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Las Vegas Sands' (NYSE: LVS ) first-quarter results certainly didn't look all that good. On a GAAP basis, the gaming company reported a $36 million net loss -- roughly three times the size of its loss last year. The loss stemmed from rising costs stacked on top of a flat top line. And even though borrowing costs fell dramatically from last year, $71 million in interest payments were enough to drag the $36 million in operating profit under water.
We've already seen reports from MGM Mirage (NYSE: MGM ) and Wynn (Nasdaq: WYNN ) (here and here), as well as a bunch of the smaller non-Vegas players such as Ameristar (Nasdaq: ASCA ) , Pinnacle (NYSE: PNK ) , and Penn National (Nasdaq: PENN ) . So how does Las Vegas Sands stack up? To keep it short and sweet, I'd say "pretty well."
MGM is at the bottom of the heap for me. Yes, yes, I know that its stock has been a tremendous performer over the past few months, and that it has CityCenter still on the horizon. However, it also has the weakest financial position of the major public players and has a lot of Las Vegas properties that have been marginalized by recent Strip development, and will be further marginalized when CityCenter launches. And, hey, there's a reason that Dubai World was excited to make CityCenter remote from any MGM bankruptcy.
But we're talking Las Vegas Sands here, not MGM. So what's the difference? A major part of the difference is that Sands is far less levered to The Las Vegas Strip than MGM. Over 65% of Sands' adjusted EBITDA from its properties came from its Macau properties in China, and overall, Macau seems to have been holding up better than The Strip. Plus, the properties on The Strip that it does own -- The Venetian and The Palazzo -- are very high quality.
And Sands is only going to get more diversified geographically. The company has two projects under construction -- Marina Bay Sands in Singapore and Sands Bethlehem in Bethlehem, Pa.
But right now, financial strength is what we need to focus on with the gaming companies. After all, it won't mean squat to equity investors how well the casino properties do if they get wiped out in bankruptcy. For now, Sands appears to be in relatively good position.
Although it carries a hulking $10.4 billion debt load, it has $2.8 billion in cash on hand. Interest coverage based on EBITDA was a somewhat tight 2.5, though interest coverage based on adjusted EBITDA -- which excludes pre-opening expenses -- was a downright comfortable 3.2.
The Venetian is hands down my favorite poker room on The Strip, and if Las Vegas Sands continues to plug away like this, it could move up the list to be one of my favorite gaming stocks.