Good afternoon. My name is Nora, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Third Quarter 2020 Earnings Conference Call. I will now turn the call over to Mr. Daniel Briggs. Please go ahead.

Thank you, operator. Joining me on the call today are Sheldon Adelson, our Chairman and Chief Executive Officer; Rob Goldstein, our President and Chief Operating Officer; and Patrick Dumont, our Executive Vice President and Chief Financial Officer. Also joining us are Dr. Wilfred Wong, President of Sands China, and Grant Chum, Chief Operating Officer of Sands China. 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 provision of federal securities laws. The Company's actual results could differ materially from the anticipated results in these forward-looking statements. In addition, we may discuss non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures is included in the press release. Please note that we have posted supplementary earnings slides on our Investor Relations website and may refer to those slides during the Q&A portion of the call. Finally, for those who would like to participate in the Q&A session, we ask that you please limit yourself to one question and one follow-up question. Please note that this presentation is being recorded. With that, let me please turn the call over to Mr. Adelson.

Good afternoon, everyone, and thank you for joining us today. I hope that all of you and your families are staying safe and healthy. While the business volumes continue to be impacted by the pandemic, we are pleased to see improving operating results, especially in Asia. In Singapore, Marina Bay Sands had a profitable quarter as operations progressively resumed across the resort during the summer. In Macao, operating losses reduced sequentially over the second quarter. The third quarter results, however, are not representative of our current business trajectory. As the resumption of visa issuance across all provinces in China only commenced toward the end of September, the initial stages of recovery since then have been very encouraging. During the October Golden Week, we saw meaningful recovery across the different segments of our Macao operations. Importantly, business volumes in the Premium Mass segment enjoyed the most significant resurgence. This vital segment is central to our ongoing investment program in Macao and has been leading our revenue generation at this stage of the recovery. We expect the base mass market to recover as visitation to the market increases. Consistent with the recovery in premium mass and overall domestic China consumption trends, we also experienced strong recovery in our retail malls with the Luxury Retail segment enjoying the strongest performance. We continue to make excellent progress in our $2.2 billion capital investment for the Londoner Macao and Four Seasons budgets. The Grand Suites at Four Seasons, the largest all-suite Four Seasons hotel in the world, is now complete, licensed, and hosting customers in the Premium Mass segment. These gorgeous full suites have been receiving great customer feedback since the Golden Week. We will be introducing a variety of additional world-class integrated resort products and amenities as we complete the Londoner in Macao and other capital projects. The Londoner will include two new all-suite hotels, more than a dozen new restaurants, additional retail, and new MICE and entertainment facilities. Our unwavering commitment to significant ongoing investments in Macao enables us to support local employment and the local economy. It also ensures Macao will be even better positioned to recapture and, over time, increase its share of leisure and business tourism from China and the rest of Asia. I remain steadfast in my belief that Macao has the potential to become one of the greatest business and leisure tourism destinations in the world and the MICE capital of Asia. As I've said on many occasions, we would welcome the opportunity to invest billions of additional dollars and extend our contributions to Macao's diversification and evolution into Asia's leading leisure and business tourism destination. Now turning to Marina Bay Sands in Singapore. We are encouraged that MBS was profitable in the third quarter despite the absence of overseas tourists. We hope to see the initiation of reciprocal travel arrangements in the coming months as health concerns permit. We remain committed to pursuing long-term investment in Singapore and our expansion of Marina Bay Sands, although there would likely be delays in the timing of the expansion given the challenges created by the pandemic. In addition to the expansion, we will continue to reinvest in Marina Bay Sands to enhance the customer experience and the tourism appeal of the resort. In Las Vegas, we are pleased to report that the recovery is well underway. Weekend occupancies have been as high as 70%. Together with our state and local government leadership and the entire Las Vegas community, our team members are working diligently to prepare to safely host convention and group meeting customers from throughout the world. We look forward to once again welcoming these customers back to Las Vegas, which will always be the most important convention and group meeting market in the United States. As we have said in the past, increased airlift and the resumption of the convention and group meeting business are both critical components to achieving a full recovery in Las Vegas. Maintaining a strong balance sheet makes great business sense while we weather the storm caused by this pandemic. Our balance sheet strength enables us to continue to execute our capital investment programs in both Macao and Singapore, which we believe will position the company to deliver industry-leading growth and profitability in the years ahead. We're as confident as ever in the strength of our business model and the eventual recovery in travel and tourism spending in our markets. So thanks again for joining us on the call today. Now we'll take questions.

