Las Vegas Sands' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Las Vegas Sands (LVS)

Q1 2012 Earnings Call

April 25, 2012 4:30 pm ET

Executives

Daniel J. Briggs - Vice President of Investor Relations

Sheldon Gary Adelson - Chairman, Chief Executive Officer, Treasurer, Chairman of Las Vegas Sands Llc, Chairman of Sands China Ltd and Chief Executive Officer of Las Vegas Sands Llc

Kenneth J. Kay - Chief Financial Officer and Executive Vice President

Michael Alan 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

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

Analysts

Joseph Greff - JP Morgan Chase & Co, Research Division

Shaun C. Kelley - BofA Merrill Lynch, Research Division

Mark Strawn - Morgan Stanley, Research Division

Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division

Steven E. Kent - Goldman Sachs Group Inc., Research Division

Carlo Santarelli - Deutsche Bank AG, Research Division

Felicia R. Hendrix - Barclays Capital, Research Division

Robin M. Farley - UBS Investment Bank, Research Division

Presentation

Operator

Good afternoon. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Las Vegas Sands Corp. First Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Mr. Daniel Briggs, Vice President of Investor Relations. Mr. Briggs, you may begin your conference.

Daniel J. Briggs

Thank you, operator. 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're 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 Gary Adelson

Thank you all, for joining us today. Before we go to Q&A, let me make some brief opening remarks. I want to apologize in advance if I -- if you hear some paper rattling because I've got several papers that people have given me. I'm trying to take information from the paper.

We're very pleased with the overall financial results for the quarter. As you saw in the press release, we have set an all-time industry-wide record. No company in our industry has ever achieved $1 billion EBITDA for a quarter. We're very proud of that, and we hope it will be the first of many -- well, we know it's the first of many records that we're already setting, and we hope it will be the beginning -- well, a continuation of a lot more records that we’re going to set.

We also -- we went up -- the earnings per share went up 89% from last year to $0.70. Now I know there were a lot of estimates coming out in the 50s, in the $0.52, $0.53. I even saw an analyst last night that said his estimate the day before our earnings release from $0.56 to $0.61 or something like that. That was probably the highest.

Our net revenue, after -- and again, according to GAAP, net revenue increased 31% to $2.76 billion. Now frankly, the gross revenue was somewhat higher, and I've been having discussions with our auditors, PricewaterhouseCoopers, as to why the industry reports net. And if I read the rules regarding it under the FASB, the Financial Standards -- the Financial Accounting Standards Board, under the rules, I read that, and I have some questions about that. In any event, it would be up to $3-point-something billion.

The EBITDA margin is an industry-leading EBITDA margin of 38.6%. In the case of Macau, we have results that are in excess of our Cotai share. This is the 11th consecutive quarter of EBITDA growth, and I have the chart in front of me. And it comes to a whopping and instead of CAGR, C-A-G-R, compounded annual growth rate, we've got -- I don't know how to pronounce it.

Kenneth J. Kay

CQGR.

Sheldon Gary Adelson

CQGR. Compound quarterly growth rate of 14.2% from quarter-to-quarter. I'm looking at a bar chart. For the last 11 quarters, we've gone from $247.6 million in EBITDA to $1,070,000,000 EBITDA. I suppose that managed to surprise a few of you, guys, because nobody even approached $1 billion and most of the analysts that I -- most of the analysts' projections were in the, I believe, some in the 800s, some in the low 900s.

In earnings per share, we had a 47.1% increase in earnings per share. In gross revenue we had a 9.4% increase and a net revenue and a 9.1% increase.

There was the -- let me look at our 2 biggest markets. Our business in Macau has never been in a stronger position. Our mass business is growing, our VIP efforts are working and our non-gaming revenue, the backbone of the IR model also increased significantly. We've had record consolidated non-model drop of $1.92 billion, up 10% versus 2011. We're cooking on all cylinders.

We’ve had record consolidated slot handle up 53% to $2.1 billion. Retail mall revenue increased 30% versus last year, and I'd like to address the issue that somebody talked about that we were trueing up or loading up our books to show more income, more retail income in the fourth quarter of the year.

So let me point something out you. In the United States, I've seen figures that, and you guys will probably know better than I, but I'm only going by memory, that 40% of an annual sales are done between Thanksgiving and Christmas. So the larger percentage of sales over there are done during these periods. They're in the same period. Hong Kong is not just -- it doesn't have exactly the same holidays that the mainland does. There are a lot of Christians in Hong Kong, a lot of Christmas shopping going on from different visitors to Macau.

And the interesting part about it is that it's natural that in the fourth quarter, because of our relationship with the -- there is no trueing up. We don't do true-ups. But where something is required to do, a true up will do it but this is not a policy nor a practice to say we're going to pump up the figures in the last quarter of the year.

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