Las Vegas Sands Corp. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Amounts are in U.S. dollars; financial results are unaudited. Unless stated otherwise, operating results below are from continuing operations and exclude the Las Vegas Operations, which are classified as discontinued operations held for sale.
Business context
The company operates integrated resorts in Macao and Singapore. COVID-19-related travel restrictions and capacity measures continued to weigh on visitation, though management reported recovery as restrictions eased. Las Vegas capacity restrictions were lifted June 1, 2021; the Las Vegas properties are presented separately as discontinued operations.
Financial highlights
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Net revenue | $1.173 billion | $62 million | $2.369 billion | $1.479 billion |
| Operating loss | $139 million | $757 million | $235 million | $751 million |
| Net loss from continuing operations | $280 million | $841 million | $560 million | $933 million |
| Net loss attributable to LVS | $192 million | $820 million | $470 million | $821 million |
| Adjusted property EBITDA | $244 million | $(425) million | $488 million | $(76) million |
Q2 revenue growth reflected higher visitation and the comparison with 2020 property closures; Macao and Marina Bay Sands revenue increased by $810 million and $304 million, respectively. For the first half, revenue increased 60% year over year, with casino revenue up 59.5%. Higher operating costs accompanied the rebound, including gaming taxes, which rose $352 million in Q2 and $293 million for the first half versus the comparable periods.
For the six months, net cash used in continuing operating activities was $105 million, versus $956 million used in 2020. Continuing capital expenditures were $448 million; continuing financing activities generated $532 million, principally from $505 million of revolving-credit borrowings. Cash and cash equivalents were $2.057 billion at June 30; including restricted cash, continuing-operations cash was $2.073 billion. Total debt carrying value was $14.450 billion, including $75 million of current maturities, compared with $14.004 billion at year-end 2020. Six-month net interest expense was $312 million, versus $242 million.
Management cited $3.94 billion of available borrowing capacity across revolving facilities, net of letters of credit, and an additional SGD 3.69 billion (approximately $2.74 billion) available under the Singapore delayed-draw facility for the Marina Bay Sands expansion, subject to delivery of the project cost estimate and schedule. The company reported compliance with debt covenants at quarter-end; certain financial covenant requirements had been waived for specified periods.
Material changes and unusual items
- The announced Las Vegas sale has an aggregate enterprise value of $6.25 billion and was expected to close in Q4 2021, subject to regulatory approval and other conditions. Consideration includes approximately $1.05 billion cash for operating assets, $1.20 billion in seller financing, and approximately $4.0 billion cash for real estate.
- The sale agreement includes contingent lease support payments tied to operating performance through 2023, with an annual cap of up to $250 million, subject to timing-related proration. Las Vegas Q2 discontinued operations reported $290 million revenue and $38 million net income; first-half revenue was $429 million and net loss was $24 million.
- The quarterly dividend program remains suspended. Sands China also did not pay a final 2020 dividend.
- The company recorded a $20 million valuation allowance for certain U.S. foreign tax credits, which it no longer expects to use following the planned Las Vegas sale and lower forecast U.S. taxable income.
Outlook, commentary and principal risks
Management said the pandemic’s effect on 2021 results, cash flows and financial condition would be material but could not be reasonably estimated. Travel restrictions, public-health rules, visitation and consumer demand remain uncertain across Macao and Singapore. Management described liquidity as sufficient to support operations and current major construction projects, and cited cost and capital-spending controls to reduce non-essential outflows. The filing provides no numerical earnings or revenue guidance.
- Macao gaming rights: The subconcession expires June 26, 2022. Management believes it will be renewed or extended, but non-renewal could prevent gaming operations and could trigger debt repurchase or acceleration provisions with a material adverse effect.
- Debt covenants and liquidity: Covenant waivers have defined end dates; future compliance may depend on recovery and additional waivers. The Singapore delayed-draw borrowing is conditional on project documentation that was not delivered by the June 30 deadline.
- MBS expansion: The project’s stated total cost is approximately SGD 4.5 billion, but the company is reviewing its budget and timing; the cost estimate and schedule remain outstanding.
- Litigation: In the Macao Action, the plaintiff sought to increase its claim to 96.45 billion patacas (approximately $12.06 billion). The company said it could not determine the probability of outcome or reasonably possible loss and intends to defend the case. Securities and derivative lawsuits also remain at preliminary stages.
- Other sale risks: Closing conditions, carve-out costs, possible transaction disruption, repayment risk on seller financing, and the amount of any contingent support payments could affect the outcome of the Las Vegas transaction.
Important facts for investors to verify
- Whether the Las Vegas sale closed on expected terms and timing, including seller-financing repayment and contingent lease-support exposure.
- Developments in Macao subconcession renewal and any related changes to gaming laws or debt protections.
- Travel restrictions, visitation and operating capacity in Macao and Singapore, and their effect on property-level EBITDA and cash generation.
- Debt balances, covenant waiver deadlines, availability of revolving facilities, and satisfaction of conditions for the Singapore delayed-draw facility.
- Updated cost, schedule and funding plans for the Londoner Macao and Marina Bay Sands expansion projects.
- Developments in the Macao Action and other litigation, for which the filing does not provide a clear estimate of potential loss.