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Wynn Resorts' (WYNN) Q4 Earnings & Revenues Miss Estimates

Zacks Equity Research

Wynn Resorts, Limited WYNN reported fourth-quarter 2019 results, wherein both earnings and revenues missed the respective Zacks Consensus Estimate for the second straight quarter. Following the results, the company’s shares declined 1.6% in after hour trading session on Feb 6.

The company reported an adjusted loss of 62 cents per share, missing the Zacks Consensus Estimate of earnings of 85 cents. In the prior-year quarter, the company had reported adjusted earnings per share of 95 cents. In the reported quarter, the bottom line was hurt by operating loss at Encore Boston Harbor. Macau and Las Vegas operations also reported decline in operating income.

Revenues totaled $1,653.5 million, which lagged the Zacks Consensus Estimate of $1,718 million. The top line also decreased 2% thanks to dismal performance by Wynn Palace, Wynn Macau and Las Vegas operations.

Concurrent with the earnings announcement, the company declared a quarterly cash dividend of $1.00 per share. This dividend will be payable Mar 6, 2020, to its shareholders of record as of Feb 26.

Wynn Palace Disappoints

Revenues from Wynn Palace totaled $590 million in the fourth quarter, down 20.3% year over year. Casino revenues amounted to $490.4 million, down 23%. Rooms, food and beverage, and entertainment, retail and other also declined 3.2%, 1.4%, 7.5%, to $43.2 million, $29.7 million and $26.7 million, respectively.

At the VIP segment, table games turnover was $9.31 billion, down 42.4% year over year. VIP table games win rate (based on turnover) was 3.07%, above the expected range of 2.7-3% but below 3.25% witnessed in the year-ago quarter. Table drop at the mass market segment was $1.25 billion, up 3.6% from the year-ago quarter. Furthermore, table games win in mass market operations amounted to $315.4 million, up 2.6% year over year.

Notably, average daily rate (ADR) came in at $268 (down 3.2%), occupancy was 96.9% (down 30 basis points year over year) and revenue per available room (RevPAR) was $260 (down 3.3%).

Wynn Macau Operations

Wynn Macau revenues were down 5.1% year over year to $525.4 million in the fourth quarter on account of decrease in casino, rooms, food and beverage, and entertainment, retail and other revenues.

Notably, casino revenues in the reported quarter dipped 1.7% to $455.9 million. Rooms, food and beverage, and entertainment, retail and other revenues declined 5.8%, 1.4% and 13%, to $28.3 million, $20.9 and $20.2 million, respectively.

Table games turnover at the VIP segment declined 37.9% to $7.9 billion. Meanwhile, the VIP table games win rate (based on turnover) was 3.27%, above the expected range of 2.7-3.0% and higher than the year-ago quarter figure of 2.86%.

Table drop at the mass market segment was $1.39 billion, up 10.6% year over year. Table games win in the mass market category amounted to $283.2 million, up 10.7%.

Notably, average daily rate (ADR) came in at $291 (down 1%), occupancy was 99.3% (flat year over year) and revenue per available room (RevPAR) was $289 (down 1%).

Wynn Resorts, Limited Price, Consensus and EPS Surprise

 

Wynn Resorts, Limited Price, Consensus and EPS Surprise

Wynn Resorts, Limited price-consensus-eps-surprise-chart | Wynn Resorts, Limited Quote

Las Vegas Operations

Revenues from Las Vegas operations were down 6.3% year over year to $368.8 million in the quarter under review. The downside can primarily be attributed to decline in casino revenues.

Casino and food and beverage revenues dropped 27.8% and 1.3%, to $75.7 million and $120.3 million, respectively.  Rooms and entertainment, retail and other revenues increased 2.1% and 7%, to $120.3 million and $52.5 million, respectively.
    
Further, table games drop decreased 18.5% to $414.5 million. Meanwhile, table games win witnessed a sharp decline of 36.8% year over year to $71.9 million. Table games win percentage of 17.4% was down from 22.4% in the year-ago quarter and also below the projected range of 22-26%.

During the quarter, RevPAR increased 3.2% to $288. Occupancy rate was 89.4%, down 20 basis points from the prior-year period. ADR came in at $322, up 2.2%, year over year.

Encore Boston Harbor

The company, which opened Encore Boston Harbor on Jun 23, 2019, reported revenues of $169.3 million. Table games win was 19.2%, within company’s expected range of 16-20%. Occupancy was 76%, while ADR and RevPAR were $352 and $267, respectively.

Operating Performance

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) decreased 11.3% year over year to $443.1 million on dismal performance by Wynn Macau and Las Vegas operations.

In the quarter under review, adjusted property EBITDA from Macau totaled $347.7 million, down 11.8% year over year. Adjusted property EBITDA from Las Vegas operations jumped 23.8% to $80.1 million.

Cash Position

As of Dec 31, 2019, Wynn Resorts’ cash, cash equivalents and restricted cash totaled $2.36 billion.

Outstanding debt at the end of the fourth quarter amounted to $10.4 billion, including $3.11 billion of Wynn Las Vegas related debt, $4.96 billion of Macau debt, $1.72 billion of Wynn Resorts Finance debt, and $611.7 million of debt held by the retail joint venture, which the company consolidated.

Coronavirus Impact

Wynn Resorts business in China is likely to be impacted by the coronavirus outbreak. The company is bearing the brunt of nearly $2.4 million to $2.6 million per day due to the casino being located in China. The expenses mostly comprised of payroll to 12,200 employees.

Zacks Rank & Key Picks

Wynn Resorts currently has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the same space are Churchill Downs Incorporated CHDN, SciPlay Corporation SCPL and Caesars Entertainment Corporation CZR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Sell) stocks here.

Churchill Downs has three-five year expected earnings per share growth rate of 20%.

SciPlay Corporation and Caesars Entertainment 2020 earnings are expected to improve 48% and 100.1%, respectively.

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