Business context and reporting period
Las Vegas Sands Corp. (LVS) reported unaudited results for the three months ended March 31, 2021. Continuing operations comprised its Macao and Singapore integrated resorts; Las Vegas operations were classified as discontinued operations and held for sale following the announced sale agreement.
Financial performance and liquidity
Unless otherwise noted, amounts are in U.S. dollars.
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Continuing-operations net revenue | $1.196 billion | $1.417 billion |
| Operating income (loss), continuing operations | $(96) million | $6 million |
| Net income (loss), continuing operations | $(280) million | $(92) million |
| Net loss attributable to LVS | $(278) million | $(1) million |
| Adjusted Property EBITDA, continuing operations | $244 million | $349 million |
| Operating cash flow, continuing operations | $(188) million | $(388) million |
| Capital expenditures | $291 million | $290 million |
Including discontinued operations, total net loss was $342 million versus $51 million in Q1 2020. Las Vegas discontinued operations generated $139 million revenue and a $62 million net loss in Q1 2021, compared with $365 million revenue and $41 million net income in Q1 2020. No consolidated operating margin is stated; operating loss on continuing revenue was approximately 8.0% in Q1 2021, versus operating income of approximately 0.4% in Q1 2020.
Casino revenue fell 19.5% to $865 million; rooms revenue fell 31.9% to $96 million. Mall revenue rose 51.5% to $156 million, mainly reflecting fewer tenant rent concessions and higher turnover rents. Marina Bay Sands Adjusted Property EBITDA declined to $144 million from $282 million, while Macao’s rose to $100 million from $67 million.
At March 31, 2021, cash and cash equivalents were $2.074 billion (plus $16 million restricted cash). Total debt carrying value was approximately $14.446 billion, including current maturities; long-term debt was $14.374 billion. The quarter included $505 million of SCL revolving-facility borrowings. Available revolving capacity was approximately $3.94 billion; an additional SGD 3.69 billion (about $2.74 billion) was available under a Singapore delayed-draw facility restricted to Marina Bay Sands expansion capital expenditures. Management said liquidity was adequate for operations, committed projects and debt obligations.
Material changes, outlook, and risks
- COVID-19 effects: Management attributed weaker results to travel restrictions, low visitation and capacity limits. Macao and Las Vegas properties were open at reduced levels; Singapore visitation was severely affected by border restrictions. Management said the pandemic’s 2021 impact would be material but could not be reasonably estimated.
- Proposed Las Vegas sale: Definitive agreements signed March 2, 2021 provide for total enterprise value of $6.25 billion, with closing expected in Q4 2021 subject to approvals and other conditions. Consideration includes approximately $1.05 billion cash and $1.20 billion seller financing for operating assets, and approximately $4.0 billion cash for real estate. No impairment was recorded. A contingent lease-support arrangement could require payments through 2023, subject to annual caps of up to $250 million and performance-based terms.
- Debt and projects: Financial covenant requirements were waived through December 31, 2021 under relevant facilities. Compliance thereafter may depend on operating recovery and further waivers; management believes it can obtain needed waivers but gave no assurance. The Londoner Macao development was being completed in phases, with total costs for the cited Macao projects estimated at approximately $2.2 billion. The Marina Bay Sands expansion was estimated at SGD 4.5 billion.
- Other unusual items: Q1 2021 continuing-operations other expense included $16 million of foreign-exchange transaction losses. The company recorded a $20 million valuation allowance related to U.S. foreign tax credits. The quarterly dividend remained suspended.
- Contingencies: In the Macao AAEC litigation, the plaintiff sought 96.45 billion patacas (approximately $12.04 billion); LVS said it could not determine the likelihood of outcome or reasonably possible loss. Securities and shareholder derivative actions were also at preliminary stages, with outcomes and loss ranges not estimable.
The filing provides no quantified earnings or revenue guidance. Management expected properties and major projects to be supportable with available liquidity, while emphasizing uncertainty around travel, operating restrictions, visitation and consumer demand.
Most important facts for investors to verify
- Progress, approvals, closing conditions and final proceeds for the proposed Las Vegas sale, including the seller-financed loan and contingent lease-support exposure.
- Recovery in visitation, gaming volumes and capacity restrictions across Macao, Singapore and Las Vegas, and the resulting operating cash flow.
- Cash availability, debt maturities, covenant status after 2021 and whether additional waivers are obtained.
- Capital spending, costs and completion timing for The Londoner Macao and Marina Bay Sands expansion.
- Developments in the AAEC claim and other litigation, for which the filing does not provide a clear estimated loss range.