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Why Las Vegas Sands’ revenues decreased

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Revenues

On January 28, 2014, Las Vegas Sands (LVS) released fourth-quarter and fiscal year results ended December 2014. Quarterly net revenues decreased year-over-year. However, net revenues for 2014 increased when compared to 2013.

Casino company Wynn Resorts (WYNN) reported 4Q14 results this week with net revenues decreasing on a quarterly as well as a full-year basis. Other casino companies such as Melco Crown Entertainment (MPEL) and MGM Resorts International (MGM) are scheduled to release their 4Q14 results on February 12 and February 17, respectively. The VanEck Vectors Gaming ETF (BJK) provides ~25% exposure in these companies. LVS forms 8.3% of BJK.

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Las Vegas Sands’ revenues for the fourth quarter of 2014 were $3,416 million, down by 6.6% year-over-year. The decline was attributable mainly to a 15.9% year-over-year decrease in net revenue from the Macao operations. Net revenues for the company’s Las Vegas operations also fell by 6.0% year-over-year.

It should be noted that Las Vegas Sands’ net revenues fell 3.3% from the last quarter. Revenues fell 4.7% quarter-over-quarter in Las Vegas and 9.0% quarter-over-quarter in Macao. LVS derives nearly two-thirds of its revenues from its Macao operations. The Macao operations were negatively affected over the last four quarters because of lower VIP gaming activity.

In the subsequent part of this series, we’ll take a look at why LVS’s adjusted earnings before interest, taxes, depreciation, and amortization (or EBITDA) increased even though revenues declined in the fourth quarter of 2014.

Key takeaways from the 4Q14 earnings call

Sheldon Adelson, chairman and CEO (chief executive officer) of Las Vegas Sands, said, “Our mass and non-gaming revenue streams which comprised more than 80% of our departmental profit in Macao naturally make our business far more defensive than the Macao gaming market as a whole. It is also important to remember again, that our business in Macao for the year produced $3.3 billion in EBITDA, an increase of 12% over 2013.”

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