Good afternoon. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Second Quarter 2015 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. Mr. Daniel Briggs, Senior Vice President of Investor Relations, you may begin your conference.
Thank you, Kate. 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 the anticipated results in those forward looking statements. Please see today's press release under the captioned 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 have posted supplementary earnings slides on our Investor Relations website for your use and reference we may refer to those slides during the Q and A portion of this 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, so we might allow everyone the opportunity to participate.
With that, let me please introduce our Chairman, Sheldon Adelson.
Thank you, Dan. Good afternoon, everyone, and thank you for joining us today. I'm pleased we continued to execute our strategic objectives during the quarter. And despite the continuing challenges in the Macao market, we delivered a solid set of financial results with company wide adjusted property EBITDA reaching US1.02 billion dollars At the same time, we continue to return excess capital to shareholders. It has always been clear to me that our unique MICE based integrated resort business model positively differentiates us from our competitors.
In terms of both financial performance and economic contribution to our host jurisdictions, During the quarter, it was not surprising to see our company weather this cyclical downturn in Macao better than the industry overall. Our EBITDA in Macao grew sequentially by 6%. Against the backdrop of double digit market revenue decline, new competition and general wage inflation, our Macau operations managed to improve EBITDA and profit margin on a quarter to quarter In addition, our gaming revenue market share in Macao reached 24.6% for the quarter, our highest market share in any quarter since Q1 of 2,009. In Singapore, Marina Bay Sands delivered another record quarter in mass gaming winter day when measured in Singapore Darwin. At the heart of our company's success is having the right strategy at the outset.
We had the courage of our convictions to build early and aggressively. We develop critical mass through scale and diversification and we offer product and amenities that are best positioned to capture long term tourism and consumption growth in Asia. I remain steadfast in my belief that we will grow and prosper in the long term, while continuing to contribute to the economic development of our host jurisdictions. Our industry leading financial strength enables us to stay fully committed to our markets, our development plans and the return of capital to shareholders. We remain confident that our recurring dividends will increase in the years ahead as the Macao market and our cash flow grows.
Now let me take you through some of the operating highlights of our results in Macao for the quarter. In quarter 2, same time EBITDA was USD 564,000,000. This represents a decline of 29% over the prior year, but a 6% sequential increase over the prior quarter. Sorry you guys who projected we'd come in $50,000,000 less than consensus. Furthermore, our EBITDA margin at our Macau properties improved by 200 basis points sequentially to 32.2 percent, primarily reflecting strong gains in cost of entities, which more than offset the impact of wage inflation.
Whole normalized EBITDA margin also improved sequentially by 150 basis points to 31.7%. In the base mass segment, we continue to benefit from the scale of our hotel room inventory. The diversity of our product offering and the attraction of the Venetian Macao's as Macao's must see destination. I'm also pleased that we managed to achieve market share gains while being disciplined and judicious in our casino reinvestment offset some a lot of the weakness in the junket segment and enabled us to outperform the Macao VIP market. Our premium direct rolling volumes were up 3% quarter on quarter, resulting in our overall rolling volumes declining by 10% sequentially versus the 15% decline in Macao's VIP junket volumes.
We also experienced strong growth in retail mall revenues. Based on the latest published government statistics, overall Macao market hotel occupancy for the period January to May of 2015 was 79%, a decline of 8 percentage points compared to 2014. This decline in occupancy was principally related to the decrease in casino room occupancy across the market, particularly in the Checkat segment. Sands China's hotel occupancy for the same period was 4 percentage points higher than out of the Macao market at 83%, And our occupancy decline of 6 percentage points also outperformed the market. The scale of our hotel room inventory remains one of our key strategic advantages.
It allows us to target higher value overnight visitors from Greater China and the rest of Asia and to grow the base of high value visitors from Macau. With the completion of the St. Regis and the Parisian, we will have almost 13,000 hotel rooms and 4 interconnected resorts, over 840 stores across 4 shopping malls with the potential to add several 100 more stores in a few to develop spaces, subject to government approval. 2,000,000 square feet of meeting and exhibition space and 4 performance and event venues, including our Venetian COTA arena, which can be utilized either for our MICE business or major entertainment events. We have the room inventory, the resort content, the iconic must see destination and the operating experience in growing the overnight visitor market in Macau.
