Las Vegas SandsLVS

Key highlights

• Low luck in Macao: Net income at Sands China fell 50.0% to $107 million, largely because the company had an unusually low hold, which is the amount of money the house keeps after bets are paid out. On a normal hold rate, earnings for the Macao business would have been $87 million higher.
• Massive share buybacks: The company repurchased $787 million of its own stock this quarter, bringing the total reduction in shares to 16.3% since late 2023. This is good for long term owners because it makes each remaining share own a larger piece of the business, and the board just authorized another $6.0 billion for future buybacks.
• Marina Bay Sands strength: Revenue from hotel rooms in Singapore rose to $151 million from $134 million a year ago, helped by average daily rates reaching $982. This property remains the company's powerhouse, contributing $689 million in profit before interest and taxes even with heavy construction underway.
• Spending on renovations: Management spent $332 million on construction and upgrades this quarter, with the majority of that money, $215 million, going into the Marina Bay Sands expansion. These investments are meant to drive higher spending per visitor as the company shifts toward more premium customers.
• Future spending plans: The company signaled its commitment to growth by keeping a massive $4.68 billion credit line available specifically for its Singapore expansion project. While this represents a high amount of future spending, management noted that they have $3.38 billion in cash on hand to support these plans.

Our take: A soft quarter because of bad luck at the gambling tables, but the business underneath is very healthy. The 16.3% reduction in shares over the last few years shows management is serious about returning cash. Despite the headline miss, the core strength in Singapore and Macao keeps the long-term story intact.