Good day, ladies and gentlemen, and welcome to the Sands First Quarter 2022 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to Mr. Daniel Briggs, Senior Vice President of Investor Relations at Sands. Sir, the floor is yours.

Thank you, Paul. Joining the call today are Rob Goldstein, our Chairman and Chief Executive Officer; and Patrick Dumont, our President and Chief Operating Officer. Also joining are Dr. Wilfred Wong, President of Sands China; and Grant Chum, Chief Operating Officer of Sands China. 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 those 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. We have posted supplementary earnings slides on our Investor Relations website. We may refer to those slides during the Q&A portion of the call. [Operator Instructions] Please note that this presentation is being recorded. With that, I'll turn the call over to Rob.

Thanks, Dan. Good afternoon, and good morning to our colleagues in Asia. Some brief comments, and we'll go to Q&A. Our results continue to reflect the pandemics impact, the travel restrictions to press visitation, our financial results in both Macao and Singapore this quarter. We did generate positive EBITDA for the quarter in Singapore and for the company in total. The [business] in Singapore as the travel corridors established last quarter have been replaced with an introduction of the backdated traveler framework, which allows backdate travelers to enter Singapore in much the same way as prior to the pandemic. In short term, as we are open for business in Singapore. Our conviction and long-term opportunity in the Singapore market remains steadfast. The $1 billion capital investment currently underway at MBS introduced luxurious new suite product and amenities that disorder. In Macao, our considerable investment Londoner are nearing completion. As the market recovers 4 Seasons, Londoner will provide growth opportunities in both premium and mass customer segments. We continue to have the largest footprint in the Macao marketplace, and we appreciate the opportunity to provide input in the public consultation process, and we look forward to participating in the retendering process as well. While the current quarter results in Macao were impacted severely by the enhanced travel restrictions in China, customer demand and spending Macao have proven resilient at the premium mass level from both a gaming and retail perspective in periods when the restrictions have been relaxed. We remain confident that we return to positive cash flow in both Macao and Singapore in the future as restrictions are eased and travel and tourism recover. We consider our portfolio of resorts in Asia to be outstanding the platform for growth for the years ahead. In addition, we continue to pursue opportunities to develop large-scale resorts in both the United States and Asia. The sale of Las Vegas was completed this quarter, which creates additional liquidity and optionality. Lastly, we can build out our digital presence and to explore multiple opportunities. We will provide additional color at the appropriate time. Let's go to your questions.

Paul, we're ready to go to questions. Thanks.

[Operator Instructions] And the first question is coming from Joe Greff from JP Morgan.

Rob, I love to get a little bit more detail on the recent experience in Singapore with the VTL framework? And can you tell us or share with us business volumes, visitation improvements in March and April to date? And when we kind of look at the first quarter and looking at the $121 million of hold normalized EBITDA. How much of that was sort of the last month of the quarter, given the benefits from more international inbound tourism?

Yes. Joe, it’s a fair question. The core to MBS was clearly driven, it moved upward as you went along. I started $17 million in January, went to $46 million in the hours of February. We had $58 million of EBITDA in March. And that trajectory is continuing the momentum is going upward in April. I think – look, Singapore is back, and it will experience the same post-COVID numbers as you see in the U.S., in my opinion. The question is how fast does it get there? The demand is there. It will continue. Assuming there’s no more surprises from the COVID situation. We like to think that Singapore returned to $1 billion run rate in this year. So $58 million in March feels pretty good, and that momentum is continuing.

Great. That’s helpful. And hopefully, I’m not going to follow up Macao-related question but is much to ask. Can you talk about Thailand and sort of that as an integrated resort opportunity and what the latest is there? I know there have been press reports with your efforts and that as an opportunity.

Yes, I think it’s premature, Joe, and we’re looking at a lot of different things in Asia, and that’s certainly a list of things, but I think it’s premature to get ahead of ourselves there. I’ll pass on that.