We remain fully committed to pioneering role in Macau's transformation into the world's leading business and leisure tourism destination. Our track record in being transformative pioneers in MICE, retail and entertainment speaks for itself. Now moving on to Marina Bay Sands in Singapore. We delivered another solid quarter at Marina Bay Sands, which despite the impact of the stronger U. S.
Dollar generated adjusted property EBITDA of $363,000,000 Despite a 9% decline in rolling volumes, our whole normalized EBITDA was down by only 1% year over year. On a constant currency basis, our whole normalized EBITDA was up 6%. I think this again demonstrates the quality and resilience of the cash flow generation at Marina Basin. Mass win in Singapore mass win for us in Singapore per day was $4,700,000 up 1% year on year. Again, when adjusted for the currency effect, our mass win per day in Singapore dollar terms was actually up by 9%, principally driven by our successful efforts in bringing in foreign premium mass customers to Singapore.
We set another all time quarterly record in mass winter day in Singapore dollars. 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. Arena based sands continues to serve as the most important reference site for emerging jurisdictions that are considering large scale MICE based integrated resort developments. Our MICE based integrated resort business model allows us to meaningfully contribute to the long term economic success of our host jurisdictions, something we are both eager and uniquely well positioned to replicate in our markets. Las Vegas enjoyed strong gaming volumes, but low hold impacted our reported results.
Bethlehem continues to grow and delivered a 2nd quarter a 2nd calendar quarter record EBITDA performance. Now on to my favorite subject, the return of capital to shareholders. Let me be clear. We remain committed to the maintenance of our generous recurring dividend program, And we remain committed to increasing those recurring dividends in the future as our cash flow grows. Our industry leading cash flows and balance sheet strength enable us to continue our recurring dividend programs at both Las Vegas Sands and Sands China while retaining more than sufficient financial resources to invest for future growth and pursue new development opportunities.
Yay dividends and yay buybacks. We bought back $65,000,000 of stock in the most recent quarter. We have approximately 1.7 $1,000,000,000 remaining under our current stock buyback authorization, and we look forward to continuing to utilize the stock buyback program to return excess capital to shareholders and to enhance long term shareholders. In conclusion, we will continue to stay disciplined and execute our business plan. I am today more confident than ever about our future success.
Now let's take some questions.
Operator, we're ready for the first question.
Your first question comes from the line of Felicia Hendrix from Barclays. Your line is open.
Hi, good afternoon. Thanks for taking my questions. Sheldon, in your prepared remarks and also in the press release, you referred to efficiencies that you guys have been able to take advantage of to help some of the help your margins and some of the flow through. The question is both for you, Sheldon, and for you, Rob. You've talked in the past about some of the financial flexibility that you've had to cut costs.
Can you just talk about some of the things that you did in the quarter? And as you kind of look at the different scenarios for the market going forward, what kind of programs can you employ to continue to cut costs and basically to offset some of the cost pressures that you're seeing in the market, particularly in labor? Thanks.
Patrick? Yes. Elyse, hi, it's Rob. Our team in Macau, I think, has done a really good job of addressing costs across the board. And of course, there's always an opportunity to cut more costs, but we have to balance that with our employees and their development and our long term plans to excel in Macao.
We don't want to throw the baby out with a bathwater. So a lot of costs relate to marketing spend, cost against customer spend and then general cost as it relates to labor, non Mac and East labor for the most part. And keep in mind that we are burdened somewhat with having a very, very strong team in place already for the opening of the Parisian, which will be very beneficial next year we open the Parisian. We're carrying a lot of especially the casino side, most of our teams in place has been in place for a while. So the majority of the cost this quarter relate to promotional spend, marketing spend, some labor cost.
I don't expect to see this continue in terms of cutting additional costs in any kind of material way. We'll just remain disciplined. I would add also, we're fortunate the market has remained disciplined in terms of how it spends money against the customers promotionally. We're very pleased with the quarter. We want to maintain the margins we did.
I think for the quarter, we came in just under 32%, which is very acceptable to us, especially in this very difficult time in Macau. We're hoping for a GGR increase and even better margins in the future.
Thanks. And then just as a follow-up question, Sheldon, yay dividends and you talk about your commitment to that return to shareholders and also potentially raising the dividend. Just as you think about the difficult environment and you look at your different scenarios,
just what
are what kind of scenarios are you using to underwrite your current decision or your current commitment to raising the dividend?
