PRESS RELEASE
LAS VEGAS, NV — (MARKET WIRE) — 07/26/11 — Las Vegas Sands Corp. (NYSE: LVS)
- Consolidated Adjusted Property EBITDA Increases 90.4% to Record $901.6 Million on Record Net Revenue of $2.35 Billion
- Consolidated Adjusted Property EBITDA Margin Increases 870 Basis Points to 38.4%
- Marina Bay Sands Generates Adjusted Property EBITDA of $405.4 Million and EBITDA Margin of 55.0%
- Macau Property Operations Adjusted Property EBITDA Increases 27.5% to Record $391.6 Million with EBITDA Margin of 33.0%
- Consolidated Adjusted Earnings Per Diluted Share Reaches $0.54 Compared to $0.17 in the Second Quarter of 2010
Las Vegas Sands Corp. (NYSE: LVS) today reported record financial results for the quarter ended June 30, 2011.
Company-Wide Operating Results
Net revenue for the second quarter of 2011 was a record $2.35 billion, an increase of 47.1% compared to $1.59 billion in the second quarter of 2010. Consolidated adjusted property EBITDA in the second quarter of 2011 increased 90.4% to $901.6 million, compared to $473.5 million in the year-ago quarter. Consolidated adjusted property EBITDA margin increased 870 basis points to 38.4% in the second quarter of 2011, compared to 29.7% in the second quarter of 2010.
On a GAAP (Generally Accepted Accounting Principles) basis, operating income in the second quarter of 2011 increased 264.6% to reach $608.1 million, compared to $166.8 million in the second quarter of 2010. The increase in operating income was principally due to stronger results across our portfolio of properties in Macau and at Marina Bay Sands in Singapore.
Adjusted net income (see Note 1) increased to $438.6 million, or $0.54 per diluted share, compared to $129.3 million, or $0.17 per diluted share, in the second quarter of 2010.
On a GAAP basis, net income attributable to common stockholders in the second quarter of 2011 increased to $367.6 million, compared to a net loss of $4.7 million in the second quarter of 2010. Diluted earnings per share in the second quarter of 2011 was $0.45, compared to a diluted loss per share of $0.01 in the prior year quarter. The improvement in our net income attributable to common stockholders of $368.8 million reflects the increase in operating income, partially offset by increases in net income attributable to noncontrolling interests (primarily Sands China Ltd.) and income tax expense.
Second Quarter Overview
We are pleased to report record financial results for the second quarter of 2011. We set quarterly records for both net revenue and adjusted property EBITDA during the quarter. Strong revenue growth and margin expansion in Macau, together with the continuing ramp of growth in all areas at Marina Bay Sands in Singapore contributed to excellent financial performance overall.
In Macau, we experienced increased gaming volumes in our Sands China property portfolio, while adjusted property EBITDA margin expanded to reach a market-leading 33.0%. The growth of our higher margin mass table and slot businesses, together with the contribution from the important non-gaming (hotel, retail and convention) components of our integrated resort business model, continue to drive significant margin improvement at Sands China. We look forward to building on our strong business momentum when we introduce in early 2012 our next integrated resort destination, the 13.7 million square foot development on parcels 5 and 6 on the COTAI Strip.
In Singapore, Marina Bay Sands produced a record $405.4 million of adjusted property EBITDA during the quarter and an EBITDA margin of 55.0%. Record VIP, mass gaming and slot volumes coupled with steady growth in non-gaming revenue streams including hotel, food and beverage, retail and entertainment reflect the broad appeal of the property to Singapore’s visitors from across the Asian region. Looking ahead, as the property continues to mature, we are confident that Marina Bay Sands will generate significant increases in business and leisure visitation to Singapore, provide an ideal platform for strong growth in gaming and non-gaming segments, and generate outstanding returns for our company.
In Las Vegas, The Venetian and Palazzo generated $92.9 million in adjusted property EBITDA during the quarter. Our quarterly results clearly reflect the implementation of our strategy to focus on cash-paying corporate group, convention and FIT customers, and to optimize our promotional activity for gaming customers as the Las Vegas market continues to recover. Table games drop was up modestly during the quarter, while slot handle naturally reflected the contraction expected with the decreased promotional activity. Cash revenues from occupied rooms increased by more than 18% compared to the same quarter last year. In addition, 97% of our occupied rooms during the quarter were sold to cash paying customers, compared to just 70% in the second quarter of 2010. Our average daily rate also increased 4.2% as our FIT, group meeting and convention businesses expanded. In Bethlehem, Sands Bethlehem produced another solid quarter reflecting healthy slot handle and growth from the introduction of table games play last year.
