Las Vegas Sands reported revenue of $2.54 billion for the latest quarter, a 143% increase compared to the same period last year. Over the first six months, the company announced a total revenue of $3.40 billion, representing a 154.7% rise from the previous year's total of $1.34 billion.
This surge in revenue resulted in a net income of $312 million, a significant recovery from a loss of $290 million in 2022. For the first half of the year, net income amounted to $513 million, leading to earnings per share of $0.46. This figure exceeded market expectations, with Zacks’ consensus estimate being $0.45 per share.
Sands' adjusted property EBITDA reached $973 million for the quarter, marking the company’s strongest performance since 2019. Most of Sands' revenue is generated from its operations in Macau, which have significantly benefited from the lifting of zero-Covid restrictions in China and the resulting rebound in tourism from the mainland.
“We were pleased to see the robust recovery in travel and tourism spending underway in both Macao and Singapore progress during the quarter,” stated Sands' chairman and CEO, Robert G. Goldstein. “We remain enthusiastic about the opportunity to welcome more guests back to our properties throughout the remainder of 2023 and in the years ahead.”
According to Sands, visitor numbers in Macau have returned to 70% of 2019 levels. In June, Macau welcomed 2,209,662 visitors, marking a 480% year-on-year increase. Sands’ Macau properties generated $1.63 billion in revenue for the three-month period ending June 30, a 335% increase from the $374 million reported last year. The company’s Singapore casino, Marina Bay Sands, saw a revenue increase of 36%, bringing in $925 million, while the Venetian Macao generated $653 million during the same quarter.
During the earnings call, Sands' president and COO, Patrick Dumont, shared insights about the future of the Singapore casino market, expressing strong confidence in its potential. “First off, we have very strong feelings about the future success of Singapore,” he commented, noting that the quarter’s financial results and customer profiles influenced their optimistic outlook. The company plans to invest in Marina Bay Sands to enhance its capacity and is currently in discussions with the government regarding the project's final form.
Although Macau is experiencing a recovery, revenue in the region remains below the business' Q4 2019 total of $2.24 billion, indicating that the market has yet to return to pre-Covid levels. Sands also acknowledged the ongoing weakness in the mainland Chinese economy. However, Goldstein expressed positivity about market trends, asserting that Macau would likely strengthen further. “Our story is pretty simple, more visitation, especially more base mass, more penetration into China will yield bigger GGR and we’ll be a huge recipient of that,” he added. He called summer a crucial indicator for how quickly the region might approach revenue levels of $26 billion to $32 billion.
Total operating costs for Sands reached $2.01 billion for the quarter and $3.75 billion for the half-year period. While most costs remained stable year-on-year, resort operations costs nearly doubled to $1.58 billion from $842 million. Development costs also increased, totaling $54 million, compared to the $22 million invested in 2022. Quarterly costs rose nearly 10% from the $1.74 billion spent in Q1. Dumont emphasized that to succeed moving forward, the company needs to enhance its customer profile, stating, “There are some things we need to overcome through higher-value customers, through pricing and through volumes.”
The costs associated with Sands' debt also increased during the quarter, rising to $210 million from $162 million the previous year. The company incurred substantial debt during the Covid-19 pandemic to maintain operations, and as of June 30, 2023, total debt stood at $14.70 billion.
Addressing Sands' digital strategy, Dumont noted that while the company is working on a digital offering, it is still in early development stages. He emphasized that the company intends to build its in-house digital capabilities rather than opt for off-the-shelf solutions, stating, “We’re not buyers, we’re builders.” Dumont reaffirmed the long-term commitment to maintaining regulatory standards and selectively partnering with others when it aligns with their goals.
