Las Vegas Sands (NYSE: LVS) missed analyst expectations in the second quarter. Net revenue landed at $3.15 billion, short of the $3.32 billion consensus, while adjusted EPS was $0.59, well under the $0.76 estimate. The problem: an unusually low rolling chip win percentage in Macao, a statistical variance management insists is not a demand issue.
Revenue slipped just 0.7% from $3.18 billion a year ago. Operating income dropped 21% to $618 million from $783 million. Consolidated adjusted property EBITDA fell 16% to $1.12 billion from $1.33 billion. The headlines hide a more nuanced picture. Volume grew across all gaming segments in Macao. Marina Bay Sands in Singapore still delivered industry-leading margins. But hold percentages in both markets fell below theoretical expectations.
The story is clearest in Macao. Net revenue there declined 0.8% to $1.78 billion, but adjusted property EBITDA cratered 24% to $430 million. At The Venetian Macao, the company's largest property by revenue, the rolling chip win percentage collapsed to 0.62% from 3.57% a year ago. That 295 basis point swing alone cost the property roughly $67 million in casino revenue. The Plaza Macao and Four Seasons Macao saw an even more extreme swing: the rolling chip win percentage fell to negative 1.15% from positive 2.72%. This statistical anomaly turned what would have been strong volume growth into a $46 million EBITDA decline at that property.
Management's supplemental data clarifies this was a hold issue, not a demand issue. Rolling chip volume at The Londoner Macao surged 68% to $3.52 billion. At The Plaza and Four Seasons, rolling chip volume more than doubled to $2.82 billion. Non-rolling chip drop increased across every Macao property. Slot handle rose everywhere except The Plaza, where machines were relocated. Customer activity was robust. The math simply didn't cooperate.
Marina Bay Sands in Singapore posted net revenue of $1.38 billion, essentially flat year-over-year, and adjusted property EBITDA of $689 million, down 10% from $768 million. The 49.9% EBITDA margin, still best-in-class, contracted 540 basis points from 55.3% a year ago. Rolling chip win percentage of 4.74% came in below the theoretical 4.2% target, though the miss was smaller than in Macao. The Singapore property's strength shows in its hotel stats: occupancy of 95.6%, average daily room rate of $982, and RevPAR of $939, each up year-over-year. The property is capturing pricing power in non-gaming even as gaming hold fluctuates.
The stock repurchase program is the most aggressive signal in the release. LVS bought back $787 million of stock in Q2, about 15 million shares at a weighted average price of $52.37. Since resuming buybacks in Q4 2023, the company has repurchased 16.3% of outstanding shares—roughly 124 million shares at an average price of $48.49, for a total of $6.03 billion. The board then increased the remaining authorization to $6.0 billion and extended it to July 2029. That is a substantial commitment for a company with $15.1 billion in debt and $3.4 billion in cash, even after receiving $1.26 billion from the repayment of the Las Vegas seller financing loan in May.
The buyback pace looks aggressive given the earnings trajectory. Adjusted net income attributable to LVS fell to $384 million from $547 million a year ago, a 30% decline. The company spent more on buybacks in a single quarter than it earned in net income. That math works only if management believes the hold-driven earnings dip is temporary and that the underlying business is worth more than the current market price. The $6.0 billion authorization, roughly 20% of the current market cap, suggests they are betting heavily on that view.
Capital expenditures totaled $332 million in the quarter, with $215 million directed at the Marina Bay Sands expansion project. The company has $4.68 billion available under a delayed draw term loan facility for that project. The expansion adds a meaningful growth catalyst in Singapore, but it also increases the fixed-cost base at a time when variable returns from gaming are proving volatile.
Hold-adjusted numbers tell a cleaner story. Management disclosed that hold-adjusted EBITDA would have been $50 million higher in Q2, implying adjusted property EBITDA of roughly $1.17 billion on a normalized hold basis. That is still below the $1.33 billion reported a year ago, suggesting some underlying cost pressure. Resort operations expenses rose 10.6% to $2.04 billion from $1.85 billion, outpacing revenue growth. The question is whether that cost creep is structural or a function of investing for the Singapore expansion. The answer will determine whether the buyback thesis holds or whether management is buying stock into a margin compression cycle.