Las Vegas Sands Reports In-Line

Las Vegas Sands Corp. (LVS: 16.09 0.00 0.00%) reported fourth quarter earnings of 3 cents per share, a penny over the Zacks Consensus Estimate. The company had incurred a loss of 4 cents in the year-ago period. Results reflected the strong performance of its Macau business and the benefits of its cost-containment measures, though business in Las Vegas remained weak.

However, on a GAAP basis, the company has narrowed its loss in the quarter. Sands incurred a loss of $113.9 million or 17 cents a share, compared to a loss of $136.5 million or 27 cents in the year-ago quarter, primarily reflecting an increase in operating income and a decrease in interest expense.

For full year 2009, Sands reported a loss of $540.1 million or 82 cents per share, compared to a loss of $188.8 million or 48 cents in 2008. Though net revenue was up 3.9% to $4.56 billion, the increase in loss was primarily due to increases in non-cash impairment losses and losses on early retirement of debt.

Quarterly revenue was up 17.5% year-over-year to $1.28 billion. In Macau, Sands owns Venetian Macao, Sands Macao, Four Seasons Hotel Macao and Plaza Casino. In Las Vegas, the company holds the Venetian and Palazzo casino resorts.

Macau Businesses

In Macau, revenue was up 21% to $570 million at The Venetian Macau while Sands Macao posted a 15% increase in revenue to $284.9 million. Revenue at Four Seasons Hotel Macao and Plaza Casino significantly increased to $97.8 million from $42.2 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 and a slackening of visa restrictions by Beijing to allow more mainland tourists to visit the city have helped the gaming industry in Macau to achieve record earnings.

Las Vegas Businesses

However, in Las Vegas, The Venetian Las Vegas and The Palazzo had a disappointing quarter, primarily due to decreases in room and food and beverage revenues. Revenues were down 19% year-over-year to $264 million. Occupancy rates and average daily room rates reported a significant decline in the quarter resulting in a substantial decline in revenue per available room (RevPAR).

RevPAR decreased 19% at The Venetian Las Vegas and 17% at The Palazzo. Table games win percentage was 17.1%, compared to 19.9% in the prior-year period. Slot handle decreased 31% year-over-year.

Other Developments

Sands is also developing Sands Casino Resort Bethlehem, an integrated resort in Bethlehem, Pennsylvania. Sands Bethlehem reported revenues of $57.5 million in the quarter. Slot handle at the property continues to grow as the property matures, reaching $847.6 million in the quarter, compared to $813.3 million in the prior quarter, an increase of 4.2%.

In addition, Sands is developing Marina Bay Sands, an integrated resort in Singapore, the first phase of which will open in late April. Of the $42.1 million spent by the company on pre-opening expenses in the reported quarter, the major focus was on the Singapore resort.

As of Dec 31, 2009, the company’s total debt outstanding was $11.03 billion. Sands raised $2.5 billion during the reported quarter, with an initial public offering on the Hong Kong Stock Exchange.

Though Sands maintains a robust development pipeline, we believe that the company will continue to be challenged by the global recessionary economy, which forces people to travel less and compels gamblers to take fewer risks.