WYNN Q3: BACK TO GROWTH

We're ahead of the Street on revs and EBITDA. This should be the first of many EBITDA growth quarters.

Wynn Resorts will report earnings tomorrow morning and hold a 11:30 EST conference call.  We are projecting Q3 net revenue of $769 million and EBITDA of $183 million, both above the Street estimates of $740 million and $180 million, respectively.  If we are right, EBITDA growth will be positive for the first time in five quarters and should continue to be positive for the foreseeable future.

In Macau, we are projecting EBITDA to grow from $106 million to $133 million in Q3 2009.  All of the growth will be driven by the expense side.  Last year, WYNN took a $19 million hit to the allowance for doubtful accounts versus a more normalized $1-2 million.  On the casino side, we are essentially projecting slightly down revenues (-3%) primarily due to the Mass table segment.  VIP looks flattish while slot revenues should be up year-over-year.

On the other hand, Las Vegas will look worse, although better than it should.  In Q3 of last year, WYNN also boosted the doubtful account allowance in anticipation of tough times ahead.  Then, the charge was $18 million versus our estimate of $4 million in Q3 2009.  Overall, we are projecting Q3 Las Vegas EBITDA of $64 million versus $70 million last year.  The decline is despite having Encore open this year.

For those of you who are concerned with EPS - for WYNN we are not - we are projecting untaxed EPS $0.25.  Why untaxed?  The tax provision has been all over the place so we are going with a more consistent measure.

The call tomorrow should be positive, on the margin, in our opinion.  The Macau catalysts look positive and we expect Steve Wynn to downplay the near-term impact of the recent visa tightening in favor of the positive long-term "excess demand" thesis of strong but controlled growth.  While the Las Vegas commentary won't be as good, we don't expect any incremental negative developments.