Las Vegas Sands Corp. (LVS) Earnings Call Transcript & Summary

Good day, everyone, and welcome to the Sands' Third Quarter 2026 Earnings Conference Call. [Operator Instructions] It is now my pleasure to hand the floor over to your host, Mr. Daniel Briggs, Senior Vice President of Investor Relations. Sir, the floor is yours.

Thank you. Joining the call today are Patrick Dumont, our Chairman and Chief Executive Officer; Dr. Wilfred Wong, Executive Vice Chairman of Sands China; and Grant Chum, CEO and President of Sands China; and EVP of Asia Operations. Today's conference call will contain forward-looking statements. We will be making those statements under the safe harbor provision of federal securities laws. The language on forward-looking statements included in our press release also applies to our comments made on the call today. The company's actual results may differ materially from the results reflected in those forward-looking statements. In addition, we will discuss non-GAAP measures. Reconciliations to the most comparable GAAP financial measure are included in our press release. We have posted an earnings presentation on our website. We will refer to that presentation during the call. Finally, for the Q&A session, we ask those with interest to please pose one question and one follow-up, so we might allow everyone with interest the opportunity to participate. This presentation is being recorded. I'll now turn the call over to Patrick.

Thanks, Dan. Good afternoon. Thank you for joining the call. I want to start with a few summary points. We remain confident in our long-term strategy in both Singapore and Macao, and we'll continue to invest for future growth. We have a long-term view on economic growth in Asia. We believe the trends of economic growth in wealth creation will continue into the future. Our goal is to position our property portfolio to capitalize on the growing demand of premium travel and world-class entertainment experiences in Asia. We were fortunate to have the balance sheet and cash flow strength to support our meaningful capital investment program. Turning to our quarterly results. The high end was softer in both of our markets this quarter, which negatively impacted our reported financial results. Despite this, we delivered strong financial results at Greater Bay Sands in Singapore, generating EBITDA of $590 million for the quarter. If we had held as expected in our rolling play, our EBITDA would have been $4 million higher or $594 million. Singapore remains an ideal market for high-value tourism. Our focus on creating unique and memorable entertainment and hospitality experience for our customers continues to generate industry-leading financial performance. We believe that growth in tourism in Singapore will continue over the long term. Our financial results continue to reflect the elevation of Marina Bay Sands structural earnings power following our significant product investments, sweep renovations, service enhancements and the execution of our premium customer strategy. Looking further ahead, we remain enthusiastic about the additional growth opportunities presented by our new development project in Singapore, which will be directly adjacent to Marina Bay Sands. And it will meaningfully increase our premium suite capacity, service and entertainment offerings and will include the introduction of a state-of-the-art arena and vision to be the finest in Asia. We remain on track with the development process and look forward to opening our new development in early 2031, subject to the required government approvals. Let's turn to Macao. We delivered $529 million of EBITDA for the quarter. If we had held as expected in our rolling play, our EBITDA would have been $11 million lower or $518 million. Sands China's growth in gaming revenues and volumes meaningfully outperformed the Macao market overall. We are encouraged by our progress there. Our market share of Macao mass gaming revenue reached 26.1% for the quarter, our strongest performance since the fourth quarter of 2023. When compared to the third quarter of 2025, we delivered growth in gaming volumes across all segments. Rolling volume was up 31% year-over-year. Our non-rolling drop was up 11% year-over-year, and slot ETG handle was up 26% year-over-year. We believe these improvements are indicative of our progress in product and service level improvements. I would also like to highlight our approach to reinvestment in Macao has remained consistent over the last several quarters. Our goal is to remain consistent with our reinvestment strategy going forward and to achieve greater profitability as revenues grow in the future. With respect to operating expenses, as we mentioned last quarter, we have elected over the last year to invest in additional table operating hours, increased sales, marketing and customer service personnel and enhanced levels of customer service. We continue to believe these investments are critical to the achievement of our long-term objectives. These objectives are providing outstanding service and hospitality to our customers and creating unique and memorable experiences. We are continuing to invest in Macao, and we are focused on the highest return projects over the next 3 years to create the best opportunities to increase cash flow. Through our capital investment program, we are reorienting our Macao portfolio to address the most profitable segments. The renovation of the Venetian, which commenced in March is progressing. We expect to have the Venetian refreshed and reintroduced by Chinese New Year 2028, along with new premium focused gaming salons and related amenities. Macao remains the largest gaming market in the world, and we believe the market will grow and reach new heights in the years ahead. We retain our goal of reaching $700 million in quarterly EBITDA and more over time as we fully implement our investment and operating strategies and as the Macao market grows in the future. Regarding our programs return capital to shareholders, we repurchased $950 million of LVS stock during the quarter. We have now repurchased 19% of the company's outstanding shares over the last 12 quarters. We have approximately [ $5 billion ] remaining on the $6 billion repurchase authorization from our Board approved in [ July. ] We believe additional repurchases of LVS equity through our share repurchase program will be meaningfully accretive to the company and its shareholders over the long term. We also paid our recurring quarterly dividend of $0.30 per share during the quarter. In addition, our board has approved a 20% increase in our quarterly dividend to $0.36 per share beginning in the first quarter of 2027. We also purchased additional shares of SCL during the quarter, the company's ownership percentage of SCL has reached 75.6% as of September 30, 2026. We look forward to continuing to utilize the company's share repurchase and recurring dividend programs to increase returns to shareholders. Thanks again for joining the call today and for your interest in the company. Now let's take some questions.

