Las Vegas Beats Earnings, Rev Miss - Analyst Blog

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Las Vegas, Nev.-based casino and hotel operator, Las Vegas Sands Corp. 's ( LVS ) second-quarter 2013 adjusted earnings of 72 cents per share, beat the Zacks Consensus Estimate of 69 cents by 4.3% and the comparable year-ago quarter's earnings by 41.2%. Earnings in the quarter received a boost from the company's margin expansion.

Quarterly net revenue increased 25.6% year over year to $3.24 billion but fell short of the Zacks Consensus Estimate of $3.29 billion by 1.5%. The company's Macau as well as Singapore businesses backed the year-over-year rise in revenues. Visitation in Macao market remains strong ensuring a speedy recovery from the damage caused by the weak macroeconomic condition in China.

The operating margin expanded 870 basis points (bps) to 24.1% in the first quarter. The rise was mainly attributable to lower pre-opening costs and reduced development expenses.

Consolidated adjusted property EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.17 billion, up 29.0% year over year, driven by higher gaming volumes in Macao.

Property Level in Detail

U.S. Business

Las Vegas Operations (The Venetian Casino and The Palazzo) 

Net revenue from the Las Vegas operations increased 5.6% year over year to $345.7 million, mainly driven by an 11.1% increase in casino revenues. Moreover, non-gaming revenues were up 3.4% year over year to $240.6 million, benefited by improved revenues from the room, and convention, retail and other segments offset somewhat by lower food and beverage sales.

During the quarter, average daily rate (ADR) remained flat at $205 million but occupancy improved 540 bps and came in at 91.6% which led to an increase of 6.8% in revenue per available room (RevPAR). EBITDA margin fell 150 bps to 18.2% in the second quarter due to higher costs.

Sands Bethlehem, Pennsylvania

Sands Bethlehem in Bethlehem, Pa. opened the first phase of its facilities for business on May 22, 2009. Net revenue at Sands Bethlehem was $126.8 million in the first quarter, up 10.2% year over year, driven by a 10.3% improvement in casino revenues. Room revenues increased 16.7%, primarily attributable to an 18.2% rise in RevPAR due to higher occupancy rate. EBITDA margin increased 310 bps to 26.5%, gaining from higher top line.

Asia Business

Macao Operations

Las Vegas Sands' integrated resort properties and other assets in Macao are owned and operated by one of its majority-owned subsidiary - Sands China Ltd. The company continues to witness significantly higher visitation in its Macao properties in the second quarter.

The company's Macao business includes the following resorts:

The Venetian Macao 

Net revenue increased 37.8% to $894.7 million at The Venetian Macao, driven by higher traffic and a 42.6% increase in casino revenues. The Venetian Macao played a major role in augmenting the company's revenues.

RevPAR increased only 0.5% in the quarter with a 70 bps improvement in occupancy, offset by a 0.4% decline in ADR. EBITDA margin increased 500 bps to 40.3%, gaining from higher top line.

Sands Cotai Central

On Sep 20, 2012, the company successfully unveiled the second phase of its Integrated Resort offering - Sands Cotai Central - at the centre of the Cotai Strip. Sands Cotai Central welcomed 3.7 million guests in the second quarter.

Net revenue at Sands Cotai Central stood at $584.0 million which was significantly higher than the year-ago quarter's revenues of $265.6 million. The quarterly revenues were driven by higher casino and no-casino revenues and strong traffic. EBITDA margin increased 550 bps to 25.0%, driven by higher gaming volume.

We believe that the facilities provided by Sands Cotai, especially its high gaming potential, will further boost Las Vegas Sands' market share in Macao.

Four Seasons Macao

Revenues at Four Seasons Hotel Macao and Plaza Casino increased 3% to $274.1 million with 8.8% RevPAR growth and higher non-gaming revenues.

Sands Macao 

Sands Macao's revenues were up 8.5% to $294.7 million due to an 8.6% rise in casino revenues. EBITDA margin increased 370 bps to 30.0%.

Marina Bay Sands, Singapore

Revenues at Marina Bay Sands, which made its debut in Apr 2010, jumped 6.4% to $739.5 million during the second quarter with significant improvement in gaming and non-gaming revenues. Sands also enjoyed an 8.3% RevPAR growth, driven by 8% rise in ADR. EBITDA margin also increased 50 bps to 48.1%, led by higher rolling chip volume.

After posting weak results in the past few quarters the company's business at Marina Bay Sands, Singapore is stabilizing. The company's mass revenues in the region are showing signs of improvement following its new marketing programs and higher traffic growth.

Share Repurchase

On Jun 5, 2013, the company approved a new $2.0 billion share repurchase plan. At the end of the second quarter, Las Vegas bought back shares worth $46.5 million.

Other Stocks to Consider

Las Vegas Sands currently carries a Zacks Rank #2 (Buy). Some other companies from the industry that are worth looking at the current level include Multimedia Games Inc. ( MGAM ), Full House Resorts Inc. ( FLL ) and Asia Entertainment & Resources Ltd. ( AERL ). While Multimedia Games carries a Zacks Rank #1 (Strong Buy), Full House Resorts and Asia Entertainment & Resources carry a Zacks Rank #2 (Buy).



ASIA ENTMNT&RES (AERL): Free Stock Analysis Report

FULL HOUSE RESO (FLL): Free Stock Analysis Report

LAS VEGAS SANDS (LVS): Free Stock Analysis Report

MULTIMEDIA GAME (MGAM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AERL , FLL , LVS , MGAM

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