Conference Transcript - LVS 2026-05-27

Richard Clarke, Analyst — Bernstein

Thanks very much for joining the 4.30 session here at the Strategic Decisions Conference, 42nd Annual Strategic Decisions Conference. Anyone that doesn't know me, I'm Richard Clark. I'm the GLL analyst, OTAs and crews analyst here at Bernstein, and delighted to have Patrick Dumont here for, I guess, your first Strategic Decisions Conference, if that's right.

Patrick Dumont, CFO

That's right. Thanks so much for having me.

Richard Clarke, Analyst — Bernstein

I really appreciate it. Delighted to have you here, representing Las Vegas Sands. So maybe for anyone in the room that doesn't know the business that well, maybe just a short description, and then you've been in the job now for, I guess, three months. Is that about right? Not new to the industry, not new to the business, appreciate that. But just any first impressions, early impressions of sitting in the hot seat at LVS?

Patrick Dumont, CFO

I think the great thing is I've worked for the company for almost 16 years, and so our team is a group that's worked together for a long time. You asked for a description of our company. We are the premier developer and operator of integrated resorts in Asia. So our founder, Sheldon G. Adelson, had a vision for large-scale growth in tourism through scale investments for both leisure and business tourism, and he accomplished that. And so today, we're the scale operator in two of the most important markets in the world for our industry.

Richard Clarke, Analyst — Bernstein

Great. Well, I mean, I think when we hosted the company before, we've always started in Macau, but now it feels like we should start in Singapore for the best news. So I think, you know, Singapore has now become pretty much your biggest or at least joint biggest part of the business. Exceeded, I think, anyone's expectations of what they would have had for Marina Bay Sands. Maybe you could just talk us through, you know, what's driven that success. You know, is that structural? Have you had some cyclical upside from it? You know, what's driving the strong performance you've seen in Singapore in the last year or so?

Patrick Dumont, CFO

If you look at our company's history, we've always created success through investment. So the first investment that the company did was based on changing the status quo, about developing something new that had both leisure and tourism components. And our company brought that to Singapore. And I think there's always been a long-term vision about the growth of Singapore. I think our company has a very positive view about Singapore and its long-term potential. And we've been investing behind that thesis for more than 15 years. And so if you look at Marina Bay Sands, it's actually always exceeded industry expectations. You know, when it was first opened, And I think people didn't anticipate just how well it received it would be. It created massive tourism growth for Singapore, which was the goal. Created a lot of follow on foreign direct investment, which was the goal. And we've had a great partnership with Singapore and developing high value tourism over time. We've invested a lot in the mice industry there. We've invested a lot in entertainment and in hospitality. And I think the last round of investment that we did, which was a one and three quarter billion reinvestment program, really created a much better experience for high-end patrons and high-end guests. And we really focused on a few things. We focused on the product. We focused on the design, the materiality of our rooms, how we would service our customers. And we created a whole new category of suite product that we didn't have before, on top of renovating our food and beverage and some of the other experiences our guests would have. And that helped create the growth that we see today in Singapore. So for us, it's really in the most important market in our industry in terms of the high-end part of it. The structural tailwinds for Singapore are extraordinary, and we have a government that is investing in other sectors to help high-value tourism. So I think it's a great market. Southeast Asia is growing. There's a lot of wealth creation, and a lot of people are looking for tremendous experiences, unique experiences, and they come to us. And so it's very fortunate that we're there.

Richard Clarke, Analyst — Bernstein

So is Singapore now the destination for premium gaming tourism? Is that now overtaken Vegas, Macau? It's the top destination now to go to if you want a gaming vacation.

Patrick Dumont, CFO

That's what it seems like. That's what our goal was. Our goal was to create the best hospitality experiences in the world, the best service experiences in the world, the best dining, the best entertainment in a way that these critical massive amenities would drive the highest value tourists. And I think we've achieved that, and we're going to continue to invest and continue to look to grow.

Richard Clarke, Analyst — Bernstein

So talk to us about the extension. So I think $8 billion, correct me, Yvonne.

Patrick Dumont, CFO

Expansion.

Richard Clarke, Analyst — Bernstein

Expansion. Okay, well, maybe you explain exactly what the expansion is then, if I'm using the wrong term in Singapore. Fourth tower, am I again using the wrong terms here? All are good. What are you looking to achieve, adding this extra capacity? What does that add to the product in Singapore?

