WYNN: MACAU TO DRIVE A DECENT Q3

Similar to LVS, we are expecting an EBITDA and EPS beat.

We estimate that Wynn Resorts will report $1,306MM of net revenue and $376MM of EBITDA, in-line and 2% ahead of the Street, respectively.  We think the catalysts are lining up generally positive for the Macau operators although we would caution that Wynn’s share is very low month- to-date in October and while that is mostly due to hold, we would expect continued pressure on volume share both in Mass and VIP.

Q2 Detail:

We estimate that Wynn Macau will produce $927MM of net revenue and $291MM of EBITDA (2% above consensus)

• Net casino revenue of $869MM
  • $606MM of net VIP win
    • Assuming 10% direct play, RC volume of $27BN
      • Down 14% YoY—the 2^nd YoY decline since 2Q09; and
      • Down 11% QoQ—the 2^nd consecutive QoQ decline since opening
  • 3.2% hold
  • Rebate rate of 96bps or 30% on a rev share basis
  • The property's historical hold rate since opening has been 2.94%.  If Wynn held at its historical hold rate in 3Q, net revenues and EBITDA would be $49MM and $12MM lower, respectively.
• Mass win of $208MM, +7% YoY increase
• Slot win of $54MM, down 15% YoY and 14% QoQ
• $59MM of net non-gaming revenue
  • Room revenue:  $29MM
  • F&B:  $24MM
  • Retail & other:  $50MM
  • Promotional allowances:  $45MM
• $516MM of variable expenses
  • $443MM of taxes
  • $65MM of gaming promoter expense assuming a blended commission rate 42.7%
  • Recorded non-gaming expenses of $19MM
• Fixed expenses of $102MM, flat QoQ and down 3% YoY

We’re projecting $379MM of net revenue and $108MM of EBITDA for Wynn Las Vegas (8% above consensus)

• Net casino revenue of $152MM and operating margin of $67MM
  • Table win of $146MM
    • 10% increase in table drop to $634MM
    • 23% hold rate
• $40MM of slot win
• 1% drop in handle to $667MM
• 6.0% win rate
• $33MM discounts & rebates or 18% of gross casino win
• Casino expenses of $73MM, up 3% YoY
• $273MM of non-gaming revenue
  • Room revenue of $91MM
    • RevPAR:  $206 (ADR: $245/ Occ: 85%)
    • CostPAR:  $85.33
• F&B:  $123MM revenues at a 41% operating margin
• Entertainment, retail, & other:  $59MM at a 38% operating margin
• $46MM of promotional spending or 30% of casino revenue
• SG&A:  $52MM, up 3% YoY

Other assumptions:

• Corporate expense:  $23MM
• D&A:  $94MM
• Stock comp:  $6MM
• Net interest expense:  $74MM