Las Vegas Sands (LVS +1.65%) continues to be a cash machine in the gaming industry, posting yet another strong quarter in Q3 2018. Revenue was up 6.7% to $3.37 billion, and net income rose 2.2% to $699 million, or $0.73 per share.
Without any major growth projects on the horizon, the company is also sending tons of cash back to shareholders. A dividend of $0.75 per share was paid to shareholders, which will jump to $0.77 per share quarterly in 2019, while $300 million of the stock was repurchased in the quarter. For investors looking for a company that generates a lot of cash, there aren't many better options out there. Let's dig into where all that cash is coming from.
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The biggest gaming market in the world
Las Vegas Sands still dominates the Macau market, which is still the biggest gaming market in the world. Overall, gaming revenue grew 10.2% in the quarter in Macau, which is the benchmark against which we should judge all gaming companies.
Las Vegas Sands had strong performance at the Venetian Macau and Sands Cotai Central, which grew revenue 22.1% and 15% respectively, driving 13.1% revenue growth in the quarter for Macau. That's strong outperformance versus the market overall. It's also interesting to note that Sands Macau's revenue was up 12.7%, a reversal from long-standing drops in revenue in the older Macau Peninsula region of Macau.
Adjusted EBITDA, which is a measure of cash flow from resorts, jumped 15.8% to $754 million.
The other behemoth in Asia
Marina Bay Sands in Singapore, which is Las Vegas Sands' most profitable resort, had a weaker quarter than the company would have liked, but its operations have been up and down for years. Revenue was down 2.9% to $766 million on an 8.7% drop in casino revenue, but room revenue jumped 12.8%, and food and beverage revenue were up 15.2%, so demand was still strong at the resort.
Adjusted property EBITDA was down 5.2% to $419 million, which is still an astoundingly large number for a single resort. That's a pace to generate over $1.6 billion in EBITDA annually from a single property, the kind of cash flow that allows Las Vegas Sands to be such a cash machine.
Las Vegas looks small by comparison
Compared to Macau and Singapore, results in Las Vegas look anemic. Revenue was down 2.1% to $379 billion, and EBITDA was flat at $76 million.
The reality of the gaming industry today is that Asia is where the money is and Las Vegas has been left in the dust. Americans simply don't gamble at the same rate as their Asian counterparts.
The cash machine story is alive and well
If you own Las Vegas Sands stock today, you should be looking at the cash being generated in the company's major regions, and right now they're all doing relatively well. Investors should watch for macro trends like a slowing economy in the U.S. or China as a sign that cash flow could slow, but right now there doesn't seem to be anything stopping Las Vegas Sands' dividend or massive buybacks each quarter.
