Las Vegas Sands Corp. (LVS) recorded adjusted earnings of 37 cents per share in the first quarter of 2011, which fell shy of the Zacks Consensus Estimate of 44 cents but improved considerably from 7 cents reported in the year-earlier quarter.

On a GAAP basis, the company reported earnings of 28 cents per share, compared with a loss of 4 cents in the year-ago quarter. The improvement primarily reflects a rise in operating income partially offset by increases in net income attributable to non-controlling interests (primarily Sands China Ltd.) and income tax expense.

Quarterly revenue climbed 58.2% year over year to $2.11 billion, but lagged the Zacks Consensus Estimate of $2.12 billion. Consolidated adjusted property EBITDA (earnings before interest, taxes, depreciation and amortization) shot up significantly to $745.7 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 improvements in its Las Vegas business.

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 22.6% year-over-year growth in revenues to $1.16 billion during the quarter.

Revenues were up 16.1% year over year at $638.3 million at The Venetian Macau while Sands Macau increased 13.7% to $322.8 million. Revenues at Four Seasons Hotel Macau and Plaza Casino registered an even higher growth of 68.2% to reach $172.1 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.

Average daily rate improved in Venetian Macau as well as Four Seasons Hotel Macau and Plaza Casino but declined in Sands Macau.

Las Vegas Business

Revenues from the Las Vegas operations, which consist of The Venetian Las Vegas and The Palazzo, dropped 7.7% year over year to $305.1 million. Low hold rate on table games adversely affected the revenue. However, average daily rate (ADR) increased 2.4% to $212 from $207 in the comparable quarter last year.

Sands Bethlehem Business

Net revenue for Sands Bethlehem in Pennsylvania was $91.0 million, up 35.4% year over year.

Marina Bay Sands in Singapore

In Singapore, Las Vegas Sands opened Marina Bay Sands last year in April and first quarter 2011 revenues were $584.9 million, up 4.4% 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 quarter end, the company had $3.13 billion in unrestricted cash balance and short-term investments. Total debt outstanding, including the current portion, was $10.10 billion. The company has scheduled principal payment requirement of $652.3 million for the remainder of 2011.

Our Take

We anticipate solid growth prospects at Macau and see Marina Bay Sands as the key catalyst for the company. We expect Las Vegas Sands’ Asian operations to significantly support its earnings in the coming quarters.

But the company’s Las Vegas business remains a concern. Las Vegas business, which was hit the hardest during the slowdown, is rebounding at a slow pace due to excess capacity in the market. Nonetheless, one of Las Vegas Sands’ primary competitors Wynn Resorts Limited (WYNN) recorded 24.0% year-over-year growth in revenue from Las Vegas operation. Wynn Resorts Limited reported earnings of $1.38 cents per share, surpassing the Zacks Consensus Estimate of 73 cents. Its revenue of $1,260.3 million also outpaced the Zacks Consensus Estimate of $1,133.0 million.

Las Vegas Sands currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

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