Las Vegas Sands performed strongly in Q1 2023 as mass gaming revenue returned to pre-pandemic levels for the first time.
Group revenue for the quarter came in at $2.12bn, an increase of 124.8% on Q1 last year.Of that total, $1.54bn came from the firm’s casino operations, which climbed 145.8% year-on-year.
The operator’s Marina Bay Sands property in Singapore continued to be its biggest earner, generating $848m in revenue, up 112.5% and generating 40% of the quarterly total.
Adjusted EBITDA across the business totalled $792m, up more than sevenfold from the $110m generated in the prior-year period.
Despite a 39.9% increase in operating expenses to $1.74bn, the business achieved an operating income of $378m, compared to a $302m operating loss in Q1 2022.
The business paid income tax expenses of $50m and declared a net income from continuing operations of $145m.
The business is now bouncing back strongly from the impact of the Covid-19 pandemic, as “a robust recovery in travel and tourism spending across our markets is now underway,” according to chairman and CEO Robert G. Goldstein.
Mass gaming revenue from the Marina Bay Sands reached an all-time record of $549m in the quarter, while mass gaming revenue across Sands’ Macau properties surpassed $1bn for the first time since 2019.
The firm’s long standing investment into Macau to improve its appeal as a tourism destination and global business centre “positions us exceedingly well to deliver strong growth as visitation to the market increases and the recovery in travel and tourism spending proceeds,” Goldstein added.
The business also has a strong balance sheet to continue its investment and capital expenditure programmes in both Macau and Singapore, “as well as our pursuit of growth opportunities in new markets,” Goldstein concluded.The firm held unrestricted cash balances of $6.53bn as of the end of Q1, with access to $2.48bn in borrowing under its revolving credit facilities, with total debt outstanding of $15.97bn.
The most interesting question on Sands’ Q1 earnings call came from Brandt Montour at Barclays, who asked management for an update on the process of applying for a casino licence in New York State.
In response, CEO Goldstein said that the business continues to await a response from the government there, and while nothing is certain, “we’ve been told it could be early first quarter of 2024.”
Goldstein also added some colour on the strength of LVS’ bid. He said: “We do believe we have a very compelling bid, the project’s in sync with our historical approach to developments – a large-scale resort with enormous non-gaming amenities; hotel, convention space, entertainment, spa etc.
“It’s a very beautiful design, very much the LVS spirit of the way hotels should be – designed as a real resort, a real destination. We have close to 80 acres, so I think we have a very special bid, a very compelling bid and I hope the market sees it that way.”
CEO Goldstein mixes his sports metaphors when asked about the company’s continuing recovery:
“We’re early innings here. In fact, I would say if you’re playing golf, we’re still in the driving range. We haven’t even gotten the first tee yet. My point is that it’s evolving so quickly, and I don’t think it’s easy to spot trends.”
Current trading and outlook
Sands expects to continue growing its earnings from its properties in Macau and Singapore as visitation levels continue to increase, pushing up revenues across all of its business segments.
The company lauded its investments made during the pandemic and suggested it would be a “raging bull” on investing further in Macau in the future, not least through the new gaming concession it was granted by the government in December 2022.
Those investments will take place across all business areas, Goldstein suggested, as “we believe non-gaming assets are wildly profitable, but they also drive gaming assets. It’s all in sync. So we build more hotels or we build more retail, and it drives the gaming wind.”