01—Abstract
Summary
Summary of the 10-K filed February 23, 2018. Cited figures are marked; the original filing is the authoritative source.
Las Vegas Sands Corp. (NYSE: LVS) reported net revenues of $12.88 billiona for 2017, up from $11.41 billion in 2016, with net income attributable to Las Vegas Sands Corp. of $2.81 billion ($3.54 per diluted share) versus $1.67 billion ($2.10 per share) in 2016.
Operating income rose to $3.46 billionb from $2.49 billion, driven primarily by The Parisian Macao, which opened in September 2016, and higher Rolling Chip win and volume at Marina Bay Sands. Net income also benefited from a nonrecurring non-cash income tax benefit of $526 million tied to U.S. tax reform, and the effective tax rate was (6.8)%, compared with 10.6% in 2016. The company's cash generation strengthened, with net cash from operating activities of $4.54 billion in 2017 versus $4.04 billion in 2016.
Capital expenditures fell to $837 millionc from $1.40 billion, and cash and cash equivalents ended the year at $2.42 billion. Long-term debt was $9.34 billion at year-end, with substantially all debt at variable rates, and the filing states that a hypothetical 100 basis point rate change would change annual interest cost by approximately $98 million. Leverage ratios under the U.S., Macao and Singapore credit facilities were 0.5x, 1.7x and 1.8x, within maximum allowed levels.
Common dividends totaled $2.92d per share for 2017, and the board declared a $0.75 quarterly dividend for 2018. Key risks highlighted include the Macao subconcession, which expires June 26, 2022, and which the Macao government may redeem beginning December 26, 2017 with one-year notice; the expiration of Macao corporate income tax exemptions at the end of 2018; reliance on Macao, Singapore and Las Vegas for all cash flow; and the controlling influence of principal stockholder Sheldon G. Adelson and his family, who beneficially own approximately 55% of common stock.
02—Key points
Key Highlights
- Net revenues rose 12.9% to $12.88 billion in 2017, led by a $1.02 billion increase at The Parisian Macao and a $355 million increase at Marina Bay Sands.
- Operating income increased to $3.46 billion from $2.49 billion; operating expenses rose to $9.42 billion, including higher casino expenses tied to gaming tax on Parisian's growth.
- Net income attributable to Las Vegas Sands Corp. was $2.81 billion ($3.54 per diluted share), boosted by a nonrecurring $526 million tax benefit from U.S. tax reform.
- Operating cash flow reached $4.54 billion, while capital expenditures declined to $837 million from $1.40 billion in 2016.
- Long-term debt stood at $9.34 billion, with substantially all debt at variable rates; a 100 basis point rate move would change annual interest cost by about $98 million.
- The Macao subconcession expires June 26, 2022, and the Macao government may redeem it beginning December 26, 2017 with one-year notice; Macao tax exemptions expire at the end of 2018.
- Quarterly dividend was $0.73 per share in 2017 and the board declared $0.75 per share for 2018, with about $592 million estimated in total payments.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 23, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $12.88B$11.41B | +12.9% |
| SG&A Expenses | $1.42B$1.29B | +10.1% |
| Operating Expenses | $9.26B$8.77B | +5.6% |
| Operating Income | $3.46B$2.50B | +38.4% |
| Interest Expense | $327.00M$274.00M | +19.3% |
| Net Income | $2.81B$1.68B | +67.2% |
| EPS (Basic) | $3.55$2.11 | +68.2% |
| EPS (Diluted) | $3.55$2.11 | +68.2% |
| Shares Outstanding (Basic) | 792.00M795.00M | −0.4% |
| Shares Outstanding (Diluted) | 792.00M795.00M | −0.4% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue and operating income in 2017?
Net revenues increased $1.47 billion to $12.88 billion, primarily due to increases of $1.02 billion at The Parisian Macao, which opened in September 2016, and $355 million at Marina Bay Sands, mainly from higher casino revenues. Operating income rose to $3.46 billion from $2.49 billion.
How much of 2017 net income was affected by the U.S. tax reform?
The company recorded a nonrecurring non-cash income tax benefit of $526 million due to U.S. tax reform enacted at the end of 2017. The company states its effective tax rate would have been 10.4% without this one-time benefit, compared with the reported (6.8)%.
How is LVS's debt position and interest rate exposure described?
Long-term debt was $9.34 billion at December 31, 2017, and substantially all of it is at variable rates. A hypothetical 100 basis point change in interest rates would change annual interest cost by approximately $98 million. Leverage ratios were 0.5x (U.S.), 1.7x (Macao) and 1.8x (Singapore), all below their maximum covenant levels.
What is the biggest long-term risk to the Macao business?
The Macao subconcession expires June 26, 2022. Unless extended, casinos and gaming equipment transfer to the Macao government without compensation, and the company would stop generating gaming revenue there. The Macao government may also redeem the subconcession beginning December 26, 2017 with at least one year's notice, paying fair compensation.
How much control does the principal stockholder have?
Sheldon G. Adelson, his family members and related trusts and entities beneficially own approximately 55% of outstanding common stock as of December 31, 2017. The filing states this gives him significant influence over board composition and any matter requiring stockholder approval, including mergers and asset sales.
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