Patrick Dumont, CFO

I think we've learned a lot in the last 15 years about the market and about its potential, and we've been able to get the benefit of some of that knowledge and experience in the recent reinvestment that we did and the EBITDA growth that you've seen across through 2025. And I think now we're looking at our IR2 and it will have a name besides IR2 by the time we open it. We're looking at IR2 as a way to take all of that knowledge and experience and create a higher level of luxury, a higher level of unique hospitality experiences, a higher level of food and beverage, a higher level of gaming, and most importantly, a higher level of entertainment with a new 15,000-seat live performance venue that really creates experiences that our customers can't get anyplace else to continue our leadership in Southeast Asia as the premier IR.

Richard Clarke, Analyst — Bernstein

And talk to us about the sort of getting a return. I mean, sitting from a sort of hotel analyst, $8 billion sounds like a lot of money to spend on an expansion, an extension, whatever it is. Are you hoping to get the same return on that investment as you put into the original Marina Bay Sands hotel?

Patrick Dumont, CFO

We think about it as a total investment. So we don't break it into its component parts. We think about it as we spent close to $6 billion building Marina Bay Sands. We spent several billion dollars recently renovating it. We spent almost a little bit more than a billion dollars over the years in CapEx in certain areas. And then with the expansion of $8 billion, I do want to point out the $2 billion of that is actually land premium to the Singapore government. And so you could almost think about that as amortizing that over the life of the investment of the lease. But more importantly, even if you want to consider the $8 billion, I would say that when you look at all that spending in aggregate and you look at the productivity of the asset in aggregate, we would exceed our return thresholds that we expect. So we're very excited about it. We have a very long-term view about Singapore. We consider this a tremendous opportunity for our company to invest in this scale, these type of assets in this market, given what the market has in terms of its productivity. And we're very excited about it, and we're optimistic about the returns. Otherwise, we wouldn't be doing it.

Richard Clarke, Analyst — Bernstein

And is the current level of profitability you enjoy in Singapore, I think it's a 52% EBITDA margin, is this a sustainable margin through the future of Singapore, or does it eventually get competed away in some way?

Patrick Dumont, CFO

So I think what's interesting about Marina Bay Sands is if you look at it throughout its history, its margin structure has been the best in the industry at that scale. And I think that's driven by the quality of investment and the type of patrons that are available in Singapore as a market, which is unique. It's a very high-end market. It is rarefied air. These are the best patrons in the world, and they're there in scale. And so for us, to be able to have an opportunity to expand and take advantage of this is very powerful.

Richard Clarke, Analyst — Bernstein

And you mentioned it there that the expansion will take on a bit more of an entertainment focus. Is this to attract a different customer to the property? or is this providing more experiences to your existing kind of core customer base? Are you trying to expand the appeal of Marina Bay Sands with adding more of these entertainment type?

Patrick Dumont, CFO

So it creates opportunities for a couple different types of customer. I think it will drive more foreign tourism into Singapore. You saw that with Taylor Swift. You saw that with Lady Gaga. You see that with F1, that high-quality entertainment events drive visitation to Singapore. And so we think that'll be a great benefit to not only Marina Bay Sands, but also Singapore tourism as a whole. We think it will be a very unique experience for our high-value patrons because the type of luxury entertainment experience that we're going to present in the new arena is going to be unique to Asia. We're going to have a lot of high-quality amenities within the arena and create experiences that our customers can't get anyplace else. And I think the third component is it'll be great for Singaporeans because now they'll have a live performance menu that they don't have today in Singapore. And so I think it hits a couple different components, and it will do them all very well.

Richard Clarke, Analyst — Bernstein

Okay.

Patrick Dumont, CFO

And then talk to us about the MICE opportunity, may be there as well that's also going to be accelerated by the by the expansion you going to be there how important is that to the to the singapore customer the singapore revenue pool so singapore has a has a goal of actually growing mice materially over the next couple years and and so there's been a lot of focus on how to grow mice and so we have an additional mice component in our expansion in ir2 and this mice component will be very important because it allows us to host events that we can't accommodate today because of the capacity. We'll also add another large-scale ballroom that's calm-free. And, of course, the arena itself is very useful for MICE because of the types of sessions you can run now and the types of events that you can have in coordination with the exhibition space and the convention space. So for us, this just helps fill out and make our offering stronger. So it will be a good component of the MICE offering that Singapore has.

Richard Clarke, Analyst — Bernstein

So beyond the current projects, is there more investment opportunities in Singapore?

Patrick Dumont, CFO

Sorry about that.

Richard Clarke, Analyst — Bernstein

I'm sure you've been talking all day. Is there more opportunities in Singapore? Can you keep growing? Fifth town, sixth town, seventh town, other sites?

Patrick Dumont, CFO

Let's start with this one and see how it goes. But I like how you think.

Richard Clarke, Analyst — Bernstein

Hopefully so. And then maybe just to throw in one short-term question here. Obviously, we've seen a lot in Asia about jet fuel shortages and flights, et cetera, and I guess with Singapore in particular, you know, it's very much a transportation hub. Are you seeing any impact from sort of flight turmoil in terms of the demand coming into Singapore?

