Wynn Resorts announced on Tuesday significant delays in its UAE resort project, with the opening pushed to 2026 and its budget ballooning by $600 million due to ongoing regional conflicts. Despite these challenges, the company's second-quarter performance in Macau was noteworthy.
The luxury gaming operator reported group revenues of $1.86 billion for the quarter, marking a 7% increase compared to the previous year. Wynn's net income surged from $66.2 million last year to $140.1 million this year, and group-adjusted EBITDA saw a modest 3% rise to $568.3 million.
Macau emerged as the strongest contributor in this quarter, particularly Wynn Palace in Cotai, which experienced a remarkable 21% revenue growth year-over-year, reaching $653.4 million. The adjusted EBITDAR for the property climbed 28% to $201.5 million, driven primarily by the mass market segment rather than the VIP clientele. Specifically, Wynn Palace reported a 32% drop in VIP turnover and a 29% decline in VIP table games win, while mass market table game win increased by 37%.
Earlier in the year, Wynn revealed plans for The Enclave, a new hotel tower with 432 suites at Wynn Palace, projected to cost between $900 million and $950 million. Wynn CEO Craig Billings confirmed that construction of The Enclave would commence by the end of the year. He also shared plans for the long-anticipated event center and theater at Wynn Palace, which is expected to open in 2028, with The Enclave set for 2029.
"Really, we kind of just continue to stick to our knitting [in Macau]," Billings stated, emphasizing the company's commitment to its target customer base, which is currently leading market trends.
In Las Vegas, Wynn's total revenue was stable at $643.2 million, with casino revenue up 6.5% to $158.1 million, though segment-adjusted EBITDAR fell by 8% year-over-year to $215.2 million. The competitive landscape in Las Vegas has intensified, especially as MGM and Caesars pursue different strategies. Caesars is set to go private through Fertitta Entertainment, while MGM's market gains reflect its aggressive positioning.
Wynn CFO Craig Fullalove noted, "We believe the best way to earn and retain the highest value customers in Las Vegas is to continually raise the bar on what we offer them."
Discussion around a potential NBA franchise in Las Vegas emerged, with Wynn holding a 38-acre plot on the Strip that could serve as a site for an arena. Billings acknowledged that while the NBA does not attract the same tourist demographic as the NFL, he remains enthusiastic about having an NBA team in the city, as it could bring affluent visitors associated with the league.
At Encore Boston Harbor, a 3% decline in revenue was reported, totaling $209.2 million, coupled with a 12% drop in adjusted EBITDAR to $56 million. The outlet experienced a 6% decrease in casino revenue, primarily from a 12% reduction in table game performance. Billings, however, highlighted that Encore Boston Harbor achieved record numbers for revenue per available room and hotel revenue. He observed that demand in Boston remained robust, with slot handle exceeding last year's figures.
Additionally, the legalization of historical horse racing (HHR) in Massachusetts could be on the horizon. Language permitting HHR machines at the state’s racetracks was included in an economic bill that passed the Massachusetts House in early July but is still pending approval in the Senate. Suffolk Downs, located five miles from Encore Boston Harbor, is expected to benefit from this potential legalization.
Closing the quarter, Wynn's cash and equivalents reached $1.5 billion, weighed against current and long-term debt of $10.7 billion. The company repurchased $75 million worth of shares during the quarter, leaving $326 million in repurchase authority. Shares ended Wednesday at $101.15, reflecting a 3% increase, although the stock is down approximately 17% since the beginning of the year.
Macquarie analyst Chad Beynon expressed optimism by maintaining an outperform rating for Wynn with a target price of $143, arguing that the market undervalues the resilience of earnings from Las Vegas and Macau. He reiterated a bullish outlook for the UAE resorts, despite the recent setbacks, citing factors such as expected Macau market growth and luxury assets in Las Vegas.
