Wynn Resorts reported second-quarter results on Tuesday, highlighting a significant delay in the launch of its UAE resort and a $600 million increase in its overall budget due to ongoing conflicts in the Middle East. Nevertheless, these issues did not overshadow a strong performance for the luxury gaming operator during this quarter.
The company achieved group revenue of $1.86 billion for the quarter, reflecting a 7% year-over-year growth. Net income surged from $66.2 million last year to $140.1 million this year, while group-adjusted EBITDA rose approximately 3% to $568.3 million.
Macau emerged as the top performer, particularly Wynn Palace in Cotai, where revenue surged 21% to $653.4 million, and adjusted EBITDAR jumped 28% to $201.5 million. Notably, these gains were driven by mass-market players, contrasting with Wynn's usual focus on high-stakes VIP clients; the property recorded a 32% decrease in VIP turnover and a 29% decline in VIP table game wins, even as mass-market table game winnings rose by 37%.
In the first quarter, Wynn announced The Enclave, a new hotel tower at Wynn Palace consisting of 432 suites with an estimated construction cost of $900 million to $950 million. CEO Craig Billings confirmed that work on The Enclave will commence by the end of this year, along with the long-planned event center and theatre at Wynn Palace, scheduled to open in 2028 and 2029, respectively.
“We continue to focus on our specific customer demographic that is driving the market at this time,” Billings remarked to analysts.
In Las Vegas, the company reported total revenue of $643.2 million, which remained nearly unchanged compared to the previous year. However, casino revenue increased by 6.5% to $158.1 million, although segment-adjusted EBITDAR saw an 8% decline year-over-year, reaching $215.2 million. Wynn is facing heightened competition for high-rollers in Las Vegas as MGM and Caesars take opposing strategies; while Caesars is set to become privatized under Fertitta Entertainment, MGM has reported growth in the region.
CFO Craig Fullalove emphasized that Wynn aims to provide exceptional experiences to retain high-value customers, which is reflected in the company’s financial metrics.
When asked about the potential of an NBA franchise in Las Vegas, Billings expressed enthusiasm. The company has owned a 38-acre plot near its property since 2017, which could be suitable for an arena, amid MGM and Caesars also pursuing endeavors in this area. Billings acknowledged that NBA games do not drive tourism like NFL events do but remained optimistic about the franchise's benefits for Wynn.
At Encore Boston Harbor, second-quarter revenue declined by 3% to $209.2 million, with adjusted EBITDAR dropping 12% to $56 million. Casino revenue fell by 6% largely due to a 12% drop in table game winnings, though performance metrics for hotel operations set new records for revenue per available room and hotel revenue. President Billings noted healthy demand in Boston, with slot machine engagement slightly higher than last year.
A notable development is the potential legalization of historical horse racing in Massachusetts. This provision is part of an economic bill that recently passed the Massachusetts House and is currently under review by the Senate. If approved, Suffolk Downs, located five miles from Encore Boston Harbor, would be one of the beneficiaries of the new HHR machines.
Wynn concluded the quarter with $1.5 billion in cash and equivalents, compared to $10.7 billion in total debt. The company repurchased $75 million in shares during the quarter and has $326 million remaining in its buyback authority. Wynn shares closed at $101.15 on Wednesday, marking a 3% increase for the day; however, the stock remains down approximately 17% from the start of the year.
Macquarie analyst Chad Beynon maintained an outperform rating for Wynn with a target price of $143, suggesting that the market is undervaluing the earnings potential in both Las Vegas and Macau. He highlighted factors that could benefit Wynn, including anticipated growth in the Macau market, luxury positioning in Las Vegas, the Al Marjan Island resort launch in the UAE, and a strategic approach to capital allocation.
