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May 24, 2018

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Macau VIP rebound encourages Wynn in earnings call


Mikayla Whitmore

The Wynn hotel-casino on Las Vegas Boulevard on Sept. 30, 2015.

Wynn Resorts Ltd, which owns and operates the Wynn and Encore in Las Vegas as well as Wynn Macau and the Wynn Palace in Macau, reported its fourth-quarter and full-year financial results today.

Company: Wynn Resorts, Limited (NASDAQ: WYNN)

2016 fourth-quarter results

Net Revenue: $1.30 billion for the fourth quarter of 2016, an increase of 37.3%, compared to $946.9 million in the fourth quarter of 2015.

Net Income: $113.8 million, in the fourth quarter of 2016, an increase of 30.5%, compared to $87.2 million for the same period of 2015.

Income (diluted) per share: $1.12 per share, compared to $0.86 per diluted share for the fourth quarter of 2015.

2016 full-year results

Net Revenue: $4.47 billion, an increase of 9.6 percent, compared to $4.08 billion for 2015.

Net Income: $242.0 million, compared to $195.3 million for the fiscal year 2015.

Income (diluted) per share: $2.38 compared to $1.92 for the same period of 2015.

What it means

During a 2016 fourth-quarter and year-end earnings conference call Wednesday, Wynn Resorts principals, including CEO Steve Wynn, fielded questions about financial results and the state of the casino business in Macau. The VIP market segment, which until a few years ago was the primary driver for the small Chinese peninsula, was one of the main topics.

Responding to an analyst's question, Ian Coughlan, president of Wynn Macau Ltd. and Wynn Resorts Macau, said the VIP business has recovered over the last few months and said the outlook for the segment was promising.

Appealing to these luxury-conscious customers is central to his company’s approach, Wynn said.

“The better customers are people who have the money to choose where they want to go,” Wynn said. “They all have a common thread that is undeniable: They go where they are treated the best and where the facilities are superior.”

Wynn said there is a second approach to the business “that is more akin to, say, Wal-Mart. That is a mass approach, and that is what the Sands (and others) do. And they do that beautifully. We come to these people with a different message.”

The crackdown on corruption from the mainland Chinese government that killed VIP traffic for several years was the “right thing to do for the right reasons,” Wynn said, even though had a negative effect on gaming in Macau.

He also said the long-term growth prospects in China are “inexorable and undeniable.” Wynn Resorts will build more resorts in China and has the real estate to do it, he said.

Wynn also spoke about plans for the golf course behind Wynn and Encore in Las Vegas, saying most of the design decisions are complete. He hopes to take a business plan to the board of directors in the second quarter and that work could begin in fourth quarter of this year, Wynn said.

In a digression from discussing finances and market share, Wynn also spoke about the relationship between the U.S. and China, and the political direction the U.S. has taken since electing Donald Trump as president.

He agreed with an analyst’s description that the sparring over trade issues between China and the U.S. amounted to saber-rattling, but that people on both sides recognize how important each country is to the other.

“As you know, I’m acquainted with the administration,” Wynn said. “Several of us were sitting within 30 feet of Trump as he took the oath of office. There will have to be a rapprochement and adjustment. But we do have intelligent people on both sides.”

Wynn also praised the new administration and said that the change the U.S. is going through is one of the greatest things that’s happened to the country in a long time “because we were so on the wrong track for the last eight years.”

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