And the next question is coming from Stephen Grambling from Goldman Sachs.

Maybe sticking with new development opportunities. There's obviously been a lot of back and forth in New York, specifically New York City, different boroughs, you've been seeing some headlines around Times Square. Just curious what you're seeing there, how we should think about that as an opportunity?

Well, New York has been on our radar for a long time. We continue to be in the hunt there. I don't want to get into static borrowers locations. I think that's proprietary. But we remain interested. I think it's a huge market for us. We've been very clear about that in the past. The process is quite a long way to go. And we'll just keep you posted as we hear and learn things, but we're in the hunt and we'll see how it works out for us.

And then you did mention you'll discuss digital when the time is right and they obviously say patience is a virtue, which is clearly paid off looking at some of these stocks. So as you think about the opportunity set in front of you, has anything changed in terms of your thinking of what areas of the industry might be more or less interesting to dig into even before considering where the investment might end up?

So it's Patrick. So I think nothing has really changed in our view. We take a very long-term perspective on digital. I think our comments have been pretty consistent across the quarters. We're really in a growth and investment stage. So it's very early on, and we have something to talk about, we'll definitely start discussing it. But at this point, it's a very early stage. We're building a team and looking forward to the future.

Awesome. Maybe one last one if I can sneak it in then. So since the development opportunities feel like they're still pushed out and you've gotten some proceeds in from Vegas. I think you maybe have mentioned this in the remarks, but just remind us in terms of thinking about capital allocation priorities. I mean is buyback something that's on the table that you'd be thinking about with some of those proceeds? Or do you feel like there's enough other things to spend the money on the near term?

No problem. This is a question that I think we get pretty often. I'll refer to the answers that we gave in our last quarterly call. But I think the key thing to take away is we're very focused on new development. The sale of Las Vegas was really to reinvest capital in high growth opportunities that we think are unique to our company. We feel very strongly about our development capabilities and our ability to execute large-scale developments in new markets. And we think there's a lot of them out there, a lot of potential. And so we're waiting to see this 1 come forward. And as Rob said, where we can invest to get the highest returns. In terms of return of capital, I think we've always said that the dividend is really the cornerstone of our turn capital program. It's something that we want to look at in terms of really long-term operational cash flow growth, and then we'll size it accordingly and look to that to recur before we actually start the dividend again. In terms of share repurchases, we've always said we've been opportunistic to return capital that way as well. If you look at our past, we've actually returned a fair amount of capital through share versus when we felt that we had the excess liquidity. So I think at this point, our priority is to make sure we get out of the pandemic, make sure we have ample liquidity and a protected balance sheet to ensure that we recover from our pandemic operations. We can support a local host market, support our team members as we go through that process. Then we're going to focus on new development and growth and investment in our existing markets, which we've been doing throughout the pandemic and then we'll look to restart the dividend as operating cash flows recover. And then lastly, I think we'll look at share repurchases where the opportunities arise.

Let's not forget that we are investing $1 billion currently in Singapore. We're trying to invest more in Singapore. And we think Macao when things reopen might be opportunistic as well. People forget how much capital we could put to work in our existing marketplaces.

And the next question is coming from Shaun Kelley from Bank of America.

Just maybe to actually touch on Macao for a minute. Rob, there have been some different starts as it relates to the reopening in Hong Kong, and I think some positive progress there as case counts have come down. Any signposts maybe out of that market and maybe reconnecting that with Macao that the local team could give us some color on?

Sure. Grant, do you on the call?

Yes. Thank you for the question. Yes. I mean at this stage, there is no new information or news in terms of quarantine-free travel from Hong Kong to Macao. I think Hong Kong cases have been improved. But we're not at the point where there's any change in the quarantine policy.

Grant, maybe just to clarify, is that specifically as it relates to its interaction with Macao? Or what about for visitors coming from overseas possibly opening up a corridor to Singapore? So maybe help us think a little bit more broadly, if you could?