Your first question comes from the line of Joe Greff with JPMorgan. Your line is open.

Good morning, everybody. Sheldon, your comments about recent trends in Macao on the premium mass and the luxury retail side are certainly encouraging. I was hoping you could give us a little more detail on what you've seen since Golden Week. And would you say at this point that if you're running at these levels and they continue, you would be at EBITDA breakeven levels in Macao?

That's what we're shooting for.

But you're not currently there as of yet.

The trajectory is heading in the right direction.

Sheldon, I'd like to make some comments. Joe, it's Rob. How are you doing? To begin, let's just start with the obvious. Our confidence in Macao being the world's greatest gaming market and its principal source of customers coming from China is indicated by the favorable economic position vis-à-vis COVID. The renminbi is as strong as it has been in many years. The Chinese consumer is not traveling to foreign countries. We think this fact pattern from a macro perspective is very favorable for Macao. And as you know, Macao has been a $40 billion to $50 billion revenue market for the past number of years and year in, year out performs. The COVID IVS obstacles are real, but we believe as they start to lessen, we'll go back to marching toward our goal of $4 billion annually. Our new Four Seasons is now open. It's quite a product. The Londoner will complete from the interior perspective by December. We've never been stronger from an asset perspective. But there's no question, while demand from Macao is there, the visa and testing issues have proven to be challenging and do limit access. Now we hope the government will loosen restrictions and access to Macao will continue to improve. The way Macao and China have handled the virus is very capable, and Macao will be the beneficiary of reduced travel to other markets, with Chinese consumers not traveling outside of China. So it's a domestic travel bubble we hope to be included in. I'd like Grant to offer some insights and talk about this. I asked Grant and Wilfred Wong to join the call and provide you color from the ground since we haven't been there in many months.

We're well awake, yes. Thank you, Rob. Yes. October was the first time since January that we've seen significant real business volumes in patronage. Premium mass has been the strongest segment by far, and that is reflected across all the different tiers of premium mass. The patrons returning first to Macao are the high-quality, high-frequency customers. I think that reflects the pent-up demand that these guests have, and these are the ones who are used to staying overnight in Macao. They are used to having multiple-night stays in Macao, enjoying the destination, and these are the first customers to come back, which is natural. In terms of the question about where we are on the volumes and profitability, mainly based on the premium mass recovery, October month to date, our Non-Rolling drop per day is just over $20 million. That's about 30% of last year's level. And at this level of Non-Rolling drop, we are able to achieve a slight positive EBITDA month to date based on the current cost structure and business mix. What's particularly encouraging, to Joe's question about what's happening, is that after Golden Week, we had the expected lull in the second week of October, but then we saw a very notable rebound in the third week. In fact, in the third week, we are averaging around or just under $20 million drop per day. So we are well on that trajectory, and we hope we can maintain that. In tandem with the premium mass recovery, we've seen a resurgence in retail mall sales, especially true in the Four Seasons, in the Luxury Retail segment. The retail recovery actually began in September and has continued into October. In fact, a number of our top first-line brands within the Four Seasons mall are up year-on-year in the first two weeks of October. Now regarding the Grand Suites for Four Seasons, these suites have received exceptional customer feedback. These are exactly the right product for this Premium Mass segment. Also, consumers are looking for higher quality, looking for premium experiences and increased personal space. So we're very happy with how that product has performed and, in fact, it is one of our best-performing hotels in October. In terms of the base mass, it's relatively low in traffic right now. The overall visitation in Macao remains relatively low. There are impediments—some are real, and some are perceived—with awareness in terms of policies. But there are real logistical challenges relating to COVID testing and the visa application process. But as awareness builds, as word of mouth spreads, as some of these visa application processes are shortened and become more streamlined, some of these logistical challenges will be overcome, and we are confident that the base mass will follow as visitation recovers. The VIP segment has been slower in recovery, which is expected, but we're also seeing reasonable play coming through that segment in October. I hope that gives you some insights on the October month.

