Las Vegas Sands profit soars in fourth quarter

By Liz Benston

Tuesday, March 8, 2005 | 10:50 a.m.

Fourth-quarter profit rose more than ninefold for the owner of the Venetian resort in Las Vegas as gamblers flocked to the company's newly opened resort in Macau.

Las Vegas Sands Corp., which raised $744 million in December in the biggest IPO by a U.S. casino company, opened the first Las Vegas-style casino in Macau in May 2004. The company is also building a 3,000-room resort adjacent to the Venetian called the Palazzo as well as a version of its Venetian resort in Macau. Las Vegas Sands recently created several luxury suites surrounding a soon-to-open private gaming salon for high rollers at the Venetian in Las Vegas. The high-end venue, called the Paiza Club, will be reproduced at the Palazzo to attract Asian high-rollers from Macau and vice-versa, the company said in a statement today.

The company reported fourth-quarter profit of $69.3 million or 21 cents per share compared with $7.7 million or 2 cents in the same quarter of last year.

Revenue more than doubled to $347.6 million.

Gambling revenue in Macau as well as increased room rates at the Venetian, driven by convention business, boosted results, Las Vegas Sands Corp. President and Chief Operating Officer William Weidner said.

Revenue at the Venetian resort rose 7 percent but earnings before certain one-time costs fell mainly because 2003 results didn't include the Grand Canal Shoppes mall, which was sold in May 2004 for $766 million.

Hotel revenue in the fourth quarter rose 8 percent to $75.5 million and occupancy rose less than a percentage point to 93.2 percent. Average daily rates increased $18 from last year to $222. Casino revenue rose 8 percent to $72.4 million though gamblers won more money at the tables than a year ago.

The Sands Macau casino generated revenue of $171.5 million in the fourth quarter. The resort opened several high-end gaming rooms, restaurants and 52 suites, an invitation-only venue for high rollers known collectively as the Paiza Club, in August. The Pearl Room, with 17,000 square feet of public gaming space including 40 tables and 180 slots, opened adjacent to the lobby early this year.

The property's 300 table games reported revenue of $37,097 per day compared with $22,102 per day for the Venetian's 134 tables.

In a research note to investors today, Prudential Securities analyst William Lerner said the company's gambling revenue in Macau was strong but that Venetian results came in a bit lower than expected because gamblers were luckier at the tables.

Goldman Sachs & Co. analyst Steven Kent said he is bullish on Las Vegas Sands in spite of disappointing earnings results from Strip competitor Mandalay Resort Group and unofficial reports that growth in Macau has slowed.

"We expect LVS shares to continue to outperform as the quarter was a very solid indicator of broad strength in both the (Las Vegas and Macau) markets," Kent wrote in a separate note today.

Excluding one-time events such as $9.4 million in pre-opening expenses and development expenses and a $13.7 million income tax benefit, the company's fourth quarter earnings would have been $63.5 million or 19 cents per share compared with fourth quarter 2003 profit of $8.2 million or 3 cents per share.

Analysts expected the company to earn 16 cents per share in the most recent quarter.

For the full year of 2004, profit rose more than sevenfold to $495.2 million. Revenue rose 73 percent to $1.2 billion.

Last month the company refinanced $834 million in debt with lower interest rate bonds, bank loans and cash. The company's outstanding debt as of February was $1.5 billion.

Shares of Las Vegas Sands fell more than 3 percent to $48.27 per share in midday trading today.