I'm sorry, are you referring to overseas visitors from [indiscernible]

Yes. Either, I think arriving in Hong Kong and then, I guess, coming in from inbound places or leaving Hong Kong going to places like Singapore.

Sorry, you're asking a question about people going to Singapore or to Macao?

Well, specifically talking about -- just is there any sign that Hong Kong is loosening of its overall visitation policy because it's been pretty closed from the external perspective. I guess that's where I'm trying to go.

Sorry, I'd be asking about Hong Kong. Yes, they have relaxed. So non-residents can now travel to Hong Kong from the 1st of May and that was -- that hasn't been possible for some time. So you can go to Hong Kong from next month overseas into Hong Kong, but you would still have to be subject to the quarantine policy once you enter Hong Kong.

Something more to say, Glen, I'm going to cut you off, more to say?

No, that's it. That Okay.

Next question is coming from Robin Farley from UBS.

I wonder if you could talk a little bit more about Singapore and any change in the composition of business there in terms of what's coming back? Is it more mass? Is it more VIP? Is it higher win per visitor than what you saw before or just more absolute number of visitors. Just kind of what are you seeing sort of come back first?

The answer is yes. It's all coming back. I mean it's demand over there for -- in the month of March, we saw outsized demand from free independent travelers on the pure leisure side, we saw premium mass. We saw high-end plate coming out of over the relm. I just think Singapore is a unique position. It's -- obviously, in Macao is in a difficult place right now, so people are going to gravitate to other opportunities. They want to travel. They're no different than what we've seen here in the U.S. I think our MBS products as a very, very unique opportunistic window here. We're hoping Macao's up obviously sooner. But until it does, I think you'll see a lot more demand than typical. I think it's from all segments, the team there is being very good about what happened in the month of March. And again, it's leisure travel, it's casino, it's is VIP casino, it's premium mass as casino. It's universal. And it feels like renewal very positive beginning. And hopefully, without a COVID interruption or a change in policy, I believe MBS is going to be very productive '22.

Great. And then my follow-up question is about you had an announcement a week or 2 ago about it's probably a small investment, and I think it was sort of an integrity-related business for online sports betting. And I wonder if you could just talk about that because it seems like there are some B2B online sports companies that already sort of provide that kind of for free as part of their services between the leagues and the sports books. And so I just -- I wonder if you could talk about what interested you in that angle or what's different about that? And kind of what's offered almost for free really by the other OSB B2B providers?

Sure. It's Patrick. And I think what you'll see over time is us make investments in small companies where we think they have a competitive advantage in the B2B space that has a lot of growth potential and also where we think over time we may form it to a larger platform. So from our standpoint, we're looking at a variety different businesses that are in start off or early stage in order to make sure that we stay in front of technological innovation in our industry. And so this is part of a broader strategy. It is a relatively small investment relative to Las Vegas and -- we think over time, this investment in others will help contribute to our overall digital efforts. So I'm not going to get into the exact thesis behind every investment that we do. There's a long-term plan for what we're approaching. And I think over time, you'll start to see how that evolves.

And the next question is coming from Carlo Santarelli from Deutsche Bank.

I just have 2 kind of time line-related questions. And I don't know, Rob, maybe answer the first and then perhaps something on color on Macao and the time line there. But just in terms of MBS, obviously, construction and things along those lines in this type of environment is very hard to predict. And I have not gotten a chance to get through the slides yet to see if there any changes to kind of your expectations for the time line there. But what are some of the goalposts in terms of construction on that? And then secondarily, as it pertains to the tender process and whatnot in Macao. How do you guys see the time line for that shaping up as we move through the rest of 2022?

