Wynn Resorts 1st-quarter profit falls 20 percent
LAS VEGAS—Casino operator Wynn Resorts Ltd. reported Thursday that first-quarter profit fell 20 percent on an increase in operating costs, but said revenue rose thanks primarily to business at its resort in Macau.
Billionaire Steve Wynn, chairman and chief executive of the Las Vegas-based gambling resort company, told investors during a conference call that his company would weather the current economic slowdown.
"This is about the sixth time I've been through slowdowns in Las Vegas in my 40-year career," Wynn said.
"This is not a company that gives a damn about short-term markets," he said.
The company said it earned $46.7 million, or 41 cents per share, compared with $58.4 million, or 54 cents per share, in the year-ago period.
The company said operating costs rose 30 percent to $688.1 million.
Excluding items such as losses on interest expenses and other financing, adjusted net income totaled $78.2 million, or 69 cents a share for the period ended March 31. That was up from $72.6 million, or 67 cents a share, a year earlier.
Sales were up 22.6 percent, to $778.7 million, from $635.3 million in the same period in 2007.
The results were slightly below analysts' expectations of earnings of 70 cents per share on sales of $734.4 million.
The conference call came after Wynn shares closed at $108.19, up $2.85. The stock price fell $3.49, or 3.23 percent, to $104.70 in after-hours trading.
Wynn focused on gross non-casino revenue, which the company reported was $201.6 million for the quarter at the Wynn Las Vegas resort, up 3.3 percent from the first quarter of 2007 and driven primarily by higher entertainment revenue.
Hotel revenue was down 3.3 percent, to $70.6 million during the quarter.
"Non-casino revenue is not down, it is even or up slightly," Wynn said.
The company said its overall revenue increase was primarily driven by sales at its Wynn Macau property, where the company opened an expansion in December.
The company said the Macau property generated net revenue of $491.5 million, up 61 percent compared with $304.6 million for the first quarter of 2007.
"The numbers out of Macau were pretty fantastic," said Robert LaFleur, an analyst with Susquehanna Financial Group who said he thought Wynn benefited from a high-end position in the market.
"Las Vegas was tougher," LaFleur said.
Wynn pointed to figures showing slot machine revenue dropped in Las Vegas from $60.4 million to $52.7 million. He called the decline most pronounced in quarter-play machines.
"That is exactly the narrative," LaFleur said, "which is that the downturn in Vegas is much more concentrated in the middle and low end of the market."
Deutsche Bank analyst Bill Lerner said Wynn business in Las Vegas was down "relatively modestly," and losses were compounded by poor luck in a typically lucky three-month period that draws baccarat players during Chinese New Year.
Wynn reported a lower table hold percentage for the quarter, at 19.9 percent in 2008, compared with 27.6 percent in 2007.
"That shows that they won less than they normally would in a first quarter," Lerner said.
Wynn plans a Macau expansion, with the opening of the $600 million, 405-room Wynn Diamond Suites resort in 2010. The company also is awaiting approval from the Macau government to develop a 52-acre site.
Wynn said internal hiring has begun and room reservations will begin June 15 for the $2.1 billion Encore tower adjacent to the Wynn Las Vegas on the Las Vegas Strip. He said he expected the new resort will open by Christmas, no matter what the economy.
"If the market is soft in December, I don't care," he declared.
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Associated Press Writer Sandra Chereb in Reno contributed to this report.
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Wynn Resorts Ltd.: http://www.wynnresorts.com
