Macau Drags Las Vegas Sands to Profit Miss

Las Vegas SandsLVS widely missed first-quarter earnings estimates after the market close Wednesday because of disappointing Macau casino results, pointing to the competitive nature of the world's largest gambling market.

While many investors had been fretting about the company's Las Vegas properties because of the weak U.S. consumer, the Macau results surprised investors.

The stock fell 7.2% to $70.75 in recent after-hours trading Wednesday.

"Macau looks awful. Vegas does look better than I would have thought, but they still missed on every property metric," says a buy-side analyst who follows the casino sector.

Overall, Las Vegas Sands reported adjusted net income of $23.6 million in the quarter, or 7 cents a share, compared with profit of $114.6 million, or 32 cents a share a year earlier. Management blamed increased operating costs and interest expenses for much of the profit decline.

Revenue rose 72% from a year ago to $1.08 billion.

The bottom- and top-line numbers were worse than analyst expectations for adjusted EPS of 36 cents on $1.24 billion in revenue, according to Thomson Financial.

On a property basis, the Venetian Macau contributed $110.3 million of adjusted cash flow (earnings before interest, taxes, depreciation and amortization). Analysts were expecting $137 million of EBITDA at the property, which opened in August last year, according StreetAccount. The property's "whisper number," which is the unofficial estimate passed from sell-side analysts to money managers on Wall Street, was $120 million, according to the buy-side source.