Carl, in Singapore, as you know, we're underway in a rather extensive renovation, $1 billion-plus renovation in Singapore that's underway as we speak. And it's going to take a while. It won't complete until the '23 but it's going to be a very encompassing. We've had -- as everyone in the world has been impacted by COVID, both getting supplies and labor has been issued, but it's happy it's underway. We're still working through our issues with IR too. We were not ready to talk about that today because we're still working through issues there. Same issues supplies, labor costs, et cetera. We intend to complete IR 1, again, '23 IR2 is token for interpretation. As for Macao time lines and the retendering, I'm going to turn it over to Wilfred or Grant to take that question. Maybe Wilfred, the best suited.

Thank you. The time line for retendering of the concession is progressing according to the time line announced by the Macao SAR government. Now currently, a few things are at play, 2 bills relating to the gaming law is -- has been approved by the legislative assembly and will be approved in full after the panel discussion before the end of this legislative session in August. And we are hearing all kinds of suggestion that it will be earlier than August. At this stage, we are going to be granted an extension of the current concession until the end of 2022. And that is the time that we expect the retendering exercise will be completed. And so after the amendment of the law, then the retendering procedure will start a lot of information about the retender will come out. We are in the process of preparing for that retendering exercise and hopefully, everything will be done before the end of 2022.

That's helpful. So just so I'm clear, in August, you'll more or less have everything you need from the gaming law perspective? And then that period from, say, August, if not maybe earlier through December will be the formal tendering process when everything is more or less buttoned up. Is that the right interpretation?

That's right.

The next question is coming from George Choi from Citigroup. George?

A couple of questions from me. Firstly, Macao. The Macao Corp has recently ruled that a couple of your competitors are joining and separately liable for some illegal deposits for I guess, how do you see the likelihood that you guys will also be found liable for this potential liability after the recent close down of the major changes there?

Grant, do you want to handle that?

Sure. Thanks, Josh, for the question. I think, as you know, the cessation of operations of all of these fixed-room junket promoters, obviously happened fairly recently in December of last year. And as a result of that, obviously, there are some new court cases being raised by various stakeholders and participants in that system. Currently, there is nothing material to report from Sands China perspective. There are a few cases ongoing, but none of them are material, and we will continue to monitor the situation and obviously report back if there any changes.

And my second question is on your balance sheet. Now clearly, the first quarter was quite difficult for your Macao operations is putting a lot of stress on your balance Sands China. When it gets to a point where Sands China needs to raise funds, could you guys consider equity as option or is because of that still cheap enough that you would continue to look to response from the decapital market?

Patrick?

It's Patrick. So a couple of thoughts here. I think we're very optimistic about the long-term future of Macao. We understand there's articles out about concerns around liquidity. I think we have a very strong balance sheet. Yes, we've received some stress over the last few years under the pandemics tough operating conditions, I think we all have. But the good news is that our company as a group has a lot of liquidity a lot of different options. I think the good news is also that we were an investment-grade company during the pandemic, which does a lot about the market's view about our ability to raise additional capital. So from our standpoint, I think we have a lot of flexibility. Our balance sheet was designed to withstand shocks and a lot of variability in our respective operating markets. I think we've proven that. And I think where we are today is we'll look to see how the operations continue coming out of the pandemic, which hopefully soon, look at our liquidity to review. I think we have cash of the parent, we have cash around the system. We have an investment-grade credit rating. We have access to credit markets. And I think the good news is we position ourselves well to benefit from the recovery on the other side. So I think we have a lot of flexibility, and we'll use it as net

Next question is coming from Chad Beynon from Macquarie.

I wanted to ask about inflation. I know it's obviously something that people are a little bit more focused on here in North America and it's different in different regions of the world. But wondering if you could kind of talk about the labor inflationary environment or employment situation in your key markets, Singapore and Macao? And how that could potentially impact margins when the business is fully recovered on the revenue side?

