Las Vegas Sands’ revenue, profit slide spoils Adelson’s return


las-vegas-sands-macau-vip-gambling-declineCasino operator Las Vegas Sands saw its revenue, earnings and profit decline in the third quarter of 2019 but owner Sheldon Adelson showed up for the earnings call anyway.

On Wednesday, Sands reported that its revenue hit $3.25b in the three months ending September 30, a 3.6% decline from the same period last year. Operating income fell 2.5% to $899m while net income fell 6.6% to $533m.

The negative results partially reflect the sale of Sands Bethlehem, which received regulatory approval in May, providing a nine-figure boost to Sands’ Q2 results. The Bethlehem property provided revenue of $138m and earnings of $33m in Q3 2018 but nada to this most recent quarter.

Sands’ Las Vegas operations did their best to carry on, with revenue up 7.1% to $406m, while adjusted earnings jumped more than one-fifth to $93m. Gaming revenue jumped 17% to $103m despite table drop falling 6.7%, as slots handle rose an impressive 6.8%.

Turning to Macau, Sands China’s revenue was down 2% to $2.08b, primarily due to a 9.3% decline at Sands Cotai Central, which is in the messy process of being converted into The Londoner. The construction is apparently keeping fussy high-rollers at bay, as the property’s VIP gambling turnover fell nearly 57%. Making matters worse, VIP win tumbled 1.59 points to a well below average 2.36%.

In fact, in a reflection of the overall Macau market’s current trends, VIP turnover was down double-digits at all Sands China properties, including its flagship Venetian Macao casino, where VIP turnover fell more than one-fifth and VIP win slipped 1.05 points to 2.7%.

Fortunately for Sands, it was a different story in the less flashy but infinitely more profitable mass market segment. With the exception of Sands Cotai Central, Sands China reported across the board year-on-year mass turnover gains, including rises of 7.6% at the Venetian and 7.3% at the Parisian.

Sands President Rob Goldstein admitted that the current climate in Macau was “challenging,” noting that market veterans were used to the VIP tide rising and falling but there was no doubt that “we’re in a difficult time period.”

Things were brighter in Singapore, where the Marina Bay Sands resort reported revenue up 3.5% to $793m while adjusted earnings gained 3.8% to $435m. The property enjoyed modest rises in both VIP (+2.4%) and mass market (+4.6%) table turnover while VIP win rose 0.55 points to an outsized 3.98%.

Adelson, who hadn’t shown up to an earnings call this year due to his battle with non-Hodgkins lymphoma, addressed analysts Wednesday via a prepared statement in which he thanked everyone for their support over the past year. However, the 86-year-old Adelson didn’t take any questions and didn’t say much other than to utter his familiar ‘yay dividends’ catchphrase at the appropriate moment.

As for Sands’ Japanese ambitions, Goldstein said that he and some other top execs had spent so much time in the country over the past six months, “I feel like I could write a guide book.” Goldstein also suggested that the $10b budget figure that’s been bandied about by many would-be Japan integrated resort licensees may actually be “the starting point,” and that companies would have to ask themselves “is that prudent?”

Goldstein said Sands was “starting, not writing off” anything, but “we’ve got to make sure, at the end of the day, it’s prudent” and the returns are there to make it a worthwhile investment for Sands shareholders. Yay, pragmatism.