01—Abstract
Summary
Summary of the 10-K filed February 7, 2020. Cited figures are marked; the original filing is the authoritative source.
Las Vegas Sands Corp. reported net revenues of $13.74 billiona for 2019, essentially flat versus $13.73 billion in 2018, while net income rose to $3.30 billion from $2.95 billion, driven mainly by a $556 million gain on the sale of Sands Bethlehem, which closed May 31, 2019.
Operating income declined to $3.70 billionb from $3.75 billion, reflecting a nonrecurring legal settlement and higher corporate expense. Adjusted property EBITDA increased 2.1% to $5.39 billion, with Macao and the Las Vegas Operating Properties improving and Marina Bay Sands declining slightly. Net cash generated from operating activities fell to $3.04 billion from $4.70 billion, primarily due to a $963 million land lease payment in Singapore for the MBS Expansion Project and higher interest costs.
The filing's most urgent disclosure concerns the 2019 Novel Coronavirus outbreak. The Macao government suspended casino operations from February 5, 2020, the China Individual Visit Scheme was suspended, and the Hong Kong Macao Ferry Terminal was closed. The company states that the impact on its Macao operations will be material, though it cannot reasonably estimate the consolidated effect at this time.
Long-term debt stood at $12.49 billionc, and the company continues to pay a quarterly dividend, declaring $0.79 per share in January 2020 for payment on March 26, 2020. Balance sheet and liquidity remain substantial: unrestricted cash and equivalents were approximately $4.23 billion at year-end 2019, with $3.95 billion available under U.S., Macao and Singapore revolving facilities.
Leverage ratios were 1.2xd (U.S.), 1.8x (Macao) and 2.0x (Singapore), each well below covenant maximums. Macao gaming subconcession expires June 26, 2022, a key long-term risk.
02—Key points
Key Highlights
- Net revenues of $13.74 billion, roughly flat versus $13.73 billion in 2018; net income attributable to Las Vegas Sands Corp. rose to $2.70 billion from $2.41 billion.
- Gain of $556 million on the sale of Sands Bethlehem, closed May 31, 2019, for $1.16 billion in net cash proceeds.
- Adjusted property EBITDA increased 2.1% to $5.39 billion, with Macao up $110 million and Las Vegas Operating Properties up $93 million.
- Operating cash flow fell to $3.04 billion from $4.70 billion, reflecting a $963 million Singapore land lease payment and higher interest cost.
- Macao casino operations were suspended from February 5, 2020 due to the 2019 Novel Coronavirus; management says the Macao impact will be material but cannot be reasonably estimated.
- Long-term debt of $12.49 billion; leverage ratios of 1.2x (U.S.), 1.8x (Macao) and 2.0x (Singapore) are within covenant limits, with $3.95 billion of revolving capacity available.
- Quarterly dividend of $0.79 per share declared in January 2020 (about $603 million), with the company expecting this level to continue through 2020.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 7, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $12.13B$13.73B | −11.7% |
| SG&A Expenses | $1.12B$1.48B | −24.6% |
| Operating Expenses | $8.76B$9.98B | −12.2% |
| Operating Income | $3.37B$3.75B | −10.3% |
| Interest Expense | $449.00M$446.00M | +0.7% |
| Net Income | $2.70B$2.41B | +11.8% |
| EPS (Basic) | $3.50$3.07 | +14.0% |
| EPS (Diluted) | $3.50$3.07 | +14.0% |
| Shares Outstanding (Basic) | 771.00M786.00M | −1.9% |
| Shares Outstanding (Diluted) | 771.00M786.00M | −1.9% |
05—Questions
Frequently Asked Questions
How did the coronavirus affect Las Vegas Sands' outlook in this filing?
The company stated that the Macao government suspended casino operations from February 5, 2020, that China's Individual Visit Scheme to Macao was suspended, and that the Hong Kong Macao Ferry Terminal was closed. Management said the impact on Macao operations will be material and on Singapore and Las Vegas could be adverse, but that the consolidated impact cannot be reasonably estimated at this time.
Why did net income rise while operating income fell in 2019?
Net income increased to $3.30 billion from $2.95 billion mainly because of the $556 million gain on the sale of Sands Bethlehem. Operating income decreased 1.4% to $3.70 billion, primarily due to a nonrecurring legal settlement that increased corporate expense.
Why did operating cash flow decline significantly in 2019?
Net cash generated from operating activities decreased $1.66 billion to $3.04 billion. The filing attributes this mainly to a $963 million land lease payment in Singapore for the MBS Expansion Project, higher interest costs and a nonrecurring legal settlement, with lower customer deposits and chip liabilities also contributing.
How strong is the company's liquidity and debt position?
At December 31, 2019, unrestricted cash and cash equivalents were approximately $4.23 billion, with about $2.89 billion held by non-U.S. subsidiaries. Long-term debt was $12.49 billion, and $3.95 billion was available under U.S., Macao and Singapore revolving facilities, plus $2.78 billion under the Singapore Delayed Draw Term Facility.
What is the key long-term risk to the Macao business?
The Macao gaming subconcession expires on June 26, 2022. Unless it is extended, casino premises and gaming equipment will transfer to the Macao government without compensation, and the company will cease generating gaming revenue from those operations. The Macao government may also redeem the subconcession with at least one year's notice.
06—Continue