Quarterly Net Revenue of $1.06 Billion and Adjusted Property EBITDAR of $247.6 Million Achieved Despite Soft Market Conditions
Cost Savings Programs on Track to Generate $500 Million in Annualized Savings
LAS VEGAS, July 30 /PRNewswire-FirstCall/ -- Las Vegas Sands Corp. (NYSE: LVS) today reported financial results for the quarter ended June 30, 2009.
Company-Wide Operating Results
Net revenue for the second quarter of 2009 was $1.06 billion, a decrease of 4.8% compared to $1.11 billion in the second quarter of 2008. Consolidated adjusted property EBITDAR in the second quarter of 2009 decreased 14.0% to $247.6 million, compared to $287.9 million in the year-ago quarter.
On a GAAP (Generally Accepted Accounting Principles) basis, operating loss in the second quarter of 2009 was $171.3 million, compared to income of $73.3 million in the second quarter of 2008. The decrease in operating income was impacted by difficult operating conditions, the settlement of a legal matter, a non-cash impairment loss of $151.2 million, related principally to a decrease in expected future proceeds from our sale of The Shoppes at The Palazzo, and an increase in depreciation and amortization expense. Excluding the legal settlement and impairment loss, operating income would have been $22.3 million.
Adjusted net income (see Note 1) was $8.8 million, or $0.01 per diluted share, compared to $30.9 million in the second quarter of 2008, or $0.09 per diluted share. The decrease in adjusted net income of $22.1 million reflects reduced operating income for the aforementioned reasons, partially offset by a decrease in net interest expense and a benefit for income taxes.
On a GAAP basis, net loss attributable to common stockholders in the second quarter of 2009 was $222.2 million, compared to a loss of $8.8 million in the second quarter of 2008, resulting in a diluted loss per share of $0.34 compared to $0.02 in the prior year quarter. The increase in net loss attributable to common stockholders of $213.4 million reflects the after-tax impact of the non-cash impairment loss, the legal settlement and the increase in depreciation and amortization expense mentioned above, as well as $23.2 million in preferred stock dividends and accretion on preferred stock of $23.1 million, partially offset by decreases in corporate expenses, excluding the legal settlement, and net interest expense. Excluding the legal settlement and impairment loss mentioned above, diluted loss per share would have been $0.12.
Second Quarter Highlights
Sheldon G. Adelson, chairman and CEO, stated, "While our operating results reflect the challenging economic environment, we remain pleased that our properties in both Las Vegas and Macau continue to generate solid cash flow. We have made marked progress during the quarter on the execution of each of the three principal components of our business plan. First, to maximize our cash flow from current operations in Las Vegas and Macau through the implementation of cost savings programs designed to right-size our global operations; these savings programs are now targeted to achieve at least $500 million in annualized cost reductions. Second, to complete our Marina Bay Sands development in Singapore in a timely and cost efficient manner. Third, to enhance our financial flexibility by advancing opportunities that will increase liquidity and enable us to execute our de-leveraging strategy.
"The operating performance of our Las Vegas and Macau properties during the quarter again reflected the relative strength of our diversified, convention-based business model. Notably, The Venetian Macao continued to attract large numbers of visitors, with visits to the property during the second quarter increasing by 7.1% compared to visits in last year's second quarter while overall visitation to the Macau market as reported by the Macau Government decreased by 13.2% during the quarter. This 20 percentage point differential reflects the strong appeal of the property despite the reported impact of the H1N1 virus on visitation to the Macau market and The Venetian Macao. Gaming volumes at The Venetian Macao were up in total, with a notable increase in slot handle. In Las Vegas, our gaming volumes remained healthy while RevPAR reflected pricing pressure."