Before we announced in the last earnings call that we were going to we intended to raise the dividend in the future. We did a very thorough cash flow and we looked at all the sensitivities that could affect it. What the market I think is missing, it didn't used to miss it, but we haven't heard very much about it lately is that we have built where the we created integrated resort Myspace business model. And the critical mass of the components that make up an integrated resort is something that the competitors don't have. And we will say that where I mentioned in my prepared remarks that there were several instances in which we outperformed the market.
I was tempted to interrupt, but I know somebody would ask this question while I was reading. And what I'm saying is that the critical mass, the our perception and not just to call us words and say we're an integrated resort. I remember when we put all the components of attraction and entertainment together on the strip. Everybody called themselves the mega resorts because they were big. But people are forgetting that critical mass must see attractions.
The very broad mixture of the various and the depths of each of the integrated resort components is what assures us that we're going to continue. Why all of a sudden have we jumped in the whole quarter into 1st place? SJM has got 30 some odd 25, 30 some odd gaming licenses out there, bringing money into them. And why is it that we're we've always been number 1 in EBITDA and that is not going to change. The other guys can't catch up to us.
That train has left the station. When I first envisioned the idea of Cotai strip, other people criticized me and say it's never going to work and now everybody's cutting off their arms to get into go time. So my answer to you is we are different. We originally envisioned the difference. We built the difference.
We continue to maintain and improve that difference.
Thank you.
Thanks, Alicia.
Your next question comes from the line of Joe Greff from JPMorgan. Your line is open.
Good afternoon, everybody. My first question relates to the Macao margins. Obviously, better than expected 150 basis points of sequential improvements on a normalized basis. You mentioned in our earnings release a function of strong cost discipline. Rob, can you help us understand what specific costs you're taking out?
Or is it really just a more favorable mix that's spitting out a better margin? And if it is a function of taking out specific costs, how much did you get out on sort of a run rate basis in the 2Q that you think we can actually tangibly see going forward from here? And then I have a follow-up. Thanks.
Okay. Well, Joe, it's across all you can't get these kind of costs out in one specific area. There's some labor costs in there, mostly non Macanese. There's some direct marketing costs against the customer. There's cost against general marketing spend.
We're looking at every aspect of our business. And again, it's trying to be disciplined and not cut out the muscle, just cut the fat. And we're also being trying to look forward to the fact we plan to be in Macao for many years to come and we want to maintain a great approach or a great environment for the employees and for the customers. So it really is not one specific area. It's general marketing, direct marketing costs, labor costs, anywhere and everywhere we see excess spend we think is irrelevant.
And it will continue to be that way. We're not done, but I think we've done it very good. The team there has been very disciplined, very focused. We understand it's a harsh new environment that we're operating in. We have to maintain margin and to grow EBITDA, we have to do this.
You see this in the Q1, obviously, our spend is just improving, our spend against the customer, our spend against the employee, everything. So there's not one specific area. It's across the board, Joe. And it won't stop here. We'll just keep looking at it.
But again, the bigger term picture, we have to think long term too about how to maintain our leadership position, especially vis a vis the employee and the customer. We can't be shortsighted and just cut cost to cut costs.
Thanks, Rob. And then one other thing I found interesting in your earnings slide deck on slide 14 was that the base mass revenue was down sequentially more than the premium mass revenue was on a sequential basis. I would have otherwise thought it would have been the reverse. Can you help understand that? And I know you talked a little bit about success on the direct side of things on the VIP.
Is that impacting the premium math?
Yes. Actually, we had some junket space that physically we converted some junket space in the plaza, for example, over to the premium mass. We've had some wonderful success going direct to the customer in the premium mass side. The plaza had a very good quarter and we're continuing to make that transition. As the junkets weaken, soften, in some cases, leave us, we're making that transition.
So we're getting more revenues out of that premium mass side and premium direct side than we had in the past. And I think it's a positive to this. Hoping for some strength in the junket space, but hasn't been there. So I think our success there and also we've controlled the margins against that premium mass and premium direct customer. That's been part of the reason why the Plaza performed so well this quarter.
Great. Thank you.
Your next question comes from the line of John Oh from CLFA. Your line is open.
Hi, good afternoon. Thanks for taking my questions. I'll start with a follow-up on Rob's point on costs earlier. As you think about the cost cut and I think you alluded to a sustainable cost cut going forward in the future. How do we think about the new competition that has come up?
