Three prominent gaming companies reported their fiscal experience for the quarter that ended on Dec. 31, 2005, last week with each showing strong results.
Yet, since the performances of Harrah’s Entertainment Inc. (HET), MGM MIRAGE Inc. (MGM) and Wynn Resorts Ltd. (WYNN) were pretty much expected, investors reacted to the announcements with little more than a yawn.
Harrah’s Entertainment reported revenues nearly doubled those of the previous year primarily because of the addition of the Caesars Entertainment properties that help boost revenues 76% to $2.1 billion from last year’s $1.2 billion.
Adjusted earnings per share from continuing operations were $0.66 and increase of nearly 12% over the previous year. Among the adjustments made during the period were $88.7 million of intangible assets at its Biloxi, Miss. property; $56.1 million pre-tax of goodwill on its Lake Charles, La., property, and $78.6 million, after tax, on its Gulfport, Miss. property.
Also, the company recorded a $19.2 million recovery on the Lake Charles casino.
After these adjustments, HET recorded income from operations of $111.5 million, down from the comparable period’s $165 million, making the net loss for the quarter $142.2 million. In the fourth quarter of 2004, the net income was $76.9 million.
However, the company noted that same store sales at what is described as "legacy" Harrah’s properties rose 12.3% while cross-market play increased 23.3%.
Commenting on the quarter’s experience, Gary Loveman, chairman and CEO, remarked, "Effective marketing stimulated increased customer loyalty at the Harrah’s and Horseshoe brands resulting in both trip growth and higher spending per trip across our portfolio of legacy properties."
It was a record quarter for MGM MIRAGE with adjusted earnings from continuing operations per diluted share of $0.35, a 25% jump over the $0.28 earned in the fourth quarter of 2004.
The company said it continued to benefit from its acquisition of the Mandalay Resort properties.
Net revenues increased 65% to $1.8 billion while same store net revenues increased by 11% over the previous year.
Non-gaming revenues also increased with same-store hotel revenues up 20% and same store food and beverage revenues up 17%. As for the revenues per available room, the company’s Las Vegas Strip resorts increased 8% on both a same-store and pro-forma basis.
Among the negative impacts, the company said, were the table game hold percentage which fell by 200 basis points and the corporate expense that increased from $32 million to $40 million due to non-recurring merger integration costs and litigation accruals.
Also affecting the results were the closure of Beau Rivage that was damaged by Hurricane Katrina and a tax benefit experienced in the comparable quarter of 2004 that was not received this year from its partnership at the Borgata Resort in Atlantic City.
For the full year, the company had net revenues of $6.5 billion, an increase of 11% over 2004 which produced adjusted earnings of $479.1 million, easily topping the previous year’s $371.1 million.
Although the financial experience for the quarter was mainly on the Las Vegas Strip property of Wynn Resorts, Ltd., the company focused more of its immediate future planning on its Macau property that will open in the third quarter.
For the quarter ended on Dec. 31, 2005, Wynn Las Vegas generated net gaming revenues of $131.9 million with table games generating a per table per day win of $8,842 on a win percentage of 21.3%.
Gross non-gaming revenues were $177.2 million with room revenues at $64.3 million. Average daily room rate was $278 on an occupancy rate of 92.7%.
For the full year that began with the property’s opening on April 28, the net gaming revenues were $353.7 million while net non-gaming revenues were $368.3 million.
After booking one-time charges for both the Las Vegas casino and the Macau property, the company lost $11.4 million during the fourth quarter. Excluding $16.5 million charges, the company earned $5 million or $0.05 per share.
Chairman and CEO Steve Wynn, who just returned from a visit to Macau said the construction of the property was progressing on time and within budget. It will have 600 hotel rooms and suites and about 100,000 square feet of casino gaming space. There will be seven restaurants and a retail area of 26,000 square feet.
A second phase to the Macau casino will open in the third quarter of 2007.