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Wynn Resorts stays away from regulatory questions in Q4 call

Updated January 30, 2019 - 9:46 pm

If Wynn Resorts Ltd. CEO Matt Maddox is nervous about upcoming meetings with regulators in Las Vegas and Boston, he didn’t show it Wednesday.

Maddox, on the job as the top executive at the Las Vegas-based resort company for just under a year, told analysts in a fourth-quarter earnings conference call about the company’s growth path, rather than dwell on what will happen next month with the Nevada Gaming Commission and eventually with the Massachusetts Gaming Commission.

Wynn Resorts said Monday it agreed to settle a 10-count complaint with the Nevada Gaming Control Board that listed violations by Wynn Las Vegas and its parent company for turning a blind eye toward decades of sexual harassment violations. The company admitted to most of the allegations in the complaint. The amount of a fine, if any, is expected to be determined by the Nevada Gaming Commission at its Feb. 28 meeting.

Analysts asked only one question on Wednesday’s call related to Wynn’s upcoming meetings with regulators, and Maddox answered it diplomatically.

“I’m sure you saw the press, we settled here in the state of Nevada on the regulatory issues, everything except the fine,” Maddox said. “There’s no limit on our licenses. There are no current employees under review, and we’re really looking forward to working with the Massachusetts regulators and the Gaming Commission to get through the process there. I want to commend the regulators for the extensive and thorough work that they’ve done in Massachusetts. They’ve taken this extremely seriously, and I think they’ve done a very good job and we’re now just looking forward to a hearing being set and for us to present our case.”

An adjudicatory hearing in Massachusetts has been delayed by lawsuits filed by former Wynn Chairman and CEO Steve Wynn, who is trying to block the release of some details of a report developed by the commission’s investigative unit.

Higher occupancy, room rates

Much of the call was spent discussing the company’s growth plans.

“2018 was a year of transition for our company, and that transition is now over,” Maddox declared. “We’re ready to execute our strategy, and our strategy is growth. I believe we have the best and most robust pipeline in our industry.”

That pipeline includes plans to open Encore Boston Harbor in June and a new 400,000-square-foot convention center at Wynn Las Vegas in the first quarter of 2020, along with a major makeover of the company’s original Wynn Macau property and new amenities — including two new 670-room towers at Wynn Palace, its premiere resort on Cotai.

Maddox said he believes the Las Vegas convention facility and the adjacent 18-hole golf course being remade by professional designer Tom Fazio will expand occupancy rates by 4 to 6 percentage points, which should enable the company to drive higher room rates.

In Las Vegas, the occupancy rate was 88.6 percent in the fourth quarter, and the average daily room rate was $315 a night. A year earlier — a quarter affected by a drop in visitation due to the Route 91 Harvest festival shooting — the occupancy rate was 82.1 percent, and the room rate averaged $301. Revenue per available room jumped from $247 in 2017 to $279 last year.

“Not only does that golf course make money on its own, but we’ve underestimated the impact that it has on our domestic casino business, allowing our hosts and our team to run special events, to run programs that will continue to enhance our casino play,” Maddox said.

If that weren’t enough, Maddox told analysts the company expects to be a strong contender for new concessions in Japan, and the company has 38 acres across Las Vegas Boulevard from Wynn Las Vegas for future development.

“While you don’t count the chickens before they hatch, I think we’re well-positioned in Japan,” he said. “We’re working on that right now. We have our designers here with me, and we’re focused with putting forward what we think will be, without a doubt, the most innovative and creative project and presentation in Japan. That’s further down the road, but we’re going to continue to do those things and do them at the highest level.”

Expectations

Earnings for the quarter that ended Dec. 31 fell from the fourth quarter of 2017.

The company reported net income of $476.6 million, or $4.41 a share, on revenue of $1.688 billion for the quarter. That compared with $491.7 million — a 3.1 percent decline — or $4.77 a share, on revenue of $1.622 billion, which was a 4 percent increase.

The company declared a dividend of 75 cents a share, payable Feb. 26 for shareholders of record Feb. 15.

Cameron McKnight, an analyst with Credit Suisse, said the company’s fourth-quarter results in Macau were ahead of expectations, but a boost in revenue per available room in Las Vegas didn’t translate into material revenue and cash flow growth.

Wynn shares closed up 3.3 percent, or $3.80, to $120.48 on average trading. In after-hours trading, the stock climbed another 3 percent, or $3.62, to $124.10 a share, still on the low side of the company’s 52-week range.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.

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