Patrick Dumont, CFO

Right now, we don't have anything to report. And the question remains, how long does this go on? And so we'll wait and see. But as of right now, there doesn't seem to be anything that we can measure.

Richard Clarke, Analyst — Bernstein

Okay, perfect. Let's shift over to your other key market, Macau. I guess it would be fair to say, in a slightly different trajectory to Singapore, is this simply a cyclical impact of a software Chinese consumer? Is it getting more competitive than maybe Singapore has been? Or is there any sense you've kind of underperformed in that market?

Patrick Dumont, CFO

So, excuse me, sorry about that. So, Macau is very interesting because Singapore opened after the pandemic in a different timeline. And when you think about when Macau opened in January of 23, there was a lot of uncertainty about what that would actually look like. And it took a little while for the visas to actually hit a normal run rate. And so as Macau opened as a market, it didn't recover as a snapback. So in other markets, when the pandemic finally receded, there was a snapback. Macau had more of a ramp. And so it was uncertain what the ultimate market stability would look like. It's the stabilization point. And the great news is Macau has actually kept growing. So if you look at the gross gaming revenue run rate in 23 when it first opened, it was more than $10 billion less than it is today. And over time, the patrons who have returned to Macau are actually new. There's a lot of new customers coming to Macau. A lot of them skew younger. They bring their families. And a lot of them have made a significant amount of wealth in the last five years because of the growth that has occurred across Southeast Asia and China in certain sectors. And so what we're seeing is it's really a more premium-led recovery as opposed to the unrated play, which represented a large portion of our business. And so we're the scale player in the market. We have the most assets, the most hotel rooms, the most gaming positions. And so for us, it represents an opportunity to invest and actually change the way we address the market for the segments that are now the most powerful and the deepest, which we have the capacity to do. And so what we intend to do is invest over time and actually make adjustments based on some of the ways we position ourselves post-pandemic to ensure that for the long term we invest for success. But we really very strongly in the Macau market. We think there's a bright future there. Its feeder is China, Hong Kong. and certain other countries in smaller amounts. And we feel like that the future is very bright, given the level of investment there and the high-quality assets that exist in Macau today.

Richard Clarke, Analyst — Bernstein

So is that a very different customer split than Singapore? Singapore is broader. It's not just Chinese and Hong Kong customers. That's coming from all around Southeast Asia. I mean, can you attract those customers to Macau as well? Can you broaden the appeal of it? Or is it about getting the Chinese customer right that's about winning in Macau?

Patrick Dumont, CFO

So it is very different feeder markets for both of these properties or grouping of properties in Macau. So Singapore is really inbound tourist from all around Southeast Asia. So Indonesia, Malaysia, Cambodia, Vietnam, Thailand, a little bit of Laos, some South Korea, some Japan. But it's really more of a local Southeast Asia customer base. And when you look at Macau, it's what I described before. and the thing that's interesting about Macau is that we have a mandate to grow inbound tourism from other countries and so all of us as a group of concessionaires are working on doing that and it's much easier now because the Hong Kong airport is readily accessible with the bridge that goes from the Hong Kong airport to Macau and so that is something that we're working on to help make a reality but because of the attractiveness of the Macau assets and their relative competitiveness to other hospitality centers globally, we feel like that's a possibility for the long term and we're working towards that And so talk to us about some of the investments you're doing into Macau.

Richard Clarke, Analyst — Bernstein

So if I understand correctly, the attractive customer now is a little bit more premium than it used to be. So what do you need to do in your properties to attract that customer? How much investment is maybe necessary to get to that, to attract that customer?

Patrick Dumont, CFO

So I think for us, we're really focusing on three things. We're focusing on our product, which is part of the renovation that we talked about. I mentioned on our earnings call about how we're looking to engage in a CapEx program over the next three years. to help create higher opportunities for return on investments. We're really focused on our people to ensure that we have the right people in the right positions to maximize the value of the assets. And most importantly for our customers, we're really improving our service. You know, it's something that post-pandemic, we've had a lot of work to do on, and we're doing it. And so when we combine all these things, we feel like we'll have a really good opportunity to address the market and attract these high-value patrons. But they're a very discerning group. They're very sophisticated. They're on social media. They travel internationally. they're aware of other markets and so you have to be very competitive on a global basis to ensure that you retain these patrons. And so it really is about investment in those things.

Richard Clarke, Analyst — Bernstein

So talk to us about the Londoner. So that's now, is that fully open? Is that your favorite property of ours? I like to go to themed properties based around where I work.