You had Galaxy opening in May, you've got a couple of more properties opening maybe over the next 9 months or so. How much of the cost that you've taken out, especially as it relates to general marketing, do you think could be something that you may want to maybe exercise some restrain to stay competitive? Due to your point about you want to be relevant in the long run, but just trying to map out how do we think about the sustainability of what you've taken out in the Q2 and how do we extrapolate that over the next 4 quarters or so?
I'd like to point out to you the number of years of experience between Rob and myself and other in this industry and the number of years of experience of other people actually sitting in the hot seat and making our decisions. Galaxy made an enormous mistake. The other companies will make big mistakes. They're already making big mistakes. Now don't ask me what they are, because I don't want to create another Houdini.
Houdini doesn't tell the secrets and LVS and SEO are not going to tell its sequels. Now they can't they're going to throw properties onto the market. But if you look at the fact that take for instance Galaxy, one they were never in the business before at all. So they have little experience cumulative experience in their executive ranks. And to back up their strategic judgments.
SJM has been a and Ambrose has been a monopolist for decades. I don't see that they have the ability. They're not used to living in a competitive environment, all of them. It's the same thing by the way with Kenting and Singapore, they never worked in a competitive environment. We never worked in anything but a competitive environment.
So you take Lawrence Ho, very bright guy, very nice man, he's done a good job, started off slow, picked up, SODENT Galaxy started off slow, picked up. But at one point, you got to do something beside opening the doors. And Wynn is used to competing, but he specializes as we all know. He has specialized and done an excellent job in the high end of the market. And what's the last one?
MGM. MGM, the only thing they ever developed was city center. And for those of us in the United States, particularly those of us who live here in Vegas, it doesn't need any further comments. So from our standpoint, we are very pleased. We've worked in competitive environments all of our life.
We have never not worked in a competitive environment. So we know what it takes. And I could tell you the mistakes that have been made. I don't want to go into them and make it public because I don't want to stop them from making mistakes in the future after all we're competitors. But other people are making mistakes.
We're not making the same mistakes. We're sticking we're staying the course. We're sticking to our critical mass, very broad, very in-depth entertainment and consumer attraction attraction components of the integrated resort model, which we claim we have started.
Mountains we have and the mountains we have have given us a terrific advantage in this market. I mean, we have 9,000 keys and the Parisian will bring 3,000 more and then the St. Regis. One thing is happening is this has become much more of a traditional resort market, I mean weekends, high demand periods, special event periods, holidays is when a lot of the casino wins coming out of those high demand for room time periods. And having 9,000 keys representing all types of accommodation and rates, the diversity here is critical in these peak periods.
It's helping our earning power terrifically in our margins, frankly. So this market looks a lot more like it used to be in Las Vegas or in more resort markets where you have a lot of demand on weekends, a lot of demand on the where there's special events. We're very fortunate to have diversity of product and pricing. So our room product more than ever is performing, a big part of our success.
What I'd like to say, John, is that notwithstanding my previous comments about our competitors, we do want to work together with them because collectively we can work together and bring a lot of visitation to our grounds to Macau. Yes. We could fight over the customer. And our claim to be able to do a better job fighting over the customer when they get off the plane, they get off the boat or they get off the bus. We could do that.
That's legitimately we could fight. But we got to work together to help Macau to improve it and to improve the visitation.
Thanks, John.
Okay. If I can follow-up with a question on policy. There was a recent transit visa relaxation that came into effect in early July. And I think a lot of us saw that as a positive signal. Many investors have asked us if this particular reversal is an indicator of maybe the government's willingness to take a softer stance in Macau on any future policy decisions.
Do you think that's a fair statement? Do you think that this is at least a signal that things are going to be better going forward? Would you read it that way?
John, there's just no way to for any of us to forecast the government's position in terms of Visa, smoking. I think we have to wait and see. I think it'd be silly for us to pretend to know. We don't know. We hope for the best.
We wait patiently for the government's direction, be it smoking, be it visas. But for us to sit and pretend to know, we just don't know. We are respectful of the government. We're hopeful that they'll support Macau. The citizens there, our employees, our futures reside there.
So we're hoping for the best and waiting for further direction. No forecast though. Okay. Thank you. Thanks, John.
