Las Vegas Sands Corp. (LVS) recorded adjusted earnings of 42 cents per share in the fourth quarter of 2010, beating the Zacks Consensus Estimate of 38 cents and 3 cents in the year-earlier quarter.
On a GAAP basis, the company reported net income of $273.0 million or 34 cents, compared with a loss of $113.9 million or 17 cents in the year-ago quarter, primarily reflecting an rise in operating income and decline in net interest expense.
Quarterly revenues climbed 56.9% year over year to $2.02 billion, but was below the Zacks Consensus Estimate of $2.05 billion. Consolidated adjusted property EBITDA (Earnings before interest, taxes, depreciation and amortization) shot up 141.3% to $738.9 million from the year-ago quarter.
The company’s results reflect strong performance at its Macau business, outstanding results at its new resort in Singapore and improvement at its Las Vegas business.
The company’s full-year adjusted earnings per share were 98 cents per share versus 7 cents per share in full fiscal 2009. Revenues were $6.85 billion in full fiscal 2010, representing a year-over-year growth of 50.2%.
Macau Businesses
Las Vegas Sands’ integrated resort properties and other assets in Macau are owned and operated by Sands China Ltd., which is a majority-owned subsidiary of the company. Sands China reported a 13.1% year-over-year growth in revenues to $1.09 billion during the quarter.
Revenues were up 15.7% year over year at $661.5 million at The Venetian Macau while Sands Macau increased 12.1% to $319.3 million. Revenues at Four Seasons Hotel Macau and Plaza Casino dropped 6.1% to $91.8 million.
Macau, the only Chinese city where gambling is legal, has survived the economic downturn relatively well. Gaming-friendly policies of the local government have enabled the industry to achieve record earnings.
Las Vegas Businesses
Revenues from the Las Vegas operations, which consist of The Venetian Las Vegas and The Palazzo, also spiked up 16.5% year over year to $310.6 million. The operating environment in Las Vegas is improving with strong group bookings and increased occupancy.
Marina Bay Sands in Singapore
In Singapore, Las Vegas Sands opened Marina Bay Sands on April 27, 2010, and fourth quarter revenues were $560.4 million, up 15.3% sequentially. The property has been well received by the market and it provides the company a great opportunity to explore the Asian market.
Balance Sheet
At the end of 2010, the company had $3.04 billion in unrestricted cash balance and short-term investments. Total debt outstanding was $10.14 billion. The company has scheduled principal payments requirement of $767.1 million in 2011.
Our Take
We believe the company is on track to deliver solid results. We remain bullish regarding the growth prospects at Macau and believe that Marina Bay Sands in Singapore represents the largest catalyst for the company. We expect its Asian operations to significantly support its earnings in the coming quarters. The company reported better-than-expected results, thus estimates are most likely to increase in the coming days.
We have a Zacks #3 Rank (short-term Strong Hold rating) on the stock. Our long term recommendation remains Neutral on the stock.
One of Las Vegas Sands’ primary competitors – MGM Resorts International (MGM) – is scheduled to report fourth quarter earnings on February 14, 2011.
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