Las Vegas Sands (LVS)

Q2 2011 Earnings Call

July 26, 2011 4:30 pm ET

Executives

Robert Goldstein - Executive Vice President and President of Global Gaming Operations

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Sheldon Adelson - Chairman, Chief Executive Officer, Treasurer, Member of Nominating & Governance Committee, Chairman of Las Vegas Sands LLC, Chairman of Sands China Ltd and Chief Executive Officer of Las Vegas Sands LLC

K. Kay - Chief Financial Officer and Executive Vice President

Michael Leven - President, Chief Operating Officer, Secretary, Director, Chairman of Advisory Committee, Acting Chief Executive Officer of Sands China Ltd, President of Las Vegas Sands LLC and Chief Operating Officer of Las Vegas Sands LLC

Daniel Briggs - Investor Relations

Analysts

Shaun Kelley - BofA Merrill Lynch

Jon Oh - Credit Agricole Securities (USA) Inc.

William Lerner - Deutsche Bank Securities

Felicia Hendrix - Barclays Capital

Janet Brashear - Sanford C. Bernstein & Co., Inc.

Joseph Greff - JP Morgan Chase & Co

Mark Strawn - Morgan Stanley

Robin Farley - UBS Investment Bank

Harry Curtis - Nomura Securities Co. Ltd.

Presentation

Operator

Good afternoon. My name is Ally, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Second Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Dan Briggs. Sir, you may begin your call.

Daniel Briggs

Thank you, Ally. Before I turn the call over to Mr. Adelson, let me remind you that today's conference call will contain forward-looking statements that we are making under the Safe Harbor provisions of Federal Securities Laws. The company's actual results could differ materially from the anticipated results in those forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for a discussion of risks that may affect our results.

In addition, we may discuss adjusted net income, adjusted diluted EPS and adjusted property EBITDA, which are non-GAAP measures. A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release.

Please note that this presentation is being recorded. With that, let me please introduce our Chairman, Mr. Sheldon G. Adelson.

Sheldon Adelson

Thank you, Dan, and good afternoon, everyone. On behalf of our management team and our Board of Directors who are here with me today, I would like to thank you for joining us. In an effort to get to more of your questions, I'll provide a brief overview of our results in the quarter and then turn it over to Mike, who will provide some quick operational updates. We will then move to the Q&A part of the call. So let's get started.

I want to begin by saying that across every part of our operations, I cannot be more proud of the team members and management teams who helped us achieve this historic quarter, and these results are truly historic. So let me spend just a minute reflecting on what the company achieved over this past quarter.

First, the company record $2.35 billion in revenue, a 47% increase compared to $1.6 billion during the same quarter 1 year ago. Second, the company record and to the best of our knowledge, an industry record, $902 million in EBITDA. This is an increase of 90% over last year's $473 million of EBITDA. Finally, the company produced adjusted earnings per diluted share this quarter of $0.54. This is compared to last year's second quarter, which produced adjusted earnings per diluted share of $0.17, and what I understand is also an estimate -- a consensus estimate of $0.43.

More broadly speaking, our growth curve has continued unabated. We have shown steady consistent growth, and in fact, these results represent the eighth quarter in a row that we have increased our EBITDA from one quarter through the next. As the only operator with a presence in the world's 2 most lucrative gaming markets, Macau and Singapore, we see absolutely no reason, no catalyst at hand which would change this upward trend.

Let me now give some commentary on our specific property operations. I'll start in Singapore, where Marina Bay Sands recorded a whopping $405 million in adjusted property EBITDA. While I believe the ramp-up process is still ongoing in Singapore, Marina Bay Sands generated net revenue of $738 million and an EBITDA margin -- are you listening? -- 55%. Just want to make sure you heard it.

Rolling Chip volume, the VIP business, was a record $12.2 billion. Non-Rolling Chip drop mass market was $1.1 billion, and slot handle reached $2.38 billion. Our combined mass win was nearly $4.2 million per day versus $3.7 million per day during the first quarter of 2011. So that's sequential. That's an increase of 14% quarter-over-quarter, which we think is pretty healthy as we used to like to say in Boston, how about them apples?

The property also saw its hotel Average Daily Rate increased to USD $295, while occupancy rose to 90.8%. Demand is quickly starting to outpace supply at Marina Bay Sands, and ADR and occupancy are continuing to rise. It's important to point out that the property's non-gaming amenities, like the hotel, are very valuable contributors to its overall profitability, especially with the profit margins they were able to deliver.

Now I'm being advised that I need to help manage all of your expectations as it relates to our business in Singapore, something I haven't been very good at in the past. So I'll leave you with one simple conservative statement, which is this. Now that we have entered our second year of operations, it is increasingly clear that Marina Bay Sands is becoming the most successful integrated resort in the history of the hospitality, gaming and entertainment industry. So with what I take as an expectations managing remark behind those, let's turn to our results in Macau.

The Macau properties operated by our majority-owned subsidiary, Sands China Ltd., also enjoyed a very strong quarter. Total net revenue for Sands China was $1.2 billion. As you know, we place an emphasis on EBITDA and EBITDA margin, and we continue to widely lead the market in both categories. Macau property operations adjusted EBITDA was a record $392 million, an increase of 27.5% versus the same quarter last year, while adjusted property EBITDA margin was 33% again, a leading figure.

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