Your next question comes from the line of Shaun Kelley from Bank of America Merrill Lynch. Your line is open.
Hi, good afternoon. Thank you for taking my question.
I was just wondering if you guys could give
a little bit more color on some of the trends that you're seeing from a kind of on a customer basis because within Macau, if we look at RevPAR, you guys are obviously seeing numbers that are down sort of in the mid teens right now. Although, I think as was mentioned in the prepared remarks, the numbers are pretty good relative to the market. But I was kind of curious on the decline in RevPAR versus you're actually seeing some continued sequential growth and year on year growth for sure in the retail business. Can you just help us understand what you think you're seeing reading between the lines and sort of kind of customer behavior at this stage at least on the mass market?
I think that the other hotels really the other operators really having difficulty and challenges confronting this situation, the challenges for all of us in Macau. We are maintaining a higher and they've taken all their rooms and doing something with them that they didn't do before. They're going to sell them. They're not selling the rooms. They don't have the experience in selling the rooms.
All they did was give them all away. We have experience in selling the rooms. It's what I said before. We are I'm sorry to sound boastful like this. I apologize for it, but we have to look at the reality.
The reality is that our experience tells us what to do when other people are confronting experiences they've never confronted before. Rob, do you want to say anything?
Yes. So you mentioned so let's go beyond. You mentioned retail. And I want to stop for a second and mention that ex jewelry and watches, our retail business is pretty good. And I think it's good on 2 fronts.
1, we're getting great traffic and our sales are still holding up pretty well if you take out the very premium, not the fashion, but the watches and jewelry are particularly soft across the Macao market. Saw that in some of the luxury report numbers. But our retail malls provide both income, but also visitation to the properties. I think it's a really important point. We built those malls a long time ago and they get stronger year after year, visitation stronger.
It's a reason to come to our properties. We're very, very we're very proud what's happening in the retail segment and how it translates down to the casino and the room occupancy. What you're seeing at Cal very clearly is the it's a mass market. It's a mass premium mass. It's no longer driven by junket GGR.
I hope the junkets resurrect, but right now it doesn't look promising. Diversity of pricing, lots of tables, lots of spots, ETGs, diversity of pricing, lots of tables, lots of spots, ETGs. That's our that's who we are. That's our background. We build our products for that.
When Macau was developed and Coatsai was brought to be, we've Sheldon's vision always was a Vegas style strip with lots of visitation, lots of mass market. It's happening. And so our products are a lot more I think they're diverse in both pricing and quality. The room product brings us all over the board from very high end suites to base rooms, lots of ETGs, slot machines. That's what's happening in Macao very clearly.
It's a mass market. Now the question becomes the future, how fast can it develop and get deeper into Mainland and China and more China visitation? That's the real question to grow GGR for all the operators to benefit and we're hoping we see that shortly. So that's the trend we're seeing and we hope it will return to the higher end, but right now we're living in a mass market with weekend penetration being very strong, midweek is not so strong. And you're seeing obviously deterioration of metrics because of the loss of the 10% or 15% of the very high end customers that drove so much more GGR on certain tables.
Thanks for that. And just as
my follow-up, as tempting as it is
to ask about Sheldon's views on Donald Trump, I'll hold back. And I'd love to get some let me get your thoughts on one other thing, which is on the dividend last quarter, I think in some of the remarks, you mentioned that the target was still at least to try and be able to increase your dividend by 10% for a year for the next 3 years. Is that something that you believe is still on the table at this stage?
The 10% increase? It's on the
table assuming that revenues keep growing and business gets better. Can we go to the different
I don't see any reason why to even reconsider it. We constantly maintain a rolling evaluation and rolling cash flows. There's no reason to even question it. Patrick, do you want to say something about that?
We spent a lot of time analyzing different scenarios with the Board and with the Chairman regarding our return of capital program, specifically the dividend. And we feel very confident that as our cash flows continue to grow that we'll be able to support the Chairman's wishes on dividend growth. We have a
we're getting more and more vibes that something is going to open up in Asia. And clearly, if you talk anybody in any of the countries where we've been, let's use the word lobbying for a number of years, there is not anybody who doesn't think that we're in the pole position in any one of these countries. So it's getting to smell like something's going to be coming up soon. And we've considered that in our cash flows visavis estimating the dividend and knowing that we're going to have enough to do. And we're not taking into account the opportunity to borrow money to pay the dividend, which by the way, if we did, we'd have a very, very, very super healthy dividend.
