Form 8-K LAS VEGAS SANDS CORP For: Nov 03

Press Release

Mr. Sheldon G. Adelson, chairman and chief executive officer, said, “We are pleased to have continued to execute our strategic objectives this quarter and to have delivered a solid operating performance in each of our markets, which enabled us to generate $1.14 billion in adjusted property EBITDA for the quarter, an increase of 8.6% compared to the third quarter of 2015. Importantly, the operating environment in Macao continued to improve during the quarter, particularly in the mass segment, as the Macao market exhibited growth in total gaming revenue, overnight visitation, and length of stay. Our Macao portfolio experienced strong visitation and enjoyed the benefits of our market-leading hotel, retail and entertainment offerings while generating $628.5 million in adjusted property EBITDA, an increase of 15.3% over the same quarter last year.

“The Parisian Macao, our latest Integrated Resort on the Cotai Strip in Macao, opened on September 13, 2016, expanding our hotel, group meeting retail and entertainment offerings, and contributing more than $19 million of adjusted property EBITDA (at an EBITDA margin of 28.0%) during its first 18 days of operation. We are pleased to have had the opportunity to invest approximately $13 billion in Macao, contributing to Macao’s diversification and appeal as a business and leisure tourism destination. We remain confident that our market-leading Cotai Strip properties will continue to provide the economic benefits of diversification to Macao, help attract greater numbers of business and leisure travelers, and provide both Macao and our company an outstanding and diversified platform for growth in the years ahead.

“We remain steadfast in our focus on the consistent execution of our proven global growth strategy, which leverages the power of our unique convention-based Integrated Resort business model. Our business model generates the industry’s most diversified set of cash flows and delivers the industry’s highest revenue and profit from non-gaming segments, while bringing unsurpassed economic and diversification benefits to the regions in which we operate. We remain confident in our ability to further extend our global leadership position and deliver strong growth in the future.

“The prudent management of our cash flow, including the ability to continue the return of capital to shareholders while maintaining a strong balance sheet and ample liquidity to invest in future growth opportunities, remains a cornerstone of our strategy. Accordingly, I am extremely pleased to announce that the company’s Board of Directors has increased the company’s recurring common stock dividend for the 2017 calendar year to $2.92 per share, or $0.73 per quarter.”

The company paid a recurring quarterly dividend of $0.72 per common share during the quarter. The company announced that its next recurring quarterly dividend of $0.72 per common share will be paid on December 30, 2016, to Las Vegas Sands shareholders of record on December 21, 2016.

Marina Bay Sands in Singapore continues to attract visitors from across the region to Singapore. Consistent mass win-per-day of $4.8 million and strength in non-gaming revenues, including a 10.4% increase in RevPAR, and higher win percentage in the rolling gaming segment contributed to an adjusted property EBITDA performance of $390.7 million, up 0.3% compared to the same quarter last year.

At The Venetian Las Vegas and The Palazzo, including the Sands Expo and Convention Center, an 8.9% year-over-year increase in RevPAR to $232, and growth in slot volumes and non-Baccarat table win, drove a 6.9% increase in adjusted property EBITDA during the quarter.

Company-Wide Operating Results

Net revenue for the third quarter of 2016 increased 2.6% to $2.97 billion, compared to $2.89 billion in the third quarter of 2015. Net income decreased 2.1% to $605.5 million in the third quarter of 2016, compared to $618.2 million in the year-ago quarter.

On a GAAP (accounting principles generally accepted in the United States of America) basis, operating income in the third quarter of 2016 decreased 2.6% to $719.6 million, compared to $739.1 million in the third quarter of 2015. The modest decrease in operating income was a result of higher pre-opening and depreciation and amortization expenses during the third quarter of 2016, partially offset by stronger results across the company’s Macao and Las Vegas property portfolios. Consolidated adjusted property EBITDA (a non-GAAP measure) of $1.14 billion increased 8.6% in the third quarter of 2016, compared to the year-ago quarter. On a hold-normalized basis, adjusted property EBITDA decreased 2.6% to $1.06 billion in the third quarter of 2016.

On a GAAP basis, net income attributable to Las Vegas Sands in the third quarter of 2016 decreased 1.2% to $513.4 million, compared to $519.4 million in the third quarter of 2015, while diluted earnings per share in the third quarter of 2016 of $0.65, was unchanged compared to the prior-year quarter. The decrease in net income attributable to Las Vegas Sands reflected the decline in operating income described above, partially offset by a decrease in net income attributable to noncontrolling interests and a slightly lower tax expense.

