Las Vegas Sands Corp. LVS posted mixed third quarter 2015 results. After missing the Zacks Consensus Estimate for two consecutive quarters, Las Vegas Sands’ earnings beat the same in the third quarter of 2015. Decline in costs aided earnings. Also, the company declared a 10.8% increase in dividend for 2016. Shares of the company went up 3.5% in aftermarket hours.
Though revenues from Las Vegas, Sands Bethlehem in Pennsylvania and Marina Bay Sands, Singapore posted growth, total revenue missed the consensus mark for the sixth consecutive quarter owing to a sluggish environment in Macau.
Earnings and Revenue Discussion
Las Vegas Sands’ third quarter earnings of 66 cents beat the Zacks Consensus Estimate of 63 cents by 4.8%. However, it fell approximately 21% year over year. The downside reflects a decline in revenues, partially offset by a decline in expenses.
Adjusted earnings exclude pre-opening expenses.
Quarterly net revenue of $2.89 billion missed the Zacks Consensus Estimate of $2.97 billion by 2.6% and declined 18% year over year due to weak performance in Macau.
Gross gaming revenues in Macau declined in double digits in all three months of the quarter. The downside reflects a slowdown in Macau gambling growth as a result of high-stake gamblers curtailing spending amid a cooling Chinese economy. The region has struggled owing to the anti-graft corruption drive, which has lowered footfall at the casinos. Also, credit growth concerns, tighter restrictions on visas and the partial smoking ban in casinos have adversely impacted revenues generated from the region.
On a consolidated basis, adjusted property EBITDA decreased 18% year over year to $1.05 billion during the quarter owing to lower revenues. Operating expenses (including loss on disposal of assets, pre-opening and development expense) were down approximately 16% year over year, primarily due to an 18% decline in resort operation expenses.
Property Details: Asian Operations
The company's Asian business includes the following resorts:
Marina Bay Sands, Singapore
Revenues at Marina Bay Sands grew 2.1% year over year to $750.7 million owing to a 2% increase in casino revenues and a 6.7% increase in food and beverage. However, the increase was partially offset by a 2.9% decline in rooms revenue, 7.4% decline in mall revenues and 2.1% decline in convention retail and other revenues. Per market analysts, mass gaming in Singapore is less dependent on mainland China and is more concentrated in Southeast Asia that has helped growth.
Meanwhile, Rolling Chip volume increased 25.4% while Non-Rolling Chip drop fell 5.8%.
Four Seasons Hotel Macau
Revenues at the Four Seasons Hotel Macau and Plaza Casino fell 36.7% to $167.9 million due to a 41.5% decline in casino revenues, 15.6% fall in food and beverage, 11.8% decline in mall revenues and 20% decline in convention, retail and other revenues.
Non-Rolling Chip drop fell 12.3% while Rolling Chip volume decreased 54.8% year over year. Adjusted property EBITDA fell 41.9% year over year to $58.8 million.
Sands Macau
Sands Macau's revenues also declined 26% year over year to $207.4 million owing to a 26.6% decline in casino and 12.2% decline in food and beverage. These declines were partially offset by a 5.3% increase in room revenues and 4% increase in convention retail and other revenues. Adjusted property EBITDA also declined 42% year over year to $51.1 million.
Non-Rolling Chip drop decreased 14.1% while Rolling Chip volume decreased 52.3%.
The Venetian Macau
Net revenue declined 25.8% year over year to $699.6 million at The Venetian Macau due to a 27.9% decline in casino, 19.5% decline in room revenues, 25.2% decline in food and beverage revenues and 12.6% decline in convention, retail and other revenues. Non-Rolling Chip drop declined 21.1% year over year while Rolling Chip volume decreased 32.1%.
Adjusted property EBITDA was down 27.3% year over year to $256.4 million in the reported quarter.
Sands Cotai Central
Net revenue at Sands Cotai Central fell 32.6% year over year to $550.2 million owing to a 34.7% decline in casino revenues, a 16% decline in room revenues, a 27.6% decline in food and beverage revenues, 10.7% decline in mall revenues and a 30.5% decline in convention retail and other revenues.
Non-Rolling Chip drop declined 22.9% while Rolling Chip volume declined 56.1% year over year. Adjusted property EBITDA was $170.5 million, down 36.1% year over year.
Las Vegas Operations
Net revenue from Las Vegas operations, which comprise The Venetian Las Vegas and The Palazzo, increased 1.3% year over year to $385.5 million driven by a 19.4% increase in rooms revenues and 33.9% increase in food and beverage revenues and 5% increase in convention, retail and other revenues. However, the increase was partially offset by 22.5% decline in casino revenues. Table Games Drop fell 4% year over year.
Adjusted property EBITDA fell 11.5% year over year to $79.8 million.
Sands Bethlehem, Pennsylvania
Net revenue at Sands Bethlehem was $144.0 million in the quarter, up 13.1% year over year, attributable to a 13.5% increase in casino, 11.1% in room and 18.2% increase in convention, retail and other revenues. Table Games Drop was up 5.9% year over year. Adjusted property EBITDA increased 25.8% year over year to $37.5 million in the quarter.
Las Vegas Sands has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the gaming industry include Boyd Gaming Corporation BYD, Isle of Capri Casinos, Inc. ISLE and Century Casinos Inc. CNTY. While Boyd Gaming and Isle of Capri Casinos sport a Zacks Rank #1 (Strong Buy), Century Casinos carries a Zacks Rank #2 (Buy).
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