Patrick Dumont, CFO

Because you can go from Venice to Paris to London all in one day. No, they're not interesting to me.

Richard Clarke, Analyst — Bernstein

I only want fish and chips and pies and David Beckham sweets. So you can cut in there. ever know. I mean, how well has that product resonated? I guess it's a new theme, if you like, for casinos. I guess Paris and Venice have been well tried and tested. Is London a theme that resonates with it?

Patrick Dumont, CFO

London's a hit. I have to tell you, London's a hit. But I think the takeaway is theming is not easy in our industry. There was a time when, particularly in the history of Las Vegas, the theming had a certain amount of import to it. And I think for us, because our Macau properties are themed we have to do it in a way that is both tasteful and remains current relevancy right I think we were able to do that with the Londoner I think it's a lot of fun it has some whimsy to it and people are happy with it but I also think at the end of the day it comes down to the performance of the asset yeah and if you look at what we were doing before and the results after you can see that there's a real opportunity for growth there I think the other thing to note as just as an operator are properties that are most freshly renovated are the ones that perform the best and that makes sense intuitively someone who understands hospitality very well there's there's a need not only to invest to offset appreciation which is real in our industry you know you really have to invest to keep your properties fresh but also to create experiences that are new that keep people talking about it I think we've we've done that well with the Londoner transformation and I guess when you talk about sort of Marina Bay Sands back in Singapore you know I think they actually actually took rooms out to make the room bigger and more premium is that something that's an option in Macau is that something that's also going on you can sort of premiumize the product make it more exclusive we've done that you know I think if you look at the transformation of the Londoner particularly most notably with the Londoner grand product that was a Sheridan hotel and we basically went two for one and we did that to create better experiences for people and go out of the room product into a suite product and we were we were fortunate because of the way the the floor plates worked that we're able to do it in a very efficient way and so we I think we got an outcome that worked very well particularly with the direction of the market and where the deepest segments are to be able to create these sweet products to attract these high-value tourists to Macau. But we still have hotel rooms in all of our hotels, but we're also overweighting certain types of sweet products to ensure that we can grow with the market given where it's headed.

Richard Clarke, Analyst — Bernstein

Okay, makes sense. How, I mean, if we sort of think about, you kind of mentioned there you need to do theming, right? You switched over a Sheraton product to one of your own brands, can we take that to mean that that kind of branding product, like having Four Seasons or Ritz-Carlton or Sheraton above the door, that is resonating less for your customers, and it's more about the quality of the product that matters?

Patrick Dumont, CFO

No, I think it depends on the brand, where the brand positions versus where the customers are headed, because these are international brands. The Sheraton brand is a very strong brand globally, but when we made the decision, was Was it right for the type of customer that we wanted to attract into the building given who's available to come to Macau and the type of investment we were making? And does it fit with the theming of the property that we felt would be a marketing advantage? And so we have a great relationship with Marriott, we have a great relationship with the other hotel operators, we have a great relationship with Four Seasons, and there are some brands that work with what we're trying to do, and there are some brands that maybe are not aligned at this time. And so Four Seasons is a great brand, and they've done great work and we really appreciate the partnership, and it's a brand that I think resonates really well with the customers that we have on that property. Same thing is true with the St. Regis. It's been a great brand to have, and it's done very well for us. So I think it really depends on the type of product. There's certain things that we do at the very high end that are necessary to brand with a proprietary brand, right?

Richard Clarke, Analyst — Bernstein

There are certain things that we offer that are a certain level of design, a certain level of aesthetic, a certain level of service that goes beyond the typical five-star hotel and so therefore it makes sense to identify it with the brand that we control it makes makes makes sense maybe just going for a bit more of a short-term question here on macau as well what is your sort of macro outlook for macau i mean are you seeing chinese consumer spending are you positive on that trend is it a necessary positive trend for you you know do you have a sort of positive outlook that there's a you know will be macro tailwinds in macau for your business so i I have a very positive outlook for Macau for the next three, five, and ten years.

Patrick Dumont, CFO

And that's the reason why we're so confident to continue to invest there. I think it's a very unique collection of assets. I think there's been a huge amount of infrastructure that takes people directly into Macau from China, the rail system, the bridge, the connection to the Hong Kong airport. All of these things are very powerful and very helpful. But also more importantly, there's a broader initiative to create a more powerful economic engine in the greater bay area which we're the hospitality component of so in the long term we feel very strongly that this investment will be part of a much larger initiative that we'll follow along with and we think that's that's positive just from a broader macro tailwind i think the other thing is when you look at the size of the gaming market given all the all the turbulence that you're seeing in sort of recent economic trends in the region um it's a 30 billion dollar plus gaming market so imagine how well it's going to do when things stabilize and return to growth as you've seen prior to some of the turbulence. So we feel very confident in the long term. We're very thoughtful in the way that we invest. But we think overall, given the rising middle class in China, the wealth creation that's going on in Southeast Asia, and demand for high quality experiences today, we think we're positioned very well.

