Observations from Las Vegas Sands’ Q2 2014 Earnings Report

Let me be clear up front:  I am not a casino analyst: I am a casino enthusiast.  The purpose of this post is in no way, shape, or form to make a valuation case for or against $LVS (no positions).   I simply enjoy looking at the data in their earnings reports and marveling at the scale of their Asian business (note: I have never been to Macao).     I wrote two years ago about how $LVS does more gaming revenue in Bethlehem, PA than they do in Las Vegas, and I’m still shocked every time I see this data point in their earnings.  Again, this quarter, Bethlehem casino revs topped Vegas casino revs.

The other thing that always jumps out at me is how the Las Vegas revenues are the only ones that are “diversified.”  Here’s a table I made quickly with data from the report:

data manually transcribed from LVS q2 2014 8k. subject to typos

data manually transcribed from LVS q2 2014 8k. subject to typos

You can see that I highlighted the Vegas/Bethlehem casino revenues, as well as the cell in the bottom section that shows that in Las Vegas, only 29% of the net revenues come from the casino business – vs 80-98% for the other properties!

I also highlighted the occupancy and REVPAR numbers for the Marina Bay Sands, which are simply amazing (quick note: in the same period last year, Marina Bay Sands was at 99.4% occupancy with a REVPAR of $377).

Finally, I highlighted the “contribution” from the Las Vegas and Bethlehem properties.   Yes, I still believe that “Las Vegas” Sands should change its name, as Las Vegas has nothing to do with their bottom line anymore.

Another thing I like to do is look at how “lucky” LVS got in the quarter.   They no longer give quite as much data in terms of expected hold, but they do say that they expect rolling chip win % to be in the range of 2.7% – 3.0%.   If you take the actual rolling chip win % for the Macao properties, and measure the deviation from the 2.85% midpoint of the expected range, you can come up with a “luck” or “variation” factor, which I did here:


Interestingly, LVS now discloses these numbers also (exhibit 2 in the 8k), and they came up with 100.8MM (vs. my $ 118MM) for the Macao properties and 61.7MM (vs. my $ 62.68MM) for Marina Bay Sands – so I’m pretty happy with my back-of-the-napkin voodoo casino math.  They even explain that they only “adjust” for hold outside of the normal range, while I adjusted for all deviations from the midpoint of the range:  Sands Cotai was at 2.97%, leading to $14.89MM in my number that’s not in theirs and explaining most of the variation.

Finally I want to copy and paste a table (exhibit 5) from the earnings report that I think it absolutely amazing in terms of showing the scale of the Macao business:


Look as the “table games win per unit per day” numbers for Las Vegas vs various Macao properties.  Remarkable.

Anyway, this concludes my bored-on-a-Thursday morning dive into Las Vegas Sands’s earnings report.



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