International edition
June 18, 2021

As gamblers stayed away

Las Vegas casinos report weak first quarter

(US).- Casino companies Las Vegas Sands, MGM Mirage and Wynn Resorts, slammed hard by the recession, reported their revenue suffered and profit plunged in the first quarter.

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ynn Resorts, which opened the casino Encore Las Vegas in December just before the quarter began, reported this week that - with a 27-cent-per-share adjusted loss - it fell well short of analysts' average forecast of a 2-cent-per-share adjusted profit.

Wynn's miss was the most dramatic among the three major casino operators that reported earnings this week, which also include MGM Mirage and Las Vegas Sands Corp. But shares in all three companies rose Tuesday.

But MGM Mirage's profit for the quarter that ended March 31 included a hefty gain from selling a hotel and casino, and its adjusted results showed a loss of 10 cents per share, 3 cents greater than the 7-cent-per-share loss analysts forecast.

And Las Vegas Sands Corp. reported that its first-quarter loss widened compared with a year earlier as its revenue stagnated and expenses rose, though the results were slightly better than Wall Street expected.

All three companies reported grander losses for the fourth quarter of 2008 - 27 cents per share at Las Vegas Sands, us$ 1.49 per share at Wynn and a whopping us$ 4.15 per share at MGM Mirage. And MGM Mirage CEO Jim Murren, who singled out convention cancellations in first-quarter conditions that he called "brutal," said Monday evening that things are improving.

"When people came to visit us in January, they left their wallets at home," Murren told The Associated Press after his company released its earnings. "Now, at least they've got their wallets in their pockets."

Murren also cited improved occupancy, bookings and prices. Las Vegas Sands reported that its group bookings are showing a pulse as well. "Our group business in 2010 and 2011 is now starting to improve as future bookings come in, and groups who have previously canceled for 2009 are booking future years," said Rob Goldstein, president of the Venetian Las Vegas and the Palazzo.

But Wynn CEO billionaire Steve Wynn sounded a more cautious tone Tuesday. "I think that the economy is bouncing around," Wynn said during a conference call with investors. Some metrics - like occupancy and how far ahead customers are booking travel - have strengthened in recent weeks for his company, Wynn said.

BMO Capital Markets analyst Jeffrey Logsdon advised investors to take heed of Wynn's tentative stance. "While some operators claim to see a faint light at the end of the tunnel, Steve Wynn remains somewhat more guarded (in) outlook," Logsdon wrote in a note to investors Tuesday. "We won't attempt to judge who is right or wrong ... (but) we would note that, in our experience, Wynn has been honest in his quarterly assessments ... and generally quite accurate."

Visits to destination casinos have fallen, tourists' trips have shortened and they are gambling less than in recent years. At MGM Mirage, which has more than us$ 14 billion in debt outstanding - and has repeatedly renegotiated its terms - the shadow of the massive CityCenter casino, hotel, condominium and retail complex it is building in partnership with Dubai World also looms.

Even after MGM reached agreements last month with its lenders and Dubai, Oppenheimer & Co. analyst David Katz said, questions remain. "Now that CityCenter is financed, the big question is how it's going to open - what's it going to look like from an operating perspective?" he said.

Along with Harrah's Entertainment, MGM Mirage, Las Vegas Sands and Wynn are the world's largest casino companies. All are based in Las Vegas. A summary of Wynn's, Sands' and MGM's first-quarter earnings follows.

Wynn's net loss of us$ 33.8 million, or 30 cents per share unadjusted, compares with profit of us$ 46.7 million, or 41 cents per share, a year earlier. Wynn said its revenue dropped 5 % to us$ 740 million, missing Wall Street's forecast of us$ 742.6 million.
 
Excluding some nonrecurring items related to property charges and debt repayment, it lost 27 cents per share. Analysts surveyed by Thomson Reuters, who generally exclude one-time items, on average predicted profit of 2 cents per share. But the results are much better than what Wynn reported for the fourth quarter: a loss of us$ 159.6 million and a 43 percent drop in gambling revenue compared with 2007's fourth quarter.

Wynn shares rose us$ 7.17, or 16.8 %, to close at us$ 49.98 Tuesday. The earnings news was released before the market opened. Las Vegas Sands lost us$ 87.7 million, or 14 cents per share, after paying dividends. A year ago, Las Vegas Sands lost us$ 11.2 million, or 3 cents per share.

Excluding one-time items, the company earned 1 cent per share on revenue of $1.08 billion, roughly flat with the first quarter of 2008. Analysts polled by Thomson Reuters, who generally exclude one-time items, forecast a loss of 2 cents on revenue of $1.06 billion. Las Vegas Sands shares rose us$ 1.84, or 19.4 %, to close at us$ 11.34 Tuesday before the earnings news was released. They fell 25 cents in after-hours trading.

MGM Mirage earned us$ 105.2 million in the first quarter, or 38 cents per share, compared with profit of us$ 118.3 million, or 40 cents per share, a year earlier. The results include a 44-cent-per-share one-time gain from selling the Treasure Island hotel and casino in Las Vegas and smaller one-time gains related to a fire at MGM Mirage's Monte Carlo resort and casino.

Without those special items, MGM's loss totaled 10 cents per share. Analysts polled by Thomson Reuters, who generally exclude one-time items, expected MGM Mirage to lose 7 cents per share. MGM Mirage shares rose us$ 3.36, or 35.6 %, to close at us$ 12.80 Tuesday, the day after the earnings news was released.

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