Las Vegas, NV (November 10, 2008)—Las
Vegas Sands Corp. (NYSE: LVS), today reported financial results for the quarter ended
September 30, 2008.
Company-Wide Operating Results
Net revenue for the third
quarter of 2008 increased 67.2% to $1.11 billion, compared to $661.0 million in
the third quarter of 2007. Consolidated
adjusted property EBITDAR in the third quarter of 2008 increased 48.4% to $243.8
million, compared to $164.3 million in the year-ago quarter. On a GAAP (Generally Accepted Accounting Principles)
basis, operating income was $28.2 million versus an operating loss of $20.8
million in the third quarter of 2007.
Adjusted net income
(excluding loss on disposal of assets, pre-opening expense, development expense,
and loss on early retirement of debt) was $8.1 million, or adjusted earnings
per diluted share of $0.02, compared to $41.8 million, or adjusted earnings per
diluted share of $0.12, in the third quarter of 2007. The decrease in adjusted net income of $33.8
million reflects increases in net interest expense and depreciation and
amortization. On a GAAP basis, net loss
in the third quarter of 2008 was $32.2 million, or $0.09 per diluted share,
compared to net loss of $48.5 million, or $0.14 per diluted share, in the third
quarter of 2007. The decrease in GAAP
net loss of $16.3 million reflects the increases in operating income mentioned
above and a benefit for income taxes, partially offset by an increase in
interest expense and a decrease in other income.
Third Quarter Highlights
William P. Weidner,
president and COO stated, “Our third quarter results reflect solid operating
performance, with both revenues and adjusted property EBITDAR increasing
substantially in both Las Vegas and Macao, despite challenging
operating environments in each market.
“In Macao, despite the implementation of
stricter visa restrictions for certain mainland Chinese visitors, visitation to
The Venetian Macao continues to grow, while the maturing of the assets and
amenities of the property, which celebrated its one year anniversary during the
quarter, is clearly evident in our operating performance. Despite that strong performance, given the current
conditions in the global credit environment, we have elected to significantly
slow the pace of our development activities on the Cotai Strip, including a
suspension of our development on sites five and six of the Cotai Strip, as we
focus our current efforts on maximizing our cash flow and our returns on
invested capital from our existing properties in Macao: The Venetian Macao and
the Four Seasons Macao on the Cotai Strip, and the Sands Macao on the Macao peninsula.
We will focus our
development activities and available capital principally on the timely completion
of both Marina Bay Sands, in Singapore,
and Sands Bethlehem, in Bethlehem,
Pennsylvania. At an appropriate time in the future, to the
extent capital becomes available on acceptable terms, we plan to resume the
development of sites five and six on the Cotai Strip. We remain confident that our long-term
development strategy, including the completion of additional properties on the
Cotai Strip should capital become available on acceptable terms, will provide
the people of Macao
and the surrounding region with significant and sustainable economic benefits.
“In Las Vegas, despite an increasingly challenging
operating environment, the combined Venetian and Palazzo integrated resort
performed solidly, although low table hold negatively impacted the current
quarter’s operating results. Looking
ahead, we will focus our efforts on both controlling our costs and maximizing
our cash flows from our Las Vegas
Las Vegas Third Quarter Operating Results
Adjusted property EBITDAR
for our Las Vegas
operations for the third quarter of 2008 was $73.3 million, compared to $60.2
million in the third quarter of 2007. On
a GAAP basis, operating income for our Las
Vegas operations decreased to $6.1 million, compared
to $29.6 million in the 2007 period.
In the third quarter of
2008, Las Vegas
operations' table games drop was $477.2 million, an increase of 33.9% compared
to $356.4 million in the third quarter of 2007. Slot machine handle (volume) was $976.6
million for the quarter, an increase of 57.6% compared to $619.8 million in the
third quarter of 2007. The increases in
table games drop and slot handle are principally the result of the expansion of
gaming capacity with the opening of The Palazzo. In the third quarter of 2008, table games win
percentage (calculated before discounts) was 13.8%, compared to 14.7% in the third
quarter of 2007 and below our expected range of 20% to 22%. Slot win percentage (calculated before slot
club cash incentives) was 6.0%, compared to 6.2% in the 2007 quarter. Casino revenues for our Las Vegas operations were $113.2 million for
the third quarter of 2008, increasing 36.2% compared to $83.1 million in the
third quarter of 2007.
