Wynn Posts Better Than Expected Results Despite Lingering Weakness In Macau
Wynn Resorts (WYNN) - Get Report beat Wall Street's forecasts with its first-quarter results, despite lingering weakness in the Macau properties that have been the focus of investor attention the last several quarters.
Revenues at Wynn's Macau property declined 14% in the period, on a year over year basis, to $608 million. That was in line with projections for Macau-based sales, though worse than the overall 9.5% drop in Macau gaming properties reported for the month of April, a figure that actually proved to benefit stocks of gaming companies with Macau exposure, since the decline was not as dramatic as experts had been anticipating.
Shares of Wynn, which came into the session down more than 10% in just the last two weeks, to $89 a share Wednesday, traded higher in afterhours action, moving up to $91 a share.
Macau has seen its gaming operations hurt by the government of China's crackdown on junkets to the gaming destination, which has limited the excursions by high rolling casino customers, as well as the government's efforts to curtail the once rampant corruption and money laundering that accompanied the expansion of gaming in the region.
Wynn, headed by founder and CEO Steve Wynn, is acutely exposed to the Macau region, which accounts for 60% of its revenues, because, in addition to its existing property there, it's preparing to open its $4 billion Wynn Palace property in Macau in the third quarter of this year, ahead of a big bulge in new casino sites in Macau.
Wynn, though, topped Wall Street's forecasts on its bottom line, reporting $1.07 a share, versus estimates of 83 cents a share, on an adjusted basis. Revenue of $998 million came in just shy of estimates of just over $1 billion.
Wynn's Las Vegas operations actually showed modest improvement in the quarter, with revenues there ticking up nearly 1%. The rebound in national employment and the uptick in economic conditions, even though modest, has benefitted Vegas casino properties, as leisure travel to there has picked back up.
The gaming company also said its board authorized a 50 cent a share dividend for the quarter, marking no change from its previous payout levels.
Meanwhile, in other gaming news, Caesars Entertainnmet (CZR) - Get Report reported first quarter results that showed revenue increased by a healthier than expected rate of nearly 7%, reaching $1.17 billion in the period.
Caesars has had an uneven financial performance the last several quarters, and operates with a complex balance sheet. The company was bought in 2008 by private equity sponsors Apollo Global Management (APO) - Get Report and TPG Capital Management, as another iteration of the big ticket LBOs that preceded the financial crisis, but have proven to be a drag on the PE sponsors' own performances.
Caesars primary operating unit entered bankruptcy protection in January 2015, and it continues to negotiate with creditors.
Shares of Caesars common stock were trading at $6.74 per share after hours Thursday.