But we at this stage of the game, we're not anticipating borrowing to pay the dividends. We've got enough cash flow. Notwithstanding the reduction in overall cash flow because of the challenges in Macau, we're still earning a huge amount of money, 1,000,000,000 of dollars.
But I guess just to
be clear, dividend growth seems like it's tied to cash flow growth. Is that kind of the key part of the algorithm that investors should be aware of?
I think that's a fair statement.
Great. Thank you very much.
Thank you.
Your next question comes from the line of Thomas Allen from Morgan Stanley. Your line is open.
Hey, good afternoon guys. Can you just give us an update on the Parisian given the state of the market? Are there any changes to kind of the timeline or the scope or anything like that?
I think the timeline is about give or take about 12 months from now. For a full opening. We're not we haven't lately looked at a partial opening. It all depends. There are still some things, some imponderables out there.
But right now, the way things are going, we don't have as much labor as we'd like to have, etcetera, etcetera. But we're happy enough with what the government is giving us. We're grateful. We're appreciative. And right now, it looks like we're probably going to have an opening in about 12 months.
Hey, Tom, this is Rob. Just on the opening Sheldon addressed, but again, we think more than ever in this environment, the Parisians European themed is exactly the right focus for the mass visitation. And just like the Venetians, the most visited hotel in Macao, we think the Parisian is just situated perfectly in terms of the consumer in today's Macau.
Great. Thanks. And then just as my follow-up, following up on a previous question, just on your thinking around the rooms. Can
you give us some
more color on the kind of mix today versus maybe 6 months or a year ago on the number of rooms that are going to junkets versus direct casino customers versus selling rooms? And I mean you guys have a lot of experience. You have over 7,000 rooms in Vegas. And can you just talk about how you're thinking about that mix in general? Thanks.
Well, it changes every day, obviously. And to your point, 6 months ago and a year ago is different. But the biggest single change you well know is the decline of junket participation in the rooms. So that used to be a very important part of the mix has become much, much less important. We are spending more time focusing on getting more premium direct customers and premium mass customers those rooms.
We use them as more directly as a tool. We have been more aggressive in the pricing and how we get premium mass customers and there's a time when we're as high as $1200 or $14 a night ADR. That's dropped to half that. We're now looking at $600,000 $700 a night. And again, we sell those our network.
We're very aggressive on the pure cash sales. We always have been because we've had to be from day 1. Unlike competitors that maybe had 1,000 hotel in comp 90%, we've always been heavily skewed towards cash sales. We've built our network to sell rooms is a lot more advanced perhaps than others because it had to be that business. But I think in the future, you're going to see the increase on pure cash sales, the decline of junket sales, the increase of premium mass and direct mass play.
We're becoming more self reliant because the junkets just can't pick up the slack at this point. And that mix will move based on the market. But one thing is very clear, we make most of our money these days on weekends. Weekends look a lot like it did a year ago. There's huge room demand on weekends.
We run very high occupancies, very high rates. There's all kinds of competition among the segments weekend. Where the trouble comes in Macau like Las Vegas was when we first got here 20 years ago is midweek demand is soft. There isn't much junket pickup. There isn't as much premium mass play.
So we're making a lot more of our money. It's much more skewed to weekends because demand is there. The nice thing is the old church for Easter Sunday or synagogue for the high holidays depending on your religious beliefs, But we have a lot more ability to fill those seats, those rooms on the high demand weekends, special event periods, holidays. We are that's where the money is being made in Macau today. And when you've got 9,000 soon to be 13,000 keys, you can participate more than ever in that high demand period.
So just like the fight when the MGM guys bought the fight late in May, you couldn't get enough rooms, enough gaming tables. That's happening on weekends in Macau. That's where demand is and that's where the market is moving to. Everyone is struggling mid week in my opinion. It's the weekends
where the money is being made. So that's my take on the risk demand. We're struggling less than our competitors are struggling because we have a unique tool. It's called MICE. They can fill up with MICE, we can.
So that's why our occupancy is higher, our rates are high, our cash rates are higher And we could we have more of a mass market in the casino. It's again, it's you got to look at what we what the fundamental business model is. We are MICE based. We're supposed to fill up the midweek at the rates of the weekend when you have good MICE business. That's the fundamental nature of being in the trade show and the convention business.