[Operator Instructions] Your first question is coming from Dan Politzer from JPMorgan.

Patrick, first off, I think in your prepared remarks, you alluded to some incremental softness in Macao and Singapore, particularly at the high end of the market. Can you maybe break down how much of that -- the recent step down do you attribute to macro or cyclical factors versus any behavioral shift among that high-end customer base, particularly pertaining to some of the Chinese offshore wealth tax strategies or collections.

Yes. So first off, I do want to point out that there was softness at the high end in both of our markets. And so that was really the story for the quarter for us. I think we made a lot of strides in the things that we're trying to improve and create better experience for our customers. But when the customers don't show up, it's a little problematic. I think to sort of address your question in terms of Asia macro, there are a bunch of things going on globally that may have an impact on terms of visitation, how people think about tourism or just the spending during the quarter. I also want to point out that the World Cup final was July 19. So that did happen. There are many things in the global environment generally that created a lot of uncertainty in the quarter. And just one certainty is introduced into people's lives and how they think about tourism, it may change their behaviors. So I can't really point to one thing that I would tell you that was the cause. We feel pretty confident that the future will not be impacted by this. just knowing what our customers like to do, and how frequent they show up, and what we have on our offer. So we feel pretty good about how we're positioned. We also don't base our decisions on these cycles. We have a long-term view on growth in Asia. We really believe fundamentally that the trends of economic growth and wealth creation are there, and we believe that they will continue in the future. And that's really what we're focused on. But this quarter was definitely aberrational in that regard.

Got it. And just on Macao specifically, you've been through several stages of improvement in Macao, right? You improved your properties, you've been promoting a little bit more at a more competitive level, and now you're even investing in increasing your service. So where do you think you are in terms of the OpEx increases in Macao, just given, obviously, there's concern on kind of the growth outlook for the market and kind of where you sit in the expense structure?

So first off, I think we're in early days in terms of our product repositioning, and I think that's really important. So as we get great product online and these high-value customers come to our properties because of it, the service will really matter. But that will also grow our revenues, our gross gaming revenue and our EBITDA. And so just structurally, we're positioning ourselves to grow as we bring these products online, which address the segment that is there and that is strong. We just don't have all the product that we want to address it. I will tell you that we're making progress as evidenced by our volume growth. The drag on our EBITDA was higher expenses. And the reinvestment strategy that we have, as I mentioned in the prepared remarks, is consistent. So it's really -- as we continue to grow revenues, we'll gain operating leverage, and we'll see more flow through. Grant, I don't know if you have any other comments or anything you'd like to highlight?

I think the most important point for the quarter is we're able to gain revenue share across all segments whilst controlling the reinvestment. As Patrick referenced, we've remained very consistent in the reinvestment strategy. We have optimized the program significantly over the last 9 months. and we've been able to gain share partly because we've been able to invest back into the customer experience, both in terms of service levels as well as our event calendar. So I think you're seeing some of the positive progress that we're making in that regard. With respect to operating expenses, I think we've talked about this before in the last quarter. We've been increasing our payroll as we've hired more gaming staff for the additional table hours as well as the sales distribution and then also the hospitality our staff to enhance the service levels. We see now that this cost increase is embedded in second quarter and third quarter, and I would say that sequentially, we are essentially flat in terms of fixed expenses, and we would expect, obviously, the payroll would inflate by the cost of living adjustment analysis next year. but we don't anticipate a significant increase in headcount from this point on.

Your next question is coming from Lizzie Dove from Goldman Sachs.

