Las Vegas Sands Corp. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. The filing also presents unaudited fourth-quarter results. LVS develops and operates integrated resorts in Macao, Singapore, and Las Vegas; it owned 69.9% of Sands China Ltd. (SCL) at year-end.
Financial results and liquidity
| Metric | FY2020 | FY2019 |
|---|---|---|
| Net revenue | $3.612 billion | $13.739 billion |
| Operating income (loss) | $(1.688) billion | $3.698 billion |
| Net income (loss) | $(2.143) billion | $3.304 billion |
| Net income (loss) attributable to LVS | $(1.685) billion | $2.698 billion |
| Diluted EPS | $(2.21) | $3.50 |
| Operating cash flow | $(1.312) billion | $3.038 billion |
| Capital expenditures | $1.330 billion | $1.216 billion |
| Consolidated adjusted property EBITDA | $(172) million | $5.389 billion |
Revenue fell 73.7%, as pandemic-related closures, travel restrictions, and reduced visitation affected all markets. Casino revenue declined 76.9%; rooms fell 71.6%, food and beverage 68.5%, mall 46.8%, and convention, retail and other 66.7%. Mall rent concessions totaled $272 million. The provision for credit losses rose to $99 million from $30 million.
Q4 2020: Revenue was $1.146 billion, operating loss $211 million, net loss $376 million, loss attributable to LVS $299 million, and diluted loss per share $0.39. Q4 2019 revenue was $3.509 billion and net income was $783 million.
Cash and cash equivalents were $2.121 billion at year-end; restricted cash was $16 million. Debt was $14.007 billion carrying value, including current maturities, and $14.12 billion contractual principal. Available revolving capacity was $3.96 billion, plus $2.79 billion under a Singapore delayed-draw facility restricted to MBS expansion capital expenditures. Current assets were $2.644 billion and current liabilities $2.309 billion. Interest expense, net, was $536 million; cash used in operations and investment spending reduced cash and restricted cash by $2.105 billion during the year.
Material changes and unusual items
- All three markets experienced substantial pandemic disruption and temporary closures. Macao gaming revenue was down 79.3% market-wide; reported visitation to Macao fell to about 6 million from about 39 million in 2019.
- Adjusted property EBITDA was negative in Macao ($(431) million) and Las Vegas ($(124) million); Marina Bay Sands generated $383 million, down 76.9% year over year.
- The regular quarterly dividend was suspended in April 2020 after one $0.79-per-share payment in March. No LVS shares were repurchased in 2020. SCL did not pay a final 2019 dividend.
- SCL issued $1.5 billion of senior notes in 2020 to support liquidity and general corporate purposes. Lenders waived or amended certain financial covenant requirements for LVS, SCL, and MBS through specified periods ending in 2021 or early 2022. Management said the company was in compliance with debt covenants at year-end.
- FY2019 included a $556 million gain on the sale of Sands Bethlehem, making the year-over-year earnings comparison less directly comparable.
- Founder and CEO Sheldon Adelson died on January 12, 2021. Robert Goldstein became Chairman and CEO, and Patrick Dumont became President and COO.
Outlook, risks, and contingencies
Management gave no quantified earnings or recovery guidance and said the duration and financial impact of COVID-19 could not be reasonably estimated. It said available cash and borrowing capacity should support operations, planned capital spending, debt obligations, and ongoing major construction, while noting cost and capital-spending reductions for nonessential items.
- Development: The Londoner Macao conversion was proceeding in phases, with completion expected through 2021; the Londoner Macao Hotel opened in January 2021. Londoner Macao and the recently completed Grand Suites at Four Seasons were expected to cost about $2.2 billion in total. The MBS expansion was estimated at SGD 4.5 billion (about $3.4 billion), with cost and schedule still to be finalized. The Las Vegas condominium project remains suspended; up to $130 million of capitalized construction costs could be subject to a charge if abandoned.
- Licensing: The Macao gaming subconcession expires June 26, 2022. Without an extension, gaming premises and equipment transfer to the Macao government without compensation. Related Macao tax arrangements also expire in 2022. Singapore’s casino license expires in April 2022 and is renewable subject to regulatory requirements.
- Debt and distributions: Debt maturities include approximately $1.86 billion in 2023, $1.89 billion in 2024, and $3.36 billion in 2025. Debt agreements restrict distributions, and covenant waivers do not eliminate future refinancing or compliance risk.
- Litigation: AAEC’s Macao claim was increased to 96.45 billion patacas (about $12.08 billion). The matter was preliminary; management said it could not estimate the probability of outcome or reasonably possible loss. The filing also describes shareholder securities and derivative actions with no estimable outcome or loss at that stage.
- Other principal risks include prolonged travel restrictions or weak demand, credit-receivable collection, gaming regulation and competition, foreign exchange and interest rates, construction cost or schedule overruns, and cybersecurity. The auditor issued an unqualified opinion; internal control over financial reporting was reported effective.
Most important facts for investors to verify
- Whether travel restrictions ease and visitation, gaming volumes, hotel occupancy, and MICE business recover across Macao, Singapore, and Las Vegas.
- Liquidity and covenant headroom, debt maturities and refinancing plans, including restrictions on subsidiary distributions and the use of the Singapore delayed-draw facility.
- Any extension or change to the Macao subconcession and associated tax arrangements before their June 2022 expiry, and renewal of the Singapore casino license.
- Actual final cost, schedule, and funding for The Londoner Macao and the MBS expansion, and any impairment or write-off related to the suspended Las Vegas condominium project.
- Developments in casino receivable collections and the material lawsuits, particularly the AAEC claim whose potential loss was not estimable.