And sorry, just to throw one other quick one in here. Can you guys you guys don't often give a lot of metrics around your mice business in Macau. Is there anything you can talk about in terms of like year over year growth or anything like that that may help us think about how that's helping sustain your business and account for its competitors? Thanks.
We can provide those stats. I'd rather do a different time because it's complex and time consuming. I'd move on to next question. I'd be happy to offline with you, Thomas. Thank you very much.
Your next question comes from the line of Carlo Santarelli from Deutsche Bank. Your line is open.
Hey, everybody. Good afternoon and thanks for taking my question. I had a 2 part question both of which were pertaining to the dividend excuse me to the balance sheet. 1st and foremost, as you talk about using a little bit more of your direct using the balance sheet a little bit more for direct play in Macau, could you kind of talk us through the thinking in terms of credit extension and doing a little bit less with the junkets? And if you see that being a real focus going forward or just kind of offsetting some volatility in the near term?
And then additionally, as it pertains to uses of cash from the balance sheet, what leverage level are you guys comfortable with as it pertains to paying the dividend on a go forward basis? Is there a certain level of say net debt to EBITDA where you would think that maybe additional dividend growth would be something that you'd have to think a lot more about? I
was listening to your dividend question. So your question I was listening to your dividend question. So your question relates to junkets and the premium direct?
Yes, exactly. Just how much you're willing to kind of use the balance sheet I know in the position that you're in, obviously a position of strength from a balance sheet perspective. Using the balance sheet for more direct play and kind of offsetting some of the junket softness is an option that's available to you? Right.
Well, it's really not a balance sheet question from my perspective because it's a creditworthiness question. And the reason I say that is we've got plenty of capacity to use the balance sheet if we could feel comfortable with the credit issuance. I mean, the first question is always not can we afford to take the risk is a good risk to begin with. And the problem I have unfortunately a lot of the success in Macao has been through the junk is because it's not as transparent to creditworthiness to some of these customers. So the people we know well, the people have proven to be creditworthy and can pass all the regulatory compliance issues, we're happy to extend credit to.
We did it aggressively in this quarter. We've done it aggressively in the last few quarters. We'd love to step into that position, but it's getting enough transparency and comfort from a regulatory perspective who we're dealing with to issue credit. We'd like to give 1,000,000 of dollars of credit every day in Macau like we do in Singapore. As you know in Singapore we've issued probably $20,000,000,000 of direct credit, but the customers are very high profile.
They're very scrutinized. They've got long track records and they're very regulatory compliant. If we get that kind of transparency in Macau, we'd be big advocates of direct credit. We have no we're the biggest credit granter in the world by a lot into the casino business. We're aggressive in Singapore, aggressive heck in Las Vegas.
But to get there in Macao means we need to know the customers deeper and there are far more customers in Macao, much more diverse and much more much less transparent to us. As we become more conversant with those customers understand it, I think we can issue more credit. But I wouldn't look for us to replace the junket segment nearly the quantities they've issued. We are getting closer to a balance with our junket play. If I look at this quarter, our junket play balance against the premium direct is getting more in balance.
But do we ever get the same level of credit that junkets do? Not in
the near term, no. As a dividend question, I'll turn it to Mr. Allison. We're committed to the dividends. As I've said a number of times, our interest my family's interest is on the same page as yours.
Our interests are very much aligned. To answer your question very specifically, we are comfortable with a 2 to 3 times leverage to EBITDA. Now we're not near that. And we don't have, as I said earlier in the call, our present intention is not to borrow money to pay dividends. We have sufficient cash flow and excess cash flow to be able to do that.
And we're just thinking about new development opportunities. It's there's a lot of conjecture about what a new development opportunity in an emerging market like Japan or somewhere else in the Far East, Keeping our powder dry so that we could go after that aggressively and we could build what it takes to build to win today, to win the competition. We're keeping our powder dry and our borrowing capacity. We're not uncomfortable with 2 to 3 terms, but we are uncomfortable right now to go out and borrow money to pay dividends. We as I said earlier, we're beginning to feel vibrations that a development opportunity is hopefully around the corner.
Great. Thank you very much.
We have now reached the end of time allotted for questions. This will conclude today's conference call. Thank you for joining us. You may now disconnect.