On Singapore, again, I'm wondering in terms of your comments of, has anything changed about what you see as the run rate quarterly for this business? And I know there was a period of time where it was $700 million hold adjusted plus or minus. Has anything changed there? And on the point of whether this is kind of temporary or change more structurally. Anything you can share in terms of cadence throughout the quarter, whether that got better post World Cup or even anything in terms of kind of any October rebound.

Thank you. So in mind, nothing has changed. This is a $2.7 billion, $2.8 billion run rate property in my mind. That's where we're focused. I think this quarter was operational. There were a bunch of things that happened in this quarter, that we thought were unusual. And then I also feel like some of the sentiment out of the market are our highest end players, they didn't visit. So I think for us, this is something where product is still strong. Response is still strong from the customers. We still have a view about that sort of baseline of EBITDA range that I just talked about and hopefully growing from there in the future. That's really what we're focused on. I think there was a particular softness in both July and September, just as you look across the quarter. But we feel pretty good about how we're positioned going forward in Q4.

Got it. And then just one follow-up. Obviously, a really big repurchase number this quarter that's kind of been ramping in the last few quarters. Is this kind of the new run rate would you say as you still kind of work through these challenges in Singapore and Macao, or how should we kind of think about any changes in terms of capital returns?

Yes. So first off, I just want to say that we see meaningful value in both LVS and SCL equity, and we're going to continue to act on this belief. So you saw that in full display this quarter. We intend to continue excess returns sorry, excess cash flow to shareholders with the repurchases representing like the larger portion of our overall capital return, so even more of the dividend. You've heard us on prior calls. We've been focused on treating the share count over time. It's because we see meaningful value in LVS and SCL that we're acting so strongly. We see really long-term value creation and our ability to compound earnings and free cash flow growth per share just by reducing the share count, particularly at current prices. And our free cash flow and excess cash balance provides flexibility for us to opportunistically increase the amount of share repurchase based on market conditions, and that's what we did this quarter. And so for us, I think we really understand the importance of share repurchases, but we also understand the importance of maintaining our investment grade rating, which we view as a competitive advantage. So as you kind of think about it, we intend to stay within what we articulated previously in terms of our gross leverage target of approximately 2x or 3x. But this is before the impact of any development related that. So when you think about share repurchases, we sort of think about it like cash on hand, how do we think about return of capital, and how aggressive can we be based on the market, and you saw that this quarter.

Your next question is coming from Shaun Kelley from Bank of America.

Patrick or Grant whoever is right to answer this. I want to go back to Singapore for a moment. And just ask, Patrick, you mentioned a couple of times behavioral changes out there. I think one thing that jumps out in the numbers is mass market hold the volume looks pretty good actually, but the whole number kind of set back to levels that we haven't seen in a couple of years. So is the behavior aberration that we're seeing just that perhaps people are not feeling as good about the market and they're kind of getting up from sessions earlier or acting a little differently at the tables themselves? Or is it more of, again, a direct traffic issue? And sort of why would that be weighing on maybe that that hold figure given that, again, the volume numbers -- even the VIP volume number wasn't that far out of whack relative to what we've seen in the last quarter or two?

Yes. It's really -- it's an interesting thing. I will tell you over the last couple of years as we introduced the side bets, there was the opportunity for players to have a little more volatility, but for us to hold a little bit better. I think what happened in rebate Sands is we just didn't hold well during the quarter. And if you sort of look at that, it's very different from a year ago. And so that will impact our margin and our earnings. So that hold was meaningful. But the good news is the door swings both ways, right? There are times like a year ago in that quarter, we held really strongly. And the great thing is the volumes are there, the customers are there. We had a lot of high-value patrons at our highest levels, just not show up this quarter at certain points, and if you just don't get that revenue back. So from our standpoint, volumes were good. We missed some customers, but did impact our quarter. But the good news is in the future, hopefully it won't. That's the nature of our business. And when you have less offsetting play, the volatility on the bed size matters. And so for us, having these very high-value patrons that come in [ come in ] at Sands, is very specialized casino with the best patrons in the world in our view, concentrated at the high end, there's volatility, both on the mass side and on the rolling side. And if you go to Page 11 in our deck, we lay out our AC hold, our smart table, and you can see that volatility, and that's driven, to some extent, as we said on prior calls, by patron decisions, and how they choose to wager. But on the mass side, we just we didn't hold as well as we did in prior year. But -- and it did impact us for the quarter. But hopefully, in the future, we'll continue to hold in a positive point.