Richard Clarke, Analyst — Bernstein

And just to repeat the question we asked in Singapore, is this also a market where things like entertainment and mice are also important to attracting that incremental consumer into the market?

Patrick Dumont, CFO

Or less important? I think they're different pillars of the operation. And I think entertainment's very interesting because we have a partnership with the NBA and we present NBA preseason games and the NBA China games in Macau. And that's been a very strong success because it helps create a buzz and a halo effect around tourism for Macau. It allows us to attract customers, to draw attention to us, to be able to show us as a relevant and internationally interesting tourism destination and really highlights the high-quality assets that Macau has because people pay attention to what the NBA does, particularly in China. And I think other entertainment acts that come to Macau also bring that. There's K-pop acts that show up both with us and with some of our competitors' venues, and all of this is beneficial to Macau. So I think highlighting Macau as a tourism entertainment destination is very positive for the city, creates a buzz around the city, and creates interest, which ultimately translates into visitation.

Richard Clarke, Analyst — Bernstein

Great. I've got a couple of questions in the audience on Macau. Thanks for submitting those. Maybe this is winged into one of mine, but if I look at your stock price, it almost feels like Macau has driven your stock maybe more than the Singapore success. Is that fair? Maybe what has been misunderstood there? And would you ever consider spinning off or splitting the business between Macau and Singapore?

Patrick Dumont, CFO

So I think I would encourage everyone to go to Macau and actually see it. Anyone who wants to, we're happy to give you a tour and show you around just to see the high quality of tourism assets that are there and I think the quality visitation there is also quite high as so evidenced by our growth in retail you know some of the things we've experienced I think we have some work to do on our end and I think we're going to embark on that and we're going to obviously invest to improve where we are but there we have no interest in spinning off Macau we actually think that it's great for Las Vegas Sands to be a scale operator in both of these markets. We think there's synergies for management. We do have players that go back and forth. We think there's a branding component. And if you look out for the long term, we think this is a great asset base, and it's one of the foundational parts of our company. So I can't tell you why the market isn't viewing our cash flow with the same level of quality as we believe that it has. I will tell you that I think Singapore is the highest quality cash flow in our industry, just given the high barriers to entry, the quality of customer, the market that it's in, and the EBITDA margins that it produces. But I think Macau is an unbelievable market for its potential. There's a limited number of operators there. And over the long term, we feel very strongly about it. There's a lot of people in this room that might be able to answer this question better than I can. But I will tell you is that we fundamentally believe in the long term value of our company. So we've been buying back stock aggressively. And we'll continue to do that. And so we think the valuation is low. And we think it's an opportunity for us to buy as much as we possibly can. So we've been buying stock very aggressively. And, you know, we think that this enhances shareholder returns and increases our free cash flow per share. And we're very happy to do it. So I'm going to just put in a couple of slightly more negative questions.

Richard Clarke, Analyst — Bernstein

We'll move back on the front foot after that. But I'm going to read this one verbatim. In a sharp Chinese premium mass slowdown, how much property EBITDA can realistically come from non-gaming by 2028? what levers do you have to defend margins?

Patrick Dumont, CFO

So I think for us, you know, the business in Macau is driven by visitation, driven by gaming. And so if there's a material decline in visitation or material decline in gaming play, like you saw in 23, that will impact the business and the margins. So the downside case, we already went through. So, you know, you can actually see it in our results. 2019 was our best year on record and then 2020 was one of our worst years of all time when the company had all of its assets open and we were forcibly closed and there was a global pandemic going on and so I think there's variability within these downside cases and variability in the upside case I think the great news is we continue to invest, the premium mass market is strong today and there's more and more patrons that are new coming to Macau and they're spending more money And so I can't go through all the outcomes of a hypothetical because there will probably be many other things that would be true that aren't true today. But I will tell you we feel very strongly about Macau and its future.

Richard Clarke, Analyst — Bernstein

And you've talked, I think, in reference, sort of ambition of EBITDA in Macau of 2.7 to 2.8 billion. What's the current pathway to get there? How much of that comes from revenue or margin expansion and what kind of time frame could be looked at to get to that level?

