Las Vegas Sands Reports First Quarter 2016 Results

LAS VEGAS, April 20, 2016 /PRNewswire/ -- 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 March 31, 2016.

First Quarter Overview

Mr. Sheldon G. Adelson, chairman and chief executive officer, said, "The operating environment in Macao remained challenging during the quarter; but we do see signs of stabilization, particularly in the mass market. Our focus on the higher margin mass and non-gaming segments and the geographic diversification of our cash flows enabled us to once again deliver in excess of one billion U.S. dollars of hold-normalized adjusted property EBITDA during the quarter.  We remain intensely focused on the consistent execution of our proven global growth strategy, which leverages the power of our unique convention-based Integrated Resort business model.

"Our convention-based Integrated Resort business model continues to appeal to the broadest set of customers, generate the most diversified set of cash flows and deliver the industry's highest revenue and profit from non-gaming segments, while bringing unsurpassed economic and diversification benefits to the regions in which we operate.  We remain confident in our ability to both further extend our global leadership position and deliver strong growth in the future.

"The prudent management of our cash flow, including the ability to increase the return of capital to shareholders while maintaining a strong balance sheet and ample liquidity to invest in future growth opportunities, remains a cornerstone of our strategy."

The company paid a recurring quarterly dividend of $0.72 per common share during the quarter, an increase of 10.8% compared to the first quarter of 2015. The company announced that its next recurring quarterly dividend of $0.72 per common share will be paid on June 30, 2016, to Las Vegas Sands shareholders of record on June 22, 2016.  That dividend also represents an increase of 10.8% compared to the dividend paid in the second quarter of 2015.  Additionally, since the inception of the company's share repurchase program in June 2013, the company has returned $2.44 billion to shareholders through the repurchase of 35.4 million shares.

Mr. Adelson added, "In Macao, notwithstanding the difficult operating environment, we delivered $510.4 million in adjusted property EBITDA across our Macao property portfolio during the quarter. We remain confident that our market-leading Cotai Strip properties, which will be complemented later this year by The Parisian Macao, targeted to open in mid-September 2016, will continue to provide the economic benefits of diversification to Macao, help attract greater numbers of business and leisure travelers, and provide our company with an outstanding and diversified platform for growth in the years ahead."

Marina Bay Sands in Singapore continues to attract visitors from across the region to Singapore, which enabled us to generate yet another record mass gaming win-per-day in local currency terms. While the impact of the stronger U.S. dollar and low win percentage on Rolling Chip play negatively impacted the company's reported financial results for the quarter, both gaming volumes and our non-gaming segments remain resilient. On a constant currency basis, hold-normalized adjusted property EBITDA increased 10.3%.

At The Venetian Las Vegas and The Palazzo, including the Sands Expo and Convention Center, a 10.0% year-over-year increase in RevPAR to $231 drove a 17.3% increase in adjusted property EBITDA during the first quarter of 2016.

Company-Wide Operating Results

Net revenue for the first quarter of 2016 decreased 9.8% to $2.72 billion, compared to $3.01 billion in the first quarter of 2015. Consolidated adjusted property EBITDA of $917.6 million decreased 12.7% in the first quarter of 2016, compared to the year-ago quarter. On a hold-normalized basis, adjusted property EBITDA increased 0.9% to $1.03 billion in the first quarter of 2016.

On a GAAP (Generally Accepted Accounting Principles) basis, operating income in the first quarter of 2016 decreased 17.6% to $585.6 million, compared to $711.1 million in the first quarter of 2015.  The decrease in operating income was principally due to softer results across the company's Macao property portfolio and lower win percentage on Rolling Chip play at Marina Bay Sands in Singapore.

On a GAAP basis, net income attributable to Las Vegas Sands in the first quarter of 2016 decreased 37.5% to $320.2 million, compared to $511.9 million in the first quarter of 2015, while diluted earnings per share in the first quarter of 2016 decreased 37.5% to $0.40, compared to $0.64 in the prior-year quarter. The decrease in net income attributable to Las Vegas Sands reflected the decline in operating income described above as well as a $35.8 million mark-to-market loss on Singapore dollar forward contracts. This was partially offset by a $10.4 million decrease in net income attributable to noncontrolling interests. 

