Las Vegas Sands’ Q2 2021 Report Painted Slow Recovery

Global land-based casino operator Las Vegas Sands (LVS) released its financial results for the quarter ended June 30, 2021, posting an operating loss for the quarter.

Slow Pace of Recovery

Las Vegas Sands revealed net revenue in the second quarter amounted to $1.17 billion, which compared to the $62 million the world’s leading developer of integrated casino resorts posted in Q2 2020, marks a significant improvement year-over-year.

Compared with the most recent respective quarter prior to the coronavirus impact on the land-based casino industry, Q2 2019, in which LVS generated $3.33 billion, Q2 2021 stands at 50% of pre-pandemic levels.

The operating result for the quarter ended June 30, 2021, was a $139 million loss, reduced from the $757 million loss the casino company posted for the respective quarter last year, while net loss from continuing operations improved from $841 million for Q2 2020 to $280 million in Q2 2021.

Consolidated adjusted property earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter came out at $244 million, coming up from a negative $425 million for Q2 2020. Consolidated adjusted property EBITDA in Q2 2019 was $1.27 billion, suggesting financial performance at around 20% of pre-pandemic levels.

Las Vegas Sands accounted for the ongoing sale of its Las Vegas real property and operations for an aggregate price of $6.25 billion as agreed in March as a discontinued operation held for sale, as the transaction is expected to close in the last quarter of 2021.

Sand China Ltd (SCL) generated on a GAAP basis net revenues of $849 million, recovering from the $40 million the LVS subsidiary accounted for in Q2 2020, reducing the net loss for the quarter from $549 million in the year prior to $166 million for the reported 3-month period.

Macau is also the jurisdiction in which Las Vegas Sands is facing legal headwinds after its former partner, Asian American Entertainment Corporation, filed legal action against the company, seeking damages amounting to 70% of profits from 2004 to 2022, estimated around $12 billion. The legal case is already underway and the outcome is far from certain.

Other Factors Affecting Earnings

Net of amounts capitalized, interest payments in Q2 2021 reached $158 million, up 38% compared to $114 million in Q2 2020, and 10.5% higher than the pre-pandemic Q2 2019. The weighted average cost in the reported quarter also went up, 4.4%, compared to 3.6% in Q2 2020, but lower than the 4.7% in Q2 2019.

Weighted average debt was impacted by SCL’s issuance of senior notes for $1.5 billion in June 2020 and $505 million of credit facility in the first quarter. For comparison, the Q2 2019 reading was impacted by another SCL issuance in August 2018 and a US credit facility in June 2018.

As of June 30, 2021, LVS has cash balances of $2.06 billion, down from $3.02 billion as of June 30, 2020, and further down from the $4.02 billion at the end of Q2 2019.

Total debt excluding finance leases at the end of Q2 2021 amounted to $14.42 billion, up from $13.82 billion in Q2 2020, and $12 billion at the end of Q2 2019.

The capital expenditure of the company decreased to $157 million, with $129 million for construction and development in Macau and $27 in Singapore. In Q2 2020, capital expenditure was $213 million, with $99 million in Macau, $65 million in Las Vegas, and $49 million at Marina Bay Sands in Singapore. In Q2 2019, capital expenditure amounted to $382 million.