Wynn Resorts Ltd released their financial results for the first quarter of 2016, ending March 31, last week, which showed significant a year-over-year decline in their Macau operations and a slight increase in income from the Las Vegas operations. While this is the 6th consecutive quarter where Wynn has reported a loss in revenues, their numbers for Q1 of 2016 surpass the Zacks Consensus Estimate.
According to the statement from Wynn, which owns and operates casino-hotel resorts in Las Vegas and the Macau, China, net revenues for the first quarter of 2016 was clocked at $997.7 million, an 8.6 % decline from the same period in 2015, when they reported net revenues of $1.09 billion. The drop, which was largely attributed to the poor performance in Macau, missed the Zacks Consensus Estimate of $1 billion by 0.9%.
Adjusted Property earnings before interests, taxes, depreciation and amortization (EBITDA) showed a year-over-year declined of 7% to $300.3 million from the $323 million reported in Q1 of 2015. Total operating costs and expenses saw a 13.8% declined for the quarter to $839.4 million: this was mainly due to lower casino and administrative expenses encountered in 2016.
Due to the decline in revenues, adjusted earnings per share dropped 52.9% to $1.07; but still beat the Zacks Consensus Estimate of $0.83 by 28.9%.
Revenues for Wynn Macau dropped a massive 13.8% since Q1 of 2015 to $608.2 million this year and adjusted Property EBIDTA amounted to $191.2 million, 9.9% lower than the $212.3 million reported in the same period of 2015.
Gross gaming revenues saw a gradual decline over each of the three months of the quarter; this seems to be keeping with the downward trend they have experience since June 2014. The Macau operations have been struggling due to a list of reasons; notably, the Chinese government's anti-graft corruption drive, which has lowered traffic at the casinos, credit growth concerns, which has seen tighter restrictions on visas and lastly, a partial smoking ban in the casinos, which has also been responsible for the sluggish market.
The table games at Wynn Resorts Macau is split into two segments – the VIP and the mass market.
The VIP segment for table games saw a year-over-year plunge of 21.4% to $13.47 billion compared to the $17.13 billion, which was reported in Q1 of 2015 and table games win rate was up by 10 basis points (bps) to 2.81%, which was within the projected range of 2.7% to 3%.
Meanwhile, revenues from VIP tables also suffered because the average number of VIP tables decreased to 189 units in the first quarter of 2016, from 252 units in the first quarter of 2015.
The gross gaming revenues in the mass market was reported at $1.21 billion, which reflected a 5.6% drop from the equivalent period in 2014. Table games wins amounted to $247.5 million in revenues, which unfortunately also suffered an 11.5% decline but the mass market win rate, which was up by 20.5% translated to a 130 bps gain; while still remaining below the 21.8% experienced in the first quarter of 2015.
The hotels also saw a low occupancy rate, resulting in a 270 bps decline from the same period last year; this resulted in Revenue per available room (RevPAR) dropping 5% and average daily rate (ADR) slipping 2.1%. Non-casino revenues before promotional allowances plummeted 13.2% to $76.7 million.
Wynn Resorts, which is still working on the Wynn Palace Project on the Cotai, scheduled to open in the third quarter of 2016; has estimated costs for the project to currently stand at around $4.2 billion and $177.5 million of that was spent in Q1 of 2016, contributing to their financial figures.
Las Vegas Operations
Revenues from Wynn Resorts' Las Vegas operations was reported at $389.4 million, a small 0.7% year-over-year increase, supported by higher non-casino revenues and increased room revenues.
Table games win percentage was 26.3%, up 260 bps and well above management's guidance range of 21 to 25%.
Total non-casino revenues, before promotional allowances saw a year-over-year growth of 0.5%. Room revenues were reported at $105 million for the quarter, a 5.5% increase backed by higher ADR; which went up by 5.3% and saw a 3.4% growth in RevPAR. However, occupancy rate fell 130 bps to 81.7%.
Wynn has been suffering for a while now due to the weak performances in their operations overseas and the environment in Macau hurt revenues for this quarter as well; similar to some other companies like Melco Crown Entertainment Ltd., whose Macau ventures have also been dragging their overall revenues down. Despite that, Wynn can take some comfort in the small growth in business their Las Vegas operations have generated in Q1 of 2016 and hope that this is the beginning of an upward trend fuelled by the re