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Wynn Resorts Ltd. (WYNN - Analyst Report) reported third quarter 2012 adjusted earnings of $1.48 per share, surpassing the Zacks Consensus Estimate of $1.33 as well as prior-year earnings of $1.05. On a GAAP basis, earnings per share were $1.11 versus $1.01 in the comparable quarter last year. The better-than-expected results were driven by strong gambling businesses in Las Vegas.

Net revenue was flat year over year at $1,298.5 million, missing the Zacks Consensus Estimate of $1,311.0 million.

Macau Operations

Net revenue at Wynn Macau was $910.5 million in the quarter, down 4.3% year over year, due to a decline in VIP table games.

The table games turnover in the VIP segment declined 12.1% from the prior-year period to $27.6 billion. Though, VIP table games win was 3.08% based on turnover, above the expected range of 2.7% to 3.0% as well as the year-ago level of 2.95%.

However, table games in the mass market category jumped 8.3% to $211.3 million. Moreover, the mass market table games win rate was 30.8%, which was higher than the expected range of 28% to 30% and year-earlier rate of 27.7%.
Average daily rate (ADR) at Wynn Macau was $307, 2.5% lower than the $315 in the year-ago quarter. The property’s occupancy level was 94.2% up from 93.7% in the prior-year quarter. Combining both the effects, revenue per available room (REVPAR) slipped 2.0% year over year to $295.

Wynn Resorts currently comprises 492 tables (286 VIP tables, 196 mass market tables and 10 poker tables) and 891 slot machines in Macau.

Las Vegas Operations

Wynn Resorts’ revenue from Las Vegas operations achieved an upside of 11.8% year over year to $388.0 million as net casino revenue surged 22.6% from the prior-year period to $155.6 million. However, gross non-casino revenue increased 5.3% year over year to $280.1 million, buoyed by improved revenues from the hotel, and food and beverage segments, offset somewhat by lower retail and entertainment sales.

During the quarter, Wynn recorded a 1.4% year-over-year increment in room revenues. Average daily rate (ADR) inched up 1.9% to $244, but occupancy fell to 85.7% from 88.3%. Both the matrices led to a decline of 1.2% in REVPAR.

Liquidity Position

At the end of the quarter, Wynn Resorts’ total cash and investments were $2.7 billion. Total debt outstanding was $5.8 billion.


The company announced a cash dividend of $8.00 during the quarter which includes a $7.50 special dividend and 50 cents per share quarterly dividend. Additionally, Wynn Resorts plans to double its quarterly dividend to $1.00 from 50 cents in 2013.

Our Take

Despite the weak operating results at Macau, the casino operator was able to post profits above expectation, thanks to the strong business at Las Vegas. Moreover, a special dividend in the reported quarter and a boost in quarterly dividend for next year encouraged investors further.

Wynn Resorts which competes with Las Vegas Sands Corp. (LVS - Analyst Report) and MGM Resorts International (MGM - Analyst Report) currently retains a Zacks #3 Rank that translates into a short-term Hold rating. We are maintaining our Neutral recommendation on the stock over the long term.

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