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Howard Stutz

Las Vegas Sands earnings miss expectations, but revenue rises

26 July 2012

Las Vegas Sands Corp. didn't dance around bad news over the company's second-quarter earnings.

"Our quarterly results did not meet my expectations," company Chairman Sheldon Adelson said Wednesday.

The casino operator blamed lower hold on table games play, higher provisions for accounts receivable at the Marina Bay Sands in Singapore, and unspecified elevated legal expenses for a 34.6 percent decline in net income and a 35.6 percent decrease in earnings per share for the three-month period ended June 30.

Still, Las Vegas Sands, which operates casinos on the Strip, and in Macau, Singapore and Pennsylvania, had net revenues of $2.58 billion in the quarter, an increase of 10.1 percent compared with $2.35 billion in the second quarter of 2011.

"Our financial results reflected solid revenue growth overall and significant cash flow in both Macau and Singapore, as well as the continued steady execution of our Cotai Strip development plan in Macau," Adelson said.

The company's net income for the quarter was $240.6 million, compared with $367.6 million in the second quarter of 2011. Earnings per share were 29 cents, compared with 45 cents in the prior year quarter. Analysts polled by Yahoo Finance expected earnings of 61 cents per share.

The earnings miss was not met well by the investment community. Shares of Las Vegas Sands, which fell 88 cents or 2.29 percent to close at $37.51 on the New York Stock Exchange Wednesday, fell another 5 percent in after-hours trading.

"Generally, performance was poor but liquidity remains strong," KDP Investment Advisors gaming analyst Barbara Cappaert said in a research note. "We do think that event risk remains high as market concerns about a slowdown in [Las Vegas and Macau] have translated into weak stock performance for Las Vegas Sands shares."

In Macau, where in April Las Vegas Sands opened the first phase of the $4.4 billion Sands Cotai Central development to go along the company's other three hotel-casinos, total revenues in the quarter were $1.48 billion, an increase of 22.3 percent compared with $1.21 billion a year ago.

Net income in Macau, however, fell 40 percent to $160.5 million, mainly because of a $100.8 million noncash impairment loss on two Cotai development parcels, lower VIP table game hold, and increased pre-opening expenses related to Cotai Central.

Macau's revenue increase helped offset declines the company's other two key markets, Singapore and Las Vegas.

In Singapore, total revenues at the Marina Bay Sands fell 5.8 percent, to $694.8 million. The figure includes 7.5 percent decrease in casino revenues, which were hurt by lower table game hold.

"Looking ahead, as Singapore's complementary business and leisure tourism offerings continue to expand, we are confident that Marina Bay Sands will continue to generate outstanding returns for our company," Adelson said.

Total revenues on the Strip from The Venetian and Palazzo fell 1.6 percent to $327.3 million in the quarter. Hold percentage was lower compared to a year ago, which lowered the company's results.

"Baccarat play was up, but other table games play was down, reflecting overall market conditions in Las Vegas," Adelson said.