Cost Savings Program Update
Mike Leven, president and COO, stated, "We continue to make progress in reducing our cost structure and in the implementation of operating efficiencies across our organization worldwide. These ongoing efforts have enabled us to continue to produce solid cash flow across our operations while positioning us to benefit from meaningful operating leverage when economic conditions improve. While we have now increased our annualized cost savings objective to more than $500 million across our entire organization, we will continue to seek additional areas where savings may be achieved. In addition to the $500 million in expense savings, we are avoiding over $100 million of annual costs on a temporary basis. We expect the $100 million cost avoidance savings to erode over time as business conditions improve.
"With respect to our $500 million in cost savings programs, as of June 30, 2009, we have successfully eliminated approximately 69% of these costs from our current expense run rate, or approximately $345 million on an annualized basis. We expect to have implemented 100% of our currently identified savings programs by December 31, 2009, and to have eliminated these expenses from our expense base as we enter the calendar year 2010. With respect to income statement realization of our cost savings programs, we realized approximately $100 million of the implemented savings in our historical financial statements in calendar year 2008, and we expect to realize approximately $300 million of savings in calendar year 2009, including approximately $70 million that was realized in the second quarter of 2009. Finally, in calendar year 2010, we expect to realize approximately $100 million in additional savings from our initiatives implemented during calendar year 2009."
Las Vegas Second Quarter Operating Results
Despite the weak economic environment in Las Vegas, The Venetian Las Vegas and The Palazzo produced solid cash flow for the quarter. Table games drop for the two properties was down 5.4% compared to the year ago quarter. Table games win percentage was 19.3% in the second quarter compared to 20.5% in last year's second quarter. Slot handle decreased 27.0% compared to last year's second quarter, due principally to changes in machine mix on our gaming floors. Slot win percentage increased to 7.2% in the second quarter, compared to 5.5% in the year ago quarter.
The decrease in Las Vegas hotel revenues for the quarter reflected the lower pricing and demand trends in the current operating environment. The lower rate and RevPAR across our 7,100 suites in Las Vegas was the principal negative factor impacting our Las Vegas operations adjusted property EBITDAR. Our group business continued to provide occupancy during mid-week periods. We continue to implement our cost savings program of approximately $200 million of annualized savings across our Las Vegas operations, with approximately $35 million in savings realized in the quarter, compared to the quarter one year ago, and approximately $135 million achieved on an annualized basis. We expect to have implemented $200 million in annualized savings across our Las Vegas operations by December 31, 2009. The right-sizing of our cost structure should provide significant operating leverage which will contribute to increases in operating margins when room rates increase and market conditions improve in the future.
The following table summarizes our key operating results for our Las Vegas operations for the second quarter of 2009 compared to the second quarter of 2008:
Three Months Ended
Las Vegas Operations June 30,
(In millions, except for ------------------
Percentages and basis points) 2009 2008 $Change %Change
---- ---- ------ ------
Revenues:
Casino $119.1 $126.5 $(7.4) -5.8%
Rooms 112.8 142.4 (29.6) -20.8%
Food & Beverage 59.3 68.7 (9.4) -13.7%
Retail & Other 41.5 45.6 (4.1) -9.0%
Less - Promotional Allowances (41.7) (34.8) (6.9) 19.8%
----- ----- ----
Net Revenues $291.0 $348.4 $(57.4) -16.5%
Adjusted Property EBITDAR $78.1 $106.6 $(28.5) -26.7%
EBITDAR Margin % 26.8% 30.6% -3.8 pts
Operating Income (Loss) $(137.5) $42.1 $(179.6) -426.6%
Gaming Statistics
(In millions, except for percentages)
Table Games Drop $386.1 $408.2 $(22.1) -5.4%
Table Games Win %(1) 19.3% 20.5% -1.2 pts
Slot Handle $668.6 $916.1 $(247.5) -27.0%
Slot Hold %(2) 7.2% 5.5% 1.7 pts
Hotel Statistics
The Venetian Las Vegas:
Occupancy % 88.9% 90.6% -1.7 pts
Average Daily Rate $186 $245 $(59) -24.1%
Revenue per Available Room $166 $222 $(56) -25.2%
The Palazzo:
Occupancy % 91.5% 92.9% -1.4 pts
Average Daily Rate $207 $243 $(36) -14.8%
Revenue per Available Room $190 $226 $(36) -15.9%
(1) This compares to our expected table games win percentage of 20% to
22% (calculated before discounts).
