Las Vegas Sands (LVS) Stock Gains Despite Q3 Earnings Miss

Las Vegas Sands Corp. LVS reported dismal third-quarter 2020 results, wherein earnings and revenues not only missed the Zacks Consensus Estimate but also declined sharply on a year-over-year basis. Notably, both the metrics missed the consensus mark for the second straight quarter.

Despite the performance, the company’s shares gained 4.2% in after-hour trading session on the company’s optimism regarding future growth backed by a strong balance sheet. Further, management stated that recovery from the coronavirus pandemic continues in every market. Per management, its strong balance sheet supports its previously announced capital expenditure programs in both Macao and Singapore and new growth opportunities in new markets.

Earnings & Revenue Discussion

The company reported adjusted loss per share of 67 cents, wider than the Zacks Consensus Estimate of a loss of 58 cents. Notably, it had reported adjusted earnings per share of 75 cents in the prior-year quarter. Interest expenses, net of amounts capitalized, came in at $137 million, flat year over year.

Quarterly revenues of $586 million missed the consensus mark of $822 million. The figure also declined 82% from the year-ago quarter. Notably, the top line was impacted by lower occupancy rates and Revpar across all regions and casino closures in Las Vegas.

Las Vegas Sands Corp. Price, Consensus and EPS Surprise

Las Vegas Sands Corp. price-consensus-eps-surprise-chart | Las Vegas Sands Corp. Quote

Asian Operations

Las Vegas Sands’ Asia business includes the following resorts:

The Venetian Macao

Net revenues declined 92% year over year to $68 million. Casino and rooms revenues amounted to $32 and $3 million, down 95.4% and 94.8%, respectively. Food and beverage, and convention, retail and other revenues declined 88.2% and 86.4% year over year to $2 million and $3 million, respectively. Mall revenues contracted 56.9% year over year to $28 million.

Adjusted property EBITDA during the third quarter came in at ($78) million against $342 million reported in the prior-year quarter.

Non-rolling chip drop declined 95% and rolling chip volumes fell 96.8% on a year-over-year basis.

During third-quarter 2020, the segment’s hotel Revpar declined 93.3% year over year to $15 million, while occupancy rates came in at 7.6% compared with 95.7% in the prior-year quarter.

Sands Cotai Central

Net revenues plunged 95.5% year over year to $22 million owing to declines of 98.6%, 97.5% and 87.5% in casino revenues, rooms revenues, and food and beverage, respectively. Moreover, mall; and convention, retail and other revenues declined 52.6% and 25% year over year, respectively.

Adjusted property EBITDA plunged 142% year over year to ($71) million.

Both non-rolling chip drop and rolling chip volume declined 98.2% and 100% year over year, respectively.

The Parisian Macao

Revenues amounted to $40 million, reflecting a year-over-year slump of 89.5%. The downside can primarily be attributed to a decline of 91.7% in casino revenues. It was further aggravated by declines of 87.9%, 83.3%, 53.8% and 80% in rooms, food and beverage, mall, convention and other retail revenues, respectively.

Adjusted property EBITDA plunged 133.3% year over year to ($40) million.

Both non-rolling chip drop and rolling chip volumes fell 96.1% and 91.4% year over year, respectively.

During third-quarter 2020, the segment’s hotel Revpar declined 89.2% year over year to $17 million, while occupancy rates came in at 12.7% compared with 96.9% in the prior-year quarter.

The Plaza Macao and Four Seasons Hotel Macao

Net revenues tanked 87.2% to $25 million owing to declines of 93.2%, 90%, 100%, 59.4% in casino, rooms, food and beverage and mall revenues, respectively.

Adjusted property EBITDA in the reported quarter totaled ($15) million, plummeting 120% on a year-over-year basis.

Both non-rolling chip drop and rolling chip volume declined 88.4% and 84.8% year over year, respectively.

During third-quarter 2020, Revpar declined 92.4% year over year to $23 million, while occupancy rates came in at 8.7% compared with 92.6% in the prior-year quarter.

Sands Macao

Revenues were down 93% year over year to $12 million owing to declines of 93.1%, 100%, 83.3% in casino, rooms, food and beverage revenues, respectively.

Adjusted property EBITDA in the reported quarter totaled ($26) million, declining 150% on a year-over-year basis.

Both non-rolling chip drop and rolling chip volume fell 93% and 88.2% year over year, respectively.

During the quarter under review, the segment’s hotel Revpar declined 86.7% year over year to $23 million, while occupancy rates came in at 14.5% compared with 99.8% in the prior-year quarter.

Marina Bay Sands, Singapore

Net revenues decreased 64.6% year over year to $281 million owing to declines of 64.4%, 77.1%, 63.9%, 39.1% and 62.5% in casino, rooms, food and beverage, mall, and convention, retail and other revenues, respectively.

Adjusted property EBITDA in the reported quarter totaled 70 million, reflecting a slump of 83.9% on a year-over-year basis.

Both non-rolling chip drop and rolling chip volumes declined 70.4% and 79.7% year over year, respectively.

During third-quarter 2020, the segment’s hotel Revpar declined 69.2% year over year to $143 million, while occupancy rates came in at 55.5% compared with 97.7% in the prior-year quarter.

Domestic Operations

Las Vegas

Net revenues from Las Vegas operations dropped 62.6% to $152 million owing to declines of 42.7% and 65.2% in casino, and food and beverage revenues, respectively. Rooms revenues also slumped 71.5%. Moreover, convention, retail and other revenues declined 68.8% year over year.

Adjusted property EBITDA in the reported quarter totaled ($40) million, declining 143% on a year-over-year basis.

Table games drop were down 10.1%, while slot handle fell 20.4% on a year-over-year basis.

During the reported quarter, Revpar declined 66.1% year over year to $76 million, while occupancy rates came in at 43.7% compared with 94.6% in the prior year quarter.

Operating Results

On a consolidated basis, adjusted property EBITDA totaled ($203) million in the third quarter, against $1.28 billion reported in the prior-year quarter. Las Vegas operating properties, Sands Macao, The Plaza Macao and Four Seasons Hotel Macao, Venetian Macao, Sands Cotai Central, The Parisian Macao and Marina Bay Sands, all witnessed declines in adjusted EBITDA.

Balance Sheet

As of Sep 30, 2020, unrestricted cash balances amounted to $2.38 billion. Total debt outstanding (excluding finance leases) was $13.89 billion.

In the reported quarter, capital expenditures totaled $376 million. This can primarily be attributed to construction, development and maintenance activities of $279 million in Macao, $21 million in Las Vegas and $76 million at Marina Bay Sands.

Zacks Rank & Key Picks

Las Vegas Sands currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same space includes Boyd Gaming Corporation BYD, Monarch Casino & Resort, Inc. MCRI and Red Rock Resorts, Inc. RRR. Boyd Gaming and Monarch Casino & Resort sport a Zacks Rank #1 (Strong Buy), while Red Rock Resorts carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Boyd Gaming has a three-five-year earnings per share growth rate of 5.6%.

Shares of Casino & Resort have surged 67.8% in the past six months.

Red Rock Resorts expects 2021 earnings to surge 22.5%.

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