Sands Top Q2 Estimates, Surprises With Dividend Reinstatement

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Posted on: July 19, 2023, 03:57h. 

Last updated on: July 19, 2023, 04:01h.

Las Vegas Sands (NYSE: LVS) provided a positive surprise to investors today as the largest casino operator by market capitalization said it will reinstate its quarterly dividend.

Sands
Visitors outside Parisian Macau. Operator Las Vegas Sands beat Q2 estimates and is restarting its quarterly dividend. (Image: Anthony Kwan/Bloomberg)

The payout had been suspended for more than three years as the gaming company sought to conserve capital during the early stages of the coronavirus pandemic and as the Macau rebound took longer than expected to materialize. Sands made the dividend announcement in conjunction with reporting its second-quarter earnings.

The company announced the resumption of its program to return capital to stockholders,” according to a statement from the Las Vegas-based company. “The company’s quarterly dividend has been reinstated at $0.20 per common share.  The next dividend will be paid on August 16, 2023, to Las Vegas Sands stockholders of record on August 8, 2023.”

Sands resuming its quarterly payout dividend is relevant for several reasons, including the fact it was widely expected such an event wouldn’t occur until 2024 or 2025. It’s also a sign that the company is on firm financial footing because creditors likely needed to approve the move. The Venetian Macau operator getting back into the dividend game is also pertinent because it was once the best dividend story in the gaming industry and because rival Wynn Resorts (NASDAQ: WYNN) restarted its payout earlier this year.

Sands’ Q2 Results Strong

For the June quarter, Sands earned 46 cents a share on revenue of $2.54 billion. Analysts expected earnings of 43 cents on sales of $2.39 billion. The operator adjusted property earnings before interest, taxes, depreciation, and amortization (EBITDA) of $973 million with $541 million derived from its five Macau properties and the remainder coming from Marina Bay Sands in Singapore.

That’s further confirmation of the Macau rebound — one that’s propelled shares of Sands to a year-to-date gain of 24.11%. Additionally, analysts expect that this month will be the best in terms of gross gaming revenue (GGR) in the Chinese enclave since before the start of the pandemic, potentially paving the way for GGR to return to 2019 levels later this year.

On the basis of generally accepted accounting principles (GAAP), Sands China Ltd. (SCL) second-quarter net revenue “increased to $1.62 billion, compared to $368 million in the second quarter of 2022. Net income for SCL was $187 million, compared to a net loss of $422 million in the second quarter of 2022,” according to the operator.

The Las Vegas Sands investment thesis is buoyed by the fact that Venetian Macau and Marina Bay Sands are two of the most profitable casinos in the world.

Sands’ Cash Position Strong

Sands’ cash position is one of the sturdiest in the industry. At the end of the second quarter, it had unrestricted cash of $5.77 billion with access to $3.67 billion in borrowing capacity.

The company has $14.70 billion in debt and repaid $1.20 billion on a Sands China credit revolver during the June quarter.

“Our financial strength supports our ongoing investment and capital expenditure programs in both Macao and Singapore, our pursuit of growth opportunities in new markets, and the return of capital to stockholders,” said CEO Rob Goldstein in the statement.

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