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Wynn Resorts sees profit in first quarter

Image

Steve Marcus

The Encore is shown to the left of the Wynn Las Vegas on the Strip.

Updated Thursday, April 29, 2010 | 4:34 p.m.

Wynn Resorts Financial Information

  1Q 2010 1Q 2009 % Change 4Q 2009
Revenue $908.9 million $740 million 22.8% $809.3 million
Net income $27 million $33.8 million N/A ($5.2 million)
Net income per share 22 cents (30 cents) N/A (4 cents)

Wynn Resorts swung to a profit during the first quarter of 2010 as revenue increased in Las Vegas and Macau.

The Las Vegas-based company reported net income of $27 million, or 22 cents per share, in the first quarter of 2010 compared to a net loss of $33.8 million, or 30 cents per share, in the same period of 2009.

Net revenue for the first quarter of 2010 was $908.9 million, compared to $740 million in the first quarter of 2009. The revenue increase was driven by a 31.6 percent increase at Wynn Macau and a 9.3 percent increase from Las Vegas operations, the company said in today’s earning report.

“The numbers, I think, speak for themselves. I really have very little to add to that except that the first quarter numbers do not include any contribution from Encore at Wynn Macau. We’re looking forward to it contributing to the overall impact of our operation in Macau,” Wynn Resort Chairman and Chief Executive Steve Wynn said during the company’s first quarter conference call.

Wynn Resorts’ Las Vegas operations generated EBITDA of $60.3 million in the first quarter of 2010, compared to $43.9 million in the first quarter of 2009. EBITDA is a profitability measure meaning earnings before interest, taxes, depreciation and amortization.

Net casino revenue in the first quarter of 2010 was $139.5 million, up 19 percent from the first quarter of 2009.

Hotel revenue at Wynn Las Vegas and Encore was down about 9 percent to $77.6 million during the quarter, versus $85.1 million in the first quarter of 2009. Average daily room rates also fell about 9 percent, from $222 to $203 during the year-over-year period. Occupancy at Wynn and Encore was flat at about 90 percent.

Food and beverage revenue in Las Vegas decreased slightly, by 1 percent, to $95.9 million in the quarter. Retail revenue fell about 3 percent, to $18.9 million, during the year-over-year period.

Entertainment revenue increased by 42 percent to $18.2 million from the first quarter of 2009 primarily due to Garth Brooks performances and increased revenue from Le Rêve, the company said in the report.

Wynn reaffirmed a May 28 opening day for the Encore Beach Club and Surrender nightclub at Encore Las Vegas. The $68 million project has replaced the Encore porte-cochere. It will also include outdoor seating for Switch restaurant, updates to Society Café and a new entrance plaza. Wynn said he expects the additions will have a significant effect on walk-in traffic.

In Macau, revenue was $590.6 million in the first quarter of 2010, compared to $448.7 million in the same period of 2009. Wynn Macau’s EBIDTA grew to $181.6 million from $114.6 million a year earlier.

Click to enlarge photo

The Encore Macau grand opening fireworks illuminate the night sky above Wynn Macau on April 21, 2010.

The company opened Encore at Wynn Macau, a 414-room hotel and casino, on April 21. The hotel includes restaurants, luxury shopping and gaming space with 61 table games and 69 slot machines.

“We believe that Macau Encore is the loveliest urban hotel in the world,” Wynn said.

During the Encore at Wynn Macau opening, Wynn commented during an interview that he was considering moving his headquarters to Macau. Wynn elaborated on that comment during Thursday’s call.

“We are going to include a new headquarters in the Cotai project and I intend to begin the process by switching my own schedule and my CFO’s in almost the immediate future,” Wynn said. “It really first amounts to an allocation of our time and our focus. I don’t intend to uproot everyone who works for me here. They’ve got lives and homes.”

Wynn said his Cotai resort would not open until at least 2014 after a table game cap expires in 2013. The cap was imposed by the local government to control an increase in table games over the next three years. Wynn said he hopes to build a destination resort on his 51-acre parcel.

“What I believe is missing from Cotai is a legitimate destination resort that has the one thing in China that is so scarce, and that is space. I want to build a hotel in Cotai and I have designed one that has made use of our 51-acre parcel,” Wynn said.

Wynn said the hotel will include gardens, waterfalls and extensive grounds.

Wynn has been spotted with his team at several regional casino sites around the country, sparking rumors that he pulled out of the Philadelphia Foxwoods project to invest in another regional casino.

“We were just curious,” Wynn said. “You should read nothing into it. There is no agenda.”

Wynn said his next project will be in China, unless he gets involved in Massachusetts, where lawmakers approved a bill to license two resort-style casinos earlier this month.

Wynn abruptly pulled out of the stalled Foxwoods project earlier this month just days after meeting with the Philadelphia mayor and Pennsylvania Gaming Control Board. Under the proposed agreement, Wynn would have taken a 51 percent stake in the project, while a partnership including the Connecticut Indian tribe that owns Foxwoods Casino in Mashantucket, Conn., and local investors would have had the remaining shares.

“The gaming opportunities in Pennsylvania were interesting and stimulating, but the particular deal we were in, a deal in which we were a participant in someone else’s company, became unattractive to us at the last minute. We backed out of a deal more than we backed out of Pennsylvania.”

Wynn said he would consider bidding on the Foxwoods project license if it came up for bid again.

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