Wynn Resorts, the casino company that owns the Wynn and Encore on the Strip as well as property in Macau, reported its third quarter earnings today.
Company: Wynn Resorts Ltd. (NASDAQ: WYNN)
Revenue: $996.3 million, down 27.2 percent from the third quarter last year. The company attributed most of the decline to a big drop in revenue from its Macau operations, as well as a smaller decline in revenue from its Las Vegas resort business.
In this Thursday, Jan. 15, 2015, photo, Wynn Resorts CEO Steve Wynn delivers the keynote address at Colliers International Annual Seminar at the Boston Convention Center in Boston.
Earnings: $73.8 million, down 61.4 percent from the third quarter of 2014.
Earnings per share: 73 cents, compared to $1.88 during the same time period last year.
What it means: CEO Steve Wynn made it clear on a conference call to discuss the quarterly earnings that he is deeply frustrated with the Macau market, which has been hurting his company’s finances.
Wynn directed most of his anger not at the existing operations, but rather at the Macau government’s “mystical policies” regarding equipment in new casinos — specifically the number of table games allowed. He was obviously incensed by uncertainty surrounding the number of tables that his $4.1 billion Wynn Palace, scheduled to open next year, will feature.
Wynn said that such a large question mark hanging over his new Macau casino makes it difficult for his company to train employees and called the situation “outrageous and ridiculous.”
Faced with a government-led corruption crackdown that has damaged business from high rollers, as well as broader Chinese economic struggles, Macau has reported 16 consecutive months of year-over-year declines in gaming revenue. That’s been bad news for Wynn Resorts, which gets the bulk of its revenue from Macau, and it showed this quarter: Revenue from the company’s Macau operations dropped 37.9 percent to $585.1 million.
Like the Strip, Wynn said that Macau has proven it can expand the market beyond gambling by providing a more diverse range of offerings to visitors. But he emphasized that the casino side is still critical.
“The reason these extraordinary nongaming attractions exist is because the damn casino is the cash register,” Wynn said on the conference call. “The gaming allows the nongaming to flourish, and that’s the lesson we’re trying to get to penetrate the leadership of Macau.”
Revenue from the company’s Las Vegas operations, meanwhile, dropped 3.9 percent to $411.2 million. That was led by a 14.8 percent decrease in casino revenue, while some other areas actually improved slightly.
Wynn Resorts said its total non-casino revenue in Las Vegas, prior to factoring in promotional allowances, increased 1.9 percent from last year. Room revenue rose 0.2 percent and food and beverage revenue increased 4.5 percent. Entertainment, retail and other revenue decreased 1.3 percent, however.
Wynn said on the conference call that his property is the “principal beneficiary” of international business in Las Vegas.
“So if a segment of the international market is impacted for extraneous reasons, or external reasons like a change in government policy...in China, then we would be the principal victims, or we would suffer the most,” he said. “That’s exactly what happened.”
Wynn stressed that his company is “very satisfied with Las Vegas.”
The company also announced today that it appointed two new members to its board of directors: Patricia Mulroy, the former general manager of the Southern Nevada Water Authority who has served on the Nevada Gaming Commission, and Clark T. Randt Jr., a former U.S. ambassador to China who is now president of Randt & Co. LLC, which advises firms with Chinese interests.