It has been about a month since the last earnings report for Wynn Resorts (WYNN). Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Wynn due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Wynn Resorts Q1 Earnings & Revenues Miss Estimates
Wynn Resorts reported first-quarter 2021 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and bottom lines missed the consensus mark for the seventh consecutive quarter.
The company reported an adjusted loss of $2.41 per share, wider than the Zacks Consensus Estimate of a loss of $2. In the prior-year quarter, the company had reported adjusted loss of $3.54 per share.
Revenues during the first quarter came in at $725.8 million, missing the Zacks Consensus Estimate of $760 million by 4.5%. The top line also declined 23.9% year over year due to dismal performance by Wynn Palace, Wynn Macau and Las Vegas operations.
Wynn Palace Operations
During the first quarter, Wynn Palace revenues fell 8.5% year over year to $237.3 million. Casino revenues were $185.9 million, down 10.4% year over year. Rooms and food and beverage revenues declined 13.7% and 12.2% year over year to $17 million and $11.7 million, respectively. During the first quarter, entertainment, retail and other revenues rose 20.1% year over year to $22.7 million.
In the VIP segment, table games turnover was $2,200.2 million, down 54.1% year over year. VIP table games win rate (based on turnover) was 4.38%, higher than the expected range of 2.7-3%. It was also above the year-ago quarter’s figure of 2.91%. Table drop at the mass market segment came in at $607.5 million, up 27.8% from the year-ago quarter’s reported figure. Furthermore, table games win in mass market operations amounted to $131.6 million, up 0.7% year over year.
During the reported quarter, average daily rate (ADR) was $178 (down 39.5%, year over year). Occupancy rate stood at 60.4% compared with 41.6% reported in the prior-year quarter. Meanwhile, revenues per available room (RevPAR) came in at $108 (down 11.5%, year over year).
Wynn Macau Operations
During the first quarter, Wynn Macau revenues declined 21.7% year over year to $179.7 million. The downside was due to a decline in casino, rooms, food and beverage revenues.
Notably, casino revenues in the reported quarter plunged 26.9% year over year to $138.9 million. Rooms and food and beverage revenues declined 7.6% and 22% year over year to $14.7 million and $7.4 million, respectively. During the first quarter, entertainment, retail and other revenues rose 33.6% year over year to $18.6 million.
Table games turnover in the VIP segment declined 39.1% year over year to $1,804.4 million. However, the VIP table games win rate (based on turnover) was 3.25%, higher than the expected range of 2.7-3.0%. However, it was below 4.14% reported in the prior-year quarter.
Table drop at the mass market segment was $590.9 million, up 2.2% year over year. However, table games win in the mass market category came in at $105.2 million, down 10.8% year over year.
During the reported quarter, occupancy levels in the segment moved up to 60.8% compared with 49.2% in the prior-year quarter. However, ADR came in at $242, down 24.6% year over year. Also, RevPAR declined 7% year over year to $147.
Las Vegas Operations
During the first quarter, revenues from Las Vegas operations plunged 44.8% year over year to $178.7 million due to weak occupancy levels.
Casino revenues increased 12.1% year over year to $79.9 million. However, revenues from food and beverage, rooms as well as entertainment, retail and other fell 62.2%, 62.5% and 53.1% year over year to $40.1 million, $39.8 million and $19 million, respectively.
Further, table games drop fell 21.8% year over year to $324.5 million. Moreover, table games win declined 7.3% year over year to $76.7 million. During the quarter, table games win percentage of 23.6% was within the projected range of 22-26% and above 19.9% reported in the prior-year quarter.
During the reported quarter, RevPAR declined 60.9% year over year to $117. Occupancy rate was 35.3%, down from 80.1% in the prior-year quarter. ADR came in at $331, declining 11.5% year over year.
Encore Boston Harbor
Encore Boston Harbor closed all operations on Mar 15 for remainder of the first quarter and second-quarter 2020. On Jul 10, Encore Boston Harbor reopened operations. Following the reopening, certain food and beverage outlets had remained temporarily closed with limited hotel operations. On Nov 6, a Massachusetts directive implemented an overnight curfew on certain businesses. Due to this, Encore Boston Harbor limited its daily operating hours and temporarily closed the hotel tower. Following the relaxation in restrictions on Jan 25, 2021, Encore Boston Harbor restored certain operations and reopened its hotel tower on a (Thursday through Sunday) weekly schedule. However, capacity restrictions are still in place.
During the first quarter, revenues from Encore Boston Harbor operations decreased 7.7% year over year to $130.1 million. During the quarter, table games win percentage of 21.1% was within the projected range of 18-22% and above 20.8% reported in the prior-year quarter.
Meanwhile, adjusted property EBITDA from Encore Boston Harbor operations came in at $30.4 million against ($12.6) million reported in the prior-year quarter.
During the fourth quarter, adjusted property earnings before interests, taxes, depreciation and amortization (EBITDA) came in at $58.9 million against ($5.3) million in the prior-year quarter.
In the quarter under review, adjusted property EBITDA from Macau totaled $16.6 million compared with $19.2 million reported in the prior-year quarter. Adjusted property EBITDA from Las Vegas operations came in at $28.1 million against ($22.1) million reported in the prior-year quarter. Meanwhile, adjusted property EBITDA from Wynn Palace operations came in at $27.4 million compared with $10.2 million reported in the prior-year quarter.
As of Mar 31, 2021, Wynn Resorts’ cash and cash equivalents totaled $2.89 billion.
Outstanding debt at the end of the first quarter amounted to $11.95 billion, including $3.12 billion of Wynn Las Vegas related debt, $5.96 billion of Macau debt, $2.26 billion of Wynn Resorts Finance debt and $612.5 million of debt held by the retail joint venture, which the company consolidated.
On the development front, Wynn Resorts made significant progress with respect to Wynn Interactive. To this end, the company entered into a definitive agreement with Austerlitz Acquisition Corporation to make it a public entity. The business combination includes approximately $640 million of cash proceeds from Austerlitz Acquisition Corp. Notably, the initiative is likely to boost Wynn Interactive’s prospects with additional capital and expertise to accelerate its vision as a standalone company.
In this regard, Matt Maddox, CEO of Wynn Resorts and chairman of Wynn Interactive, stated, “We are confident that this transaction will unlock the tremendous potential of Wynn Interactive to further accelerate growth and enable the business to capture the massive opportunity in North America.”
The company expects to close the deal by 2021-end, subject to approval by Austerlitz stockholders, gaming regulatory approval and other customary closing conditions.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 7.74% due to these changes.
At this time, Wynn has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Wynn has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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