Las Vegas Sun

March 29, 2024

gaming:

Loss widens for Las Vegas Sands in first quarter

Palazzo

LAS VEGAS SUN file

The Palazzo on the Las Vegas Strip.

Updated Tuesday, May 5, 2009 | 2:59 p.m.

Las Vegas Sands Corp. today said its revenue remained steady in the first quarter, despite the recession. But financing costs led to a widening of its first quarter loss, from $11.2 million or 3 cents per share in the 2008's first quarter to $87.7 million or 14 cents in the 2009 quarter ended March 31.

Revenue before promotional allowances of $1.173 billion was up from $1.148 billion in the year-ago quarter.

Business at the company's big Venetian and Palazzo resorts was off because of the recession, with revenue of $351.6 million in the 2008 quarter falling to $317.5 million in this year's quarter. Operating income of $57.4 million fell to $25.5 million as the Venetian reported a room occupancy percentage of 92.1 percent last year and 89.1 percent this year, with revenue per available room falling from $250 to $187. The Palazzo, which opened in January 2008, saw its occupancy rate improve from 79.1 percent to 92.7 percent and revenue per available room grow from $193 to $204.

Elsewhere, Las Vegas Sands reported mixed results in Macau, said the company is on track to cut expenses by about $470 million annually and that it's on track to open a new casino this month in Bethlehem, Pa., and a resort in Singapore later in the year or in early 2010.

"The steady execution of the business plan we presented in November 2008, including the implementation of our cost savings program, continues to be our primary focus as we navigate through the current challenging economic conditions. We have made notable progress during the quarter on each of the three basic objectives of our plan -- first, to maximize our cash flow from current operations in Las Vegas and Macao, including through the implementation of approximately $470 million in annualized cost savings; second, to complete on time and on budget our properties currently under development in Singapore and Bethlehem, Pa.; and third, to enhance our financial flexibility by advancing opportunities that will increase liquidity and allow us to execute our de-leveraging strategy," Chairman and Chief Executive Sheldon Adelson said in a statement.

The company said its loss increased in part because of required dividends paid, accumulated but undeclared dividend requirements and accretion on preferred stock of $53.1 million, as well as increases in pre-opening expense and depreciation and amortization expense, partially offset by a decrease in net interest expense.

Of Las Vegas, the company said: "Despite the weakened economy, the Venetian Las Vegas and the Palazzo generated solid cash flow. While slot handle was down during the quarter, table games volumes were relatively stable for our Las Vegas operations, with table games drop down only 2.7 percent compared to the first quarter last year. Our table games win percentage of 20.6 percent was down significantly compared to 25.3 percent in last year's first quarter. The Palazzo, which has now completed its first full year of operations, has established a solid base of gaming and hotel customers. Our group business continues to provide occupancy during mid-week periods, and our market-leading convention and group meeting assets have allowed us to target our marketing efforts to those group segments that continue holding meetings despite weaker economic conditions. We remain focused on opportunities to reduce our cost structure and have increased our targeted cost savings to approximately $200 million of annualized savings across our Las Vegas operations. These reductions in our cost structure should provide operating leverage when market conditions improve."

With Las Vegas Sands weighed down by some $10.47 billion in debt, Adelson said the company continues to look at asset sales, along with cost reductions, to improve its balance sheet.

"We remain focused on the reduction of our financial leverage. The complete implementation of our $470 million cost savings program, together with the future addition of operating cash flows from the openings of our properties currently under development in Bethlehem, Pa., and Singapore, will significantly enhance our financial position. We believe we have opportunities to generate additional liquidity, should we choose to do so, through the monetization of non-core assets or the sale of minority interests in certain of our operating assets or subsidiaries in Macao. We remain confident that our currently available liquidity and capital resources, coupled with our opportunities to generate additional liquidity, provide sufficient means to complete our current development plans and meet our obligations," he said.

In Macau, the Venetian Macau's revenue grew from $455.7 million to $483.7 million, with operating income growing from $56.8 million to $67 million. But the Sands Macau saw revenue fall from $268.3 million to $224.4 million and operating income slip from $49.6 million to $36.8 million. The Four Seasons Macau, which opened in August, produced revenue of $47 million and earnings before interest, taxes, depreciation, amortization and rent of $4.4 million.

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