Las Vegas Sands Corp. continues to believe in — and profit from — Macau.
The casino company that owns the The Venetian and Palazzo on the Strip generated 62 percent of its 2018 revenue from its Macau operations, company executives said Wednesday in announcing fourth-quarter earnings.
Macau and the company’s operation in the Chinese gaming enclave dominated the company’s earnings call with analysts.
“We achieved record mass revenues, we increased our market share of revenue in our most important market. Our growth in Macau is coming from every gaming and non-gaming segment,” said Rob Goldstein, president and chief operating officer of the Las Vegas-based company.
“Looking ahead, we believe there is no better market in the world than Macau with regard to continued deployment of our capital,” he said.
Macau, where Las Vegas Sands is the market leader, shored up fourth-quarter revenue of $3.475 billion, 2.5 percent ahead of fourth quarter revenue in 2017. The company’s segments in Singapore, Las Vegas and Bethlehem, Pennsylvania, fell short of 2017 numbers.
The company also confirmed its announced 77-cents-per-share dividend, payable March 28 to shareholders of record March 20.
Revenue and earnings also fell short of Wall Street analysts’ expectations for the quarter that ended Dec. 31.
Quarterly loss on paper
The company reported a quarterly loss of $40 million, 22 cents a share, primarily due to $782 million in non-recurring, non-cash income tax items resulting from income tax reform. In the 2017 fourth quarter, Sands reported net income of $1.361 billion, $1.53 a share.
The income tax items had a 93-cents-per-share impact on earnings.
Fourteen industry analysts on average anticipated revenue of $3.53 billion and earnings of 84 cents a share.
In Wednesday’s call, Goldstein emphasized how bullish the company is on Macau, where the company is investing $2.2 billion to upgrade several properties.
“We’re strong, strong believers in Macau and we’re investing for the long-term,” Goldstein said. “Yes, there’s a smoking issue today or a blip in the economy. There’s always something to worry about, we get that. But look at this magnificent market this last three years and what it’s done. It’s absorbed all kinds of capacity and it’s still growing. We’re just very bullish and we’re blinded by the extreme size of Macau in terms of the market today, but more importantly, tomorrow.”
Goldstein said he believes Macau’s best days are ahead of it, especially now that the 34-mile Hong Kong-Zhuhai-Macau bridge is completed and operational. Goldstein said he was there last week and drove the bridge.
It’s currently being used by commercial operators, but eventually it’s expected to be made available to the mass market.
“The opening of the bridge is a major milestone that will help Macau grow tourism and meetings, incentives, conventions and exhibitions business in the years ahead, an engineering feat of unprecedented scale connecting the Hong Kong airport with Macau,” he said.
No merger and acquisition plans
Asked by an analyst whether Sands has any interest in domestic mergers and acquisitions, Chief Financial Officer Patrick Dumont said the company remains laser-focused on the portfolio Chairman and CEO Sheldon Adelson has laid out.
“There’s always a lot of speculation, particularly in our industry, about the opportunity for acquisition,” Dumont said. “If you look at the portfolio that (Adelson) designed and built from the ground up, we believe we have the best assets in the business. And, for us, we think investing in those assets are the best way to create long-term shareholder returns and we’ve demonstrated that over the years.”
In Singapore, Goldstein said the company’s Marina Bay Sands resort is “capacity constrained” with no room to grow.
In Las Vegas, where revenue was off 0.2 percent to $424 million for the quarter, the company is pinning its expectations on a new performance venue, the MSG Sphere at The Venetian, which Goldstein said on the call would be completed in 2021 and not 2020 as previously reported.
Adelson, a usual participant on Sands earnings calls, is recovering from an illness and wasn’t on the call, Goldstein said.
Sands shares closed up 24 cents, 0.4 percent, to $57.29 a share on volume slightly above the daily average. After hours, shares dipped $1.83, 3.2 percent, to $55.60 a share.
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.
Las Vegas Sands Corp.
Fourth-quarter revenue and earnings for Las Vegas-based Las Vegas Sands Corp. (NYSE: LVS)
4Q 2018: $3.475 billion
4Q 2017: $3.391 billion
Net income (loss)
4Q 2018: ($40 million)
4Q 2017: $1.361 billion
Earnings (loss) per share
4Q 2018: (22 cents)
4Q 2017: $1.53