Patrick Dumont, CFO

So it's definitely going to come from revenue growth, right? It's going to come from us introducing products that are more able to address the demand of higher-value patrons because we're missing capacity in the most premium areas. And there's also some things we can do in the premium mass and actually in the base mass to optimize, and we're engaging and embarking on all those things. But the key is going to be, like I said before, investment in our product, which we're going to do now and over the next three years. The Venetian is going under renovation right now as we speak, and over the next 18 months we'll be getting rooms back online. They're newly renovated, and it will be hopefully completed by the end of 27. So that's a positive there, and then the rest of the things will happen along with that over the next three years. So that's the product side. The service side, we've been hiring people and training them, and we'll continue to do that. And I think the goal is to do this over the next few years, but it's going to require the market to continue to be the way that it is, And hopefully we'll add to the market growth by adding capacity and adding higher-end patrons showing up, which will help grow the market. And so that's really our plan. It's something that we've done previously. I always joke with people. I said before the Venetian was built, gross gaming revenue on Kotai was zero, right? So it's a product-driven market. And so you have to build things that enable customers to show up and feel like they get great experiences and therefore are spent.

Richard Clarke, Analyst — Bernstein

And then talk about expectations for the renewal of Macau licenses or changes to the framework.

Patrick Dumont, CFO

So I think for us, you know, the vision that Sheldon had about creating a Las Vegas in Macau and creating all this non-gaming amenity has been very powerful. So, you know, we operate this huge mice facility there. We had the first arena on Kotai. We have thousands of hotel rooms more than our competitors. and we have the largest retail portfolio and the largest restaurant portfolio. And these things create a critical mass of amenities that drive visitation and drive demand. And so one of the things that happened is during the midterm review for concessionaires, we got very positive marks for achieving the goals that were set out for us, including diversification of the economy and investment in working with small and medium enterprise and promotion of Macanese. And we have a lot of training programs. We do a lot of things that are helpful. we're also a good corporate citizen we're the largest employer in Macau that's private and we do a lot of things in the community we do a lot of CSR events you know we do a lot of things that show that we're part of the community part of part of the fabric of the community there and so for us the concession rule was something that we felt very strongly about because we wanted to continue to invest and follow the trajectory that we were doing so we felt very good about it we felt like we had a good thesis behind why we would get renewed and we believe this will continue in the future and that's why we continue to invest does u.s. chinese relations matter at all to your business like there's if those if that sort of animosity between the two countries thaws is that a positive or is it irrelevant so you know i think the good news is we've been in macau for more than 20 years yeah and political things change over time yeah but hopefully business and relationships and mutually beneficial exchange are durable. And so I think the way we think about it is we in Macau are a local tourism company, right? We have a subsidiary listed on the Hong Kong exchange. Our senior leadership is local and our customers come from that area. So, and our largest trade partners are small and medium enterprise from that area. So for us, I think we sort of view it as as long as we continue doing good things, we're in a good position. and then Singapore sits in a different environment. So it sits in Southeast Asia. So I think for us, as long as we continue doing the things that we've been doing, I think we're in a good position.

Richard Clarke, Analyst — Bernstein

And just a final question on this topic. If you lifted Marina Bay Sands up and you put it in Macau, would it be the hotel that it is? Like, is it the property that's spectacular or is it the Singapore market?

Patrick Dumont, CFO

You know, it's a combination of a lot of things that make it possible. The first being Singapore, the environment that is Singapore, and the people who are in Singapore and the fact that it's a major financial center, it's a major trade center, and there's a lot of people who have been very successful who make Singapore their home or visit Singapore frequently. And I think that market is very unique in that regard globally. And so I think having that building with that level of luxury, that level of experience, that level of aspiration is the perfect combination for what's there. It'd be very hard to be that productive outside of Singapore just given the concentration of visitation for very high-value tourists into that market.

Richard Clarke, Analyst — Bernstein

Makes sense. Okay, let's move on to some slightly more techy stuff, I guess. But I asked this question last year, but new CEOs, let's ask again, how are you thinking about online gaming? I guess you have a strong brand in gaming. Does it translate into online gaming at some point?