The financial benefits of our integrated resort business model, the successful execution of our deleveraging strategy, and the improving margin profile of our property portfolio in Asia are evident in our financial results. While we achieved quarterly records for net revenue and adjusted property EBITDA, we are particularly gratified to report that the flow through to earnings was again outstanding, with adjusted earnings per diluted share increasing over 217% to reach $0.54 in the quarter, compared to just $0.17 in the quarter one year ago.
Sands China Ltd. Consolidated Financial Results
Sands China Ltd. is a majority-owned subsidiary of the company, which owns and operates the company’s integrated resort properties and other assets in Macau. On a GAAP basis, total net revenues for Sands China Ltd. increased 16.3% to $1.21 billion in the second quarter of 2011, compared to $1.04 billion in the second quarter of 2010. Adjusted property EBITDA for Sands China Ltd. increased 27.1% to $382.1 million in the second quarter of 2011, compared to $300.7 million in the second quarter of 2010. Net income for Sands China Ltd. increased 100.1% to $267.4 million in the second quarter of 2011, compared to $133.6 million in the second quarter of 2010.
The Venetian Macao Second Quarter Operating Results
The Venetian Macao continues to enjoy strong visitation and financial performance. The property delivered record adjusted property EBITDA of $258.4 million for the second quarter of 2011, an increase of 34% compared to the second quarter of 2010. Adjusted property EBITDA margin was 35.1%, an increase of 190 basis points over the second quarter of 2010. Gaming volumes grew in each segment of the business. Non-Rolling Chip drop was a record $1.02 billion for the quarter, an increase of 14.1% compared to the same quarter last year, while Non-Rolling Chip win percentage was 25.6%. Rolling Chip volume during the quarter increased 36.9% to $13.37 billion, while hold for the Rolling Chip segment was 3.46%. Slot handle was $858.2 million, an increase of 22.3% compared to the quarter one year ago. RevPAR increased 7.0% to $200, due to higher ADR, although occupancy was down as expected due to the implementation of a more targeted promotional policy for hotel rooms.
Sands Macao Second Quarter Operating Results
Sands Macao’s strong second quarter operating performance reflected the Sands’ healthy competitive positioning on the Macau peninsula and the growth in the Macau market overall. Gaming volumes were stronger across the board, while margins significantly expanded. Adjusted property EBITDA was $95.6 million in the quarter, an increase of 17.7% compared to the second quarter of 2010. Adjusted property EBITDA margin was 28.9% for the quarter, compared to 26.9% for the year-ago quarter. Non-Rolling Chip drop increased 18.2% to $713.5 million, the strongest performance since the first quarter of 2008. Rolling Chip volume reached $7.75 billion for the quarter, an increase of 7.4% compared to the second quarter of 2010, reflecting increased play from both existing and new gaming promoters. Slot handle was another all-time property record of $462.6 million, reflecting strong high end slot play. Slot handle increased 13.8% compared to the quarter one year ago. RevPAR, ADR and occupancy were down compared to the same quarter last year as expected due to the implementation of a more targeted promotional policy for hotel rooms.
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Four Seasons Hotel Macao and Plaza Casino Second Quarter Operating Results
The Four Seasons Hotel Macao and Plaza Casino generated $37.6 million of adjusted property EBITDA for the second quarter of 2011. The operating results were negatively impacted by lower than expected Rolling Chip win percentage of 2.25% for the quarter, which was down compared to last year and below our expected range of Rolling Chip win percentage. The non-gaming aspects of the property continue to demonstrate healthy growth, with increases in ADR and RevPAR, while retail and other revenue was $15.8 million, a 125.7% increase compared to last year’s second quarter. Slot handle continued to expand, reaching $200.6 million, an increase of 86.4% compared to last year’s second quarter. Non-Rolling Chip table games drop increased to $96.9 million. Non-rolling win was up 34.7% compared to the year ago quarter due to a higher table games hold rate this quarter compared to the same quarter last year. Hotel occupancy was 67.8% during the quarter, with ADR increasing 8.4% to $323, compared to $298 in the same quarter last year. RevPAR increased 6.3% to $219, due to higher ADR. Occupancy was down as expected due to the implementation of a more targeted promotional policy for hotel rooms.
