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Best of Howard Stutz

Gaming Guru

Howard Stutz

Profits rise for Las Vegas Sands with revenues topping $11 billion in 2012

31 January 2013

LAS VEGAS -- An 11 percent decline in revenues produced by Las Vegas Sands Corp.'s Singapore hotel-casino was one of the few blips on the casino giant's fourth-quarter balance sheet.

Not in the eyes of Rob Goldstein, Las Vegas Sands president of global gaming operations.

The Marina Bay Sands produced more than $400 million of cash flow during the three-month period ended Dec. 31.

"A $400 million quarter is a damn good quarter," Goldstein said during a conference call with analysts Wednesday.

No one was arguing with him.

Las Vegas Sands grew profits in the fourth quarter while cracking the $11 billion mark for revenues for 2012.

The casino operator said its net income was $434.8 million in the quarter, a 35.8 percent increase from $320.1 million in the same quarter a year ago.

The profits translated into earnings per share of 53 cents, a 35.9 percent increase from 39 cents per share in the fourth quarter of 2011. Analysts polled by Thomson Reuters projected earnings of 59 cents.

The company's net revenue in the fourth quarter was $3.08 billion, an increase of 21.3 percent from $2.54 billion in the fourth quarter of 2011.

For all 2012, net revenue grew 18.3 percent to $11.13 billion, compared with $9.41 billion in 2011.

Macau was a primary reason for the company's success.

Las Vegas Sands operates three resorts and the nine-month-old Sands Cotai Central complex in the Chinese gaming market. During the fourth quarter, the company's Macau casinos produced revenues of $1.97 billion, a 48 percent increase from 2011.

For all of 2012, Macau produced $6.4 billion in revenue for Las Vegas Sands, almost 58 percent of the company's overall total.

KDP Investment Advisors gaming Barbara Cappaert said some on Wall Street expected the Macau market to soften due to a slowing in the Chinese economy.

"Clearly, China did not receive the memo," she told investors.

During the conference call, Las Vegas Sands executives talked glowingly of the company's newest venture in Macau, the $2.6 billion Paris-themed Parisian, which will include a replica of the Eiffel Tower. The development is expected to open in 2015.

"It will be gangbusters," Las Vegas Sands Chairman Sheldon Adelson said.

Las Vegas Sands returned $3.1 billion to shareholders in 2012 through dividends.

Adelson, who made international headlines last year by donating more than $100 million of his own money to failed Republican presidential candidates and other GOP causes, controls 52 percent of Las Vegas Sands, benefiting greatly from the dividends.

"As the company's largest shareholder, I naturally have a vested interest in pursuing only the highest value projects that will maximize shareholder returns," Adelson said. "Our interests are aligned."

In Las Vegas, the company's Venetian and Palazzo casinos saw revenues decline 31 percent in the fourth quarter to $308.3 million. For the year, the properties produced $1.38 billion in revenues, a 4 percent increase.

During the conference call, Adelson tried to quash rumors the company was looking to sell its Sands Bethlehem property in Pennsylvania, which grew revenues almost 15 percent in 2012.

He said the company doesn't want to "liquidate or sell" assets.

"Someone is going to learn to make the keys to our kingdom," Adelson said.

Adelson also said the company was "on the ground" in Japan, Korea and Vietnam, looking for gaming expansion opportunities internationally.

He said Las Vegas Sands was no longer interested in expanding in the United States because the company's integrated resort model would not fit in many American jurisdictions that favor smaller casinos or riverboats.

"We are of the opinion that a lot of U.S. markets oversaturated or are about to be oversaturated," Adelson said.