Las Vegas operations' hotel revenues were $130.5
million versus $83.0 million in the third quarter of 2007. The increase in
hotel revenues of 57.2% was principally due to the increased suite product
available with the opening of The Palazzo.
The Venetian Las Vegas'
average daily rate (ADR) was $207, compared to $234 in the third quarter of
2007. The Venetian's occupancy of available guestrooms was 92.0% during the third
quarter of 2008, down from 99.6% during the prior year period. Revenue per
available room (REVPAR) at The Venetian Las Vegas was $191 in the 2008 period,
compared to $233 in the third quarter of 2007. In its third quarter of
operation, The Palazzo's ADR was $231, while occupancy of available guestrooms was
94.5%, generating REVPAR of $218.
Food and beverage
revenues for our Las Vegas
operations increased to $61.6 million in the third quarter of 2008, compared to
$34.8 million in the 2007 period, an increase of 77.0%. Convention, retail and
other operating revenues were $48.5 million in the quarter, compared to $30.0
million in the third quarter last year, an increase of 61.7%.
Third Quarter Operating Results
In the third quarter of
2008, adjusted property EBITDAR for The Venetian Macao was $135.7 million,
compared to the 2007 third quarter adjusted property EBITDAR of $26.5 million. The 2007 third quarter reflected the operating
period from the property opening on August 28, 2007 through September 30, 2007.
On a GAAP basis, third quarter operating income for The Venetian Macao was $81.6
million, compared to the 2007 third quarter operating income of $6.8 million.
Rolling Chip volume at
The Venetian Macao was $9.78 billion for the third quarter of 2008. This
compares to Rolling Chip volume of $4.73 billion during the third quarter of
2007, which reflects the 34-day operating period. Non-Rolling Chip table games
drop was $930.6 million for the quarter, representing The Venetian Macao’s
highest quarterly Non-Rolling Chip table games drop in its history. This
compares to $257.1 million in Non-Rolling Chip table games drop during the third
quarter of 2007. Casino revenues for the third quarter were $432.6 million,
compared to $131.0 million in the third quarter of 2007.
The Non-Rolling Chip
table games win percentage for the third quarter was 19.7%, while Rolling Chip
table games win percentage (calculated before discounts and commissions) was 3.06%.
These results compare to our expected Non-Rolling Chip table games win
percentage of 18% to 20%, and Rolling Chip table games win percentage
(calculated before discounts and commissions) of 3.0%.
Slot handle (volume) for the
third quarter of 2008 was $549.9 million, another quarterly record, while slot
win percentage for the quarter was 7.8%.
Hotel revenues for the
third quarter of 2008 were $51.1 million. The Venetian Macao's ADR was $211
while the occupancy per available guestrooms was 92.1%, generating REVPAR of
Retail and other
operating revenues were $52.0 million, while food and beverage revenues were $16.8
Visitation at The
Venetian Macao remains robust, with a quarterly record 6.6 million visitors to
the property in the quarter, including 1.94 million visitors to the property in
September 2008, up approximately 15% compared to September 2007. In October 2008, visitation was over 2.23
million guests, up approximately 16% compared to the same period in 2007. Finally, for the seven day Golden Week
beginning October 1, 2008, visitation to The Venetian Macao was up
approximately 22% compared to the Golden Week beginning September 29, 2007.
Weidner added, “The
Venetian Macao delivered another solid operating performance as it completed
its one year anniversary as Asia’s first
integrated resort. We welcomed the greatest number of visitors ever to the
property in a quarter, 6.6 million. That
robust visitation provided the foundation for the strongest mass gaming volumes
and slot play in the history of the property.
We have now welcomed over 26 million people to The Venetian Macao since
opening our doors in August 2007, illustrating the broad appeal of our
market-leading investments in Asia's first
“While development work
on future properties on the Cotai Strip will be significantly curtailed until
the capital markets improve, our investments in the transformation of Macao
into Asia’s premier business and leisure destination, including our investments in transportation infrastructure to
encourage visitation and improve the customer experience for Macao’s visitors,
will continue. Our CotaiJet ferry
service, which provides regional ferry service directly to Taipa's temporary
Pac-On ferry terminal and is operated by our partner, Cotai Chu Kong Shipping
Management Services Co., Ltd., increased its daily sailings during the quarter
to include overnight service, and is now providing 62 sailings per day between Hong Kong's Shun Tak ferry terminal and the Cotai Strip.
