SLS Las Vegas reports a loss of $48.7 million in second quarter

SLS Las Vegas reported its second-quarter earnings last week.

Company: Stockbridge / SBE Investment Company LLC

Revenue: $36.9 million, according to a filing with the Securities and Exchange Commission. For the first six months of the year, the north Strip resort reported net revenue of $74.3 million.

Loss: $48.7 million. For the first six months of the year, the resort’s net loss was $84 million.

What it means: SLS opened last August as a reincarnation of the former Sahara hotel-casino, and its first year has been financially difficult to say the least. The most recent SEC filing reaffirms that.

SLS reported $9.5 million in casino revenue, $13.1 million in hotel revenue, $16 million in food and beverage revenue, and $1.3 million in retail and other revenue during the second quarter. For the first half of 2015, those areas reported revenues of $18.6 million, $26.7 million, $31.8 million and $2.5 million, respectively.

But total operating expenses were substantially higher: $68 million for the quarter and $130.8 million for the first six months of the year. The largest operating expenses came from food and beverage ($21.7 million in the second quarter), general and administrative ($16.2 million), and depreciation and amortization ($11.1 million).

The resort also reported other costs — including loss on early retirement of debt and interest expense — of $17.6 million in the second quarter and $27.5 million for the first half of the year.

Stockbridge Capital, which owns 90 percent of SLS, has funded the resort with capital contributions of $28.2 million through June 30, according to the SEC filing. If necessary going forward, Stockbridge intends to “provide sufficient funds” to SLS through the end of the year to allow the resort to “pay its obligations as they become due,” the filing states.

“The Company has initiated certain actions to increase revenues and reduce expenses in order to improve the results of operations, and the Company intends to initiate further actions in 2015 to improve profitability,” the SEC filing states. “However, there can be no assurance that such actions will be effective.”

The filing also says “there is no assurance” that Stockbridge will provide capital contributions after Dec. 31.

In an interview earlier this summer, SLS President Scott Kreeger said the resort’s “ramp” period to financially successful operations is “probably a little bit elongated from what I think most people would prefer.” But he said Stockbridge was “committed” to SLS.

The resort, situated at Sahara Avenue and Las Vegas Boulevard South, counts largely empty land and unfinished developments as some of its most prominent neighbors. Understanding this, Kreeger said previously that he’s focused on creating “drivers” that give customers a compelling reason to venture to his resort.

http://vegasinc.com/business/gaming/2015/aug/18/sls-las-vegas-loss-487-million-second-quarter/

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