That's great, Grant. I hope you're on the next bunch of earnings conference calls. Just a quick follow-up. How much of your volume do you think is coming from outside of Guangdong since Golden Week? Or is it primarily this month all Guangdong?

Actually, the vast majority of the volumes and room bookings are from non-Guangdong, and that ratio is actually consistent with what we saw in the past. So this is not out of the ordinary. The majority of the volume comes from outside of Guangdong, and that was the case in October already. Your question is still valid in the sense that in the first week of October, many customers from outside of Guangdong either didn't have time to get the visa or they didn't want to leave their planning to such a last-minute timeframe, so they had already made alternative plans. The nationwide visa resumption only occurred or started on September 23, which was not sufficient time for many customers to feel confident they could secure a visa before the Golden Week holidays, hence the spike in volumes since they have been able to resume travel.

Great. Thank you very much, everybody.

Thanks, Joe.

Your next question comes from Felicia Hendrix with Barclays. Your line is open.

Hi. Thank you so much. And Grant, if we could keep you on the hot seat here, I think we are all excited to hear from you. So just getting back to some of the items that you mentioned. On the visitation side, are you seeing any changes in the rate of visa application approvals or even the methodology? I mean, have the kiosks been returning? Or is it still an in-person, more manual process? And on the testing, is there any sense that this will be extended to 14 days? I know there has been some talk about that.

Sure. I think when the Guangdong visas resumed, most of the offices were operating on the physical application process and not using the kiosks. As the rest of the country has reopened for these applications, we've seen a variety; it's not uniform because different provinces have different procedures. There are some significant provinces and cities where you can get a same-day application. Most of the others range from a manual process taking anywhere between three to seven working days, but there are several that have a shorter application period. I think going forward, this will hopefully smooth out. The authorities are cautious, and that's right given the pandemic; we should avoid a huge surge in people entering Macao in a short time at the beginning.

And then, just on the testing, do you think they'll extend that to 14 days versus seven? I know that's been a bit of a gating factor?

That has been discussed in Macao, and we are waiting for further developments on that front.

Okay. And then, just as my follow-up, this could be for anybody, but on the VIP side, I'm just wondering what you guys are seeing in terms of junket liquidity. I know it's not a big part of your business, but junket liquidity is important for the market as a whole. So I just wanted to know your thoughts?

Grant, do you want to take that one?

Sure. I think some of the challenges in that segment are well documented. The segment has been slower to recover in this initial stage of recovery. But at the same time, as you correctly referenced, it's not a significant part of our business, comprising only 4% of our total contribution in 2019. Meanwhile, we have strong performance in the premium end of premium mass across both gaming and retail.

I was just wondering if you thought that maybe some of your premium mass might be benefiting from folks moving segments as it was before COVID, but maybe seeing that faster now.

I think it's too short a time period to ascertain that.

Okay. Sorry, Rob.

I think one point to make, as Grant was saying, is that the premium mass segment is recovering first. There's speculation about junket liquidity. What we're seeing in retail is strong. I was talking to our retail team this morning. It's hard to believe that in this environment, our top six net new retailers—without naming names—are up year-on-year in total sales. It shows the strength and liquidity of that premium mass segment. It reflects both gaming and retail appetite. It is exciting to realize that segment is back, and this bodes well for the future. When restrictions ease for base mass, I think we are well-positioned.

