Las Vegas Sands suffering from pandemic induced losses

The coronavirus pandemic has taken its toll on global casino operator Las Vegas Sands, which reported a fourth-quarter loss.

Barrons reports that on an adjusted basis, Las Vegas Sands notched a loss of 32 cents a share, compared with positive earnings of 88 cents in 2019’s fourth quarter.

Fourth quarter revenue totaled a little more than $1.1 billion, down 67 per cent from $3.5 billion in the corresponding period in 2019.

In after hours trading, the stock was at $48 and change, down about one cent.

The company’s financial results were partly overshadowed by the death of its founder and longtime chief executive officer Sheldon Adelson in early January, aged 87.

Company veteran Robert G Goldstein who stepped in as chairman and chief executive officer on an interim basis, was officially named to those positions earlier this week.

Goldstein has been with the company since 1995, most recently having worked as chief operating officer.

Speaking to analysts on the company’s fourth quarter earnings call Wednesday after the market closed, Goldstein, who described Adelson as a great friend and mentor said “the last two weeks have been the most difficult in our company’s history.”

In a release following the market’s close Wednesday, Goldstein said “the recovery process from the COVID-19 pandemic continues to progress in both Macau and Singapore, but concerns remain.”

Asked about trends in Macau, where Las Vegas Sands generates a big chunk of its revenues, a company executive on the call cited “the trending of the pandemic and some of these isolated outbreaks” in certain provinces in China.

“With that in mind, it’s not easy to see a relaxation in terms of the current guidelines in terms of travel” in China, the executive added.

Another issue Las Vegas Sands faces is that the company’s concession to operate its properties in China comes up for renewal in less than two years.

Although the company is based in Las Vegas, most of its revenue comes from operations outside the United States, in places such as Macau and Singapore.

In 2019, for example, about $1.8 billion, or about 13 per cent of the company’s $13.7 billion of net revenues came from Las Vegas.

Macau accounted for $8.8 billion, or nearly two-thirds of net revenues.

The stock, which has a one-year return of about minus 22 per cent, has lagged behind many of its peers.

Sands relies on conventions as other casinos thrive on gambling returns

One reason for that underperformance is that the company relies heavily on convention business, which has suffered greatly during the pandemic, along with business travel.

In its annual report filed nearly a year ago, the company cited its “best-in-class properties and convention-based model”.

One of its signature holdings is the Venetian Resort Las Vegas, located on the Strip.

Wynn Resorts, which also has a big exposure to Macau, has returned about minus 17 per cent over the past year.

MGM Resorts International, which is much more of a player on the Las Vegas Strip, has returned about minus six per cent over that period.

In contrast, many United States regional casino operators have thrived during the pandemic business; their business mostly involves customers who drive to their properties rather than fly.

And those companies attract customers who are there more for gambling, as opposed to conventions, meetings and entertainment.

Shares of Penn National Gaming, a regional casino company, have a one-year return approaching 300 per cent.

Boyd Gaming is up about 60 per cent.