Sands 2Q results down, but Macao casinos to reopen Saturday

Las Vegas Sands Corp., operators of casinos in Macao and Singapore, reported tepid second-quarter revenue results Wednesday as health restrictions in Macao continued to batter resort operators there.

The Las Vegas-based casino company reported a loss of $440 million, 38 cents a share, on revenue of $1.045 billion for the quarter that ended June 30. A year ago, the company reported a loss of $280 million, 25 cents a share, on revenue of $1.173 billion.

In addition, in the second quarter of 2021, Sands operated The Venetian, Palazzo and The Venetian Expo Center on the Strip, but sold those Las Vegas assets to Apollo Global Management Inc. for $6.4 billion earlier this year.

Sands’ second-quarter results don’t reflect revenue generated since a government-ordered closure of Macao’s 41 casinos that began July 11. Multiple sources indicate properties would reopen Saturday.

Rob Goldstein, chairman and CEO of Sands, said the rebound of the Singapore market was one ray of sunshine in the second-quarter report, and he acknowledged that Macao continues to be a struggle. He noted the company has invested $2.2 billion in Macao and $1 billion in Singapore in the past year.

Difficult market

“The operating environment there (in Macao) remains very difficult,” Goldstein told investors in a conference call on earnings. “Restrictions have been lifted. Macao has proven resilient at the premium mass level in both the gaming and retail perspective. As the market eventually recovers, our $2.2 billion investment program at Four Seasons and Londoner (in Macao) will provide outstanding growth opportunities in both the premium and mass customer segments.”

He noted Sands continues to be the market leader in Macao.

“We continue to have the largest footprint in this incredible market,” he said. “We retain great optimism at our ability to perform at prepandemic levels and beyond once visitation returns. We welcome the opportunity to invest additional dollars in Macao and we continue to believe Macao is an outstanding market for additional investment.”

The $1 billion investment in Singapore upgrades hotel rooms in the company’s Marina Bay Sands and Goldstein said he expects the update will command even higher room rates than before the pandemic. Marina Bay Sands, he said, already has delivered $319 million in adjusted property cash flow during the quarter.

“We remain confident in the recovery of travel and tourism spending across our markets,” he said. “We are fortunate that our financial strength supports our investment and capital expenditure programs in both Macao and Singapore, as well as our pursuit of growth opportunities in new markets.”

Sands officials previously have said the company hopes to invest in domestic markets in Texas, Florida and New York, but executives had no updates on those plans Wednesday.

Sands officials offered investors no guidance on the third-quarter financial picture which likely will be affected by 12 days of closures and a slow rebound.

Saturday reopening

Casino industry sources and analysts who follow the Macao market confirmed Asian media reports that Macao Chief Executive Ho Iat Seng said casinos would be among the businesses that will be allowed to reopen just after midnight Saturday after being closed since July 11 in an effort to reduce the spread of COVID-19 in the small special administrative region, the only place in China with legalized gambling.

Wynn Resorts Ltd., which has three resorts in Macao, affirmed that resorts would be allowed to reopen Saturday.

Macao’s government tourism office in a notice posted online Wednesday said hotels would be allowed to reopen.

Analysts say even with the Saturday reopening, it could take weeks for visitation numbers to bounce back.

Inside Asian Gaming and Reuters reported that casinos indicated they would reopen, despite a restriction that they be staffed with half the normal number of employees and a directive that a centralized location be used for employee meal breaks.

Gaming in Macao is important to three Las Vegas-based companies — Sands, Wynn and MGM Resorts International — which collect around half to three-quarters of their revenue from their 11 casino operations there.

All three companies are in the midst of a licensing renewal process expected to be completed by the end of the year. Details of the process, called a “retendering,” were explained to companies last month.

“We appreciate the clarity of the revised gaming law in June and we look forward to participating in the concession retendering process as it proceeds,” Goldstein said during the call with investors. “We consider our portfolio of resorts in Asia to be the ideal platform for growth in the years ahead, and we’ll additionally pursue other opportunities in large land-based destinations in the U.S. and Asia.”

Restrictions in Macao

Among the restrictions that will stay in place with the gradual reopening of Macao is that cinemas, indoor playgrounds, beauty salons, gyms, health clubs, karaoke establishments, bars, nightclubs, discos, dance halls, cabarets and public swimming pools would remain closed, while restaurants would only be able to offer take-out food.

In addition, public parks will be open, but people will be forbidden from running. Macao’s Health Department also ordered the wearing of N95 masks indoors and outdoors.

The bureau reported 18 new cases of COVID-19 detected on Monday, with the cumulative total of cases since the outbreak was first detected June 18 at 1,783.

Investors responded positively Wednesday to Macao’s outlook. Sands, traded on the New York Stock Exchange, closed up $1.55, 4.4 percent, to $37.08 a share on above-average volume. After hours, the stock continued to climb.

MGM, also on the New York Stock Exchange, closed up 83 cents, 2.7 percent, to $31.29 a share on trading nearly half the average volume.

Wynn, traded on the Nasdaq exchange, rose $2.35, 3.9 percent, to $61.92 a share on slightly above-average volume.

The Review-Journal is owned by the Adelson family, including Dr. Miriam Adelson, majority shareholder of Las Vegas Sands Corp., and Las Vegas Sands President and COO Patrick Dumont.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.