Las Vegas Sands Reports Second Quarter 2020 Results

Rhea-AI Summary

Las Vegas Sands Corp. (LVS) reported a significant decline in financial performance for Q2 2020, with revenues decreasing by 97.1% year-over-year to $98 million and a net loss of $985 million, contrasting with a net income of $1.11 billion in Q2 2019. Despite these challenges, the company emphasizes recovery efforts in Macao, Singapore, and Las Vegas, while maintaining its capital expenditure programs. The firm holds a strong balance sheet with $3.02 billion in unrestricted cash and $3.94 billion available for borrowing, positioning it for future growth opportunities.

Positive

• Strong balance sheet with $3.02 billion in unrestricted cash.
• Access to $3.94 billion for borrowing under credit facilities.

Negative

• Net revenue decreased by 97.1% to $98 million.
• Operating loss was $922 million, compared to operating income of $894 million in the prior year.
• Net loss of $985 million compared to net income of $1.11 billion in Q2 2019.
• Consolidated adjusted property EBITDA was $(547) million, down from $1.27 billion.

LAS VEGAS, July 22, 2020 /PRNewswire/ --

For the quarter ended June 30, 2020
(Compared to the quarter ended June 30, 2019)

- Early Stages of Recovery Now Underway in each of our Markets

- Greatest Priorities Remain the Safety and Security of Team Members and Guests and Support for Local Communities in Macao, Singapore and Las Vegas

- The Company will Continue Capital Expenditure Programs in both Macao and Singapore

- Strong Balance Sheet Positions the Company Well to Invest in Future Growth Opportunities

Las Vegas Sands Corp. (NYSE: LVS), the world's leading developer and operator of convention-based Integrated Resorts, today reported financial results for the quarter ended June 30, 2020.

"I am pleased to say that the early stages of the recovery process from the Covid-19 pandemic in each of our markets is now underway," said Sheldon G. Adelson, chairman and chief executive officer. "Our greatest priority during this period of the recovery remains our deep commitment to supporting our team members and to helping those in need in each of our local communities of Macao, Singapore and Las Vegas.

We remain optimistic about an eventual recovery of travel and tourism spending across our markets, as well as our future growth prospects. We are fortunate that our financial strength will enable us to continue to execute our previously announced capital expenditure programs in both Macao and Singapore, while continuing to pursue growth opportunities in new markets."

Net revenue was $98 million, a decrease of 97.1% from the prior year quarter. Operating loss was $922 million, compared to operating income of $894 million in the prior year quarter. Net loss in the second quarter of 2020 was $985 million, compared to net income of $1.11 billion in the second quarter of 2019. Consolidated adjusted property EBITDA was $(547) million, compared to $1.27 billion in the prior year quarter.

Sands China Ltd. Consolidated Financial Results
On a GAAP basis, total net revenues for SCL decreased 98.1%, compared to the second quarter of 2019, to $40 million. Net loss for SCL was $549 million, compared to net income of $511 million in the second quarter of 2019.

Other Factors Affecting Earnings
Interest expense, net of amounts capitalized, was $118 million for the second quarter of 2020, compared to $143 million in the prior-year quarter. The decrease resulted from our weighted average borrowing cost in the second quarter of 2020 decreasing to 3.6%, compared to 4.7% during the second quarter of 2019 due to the impact of the interest rate swap hedges on $5.50 billion of our SCL Senior Notes.

Our income tax benefit for the second quarter of 2020 was $54 million, compared to an income tax expense of $236 million in the prior year quarter. The income tax benefit for the second quarter of 2020 was primarily driven by pre-tax losses experienced in the second quarter of 2020 by our U.S. and Singapore operations.

Balance Sheet Items
Unrestricted cash balances as of June 30, 2020 were $3.02 billion.

The company has access to $3.94 billion available for borrowing under our U.S., SCL and Singapore revolving credit facilities, net of outstanding letters of credit.

As of June 30, 2020, total debt outstanding, excluding finance leases, was $13.82 billion.

Capital Expenditures
Capital expenditures during the second quarter totaled $382 million, including construction, development and maintenance activities of $337 million in Macao, $30 million in Las Vegas and $15 million at Marina Bay Sands.

Conference Call Information
The company will host a conference call to discuss the company's results on Wednesday, July 22, 2020 at 1:30 p.m. Pacific Time. Interested parties may listen to the conference call through a webcast available on the company's website at www.sands.com.

About Las Vegas Sands Corp. (NYSE: LVS)
Las Vegas Sands is the world's pre-eminent developer and operator of world-class Integrated Resorts. We deliver unrivaled economic benefits to the communities in which we operate.

