Las Vegas Sands Corp. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. Although the request specifies 2022 Q4, this filing is an annual report; fourth-quarter results are noted below. The company operates integrated resorts in Macao and Singapore. Its Las Vegas operations were sold on February 23, 2022 and are reported as discontinued operations.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Net revenue | $4.110 billion | $4.234 billion |
| Operating loss | $792 million | $689 million |
| Continuing-operations net loss | $1.541 billion | $1.469 billion |
| Net income attributable to LVS | $1.832 billion; diluted EPS $2.40 | Net loss $961 million; diluted EPS $(1.26) |
| Adjusted property EBITDA (non-GAAP) | $732 million | $786 million |
| Cash used in continuing operating activities | $944 million | $243 million |
| Capital expenditures | $651 million | $828 million |
FY 2022 revenue fell 2.9%. Macao revenue decreased $1.27 billion amid severe travel restrictions, largely offset by a $1.15 billion increase at Marina Bay Sands (MBS) as Singapore reopened. Macao adjusted property EBITDA declined to negative $324 million from positive $338 million; MBS EBITDA rose to $1.056 billion from $448 million. Casino revenue was $2.627 billion, rooms $469 million, food and beverage $301 million, mall $580 million, and convention, retail and other $133 million. The filing does not present a single consolidated operating-margin percentage.
Reported net income includes a $3.60 billion pre-tax gain on the Las Vegas sale ($2.861 billion after tax, as presented in discontinued operations). Excluding this disposal effect, continuing operations remained loss-making. FY 2022 Q4 revenue was $1.117 billion, operating loss $166 million, and continuing-operations net loss $269 million.
At December 31, 2022, cash and cash equivalents were $6.311 billion, plus $125 million restricted cash. Long-term debt was $15.978 billion net of discounts and financing costs, including $2.031 billion current maturities; contractual principal was $16.060 billion. Available revolving capacity was $2.48 billion, net of letters of credit. A further $2.74 billion Singapore delayed-draw facility was available only after delivery of the MBS expansion cost estimate and schedule to lenders. Approximately $2.06 billion of the $2.57 billion held by non-U.S. subsidiaries was described as available for repatriation, subject to legal, operating and contractual constraints. Cash interest paid was $618 million; net interest expense was $702 million.
Operating cash outflow was primarily driven by $612 million of cash taxes associated largely with the Las Vegas sale and losses and working-capital needs in Macao. The company reported $6.31 billion in unrestricted cash and said it believed liquidity was sufficient for operations, debt obligations and planned commitments. The quarterly dividend remained suspended; no shares were repurchased in 2022.
Material changes and unusual items
- The Las Vegas sale generated approximately $5.05 billion cash at closing before transaction costs and working-capital adjustments, plus a $1.20 billion seller-financing loan. The loan balance was $1.165 billion at year-end; it is secured, matures in six years, and had $21 million of recognized interest income in 2022.
- Macao casino revenues fell $1.04 billion year over year; MBS casino revenues increased $775 million. Total Macao market gaming revenue fell 51.4% versus 2021 and 85.6% versus 2019, according to government figures.
- The Londoner Macao conversion and key components were completed during 2022. The company received a new Macao gaming concession, effective January 1, 2023 through December 31, 2032.
- FY 2022 interest expense increased to $702 million from $621 million. S&P and Fitch downgrades increased coupon rates on SCL senior notes by 0.50 percentage points, adding $16 million of interest expense in 2022 and an estimated $36 million annually through 2024.
- Credit-loss provision was $15 million, up from $3 million. The allowance was $217 million against $484 million gross receivables; casino credit collection was identified as a key audit matter.
Outlook, commitments and risks
- No specific earnings or revenue guidance is provided. Management expects recovery as travel and tourism improve but states that the pace and extent remain uncertain. Macao visitation was substantially below pre-pandemic levels at filing; Singapore visitation also remained below 2019 levels.
- Under the new Macao concession, the company committed to spend at least 30.24 billion patacas (approximately $3.77 billion) through 2032, including 27.80 billion patacas on non-gaming projects. A market-revenue trigger could increase non-gaming investment by up to 20% in a subsequent year.
- The approximately SGD 4.5 billion MBS expansion (about $3.3 billion at year-end exchange rates) was under budget and schedule review. The construction estimate and schedule were not delivered to lenders by the extended deadline, preventing further delayed-draw borrowing. The company did not expect material expansion spending before delivery. It also began a separate approximately $1.0 billion MBS renovation.
- The company stated it might not commence the MBS expansion by the April 2023 deadline and was discussing a timeline extension with Singapore. Failure to obtain an extension could put it in breach of the development agreement. MBS’s casino license was due to expire in April 2025, subject to renewal.
- Debt covenant waivers were in place for SCL through July 31, 2023 and had covered LVSC and MBS through year-end 2022; management said additional waivers might be needed and were not assured. The 2018 SCL revolving facility, with $1.958 billion outstanding, was scheduled to mature July 31, 2023; the company expected to extend it but gave no assurance.
- Principal risks include renewed pandemic or travel restrictions, economic weakness, gaming volatility and competition, high leverage and refinancing needs, regulatory or concession changes, foreign-exchange and cash-repatriation limits, credit receivable collectability, construction delays/cost overruns, and evolving China-related regulatory and data-security requirements.
- The AAEC Macao litigation seeks a very large damages amount; the trial court ruled for the company in April 2022, but the plaintiff’s appeal remained pending. Management said it could not determine the probability of outcome or reasonably possible loss. A separate securities class action and derivative action also remained pending at the stage described.
Deloitte issued unqualified opinions on the financial statements and internal control over financial reporting. The identified critical audit matter was valuation of casino receivables.
Important facts for investors to verify
- Whether Macao travel recovery translates into sustained revenue and positive property EBITDA, and whether MBS’s strong rebound continues.
- Progress, total cost, lender approvals and revised deadlines for the MBS expansion and renovation.
- Refinancing of near-term debt maturities, covenant compliance and any further waivers or amendments.
- Cash conversion and the sustainability of liquidity after sale-related taxes, capital spending and debt service.
- Execution of Macao’s concession investment plan, including required non-gaming spending and any additional trigger-based commitment.
- Renewal of the MBS casino license and the status of Macao tax exemptions and shareholder dividend-tax arrangements.
- Collection of casino receivables and outcomes of the AAEC appeal and other pending litigation.