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Las Vegas Sands reports 2nd quarter loss
Company reports loss of $222.2 million or 34 cents per share
Published Thursday, July 30, 2009 | 1:40 p.m.
Updated Thursday, July 30, 2009 | 3:57 p.m.
Las Vegas Sands Corp. Financial Information
| 2Q 2009 | 2Q 2008 | % Change | 1Q 2009 | |
|---|---|---|---|---|
| Revenue | $1.06 billion | $1.11 billion | -4.8 % | $1.08 billion |
| Net income | ($222.2 million) | ($8.8 million) | N/A | ($87.7 million) |
| Net income per share | (34 cents) | (2 cents) | N/A | (14 cents) |
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Las Vegas Sands Corp. reported a wider second-quarter loss Thursday, citing lower revenue and a reduction in proceeds from the sale of a Las Vegas shopping center attached to its Palazzo resort.
The company lost $222.2 million or 34 cents per share vs. $8.8 million or 2 cents per share lost in 2008's second quarter.
Worldwide, quarterly revenue fell 4.8 percent to $1.06 billion.
Despite the loss, the company's big resorts in Las Vegas -- Venetian and Palazzo -- and in the Chinese district of Macau continued to produce positive cash flow, the company said.
Without one-time items including the mall sale item and a legal settlement, Las Vegas Sands said it would have reported operating income of $22.3 million vs. $73.3 million in the year-ago quarter.
During the quarter the company settled, for an undisclosed amount, a lawsuit claiming it owed millions of dollars to three businessmen for helping it to gain its gaming license in Macau.
Las Vegas Sands also took a noncash impairment loss of $151.2 million, related principally to a decrease in expected future proceeds from its sale of The Shoppes at The Palazzo to General Growth Properties Inc.
Business at the mall has not met projections, with the high-end retail industry generally suffering from weak consumer confidence in the recession -- and a resulting decline in spending by Americans.
Also included in the impairment charge was a decision to indefinitely delay expansion of the company's Sands Expo and Convention Center in Las Vegas.
During a conference call, Chairman and Chief Executive Officer Sheldon Adelson said the company is making good progress on its business plan of developing and selling assets in Asia to help pay off some of its $10.8 billion in debt.
Adelson said he's hopeful that once the economy improves, the company will be able to resume construction on its St. Regis Residences condominiums in Las Vegas -- and sell those too.
He said Las Vegas Sands hasn't decided which of several options to pursue -- including a possible stock offering in Hong Kong -- to raise cash and improve liquidity so as to continue development projects in Macau.
"Negotiations or discussions are going on virtually every single day," Adelson said. "The opportunities become more plentiful and more palatable as each day goes by."
"While our operating results reflect the challenging economic environment, we remain pleased that our properties in both Las Vegas and Macau continue to generate solid cash flow. We have made marked progress during the quarter on the execution of each of the three principal components of our business plan. First, to maximize our cash flow from current operations in Las Vegas and Macau through the implementation of cost savings programs designed to right-size our global operations; these savings programs are now targeted to achieve at least $500 million in annualized cost reductions. Second, to complete our Marina Bay Sands development in Singapore in a timely and cost efficient manner. Third, to enhance our financial flexibility by advancing opportunities that will increase liquidity and enable us to execute our de-leveraging strategy," Adelson said in a statement.
"The operating performance of our Las Vegas and Macau properties during the quarter again reflected the relative strength of our diversified, convention-based business model. Notably, The Venetian Macao continued to attract large numbers of visitors, with visits to the property during the second quarter increasing by 7.1 percent compared to visits in last year's second quarter while overall visitation to the Macau market as reported by the Macau Government decreased by 13.2 percent during the quarter. This 20 percentage point differential reflects the strong appeal of the property despite the reported impact of the H1N1 virus on visitation to the Macau market and The Venetian Macao. Gaming volumes at The Venetian Macao were up in total, with a notable increase in slot handle. In Las Vegas, our gaming volumes remained healthy while RevPAR (revenue per available room) reflected pricing pressure," Adelson's statement said.
In Las Vegas, the Venetian and Palazzo table games drop (revenue) was down 5.4 percent from the year-ago quarter while slot handle (revenue) fell 27 percent.
Similar to second-quarter results reported by Harrah's Entertainment Inc. for its Las Vegas properties, Las Vegas Sands said occupancy held fairly steady at its Las Vegas properties during the quarter but spending per visitor dropped markedly.
Overall, Las Vegas revenue for Las Vegas Sands fell from $348 million in the 2008 second quarter to $291 million in the 2009 quarter.
Room occupancy at the Venetian of 88.9 percent was down from 90.6 percent; while occupancy at the Palazzo of 91.5 percent was down from 92.9 percent.
Hotel revenue per available room at the Venetian of $166 was down from $222; and at the Palazzo was $190, down from $226.
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Locally owned and independent for more than 50 years.
these places are all in a downward spiral.
they don't have enough visitors, so they drop hotel room rates...still no increase in visitors, so they have no revenue from gaming...to pay for the debt of building the hotel rooms...so they have to drop hotel room rates, etc., etc.
look at today's story on wynn. look at the room occupancy rate...even WYNN with his billions can't get those rich people on the planes to come here.
downward spiral, that's correct: In order to "compensate" the lack of visitors, they decided to cut down the room rates, which consequently lead to higher room occupancy. However, 89 per cent occupancy rate at the reducued room rate by approx 30 per cent probably only generates about the same like 50-55 per cent "regular room rate". But they were foreced to do so as competitors also dropped their rates. Anyway, these 89 per cent occupancy rate creates less revenue than 89 per cent a few years ago as tourists do no longer gamble that much. They come to Vegas to take advantage of these great rooms and amenities, and that's about it. I wonder if this will change in the near future...
From Switzerland
This is like the sinking of the Titanic (Las Vegas); one compartment (Casino) at a time.
LVS file for bankruptcy? Not anytime soon. Their stock is up more than 500% since March.
As for Wynn, he's no fool. He knows to fill the rooms at cheaper rates will get people to gamble, and that's where the real money is.
It took awhile for things to get where they are, and it will take awhile to correct them.
This was inevitable. Vegas use to provide an escape, but now with $500 bottle service, $250 rooms and pricey restaurants, there is no money remaining to gamble with. Corporate Vegas chose to de-emphasize gambling (and many would argue service) in order to soak the customer for everything else. Where are the whales now?
the trick LVS is applying goes like this: whenever they need cash (when then stock is threatened to go too low), then the management "decides" to print new shares and thus diluding the original stock value. this way they already generated a few hundred millions of stocks and still the company does not get out of the trouble. I wonder what happens if the Marina Bay Sands in Singapore is not sky-rocketing from Day 1 after Grand Opening......
From Switzerland