Las Vegas, Nev.-based casino and hotel operator,
Las Vegas Sands Corp.
(
LVS
) posted dismal fourth quarter 2013 results with both the top and
bottom lines missing the Zacks Consensus Estimate. However,
earnings and revenue grew year over year.
Adjusted earnings of 72 cents per share increased 33.3% year over
year driven by year over year growth in revenues. However, it
missed the Zacks Consensus Estimate of 85 cents by 15.2%, which
we believe was due to higher expenses.
Adjusted earnings exclude pre-opening expense, development
expense, impairment loss, gain or loss on disposal of assets,
loss on modification or early retirement of debt and legal
settlement expense.
Quarterly net revenue increased 18.8% year over year to $3.66
billion, but missed the Zacks Consensus Estimate of $3.72 billion
by 1.6%. The top line reflects decent performance at Macau and
Las Vegas, partially offset by a decline in revenues at Marina
Bay Sands, Singapore.
Despite a 15.1% year-over-year increase in operating expenses,
operating margin expanded 240 basis points (bps) to 24.2% in the
fourth quarter, driven by solid operating performance at Macau
properties.
Consolidated adjusted property earnings before interest, taxes,
depreciation and amortization (EBITDA) were $1.21 billion, up
21.0% year over year, led by higher Macao gaming volumes.
Property Details
Las Vegas Operations (The Venetian Casino and The
Palazzo)
Net revenue from the Las Vegas operations, which comprise The
Venetian Las Vegas and The Palazzo, increased 25.1% year over
year to $385.7 million, mainly driven by a 20.6% increase in food
and beverage revenues and a 72.1% increase in Casino revenues.
During the quarter, revenue per available room (RevPAR) increased
4.5% year over year to $185.0 million with a 2.5% and 1.4% rise
in average daily rate (ADR) and occupancy, respectively. Adjusted
property EBITDA was up 67.0% year over year to $88.2 million in
the fourth quarter driven by increase in table games.
Sands Bethlehem, Pennsylvania
Sands Bethlehem opened the first phase of its facilities for
business on May 22, 2009. Net revenue at Sands Bethlehem was
$124.1 million in the fourth quarter, up 5.3% year over year,
driven by higher mall revenues. Room revenues remained flat year
over year with a 0.9% rise in RevPAR and a decline of 4.9% in
occupancy rate. Adjusted property EBITDA was up 10.2% year over
year to $30.3 million in the fourth quarter.
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 continued to witness
significantly higher visitation at its Macao properties in the
fourth quarter.
During the reported quarter, revenue at Macao was up 28.0% year
over year mainly driven by solid contribution from Sands Cotai
Central and The Venetian Macao, partially offset by a 19.6%
decline at Four Seasons Macao and just 3.8% growth at the
company’s oldest Macao casino Sands Macao.
The company’s Macao business includes the following resorts:
The Venetian Macao
The Venetian Macao played a major role in augmenting the
company’s revenues. Net revenue increased 36.3% year over year to
$1.1 billion at The Venetian Macao with a 40.0% and 61.2%
increase in casino revenues and Convention, Retail and Other
revenues, respectively. Rolling Chip volume was up 32.3% year
over year to $16.8 billion. The property witnessed solid traffic
during the quarter.
RevPAR increased 10.0% in the quarter with an 8.5% rise in ADR.
Adjusted property EBITDA was up 30.1% year over year to $433.4
million in the fourth quarter driven by increase in Rolling Chip
volume and Non-Rolling Chip Drop.
Sands Cotai Central
In Sep 2012, the company successfully unveiled the second phase
of its Integrated Resort offering – Sands Cotai Central – at the
center of the Cotai Strip. Sands Cotai Central welcomed 4.7
million guests in the fourth quarter.
Net revenue at Sands Cotai Central stood at $790.7 million, which
was 61.1% higher than the year-ago quarter’s revenues of $490.7
million. The quarterly revenues were driven by higher casino
revenues, room revenues and strong traffic. In the quarter,
Rolling Chip volume increased 72.7% year over year to $17.6
billion.
Adjusted property EBITDA was $237.8 million, up 120.2% year over
year.
Four Seasons Macao
Unlike the third quarter, revenues at Four Seasons Hotel Macao
and Plaza Casino declined 19.6% to $238.1 million mainly due to a
29.5% year-over-year decline in Casino revenues. However, RevPAR
was up 16.9% with a rise in ADR and occupancy rate.
Sands Macao
Sands Macao’s revenues were up 3.8% year over year to $326.7
million mainly driven by room revenue. However, adjusted property
EBITDA declined 3.8% year over year to $88.0 million in the
fourth quarter.
Marina Bay Sands, Singapore
Revenues at Marina Bay Sands, which debuted in Apr 2010, went
down 8.0% year over year to $659.8 million during the fourth
quarter. Gains in mass gaming and non-gaming revenue were offset
by soft VIP play.
Sands recorded 13.5% RevPAR growth, driven by a 15.5% rise in
ADR.
Adjusted property EBITDA plunged 14.4% year over year to $258.8
million, led by 16.6% decline in Rolling Chip volume.
Full Year 2013 Highlights
Adjusted earnings per share in full year 2013 went up 35.5% year
over year to $2.90 but missed the Zacks Consensus Estimate of
$2.99 by 3.0%. Revenues were $13.8 billion, up 23.7% year over
year, and missed the Zacks Consensus Estimate of $13.9 billion by
0.51%.
Our Take
Las Vegas currently has a Zacks Rank #2 (Buy). We cannot rule out
a rank downgrade in the near term following the company’s dismal
fourth quarter results. Some other stocks worth considering in
the gaming industry include
Bally Technologies, Inc.
(
BYI
),
Melco Crown Entertainment Limited
(
MPEL
) and
Wynn Resorts Ltd.
(
WYNN
), all with a Zacks Rank #1 (Strong Buy).
BALLY TECH INC (BYI): Free Stock Analysis
Report
LAS VEGAS SANDS (LVS): Free Stock Analysis
Report
MELCO CROWN ENT (MPEL): Free Stock Analysis
Report
WYNN RESRTS LTD (WYNN): Free Stock Analysis
Report
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Las Vegas Sands Misses on Earnings, Sales; Up Y/Y
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