Great. Thank you so much.

Thank you.

Your next question comes from the line of Stephen Grambling with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking the question. It seems like there's been more news and perhaps noise around overseas gambling legislation in China and some restrictions potentially there? What is your interpretation of some of these laws or legislation and the implications for both Macao and Marina Bay Sands and how that might change how you position or market LVS properties?

I’ll take the first point regarding Marina Bay Sands and ask Dr. Wong to speak to Macao. But the concerns there don’t affect us in Singapore. We do our job as best we can, monitoring all restrictions and money movement carefully. Singapore continues to be an upside market, although negatively impacted by the inability of Chinese customers to travel there. However, we do see the initiatives taken by the Singapore government to open travel to Hong Kong. Hopefully, that will be a catalyst for other jurisdictions, other countries, and airlines to open the doors to more travel into Singapore. Dr. Wong, would you speak to the issue of cross-border casino from your perspective as it relates to Macao?

Sure. We understand the National People's Congress is still debating the final form of that legislation. The main target is gambling in foreign countries, particularly Internet and telephone betting. Macao has never been considered foreign in China. All concessionaires in Macao respect the law in China. We never promote gaming in China, only our hospitality and MICE facilities and services. So we believe that Macao has a unique position under the one country, two systems model in China, and we will continue to operate under the confines of the legislation.

That's helpful. I'll jump back into the queue. Thanks so much.

Thank you.

Your next question comes from the line of Carlo Santarelli of Deutsche Bank. Your line is open.

Hey, guys. Thank you. I just want to follow up on Felicia's question and talk a little bit about the VIP segment. Grant, you're probably best positioned to answer this, but how much of it do you think is a supply issue in terms of liquidity and supply of capital versus a demand issue? Part of that gets to demand actually just showing up in your premium mass, which you've already addressed. Any color on the supply and demand dynamics within the VIP segment?

Rob, do you want me to take that?

Grant, I want to finish a comment after you. If you're going to initiate, please do.

Sure. I don't particularly see it as a demand issue. The disruptions caused by the pandemic have really affected the working capital cycle in that segment. The business stopped completely for so long, which has especially damaged that segment's ecosystem. But as gaming activity resumes and demand returns, we hope some issues will evolve positively.

I'm going to say the obvious, but I want to note it anyway. The aging customers—we have the highest offense in the world. It's been that way for decades and will be for decades to come. I don't believe the demand—the appetite of the consumer has diminished whatsoever. The capital cycle is in jeopardy right now and will take time to adapt. We have had these issues in previous years, and we know two things are intact: Demand remains intact, and that's a fact. At some point, capital will begin to be available again. I wouldn’t count that segment out. It may be in a tough spot right now, but again, demand will be there, and eventually, we'll figure out the capital supply side.

Great. Thank you, guys. And if I could just ask one quick follow-up regarding what you're seeing in a reduced demand environment across the board—albeit healthier in premium mass—are you seeing anything unique from competitors in the market in how they are trying to drive demand at their assets, or is it pretty much business as usual across the board?

Yes. It's business as usual. We don't see anything out of the ordinary at this time. This isn't a business where the players are going to implement irrational strategies.

I would add one thing, albeit it may not be vital to our overall business, but in terms of synergies, it is essential for liquidity in the marketplace. The premium mass segment has seen the first recovery. I think with our new Four Seasons product; our Londoner product will prove to be advantageous in the future. As we move back toward our goal of $4 billion in annual EBITDA, those products are front and center. Great products will attract premium mass customers; great marketing drives this segment—for us, we’ve built attractive products that will be very appealing to this customer.

Thank you both very much.

Thank you.

Your next question comes from Steve Wieczynski of Stifel. Your line is open.

Yes, good afternoon, guys. So Rob, can I ask you a Vegas question? Can you help us think about forward bookings for group and convention traffic in Vegas next year and how those bookings at this point are shaking out by quarter?

