This summary is based on the fourth quarter fiscal 2008 earnings call conducted by Las Vegas Sands Corp. (LVS) on February 11, 2009.
Management:
President and COO: William Weidner
SVP and CFO: Kenneth Kay
SVP and President of Venetian and The Palazzo: Rob Goldstein
President of Global Operations and Construction: Brad Stone
President of Asia: Stephen Weaver
SVP and Chief Architect: Ed Feiner
SVP, Finance in Macao: Ben Toh
Key Investor Issues:
- Q4 adjusted net loss was $17.8 million compared with net income $71.1 million in the year ago quarter.
- Adjusted net income was $44.8 million 2008 versus $309.5 million in 2007.
- The cost savings program target was increased to generate about $250 million in annualized earnings.
Las Vegas Q4 Operational Highlights:
Las Vegas operations delivered adjusted property EDITDAR $89.6 million in the fourth quarter.
- In the year ago fourth quarter, the company generated approximately $106 million in adjusted property EBITIDAR.
- Visitation of both properties remains healthy while occupancy across two properties is greater than 93%.
- The Palazzo Las Vegas registered occupancy levels of 96% and fourth quarter ADR of $217.
- The ADR in occupancy and healthy gaming volumes reflect its growing appeal.
The company has been impacted by recent news regarding Las Vegas business travel.
- It is the management’s hope that the inherent value in Las Vegas pricing, diversity of product and terrific access will enable Las Vegas to maintain its position as the leader in the group business.
- The cancellations experienced create opportunities to target small groups that the company would not have been able to accommodate in the past.
- Fourth quarter gaming volumes across the Las Vegas properties in Venetian Palazzo where up across the board.
- The company has the best table game player in its history with $504 million of table game drop.
- The table game business has held up well despite the economic environment.
- The slot business in Q4 of 2008 experienced a 33% growth versus the prior year and showed an upward trend of about 2008.
In November, the management announced plans to reduce the cost structure.
- Effective then, the program has records of $125 million in annualized cost savings.
- The management identified additional opportunities on cost cutting like labor efficiencies, which included almost 14.3% pay roll reduction.
Macao Q4 Operational Highlights:
The Venetian Macao generated $112.8 million of adjusted property EBIDTAR for the fourth quarter of 2008.
- Visitation of property has been strong.
- Venetian Macao posted its greatest visitation on record with more than 6.7 million people visiting the property during the quarter.
- The company’s ferry service carried more passengers in the fourth quarter than any previous quarter and increased market shares of customers traveling from Hong Kong to Macao.
- The convention and group business expanded from seasonally stronger fourth quarter period and accounted for more than 100,000 visitors.
- This is approximately 17% of the room sold.
- The management expects Macao’s overall VIP volumes to decline in 2009 after the unsustainable growth the market experienced in 2008.
- During the quarter, directed VIP play at the Venetian Macao grew 16.7% of the total rolling volume versus 6.9% in Q4 of last year and 14.9% in Q3 of this year.
- The contribution in EBITDAR from the rolling volume was approximately 15% of the Venetian Macao’s EBITDAR of $113 million during the fourth quarter.
- This is a decrease from approximately 32% during Q4 of 2007 which had $118 million on EBITDAR.
- The management reported that the CotaiJet ferry service is a key tool to support visitation to the property.
- The promotional offerings of CotaiJet are increasingly being targeted to casino customers.
- The service continues to drive traffic to the property.
- After the July increase of the frequency in sailing, CotaiJet grew its share ferry passengers arriving in Macao from Hong Kong to greater than 30%.
- The management continues to work on controlling the cost structure.
- The cost control programs target about $125 million in annual savings across Macao operations.
- In January, the management reduced the normal work hours for dealer in Macao from 48 hours to 40 hours.
- This led to preservation of about 1,000 Macanese jobs, while at the same time reducing headcount by about a 1,000 FTEs.
- The payroll cost decreased by 13%.
- The company reduced the overall headcount of Venetian and Sands by approximately 1,800 employees year-over-year.
- This was accomplished through a combination of let offs, attritions and transfers to the newly opened Four Seasons property.
The Cotai Strip property, The Four Seasons, generated approximately $5 million in adjusted property EBITDAR during Q4.
-The property has experienced a steady increase both in visitation and mass play in each month such as opening and awareness of the property is growing.
- The Four Seasons hotel has maintained a healthy ADR of $332 during the fourth quarter.
- The Four Seasons management has begun to promote the property to increase occupancy with various bundle packages.
- In April, the company opened two floors of VIP gaming and premieres on 29 pie dimensions.
The Sands Macao delivered $52.3 million in Q4 adjusted property EBITDAR and rolling volume of $6.1 billion, up 4% versus the quarter one year ago, while mass drop was down.
- The Sands still however remains a leader in Macao peninsula recording $593 million of mass drop during the quarter.
- The additional cost savings initiatives are expected to further improve the Sands cost structure.
The Macao operations attracted some key management talents.
- Len DeAngelo is the new Senior Vice President of Operations for Asia.
- Len has more than 30 years of gaming industry experience including direct experience in managing multiple gaming properties and marketing to Asian-based customers.
