Las Vegas Sands Corp. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited results cover continuing operations in Macao and Singapore; Las Vegas operations are reported as discontinued operations following their sale on February 23, 2022. Unless noted, amounts are in U.S. dollars.
Financial and operating performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Net revenue | $1.005 billion | $857 million | $2.993 billion | $3.226 billion |
| Operating loss | $177 million | $316 million | $626 million | $551 million |
| Net loss from continuing operations | $380 million | $594 million | $1.272 billion | $1.154 billion |
| Adjusted property EBITDA | $191 million | $47 million | $510 million | $535 million |
| Net income (loss) attributable to LVS | $(239) million | $(368) million | $2.001 billion | $(838) million |
Nine-month 2022 net income includes a $2.861 billion after-tax gain on the Las Vegas sale; it does not indicate a return to profitability in continuing operations. Q3 revenue rose 17.3% year over year as Marina Bay Sands’ recovery more than offset weaker Macao results. For the nine-month period, revenue fell 7.2%: Macao revenue declined $1.07 billion, partly offset by an $834 million increase in Singapore.
In Q3, Marina Bay Sands generated $756 million of revenue and $343 million of adjusted property EBITDA, versus $249 million and $15 million a year earlier. Macao revenue was $258 million and adjusted property EBITDA was a loss of $152 million, versus $616 million and positive EBITDA of $32 million. For the nine months, Marina Bay Sands EBITDA increased to $783 million from $271 million; Macao EBITDA fell to a loss of $273 million from positive $264 million.
- Cash flow and investment: Continuing-operations operating cash use was $840 million for the first nine months, versus $345 million in 2021. Investing cash use was $599 million, including $504 million in capital expenditures.
- Liquidity: September 30 cash and cash equivalents were $5.836 billion, plus $289 million of restricted cash. Available revolving capacity was approximately $2.952 billion across U.S., SCL and Singapore facilities. A further $2.57 billion Singapore delayed-draw facility was not available until specified MBS project cost and schedule information is delivered to lenders.
- Debt: Total debt was $15.293 billion, including $1.514 billion of current maturities, versus $14.795 billion at December 31, 2021. The company drew $700 million under the SCL revolving facility during the nine-month period. Q3 net interest expense was $183 million; the weighted-average interest rate on total debt was 4.8%, versus 4.4% a year earlier.
- Balance sheet: Total assets were $21.469 billion and total equity was $3.781 billion at September 30, 2022.
Material changes and notable transactions
- The February Las Vegas sale had an aggregate purchase price of approximately $6.25 billion. LVS received approximately $5.05 billion in cash before transaction costs and working-capital adjustments, plus a $1.20 billion seller-financing loan. The company reported a $3.61 billion pretax disposal gain. The loan’s carrying value was $1.208 billion; estimated fair value was $1.06 billion. No credit-loss allowance was recorded.
- The sale proceeds materially strengthened cash balances, but continuing operations still used cash and reported substantial losses. The company’s quarterly dividends remain suspended; $916 million of share-repurchase authorization remained, with its expiration extended to November 2024.
- Credit-rating downgrades to BB+ led to a 0.50 percentage-point increase in coupons on outstanding SCL senior notes, raising expected 2022 interest expense by $16 million and by $36 million annually through 2024, before scheduled maturities reduce the impact.
Outlook, risks and contingencies
- COVID-19 and travel: Macao casinos were ordered closed July 11–22, 2022, and travel restrictions and outbreaks sharply reduced visitation. For the first nine months, mainland China visitation to Macao was down 25.0% versus 2021 and 81.7% versus 2019; Macao gross gaming revenue was down 53.1% and 85.6%, respectively. Singapore visitation was recovering but remained below pre-pandemic levels. Management said the pandemic’s full-year effect was material but could not be reasonably estimated.
- Macao gaming concession: VML’s subconcession was extended only through December 31, 2022, and it submitted a bid for a new concession. A $289 million bank guarantee is restricted as security for employee obligations if VML does not obtain a new concession. Management believed it would secure an extension or new concession, but failure could trigger noteholder put rights and credit-facility default or acceleration provisions, with potentially material consequences.
- Projects: The MBS expansion is estimated at SGD 4.50 billion (approximately $3.14 billion); the construction-start deadline was extended to April 8, 2023. The company had not delivered required cost and schedule information to lenders, and delayed-draw funding remained unavailable. A separate approximately $1.0 billion MBS renovation was also underway.
- Covenants and refinancing: Management reported compliance with debt covenants at September 30, while waivers of certain financial tests were due to expire December 31, 2022 for LVSC and MBS and January 1, 2023 for SCL. Further waivers may be needed; none were assured. The SCL revolving facility matures July 31, 2023, and management expected to extend it.
- Other exposures: The filing identifies interest-rate and currency risks, potential future effects of the Inflation Reduction Act, and regulatory risks relating to China and Macao. A Macao lawsuit with a claim increased to 96.45 billion patacas was decided in favor of the defendants; the plaintiff appealed. Management could not estimate the probability of outcome or reasonably possible loss.
- Contingent sale support: No payments had been made through September 30 under the Las Vegas sale support agreement. Remaining caps were $63 million for Q4 2022 and $250 million for 2023; management said it did not anticipate making payments.
Investor verification priorities
- Track Macao concession tender results, the restricted guarantee, and any resulting debt-holder put or acceleration rights.
- Assess whether Macao visitation and gaming activity recover, and whether renewed restrictions affect operations or cash use.
- Verify covenant-waiver extensions and refinancing or extension of the SCL facility before its July 2023 maturity.
- Monitor operating cash burn, debt levels, and availability of project financing, particularly for MBS expansion and renovation.
- Separate recurring continuing-operation performance from the one-time Las Vegas disposal gain when evaluating earnings.