Las Vegas Sands a Nickel Ahead – Analyst Blog

Las Vegas Sands Corp. (LVS) reported first quarter earnings of 7 cents per share, a nickel ahead of the Zacks Consensus Estimate of 2 cents. The company earned a penny in the year-ago period. The results reflect a higher-than-expected growth in revenues.

 

On a GAAP basis, the company also narrowed its loss in the quarter. Sands incurred a loss of $28.9 million or 4 cents per share, compared with a loss of $80.9 million or 12 cents in the year-ago quarter, primarily reflecting an increase in operating income.

 

Quarterly revenue was up 23.7% year over year to $1.33 billion. Results reflected the strong performance of its Macau business and the benefits of its cost-containment measures.

 

Though the operating environment in Las Vegas is still challenging, Sands’ operations showed some improvement in the quarter. In Singapore, the company opened Marina Bay Sands on April 27, 2010.  Sands has claimed a good market response. 

 

 

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 24.2% year-over-year increase in revenues to $945.8 million.

 

Revenues were up 13.6% to $549.7 million at The Venetian Macao while Sands Macao posted a 26.5% increase in revenue to $283.8 million. Revenue at the Four Seasons Hotel Macao and Plaza Casino significantly increased to $102.3 million from $47.0 million in the prior-year quarter.

 

Macau, the only Chinese city where gambling is legal, has survived the economic downturn relatively well. Gaming-friendly policies of the local government have helped the industry to achieve record earnings in the city.

 

The Las Vegas operations reported a somewhat improvement in the quarter. The Las Vegas operations, which consist of The Venetian Las Vegas and The Palazzo, reported a 2.2% increase in net revenues to $325.5 million.

 

 

As of March 31, 2010, Sands had $3.93 billion in unrestricted cash balance and short-term investments. Total debt outstanding at the end of the first quarter 2010 was $10.46 billion. The company has scheduled principal payments of $131.3 million this year and $1.35 billion the next year.

 

We believe the company is right on track to deliver solid results. We expect its Macau operations to significantly support its earnings in the coming quarters. Additionally, the early signs of improvement in its Las Vegas operations also bode well. However, given the sluggish rate of recovery of the U.S. economy, we believe that the recovery of its Las Vegas operations will be slow.