Marina Bay Sands Second Quarter Operating Results
Marina Bay Sands in Singapore delivered adjusted property EBITDA of $405.4 million and adjusted property EBITDA margin of 55.0%. Net revenue in the quarter was $737.6 million. The property continued to build momentum during the quarter as additional dining, entertainment, group meeting, convention and exhibition, and retail offerings came online throughout the quarter.
Gaming volumes reflected strong growth in each segment of the business. Rolling Chip volume was a record $12.23 billion for the quarter. Non-Rolling Chip drop reached $1.11 billion with Non-Rolling Chip win percentage of 22.5%. Slot handle, which includes play from electronic table games, reached $2.38 billion for the quarter with slot hold percentage of 5.4%.
The Room, Food and Beverage, and Retail segments of the property all reflected growth as the property’s offerings and amenities continued to mature. Occupancy, Average Daily Rate and RevPAR all expanded during the quarter.
Other Factors Affecting Earnings
Other Asia adjusted property EBITDA, which is principally composed of losses from our CotaiJet ferry operation, was negative $9.2 million in the quarter.
Pre-opening expenses, related principally to Marina Bay Sands in Singapore and the Sheraton and St. Regis development on parcels 5 and 6 of the COTAI Strip in Macau, decreased to $18.2 million in the second quarter of 2011, compared to $50.1 million in the second quarter of 2010.
Depreciation and amortization expense was $206.2 million in the second quarter of 2011, compared to $170.7 million in the second quarter of 2010. The increase was principally driven by the opening of Marina Bay Sands in April 2010.
Interest expense, net of amounts capitalized, was $70.6 million for the second quarter of 2011, compared to $77.0 million during the second quarter of 2010. The decrease was principally the result of lowered debt balances outstanding in the quarter compared to the second quarter of 2010, as well as increased capitalized interest during the quarter related to the development of Parcels 5 and 6 in Macau. Our weighted average borrowing cost in the second quarter of 2011 was 4.03%. The closing of our previously announced financing in Macau is expected to meaningfully reduce our weighted average borrowing costs and to generate interest savings of approximately $97 million on an annualized basis. Capitalized interest was $31.8 million during the second quarter of 2011, compared to $22.7 million during the second quarter of 2010.
Corporate expense was $42.4 million in the second quarter of 2011, compared to $26.0 million in the second quarter of 2010. The increase was primarily driven by higher incentive compensation expenses attributable to the company’s improved financial and operating performance, as well as increased legal fees.
Other income, which was principally composed of foreign currency gains, was $1.9 million in the second quarter of 2011, compared to other expense of $6.2 million in the second quarter of 2010.
The company’s effective tax rate for the second quarter of 2011 was 10.0%. The tax rate is primarily driven by a provision for the earnings from Marina Bay Sands at the 17% Singapore income tax rate.
Net income attributable to noncontrolling interests during the second quarter of $78.5 million was principally related to Sands China Ltd.
Balance Sheet Items
Unrestricted cash balances as of June 30, 2011, were $3.48 billion, while restricted cash balances were $443.8 million. Of the restricted cash balances, $431.4 million pertains to construction for the Sheraton and St. Regis development on parcels 5 and 6 in Macau.
As of June 30, 2011, total debt outstanding, including the current portion, was $10.06 billion. Scheduled principal payments required for the remainder of 2011 total $543 million. The closing of our previously announced financing in Macau is expected to reduce the principal payments required for the remainder of 2011 by approximately $300 million, and to decrease principal payments in the years 2012 and 2013 by more than $1 billion in each year, such that total principal payments in 2012 and 2013 are expected to be approximately $470 million and $545 million, respectively.
Capital Expenditures
Capital expenditures during the second quarter totaled $388.2 million, including construction and development activities of $146.3 million at Marina Bay Sands, $211.4 million in Macau, $17.9 million at Sands Bethlehem, and $12.6 million in Las Vegas.
