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US – Wynn still in the market for tier one casino acquisitions

By - 13 May 2019

Having cooled its talks to takeover Australian operator Crown Resorts earlier in the year, Wynn Resorts has confirmed it is looking out for tier-1 casinos to buy.

Wynn CEO Mike Maddox said: “When it comes to M&A, we will always be looking for opportunities for assets that are tier-1, first class assets with licences that are protected in cities that are global destinations. We are high-end operators, we’re quality operators and we will be looking at quality assets around the world.”

Mr. Maddoix made the comments as he delivered Wynn’s first quarter results where VIP was down and the premium area continued to be ‘choppy.’

Operating revenues were $1.65bn for the first quarter of 2019, a decrease of 3.7 per cent, or $64m from $1.72bn for the first quarter of 2018. Operating revenues increased $60.8m at Wynn Palace and decreased $94.4m and $30.5m at Wynn Macau, respectively.

Mr. Maddox said : “VIP was down and the premium area continues to be choppy. However, what we saw was we saw real strength in our core mass. In fact, our core mass increased over 13 per cent year-over-year, and what that shows is that our strategy is working.

Wynn Palace achieved its highest normalized EBITDA on record. And 78 per cent of that EBITDA was from the mass business and non-gaming.

Craig Billings said: “The quarter was characterised by continued choppiness in VIP and premium mass, offset by meaningful growth in main floor core mass with combined property win in that core mass segment, up 13.1 per cent year-over-year. March was particularly strong with Wynn Palace experiencing its best month ever in mass drop, mass win and EBITDA. Our results in Macau were positively impacted by VIP hold, increasing EBITDA at Wynn Palace by approximately $25mfrom a normalized level.”

Operating revenues from Wynn Palace were $726.6m for the first quarter of 2019, a 9.1 per cent increase from $665.8m for the first quarter of 2018. Adjusted Property EBITDA from Wynn Palace was $222.6m for the first quarter of 2019, a five per cent increase from $211.9m for the first quarter of 2018.

Casino revenues from Wynn Palace were $623.2m for the first quarter of 2019, a 9.6 per cent increase from $568.5m for the first quarter of 2018. Table games turnover in VIP operations was $12.63bn, a 17.9 per cent decrease from $15.39bn for the first quarter of 2018.

Operating revenues from Wynn Macau were $523.9m for the first quarter of 2019, a 15.3 per cent decrease from $618.2 million for the first quarter of 2018.

Casino revenues from Wynn Macau were $450.2m for the first quarter of 2019, a 16.5 per cent decrease from $539m for the first quarter of 2018. Table games turnover in VIP operations was $10.19 billion, a 40.3 per cent decrease from $17.09 billion for the first quarter of 2018.

Mr. Billings added: “Our Las Vegas operations delivered $108.3m of adjusted property EBITDA in the quarter on net revenues of $401m with year-over-year growth in non-Baccarat table drop and spot volumes. Consistent with the broader Las Vegas market, Baccarat volumes declined year-over-year and such declines were the primary driver of the year-over-year EBITDA increase. The property held high, adding a little over $5 million to EBITDA. Bad debt expense in Las Vegas was $3.6m compared to 400,000 in the prior year quarter.”

Operating revenues from our Las Vegas Operations were $401m for the first quarter of 2019, a 7.1 per cent decrease from $431.5m for the first quarter of 2018.

Nomura Analyst Harry Curtis said: “The de-emphasis of second tier junkets at Wynn Macau (Peninsula), which really began in 4Q, was likely responsible for much of WYNN’s share loss in the quarter.”

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