Sure. We still see bright spots in the Vegas market regarding convention and group business. There's demand in the market from those who want to organize events this quarter. However, there are some large impediments, with group size restrictions imposed by the governor being very difficult to overcome. We hope he will revisit those restrictions. Airlift is still not at pre-COVID levels, which is a challenge. There’s a number of calls in the group market. People want to return; they’re looking at different months throughout the year with increasing demand. We need the governor to revisit his restrictions and airlift to increase. The willingness of consumers to be in large gatherings is another hurdle. Weekend leisure demands in Las Vegas are strong at the moment, with occupancy high, while midweek remains a challenge. Weekend leisure is strong, but group events are a key part of Las Vegas’s recovery. We want to capitalize on this growing demand as we move ahead.

Okay, great. Thanks, Rob. And the second question—how should we think about the election coming up and each scenario potentially impacting your China relationships moving forward?

I won't answer that question, with all due respect. I think it's—first of all, I don't know if there's a good answer since we don't have insights into the Chinese perspective. I’ll pass on that. Sheldon, do you want to weigh in?

We don’t answer political questions.

Your next question comes from Robin Farley with UBS. Your line is open.

Great. Thanks. I have a question for Grant Chum, circling back to some of the earlier discussions. Grant, it’s nice to hear your voice. Just your take on whether junkets' ability to operate in Mainland China and their interactions with customers would be impacted potentially by the blacklist regulation, not that players won't come to Macao, but the ability for junkets to provide capital for players from the Mainland. Looking into the future, how long do you think capital control in Mainland China may be an ongoing concern?

Rob, shall I take that?

Yes, please.

Hi, Robin. Yes, the prohibition on gambling in Mainland China and solicitation of gambling there has always existed, and those rules and regulations are well understood by market participants. The market in Macao has been operating successfully without issues for many years. But obviously, we will watch developments closely.

Thank you. As a follow-up, Rob, can you provide an update on potential M&A activity? You mentioned there might be interest in that?

Patrick, are you in the call?

Yes. I think what we said before remains. We view capital deployment consistently with a very high return threshold. When that original commentary was made by the Chairman, it was regarding conditions that existed before all the stimulus interventions. Where we are today, we are very focused on maintaining our investments in existing markets. We’ve deployed a lot of capital to these markets consistently. As Rob and Grant mentioned, you’re starting to see the benefits in the returning premium mass in Macao and high-value investments. We’re also looking to maintain liquidity to ensure we can take advantage of future opportunities. We are optimistic about the future of our key markets. If an M&A opportunity arises, we will evaluate it. But currently, there’s nothing compelling, and we will continue to deploy capital in our markets.

Thank you.

Thanks, Robin.

Your next question comes from Thomas Allen with Morgan Stanley. Your line is open.

Thank you. Just following up on the last question. We've been getting inquiries regarding when you may resume your dividend. Would you return to the $0.79 you were paying at the beginning of the year? Can you update us on your thinking there?

Patrick?

Hey, it's Patrick. Return of capital has been a cornerstone of our shareholder value creation program. We're focused on getting back to being a dividend payer. Our Chairman has expressed this multiple times. We're motivated to grow our cash flow beyond where it was in 2019 and eventually return to being a dividend payer. The key thing is that we're in the early stages of recovery from COVID, and we will see how that trajectory progresses before determining capital return. We are focused on growing the business back beyond prior levels; we will assess dividend payouts at that time.

Helpful color. Thanks, Patrick. Can you give us further color around Las Vegas and Singapore? The third quarter looks better than the second, but what was the progression like month by month? Have things improved in October, and do you expect that trend to continue?

In Las Vegas, I think things are stable, and I don't see a substantial change based on seasonality. We’re in a different situation right now. While the leisure weekend market is surging, we’re seeing the occupancy high, and midweek is not as strong. The airlift still needs improvement, and we’re operating primarily as a regional market. There’s group demand, but we need the governor to lift the restrictions and ensure increased airlift. Meanwhile, our leisure demand on the weekends is very strong and could potentially rise beyond expectations. Development in Singapore is very much tied to air travel and foreign visitation.