And just my follow-up would be, maybe, Grant, you little bit longer-term perspectives on what's happening as it relates to the offshore trust issue. I think this has been a very common topic discussed for perhaps a broader weaker market environment. So my question to you is just you agree with that? Do you think this is changing behaviors over there? And more importantly, do you think temporary moment in time as it relates to once that window kind of like stops, I think is in the next day or so that perhaps behavior normalizes a bit with some of those mainland customers?

Shaun, I think in reality, we've had many, many different policy changes, new initiatives that have, to varying degrees, impacted the Macao market, to a great or lesser extent over the years. I don't think we can make a judgment on specific measures that you just referenced. What we can say is that during the quarter, the premium segment was a little softer, but there was also plenty of indicators certainly in the San China portfolio to indicate that the underlying demand is still very solid and very deep. We had double-digit growth in patron count. We had high single-digit growth in property visitations like Patrick referenced, we had very strong gaming volume growth across all segments. Of course, some of that is market share gain. But we see in our portfolio, pockets of strength in all segments. This quarter, we were able to capture some of the super high in the premium mass. Unfortunately, we played a little unlucky and that affected our London whole percentage and EBITDA and margin. But overall, we saw good progress there. We also experienced strong mid-tier and base mass growth in the properties that are more geared towards those segments. So we're able to significantly outgrow the market at the Parisian and the Sands Macao and also by product segment, you can see that our slot ETG segment grew 18% year-over-year in revenue. That's double the rate of the market growth of 9% in the overall Macao market. And then lastly, when you look at a weaker consumption backdrop in China, our retail tenant sales growth still achieved 10% year-on-year growth, and it was a mixture of strength in different luxury segments as well as the mass retail segments. So overall, we see a lot of positive still in the underlying demand in visiting Macao and spending there. But yes, the spend per visitor, some of that has softened, particularly at the high end.

Your next question is coming from Brandt Montour from Barclays.

So I wanted to ask about the high end, just more -- maybe more drilling in on Macao versus Singapore. It's hard for us to tell how much overlap you have between the high and guests at Macao versus Singapore? Are you seeing any differences in behaviors between those two sets of inbound consumer or players. Length of stay, booking lead time sort of maybe differences in the exit rate coming out of the third quarter that makes you kind of more favorable on one toward the other here.

It's a great question. Just to sort of highlight. So rebate Sands has a catchment area that is Southeast Asia. So if you think about who comes as luxury inbound tourists into Singapore. A lot of that is driven by Southeast Asian people who have been successful. So Indonesia, Malaysia, Thailand, Vietnam, the surrounding areas, Cambodia, South Korea and some Japan. And so the catchment area there is different from what you have in Macao, where the vast majority of visitors come from China or Hong Kong. And so on the super high end, there is some back and forth, but not a whole lot of overlap. And so the sentiment is -- was consistent in both, but we don't know if it's the same reason or say a multitude of reasons or different reasons. We just know that we have a lot of very high-end patrons who just weren't visiting it frequently. And so that's what we saw this quarter in both places. I will tell you that this quarter, in our view, does not represent the true earnings power of our properties in both Marina Bay Sands or in Singapore -- excuse me, or in Macao. So long term, this is something that we think is particularly this quarter, and we see strength coming out of it.

I think you covered it, I believe.

And then on Macao, thinking about the fourth quarter, just seasonally, last fourth quarter, you had a hit from the NBA year 1, this will be NBA year 2 this year. I imagine that maybe there's been some refinement in terms of -- or maybe the question, has there been some refinement in the way that you're setting up operations for that? And how does that affect how we should think about fourth quarter seasonality, all else equal for the calendar.

Thanks for the question. First of all, the NBA event was a tremendous success this year. It was across a number of categories and even more successful games week than a highly successful one in 2025. We will discuss the financials of that in January, but from, I think, all of the media, the social media and the reporting on the week, I think you can see just how successful it was for the entire city across not just the excitement of the basket ball, but also the activations we had across the whole resort in the fan zone, in the mice events and all of the different brand partners that came to Macao to promote their product and services in Macao. If you talk about the seasonality of fourth quarter, typically, it is a relatively stronger quarter for Macao because of the October Golden Week and now also a lengthened golden week as a result of the NBA games week. And then typically, December will also be relatively strong. So the seasonality would point to a stronger third quarter and stronger fourth quarter compared to the second quarter. And then as to how this plays out in the current market conditions where we've had a few months of contracting or growth that remains to be seen. But from a pure seasonality point of view, it is going to be typically a stronger quarter.

Your next question is coming from Robin Farley from UBS.