Adjusted net income (a non-GAAP measure) increased 8.0% to $572.2 million, or $0.72 per diluted share, compared to $529.8 million, or $0.66 per diluted share, in the third quarter of 2015.

Sands China Ltd. Consolidated Financial Results

On a GAAP basis, total net revenues for Sands China Ltd. (SCL) increased 3.6% to $1.72 billion in the third quarter of 2016, compared to $1.66 billion in the third quarter of 2015. Net income for SCL decreased 5.5% to $324.3 million in the third quarter of 2016, compared to $343.2 million in the third quarter of 2015.

The Venetian Macao Third Quarter Operating Results

The property generated revenue of $772.5 million and adjusted property EBITDA of $314.8 million in the third quarter, with an adjusted property EBITDA margin of 40.8%. Non-Rolling Chip drop was $1.71 billion for the quarter, with a Non-Rolling Chip win percentage of 25.6%. Rolling Chip volume during the quarter was essentially flat at $6.87 billion. Rolling Chip win percentage was 3.75% in the quarter, above the 3.08% experienced in the prior-year quarter. Slot handle was $957.5 million.

The following table summarizes the key operating results for The Venetian Macao for the third quarter of 2016 compared to the third quarter of 2015:

 

 

(1)	This compares to our expected Rolling Chip win percentage of 2.7% to 3.0% (calculated before discounts and commissions).

Sands Cotai Central Third Quarter Operating Results

Revenue and adjusted property EBITDA for the third quarter of 2016 at Sands Cotai Central were $517.5 million and $176.6 million, respectively, resulting in an adjusted property EBITDA margin of 34.1%.

Non-Rolling Chip drop was $1.56 billion in the third quarter, with a Non-Rolling Chip win percentage of 20.2%. Rolling Chip volume was $2.82 billion for the quarter, with a Rolling Chip win percentage of 4.16%. Slot handle was $1.48 billion for the quarter. Hotel occupancy was 89.2% with an ADR of $145.

The following table summarizes our key operating results for Sands Cotai Central for the third quarter of 2016 compared to the third quarter of 2015:

 

(1)	This compares to our expected Rolling Chip win percentage of 2.7% to 3.0% (calculated before discounts and commissions).

The Parisian Macao Third Quarter Operating Results

The Parisian Macao opened on September 13, 2016, and the third quarter results reflect its first 18 days of operation. Revenue and adjusted property EBITDA at The Parisian Macao were $68.6 million and $19.2 million, respectively, resulting in an adjusted property EBITDA margin of 28.0%.

Non-Rolling Chip drop was $189.8 million with a Non-Rolling Chip win percentage of 19.9%. Rolling Chip volume was $748.4 million with a Rolling Chip win percentage of 3.01%. Slot handle was $171.2 million and hotel occupancy was 87.5% with an ADR of $138.

The following table summarizes our key operating results for The Parisian Macao in the third quarter of 2016:

 

		18-Day Period Ended
The Parisian Macao Operations		September 30,
(Dollars in millions)		2016
Revenues:
Casino		$	58.1
Rooms			5.8
Food and Beverage			3.5
Mall			5.4
Convention, Retail and Other			1.1
Less - Promotional Allowances			(5.3	)
Net Revenues		$	68.6
Adjusted Property EBITDA		$	19.2
EBITDA Margin %			28.0%
Gaming Statistics
(Dollars in millions)
Rolling Chip Volume		$	748.4
Rolling Chip Win %(1)			3.01%
Non-Rolling Chip Drop		$	189.8
Non-Rolling Chip Win %			19.9%
Slot Handle		$	171.2
Slot Hold %			5.2%
Hotel Statistics
Occupancy %			87.5%
Average Daily Rate (ADR)		$	138
Revenue per Available Room (RevPAR)		$	121

 

(1)	This compares to our expected Rolling Chip win percentage of 2.7% to 3.0% (calculated before discounts and commissions).

 

Four Seasons Hotel Macao and Plaza Casino Third Quarter Operating Results

The Four Seasons Hotel Macao and Plaza Casino generated revenue of $161.2 million and adjusted property EBITDA of $62.5 million in the third quarter of 2016. Non-Rolling Chip drop was $269.9 million, with a Non-Rolling Chip win percentage of 23.8%. Rolling Chip volume was $2.01 billion for the quarter. Rolling Chip win percentage was 3.67% in the quarter, above the 3.13% experienced in the prior-year quarter. Slot handle was $113.1 million during the quarter.

