A year-long transition at Wynn Resorts following the downfall of Steve Wynn “is over,” CEO Matt Maddox proclaimed Wednesday, telling the investment community the casino operator is now on a growth trajectory.
Maddox, during Wynn’s fourth quarter earnings call, quickly outlined the company’s internal changes over the year – a revamped board of directors, including new chairman Phil Satre, new corporate executives and a restored corporate culture.
He then said Wynn Resorts has ”the best and most robust growth pipeline in our industry.”
Maddox outlined many of the company’s development projects, highlighting a 400,000-square-foot convention center expansion in Las Vegas, an entire casino and room renovation at Encore Macau, a non-gaming hotel expansion near Wynn Palace in Macau, and June’s planned opening of the $2.6 billion Encore Boston Harbor. He cited the projects as examples of the company’s push to change the narrative from last year’s departure of Steve Wynn to increasing cash flow.
Only briefly did Maddox mention Monday’s settlement with Nevada gaming regulators over a 10-count complaint surrounding sexual harassment and sexual assault allegations against Steve Wynn that drove the company’s founder, chairman and CEO out of the business.
While a fine is still to be determined, the company’s licenses in Nevada were left intact.
“We are now able to execute our strategy and that strategy is growth,” Maddox said.
He called Encore Boston Harbor, which is scheduled to open June 23, “the first large-scale integrated resort in a major metropolitan city. It’s right in the heart of the Boston Metroplex. That’s one step in a change in EBITDA (cash flow) for our company.”
Maddox said the company continues to “work through the process” in Massachusetts, where state gaming regulators have conducted their own investigation into issues surrounding Steve Wynn, who filed a lawsuit in Nevada to keep the contents of the probe private. A Nevada judge is expected to rule on the matter in March.
In the fourth quarter that ended Dec. 31, Wynn Resorts said operating revenues increased 4 percent to $1.69 billion. Net income for the quarter was $476.6 million, or $4.41 per share. Both figures were declines compared to net income of $491.7 million or $4.77 per share in the 2017 fourth quarter.
While the company’s two Las Vegas resorts grew revenues 3.1 percent to $393.6 million in the quarter, the Macau market showed a split. Wynn Macau, which also includes Encore, saw revenues decline by 5.2 percent to $553.4 million, but Wynn Palace saw an increase of 12.8 percent to $740.6 million.
Company-wide cash flow grew 1.9 percent to $444.8 million in the quarter. In Las Vegas, revenue per available room (RevPar) grew 11.5 percent.
Credit Suisse gaming analyst Cameron McKnight the Macau results were “ahead of expectations.” The company’s RevPar growth in Las Vegas was “strong” but “didn’t translate into material revenue and (cash flow) growth.”
For all of 2018, Wynn Resorts said operating revenues rose 10.7 percent to $6.72 billion. Net income for the year was $584.2 million or $5.46 per share, a decline from $747.2 million, or $7.28 per share in 2017. The company said the decrease was driven by a $463.6 million settlement of the Universal Distributing litigation during the first quarter.
In Macau, Maddox said the company is moving forward on a non-gaming hotel adjacent to the 1,700-room Wynn Palace. The property will be constructed in two phases, each totaling 670 rooms.
“We just don’t have enough hotel rooms at Wynn Palace,” Maddox said.
Also, the company is undertaking a casino and hotel-room remodel at Encore, which is adjacent to Wynn Macau. The project will take 13 months to complete. “We will effectively be launching a new property,” he said.
The expansion to the company’s convention facility in Las Vegas will also open in 13 months, as well as the redesigned Wynn Country Club Golf Course, which has been closed since December 2017.
Maddox said the convention center will boost occupancy at Wynn Las Vegas by “4-to-6 points.”
Toward the end of the conference call, Maddox may have disappointed analysts hoping to hear more from Satre, who spent 25 years with Harrah’s (now Caesars) Entertainment earning accolades.
“I talk to Phil at least three times a week,” Maddox said. “He’s a good resource. But I don’t think he’s interested in getting back on earnings calls with Wall Street.”
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
