Pandemic sends Las Vegas Sands to net loss of nearly $1 billion in the second quarter

Pandemic sends Las Vegas Sands to net loss of nearly $1 billion in the second quarter

  • Howard Stutz, CDC Gaming Reports
July 23, 2020 11:33 AM
  • Howard Stutz, CDC Gaming Reports
  • Other

The financial impact of the COVID-19 pandemic in Macau, Las Vegas, and Singapore decimated Las Vegas Sands second-quarter results, sending the company to a net loss of nearly $1 billion during the three-month period that ended June 30.

Company executives, during a conference call Wednesday, said factors in each market will dictate the prognosis for recovery.

“We’re in a world of hurt here,” Las Vegas Sands President Rob Goldstein said of the company’s business in Las Vegas, which is highly dependent on filling the massive Sands Expo and Convention Center.

The Venetian and Palazzo properties reopened on June 4 following a 78-day closure in response to the coronavirus pandemic. But the recovery has been slow, and the company now plans to shut down the Palazzo’s hotel to mid-week customers starting Thursday.

“There is no way for Las Vegas to return unless convention, group, and banquet business returns, and right now, there’s no indication that it’s coming back,” Goldstein said.

He added that increased airline flights into Las Vegas, especially from international destinations, would help boost a return of group business.

Las Vegas Sands Chairman and CEO Sheldon Adelson tried to paint an optimistic picture in his prepared remarks at the outset of the conference call, focusing heavily on the company’s resorts in Macau and Singapore, which provide upward of 80% of the company’s quarterly revenues.

He said the recovery for Las Vegas will take more time, but expressed confidence that “Las Vegas will remain the greatest leisure and business tourism destination in the United States.”

Las Vegas Sands is spending $5.5 billion to upgrade resorts in the two overseas markets, $2.2 billion to develop the Londoner in Macau and $3.3 billion in new developments at the Marina Bay Sands in Singapore, including a 1,000-room hotel, a 15,000-seat arena, retail shops, and additional convention space.

In Singapore, Marina Bay Sands is expected to benefit from a reduction on international travel restrictions and a resulting increase in flights into the island nation.

“My 70 years of business experience are the basis for my unbridled optimism that people will travel again, shop again, and come together again to enjoy entertainment and social interaction, to exchange ideas and to conduct business,” said Adelson, 86, who is currently ranked No. 17 on the Forbes 400 with a net worth of $30.8 billion.

“Our optimism about an eventual recovery, coupled with our financial strength, enables us to continue the execution of our capital investment programs in both Macau and Singapore,” Adelson said. “We believe these investments will strengthen our leadership position in each of these markets and will provide a larger platform for future growth as travel and tourism spending return.”

Second-quarter results

During the three-month period, Las Vegas Sands’ revenues fell 97.1% to $98 million. A year ago, the company recorded total revenues of $3.334 billion in the second quarter.

Of the total, Macau revenues were just $41 million, compared to $2.117 billion a year ago, a 98.1% decline. In Singapore, Marina Bay Sands revenues declined 96.7% to $23 million. The company’s Las Vegas properties saw revenues decline 92.3% to $36 million.

Macau, where casinos closed for 15 days in February, continues to suffer under travel restrictions from Mainland China and other regions. The Marina Bay Sands was closed for much of the second quarter. As for Las Vegas, the casinos were open for just 26 days in June.

Las Vegas Sands’ net loss in the second quarter was $985 million, compared to net income of $1.11 billion in the second quarter of 2019. Cash flow was a net loss of $547 million, compared to a positive cash flow of $1.27 billion a year ago. Las Vegas Sands lost $1.07 per share in the quarter.

While the company is carrying $13.8 billion of long-term debt, Las Vegas Sands does have access to nearly $4 billion from its borrowing line and a cash balance of $3.02 billion.

Come back

The company was the first casino operator to report second-quarter results, and the numbers don’t bode well for its major competition in Las Vegas and Macau – Wynn Resorts and MGM Resorts International.

Goldstein was optimistic that business will return quickly to Macau. As of last week, certain travelers returning to Guangdong Province from Macau are no longer subject to quarantine.

“People in China are comfortable in masks because they are a normal part of life,” Goldstein said. “Macau is a wonderful place to vacation and it’s going to come back quickly.”

Shares of the Las Vegas Sands closed at $46.84 on New York Stock Exchange, down $1.16, or 2.42 %.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.