The following table summarizes our key operating results for the Four Seasons Hotel Macao and Plaza Casino for the third quarter of 2016 compared to the third quarter of 2015:

 

 

(1)	This compares to our expected Rolling Chip win percentage of 2.7% to 3.0% (calculated before discounts and commissions).

 

Sands Macao Third Quarter Operating Results

Sands Macao’s revenue was $167.4 million and adjusted property EBITDA was $45.7 million. Non-Rolling Chip drop was $670.9 million during the quarter, while slot handle was $664.9 million. Rolling Chip volume was $1.42 billion for the quarter. The property realized 2.03% win on Rolling Chip volume during the quarter, below the 3.57% generated in the year-ago quarter.

The following table summarizes our key operating results for Sands Macao for the third quarter of 2016 compared to the third quarter of 2015:

(1)	This compares to our expected Rolling Chip win percentage of 2.7% to 3.0% (calculated before discounts and commissions).

 

Marina Bay Sands Third Quarter Operating Results

Marina Bay Sands generated revenue of $762.6 million and adjusted property EBITDA of $390.7 million.

Rolling Chip win percentage of 3.25% in the third quarter of 2016 was above the expected range and the 2.61% achieved in the third quarter of 2015. Rolling Chip volume was $7.26 billion for the quarter.

Non-Rolling Chip drop was $985.0 million during the quarter, with a Non-Rolling Chip win percentage of 28.8%. Slot handle increased 1.4% to $3.46 billion for the quarter compared to the year-ago quarter. Total mass win-per-day during the quarter was $4.8 million, consistent with the same quarter last year.

ADR was $475 during the quarter, while occupancy increased to 98.3%, resulting in a RevPAR increase of 10.4% compared to the same quarter last year.

The following table summarizes our key operating results for Marina Bay Sands for the third quarter of 2016 compared to the third quarter of 2015:

 

 

(1)	This compares to our expected Rolling Chip win percentage of 2.7% to 3.0% (calculated before discounts and commissions).

Las Vegas Operations Third Quarter Operating Results

Revenue and adjusted property EBITDA at The Venetian Las Vegas and The Palazzo, including the Sands Expo and Convention Center, were $383.2 million and $85.3 million, respectively, for the quarter. RevPAR increased 8.9% year-over-year to $232 in the quarter, reflecting an 8.1% increase in ADR to $240 and a 0.5 percentage point increase in occupancy to 96.5%.  Table games drop decreased 29.1% in the quarter to $430.8 million, reflecting softer play in the Baccarat segment, while slot handle increased 6.8% to $633.8 million.

The following table summarizes our key operating results for our Las Vegas operations for the third quarter of 2016 compared to the third quarter of 2015:

 

(1)	This compares to our expected Baccarat win percentage of 21.0% to 29.0% and our expected non-Baccarat win percentage of 16.0% to 20.0% (calculated before discounts).

Sands Bethlehem Third Quarter Operating Results

Revenue for Sands Bethlehem in Pennsylvania increased 1.6% to $146.3 million and adjusted property EBITDA also increased 1.6% to $38.1 million for the quarter. Table games drop decreased 2.4% to $283.7 million for the quarter, while table games win percentage was 19.6%, above the 18.7% realized in the third quarter of 2015. Slot handle increased 4.9% year-over-year to $1.17 billion for the quarter, with a slot hold percentage of 6.7%.

The following table summarizes our key operating results for Sands Bethlehem for the third quarter of 2016 compared to the third quarter of 2015:

 

 

(1)	This compares to our expected table games win percentage of 14.0% to 16.0% (calculated before discounts).

Asian Retail Mall Operations

Gross revenue from tenants in the company’s retail malls on Macao’s Cotai Strip (The Venetian Macao, Four Seasons Macao, Sands Cotai Central and The Parisian Macao) and Marina Bay Sands in Singapore was $146.2 million for the third quarter of 2016, an increase of 5.0% compared to the third quarter of 2015. Operating profit derived from these retail mall assets increased 3.8% year-over-year to $129.8 million.

