Wynn vs. Las Vegas Sands, A Tale of Two Casinos (WYNN, LVS)

Today we had earnings from casino rivals Wynn Resorts Ltd. (NASDAQ: WYNN) and Las Vegas Sands Corp. (NYSE: LVS).  While many consider these companies very similar for having higher-end operations and Macau operations or ambitions, these two earnings reports and the reactions are rather different.

Wynn Resorts beat its earnings handily this morning.  Las Vegas Sands reported a wider loss.  You can imagine what this did to shares today, and the reaction is sharp in the after-hours session.

Wynn beat estimates by $0.10 while missing on revenues.  The high-end casino reported earnings of $0.09 EPS rather than the Thomson Reuters figure expecting a loss at -$0.01 EPS.  Its total revenues fell 12% year-over- year to $723.3 million, under the $739.3 million estimates.

Wynn ended the quarter with cash of $1.1 billion and total debt was $4.1 billion, including approximately $2.6 billion of Wynn Las Vegas debt and $1.5 billion of Wynn Macau debt.

Wynn’s table games winnings of 20.7% was under its own expected range of 21% to 24%. It said that slot machine handles of $836.8 million was almost 2% under the 2008 period, as win per unit per day was $155 rather than $232 in the same period in 2008.  The company attributed the reductions primarily to the addition of 82 tables and 812 slot machines with the opening of Encore.  Of course, lower gambling probably had some impact on this too.

Las Vegas Sands Corp. said its loss widened out to $175.9 million, or $0.34 EPS.  That is down from a loss of $8.8 million, or -$0.02 EPS a year ago.  If you back out one-time items, Las Vegas Sands said it would have made a profit of $8.8 million, or $0.01 EPS.  Thomson Reuters had that pegged at an expected -$0.01 EPS.  Revenues fell slightly to $1.14 billion from $1.18 billion a year ago, but estimates were only $1.08 billion.

Sheldon Adelson’s company also noted that savings programs are now targeted to achieve at least $500 million in annualized cost reductions.  Surprisingly, Adelson said that The Venetian Las Vegas and The Palazzo produced solid cash flow for the quarter.  The Table games drop for the two properties was down 5.4% year over year, and table games win percentage was 19.3% versus 20.5% a year ago.  Slot handle fell by 27.0% over a year ago, which it said was due principally to changes in machine mix on the gaming floors. But the company showed a gain in its slot win percentage rose to 7.2% from 5.5% in the year ago quarter.

LVS’s unrestricted cash was $2.6 billion, while restricted cash balances were $188.6 million.  Its total debt outstanding was listed as $10.8 billion.

Wynn shares closed up 13% at $50.15 in regular trading today, and its shares are down around $49.75 in the after-hours session.  Las Vegas Sands rose 9.3% to $11.15 today on the back of Wynn’s gains, but the shares are down 8.5% from the close at $10.20 in the after-hours session.

JON C. OGG
JULY 30, 2009