That actually covered a lot of my questions about some of the dynamics between Macao and Singapore. I guess my only other question is you talked about OpEx increasing staffing hours with the tables and hospitality and sales. Just given the -- that maybe it's unclear if it's not entirely clear what the factors are causing this softness. Is that something you would revisit those OpEx levels to maybe be more in line with the trends here? Because I think I think it looks like October will be kind of month #5, maybe with year-over-year down in Macau. So just how do you think about those OpEx levels potentially needing to be adjusted.

We're actually focused on investment for growth, not on cutting our personnel that we just hired. I think we're very excited about the future of Macao. And the way we're sort of looking to make all this converge is we're underweight in our investment cycle to renovate and create higher-value products for our patrons. But we need the people to run them. We need the team members to operate them to be successful. So we've hired those teams now, so we can train them, get them up to speed and make sure they're offering seamless for all the service and focused on our customers and in our culture in a very strong way as the time the product comes online. And so it's a simultaneous story of capital investment to create the products from the rooms that we have, the suites that we have and the space that we have in Macao to a higher level to attract these higher-value patrons. And at the same time, train and create the opportunities for them to be in our property and have the experiences they need to come back and to spend. And so we have to do both. And so while we're carrying this additional OpEx, we actually view this as part of the additional investment we need in the future to grow and address the most important segments that are coming to Macao today.

Your next question is coming from Stephen Grambling from Morgan Stanley.

I wanted to dig in on the CapEx plans a little bit? Just starting with Macao. I'm curious, how is your view of what is maintenance versus growth CapEx evolved? And perhaps where you see ROI moving to and where the best returns may be had as you think about where you're spending? And then on Singapore, kind of a related question, as we think about the $8 billion spend and the potential returns on the next project. How do you think about bookends both in terms of ultimate construction costs and returns and what might weigh that one way or another.

Stephen, I'll take the question on Macao CapEx. If you look at our portfolio, which is we started developing the buildings from 2004 to now, our depreciation charge is somewhere in the region of $750 million to $800 million. So spending around $300 million. Our maintenance CapEx is reasonable, and that's reflected in the deck on Slide 21 of Dan's deck. In terms of the development CapEx, if you look at our number for 2027, there are really 3 key projects that we can reference. Firstly, we have the highest ROI projects in there, which, in our minds, include the Venetian renovation, then as well as the Conrad renovation and rebranding into a London a themed hotel. Those are the most critical projects for us if we are to continue in our product investment and innovation to capture the most important segments in the market. Then there is a third flagship project, which is for the concession commitment, which is, as you know, we have a Botanic Garden project that we are looking to accelerate and bring into Macao earlier than we had previously anticipated. And we're making good progress on design. It is going to be one of the most innovative and new tourism landmarks in Macao. So we're very excited to bring that forward and deliver that for the city over the coming years.

And in regards to Singapore, I don't think there's a better market to deploy capital in scale in our industry at the highest end. So in Page 29 of our deck, we sort of laid out the MBS expansion project development costs. I do want to highlight that of the $8 billion, $2 billion is actually land premiums, and in effect, you can advertise over time. But we just wanted to include everything related to development. The other thing is we're spending a very significant amount on an arena which will be what we hope is the most important live entertainment venue in the region. It will be technologically advanced. It will have the IT areas, hospitality areas, that are more akin to what you'd see at the top arenas in the U.S. versus ones that are in Asia, and that will be a differentiator. The other thing is it will be integrated and connected to all the amenities of the Marina Bay Sands program. And so for us, the ability to use this area not only for live entertainment and to draw tourism into Singapore, which has been evidenced by Taylor Swift and by other large performances that have occurred there, but also to use it as a MICE space and to use it for other forms of entertainment is very powerful. So when you look at the way we think about returns here, it will not only benefit the new developments and the new tower we're building. but it will also enhance the way that we draw a high-value tourists into Singapore to benefit Marina Bay Sands. And actually the surrounding area and the Marina Bay precinct. So the way we think about returns is that this will be very positive, right? If the market continues the way that it is today, and we have these conditions, we believe this will be very successful. And we believe very strongly in the future growth of high-value tourism to Singapore because of the focus of the government there. and the work that they've done and their continued investment and great tours of assets and connectivity to the surrounding region. We think we're in a great position to take advantage of the, call it, the structural benefits of being in Singapore and the long-term prospects for wealth creation in Asia and the importance of Singapore in that. And so for us, the returns, we believe will be very strong. And we think that having the connectivity back to the arena from Marina Bay Sands and our MICE facility will only enhance those offerings as well.

Fair enough. That's helpful. Maybe one very quick follow-up would just be how much of the construction costs are kind of locked in at this point? Or is there some wiggle room that could happen as we look closer to the opening?