Las Vegas Sands net income in Q2 boosted by the sale of Sands Bethlehem

Las Vegas Sands Corp. reported Wednesday financial results for the quarter ended June 30, 2019. Net revenue was $3.33 billion, an increase of 0.9% from the prior-year quarter. Operating income increased by 12.2% to $894 million. Net income increased 63.9% to $1.11 billion and included a gain of $556 million related to the sale of Sands Bethlehem on May 31.

Consolidated adjusted property EBITDA (a non-GAAP measure) was $1.27 billion, an increase of 3.3% compared to the prior-year quarter. On a hold-normalized basis, consolidated adjusted property EBITDA increased by 3.6% to $1.29 billion.

"We delivered solid financial results in the quarter, with hold-normalized Adjusted Property EBITDA reaching nearly $1.3 billion," said Sheldon G. Adelson, Chairman and Chief Executive Officer. "We remain enthusiastic about our future growth opportunities in Asia, which will be enhanced through the introduction of our Four Seasons Tower Suites Macao later this year, the Londoner Macao throughout 2020 and 2021 and the expansion of Marina Bay Sands in Singapore thereafter. We are also aggressively pursuing additional development opportunities in new markets, including in Osaka, Japan. Finally, we remain deeply committed to maintaining our industry-leading financial strength while continuing to return capital to shareholders."

The company paid a recurring quarterly dividend of $0.77 per common share and increased its return of capital through share repurchases of $180 million during the quarter. The company announced its next quarterly dividend of $0.77 per common share will be paid on September 26, 2019, to Las Vegas Sands shareholders of record on September 18, 2019.

Net income attributable to Las Vegas Sands in the second quarter of 2019 increased to $954 million, compared to $556 million in the second quarter of 2018, while diluted earnings per share increased 77.1% to reach $1.24. 

As for Sands China Ltd. (SCL), on a GAAP basis, total net revenues increased by 1.4%, compared to the second quarter of 2018, to $2.14 billion. Net income for SCL increased by 19.7% to $511 million.

Depreciation and amortization expense was $289 million in the second quarter of 2019, compared to $274 million in the same period of last year. The increase relates to the acceleration of depreciation expense for certain Sands Cotai Central assets as it is converted into The Londoner Macao.

Interest expense, net of amounts capitalized, was $143 million for the second quarter of 2019, compared to $93 million in the prior-year quarter. The increase resulted from an increased level of borrowings from the SCL Notes issued in August 2018 and from the U.S. credit facility in June 2018 and the firm’s weighted average borrowing cost in the second quarter of 2019 increasing to 4.7%, compared to 3.5% during the second quarter of 2018.

Sand’s effective income tax rate for the second quarter of 2019 was 17.6% compared to 10.7% in the prior-year quarter. The tax rate for the second quarter of 2019 is primarily driven by a provision for the earnings from Marina Bay Sands at the 17% Singapore income tax rate and the income tax impact of the sale of Sands Bethlehem. Without the sale of Sands Bethlehem, the rate for Q2 2019 would have been 9.6%.

Unrestricted cash balances as of June 30, 2019 were $4.02 billion. As of June 30, 2019, total debt outstanding, excluding finance leases, was $12.0 billion. Capital expenditures during the second quarter totaled $213 million, including construction, development and maintenance activities of $99 million in Macao, $65 million in Las Vegas and $49 million at Marina Bay Sands.