If I could add, in Singapore, operations resumed in a phased manner after the circuit breaker. Therefore, we did not have our full hotel towers until August 1st. The ramp across the quarter has been positive and continues to lead to profitability gradually.

Very helpful color. Thank you.

Your next question comes from Jared Shojaian with Wolfe Research. Your line is open.

Hi, good afternoon, everyone. Thanks for taking my question. On Marina Bay Sands, can you tell us what percentage of your business historically has come from Mainland China? Additionally, could the cross-border issues create a near-term headwind but be positive over the longer-term as more demand potentially shifts to Macao?

We’re not going to break out those percentages in terms of profitability from China to Singapore. It is an important market for us and fundamental to growth. The cross-border market indeed has dual implications; it’s beneficial for Macao, particularly as customers can't travel abroad for luxury goods and ministry. While Macao could benefit from increased domestic shopper interest, accessibility to Singapore might diminish in the short term, given current travel regulations.

Okay, thanks, Rob. Just one more for you. Given that Vegas is recovering, we’re closer to a vaccine, and Macao has been slower than expected, is it still your expectation that Macao could and should get back to prior peak revenue before Vegas?

Yes, I believe so. Macao has a strong recovery trajectory as the markets recover. China, being in a favorable position, will aid in the growth of Macao's business as soon as travel restrictions ease. Although Vegas has demand issues, Macao only requires the removal of barriers to be successful. I feel positive about Macao’s potential recovery long-term.

Alright. Thank you very much.

Thank you. Appreciate it.

Your next question comes from David Katz with Jefferies. Your line is open.

Hi, afternoon. Thanks for taking my question. I want to follow up on IVS circumstances. Considering the negligible COVID-19 cases in Macao and targeted areas in China, what insight can you provide on the government conditions for changing these restrictions? Is it more just time till processes convert back fully or speed in applications?

Mr. Chum, are you awake?

Yes. I think we need to note the great work of the governments in China and Macao in controlling the pandemic. Each relaxation step is handled cautiously; we need to assess that everything remains orderly without significant issues arising from mass movements. There are probably processes that will be expedited, and we expect further improvement as COVID-19 is managed.

Rob, this is Wilfred. Can I jump in?

Please do.

Both the central and Macao governments know what should be done, including persuading the Chinese government to work on kiosks instead of manual processes. This helps control numbers to avoid a COVID resurgence. Therefore, both administrations are moving cautiously but surely toward those changes.

Thank you for that. Just one detail follow-up. Due to the recovery in Macao, could you clarify the impact of the Londoner’s ramp-up?

Grant, please take that.

Yes. This market is highly product-driven. We’re excited to provide significantly enhanced products and experiences with the Londoner Macao. The construction progress has accelerated due to the pandemic; we’ll roll out products progressively starting at the end of this year and as we go into next year. We believe the segments recovering, particularly premium mass, gives us a natural rollout opportunity.

Let me add—this is an unusual opportunity; the SCC previously didn’t deliver the kind of results we needed. Now we’ve redone the venue, and it’s going to have superior offerings that will propel success in all gaming and retail sectors. Everyone is eager to see it fully operational. We think it should be phenomenal; it’ll be remarkable to return to Macao and witness the effects that have long been awaited.

Look forward to seeing it. Thank you for taking my question.

Thank you.

Your last question comes from Shaun Kelley with Bank of America. Your line is open.

Hi, good afternoon, and thanks for squeezing me in. I wanted to do two quick follow-ups on questions about education and Big Ten guidance.

It seems he got dropped off. We'll deal with him directly. That's it.

Thank you.

Thanks so much for joining us.

Mr. Chum, Dr. Wong, thank you for joining the call. We appreciate it. Great insights.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.