Las Vegas Sands reports Q1, reaffirms prior capital expenditure plans

Las Vegas Sands reports Q1, reaffirms prior capital expenditure plans
Written by:
Jayson Derrick
April 22, 2020
  • Las Vegas Sands reported Tuesday afternoon first quarter results.
  • The company's business was severly impacted by COVID-19.
  • However, CEO Sheldon Adelson said its future growth opportunities are "fully intact."

Casino operator Las Vegas Sands (NYSE: LVS) reported Wednesday afternoon first quarter results which sent shares higher by more than 7%.

Q1 Review

Las Vegas Sands reported a two cent per share loss in the first quarter on revenue of $1.78 billion. By comparison, Street analysts were modeling the company to earn $0.11 per share on revenue of $2.1 billion.

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Revenue was down 51.1% from the same quarter a year ago while operating income was down 94.3% to $55 million. Consolidated adjusted property EBITDA was down nearly 70% from the prior quarter at $437 million.

During the quarter, the company paid investors 79 cents per share. The company’s board suspended the dividend on April 16 but Las Vegas Sands CEO Sheldon Adelson said on the post earnings conference call he wants to see the dividends reinstated as soon as possible.

While no timeline for a resumption of dividends was offered, Adelson noted he and his family are the largest equity owners. Much like other investors, they want to see new cash flow to “our savings accounts” as quickly as possible.

The CEO also said during the conference call he is interested in mergers and acquisitions to help spur growth. Any future purchase wouldn’t come at the expense of investing in existing facilities or developing new ones. Instead, the company would look to buy a competing gaming company or individual properties as part of a rival’s portfolio.

Balance sheet strength

As expected, the casino operator’s global business was impacted by the COVID-19 pandemic.  Adelson commented in the earnings report the impact on the business is “unprecedented” and he has “never seen anything like it in my over seventy years in business.”

But despite the ongoing challenges, the balance sheet is strong enough to “emerge from this pandemic with all our promising future growth opportunities fully intact,” Adelson also said. In fact, the balance sheet is robust enough to proceed with its previously announced capital expenditure programs. Specifically, the company spent $241 million in Macao on construction, development and maintenance activities, $33 million in Las Vegas, and $46 million at Marina Bay Sands in Singapore.

‘Best of breed’

Las Vegas’ earnings report solidifies its status as a “best of breed” casino stock, CNBC “Fast Money” contributor Steve Grasso said following the earnings report. What separates Las Vegas Sands from its rivals is a revenue stream from Singapore, a gaming market that is larger than Las Vegas.

The Singapore property remained open throughout the first quarter but did shut down on April 7.

Las Vegas Sands “has always been my favorite” play in the space and “I will still be a buyer,” Grasso said.