Sands created the meetings, incentives, convention and exhibition (MICE)-based Integrated Resort. Our industry-leading Integrated Resorts provide substantial contributions to our host communities including growth in leisure and business tourism, sustained job creation and ongoing financial opportunities for local small and medium-sized businesses.

Our properties include The Venetian Resort and Sands Expo in Las Vegas and the iconic Marina Bay Sands in Singapore. Through majority ownership in Sands China Ltd., we have developed the largest portfolio of properties on the Cotai Strip in Macao, including The Venetian Macao, The Plaza and Four Seasons Hotel Macao, Sands Cotai Central and The Parisian Macao, as well as the Sands Macao on the Macao Peninsula.

Sands is dedicated to being a good corporate citizen, anchored by the core tenets of serving people, planet and communities. We deliver a great working environment for our team members worldwide, drive social impact through the Sands Cares charitable giving and community engagement program and lead in environmental performance through the award-winning -360%2Four-vision.html&a=Sands+ECO360" rel="nofollow">Sands ECO360 global sustainability program. To learn more, please visit www.sands.com.

Forward-Looking Statements
This press release contains forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the company's control, which may cause material differences in actual results, performance or other expectations. These factors include, but are not limited to, the uncertainty of the extent, duration and effects of the COVID-19 pandemic and the response of governments, including government-mandated property closures or travel restrictions, and other third parties on our business, results of operations, cash flows, liquidity and development prospects, general economic conditions, disruptions or reductions in travel, as well as in our operations, due to natural or man-made disasters, pandemics, epidemics, or outbreaks of infectious or contagious diseases, our ability to invest in future growth opportunities, execute our previously announced capital expenditure programs in both Macao and Singapore, and produce future returns, new development, construction and ventures, government regulation, risks relating to our gaming licenses and subconcession, our subsidiaries' ability to make distribution payments to us, substantial leverage and debt service, fluctuations in currency exchange rates and interest rates, gaming promoters, competition, tax law changes, transportation infrastructure in Macao, political instability, civil unrest, terrorist acts or war, legalization of gaming, insurance, and other factors detailed in the reports filed by Las Vegas Sands Corp. with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Las Vegas Sands Corp. assumes no obligation to update such information.

Contacts:

Investment Community:
Daniel Briggs
(702) 414-1221

Media:
Ron Reese
(702) 414-3607

Las Vegas Sands Corp.
Second Quarter 2020 Results
Non-GAAP Measures

Within the company's second quarter 2020 press release, the company makes reference to certain non-GAAP financial measures that supplement the company's consolidated financial information prepared in accordance with GAAP including "adjusted net income/loss," "adjusted earnings/loss per diluted share," and "consolidated adjusted property EBITDA," which have directly comparable GAAP financial measures along with "adjusted property EBITDA margin," "hold-normalized adjusted property EBITDA," "hold-normalized adjusted property EBITDA margin," "hold-normalized adjusted net income/loss," and "hold-normalized adjusted earnings/loss per diluted share." The company believes these measures represent important internal measures of financial performance. Set forth in the financial schedules accompanying this release and presentations included on the company's website are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The non-GAAP financial measure disclosure by the company has limitations and should not be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP. The definitions of our non-GAAP financial measures and the specific reasons why the company's management believes the presentation of the non-GAAP financial measures provides useful information to investors regarding the company's financial condition, results of operations and cash flows are presented below.

The following non-GAAP financial measures are used by management, as well as industry analysts, to evaluate the company's operations and operating performance. These non-GAAP financial measures are presented so investors have the same financial data management uses in evaluating financial performance with the belief it will assist the investment community in properly assessing the underlying financial performance of the company on a year-over-year and a quarter sequential basis.

Adjusted net income/loss, which is a non-GAAP financial measure, excludes certain nonrecurring corporate expenses, pre-opening expense, development expense, gain or loss on disposal or impairment of assets, loss on modification or early retirement of debt and other income or expense, attributable to Las Vegas Sands, net of income tax. Adjusted net income/loss and adjusted earnings/loss per diluted share are presented as supplemental disclosures as management believes they are (1) each widely used measures of performance by industry analysts and investors and (2) a principal basis for valuation of Integrated Resort companies, as these non-GAAP measures are considered by many as alternative measures on which to base expectations for future results. These measures also form the basis of certain internal management performance expectations.

Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is net income/loss before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal or impairment of assets, interest, other income or expense, gain on sale of Sands Bethlehem, gain or loss on modification or early retirement of debt and income taxes. Management utilizes consolidated adjusted property EBITDA to compare the operating profitability of its operations with those of its competitors, as well as a basis for determining certain incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their casinos on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands, have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income/loss from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. The company has significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal payments and income tax payments, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, consolidated adjusted property EBITDA as presented by Las Vegas Sands may not be directly comparable to similarly titled measures presented by other companies.

