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Wynn Resorts (WYNN) Tops Q4 Earnings, Revenue Estimates

Zacks Equity Research

Wynn Resorts WYNN posted better-than-expected results for fourth-quarter 2017, with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted earnings of $1.40 per share surpassed the Zacks Consensus Estimate of $1.36 by nearly 2.9%. Earnings increased more than 100% from the year-ago figure of 50 cents, given a substantial increase in operating income from Macau operations (Wynn Palace and Wynn Macau) and income tax benefit from U.S. tax reform, partially offset by a decrease in Redemption Note fair value.

Wynn Resorts’ revenues of $1.69 billion beat the Zacks Consensus Estimate of $1.54 billion by 9.7%. Revenues increased 29.9%, given significant contribution from Wynn Palace and Wynn Macau.

Concurrent with the earnings announcement, the company announced approval of a cash dividend of 50 cents per share. The dividend is payable to stockholders of record as of Feb 15, 2018 on Feb 27, 2018.

We note that shares of the company have rallied a staggering 102.9% in the last year, outperforming the industry’s gain of 35.4%.

Wynn Macau Revenues Up Year Over Year

Wynn Macau revenues increased 24.1% year over year to $618.6 million in the quarter, owing to higher casino as well as non-casino revenues.

Notably, casino revenues jumped 25.3% to $582.9 million. Meanwhile, table games turnover in the VIP segment rose a massive 44.7% to $15.62 billion. In addition, the VIP table games win rate (based on turnover) was 2.89%, down 19 basis points (bps) year over year and within the projected range of 2.7% to 3%.

Table drop in the mass market segment was $1.25 billion, up 14.1% year over year. Table games win in the mass market category amounted to $230.1 million, up 18.6%. Table games win percentage in mass market operations was 18.4%, up 70 bps from the year-ago quarter.

Non-casino revenues before promotional allowances increased 14.5% to $73.9 million. Room revenues were flat year over year at $25.9 million. Revenue per available room (RevPAR) increased 2% in the quarter to $257 million. Average daily rate (ADR) declined 1.5%. Conversely, occupancy rate increased 310 bps to 97.3%.

Wynn Resorts, Limited Price, Consensus and EPS Surprise

Wynn Resorts, Limited Price, Consensus and EPS Surprise | Wynn Resorts, Limited Quote

Wynn Palace Treads the Growth As Well

Revenues from Wynn Palace were $693.4 million in the quarter, up a massive 65.6% year over year. Casino revenues totaled $648.6 million, increasing 73.8%. Table games turnover in the VIP segment was $16.23 billion, up 57.1%. VIP table games win rate (based on turnover) was 3.02% above the expected range of 2.7-3% and up 34 bps year over year. Table drop in the mass market segment was $1.12 billion, surging 55.1% from the year-ago quarter. While table games win in mass market operations amounted to $264.5 million, increasing 65.7%, mass market win rate increased 150 bps to 23.5%.

Non-casino revenues, before promotional allowances were $90.8 million, up 5.5% from the year-ago quarter. During the quarter, room revenues were $38.9 million, up 4.1% from the year-ago figure. Notably, ADR came in at $236 million (down 13.2%), occupancy was 96.8% (up 840 bps) and RevPAR was $228 million (down 5.4%).

Las Vegas Operations Weak

Revenues from Las Vegas operations decreased 1.6% year over year to $377 million in the quarter, owing to lower casino and non-casino revenues.

Notably, casino revenues fell 14.1% to $142.7 million. Table games drop and table games win decreased 4.8% and 18.6%, respectively. Table games win percentage of 23.5% declined 400 bps from the year-ago quarter and was within the expected range of 21% to 25%.

However, total non-casino revenues, before promotional allowances increased 5.8% year over year to $275.2 million. Room revenues were up 1.9% to $107.8 million. During the quarter, RevPAR grew 2% to $250 million on the back of a 4.8% increase in ADR. Occupancy rate was 82.1% compared with 84.1% in the year-ago quarter.

Food and beverage revenues increased 9.9% to $108 million, and entertainment, retail and other revenues were up 5.8% to $59.5 million.

Operating Performance Strong at Wynn Macau and Wynn Palace

Adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) surged 40.9% year over year to $480.2 million, driven by increases at Wynn Macau and Wynn Palace, partially offset by a decline in Las Vegas.

In the quarter, adjusted property EBITDA from Wynn Macau was $186 million, up 25% year over year, while that from Wynn Palace surged more than 100% to $190.1 million. Adjusted property EBITDA from Las Vegas operations was down 9.2% to $104.1 million.

Net Income Rises on Solid Operating Performance

Adjusted net income came in at $144.3 million, up from $50.8 million in the year-ago quarter. The surge was mainly driven by increase in operating income from Wynn Palace and Wynn Macau and income tax benefit from U.S. tax reform, partially offset by a decrease in Redemption Note fair value

Cash Position Down Slightly

As of Dec 31, 2017, Wynn Resorts’ cash and cash equivalents, restricted cash and investment securities were $3.13 billion compared with $3.26 billion as of Sep 30, 2017.

Outstanding debt at the end of the quarter totaled $9.63 billion, including $3.16 billion of Wynn Las Vegas related debt, $3.60 billion of Macau debt, and $2.87 billion at the parent company and other.

During the quarter, Wynn Macau redeemed the remaining $403.6 million of untendered 5 1/4 % Senior Notes due 2021 and recorded a $12.3 million loss on extinguishment of debt.

Zacks Rank and Stocks to Consider

Wynn Resorts sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the same space include Las Vegas Sands LVS, Boyd Gaming Corp. BYD and Melco Resorts & Entertainment MLCO, each carrying a Zacks Rank #2 (Buy).

Las Vegas Sands, Boyd and Melco’s 2018 earnings are projected to grow 6.1%, 31.2% and 19.8%, respectively.

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