I stopped in for a bite to eat at Wynn Resorts' (Nasdaq: WYNN ) new Encore property in Las Vegas the other day, and I can attest that it's a very impressive place. But while the Encore definitely helped buoy Wynn's second-quarter results, it's hard to say that those results were anything quite so impressive.
Despite the surge in the stock, the good news at Wynn can be covered rather quickly. First, the company managed to report a profit. Once you back out gains on extinguishing debt and other one-time items, it's a rather slim profit, but hey, it's a profit -- which is more than we can say for Las Vegas Sands (NYSE: LVS ) and likely for MGM Mirage (NYSE: MGM ) .
Wynn Macau also continues to prove itself a great asset for the company. Revenue was down 23% there, but the single property still managed to produce adjusted property EBITDA (a measure of cash flow) about 55% higher than Wynn and Encore in Las Vegas combined. Next year, Macau will be treated to the opening of Encore at Wynn Macau. If it performs anything like Wynn Macau, it'll be a treat for Wynn shareholders as well.
I'm not going to run through all of the bad news; you can probably guess pretty accurately what happened without me telling you. Despite having an additional property versus last year, revenue was off 12% and adjusted net income plunged. Occupancy and average daily rates for the hotels (particularly in Las Vegas) were down, and game play (again, more so in Vegas) dropped noticeably.
The bottom line, though, is that Wynn remains one of the better-capitalized companies in the industry, and although we don't have a full second-quarter balance sheet yet, we do know that the company has more than $1 billion in cash and has its interest payments well covered. That positions it well to wait out the recession and be ready to welcome patrons back when the frightful times have passed.
And while the bankruptcy filing of Station Casinos doesn't make me change my stance on Las Vegas Sands and MGM, it is a good reminder that there is some value in the bit of extra financial flexibility that companies like Wynn, Penn National (Nasdaq: PENN ) , and Melco Crown (Nasdaq: MPEL ) have.
Further Foolish gaming talk:
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