 

		For The Three Months Ended September 30, 2016																				TTM September 30, 2016
(Dollars in millions except per square foot data)		Gross Revenue(1)				Operating Profit				Operating Profit Margin				Gross Leasable Area (sq. ft.)				Occupancy % at End of Period				Tenant Sales Per Sq. Ft.(2)
Shoppes at Venetian		$	52.1			$	46.9				90.0%				781,304				97.1%			$	1,359
Shoppes at Four Seasons
Luxury Retail			21.5				20.3				94.4%				142,562				100.0%				4,135
Other Stores			9.8				8.9				90.8%				116,848				93.9%				1,440
Total			31.3				29.2				93.3%				259,410				97.3%				2,971
Shoppes at Cotai Central(3)			15.1				13.0				86.1%				407,102				98.2%				868
Shoppes at Parisian(4)			5.4				3.6				66.7%				299,458				92.6%				N/A
Total Cotai Strip in Macao			103.9				92.7				89.2%				1,747,274				96.6%				1,565
The Shoppes at Marina Bay Sands			42.3				37.1				87.7%				618,649				97.2%				1,396
Total		$	146.2			$	129.8				88.8%				2,365,923				96.7%			$	1,515

 

(1)	Gross revenue figures are net of intersegment revenue eliminations.

(2)	Tenant sales per square foot reflect sales from tenants only after the tenant has been open for a period of 12 months.

(3)	At completion of all phases, the Shoppes at Cotai Central will feature up to 600,000 square feet of gross leasable area.

(4)	The Shoppes at Parisian opened in September 2016.

Other Factors Affecting Earnings

Ferry Operations and Other, which is principally comprised of our CotaiJet ferry operation, reflected adjusted property EBITDA of $9.7 million during the quarter, compared to $8.4 million in the third quarter of 2015.

Pre-opening expense was $85.9 million in the third quarter of 2016, primarily related to The Parisian Macao.

Depreciation and amortization expense was $277.8 million in the third quarter of 2016, compared to $247.7 million in the third quarter of 2015.

Interest expense, net of amounts capitalized, was $65.2 million for the third quarter of 2016, compared to $67.0 million in the prior-year quarter. Capitalized interest was $11.4 million during the third quarter of 2016, compared to $7.1 million during the third quarter of 2015. Our weighted average borrowing cost in the third quarter of 2016 was approximately 2.9%.

Corporate expense was $39.1 million in the third quarter of 2016, compared to $37.5 million in the third quarter of 2015.

The company’s effective income tax rate for the third quarter of 2016 was 10.3% compared to 10.5% in the prior-year quarter. The tax rate is primarily driven by a provision for the earnings from Marina Bay Sands at the 17% Singapore income tax rate.

The net income attributable to noncontrolling interests during the third quarter of 2016 of $92.2 million was principally related to Sands China Ltd.

Balance Sheet Items

Unrestricted cash balances as of September 30, 2016 were $1.79 billion.

As of September 30, 2016, total debt outstanding, including the current portion and net of deferred financing costs and original issue discount, was $9.76 billion.

Capital Expenditures

Capital expenditures during the third quarter totaled $397.1 million, including construction, development and maintenance activities of $348.1 million in Macao (principally for The Parisian Macao), $21.3 million in Las Vegas, $20.5 million at Marina Bay Sands, and $7.2 million at Sands Bethlehem.

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Conference Call Information

The company will host a conference call to discuss the company's results on Thursday, November 3, 2016 at 1:30 p.m. Pacific Time. Interested parties may listen to the conference call through a webcast available on the company’s website at www.sands.com.

Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the company’s control, which may cause material differences in actual results, performance or other expectations. These factors include, but are not limited to, general economic conditions, competition, new development, construction and ventures, substantial leverage and debt service, government regulation, tax law changes, legalization of gaming, interest rates, future terrorist acts, influenza, insurance, gaming promoters, risks relating to our gaming licenses, certificate and subconcession, infrastructure in Macao, our ability to meet certain development deadlines, our subsidiaries’ ability to make distribution payments to us, and other factors detailed in the reports filed by Las Vegas Sands Corp. with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Las Vegas Sands Corp. assumes no obligation to update such information.

About Las Vegas Sands

Las Vegas Sands (NYSE: LVS) is the world's leading developer and operator of Integrated Resorts. Our collection of Integrated Resorts in Asia and the United States feature state-of-the-art convention and exhibition facilities, premium accommodations, world-class gaming and entertainment, destination retail and dining including celebrity chef restaurants and many other amenities.

LVS is dedicated to being a good corporate citizen, anchored by the core tenets of delivering a great working environment for nearly 50,000 employees worldwide, driving impact through its Sands Cares corporate citizenship program and leading innovation with the company’s award-winning Sands ECO360° global sustainability program. To learn more, please visit www.sands.com.