I don't want to say one thing about our business. Obviously, margin is inflation. It's a question we're anticipating. But I would say that I believe the revenue side of the equation is going to more than take care of itself as far as margins. We're going to be really -- I'd be shocked if will see a big return in Singapore this year and then hopefully a big return in Macao in '23, hopefully, maybe '22, I don't know. We don't have any visibility more than you do about what's going to happen in China, to be clear. But I do think, just like here in the U.S., margins have gone very powerfully positive because the demand is there. I only think Asians are different. The equation is going to be driven by excessive revenue, I think, in Singapore, we'll see it this year, I believe, and hopefully see in Macao this year or next. As for the operating entities, Grant discussed as you see as far as Macao, for example, in wage inflation, I don't know how to address that question.

Sure, Rob. I think right now, Macao is a slightly different situation. If you look at the wage trend, it's very moderate, if not flattish in terms of wage inflation. But obviously, that's for reasons that are not hard to discern because there is pressure on unemployment since it's such a tourism-dependent economy. And then interestingly, in terms of construction works costs are, again, either in line with prior years or if not going down somewhat, again, because of the demand supply situation that's specific to Macao as a lot of large scale works have moderated, they being completed. So at this stage, we're not seeing any significant signs on the inflation front. Of course, there are some supplies such as food and so on, where we do experience inflation, but obviously, thoughtful for the totality of our business, this is not going to be material. But I think the important point is what Rob said, I think you also have to consider for our type of business, the revenue side of the equation, which I think is going to be the more dominant driver. -- is obviously prices tick off

And just to sort of 1 other thought. I think -- the important thing to note is where you'll see the impact of inflation is really in construction costs and in materials that go into construction inputs for large-scale projects. You see that in the U.S., you'll see it in Singapore and you'll start to see in other markets in Asia. As people come out of the pandemic and really there's a pent-up demand pipeline of things that needed to get done as well as a shortage of labor and a shortage of labor movement related to pandemic restrictions. So that is something that is a likely thing to be seen, you're already experiencing a little bit of it in certain markets. I think the other thing is, the good news is that inflation also comes pricing. And so our business is not tied into any long-term contracts. We have the ability to operate within the market. Singapore has always been a very high quality place for labor. It's been an expensive labor market. It's always been very tight, and we've always managed it. So I have faith in the team take on our execution capability to maintain margins through the cycle. And I think that's really the nature of our business that we have pricing power. We have the ability to change rates as a hotel as a consumer products company and really work through the changing inflation and in effect, make that part of the business margin.

And then separately, just on -- kind of back on the digital portfolio opportunities that you talked about just given the current valuation change that we've seen in a lot of the public companies, has anything changed just in terms of the total amount of money that you want to invest in this space given that there might be some really good opportunities in the near term just because of a valuation disconnect? Or are you still kind of disciplined in terms of the total amount that you would put forward towards this effort?

I believe we have to be disciplined. And the reason I say that is our core business, and let's be honest, our balance sheet is what it is. It's in a pretty good place. If our business returns in Singapore, like we anticipate, -- and then behind that comes to Macao, we get back to $4 billion or $5 billion, $6 billion EBITDA. Our investment portfolio approach may change as it relates to digital. But at this time, we're going to stay doing what we're doing now, which is being very disciplined waiting for our core business return because there's no 1 like us. If the Macao comes back and I think it will be back hopefully sooner than later, Singapore is coming back, we'll be in a very different place in 6 months or a year and that may change our thinking. I think it's pretty simple. We want to get back to our core strength and then we visit other things at that time.

And I think 1 other thing that's important to note is we're very much focused on building rather than buying. We want to make sure that we create a lot of long-term value. Our company has a history of being a platform of development in entrepreneurship, and we are taking that approach through our digital efforts in several different areas. And we think over time, that will provide the most reward for shareholders. So we're very patient. We're thinking long term. And yes, there are cycles in valuations across the digital space. In our mind, we'll execute against our long-term strategy and take advantage where we can.

The next question is coming from David Katz from Jefferies.

