Las Vegas Sands – 3Q '23 Earnings - A Review Of 3Q Earnings By Deep Knowledge Investing

This piece was originally published on October 18th, 2023.

Introduction

Las Vegas Sands LVS announced 3Q earnings after the close today, and after more than 3 years of Covid-related weak results, there’s one conclusion we can draw: They’re back.

Revenue of $2.8B beat analyst estimates of $2.7B and was almost 3x last year’s level.

Adjusted property EBITDA of $1.12B was above last quarter’s $973MM and crushed last year’s $191MM. This was remarkable given the September shutdown due to a typhoon. It was also 94% of the 3Q 2019 result.

Operating income of $688MM was well above last year’s $177MM.

DKI has been talking about how $LVS’ focus on the high-margin premium mass market would pay off especially given the reluctance of the big VIP players to return to the tables. We saw that happen as property-level EBITDA margins of 40.1% were the second highest I have in my 8-year quarterly model.

Macau

Macau adjusted property EBITDA was $631MM vs negative $152MM last year. It was also 84% of the 3Q ’19 result.

The Venetian Macau, the Londoner Macau, the Parisian Macau, and the Four Seasons Macau all posted the highest revenue per available room levels in my 8-year quarterly model.

Singapore

The Marina Bay Sands recorded adjusted property level EBITDA of $491MM. Last quarter, I told you MBS results were back to pre-pandemic levels. This 3Q result was the second-best quarter in the last 8 years.

The facility was 96% booked and recorded revenue per available room of $656. This is by far the highest quarterly result recorded there. Second and third place were the last two quarters which tells us that Singapore has stabilized above pre-pandemic levels.

Capital Availability

Sands has always been a shareholder-friendly company. Last quarter, they re-initiated the dividend at $.20/quarter and that will continue. The company also increased its stock buyback authorization to $2B through 11/25.

The company has $5.6B in cash and credibly claims to have enough funding available to pay for all current capital expenditures for maintenance and growth, for the dividend, and for the stock buyback. They also point out that with Macau and Singapore both solidly cash flow positive, they have even more flexibility.

Despite the increased cost of borrowing, because the company received more interest income on its cash deposits, net interest expense actually declined.

Conclusion

This was a fantastic quarter, and everything we’ve read about early October which included an extra-long Golden Week holiday was positive as well. Sands’ enthusiastic return to strong results and increased capital return to shareholders will be positively received by the market. The stock traded up in the aftermarket. We expect the stock and options DKI recommended will be up nicely tomorrow.

Today’s report continues to confirm our positive thesis on the stock.

GB@DeepKnowledgeInvesting.com if you have any questions.

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