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Wynn Resorts falls to 3Q loss on debt repayment

Updated Tuesday, Nov. 2, 2010 | 3:22 p.m.

Wynn Resorts said it saw its profit swing to a loss during the third quarter, primarily due to an early debt repayment of $64.2 million.

The Las Vegas-based casino operator reported a net loss of $33.5 million, or 27 cents per share, compared to net income of $34.2 million, or 28 cents per share, during the same period of 2009.

Net revenue for the quarter totaled $1 billion, compared to $773.1 million in the same period of 2009. The company said the increase was primarily driven by a 49.7 percent increase in revenue at Wynn Macau.

At Wynn Resorts' Macau operations, net revenue was $671.4 million during the third quarter of 2010, compared to $448.5 million in the third quarter of 2009. Wynn Macau generated $198 million in earnings before interest, taxes, depreciation and amortization, up 54 percent from the third quarter of 2009.

In April 2010, Wynn Resorts opened its $550 million Encore Macau. The resort included 410 suites and four villas, along with restaurants, high-end stores and a casino.

Wynn Resorts Chairman and Chief Executive Steve Wynn said during Tuesday’s conference call that the company will soon break ground on its newest Asian property in Cotai, the landfill linking Macau's outer islands of Taipa and Coloane. Wynn said his design team has finished drawings of the property and will begin showing models to the public in the next few weeks.

Site clearing will also begin in Cotai within the next few weeks, Wynn said.

Although Wynn did not present hard financial numbers on the Cotai project during the conference call, he said he expects the property to cost about $2.5 billion. He said he would have a more solid budget during next quarter’s conference call.

Wynn called the Cotai project “the most challenging and rewarding project” of his 42-year career.

Revenue at Wynn Resorts’ Las Vegas operations, which includes Wynn and Encore Las Vegas on the Strip, totaled $334.5 million, 3.1 percent higher than the third quarter of 2009. EBITDA at the properties was up 9.3 percent to $76.5 million, primarily due to higher non-gaming revenue.

“This is the first time I’m going to say in a conference call that I believe we’ve hit bottom in Las Vegas,” Wynn said. “I don’t know how fast it’s going to get better, but I don’t think it’s going to get any worse.”

Casino revenue at Wynn and Encore Las Vegas totaled $138.4 million during the third quarter, down 3.9 percent from the same quarter in 2009. Non-casino revenue increased 6.3 percent to $239.4 million. The company said the increase was from nightclub operations at the resorts and the recently opened Encore Beach Club and Surrender Nightclub.

Food and beverage revenue increased 15.5 percent during the quarter to $111.8 million because of the opening of the dayclub/nightclub at Encore in May 2010. Entertainment revenue increased 9.2 percent.

Wynn said during Tuesday’s conference call that he expects the company to do between $150 and $160 million in nightclub revenue this year.

Room revenue was down 1.7 percent to $75.6 million during the third quarter. Wynn and Encore Las Vegas saw an average daily room rate of $210 for the quarter, which was flat with the third quarter of 2009. The properties' occupancy was 83.9 percent, compared to 87.8 percent during the prior-year period.

The company said it had about 6 percent fewer rooms to offer guests during the quarter because of a room remodel at Wynn Las Vegas. The remodel is expected to be complete during the second quarter of 2011.

Other changes are happening at Wynn’s Las Vegas resorts. Wynn Las Vegas opened a new restaurant called Lakeside Grill this week, which replaced the vacant Daniel Boulud Brasserie. La Cave, a wine and small plates restaurant by Michael Morton, is expected to open in December.

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