WYNN: Look at it two ways

Jul 29, 2008 7:00 PM

Earnings by Ray Poirier | Steve Wynn, chairman and CEO of Wynn Resorts Ltd. (WYNN), wanted to get the word out early that his company’s earnings should be viewed in two ways: Las Vegas and Macau. The former would show a substantial slowdown while its Asian counterpart would be explosive.

Last week, the company officially announced its earnings for the second quarter that ended on June 30 with total earnings reaching $272 million or $2.42 per share compared to last year’s $89.6 million or $0.82 per share.

Included in that number, however, was a tax benefit related to foreign tax credits for the Wynn Macau that represented $140 million. Without it, profit rose 23.3% to $124.3 million or $1.11 per share compared to $100.8 million or $0.92 per share in 2007.

But what was right in line with Steve Wynn’s pre-announcement was the separation of earnings.

At the Las Vegas facility, gaming revenues declined to $120.7 million from last year’s $159.4 million while non-gaming revenues increased by less than one percent. Also, hotel revenues fell by more than three percent.

Not so in Macau where the Wynn operation recorded a 50% increase in revenues bringing the company’s total revenue to $825.2 million.

Analysts had expected revenues of $828.1 million and earnings of $0.93 per share.

In a conference call, Wynn acknowledged a slowdown in Las Vegas business but referred to it as "the passing parade." He said the impact would not "change your way of doing business."

As for Macau, the company reportedly is considering a secondary offering to raise $3 billion in order to generate the financing for Encore at Wynn Macau that is expected to open in the second half of 2010.

Penn National

Peter Carlino, chairman and CEO of Penn National Gaming Inc. (PENN), didn’t expect to be addressing investors and analysts at the customary quarterly earnings conference since he had expected that the buyout offer from a pair of private equity companies would have been executed.

The deal that would have given shareholders $67 per share fell through, leaving Carlino in his same position.

"We had a good contract and found ourselves in a credit market that was a disaster," he said at the conference call. "We made a decision based on a very difficult market, and taking an impactful settlement was the right thing to do," he said.

That settlement that actually took place on July 3 left the company with $225 million in cash and an investment by the two companies of $1.25 billion in preferred equity.

As for the quarter that ended on June 30, the company reported revenues of $620.6 million and earnings of $37 million, down from last year’s $625.2 million and earnings of $38.3 million. On a per share basis, earnings were $0.42 each or a penny less than in 2007.

In addition to the downturn, the company said revenues fell because of smoking bans in two states and additional competition to some of the company’s properties.

Carlino said the immediate future will see the company paying down debt and looking for potential acquisitions.

Earnings dates

Additional announcements have been made regarding the release of quarterly earnings. They include:

MTR Gaming Group Inc. (MNTG) which will release its financial results on Wednesday, July 30, before the stock market opens.

Boyd Gaming Corporation (BYD) on Friday, Aug. 1 at 9 a.m. PDT.

Ameristar Casinos Inc. (ASCA) on Monday, Aug. 4, at l p.m. PDT.

Pinnacle Entertainment Inc.(PNK) on Wednesday, Aug. 6 at 8 a.m. PDT.