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LAS VEGAS, Nevada -- A year ago, executives from Wynn Resorts Ltd. tried to justify a net loss in quarterly earnings, saying the negative number was due to preopening expenses at the company's under-construction casino in Macau and challenges in Las Vegas.
No such explanations were needed Monday.
Wynn said strength in the Las Vegas market coupled with strong profits in Macau fueled the company's second-quarter earnings. Wynn reported a net income of $89.6 million, or 82 cents a share in the three-month period ended June 30. A year ago, the company reported a net loss of $20.1 million, or 20 cents per share.
Analysts polled by Thomson Financial expected Wynn to earn 53 cents a share in the quarter.
Second-quarter revenue more than doubled to $687.5 million from $273.4 million, largely due to Wynn Macau, which opened last September.
At Wynn Las Vegas, the casino's cash flow, reported as earnings before interest, taxes, depreciation and amortization, was $115.3 million, a 57.6 percent increase. Net revenue at Wynn Las Vegas rose 40.4 percent to $159.4 million from $113.5 million last year.
Morgan Stanley gaming analyst Celeste Brown told Wynn executives during the company's conference call with analysts and investors that the results at Wynn Las Vegas were "extraordinary."
Wynn Resorts President Ron Kramer said his company believes the Strip casino will continue to report quarterly cash flow of more than $100 million in the third quarter and beyond.
"We clearly believe in our ability to grow the business and extend the brand," Kramer said.
In a statement, the company said its under-construction Encore, being built next to Wynn Las Vegas on the Strip, will open in early 2009. The budget for Encore increased by $100 million to $2.2 billion, accounting for an employee parking garage, a pedestrian bridge overpass and costs with remodeling the theater at Wynn Las Vegas to house "Monty Python's Spamalot." The theater sits at the point where Encore will connect with Wynn Las Vegas.
At Wynn Macau, the casino generated net revenue of $352.5 million and adjusted property cash flow of $92.7 million.
Wynn Macau now has a 110,000-square-foot casino with 248 table games and 443 slot machines. Wynn intends to add 20,000 square feet of casino space and one restaurant by the end of September. Further expansion areas are expected to open by Chinese New Year. After the expansion, Wynn Macau is expected to have approximately 380 table games and 1,200 slot machines.
Company Chairman Steve Wynn told analysts there had been some miscommunication in June concerning Wynn Macau's expansion schedule. He said the company slowed construction on a high-end hotel addition.
Wynn reported earnings after trading closed Monday. Nevertheless, shares of the company soared $6.33, or 6.26 percent, to close at $107.39 on the Nasdaq National Market. In after-hours trading, Wynn Resorts shares jumped another $10 on news of the earnings.
Rival casino operator Las Vegas Sands Corp., which operates one casino in Macau and is opening another at month's end, jumped $5.26, or 5.61 percent, on the New York Stock Exchange to close at $99.02. Las Vegas Sands shares jumped $3 in after-hours trading.
Gaming analysts said the stock of both companies jumped during Monday's regular session based on positive indicators from the Macau market.
In a note to investors before Wynn's earnings announcement, Bear Stearns gaming analyst Joe Greff said he believes Wynn Macau is producing at least $1 million a day in cash flow.
"Our checks in Las Vegas indicate strong overall volumes in the second quarter with both Wynn Las Vegas gaming and nongaming volumes having performed better than the overall Las Vegas market," Greff said. "Our checks indicate decent volumes overall in the third quarter to date."
David Katz of CIBC World Markets said in an investors note that the opening of the $2.4 billion Venetian Macau on Aug. 25 will greatly increase competition for Wynn Macau.
"We believe that while Wynn's long-term prospects remain strong, near-term visibility in Macau is limited by oncoming competitive pressures and political risk," Katz said.
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