(2) This compares to our expected slot hold percentage of 6% to 7%
(calculated before slot club cash incentives).
The Venetian Macao Second Quarter Operating Results
The Venetian Macao delivered a solid operating performance during the quarter in light of a Macau market that has experienced decreases in both visitation and gaming volumes. Visitation to The Venetian Macao remained strong with more than 5.4 million visits to the property during the quarter, an increase of 7.1% from last year's second quarter. The Venetian Macao has now recorded over 11.4 million visits in 2009, an increase of 10.3% over the first six months of 2008, illustrating the growing appeal of our market-leading integrated resort. Gaming volumes at The Venetian Macao remain healthy, with slot handle increasing 19.8% compared to the quarter one year ago.
We are pleased with the ongoing maturation of The Venetian Macao and with the growing diversification of its revenue and cash flow streams. The property is increasingly less reliant on the Rolling Chip segment of the business for its cash flow generation. For the second quarter of 2009, only approximately 12% of The Venetian Macao's adjusted property EBITDAR was contributed by the Rolling Chip play segment, compared to 25% during the second quarter of 2008. The second quarter EBITDAR margin at The Venetian Macao of 24.8% decreased from our record quarter in 2008, but remained consistent with this year's first quarter EBITDAR margin.
We have now implemented cost savings of approximately $210 million on an annualized basis across our Macau operations, or approximately 70% of our $300 million target. We realized approximately $35 million in cost savings across our Macau operations in the quarter, and we expect to produce greater realized savings in the third and fourth quarters of 2009 as the impact of savings initiatives ramps up. Our cost savings programs remain an important component of our operating strategy in Macau, and we expect to implement the total annualized cost savings of at least $300 million by December 31, 2009. Write-offs of certain receivables from retailers during the quarter and entertainment losses totaling approximately $10.0 million partially offset the impact of these cost savings at The Venetian Macao in the current quarter.
The following table summarizes our key operating results for The Venetian Macao for the second quarter of 2009 compared to the second quarter of 2008:
Three Months Ended
Venetian Macao Operations June 30,
(In millions, except for ------------------
percentages and basis points) 2009 2008 $Change %Change
---- ---- ------- -------
Revenues:
Casino $380.0 $415.6 $(35.6) -8.6%
Rooms 38.5 46.5 (8.0) -17.2%
Food & Beverage 12.9 15.4 (2.5) -16.2%
Retail & Other 32.8 36.8 (4.0) -10.9%
Less - Promotional Allowances (21.0) (20.6) (0.4) 1.9%
----- ----- ----
Net Revenues $443.2 $493.7 $(50.5) -10.2%
Adjusted Property EBITDAR $110.0 $140.2 $(30.2) -21.5%
EBITDAR Margin % 24.8% 28.4% -3.6 pts
Operating Income $52.7 $83.6 $(30.9) -37.0%
Gaming Statistics
(In millions, except for percentages)
Rolling Chip Volume $9,896.2 $9,892.8 $3.4 0.0%
Rolling Chip Win %(1) 2.28% 3.01% -0.73 pts
Non-Rolling Chip Table Games
Drop $768.9 $851.6 $(82.7) -9.7%
Non-Rolling Chip Table Games
Win %(2) 24.8% 20.3% 4.5 pts
Slot Handle $535.3 $447.0 $88.3 19.8%
Slot Hold %(3) 7.5% 8.1% -0.6 pts
Hotel Statistics
Occupancy % 76.2% 80.2% -4.0 pts
Average Daily Rate $201 $225 $(24) -10.7%
Revenue per Available Room $153 $180 $(27) -15.0%
(1) This compares to our expected Rolling Chip win percentage of 3.0%
(calculated before discounts and commissions).