“The Venetian Macao has
continued to mature as the property has added additional attractions and
amenities, including Zaia, Cirque du Soleil’s first permanent show in Asia, during the quarter.
Consistent with Macao’s goal of diversifying
the origin of its visitation base, we have now begun to increase our marketing
efforts to attract new visitors from population centers outside mainland China and throughout
the wider Asian region. Despite the
slowing of our development program, our efforts to diversify Macao’s
visitor base, drive overnight visitation, and increase the length of stay in Macao will continue. The critical mass of shopping, dining, and
entertainment amenities of the recently opened Four Seasons Macao and Shoppes
at Four Seasons Macao, will enhance our ability to accomplish those objectives,"
Four Seasons Macao
Third Quarter Operating Results
The Four Seasons Macao debuted
on August 28, 2008, and portions of the property were open for 34 days during
the quarter. Adjusted property EBITDAR
was $3.0 million in the third quarter of 2008. On a GAAP basis, the Four Seasons Macao
experienced an operating loss of $4.2 million for the third quarter of 2008.
At the Four Seasons
Macao, for the 34-day operating period beginning on August 28, 2008, Rolling
Chip volume was $165.2 million and Non-Rolling Chip table games drop was $16.7
million. For the third quarter of 2008,
the Four Seasons Macao Rolling Chip table games win percentage (calculated
before discounts and commissions) was 8.33%, while Non-Rolling Chip table games
win percentage was 18.4%. These results
compare to our expected Rolling Chip table games win percentage (calculated
before discounts and commissions) of 3.0% and Non-Rolling Chip table games win
percentage of 18% to 20%. The Four
Seasons Macao slot handle (volume) for the third quarter of 2008 was $7.9
million. Third quarter casino revenues for
the quarter were $15.9 million.
The Four Season Macao’s
ADR was $440, while the occupancy per available guestrooms was 31.4%,
generating REVPAR of $138.
Weidner continued, “The
opening of the Four Seasons Macao, our second property on the Cotai Strip,
brings the world-class Four Seasons brand and world-renowned service to the Cotai
Strip, broadening and enhancing the appeal of Macao as a business and leisure destination. The luxury positioning of the Four Seasons
Macao and The Shoppes at Four Seasons Macao, our luxury retail offering, provides
a high-end complement to The Venetian
Macao and The Grand Canal Shoppes. We
believe this luxury positioning and the Four Seasons brand will enable the
Cotai Strip to attract increasing numbers of visitors from important regional
markets such as Japan, South Korea, and Southeast
Asia. We look forward to
opening additional amenities at the Four Seasons Macao in the months ahead,
including two additional floors of exclusive Paiza Club gaming capacity, and 19
private Paiza mansions, each with a private gaming area.”
Third Quarter Operating Results
At the Sands Macao, adjusted
property EBITDAR was $42.6 million in the third quarter of 2008, compared to $77.6
million in the third quarter of 2007. Operating income on a GAAP basis for the
Sands Macao was $28.5 million for the third quarter of 2008, compared to $65.5
million in last year's third quarter.
The Sands Macao Rolling
Chip volume for the third quarter of 2008 increased 15.4% to $7.26 billion,
compared to $6.29 billion in the third quarter of 2007, while Non-Rolling Chip
table games drop decreased 19.7% to $652.3 million, compared to $812.4 million
in last year’s third quarter. For the third quarter of 2008, the Sands' Rolling
Chip table games win percentage (calculated before discounts and commissions)
was 2.35%, compared to 2.85% in the 2007 quarter, while Non-Rolling Chip table
games win percentage was 17.9%, compared to 18.7% in the 2007 quarter. These
results compare to our expected Rolling Chip table games win percentage
(calculated before discounts and commissions) of 3.0% and Non-Rolling Chip
table games win percentage of 18% to 20%. The Sands' slot handle (volume) for
the third quarter of 2008 was $273.1 million, representing an 8.3% decrease
versus $297.9 million in the third quarter of 2007. Third quarter casino
revenues for the quarter were $243.5 million, compared to $294.5 million in the
third quarter of 2007.