Adjusted net income (see Note 1) decreased to $357.3 million, or $0.45 per diluted share, compared to $531.1 million, or $0.66 per diluted share, in the first quarter of 2015.

Sands China Ltd. Consolidated Financial Results

On a GAAP basis, total net revenues for Sands China Ltd. decreased 7.9% to $1.63 billion in the first quarter of 2016, compared to $1.77 billion in the first quarter of 2015. Adjusted property EBITDA for Sands China Ltd. decreased 2.5% to $517.9 million in the first quarter of 2016, compared to $531.0 million in the first quarter of 2015. Net income for Sands China Ltd. decreased 9.6% to $311.6 million in the first quarter of 2016, compared to $344.7 million in the first quarter of 2015.

The Venetian Macao First Quarter Operating Results

Despite the softer gaming market in Macao, The Venetian Macao continued to enjoy market-leading visitation and financial performance. The property generated adjusted property EBITDA of $267.8 million in the first quarter with an adjusted property EBITDA margin of 35.8%.  Non-Rolling Chip drop was $1.77 billion for the quarter, with a Non-Rolling Chip win percentage of 25.1%.  Rolling Chip volume during the quarter decreased 3.4% to $8.23 billion. Rolling Chip win percentage was 3.21% in the quarter, above the 2.83% experienced in the prior-year quarter. Slot handle was $1.07 billion.

The following table summarizes the key operating results for The Venetian Macao for the first quarter of 2016 compared to the first quarter of 2015:

Sands Cotai Central First Quarter Operating Results

Net revenues and adjusted property EBITDA for the first quarter of 2016 at Sands Cotai Central were $530.3 million and $163.5 million, respectively, resulting in an adjusted property EBITDA margin of 30.8%.

Non-Rolling Chip drop was $1.50 billion in the first quarter with a Non-Rolling Chip win percentage of 20.9%.  Rolling Chip volume was $3.60 billion for the quarter with a Rolling Chip win percentage of 3.92%.  Slot handle was $1.56 billion for the quarter. Hotel occupancy was 77.1% with ADR of $155. 

The following table summarizes our key operating results for Sands Cotai Central for the first quarter of 2016 compared to the first quarter of 2015:

Four Seasons Hotel Macao and Plaza Casino First Quarter Operating Results

The Four Seasons Hotel Macao and Plaza Casino generated adjusted property EBITDA of $48.2 million in the first quarter of 2016, an increase of 8.3% compared to the year-ago quarter.  Non-Rolling Chip drop increased 31.0% to $300.1 million, with a Non-Rolling Chip win percentage of 19.1%.  Rolling Chip volume was $2.62 billion for the quarter. Rolling Chip win percentage was 3.22% in the quarter, above the 2.81% experienced in the prior-year quarter. Slot handle was $90.2 million during the quarter.

The following table summarizes our key operating results for the Four Seasons Hotel Macao and Plaza Casino for the first quarter of 2016 compared to the first quarter of 2015:

Sands Macao First Quarter Operating Results

Sands Macao's adjusted property EBITDA was $31.0 million. Non-Rolling Chip drop was $699.9 million during the quarter, while slot handle was $657.7 million. Rolling Chip volume was $2.24 billion for the quarter. The property realized 2.45% win on Rolling Chip volume during the quarter, below the 2.86% generated in the year-ago quarter.

The following table summarizes our key operating results for Sands Macao for the first quarter of 2016 compared to the first quarter of 2015:

Marina Bay Sands First Quarter Operating Results

The stronger U.S. dollar negatively impacted the financial results and key performance indicators of Marina Bay Sands in Singapore in the current quarter.  Low win percentage on Rolling Chip play also negatively impacted our reported financial results. The property generated adjusted property EBITDA of $274.9 million. On a hold-normalized basis, adjusted property EBITDA was $382.8 million. On a constant-currency basis, hold-normalized adjusted property EBITDA increased 10.3%.

