Wynn Resorts Falls on 33% Drop in Third-Quarter Net
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10/27/09(Bloomberg) – Wynn Resorts Ltd., the casino company founded by Stephen Wynn, declined the most in five months in U.S. trading after reporting a 33 percent drop in third-quarter profit.
Wynn fell $4.81, or 7.6 percent, to $58.27 at 12:10 p.m. New York time on the Nasdaq Stock Market and slid as much as 10 percent, the biggest intraday decline since May 13. Before today, the shares had gained 49 percent this year.
“Wynn has continued to struggle to gain traction with Encore,” the new resort in Las Vegas, said Christopher Jones, an analyst at Telsey Advisory Group in New York. Some investors had “high expectations for the quarter.”
Net income dropped to $34.2 million, or 28 cents a share, from $51.2 million, or 49 cents, a year earlier, Las Vegas-based Wynn said today in a statement. Excluding some items, profit of 33 cents beat the 16-cent average of 18 analysts’ estimates compiled by Bloomberg. Revenue rose to $773.1 million from $769.2 million. Analysts on average projected $743.4 million.
With the addition of 2,034 Encore suites to the 2,716 rooms at Wynn Las Vegas, the company’s Strip revenue rose 10 percent, occupancy fell and revenue per room declined. Gambling at all Strip casinos slid almost 14 percent this year through August.
Wynn’s combined adjusted property earnings before interest, taxes, depreciation and amortization, an indicator of cash flow, rose 12 percent to $198.2 million, beating the $180.1 million average estimate of 14 analysts surveyed.
More Rooms, Fewer Bets
In Las Vegas, ebitda was little changed at $70 million at Wynn’s namesake resort and its neighbor Encore. Encore opened in December and the casino reduced win per table and slot machine.
Wynn’s Las Vegas table-game betting fell 2.4 percent to $518.1 million. The slots’ $850.3 million win was “in-line” with a year ago. Encore added 91 new tables and 812 slots.
Wynn’s Las Vegas occupancy fell to 83.9 percent from 96.1 percent a year earlier. Revenue generated by each room available in Las Vegas tumbled 33 percent to $176.
Overall Las Vegas Strip gambling fell 9 percent in August. Casinos have slashed room prices and increased special offers to counter the drop in corporate meetings and betting.
In Macau table-game betting by so-called VIPs, people who spend at least %125,000 per visit, rose 6 percent, while mass market action fell 12 percent.
“If you had to nitpick, the VIP hold rate was slightly below historical range, and the mass business in Macau was a little soft,” Jones said.
Wynn’s adjusted property ebitda in Macau climbed 21 percent $128.2 million. The company reiterated it will open a second resort in the first half of 2010. Wynn raised about $1.87 billion selling a stake in the Macau operation this month.
Macau’s revenue per available room was little changed at $235. Occupancy rose to 89.2 percent from 86.2 percent.
Overall Macau casino revenue rose to 31.8 billion patacas ($3.98 billion) in the third quarter, the city’s Gaming Inspection and Co-ordination Bureau Web site said on Oct. 16.