Weidner stated, “While
the results of the Sands Macao clearly reflect the competitive environment for
gaming customers on the Macao
peninsula, as well as low table games hold during the quarter, we remain
pleased with the market positioning of the Sands. The introduction of high-quality competitive
product, including The Venetian Macao and Four Seasons Macao on the Cotai
Strip, has been significant in the last year, but will slow dramatically from
this point forward, particularly on the Macao Peninsula. In the face of this competition, the Sands
continues to generate strong cash flow and returns. Our rolling table games play was stronger
compared to the same quarter last year, and while our mass volumes were down
year over year, they continue to reflect healthy play, and remain the largest
on the Macao
peninsula. Looking ahead, we expect to improve
our performance at the property by further reducing the Sands’ cost structure.”
Other Factors Affecting Earnings
Other Asia EBITDAR,
principally consisting of our CotaiJet ferry service, had a negative impact on consolidated
adjusted property EBITDAR of $10.8 million.
related principally to the Four Seasons Macao, Marina Bay Sands in Singapore, Sands
Bethlehem, and other resorts on the Cotai Strip were $40.8
million in the third quarter of 2008, compared to $90.4 million in the third
quarter of 2007.
amortization expense was $132.2 millionin
the third quarter of 2008, compared to $54.3 million in the third quarter of
Interest expense, net of
amounts capitalized, was $90.5 million for the third quarter of 2008, compared
to $72.6 million during the third quarter of 2007. The increase is primarily the result of reduced
capitalized interest during the quarter as well as increased borrowings to
support the company's growth pipeline and current and future development,
including borrowings related to the company's $5.0 billion domestic credit
facility, the $3.3 billion credit facility to support our developments in
Macao, as well as borrowings related to the SGD5.44 billion (approximately $3.8
billion at exchange rates in effect on September 30, 2008) credit facility to
support the development of Marina Bay Sands in Singapore. Capitalized interest was $38.4 million during
the third quarter of 2008, compared to $64.2 million during the third quarter
Interest income was $3.2
million in the third quarter of 2008, compared to $26.9 million in the third quarter
Corporate expense was $23.4
million in both the third quarter of 2008 and 2007.
expense was $15.4 million in the third quarter of 2008, compared to $9.8
million in the third quarter of 2007.
Other income, which is
principally composed of foreign currency gains, was $7.2 million in the third
quarter of 2008, compared to $17.1 million in the third quarter of 2007.
The company's effective
tax rate for the nine months ended September 30, 2008 is approximately -25.6%, which
is lower than the United States federal statutory rate of 35% due principally
to a zero percent effective tax rate on our Macao gaming income and a projected
taxable loss in the United States for 2008.
Balance Sheet Items
balances as of September 30, 2008, stood at $1.28 billion while restricted cash
balances were $239.1 million. Of the restricted cash balances, $199.6 millionis restricted for Macao-related
construction and $32.3 million is restricted for construction of Marina Bay
Sands in Singapore.
As of September 30, 2008,
total debt outstanding, including the current portion, was $10.35 billion.
during the third quarter totaled $998.1 million. This includes construction and development
activities of $551.3 millionin Macao, $108.7 millionat The Palazzo and The St. Regis Residences, $174.4 millionfor Marina Bay Sands in Singapore, $100.3 millionat Sands Bethlehem, and $63.4 million at The Venetian Las Vegas
and the Sands Expo and Convention Center in Las Vegas.
Given current conditions
in the capital markets and the global economy and their impact on the Company’s
ongoing operations, the Company has chosen to temporarily or indefinitely
suspend portions of its development projects and will focus its development
efforts on those projects with the highest rates of expected return on invested
capital given the liquidity and capital resources available to the Company
today. As previously announced, the
company is in the process of arranging a capital raising transaction. The development plan outlined below is
dependent on the Company raising additional capital.
In Las Vegas, development of the St. Regis
Residences will be suspended indefinitely, although the completion of the
podium component of the condominium tower, which will generate rental income
from currently executed leases, will continue and is expected to be completed
during the first quarter of 2009. The estimated
cost to prepare the site for the delay and to complete the podium portion of
the project is approximately $95 million.
In Bethlehem, Pennsylvania,
we will focus our development efforts on the casino component of Sands
Bethlehem, which includes the casino and related amenities including restaurants
and a 3,500-space parking garage. We plan
to open the casino component in the second quarter of 2009. The estimated cost to complete the casino
component of the project, including preopening and furniture, fixtures, and
equipment costs, is approximately $427 million.