Rolling Chip win percentage of 1.42% in the first quarter of 2016 was below the expected range and considerably below the 3.41% achieved in the first quarter of 2015. Rolling Chip volume was $9.63 billion for the quarter.

Non-Rolling Chip drop was $1.01 billion during the quarter, with a Non-Rolling Chip win percentage of 29.1%. Slot handle increased 8.8% to $3.36 billion for the quarter compared to the year-ago quarter. Total mass win-per-day during the quarter was $4.8 million and was an all-time quarterly record for the property in local currency terms.

ADR decreased to $394 during the quarter, but occupancy increased to 97.9%, resulting in a RevPAR decrease of 1.8% compared to the same quarter last year.  

The following table summarizes our key operating results for Marina Bay Sands for the first quarter of 2016 compared to the first quarter of 2015:

Las Vegas Operations First Quarter Operating Results

Adjusted property EBITDA at The Venetian Las Vegas and The Palazzo, including the Sands Expo and Convention Center, was $86.9 million for the quarter, an increase of 17.3% compared to the first quarter of 2015.  On a hold-normalized basis, adjusted property EBITDA in the quarter increased 15.0% year-over-year to $102.5 million.  RevPAR increased 10.0% year-over-year to $231 in the quarter, reflecting a 2.9% increase in ADR to $251 and a 5.9 percentage point increase in occupancy to 92.1%.  Table games drop decreased 9.3% in the quarter to $483.5 million, reflecting softer play in both Baccarat and non-Baccarat segments, while slot handle increased 1.4% to $586.5 million.

The following table summarizes our key operating results for our Las Vegas operations for the first quarter of 2016 compared to the first quarter of 2015:

Sands Bethlehem First Quarter Operating Results

Net revenues for Sands Bethlehem in Pennsylvania increased 8.6% to $138.7 million and adjusted property EBITDA increased 26.1% to $37.7 million for the quarter. Table games drop increased 6.7% to $281.0 million for the quarter, while table games win percentage was 19.8%, above the 17.3% realized in the first quarter of 2015. Slot handle increased 7.6% year-over-year to $1.08 billion for the quarter, with a slot hold percentage of 7.0%.

The following table summarizes our key operating results for Sands Bethlehem for the first quarter of 2016 compared to the first quarter of 2015:

Asian Retail Mall Operations

Gross revenue from tenants in the company's retail malls on Macao's Cotai Strip (The Venetian Macao, Four Seasons Macao and Sands Cotai Central) and Marina Bay Sands in Singapore was $134.3 million for the first quarter of 2016, an increase of 5.6% compared to the first quarter of 2015.  Operating profit derived from these retail mall assets increased 6.9% year-over-year to $120.2 million.

Other Factors Affecting Earnings

Other Asia, which is principally comprised of our CotaiJet ferry operation, reflected adjusted property EBITDA of $7.7 million during the quarter, compared to $3.5 million in the first quarter of 2015.

Pre-opening expense was $8.6 million in the first quarter of 2016 and related primarily to The Parisian Macao.

Depreciation and amortization expense was $259.9 million in the first quarter of 2016, compared to $253.9 million in the first quarter of 2015.

Interest expense, net of amounts capitalized, was $68.6 million for the first quarter of 2016, compared to $66.3 million in the prior-year quarter. Capitalized interest was $9.8 million during the first quarter of 2016, compared to $4.2 million during the first quarter of 2015.  Our weighted average borrowing cost in the first quarter of 2016 was approximately 3.1%.

Corporate expense was $46.6 million in the first quarter of 2016, compared to $45.2 million in the first quarter of 2015.

Other expense was $47.1 million in the first quarter of 2016, compared to other income of $15.5 million in the first quarter of 2015. A mark-to-market loss of $35.8 million on Singapore dollar forward contracts was incurred in the first quarter of 2016. There were no contracts in place in the first quarter of 2015. 

