Quarter was solid with good Macau commentary. Special dividend was sizable and probably in the whisper range but the announcement came early.
Stock will be up this am and it probably should be. The quarter was solid with some surprisingly strong volumes in Las Vegas. Wynn is clearly taking share on the Strip both in slots and the tables. The Macau performance was almost exactly in-line with our projections (way to go Anna!) but the forward commentary was bullish. Wynn’s share is down so far in October but that is likely due primarily to hold. More importantly, management made positive comments that trends are getting better especially with the liquidity conditions of the junkets.
The question is where do we go from here? We remain positive on Macau, so directionally we’re biased on the upside for all the Macau stocks. However, we see stronger company catalysts elsewhere (LVS and MPEL) and until Wynn Cotai opens, market share will remain under pressure. We’re on the sidelines for now on WYNN.
Dividend no longer just Special:
Wynn announced a special dividend of $7.50 payable to shareholders of record on November 7th. This year's special represents a 50% increase in what was paid out in 2011. While most investors expected a dividend in this range, the surprise came in the timing. Last year the special dividend announcement came on November 2nd, after the Company’s shareholder meeting and was payable to shareholders on record right before Christmas on Dec 21st.
In addition, WYNN doubled its regular quarterly dividend from $0.50 to $1.00/share. Given the hefty 3.5% yield, the increase in dividend should attract a new set of income oriented investors.
Macau
Wynn reported net revenue of $911MM which was 2% below our estimate, while Adjusted EBITDA of $292MM was 1% higher than we estimated.
- Net VIP table win was $14MM lower than we estimated
- RC volume fell 12% YoY and 9% QoQ, but was $560MM better than we estimated due to direct VIP RC play coming in at 10% vs. our estimate of 8%
- Hold was 12bps lower than we estimated, resulting in gross table win that was $15MM below our estimate
- The rebate rate was 30.4% or 94bps, in-line with our estimate
- We estimate that all junket commissions & rebates were 42.2%, a little lower than we estimated and impressive in the current “aggressive” promotional environment that Wynn described. However, we won’t know for sure until Wynn Macau files.
- The property’s historical hold rate since opening, inclusive of this quarter, has been 2.93%. Using the historical hold rate, net revenues would have been $29MM lower and EBITDA would have been $8MM lower.
- Mass table win was $3MM better than we estimated
- Drop declined 3% YoY and was 5% less than we estimated but the win % was 1.8% better
- We believe that higher mass hold rates are sustainable and therefore, we no longer normalize for high hold on mass
- Slot win was in-line with our estimate
- Slot handle was down 11% YoY
- Hold was 5.4%, 40bps better than we estimated
- We estimate that fixed expenses totaled $101MM, $1MM below our estimate and down $1MM QoQ
Las Vegas
Las Vegas revenues and EBITDA exceeded our estimate by 2% on both metrics and beat the Street’s EBITDA estimate by 10%. The beat came from strong volumes on both tables and slots and better F&B revenues.
- Net casino revenues were $3MM above our estimate
- Table drop grew 17% YoY vs. our estimate of 10% growth but hold was 1% lower than we estimated, resulting in table win being $4MM above our estimate
- Slot win was $6MM better than we estimated
- Slot handle was 8% better than we estimated and win % was 40bps higher at 6.4%
- Total gaming discounts and promotions totaled 21% of gross casino win, higher than the 17.7% discount rate in 2011 but lower than last quarter’s rate of 22%
