Who cares about earnings?
Despite a second quarter where robust revenue didn't translate into increased earnings, Las Vegas Sands Corp. executives were jubilant Wednesday.
Four weeks before opening the $2.4 billion Venetian Macau, company executives said the resort was ready for its unveiling after more than five years of planning, construction and preparation. The massive 3,000-room resort, the first facility to open on the Cotai Strip, opens Aug. 28 with a 550,000-square-foot casino, 1.2 million square feet of meeting space and 1 million square feet of retail with 350 stores.
"We are now approaching a signal moment in the history of both our company and Macau," Las Vegas Sands President Bill Weidner said. "This is a dramatic complex. (It's) the beginning of a new era in the long and vibrant history of Macau. Macau will begin in earnest to realize her true potential as a world-class business and leisure destination."
Discussion of the prospects for Venetian Macau and its impact on the Chinese gaming market overshadowed the company's earnings for the quarter that ended June 30. Most of the questions from analysts during Las Vegas Sands' conference call concerned Macau.
Weidner said the Venetian hosted England's Manchester United soccer club when it played an exhibition in Macau last month. The soccer team, including its stars, Cristiano Ronaldo and Wayne Rooney, gave noncasino employees at the Venetian Macau a much needed run-through in the operations of the resort. The Venetian Macau was the sponsor of the soccer exhibition.
"On the day we open, in the 5,000-year history of Asia, it will be a historic event," Weidner said. "This is by far, the biggest building and the biggest hotel in Asia."
Only one month of results from Venetian Macau will be reflected in Las Vegas Sands third quarter.
For the second quarter, Las Vegas Sands said its net income was $34.4 million, which translated into 10 cents per share, compared to $109.3 million, or 31 cents per share, in the second quarter of 2006. Analysts polled by Thomson Financial expected the company to earn 26 cents per share.
The decrease in net income of $74.9 million was due to pretax increases of $36 million in pre-opening expense, $24.4 million in net interest expense, and $11.3 million in depreciation and amortization, as well as the loss realized on the early retirement of debt of $10.7 million.
Without the adjustments, Las Vegas Sands would have reported net income of $81.9 million, or earnings per share of 23 cents.
During the quarter, Las Vegas Sands had net revenues of $612.9 million, an 18.6 percent increase compared with $517 million a year ago.
"The second quarter of 2007 was another quarter of strong execution for our company," Weidner said. "We again delivered robust operating results at both our Las Vegas and Macau properties and continued to make steady progress in the execution of our development plans around the globe."
In Las Vegas, the company's casino revenues at The Venetian were $85.4 million, a 19.8 percent increase from $71.3 million for the same quarter a year ago. Hotel revenues were $93.3 million, a 6 percent increase compared with $88 million a year ago.
At the Sands Macau, casino revenues were $373.5 million, a 21.6 percent increase from $307.1 million the 2006 second quarter.
During the conference call, Sands leaders brushed off concern over recent actions by the Chinese government that has increased visa restrictions for travel by mainland China residents to Macau.
Executives related that government officials told the company the visa restrictions are meant to cut down on day-trip visitors, which would help ease crowding and make room for convention visitors and others who will stay in Macau on a longer basis.
Las Vegas Sands officials believe overall visitation to Macau will surge when the Venetian opens.
Shares of Las Vegas Sands closed at $85.68 on the New York Stock Exchange, down $1.57, or 1.8 percent.
Las Vegas Sands is also constructing the $3.6 billion Marina Bay Sands in Singapore with more than 1,100 workers participating in the project. The 2,500-room hotel-casino is expected to open in 2009.
The company is also building the $637 million Sands Bethworks at the site of the former Bethlehem Steel plant in eastern Pennsylvania. Construction crews have done preservation and refurbishment work on portions of the plant that will be part of the casino and entertainment complex.
PALAZZO SLATED TO OPEN IN DECEMBER Las Vegas Sands Corp. announced Wednesday it would open the $1.6 billion Palazzo on Dec. 20. The 3,068-room resort, under construction next to The Venetian, will open its gaming area, hotel and restaurants, the company said during its second-quarter earnings conference call Wednesday. The Shoppes at Palazzo, the property's 450,000-square-foot retail space that is anchored by Barneys New York, will open in January. The Palazzo theater, which will feature the Broadway musical "Jersey Boys," is expected to open in the spring. When completed, The Venetian and Palazzo complex will represent the largest integrated destination resort in the world, with 7,128 hotel rooms and 2.3 million square feet of meeting, convention and exhibition space. Because the Palazzo is being operated as an extension of The Venetian, Las Vegas Sands President Bill Weidner said, the company expected to obtain back-of-house and other operating savings of between $40 million and $60 million for the combined complex. "The resort is designed to appeal to our important high-end Asian customer," Weidner said. The Palazzo will be the first new resort to open on the Strip since the April 2005 opening of Wynn Las Vegas. HOWARD STUTZREVIEW-JOURNAL AMERISTAR CASINOS HAS TAXING QUARTER Las Vegas-based Ameristar Casinos said its net income in the second quarter fell a little more than 4 percent due to a state income tax matter. The casino operator said Wednesday its earnings for the quarter that ended June 30 were $17.3 million, or 30 cents a share, compared with $18 million, or 32 cents a share, a year earlier. Analysts surveyed by Thomson Financial expected earnings of 35 cents a share. Ameristar didn't say which state was responsible for the income tax issue, which affected earnings by $2.3 million. Ameristar said its net revenue for the quarter increased 2.7 percent to $253.2 million from $246.6 million a year ago. "Net revenues at each of our properties other than Kansas City outpaced the year-over-year change in its respective market. We enhanced or maintained profitability in all of our markets," Ameristar President John Boushy said. Ameristar, which operates seven casinos in six regional markets, said it expects to complete the purchase of the company's eighth casino in September. The company plans to spend $675 million to buy the Resort East Chicago riverboat casino in Indiana. "While we pursue our strategy to double Ameristar's (cash flow) over the next three to five years, we have been and remain disciplined in our growth plans," Ameristar Co-Chairman Gordon Kanofsky said. "We continue to be primarily focused on acquiring existing income-generating assets where the integration of the Ameristar brand and management model can significantly improve cash flow -- as we believe is the case with Resorts East Chicago. We also intend to retain financial flexibility to pursue these acquisitions and development projects to achieve our growth objectives." HOWARD STUTZREVIEW-JOURNAL