     

Investment Community:	Daniel Briggs	(702) 414-1221
Media:	Ron Reese	(702) 414-3607

Within the Company’s third quarter 2016 press release, the Company makes reference to certain non-GAAP financial measures that supplement the Company’s consolidated financial information prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) including “adjusted net income,” “adjusted earnings per diluted share,” and “consolidated adjusted property EBITDA,” which have directly comparable GAAP financial measures along with “adjusted property EBITDA margin,” “hold-normalized adjusted property EBITDA,” “hold-normalized adjusted property EBITDA margin,” “hold-normalized adjusted net income,” and “hold-normalized adjusted earnings per diluted share.” The Company believes these measures represent important internal measures of financial performance. Whenever such information is presented, the Company has complied with the provisions of the rules under Regulation G, Item 10(e) from Regulation S-K and Item 2.02 of Form 8-K. Set forth in the financial schedules accompanying this release are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The non-GAAP financial measure disclosure by the Company has limitations and should not be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP. The definitions of our non-GAAP financial measures and the specific reasons why the Company’s management believes that the presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition, results of operations and cash flows are presented below.

The following non-GAAP financial measures are used by management, as well as industry analysts, to evaluate the Company’s operations and operating performance. These non-GAAP financial measures are presented so that investors have the same financial data that management uses in evaluating financial performance with the belief that it will assist the investment community in properly assessing the underlying financial performance of the Company on a year-over-year and a quarter sequential basis.

Adjusted net income, which is a non-GAAP financial measure, excludes certain non-recurring corporate expenses, pre-opening expense, development expense, gain or loss on disposal of assets, loss on modification or early retirement of debt and fair value adjustment of forward contracts, attributable to Las Vegas Sands, net of income tax. Adjusted net income and adjusted earnings per diluted share are presented as supplemental disclosures as management believes they are (1) each widely used measures of performance by industry analysts and investors and (2) a principal basis for valuation of gaming companies, as these non-GAAP measures are considered by many as an alternative measure on which to base expectations for future results. These measures also form the basis of certain internal management performance expectations.

Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is net income before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal of assets, interest, other income or expense, gain or loss on modification or early retirement of debt and income taxes. Management utilizes consolidated adjusted property EBITDA to compare the operating profitability of its operations with those of its competitors, as well as a basis for determining certain incentive compensation. Gaming companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific casino properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. The Company has significant uses of cash flow, including capital expenditures, dividend payments, interest payments and debt principal repayments, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, consolidated adjusted property EBITDA as presented by Las Vegas Sands Corp. may not be directly comparable to similarly titled measures presented by other companies.

Hold-normalized adjusted property EBITDA, a supplemental non-GAAP financial measure, that, in addition to the aforementioned reasons for the presentation of consolidated adjusted property EBITDA, is presented to adjust for the impact of certain variances in table games’ win percentages, which can vary from period to period. Hold-normalized adjusted property EBITDA is based on applying a Rolling Chip win percentage of 2.85% to the Rolling Chip volume for the quarter if the actual win percentage is outside the expected range of 2.7% to 3.0% for our Macao and Singapore properties, and applying a win percentage of 25.0% for Baccarat and 18.0% for non-Baccarat games to the respective table games drops for the quarter if the actual win percentages are outside the expected ranges of 21.0% to 29.0% for Baccarat and 16.0% to 20.0% for non-Baccarat at our Las Vegas properties. No hold adjustments are made for Sands Bethlehem. We do not present adjustments for Non-Rolling Chip drop for our table games play at our Macao and Singapore properties, nor for slots at any of our properties. Hold-normalized adjusted property EBITDA is also adjusted for the estimated gaming taxes, commissions paid to third parties on the incremental win, bad debt expense, discounts and other incentives that would have been incurred when applying the win percentages noted above to the respective gaming volumes. The hold-normalized adjusted property EBITDA measure presents a consistent measure for evaluating the operating performance of our properties from period to period.

Hold-normalized adjusted net income and hold-normalized adjusted earnings per diluted share are additional supplemental non-GAAP financial measures that, in addition to the aforementioned reasons for the presentation of adjusted net income and adjusted earnings per diluted share, are presented to adjust for the impact of certain variances in table games’ win percentages, which can vary from period to period.

The Company may also present the above items on a constant currency basis. This information is a non-GAAP financial measure that is calculated by translating current quarter local currency amounts to U.S. dollars based on prior period exchange rates. These amounts are compared to the prior period to derive non-GAAP constant-currency growth/decline. Management considers non-GAAP constant-currency growth/decline to be a useful metric to investors and management as it allows a more direct comparison of current performance to historical performance.

The Company also makes reference to adjusted property EBITDA margin and hold-normalized adjusted property EBITDA margin, which are calculated using the aforementioned non-GAAP financial measures.