The earnings report is out for gaming giant Wynn, and it does not look good.
EPS of $1.38 is well below expectations of $1.50.
Revenue of $1.25 billion is well below estimates of $1.33 billion.
From the report:
Net revenues for the second quarter of 2012 were $1,253.2 million, compared to $1,367.4 million in the second quarter of 2011. The revenue decline resulted from a 7.1% decrease in revenues from our Macau Operations and an 11.6% decline in our revenues in Las Vegas, as both properties were negatively impacted by lower hold in the 2012 quarter. Adjusted property EBITDA (1) was $384.1 million for the second quarter of 2012, compared to $447.0 million in the second quarter of 2011.
Here are the highlights from the earnings conference call:
4:32: Steve Wynn joins the call from Macau.
Notes that there’s a lot of volatility due to high-rollers playing baccarat.
Says it was a bad quarter for baccarat losses.
Says business levels in Las Vegas slightly better than last year if it weren’t for baccarat losses.
4:36: Macau business flat through the first 6 months of the year, in large part thanks to greater competition.
The game in Macau is to “preserve margin.”
Talking a lot about competition. Challenge is big.
“It’s been a rock and roll rollicking several years.”
4:41: So, what can you do if your competitors spend like crazy to steal margins? Do you just let your business get eroded.
Wynn says the “junket operators have sub-junket operators.”
Wynn is taking advantage of that by going straight to the subj-junked operators and turning them into junket operators.
Question about Vegas baccarat hold rates..
“If you normalize everything, this quarter would have
“In April, for the first time in 45 years, I saw baccarat go minus for a month.”
“Last year I saw 37 % hold… If I were a customer, I might have asked for an investigation.”
Says he doesn’t like it when the house wins too much.
It has a “stultifying effect on the psychology of customers.”
More discussion of margins and junket operators.
WYNN: “I think China is more stable than anypace else.” “They seem to have cool leadership.
Talking about the board and how stacked it is.
ORIGINAL 3:45 PM EST:
One of the most fascinating proxies for the economy, both domestic and global, reports earnings after the bell.
Wynn is one of the world’s premier gaming companies, and the company offers a great look at what’s going on in Macau (and therefore China) as well as Vegas, which gives us a sense of discretionary and business spending in the US.
The company is expected to earn $1.51 per share on revenue of $1.34 billion.
The stock has really been doing bad since the beginning of May. The stock is off about 30% since then.
We’ll be covering the earnings here LIVE and then we’ll be liveblogging the conference call to hear the latest insights from CEO Steve Wynn.