Okay.
But there are people looking for more labor. And the government wants us open because we are we have the largest number of rooms. I said we have 58% of all the concessionaires' rooms. That's a very big number. And we don't give out 100% of the rooms like our competitors do for the casino.
We leave them open for people to come in for other purposes. And they want increased tourism. They want MICE. And we're going to point I'm going to point that out to them that we can't expand on those areas that they really want as opposed to the gaming when everybody else when we don't have enough labor. We do have the permits to complete all the property.
And we're going to do our best to finish it as quickly as possible.
Okay, great. Thank you. And for my follow-up question, I wonder if you could just give us a little bit of your thinking around you're taking the CEO role at Sands China and kind of why not use it as an opportunity to strengthen the bench by having I don't know if you looked at internal and external candidates and kind of what led to that decision?
Well, it's sort of an internal political issue. The CEO title has carried with it and a separation of Sands China from its major shareholder in the last several CEOs that we've had there. So rather than risk that happening again, I'm taking the title of CEO and I'll take the responsibility of the CEO. And we'll have a President and COO. And I think listen, I haven't done too bad.
In the last 2 years,
like a lot of shareholders,
I've done very well. And if I'm doing as good as Rob said, I'm going to go to the Board and ask for a raise. Don't get carried away.
Thanks for the perspective.
Thanks, Robin.
And your next question comes from the line of Stephen Kent from Goldman Sachs.
Hi. You want to estimate, so I read your report recently. Well, let me ask a question then. The $90,000,000 tax rebate, I didn't have that in at all. Could you just explain that a little bit in Singapore?
And then also We've been paying that for the last 5 years. And Patrick went in there and justified a return on that. And we got the $91,000,000 back. So as we had to amortize it over the last 5 years, we took it in as income. Now you could amortize the return of income over the next 5 years, but we're not going to go backwards and restate earnings.
Okay. So that was Steve, it's
a $90,000,000 amount. It relates to a 5 year period. It would have a $0.09 impact on EPS if after tax if we were to pull that out. And it's something that going forward we'll have a slightly smaller income tax or property tax expense, but it was over a 5 year period, not a huge issue.
Okay. And it was
a property tax issue. It was not any other type. Right. Okay. And then the other thing is, and again, only because capital allocation is so critical to your story, on share buyback, I think you've noted you're going to be opportunistic.
And is that different from the $75,000,000 per month that you've talked about before? And it goes to sort of the other question about dividend and a 10% increase every year. I think that's what people are trying to figure out is, are you becoming more selective about some of these capital allocation issues? Or are you or is there some consistency here that maybe we're missing in the comments? We're not changing any strategy to put into the press release or to put in my prepared remarks for the earnings call whether we're going to do 10% a year, don't look into that.
If we were going to have a significant change of policy, we would disclose it. The fact that somebody else wrote it and didn't pay attention to that issue, forget about it. Whether or not we're optimistic, look when the stock goes down far more, it's down a lot more than what we think it deserves. And this earnings report gives us a little better indication that we're still doing well. Can you imagine?
$5,440,000,000 I know I said $5,42,000,000 but I'm told this morning it's $5,440,000,000 EBITDA. Now how many companies in the world do that? We're certainly in the top 100 in if not in the world at least in the United States. And we're very proud of making that kind of money. So trying to guess whether we're going to be opportunistic or we wake up one morning and somebody says the stock is down 5 points, maybe we ought to buyback or 2 or 3 points buybacks of more stock today.
Listen, all we know is I'm sending a message. You want to get my message. I haven't sold any stock. I got 432,000,000 shares and I haven't sold 1 share of stock since 2,006 when I did a secondary to create some diversification. I haven't sold any.
I have no intention of selling any. And I believe in the long term improvement of this company. And we will one day whether it's sooner or later, I can't tell you for sure, we hope it's sooner that we're going to get additional emerging market opportunities. Nobody can go out there and present the bona fides that we can do. There's not a city in the world that doesn't want more mice.
Everybody wants mice. And I know one of our competitors and was it his 3rd phase, the Galaxy, 4th phase or 5th phase or 6th phase or 7th phase or 8th phase or 9th phase or 10th phase. I don't know which one he said he's going to put some mice based in. But I've got 40 years of experience in the MICE industry. I sold my company in 1995 with the largest amount of money ever in the 1200 year history of agricultural and trade fairs.
I sold my company for the largest amount of money. Nobody understands and knows the mice market better than this company. And we have a lot of people in company that have been with me for over 20 years. There are people that work with me in the Interface group when I had Comdex and other shows. So nobody can compete with us on that score.
And what we've done in Macau, 80% of all the MICE business in Macau, the other guys are just making noise. We walk the walk. Okay. Thanks very much. I got the message.
Thanks, Steve. I hope so. If not, I'll stronger words tomorrow. I look forward to that, Sheldon.
Next question comes from the line of Harry Curtis from Nomura.
Hi, guys. We believe what you said too Harry. Well, I will continue. So Rob, you talked about the new Macau. And my question is, given the various policy changes that we've seen come out of either Macau or Beijing, do you guys have any sense of whether or not the policy changes that Macau has had to really suffer through?
Is that it? Or do you have any sense that others are being considered?
Harry, I think that's far beyond our ability to comment. The government of Macau has made that decision. Impossible to sit here and make a prediction about what may or may not happen. I mean, I think 6 months ago, there's some of the things we've seen happen, no one would have believed. So I think it's foolish to speculate and I won't do that.
In that case, it was the only other question that I had was just a clarification on Page 5 of the slide deck. Maybe Dan, you can answer it. The hold adjusted property EBITDA, the 1,273,000,000 dollars is that before the $90,000,000 tax adjustment and corporate? Yes. Okay.
Just wanted to clarify. Thanks a lot.
Okay.
Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.