Wynn opens strong

Friday, June 3, 2005 | 10:59 a.m.

Analysts say investors in Wynn Resorts Ltd. should be breathing easier after the company reported that its revenue exceeded expectations for the first 34 days of operation of the $2.7 billion Wynn Las Vegas.

The company said in a Securities and Exchange Commission filing Thursday that net gaming revenue was $64.3 million and nongaming revenue was in excess of $76.6 million for the new property in the opening month.

The Strip resort, which opened its doors April 28, reported an average daily room rate of $308 and 91 percent occupancy.

The results exceeded expectations of Wynn executives and met those of several analysts who issued reports Thursday.

"We are delighted with our first full month of operations, but we are reminded that opening a resort of this caliber and this scope is a daunting challenge," said Steve Wynn, chairman and chief executive officer of Wynn Resorts, in a statement accompanying the announcement.

"As the weeks progress and our opening and startup challenges are met one at a time, operating efficiencies will emerge. This process is far from over and will take several months. The early results should be measured accordingly."

Analysts concurred that while opening-month crowds have been strong, early expenses should also be high.

"Net gaming revenue for the first 34 days was $64 million, which is roughly what we expected from the property in the first 60 days of operation," said Robin Farley of UBS, New York, in a note to investors. "Slot win per day was $304, versus the $170 per day we have estimated as a more typical level. Win per table has also been at a premium $9,244 per day, well above the $5,100 that is more typical of premium Strip properties."

"We would note that it could take several months before the property's operating leverage to be evident, as with any casino resort opening," added Marc Falcone of Deutsche Bank Securities, New York, in a note to investors. "For example, in its first quarter, Borgata (in Atlantic City) reported very strong revenues, but a cash flow margin of about 20 percent and it took several quarters for the property to ramp up its margins."

He said the company's announcement should quiet concerns about the initial performance of the property, which were called into question when Goldman Sachs downgraded the company's stock last month.

Wynn Resorts also is building Encore, a $1.4 billion property next to Wynn Las Vegas, due to open in 2008, and a $700 million casino in Macau. The company also is submitting a bid to build a resort in Singapore.

In separate SEC filings, two executives reported they had sold shares of Wynn stock pursuant to a trading plan entered on May 6. Company President Ronald Kramer, also a member of the board of directors, sold 85,376 shares at $45.8611 and now has 323,655 shares. The sale netted $3.9 million.

Marc Schorr, chief operating officer, on behalf of the Marc D. Schorr and Jane R. Schorr Living Trust, sold 70,200 shares at $45.4079 and now has 360,523 shares. That sale netted $3.2 million.