Wynn Resorts 1Q Net Slips 19% On Softer Take In Vegas
05/07/2012| 06:48pm US/Eastern
--CEO Steve Wynn to move on Cotai project "lickety-split"
--Premium room rates contribute to Vegas occupancy slip
--Shares drop 1.7% after hours
(Updates with comments from earnings call.)
By A.D. Pruitt and Drew FitzGerald
Wynn Resorts Ltd.'s (WYNN) first-quarter profit fell 19% after the casino operator kept a smaller cut of revenue from its table games in Las Vegas.
Shares slipped 1.7% to $125.19 after hours on the weaker-than-expected results. The stock had climbed 13% this year through Monday's close.
Surging revenue from Macau drove Wynn Resorts' bottom line higher last year as high rollers from the Chinese mainland continued to stream into the only place in the nation where casino gambling is legal.
Government statistics showed gambling revenue in the former Portuguese enclave continued to climb in the first quarter, though not as briskly as in 2011. Wynn Resorts' top line also seemed vulnerable in the fourth quarter after it grew 8.6%--its first single-digit quarterly increase since 2009.
The casino operator has sought to boost its presence in Macau with plans for a new complex in Cotai, an area of filled-in land between two of Macau's natural islands. The company this month officially won approval to build a multibillion-dollar complex in Cotai, featuring a five-star hotel, gambling space, retail, dining and shopping areas as well as a spa and nightclub.
Chief Executive Steve Wynn during the earnings call declined to give specifics on the design and construction cost of the project, but noted financing would be up to 30% equity. "We're in a great position to put in a good financing package down at Cotai to make sure we have a lot of flexibility," he said. Wynn added the company was "going to be lickety-split to get it done."
The company's expansion strategy has been overshadowed in recent months as a boardroom battle with Japanese gambling tycoon Kazuo Okada continues to grab headlines. The company in February forcibly bought out Okada's 20% stake in the company at a steep discount and accused him of making improper payments to gambling regulators in the Philippines. Okada has filed a counterclaim.
Wynn reported a profit of $140.6 million, or $1.23 a share, down from $173.8 million, or $1.39 a share, a year earlier. Excluding property charges, debt-extinguishment losses and other effects, per-share earnings slipped to $1.33 from $1.38 as net revenue jumped 4.2% to $1.31 billion.
Analysts polled by Thomson Reuters expected a $1.41-per-share profit with $1.34 billion of net revenue.
The company's revenue declined 8.1% in Las Vegas after the casino operator retained a smaller cut of winnings from some of its table games. Revenue grew 9.8% at Wynn's Macau operations.
Average daily rates in Macau rose 5.4%, while occupancy grew to 91.3% from 88.6%. Las Vegas rates were up 6.4% as occupancy fell to 79.3% from 87.9%.
The company in the conference call attributed the occupancy rate decline to its decision to hold some room rates at premium prices.
-By A.D. Pruitt and Drew FitzGerald, Dow Jones Newswires; 212-416-2197; firstname.lastname@example.org