With respect to the U.S. land-based opportunities that's out there. If you sort of have your druthers or how your wishes come to pass, what does the LVS U.S. land-based presence look like over time?

Any place there's very large-scale buildings that can create large EBITDA. We're not looking to be a small regional player obviously. So that limits the opportunities doesn't to Texas, New York. We failed in Florida recently, but we're not done with Florida. We're still looking at that. And there thereaf places we can go and invest the kind of money on investment, the kind of returns we want, we're not going to be buying small businesses. So I think at this point, as you talk to you today, it would have to be Texas, New York and perhaps Florida.

And the next question is coming from Steve Wieczynski from Stifel.

Just 1 question for me. Rob, you talked about getting to that $1 billion EBITDA run rate in Singapore by potentially by the end of the year. And I'm not sure you're going to answer this. But is it fair to say that March and maybe more so April on a monthly run rate basis is enough to get you to that $1 billion run rate level? And I'm just really trying to understand a little more how strong recent trends have been?

Yes. Well, I guess, looking at March, you're at about $700 million run rate if you take you annualize March, and April looks better at this point. So I don't think it takes a lot to get there. I mean, to be honest, I don't know why we wouldn't get there. We won't get into specific numbers in April, but the trending Singapore, as I referenced earlier, Robin, someone asked the question about what's happening it's outsized demand in all segments. So why wouldn't it happen? I mean I think it's going to blow past the $1 billion, frankly, I think it should. It just depends on if we see any pushback COVID restrictions. I mean we have an outsized opportunity. Singapore is the best product at all in the market today. Macao essentially is not available. I think we compete very well anyway in Singapore, but it's unique now. And I think it's -- it should at $1 billion and better. The only negative there, as you well know, is China is still relatively close to us. So that's the market we'll miss but we feel very confident about our prospects. In the last month, things have gone from hesitancy to full-bore excitement about what's happening in Singapore. And I think the government -- I think I hope they show our enthusiasm.

And the final question is coming from Ben Chaiken from Credit Suisse.

I guess just 2 or 3 follow-ups on Singapore. You mentioned $58 million in March. Can you remind me, is that -- I believe there was some tax changes coming into play, I guess, simplistically, VIP and mass each go up roughly 300 basis points. Is that -- was that in March already in the numbers you mentioned?

Yes, it was as of March 1, that was - were impacted as of March 1 by the changes you referenced, yes.

Cool. And then two, I think in the last few days, there's been some changes in Singapore regarding travel restrictions -- can you remind us maybe -- can you just refresh us where we are today versus where we were in March?

Where we are today is if you're a vaccine, you can get into Singapore pretty easily. There are still restrictions and you've got to be -- if you're in the casino, you've got to be smoking or drinking water or something to I think your mask off. But pretty much, it's -- if you're a vaccinate, you have full access to Singapore. It's a very different place than it was a month ago. So that's why we're still bullish in Singapore. It basically is quarantine free entry for all vaccinated traveler. And no quote on number of daily arrivals is no more strict. So we're back in the business in Singapore in a very positive way.

Got it. And then just last quick one, not to get ahead of ourselves, but -- you mentioned $1 billion a few times. But why not, I mean you're doing $1.7 billion, right, pre-COVID and the new hotel coming, like what's -- is the billing just a round number to --

There's no new hotel coming. We're not building any hotel yet. So there's no new hotel. There's a renovation of a current hotel. Look, we just see $1 billion of benchmark. We think that's attainable. We're not trying to oversell it or over -- get too excited ahead of ourselves. Let's see where it goes. We're looking at the results in the U.S. We're very excited what's happened in the U.S. The demand is there. We've seen a reason why Asia shouldn't just keep ramping more positively. And again, as we referenced, that's a very unique asset. $1.7 billion at the peak was the performance of MBS. We get back to some time Yes, I think we will and then beyond that, but it won't be this year.

There were no other questions in queue. Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.