Patrick Dumont, CFO

That's not something that we intend to pursue. You know, we're very focused on doing the things that we're market leaders in. we think we're the market leader in Singapore and what we do we think we're the market leader in Macau for what we do we believe that we have a very strong argument to be made where there's if there's a new jurisdiction that wants to bring in integrated resorts that were someone that should be on the call list because we have the ability to really drive both leisure and business tourism and a demonstrated track record of building ground-up resorts that can achieve the objectives of the host markets so we feel like that's what we're really good at and that's what we're gonna stick to and when we have excess capital we're going to return it and i don't think we're going to look to pursue things that are not in our core would you ever license the brands to someone else to use for online gaming no no that would be no okay fair enough easy one what about so no online gaming what about wider digital like is there smart tables are something you've been investing in is that product continuing to improve does ai have any role in gaming like is there is there further digital transformation even if it doesn't take the brands online so yes to both we started investing in smart tables more than eight years ago our solution that we run is a little bit different from some of the other solutions that other operators run and the key for us is really a combination of rfid and optical and that allows us to really be precise about the way that we understand what's happening at the table i think the goal was really to get analytics to the point where it was almost as good as it was from the slot side, and it allows us to really understand what's happening in a much better way and actually better for the patron experience because we can rate them better and understand their behaviors better to make sure they have a better experience. So in that regard, I think the investment that we've made in our smart tables has been very successful, and it's early days yet. You know, we're still continuing to invest. We're continuing to innovate on the smart table systems that we have, and we're rolling more of them out. Right now they're, you know, they're in their early days in terms of how efficient they're making things and we think there's a real opportunity to make our operations more secure, but also create a better patron experience in a more efficient way. So smart tables have been a great investment and, you know, the question about AI, so AI is changing the way people think about a lot of things. And it's something that we look at a lot. And I think there's a couple things where it could change our business and impact our industry. I think the easiest one is how you do information technology, right? That's sort of one of the fastest ones, right? How do you develop? How do you use it to create proprietary tools? How do you use it to think about the speed and really, to be fair, the efficacy of what you create that's proprietary? And there's a lot of that in our industry, right? There's a lot of proprietary development that goes into what we do. So that's one. The other thing is, how do you make your team more efficient? So there's a lot of efficiency tools that you get from some of the AI providers that you can get today. They're actually quite useful, and they're early days yet. I mean, these are things that you're starting to see, wow, if it does this, what can it do in a year? So that's very helpful, and it's making our team more efficient and allows us to work better. But I think the biggest opportunity for us is business intelligence. The way we compile data, the way we think about our customers, we think about the behavior of our customers, and the way we learn about how we should interact with our customers by looking at our database and other bits of data that we collect, this is a new frontier for our industry. And it actually connects with the smart tables. So for us, it's early days, but there's real potential there that we see in the future. It's not gonna be right away, cuz it's gonna take a lot of work, but we're going. So we'll see. I think AI creates a real opportunity for businesses in a lot of different ways. But for me, the most important one is how we interact with our customer, how we attract new customers. I think a lot of things that you'll see is the way people actually book travel, right? Think about Expedia. Think about some of the early days of online and how that revolutionized travel and sort of opened it up and made it easier to understand what your options were. Now imagine having to do that through an agent and how quick that could be and how efficient that could be and what that could look like. And so that's another opportunity, not only for our company, but for the travel industry as a whole.

Richard Clarke, Analyst — Bernstein

Makes sense. I guess we're in the U.S. talking about gaming, so it was inevitable we were probably going to get one question on this. Prediction markets, any impact on physical gaming? Are you seeing any kind of cannibalization? Is there an opportunity that you can use that to complement table gaming in any way by using prediction markets?

Patrick Dumont, CFO

So, you know, it's an interesting thing. I think it's early days for prediction markets because I don't know the legality of how they work has been settled. I think there's a lot of opinions going on that may be conflicting that may get things up to the Supreme Court, so we'll have to see how that goes. But, you know, it's a very interesting idea. It's also a different concept than most people are used to. So when you typically would do sports wagering, you are facing the house, right? In this instance, you're facing somebody else. And so it's very interesting to see the pricing dynamics, the margins that are available to the operators at any competitive advantage you may have or may not have, given the nature of the product. And these are all things that need to be discovered. So we're watching it. We're trying to understand it. We are not in the sports wagering business. This isn't something that we intend to pursue. But it's interesting to watch and observe because it's tangential to our industry. So we'll continue to observe it and try to understand what the outcome will be.

Richard Clarke, Analyst — Bernstein

You couldn't imagine offering prediction markets on what's happening within your casino, sort of overlaying another layer of gaming on top of what's happening at the tables?

Patrick Dumont, CFO

I'm always open to innovation. I'm just not sure how we would do that today. I will tell you that we're very focused on providing the best experiences to our customers. So if that's something that ends up being useful, we'll look at it. But I think for us, we provide very high-end luxury experiences to our customers, and that's a little different from being online.

Richard Clarke, Analyst — Bernstein

Yeah, and so there's no sports gaming in your casinos at all? There's none. It's all tables, slots. Okay, let's move on to capital allocation. So very high-margin business in the hospitality world. How do you balance that against faster growth? What do you think the priorities should be, given how successful Singapore has been?

