Wynn Resorts Ltd.WYNN posted mixed third quarter 2015 results with earnings beating the Zacks Consensus Estimate but revenues missing the same. This marked the fourth consecutive revenue miss. Meanwhile, earnings and revenues both fell on a year-over-year basis. Both Las Vegas as well as Macau could not post revenue growth. Shares of this Las Vegas, NV-based casino operator plunged approximately 8.7% in aftermarket hours yesterday.
Meanwhile, the company stated that owing to the Chinese government's anti-graft corruption campaign VIP gamblers are spending significantly less than they did a year ago. Also, the company is not sure what the environment is going to be like in the future. This further lowered investors' confidence.
Earnings and Revenue Discussion
Adjusted earnings of 86 cents per share in the third quarter plunged approximately 56% year over year. The downside reflects a significant decline in revenues. However, it beat the Zacks Consensus Estimate of 75 cents by 14.7%.
Adjusted earnings exclude pre-opening cost, loss on extinguishment of debt, decrease in swap fair value, decrease in redemption note fair value, net and property charges.
Not surprisingly, Wynn Resorts' revenues of $996.3 million missed the consensus mark of $1.03 billion by 3.4%. Revenues also fell 27% year over year, owing to sluggish performance in Macau as well as Las Vegas.
Adjusted earnings before interests, taxes, depreciation and amortization (EBITDA) declined 39% year over year to $279.9 million due to a decline in revenues. Total operating costs and expenses declined approximately 18.7% to $843.5 million due to a fall in casino and general and administrative expenses.
The company owns and operates casino hotel resorts in Las Vegas and in the Macau Special Administrative Region of the People's Republic of China.
Wynn Resorts reports its Macau table games results under two categories - the VIP segment and the mass market segment.
Wynn Macau revenues plummeted 37.9% year over year to $585.1 million in the quarter, owing to lower revenues at the VIP and the mass market segment in Macau.
Notably, gross gaming revenues in Macau declined in double digits in all three months of the quarter. In fact, gross gaming revenues have gone downhill since Jun 2014. The region is struggling owing to an anti-graft corruption drive, which has lowered footfall at the casinos. Also, credit growth concerns, tighter restrictions on visas and a partial smoking ban in casinos have adversely impacted revenues generated from the region.
Table games turnover in the VIP segment plunged 51.3% from the prior-year period to $12.2 billion due to a sluggish Macau VIP market. VIP table games win rate (based on turnover) was 3.17%, up 39 basis points (bps) year over year and was higher than the expected range of 2.7% to 3%.
Table drop in the mass market segment was $1.2 billion, down 13.7% year over year. Table games win in the mass market category amounted to $234.7 million, down 28.3% year over year. However, mass market win rate was 19.6%, down 400 bps year over year.
Revenue per available room (RevPAR) fell 5.6% in the third quarter due to a 260 bps decline in occupancy rate and a 3.1% fall in average daily rate (ADR). Non-casino revenues before promotional allowances came in at $77.1 million, down 22.2% year over year. In the third quarter, adjusted property EBITDA was $162.8 million, down 50% due to weakness in the gaming segment.
Wynn Resorts is engaged in developing the Wynn Palace Project on the Cotai land in Macau. The resort is scheduled to open in the first half of 2016. Currently, the company expects the project to cost around $4.1 billion. The company spent around $434.9 million on the Cotai project in the quarter.
Las Vegas Operations
Wynn Resorts' revenues from Las Vegas operations declined 3.9% year over year to $411.2 million due to a decline in casino revenues, partially offset by an increase in non-casino revenues. Net casino revenues fell 14.8% from the prior-year period to $152.1 million. Table games win percentage was 23.7%, down 200 bps year over year. The decline was within the expected range of 21% to 24%.
However, total non-casino revenues, before promotional allowances, increased 1.9% year over year. Room revenues were up only 0.2% to $102.8 million due to an increase in ADR. During the quarter, RevPAR increased 2.1% while ADR increased 3%. However, occupancy rate fell 100 bps year over year to 88.3%. In the third quarter, adjusted property EBITDA fell 12.1% year over year to $117.1 million.
Wynn Resorts presently has a Zacks Rank #5 (Strong Sell).
A weak operating environment in Macau once again resulted in dismal revenues for this casino operator. Other companies that are also bearing the brunt of a weak gambling business in Macau include Melco Crown Entertainment Limited MPEL , Las Vegas Sands Corp. LVS and MGM Resorts International MGM .
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