This summary is based on the third quarter fiscal 2008 earnings call conducted by Las Vegas Sands Corp. (LVS) on November 10, 2008.
Management:
President and COO: Bill Weidner
Chairman and CEO: Sheldon Adelson
SVP of Finance: Scott Henry
SVP: Rob Goldstein
SVP: Brad Stone
Key Investor Issues:
- The company is in the process of raising about $2 billion in capital.
- Quarterly net revenue increased 67.2% to $1.11 billion.
- Year-to-date net revenues were $3.3 billion versus $1.9 billion in the year ago period.
Third Quarter Financial Highlights:
The adjusted net income was $8.1 million or adjusted EPS of 2 cents compared with $41.8 million or 12 cents in the third quarter of 2007.
- The decrease in adjusted net income of $33.7 million reflects increases in net interest expense and depreciation and amortization.
- On a GAAP basis, the net loss in Q3 was $32.2 million or 9 cents per share versus $48.5 million or 14 cents per share in the year ago period.
- The decrease in GAAP net loss of $16.3 million reflects increases in operating income and a benefit of income taxes, partly offset by an increase in interest expense and a decrease in other income.
Despite the implementation of stricter visa restrictions for certain mainland Chinese visitors, visitation to The Venetian Macao continues to grow.
- However, given the current global credit situation, the management has elected to slow the pace of development activities on the Cotai Strip.
- This is inclusive of a suspension of the development on sites five and six of the Cotai Strip.
- Current management efforts will be channeled on maximizing cash flow and return on invested capital from existing properties in Macao.
- In Las Vegas, the combined Venetian and Palazzo integrated resort produced a solid performance despite the challenges of the economic environment.
Las Vegas Third Quarter Operating Results:
- Adjusted property EBITDAR in Q3 was $73.3 million versus $60.2 million in Q3 of 2007.
- On a GAAP basis, operating income decreased to $6.1 million compared with $29.6 million in the 2007 period.
- During the third quarter, Las Vegas operations’ table games drop was $477.2 million, an increase of 33.9% versus $356.4 million in the year ago period.
- The increases in table games drop and slot handle are mainly due to the expansion of gaming capacity with the opening of The Palazzo.
- During the quarter, table game wins percentage was 13.8% versus 14.7% in Q3 of 2007.
- This was below the forecast range of 20% to 22%.
- Slot win percentage was 6% compared with 6.2% in the 2007 quarter.
- Casino revenues were $113.2 million for the quarter versus $83.1 million in the year ago period.
- Las Vegas operations’ hotel revenues were $130.5 million compared with $83 million in Q3 of 2007.
- The increase of 57.2% in hotel revenues was a result of increased suite product available with the opening of The Palazzo.
- The Venetian Las Vegas’ average daily rate, ADR, was $20.7 versus $234 in Q3 of 2007.
- The Venetian’s occupancy of available guestrooms was 92% during the quarter, a decrease from 99.6% during the prior year period.
- Revenue per available room, REVPAR, at The Venetian Las Vegas was $191 during the quarter compared with $233 in the equivalent period last year.
- During the quarter, The Palazzo’s ADR was $231 while occupancy of available guestrooms was 94.5%, generating REVPAR of $218.
- Food and beverage revenues increased to $61.6 million in Q3 compared with $34.8 million in the 2007 third quarter.
- Convention, retail and other operating revenues were $48.5 million, an increase of 61.7% from $30 million in the third quarter last year.
Venetian Macao Third Quarter Operating Results:
- In Q3, adjusted property EBITDAR for The Venetian Macao was $135.7 million, compared with the 2007 third quarter adjusted property EBITDAR of $26.5 million.
- The 2007 third quarter reflected the operating period from the property opening on August 28, 2007 through September 30, 2007.
- On a GAAP basis, Q3 operating income for The Venetian Macao was $81.6 million versus the 2007 Q3 operating income of $6.8 million.
- Rolling Chip volume at The Venetian Macao was $9.78 billion for the third quarter of 2008.
- This compares with Rolling Chip volume of $4.73 billion during the third quarter of 2007, which reflects the 34-day operating period.
- Non- Rolling Chip table games drop was $930.6 million for the quarter, representing The Venetian Macao''s highest quarterly Non-Rolling Chip table games drop in its history.
- This compares with $257.1 million in Non-Rolling Chip table games drop during the third quarter of 2007.
- Casino revenues for Q3 were $432.6 million, compared with $131.0 million in Q3 of 2007.
- The Non-Rolling Chip table games win percentage for Q3 was 19.7%, while Rolling Chip table games win percentage was 3.06%.