(2) This compares to our expected Non-Rolling Chip win percentage of 18%
to 20% (calculated before discounts).
(3) This compares to our expected slot hold percentage of 6% to 7%
(calculated before slot club cash incentives).
Sands Macao Second Quarter Operating Results
The Sands Macao's second quarter operating performance reflected solid gaming volumes and the benefits of the implementation of our cost savings programs, with adjusted property EBITDAR increasing to $61.0 million in the quarter, an increase of 12.8 % compared to the second quarter of 2008. EBITDAR margin was 26.1% in the quarter, an increase of 590 basis points compared to the second quarter of 2008. Our gaming volumes continue to reflect the unique market positioning of the Sands Macao on the Macau peninsula. Looking ahead, we expect to improve our financial performance at the property by continuing to reduce the Sands' cost structure and by implementing additional operating efficiencies.
The following table summarizes our key operating results for the Sands Macao for the second quarter of 2009 compared to the second quarter of 2008:
Three Months Ended
Sands Macao Operations June 30,
(In millions, except for ------------------
percentages and basis points) 2009 2008 $Change %Change
---- ---- ------- -------
Revenues:
Casino $229.4 $262.2 $(32.8) -12.5%
Rooms 6.4 6.8 (0.4) -5.9%
Food & Beverage 8.8 13.9 (5.1) -36.7%
Retail & Other 1.3 1.7 (0.4) -23.5%
Less - Promotional Allowances (11.7) (16.4) 4.7 -28.7%
------ ----- ---
Net Revenues $234.2 $268.2 $(34.0) -12.7%
Adjusted Property EBITDAR $61.0 $54.1 $6.9 12.8%
EBITDAR Margin % 26.1% 20.2% 5.9 pts
Operating Income $48.4 $40.2 $8.2 20.4%
Gaming Statistics
(In millions, except for percentages)
Rolling Chip Volume $4,711.4 $6,181.4 $(1,470.0) -23.8%
Rolling Chip Win %(1) 2.90% 2.82% 0.08 pts
Non-Rolling Chip Table Games
Drop $595.5 $657.7 $(62.2) -9.5%
Non-Rolling Chip Table Games
Win %(2) 19.4% 19.5% -0.1 pts
Slot Handle $299.8 $260.5 $39.3 15.1%
Slot Hold %(3) 6.5% 8.1% -1.6 pts
Hotel Statistics
Occupancy % 97.8% 98.8% -1.0 pts
Average Daily Rate (ADR) $253 $264 $(11) -4.2%
Revenue per Available Room
(RevPAR) $247 $261 $(14) -5.4%
(1) This compares to our expected Rolling Chip win percentage of 3.0%
(calculated before discounts and commissions).
(2) This compares to our expected Non-Rolling Chip win percentage of 18%
to 20% (calculated before discounts).
(3) This compares to our expected slot hold percentage of 6% to 7%
(calculated before slot club cash incentives).
Four Seasons Macao Second Quarter Operating Results
Net revenues for the Four Seasons Macao were $48.7 million in the second quarter of 2009, with casino revenues representing $39.6 million of that total. Rolling Chip volume for the quarter was $556.1 million while Rolling Chip win percentage was 3.27%. Non-Rolling Chip drop was $80.8 million and Non-Rolling Chip win percentage was 27.3%. Slot handle totaled $56.1 million while slot hold percentage was 6.0%. Adjusted property EBITDAR for the second quarter of 2009 was $5.6 million.
Sands Bethlehem Second Quarter Operating Results
Sands Bethlehem in Bethlehem, Pennsylvania opened the first phase of its facilities for business on May 22, 2009. The first phase of Sands Bethlehem features 3,000 slot machines, dining and entertainment amenities. Adjusted property EBITDAR for the initial 40 days of operation through June 30 was $2.8 million. The property generated $369.6 million in slot handle in its first 40 days of operation, while slot hold percentage was 8.1%.
