Las Vegas Sands Corp. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; the filing also reports fourth-quarter results. Amounts are U.S. dollars unless noted.
Business context
LVSC develops and operates integrated resorts in Macao, Singapore and the United States, combining gaming with hotels, retail, dining, entertainment and convention facilities. The filing presents the Las Vegas operations as discontinued operations held for sale; continuing operations primarily comprise Macao and Marina Bay Sands. The company owns 69.9% of Sands China Ltd.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Continuing-operations net revenue | $4.234 billion | $2.940 billion |
| Operating income (loss) | ($689 million) | ($1.393 billion) |
| Net income (loss) from continuing operations | ($1.469 billion) | ($1.900 billion) |
| Net income (loss) attributable to LVSC | ($961 million) | ($1.685 billion) |
| Consolidated adjusted property EBITDA | $786 million | ($48 million) |
| Cash from (used in) continuing operating activities | ($243 million) | ($1.191 billion) |
| Capital expenditures | $828 million | $1.227 billion |
- Revenue increased 44%, reflecting higher visitation and fewer closure days than in 2020, but remained well below pre-pandemic levels. Casino revenue was $2.892 billion; mall revenue was $649 million.
- The 2021 operating margin was approximately negative 16.3%, calculated from continuing-operations revenue and operating loss. Adjusted property EBITDA margin was approximately 18.6%; EBITDA is a non-GAAP measure and is not cash flow.
- Fourth-quarter 2021 revenue was $1.008 billion; operating loss was $138 million; continuing-operations net loss was $315 million; and net loss attributable to LVSC was $123 million, or $0.17 per share.
- At December 31, 2021, cash and cash equivalents were $1.854 billion, with $16 million of restricted cash. Long-term debt and finance leases had a carrying value of $14.795 billion; contractual debt was $14.924 billion. Interest expense, net, was $621 million, versus $523 million in 2020.
- Available revolving credit capacity was approximately $3.688 billion. A further $2.73 billion was available under the Singapore delayed-draw facility, restricted to MBS expansion expenditures and subject to conditions.
Material changes and significant items
- Continuing-operations losses narrowed year over year, while adjusted property EBITDA recovered to positive $786 million from negative $48 million. Macao adjusted property EBITDA was $338 million, compared with a $431 million loss; Marina Bay Sands EBITDA rose to $448 million from $383 million.
- LVSC agreed to sell its Las Vegas real estate and operations for $6.25 billion enterprise value, with closing anticipated in the first quarter of 2022, subject to approvals and other conditions. The terms include $1.05 billion cash for operating assets, $1.2 billion of seller financing and approximately $4.0 billion cash for real estate. A contingent lease-support arrangement could require payments through 2023, capped at up to $250 million annually, subject to adjustments.
- SCL issued $1.95 billion of senior notes and used proceeds and cash to redeem $1.8 billion of notes due 2023, paying a $131 million make-whole premium. The company reported a $137 million loss on debt modification or early retirement, including related unamortized costs.
- Dividends were suspended in April 2020 and none were paid in 2021. LVSC repurchased no shares in 2021.
- Las Vegas discontinued operations generated $1.271 billion in revenue and $193 million in net income in 2021, compared with $672 million in revenue and a $243 million net loss in 2020.
Outlook, risks and contingencies
- Management said COVID-19 travel limits, reduced visitation and operating restrictions continued to materially harm results and cash flows; timing of a recovery was uncertain. Management cited liquidity and cost-reduction measures as support for ongoing operations and committed projects.
- The Macao gaming subconcession was due to expire June 26, 2022. Renewal or replacement was not assured. The filing warns that nonrenewal could stop gaming operations and lead to transfer of casino premises and gaming equipment to the Macao government without compensation. Draft gaming-law changes were under consideration.
- The Singapore casino license was due to expire in April 2022; the renewal application had been filed. Singapore casino tax rates were scheduled to increase from March 1, 2022.
- The approximately SGD 4.5 billion MBS expansion remained under budget and timing review. The construction estimate and schedule were due to lenders by March 31, 2022; failure to deliver would suspend further delayed-draw borrowing. The company also said it could not commence certain Singapore construction on the originally required April 2022 timeline and was discussing an extension with the government.
- Financial covenant relief ran through December 2022 for LVSC and MBS and January 2023 for SCL. Management believed it was compliant at year-end but said future compliance and additional waivers depended partly on conditions outside its control.
- A Macao lawsuit by Asian American Entertainment sought 96.45 billion patacas; plaintiff experts later calculated damages of 57.88 billion and 62.29 billion patacas. Management said it could not determine the probability of loss or a reasonably possible loss range and intended to defend the case. The filing also describes securities and derivative litigation for which loss estimates were not clear.
- Other material exposures include high debt service and refinancing needs, gaming-receivable collection risk, foreign-exchange and interest-rate risk, regulatory and licensing uncertainty, competition, labor constraints, cyber risk and ongoing pandemic effects. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether the Las Vegas sale closed, the net proceeds received, the terms of seller financing and any contingent support payments.
- Developments in Macao concession renewal, gaming-law changes, and any resulting debt-holder put or acceleration rights.
- Renewal of the Singapore casino license and delivery of the MBS expansion budget and schedule by the lender deadline.
- Recovery in visitation, gaming volumes, mall occupancy and rent collections, and operating cash flow in Macao and Singapore.
- Debt maturities, covenant relief or extensions, accessible liquidity, and the impact of suspended dividends on capital returns.
- Progress and potential exposure in the Macao and U.S. litigation matters, for which the filing does not provide a clear loss estimate.