Las Vegas Sands took a 54 percent hit to its bottom line in the first quarter, most of it the result of settlement with Chinese businessman Richard Suen, who claimed the gaming giant reneged on a deal to pay him for helping it win its casino concession in Macau.
Net income for the period ended March 30 was $744 million, down 54 percent from the $1.62 billion posted in the first quarter of 2018, although the 2018 result was skewed as well by a one-time non-cash windfall of $670 million from the corporate tax cut passed by the then-Republican-controlled Congress.
Of the difference, LVS attributed $96 million of the decrease to a “non-recurring legal settlement” without identifying the Suen litigation by name. The charge was equal to 12 cents per share.
Decreases in high-end play at its Marina Bay Sands megaresort in Singapore accounted for most of the rest of the fall-off, the company said.
In total, LVS reported 75 cents in earnings per share for the quarter, down 59 percent from last year.
Net revenue for the period was up 1.9 percent to $3.65 billion, mainly the result of Macau’s $2.33 billion contribution, an 8 percent increase that helped offset a 12 percent drop in Singapore and a 1.2 percent drop in Las Vegas.
Earlier this month, LVS announced an agreement with the Singapore government to extend the company’s license for Marina Bay Sands and a commitment to invest $3.3 billion in the property for a 15,000-seat arena, a 1,000-room hotel, additional MICE space and other attractions.
“We believe the expansion of Marina Bay Sands will meaningfully enhance Singapore’s appeal as a leisure and business tourism destination while creating an outstanding platform for growth for the company,” the company said in a statement attributed to Chairman and CEO Sheldon Adelson, who is battling cancer and didn’t attend the first-quarter conference call.
The March 15 settlement with Suen ended more than a decade of litigation and was reached just before a Las Vegas jury was scheduled to hear evidence for a third time from the businessman about how his influence in China helped LVS in Macau in the early 2000s. Suen and his company, Round Square, had won verdicts and judgments of $43 million and $70 million in trials in 2008 and 2013 based on his assertion that LVS had violated an agreement to pay him a success fee of $5 million plus 2 percent of the net profit of the company’s Macau resort operations. In each of the previous awards the Nevada Supreme Court overturned the verdicts and sent the cases back to Clark County District Court.
The settlement marked the third time LVS has paid out to end litigation surrounding its Macau casinos.
in 2009, the company paid three men $42.5 million after they sued for compensation for their assistance in the Macau licensing effort.
In 2016, a settlement was reached in a six-year-long wrongful termination suit brought by Steven Jacobs, who was fired in 2010 after a year as president and CEO of the company’s Macau subsidiary, Sands China. LVS never specifically identified the sum involved, but a later earnings report cited it indirectly as a $78.8 million “non-recurring corporate expense” related to “non-recurring legal costs”.
