Las Vegas Sands Steady After Q3 Results Lag Estimates, Macau Numbers Could Have Been Worse, Dividend Increased

Posted on: October 23, 2019, 03:00h. 

Last updated on: October 23, 2019, 04:36h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Shares of Las Vegas Sands Corp. (NYSE:LVS) were mostly flat in Wednesday’s after-hours session after the largest domestic casino company by market value revealed third-quarter results that missed Wall Street estimates. But investors appeared constructive on the firm’s decent Macau data.

Sheldon Adelson’s Las Vegas Sands posted decent Q3 numbers in Macau and is raising its dividend. (Image: CNN)

On a generally accepted accounting principles (GAAP) basis, Sands earned 69 cents a share in the June through September quarter. Using the non-GAAP methodology, the company notched earnings of 75 cents, meeting analysts’ estimates. But investors put more weight on GAAP results, because those numbers offer a cleaner view of a company’s profits. Revenue was $3.25 billion, $50 million below Wall Street forecasts.

Amid a slowdown in the Chinese economy, trade tensions between that country and the US, and pro-democracy demonstrations in Hong Kong, Macau gaming revenue has been slack in recent months. However, Sands’ third-quarter numbers there weren’t terrible. The company posted earnings before interest, taxes, depreciation and amortization (EBITDA) of $755 million on revenue of $2.11 billion on the peninsula, slightly below estimates calling for turnover of $2.13 billion.

A rough patch in Macau isn’t keeping LVS from expanding in the Special Administrative Region (SAR).

We remain enthusiastic about our future growth opportunities in Asia,” said LVS Chairman and CEO Sheldon Adelson in a statement. “Next year, we will introduce approximately two million square feet of luxurious suite accommodations on the Cotai Strip with the opening of the Grand Suites at Four Seasons Macao and The Londoner Tower Suites.”

The company operates five integrated resorts in Macau.

All About Asia

In the US, LVS owns the Palazzo and the Venetian on the Las Vegas Strip, two of Sin City’s higher-end casino-resorts. But the investment community mostly views the company as a play on Asian gaming.

During the third quarter, adjusted property EBITDA for LVS’ eight venues was $1.28 billion, but Palazzo and Venetian combined for just $93 million of that total. Conversely, the companies five Macau properties and the Marina Bay Sands in Singapore had adjusted property EBITDA of $755 million and $455 million, respectively.

“Additional tourism and entertainment amenities of The Londoner Macao will debut throughout 2020 and 2021,” said Adelson. “Looking further ahead, the expansion of Marina Bay Sands in Singapore will expand our suite capacity by 40%.”

The LVS boss was also quick to note his company continues to pursue a Japanese gaming license, a competition in which the firm is widely viewed as one of the frontrunners because of the strength of its other Asian assets.

Cash For Investors

During the September quarter, LVS repurchased $100 million worth of its own shares while paying a dividend of 77 cents a share. But that latter figure is heading higher.

Starting next year, Sands’ dividend will rise to 79 cents a share per quarter, or $3.16 annually, marking the eighth consecutive year in which the firm has boosted its payout.

In the recently completed quarter, the company spent $303 million sprucing up properties in Asia and Las Vegas with $183 million of that tally directed to Macau. As of Sept. 30, LVS had $3.82 billion in cash and debt of $11.93 billion.