Patrick Dumont, CFO

Do you get sort of pressure to continue to funnel just more and more capex into that? you know keep growing that business as quick as you can so i think for us uh in terms of capital allocation we're moving as quickly as we can in singapore to build ir2 i would love to have it open tomorrow yep but we have a timeline we're executing on that timeline in terms of investing our existing assets as i said before the depreciation is real and we continue to do that you may note that in our last earnings call we actually increased our our forecast for maintenance capex in both of our portfolios over uh over the long term to ensure that we continue to maintain the high level of finish that we have. I think our goal has always been to do ground-up development. So if you look at the highest level of returns that we've created for the company, it's when we build something from the ground up, right? Because we create properties that are very unique and drive a lot of visitation and create a lot of value. And if that's not available to us, so we have IR2, we have some renovations going on in Macau, but if that's not available to us, our goal is to return capital to shareholders. So we try to be a very shareholder-friendly company. We have a dividend that is at an appropriate payout ratio, and we have a share repurchase program that is active and is looking to shrink the share count to create better shareholder returns and create more free cash flow per share. So from my standpoint, capital allocation is very much based on can we do new ground-up development, can we grow our business, can we get organic growth through investments, how do we need to maintain our properties to ensure our leadership position, and then if we don't have an appropriate return project to pursue, we return it.

Richard Clarke, Analyst — Bernstein

And so talk to us about where appropriate returning projects could manifest themselves. I think in prior years when we've sat here, a little bit of talk about the U.S., is that still an opportunity? Thailand has been talked about as an opportunity. Are there other markets you could imagine LVS going into over the years?

Patrick Dumont, CFO

So I think Texas presents itself as the best opportunity in the U.S. currently that hasn't been open. I think the propensity to play is known. If you look at some of the surrounding markets and where Texans go, it's not in Texas. So I think the state of Texas has an opportunity there, and we would look to invest there if the framework was right. And I think it's very clear that the cities in Texas are some of the largest economies in the world on their own, right? And without destination resorts in Texas, there's a missed opportunity, particularly for tourism and for tax recapture, foreign direct investment, economic multiplier. Texas should be, in my mind, this is something they should be pursuing. And I think there's a lot of people who feel the same. But I also think that there's not an opportunity today. So it may be a few years. So if it's something that presents itself and the framework is right, it's something that we'd be very interested in. We've always been interested in Thailand. We feel like it's just a fantastic market. We have customers that come there. We're very familiar with it. It's a wonderful tourism destination. It has a great hospitality culture. It has wonderful history, great cultural sites, and just fantastic cuisine. there's a lot of great things happening in thailand so if that was a market that we would be able to pursue we'd be very interested but right now it doesn't seem like anything's doing so hopefully in the future we'll have that opportunity but we're ever hopeful what's the the barrier there is just licenses just legalization legalization yeah yeah and in texas the barrier is the same legalization legalization that's simply it is getting that and and um the question here Does the growth in Middle East in gaming represent a step up in competition for you?

Richard Clarke, Analyst — Bernstein

Have you ever looked at the Middle East as a potential market?

Patrick Dumont, CFO

So I'm familiar with the Middle East. I've been to the Emirates numerous times. I'm a big fan of what they're doing from a hospitality standpoint. I think they have great investments there. The hospitality environment there is great. They have great food and beverage and nightlife. And so gaming is new there. And so I think we're watching and waiting. You know, it's great for our industry if they're very successful because I think our industry needs to experience some growth and needs to have new markets. And so I think it would be a positive thing for all of us if they're very successful in that market. And so we'd like to see how it goes.

Richard Clarke, Analyst — Bernstein

And in terms of sort of pursuing potential other opportunities, that would be purely on a returns basis if that's the best opportunity. But is there a strategy that you would like to see more diversification in the business as well? But is it just to be in the right markets? Is diversification an aim in any respect?

Patrick Dumont, CFO

I think it would be great if we could have more markets open. I think it would have a natural diversification. I think it would allow us to have more cash flow to return to shareholders. But I also think returns are really important. There's a lot of opportunities that have low return profiles for Las Vegas Sands. But we'd rather stick to the assets that we have if higher returns are not available.

Richard Clarke, Analyst — Bernstein

Okay, makes sense. And then just, I think my last question here is the balance of buying more sans China versus buying LVS shares and paying dividends. How do you think about what's the best stock to buy back?

Patrick Dumont, CFO

I think we're really interested in growing the dividend at sans China. And I think we're really interested in having the balance of return on capital that we have that you see today at Las Vegas Sands. And some of that is structural. You know, there's less liquidity in the market in Hong Kong. and so share purchases could be more structurally difficult from time to time whereas we think the dividend also makes the stock much more attractive to Hong Kong based investors so we think there's a couple of reasons why the dividend is more interesting there than it is at Perico. We think Perico in the long run will get rewarded by shrinking the share count.

Richard Clarke, Analyst — Bernstein

Okay, that makes sense. Patrick, thanks for joining us today. Thanks so much.

Patrick Dumont, CFO

Appreciate it.