Wynn Palace fuels 17Q1 profit and revenue boost

Casino operator Wynn Resorts Ltd. saw an uptick in earnings and revenue in the first quarter of 2017, beating expectations, fuelled by strong performance from Wynn Palace and Las Vegas operations.

Net revenues were $1.5 billion for the first quarter of 2017, an increase of 47.9 percent from $997.7 million for the same period of 2016.

“The increase was the result of $475.8 million from Wynn Palace and an increase of $23.4 million from our Las Vegas Operations, partially offset by a decrease of $21.2 million from Wynn Macau,” noted the company in a press release on Wednesday.

Net income was $100.8 million in the first quarter, an increase of 34 percent year-on-year.

Adjusted Property EBITDA was $427.5 million in the quarter, increasing 42.4 percent from $300.3 million for the same period of 2016.

The company has also approved a cash dividend of $0.50 per share, payable on May 23, 2017 to stockholders of record as of May 11, 2017.

Wynn Palace, which opened in August 2016, saw net revenues of $475.8 million in the first quarter of 2017. Adjusted Property EBITDA was $111.9 million.

On the other hand, net revenues from Wynn Macau slightly offset results, decreasing 3.5 percent in the quarter from $608.2 million in 16Q1 to $587 million in 17Q1. Adjusted Property EBITDA from Wynn Macau was $181.1 million for the first quarter of 2017, a 5.3 percent decrease from $191.2 million.

“The high end showed up at the Wynn properties representing the historical flight to quality that has long been a Wynn hallmark,” said Union Gaming in a note on Wednesday morning.

“We have become incrementally more bullish (i.e. comfortable) with the sustainability of ongoing VIP trends over recent weeks. Management reinforced this view with the return of familiar VIP customers, growing junkets, and, more importantly, return to previous behavior on the part of customers. As we look at 1Q17 results, the beat relative to our numbers was entirely on VIP and slots (we also believe slots was VIP-driven), while mass fell slightly short of our expectations,” noted the brokerage.

“Market should view the results positively,” noted analysts from Bernstein on Wednesday. “The Palace ramp up continues and no cannibalization at Wynn Macau (Peninsula) is a positive. Wynn Palace is strongly positioned in the market over the longer run should continue to ramp up over the next few quarters,” they added.

Wells Fargo upped its estimates following the earnings beat. It increased its Macau property EBITDA forecast by 17 percent. “The upside to expectations was driven by a solid increase in market share, better mix, lower opex qtr/qtr and higher VIP hold was a benefit,” it said.