Even the “greatest wet blanket” couldn’t dampen another blockbuster quarter at Wynn Las Vegas. Oh, and Macau helped too.



“And I'm saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime.”      


 – Steve Wynn



WYNN blew away our Q2 EBITDA estimate by 10%, and we were way ahead of the Street.  Despite the “the weird political philosophy of the President of the Unites States”, Steve managed to put up another blockbuster quarter in Las Vegas.  Then again, Steve had Lady Luck on his side this quarter – not sure about Obama and his Keynesian plan to revive the economy.  We estimate that hold favorably impacted the quarter revenue and EBITDA by $39MM and $28MM, respectively.


Overall, we’d say this was a terrific quarter.  While Macau EBITDA didn’t beat us by much, we were high on the Street.  After numbers go up, the question will be, “what’s next?”  We think Wynn Macau is a market share retainer at best and will likely lose share over time.  Market growth remains incredibly strong, but that benefits everyone.  What is the next catalyst?  MPEL for instance has many more catalysts, is cheaper, and probably has higher upcoming earnings revisions. 


Below are some observations and takeaways from the quarter. 



Wynn Macau generated $977MM of net revenue and $314MM of EBITDA, which were in-line with our estimates. 

  • VIP net table win was $12MM below our estimate
    • Direct play was only 8% vs our estimate of 10%
    • The rebate rate was 30.5% (vs. our estimate of 30%) or 88bps
    • Mass revenues were $6MM above our estimate
      • Drop increased 26% YoY vs our estimate of 44%; however, hold was 27.8% vs. our estimate of 23.5%.  Wynn’s hold since 2Q10 (when they opened Encore) has been 25.5% if we include the current quarter
      • We estimate that high hold benefited Mass revenues by $16MM and EBITDA by $10MM
      • Net non-gaming revenue was $3MM below our estimate due to higher comps
      • Fixed expenses were $93.4MM – in-line with our estimate

Las Vegas

Las Vegas results of $391MM of net revenue and $133MM of EBITDA blew away our estimates by 10% and 41%, respectively. 

  • Casino revenues came in $24MM above our estimate, entirely due to high hold on Wynn’s baccarat business
    • Table drop of $535 million was right in-line with our estimate, but hold of 27.6% was materially higher
    • Using the mid-point of Wynn’s normal range of 22.5% - we estimate that hold benefited the quarter by $27MM on net revenue and $21MM on EBITDA.  If we use the trailing 5 quarter hold rate of 23.8%, the benefit on revenues and EBITDA would have been $20MM and $16MM, respectively
    • Slot revenue was $1MM below our estimate
    • Casino discounts were 15.9% of gaming revenue or $30MM
    • Non-gaming revenues were $10MM better than we estimated due to better F&B results
    • Total operating expenses of $258MM declined $5MM sequentially and only increased 2% YoY



Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more