The company's effective income tax rate for the first quarter of 2016 was 13.4% compared to 8.3% in the prior-year quarter. The increase relates primarily to a discrete non-cash charge in connection with a valuation allowance on certain foreign deferred tax assets. The tax rate is primarily driven by a provision for the earnings from Marina Bay Sands at the 17% Singapore income tax rate.

The net income attributable to noncontrolling interests during the first quarter of 2016 of $88.7 million was principally related to Sands China Ltd. 

Balance Sheet Items

Unrestricted cash balances as of March 31, 2016 were $1.70 billion.

As of March 31, 2016, total debt outstanding, including the current portion, was $9.51 billion.

Capital Expenditures

Capital expenditures during the first quarter totaled $343.6 million, including construction, development and maintenance activities of $307.3 million in Macao (principally for The Parisian Macao), $17.0 million in Las Vegas, $13.1 million at Marina Bay Sands, and $6.2 million at Sands Bethlehem.

Conference Call Information

The company will host a conference call to discuss the company's results on Wednesday, April 20, 2016 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.

Forward-Looking Statements

This press release contains forward-looking statements that are 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, general economic conditions, competition, new development, construction and ventures, substantial leverage and debt service, government regulation, tax law changes, legalization of gaming, interest rates, future terrorist acts, influenza, insurance, gaming promoters, risks relating to our gaming licenses, certificate and subconcession, infrastructure in Macao, our ability to meet certain development deadlines, our subsidiaries' ability to make distribution payments to us, 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.

Note 1

Adjusted net income excludes pre-opening expense, development expense, gain or loss on disposal of assets, loss on modification or early retirement of debt and fair value adjustment of forward contracts, attributable to Las Vegas Sands, net of income tax.

About Las Vegas Sands

Las Vegas Sands (NYSE: LVS) is the world's leading developer and operator of Integrated Resorts. Our collection of Integrated Resorts in Asia and the United States feature state-of-the-art convention and exhibition facilities, premium accommodations, world-class gaming and entertainment, destination retail and dining including celebrity chef restaurants and many other amenities.

Our properties include The Venetian and The Palazzo resorts and Sands Expo Center in Las Vegas, Sands Bethlehem in Eastern Pennsylvania, and the iconic Marina Bay Sands in Singapore. Through majority ownership in Sands China Ltd.(HK: 1928), LVS owns a portfolio of properties on the Cotai Strip in Macao, including The Venetian Macao, The Plaza and Four Seasons Hotel Macao and Sands Cotai Central, as well as the Sands Macao on the Macao Peninsula.

LVS is dedicated to being a good corporate citizen, anchored by the core tenets of delivering a great working environment for nearly 50,000 employees worldwide, driving impact through its Sands Cares corporate citizenship program and leading innovation with the company's award-winning Sands ECO360° global sustainability program. To learn more, please visit www.sands.com.

Las Vegas Sands Corp.
First Quarter 2016 Results
Non-GAAP Reconciliations

Within the company's first quarter 2016 press release, the company makes reference to certain non-GAAP financial measures including "adjusted net income," "hold-normalized adjusted net income," "adjusted earnings per diluted share," "hold-normalized adjusted earnings per diluted share," "adjusted property EBITDA," and "hold-normalized adjusted property EBITDA."  Whenever such information is presented, the company has complied with the provisions of the rules under Regulation G and Item 2.02 of Form 8-K.  The specific reasons why the company's management believes that the presentation of each of these non-GAAP financial measures provides useful information to investors regarding Las Vegas Sands Corp.'s financial condition, results of operations and cash flows has been provided in the Form 8-K filed in connection with this press release.

Adjusted property EBITDA consists of operating income (loss) before depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal of assets, pre-opening expense, development expense, royalty fees, stock-based compensation and corporate expense.  Reconciliations of GAAP operating income (loss) and GAAP net income attributable to Las Vegas Sands Corp. to adjusted property EBITDA and hold-normalized adjusted property EBITDA are included in the financial schedules accompanying this release.