In Macao, development of sites five and six on
the Cotai Strip will be temporarily suspended until conditions in the capital
markets improve. We will continue to pursue
a project-level financing that would allow us to complete construction of the
first phase of this project, which will include a Shangri-La / Traders hotel
tower, an 1,800-room Sheraton hotel tower, and three casinos featuring a total
of 790 gaming tables and 3,500 slot machines.
Through September 30, we have spent approximately $1.16 billion on the development
of the sites, and we expect to incur additional costs of approximately $430
million through June 30, 2009, as we prepare the site for a potential indefinite
suspension. Our temporary suspension
program will enable us to recommence development in an efficient fashion, should
sufficient capital to complete phase one of our development plans become
available on reasonable terms.
Also in Macao, we will continue the development of
the Four Seasons Private Apartments Macao, and expect to complete this project
in the third quarter of 2009. The expected
cost to complete the construction of the Four Seasons Private Apartments,
including furniture, fixtures and equipment and preopening costs, is
approximately $463 million.
Given that our SGD $5.44 ($3.8
billion at current exchange rates) billion credit facility to support the
development of Marina Bay Sands in Singapore is already in place, our development
there is not significantly impacted by the current capital market conditions. Our
development plans for Marina Bay Sands, therefore, have not changed. We continue to target a late 2009 opening for
Marina Bay Sands. To date, we have invested
approximately $1.81billion in construction
costs in the project, including land, and have contributed approximately $616million in equity for the project to
date. Our current estimated cost to complete
the construction of the project is approximately $2.7 billion, and we expect to
fund between 75% and 80% of those future construction costs through proceeds
from our Singapore
credit facility, of which approximately $2.0 billion is available at current
exchange rates. We currently expect to
invest approximately $500 million in additional equity in the project through
the targeted opening of the property in late 2009.
Conference Call Information
The company will hold a
conference call to discuss the company's results on Monday, November 10, 2008
at2:00 p.m. Pacific Time (5:00 p.m.
Eastern Time) Interested parties can listen to the conference call through a
live audio webcast at www.lasvegassands.com
(click on Investor Relations).
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 ventures,
substantial leverage and debt service, government regulation, legalization of
gaming, interest rates, future terrorist acts, insurance, gaming junket
operators, risks relating to our Macao gaming subconcession, infrastructure in
Macao 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
About Las Vegas Sands Corp.
ABOUT LAS VEGAS SANDS CORP.
Las Vegas Sands Corp. (NYSE: LVS) is the leading international
developer of multi-use integrated resorts.
The Las Vegas, Nevada-based company owns and operates The Venetian
Resort-Hotel-Casino, The Palazzo Resort-Hotel-Casino, and the Sands Expo and
Convention Center in Las Vegas and The Venetian
Macao Resort-Hotel and the Sands Macao in the People’s Republic of China (PRC)
Special Administrative Region of Macao. The company also owns the Four Seasons
Hotel Macao and is constructing two additional integrated resorts: Sands Casino
Resort Bethlehem™ in Eastern Pennsylvania and Marina Bay Sands™ in Singapore.
LVS is also creating the Cotai Strip™, a master-planned
development of resort-casino properties in Macao.
At completion, the Cotai Strip will feature approximately 21,000 rooms
from world-renowned hotel brands such as St. Regis, Sheraton, Shangri-La,
Traders, Hilton, Conrad, Fairmont,
Raffles, Holiday Inn, and InterContinental.
Community: Scott Henry (702)
Media: Ron Reese (702) 414-3607
Las Vegas Sands
Within the company’s third quarter 2008 press
release, the company makes reference to certain non-GAAP financial measures
including “adjusted net income,” “adjusted earnings per diluted share,”
“adjusted EBITDA,” and “adjusted property EBITDAR.” 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
Adjusted EBITDA consists of
operating income (loss) before depreciation and amortization, gain or loss on
disposal of assets, pre-opening expense, development expense, and stock-based
compensation. Adjusted property EBITDAR consists of operating income (loss)
before depreciation and amortization, gain or loss on disposal of assets,
pre-opening expense, development expense, stock-based compensation, corporate
expense, and rental expense.
Reconciliations of GAAP operating income (loss) and GAAP net income
(loss) to adjusted EBITDA and adjusted property EBITDAR are included in the
financial schedules accompanying this release.