Hold-normalized adjusted property EBITDA, a supplemental non-GAAP financial measure, that, in addition to the aforementioned reasons for the presentation of consolidated adjusted property EBITDA, is presented to adjust for the impact of certain variances in table games' win percentages, which can vary from period to period. Hold-normalized adjusted property EBITDA is based on applying a Rolling Chip win percentage of 3.30% to the Rolling Chip volume for the quarter if the actual win percentage is outside the expected range of 3.15% to 3.45% for our Macao and Singapore properties and applying a win percentage of 22.0% for Baccarat and 20.0% for non-Baccarat games to the respective table games drops for the quarter if the actual win percentages are outside the expected ranges of 18.0% to 26.0% for Baccarat and 16.0% to 24.0% for non-Baccarat at our Las Vegas properties. No hold adjustments were made for Sands Bethlehem. We do not present adjustments for Non-Rolling Chip drop for our table games play at our Macao and Singapore properties, nor for slots at any of our properties. Hold-normalized adjusted property EBITDA is also adjusted for the estimated gaming taxes, commissions paid, bad debt expense, discounts and other incentives that would have been incurred when applying the win percentages noted above to the respective gaming volumes. The hold-normalized adjusted property EBITDA measure presents a consistent measure for evaluating the operating performance of our properties from period to period.

Hold-normalized adjusted net income/loss and hold-normalized adjusted earnings/loss per diluted share are additional supplemental non-GAAP financial measures that, in addition to the aforementioned reasons for the presentation of adjusted net income/loss and adjusted earnings/loss per diluted share, are presented to adjust for the impact of certain variances in table games' win percentages, which can vary from period to period.

The company may also present the above items on a constant currency basis. This information is a non-GAAP financial measure that is calculated by translating current quarter local currency amounts to U.S. dollars based on prior period exchange rates. These amounts are compared to the prior period to derive non-GAAP constant-currency growth/decline. Management considers non-GAAP constant-currency growth/decline to be a useful metric to investors and management as it allows a more direct comparison of current performance to historical performance.

The company also makes reference to adjusted property EBITDA margin and hold-normalized adjusted property EBITDA margin, which are calculated using the aforementioned non-GAAP financial measures.

Exhibit 1
Las Vegas Sands Corp. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share data) (Unaudited)
		Three Months Ended		Six Months Ended
		June 30,		June 30,
		2020		2019		2020		2019
Revenues:
Casino		$	10			$	2,361			$	1,187			$	5,022
Rooms		14			429			282			879
Food and beverage		12			224			151			456
Mall		42			166			145			326
Convention, retail and other		20			154			115			297
Net revenues		98			3,334			1,880			6,980
Operating expenses:
Resort operations		651			2,072			1,999			4,269
Corporate		53			51			112			203
Pre-opening		4			10			9			14
Development		9			4			15			9
Depreciation and amortization		285			289			575			590
Amortization of leasehold interests in land		13			14			27			23
Loss on disposal or impairment of assets		5			—			10			7
		1,020			2,440			2,747			5,115
Operating income (loss)		(922)			894			(867)			1,865
Other income (expense):
Interest income		4			17			17			37
Interest expense, net of amounts capitalized		(118)			(143)			(249)			(284)
Other income (expense)		(3)			20			34			(1)
Gain on sale of Sands Bethlehem		—			556			—			556
Income (loss) before income taxes		(1,039)			1,344			(1,065)			2,173
Income tax (expense) benefit		54			(236)			29			(321)
Net income (loss)		(985)			1,108			(1,036)			1,852
Net (income) loss attributable to noncontrolling interests		165			(154)			215			(316)
Net income (loss) attributable to Las Vegas Sands Corp.		$	(820)			$	954			$	(821)			$	1,536
Earnings (loss) per share:
Basic		$	(1.07)			$	1.24			$	(1.07)			$	1.99
Diluted		$	(1.07)			$	1.24			$	(1.07)			$	1.98
Weighted average shares outstanding:

FAQ

What were Las Vegas Sands' (LVS) financial results for Q2 2020?

Las Vegas Sands reported a 97.1% revenue decline to $98 million and a net loss of $985 million in Q2 2020.

How much cash does LVS have on its balance sheet?

As of June 30, 2020, Las Vegas Sands held $3.02 billion in unrestricted cash.

Did LVS continue its capital expenditure programs during the pandemic?

Yes, LVS continued its capital expenditure programs in Macao and Singapore despite the financial downturn.

What were the operating losses reported by LVS for Q2 2020?

LVS reported an operating loss of $922 million for the second quarter of 2020.

How did LVS's performance compare to Q2 2019?

Compared to Q2 2019, LVS experienced a significant drop, with net income of $1.11 billion turning into a net loss of $985 million in Q2 2020.