Las Vegas Sands Corp. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024, compared with the three months ended March 31, 2023. Amounts are in U.S. dollars; financial statement amounts are in millions unless otherwise noted. The company operates integrated resorts in Macao and Singapore.
Financial results and liquidity
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Net revenues | $2,959 | $2,120 | +39.6% |
| Operating income | $717 | $378 | +89.7% |
| Operating margin | 24.2% | 17.8% | +6.4 percentage points |
| Net income | $583 | $145 | +302.1% |
| Net income attributable to LVS | $494 | $147 | +236.1% |
| Diluted earnings per share | $0.66 | $0.19 | +$0.47 |
| Operating cash flow | $714 | $441 | +$273 |
| Capital expenditures | $196 | $166 | +$30 |
| Consolidated adjusted property EBITDA | $1,207 | $792 | +52.4% |
- Revenue growth was led by casino revenue, up 44.6% to $2,228, and rooms, up 35.8% to $330. Food and beverage revenue rose 21.0%; mall revenue rose 7.4%.
- Adjusted property EBITDA is a non-GAAP measure; the company cautions it is not a substitute for operating income or operating cash flow and may not be comparable with similarly named measures at other companies.
- Interest expense, net, declined to $182 from $218. The company reported a 5.0% weighted-average interest rate on average debt of $14,070, compared with 5.4% on $16,089.
- At March 31, cash and cash equivalents were $4,956, restricted cash was $124, and total debt was approximately $13,957, including $2,043 of current maturities. Total liabilities were $17,220 and equity was $4,025.
- Cash and cash equivalents declined $149 during the quarter. Financing outflows included $450 of share repurchases, $151 of dividends paid, and $17 of debt repayments. The company repurchased 8.58 million shares for $455, including commissions and excise tax.
- Available revolving borrowing capacity was approximately $4.43 billion across U.S., Sands China and Singapore facilities. A further SGD 3.69 billion (approximately $2.73 billion) of Singapore delayed-draw capacity was conditional on delivery of the expansion project cost estimate and schedule. Management said it believes liquidity is sufficient for operations, planned investment and obligations.
Performance drivers and changes
- Macao revenue rose $531 and Marina Bay Sands revenue rose $308 year over year. Adjusted property EBITDA increased $212 in Macao and $203 at Marina Bay Sands.
- Management attributed growth to improved visitation and higher gaming volumes following the relaxation of travel restrictions. Macao government data cited in the filing showed gross gaming revenue up 65.5% year over year in Q1 and mainland China visitation up 125.8% for January–February. Singapore visitation was approximately 4.4 million versus 2.9 million a year earlier.
- Gaming outcomes varied by property and game type. Management noted that win and hold percentages can fluctuate materially over short periods. Macao’s Plaza Macao and Four Seasons had lower casino revenue despite increased gaming volumes, reflecting unfavorable rolling-chip results.
- Operating expenses increased 28.7% to $2,242, primarily with higher gaming volumes, gaming taxes and room occupancy. General and administrative costs rose 13.9%; depreciation and amortization increased 16.8%, partly reflecting completed Marina Bay Sands renovations.
- The effective income tax rate was 2.8%, versus 25.6%. Macao gaming profits received a corporate income tax exemption for 2023–2027. A new Macao shareholder dividend tax agreement led to reversal of a previously accrued $57 tax expense and a $10 corporate expense charge related to 2023.
Outlook, investment and notable matters
- The company expects its quarterly $0.20-per-share dividend to continue through the remainder of 2024, subject to board assessment. An April-declared $0.20 dividend, estimated at approximately $149, was scheduled for payment May 15, 2024. Approximately $1.05 billion remained under the share repurchase authorization.
- The Macao concession entails a commitment to spend 35.80 billion patacas (approximately $4.44 billion) through 2032, including 33.36 billion patacas on non-gaming projects. Phase II of The Londoner Macao is estimated at $1.2 billion and expected to be substantially complete in early 2025.
- Marina Bay Sands Tower 1 and 2 renovations are complete at a cost of approximately $1.0 billion; Tower 3 renovations are estimated at $750 million and expected to complete by 2025. The MBS Expansion Project’s original minimum cost was approximately SGD 4.5 billion, but management expects total cost to materially exceed that amount due to inflation and higher labor and material costs. On April 3, 2024, the construction commencement and completion deadlines were extended to July 8, 2025 and July 8, 2029, respectively.
- On April 3, 2024, LVS entered into a new $1.50 billion unsecured revolving facility available through April 2029. Management reported compliance with debt covenants at quarter-end; reported leverage ratios were below the applicable facility limits.
- The Nassau Coliseum land lease was invalidated by a New York court ruling, and the company was found to have no leasehold interest in the land. It subsequently obtained a use and occupancy permit allowing continued operation for a nominal $1 fee. The appeal and the company’s plans for a New York integrated resort remain matters to monitor; the filing states there is no assurance it will obtain a casino license.
- The company disclosed a pending Macao claim by Asian American Entertainment Corporation. The plaintiff sought up to 96.45 billion patacas; a trial court ruled for the defendants, but the plaintiff’s appeal remained pending. Management said it could not determine the probability of outcome or reasonably possible loss.
- After quarter-end, a forward purchase transaction delivered 90.5 million Sands China shares to LVS on April 18, increasing its ownership to approximately 71%. The filing also reports that a separate shareholder derivative action was dismissed without prejudice on April 10.
Important facts for investors to verify
- Whether Macao and Singapore visitation and gaming volumes remain strong, and how normal gaming win-rate volatility affects reported results.
- Actual total cost, funding requirements and delivery schedule for the Marina Bay Sands expansion, alongside continuing renovations and Macao concession spending.
- Debt maturities, covenant headroom, restricted or conditionally available borrowing capacity, and cash accessibility across subsidiaries and jurisdictions.
- Developments in the Nassau Coliseum lease and New York casino licensing process, and the status and potential exposure of the pending Macao litigation.
- The sustainability of dividends and buybacks relative to project commitments, debt service and operating cash generation; Q1 interim results are not necessarily indicative of full-year results.