- These results compare with the expected Non-Rolling Chip table games win percentage of 18% to 20%, and Rolling Chip table games win percentage of 3.0%.
- Slot handle (volume) for the third quarter of 2008 was $549.9 million, another quarterly record, while slot win percentage for the quarter was 7.8%.
- Hotel revenues for the third quarter of 2008 were $51.1 million.
- The Venetian Macao''s ADR was $211 while the occupancy per available guestrooms was 92.1%, generating REVPAR of $194.
- Retail and other operating revenues were $52.0 million, while food and beverage revenues were $16.8 million.
- Visitation at The Venetian Macao posted a quarterly record of 6.6 million visitors to the property in the quarter, including 1.94 million visitors to the property in September 2008, up 15% versus September 2007.
- In October 2008, visitation was more than 2.23 million guests, up approximately 16% compared with the same period in 2007.
- For the seven day Golden Week beginning October 1, 2008, visitation to The Venetian Macao was up approximately 22% versus the Golden Week beginning September 29, 2007.
Four Seasons Macao Third Quarter Operating Results:
- The Four Seasons Macao debuted on August 28, 2008, and portions of the property were open for 34 days during the quarter.
- Adjusted property EBITDAR was $3.0 million.
- On a GAAP basis, the Four Seasons Macao experienced a Q3 operating loss of $4.2 million.
- At the Four Seasons Macao, for the 34-day operating period beginning on August 28, 2008, Rolling Chip volume was $165.2 million and Non-Rolling Chip table games drop was $16.7 million.
- For Q3 of 2008, the Four Seasons Macao Rolling Chip table games win percentage was 8.33%, while Non-Rolling Chip table games win percentage was 18.4%.
- This compares with the expected Rolling Chip table games win percentage of 3.0% and Non-Rolling Chip table games win percentage of 18% to 20%.
- The Four Seasons Macao slot handle (volume) for the third quarter of 2008 was $7.9 million.
- Third quarter casino revenues were $15.9 million.
- The Four Season Macao''s ADR was $440, while the occupancy per available guestrooms was 31.4%, generating REVPAR of $138.
Sands Macao Third Quarter Operating Results:
- Adjusted property EBITDAR was $42.6 million in the third quarter of 2008, compared with $77.6 million in the third quarter of 2007.
- Operating income on a GAAP basis for the Sands Macao was $28.5 million for the third quarter of 2008 versus $65.5 million in last year''s third quarter.
- The Sands Macao Rolling Chip volume for the quarter increased 15.4% to $7.26 billion, compared with $6.29 billion in the third quarter of 2007, while Non-Rolling Chip table games drop dipped 19.7% to $652.3 million versus $812.4 million in last year''s third quarter.
- For the third quarter of 2008, the Sands'' Rolling Chip table games win percentage was 2.35%, compared with 2.85% in the 2007 quarter, while Non-Rolling Chip table games win percentage was 17.9% versus 18.7% in the 2007 quarter.
- This compares to expected Rolling Chip table games win percentage of 3.0% and Non-Rolling Chip table games win percentage of 18% to 20%.
- The Sands'' slot handle (volume) for the third quarter of 2008 was $273.1 million, representing an 8.3% decrease versus $297.9 million in the third quarter of 2007.
- Casino revenues for the quarter were $243.5 million compared with $294.5 million in the third quarter of 2007.
The Q3 pre-opening expenses related mainly to the Four Seasons Macao, Marina Bay Sands in Singapore, Sands Bethlehem, and other resorts on the Cotai Strip were $40.8 million compared with $90.4 million in Q3 of 2007.
- Depreciation and amortization expense was $132.2 million in the third quarter of 2008, compared with $54.3 million in the third quarter of 2007.
- Interest expense, net of amounts capitalized, was $90.5 million for the quarter versus $72.6 million during the third quarter of 2007.
- Capitalized interest for the quarter was $38.4 million compared with $64.2 million during the third quarter of 2007.
- Interest income was $3.2 million in the third quarter of 2008 versus $26.9 million in the third quarter of 2007.
- Corporate expense was $23.4 million in both the third quarter of 2008 and 2007.
- Stock-based compensation expense was $15.4 million compared with $9.8 million in the third quarter of 2007.
- Other income, which is principally composed of foreign currency gains, was $7.2 million in the third quarter of 2008 versus $17.1 million in the third quarter of 2007.
- The company''s effective tax rate for the nine months ended September 30, 2008 is approximately -25.6%, which is lower than the United States federal statutory rate of 35%.
- This was due to a zero percent effective tax rate on the Macao gaming income and a projected taxable loss in the United States for 2008.
