Monday, October 26, 2009

Las Vegas Sands Corp. (NYSE: LVS): Third Quarter Earnings Preview 2009

Las Vegas Sands Corp. (NYSE: LVS) is scheduled to release its third quarter earnings before the market open on Thursday, October 29, 2009. Analysts, on average, currently expect the company to report a net loss of 1 cent a share on revenue of $1.17 billion. In the year ago quarter, the company reported s net loss of 9 cents per share on revenue of $1.11 billion.

Las Vegas Sands Corp. and its subsidiaries develop multi-use integrated resorts worldwide. It owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and The Sands Expo and Convention Center in Las Vegas, Nevada; and the Sands Casino Resort Bethlehem in Eastern Pennsylvania. The company also owns and operates The Venetian Macao Resort-Hotel and the Sands Macao in the Chinese gambling enclave of Macau.

The company has been hit hard by economic recession as cash strapped stayed away from casinos and slashed travel spending. Early in August, the Las Vegas, Nevada-based company reported a GAAP net loss attributable to common shareholders for the second quarter of $222.2 million or $0.34 per share, compared to a GAAP net loss attributable to common shareholders of $8.8 million or $0.02 per share for the year-ago quarter. Excluding items, adjusted net income for the second quarter was $8.8 million or $0.01 per share, compared to $30.9 million or $0.09 per share in the prior year quarter. Quarterly revenue slipped 4.8% to $1.06 billion from $1.11 billion in the same quarter last year. Analysts, on average, expected the company to report a loss of $0.01 per share on revenue of $1.08 billion for the second quarter.

Casino revenue for the quarter dropped to $798.05 million from $804.27 million a year ago, while rooms’ revenue dropped to $161.97 million from $195.69 million last year.

Net revenue from the company's Las Vegas operations fell 16.5% to $291.0 million in the second quarter from $348.4 million in the second quarter of last year. Casino revenue declined 5.8% to $119.1 million from $126.5 million last year, while rooms’ revenue dropped 20.8% to $112.8 million from $142.4 million a year earlier. Occupancy, average daily rate and revenue per available room were all down at both The Venetian Las Vegas and The Palazzo. Net revenue from Venetian Macao operations fell 10.2% to $443.2 million, while that from Sands Macao declined 12.7% to $234.2 million.

The company has been crippled by massive debt which even forced it to stall a project in rapidly growing gambling market of Macau. However, in recent times the company has focused its efforts to strengthen its balance sheet, cut costs, boost its capital position, reduce its more than $10 billion in debt and restart work on its hotel and casino complex on Macau's Cotai Strip. Early in September, the company secured commitments for up to $600 million of capital through the sale of exchangeable bonds. Similarly, in August, Las Vegas Sands Corp. announced the completion of an amendment to its $3.3 Billion Macau Credit Facility. Las Vegas also plans to launch an initial public offering of its Macau business in Hong Kong next month to raise somewhere between $1.5 billion and $2 billion. However, according to media reports, the IPO may face pressure amid nervousness about Macau's highly regulated gambling market and fickleness from China.

Early this month, Macau government said it is reviewing the gambling industry and may restrict the number of gaming tables and propose other measures to curb growth in the sector. Among changes being considered in the Chinese gambling capital are a scaling back of its 4,390 gambling tables and raising the entry-age requirement on casinos to 21 from 18. Beijing tightly controls travel to Macau, the only place in China where casino gambling is allowed. Few analysts are of the opinion that the move will actually boost the outlook for casinos in Macau gambling market by limiting oversupply.

Macau's casino gambling revenue rose 22.3% to a record high in the third quarter, according to the city's Gaming Inspection and Coordination Bureau. The surge in third quarter revenue is being attributed to a temporary easing of visa restrictions for residents of Macau's neighboring Guangdong province. However, visa restrictions have recently been tightened again. Though the third quarter revenue figures are encouraging and may have helped Macau's gaming revenue results, the fresh Chinese curbs on travel might dampen further growth in the world's fastest-growing gambling market.

Despite economic and financial difficulties, the company has not halted its aggressive expansion plans. The casino company expects to open its $5.4 billion Marina Bay Sands gaming resort in Singapore in the first half of 2010.

In terms of stock performance, Las Vegas shares are up almost 126% since the beginning of the year. Shares of the company fell 45 cents or 2.73% to close at $16.06 on Monday.

Disclosure: Author doesn’t own any of the stocks discussed here.

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