Steve Wynn better hope he can build his resort on Cotai in Macau in record speed because the resort he is currently operating on the Macau Peninsula isn't performing as well as he hoped. There's no way around it, the numbers are bad coming out of Wynn Resorts
In the second quarter, revenue fell 8.4% to $1.25 billion, property EBITDA fell 14.1% to $384.1 million, and net income fell to $139.0 million, or $1.38 per share. Declining results in both Macau and Las Vegas were responsible for the worsening results, particularly poor VIP business in Macau.
We've seen gaming dollars move to Cotai in recent quarters with Las Vegas Sands
Wynn blamed the volatility in the high limit baccarat business and hold percentages, which he said were 37% last year and 17% this year. There is also a big increase in competition with gaming revenue slowing in Macau. Wynn said that Sands has been aggressively giving discounts and promotions to customers to fill their properties in the quarter. Hold percentage and discounting vary from quarter to quarter so the market hasn't really freaked out about the results.
On Cotai, the company said its loan for building the resort is almost a done deal. The company is preparing the foundation and should release details of the project to investors soon.
Back in Las Vegas, revenue fell 11.6% to $345.6 million and adjusted property EBITDA fell 38.3% to $81.9 million, again affected by hold percentage. Wynn did report a 7.6% increase in table game drop, an indication that Caesars Entertainment
The results look extremely bad for Wynn in the second quarter but when you peel back the details they aren't quite as bad as they appear. Hold has run in Wynn's favor recently and now it has to pay the piper. I don't think this makes the stock a buy, but it isn't a reason to run for the exits either.
Also, be sure to check out a few more companies looking to grow their presence in our special free report: "3 American Companies Set to Dominate the World." In it, you'll receive a rundown of three American companies set to dominate emerging markets. Claim your free copy now by clicking here.
Fool contributor Travis Hoium manages an account that owns shares of Wynn Resorts and Melco Crown. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.