Wynn Resorts (WYNN) delivered impressive second-quarter results on Wednesday, including higher profit margins out of a resurgent China — the linchpin of our investment thesis. Operating revenue surged nearly 76% year over year, to $1.56 billion, beating analysts’ expectations of $1.54 billion, according to estimates compiled by Refinitiv. Adjusted property earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) — Wynn’s key metric for profitability — climbed 193% year over year, to $524.5 million, well ahead of analysts’ predictions of $487 million. Adjusted earnings-per-share (EPS) came in at 91 cents per share, also far ahead of the 59 cent consensus forecast. WYNN YTD mountain Wynn Resorts YTD performance Bottom line Wynn’s top-line beat came from better-than-expected performance from every major business unit. Better yet, the strength seen in the second quarter appears to be continuing into the third, with gross gaming revenue (GGR) continuing to grow in Macau and North American consumer activity holding firm. The team did note that “several components of the business are above 2019 levels” in Macau, though the region hasn’t totally reclaimed the level of activity seen prior to the pandemic lockdowns. Total EBITDAR of $246 million represents 72% of pre-Covid levels. We’re also excited that China is now running at a “structurally higher margins into a resurgent market.” Importantly, the team noted that market-wide gross gaming revenue (GGR) in Macau momentum increased throughout the quarter and continued into the third quarter “with mass drop per day in July, exceeding what [Wynn] experienced in each month in Q2 and reaching 120% of daily mass drop in 2019.” In the United States, Las Vegas is firing on all cylinders and management says it has yet to see a slowdown in consumer spending due to higher rates or inflation. And in Boston, we got an all-time property EBITDAR record. Combined adjusted property EBITDAR in for North American properties was also a second-quarter record. Quarterly commentary Macau In addition to China’s reopening, it seems the house had some luck on its side: Management said that “VIP table games win as a percentage of turnover” was higher than expectations at both Wynn Palace and Wynn Macau. We also saw the win-percentage rate for table games in the mass market operation increase versus the year-ago period. Wynn defines table games win as “the amount of table drop or turnover that is retained and recorded as casino revenues.” Table drop is the amount of cash deposited into a gaming table’s drop box (or casino cage in Macau). So, the higher the table game win rate, the more cash Wynn is holding onto and recording as revenue. Las Vegas The win rate in Las Vegas was in line with management’s expectations, though down from a year ago. On the call, management noted that thanks to margin expansion, Las Vegas is generating nearly double its 2018 EBITDAR with strength coming from everywhere — the casino, the hotel, the restaurants, and retail. In fact, hotel revenue notched a record for second-quarter revenue. Encore Boston Harbor EBITDAR of $69 billion was an all-time property record. As we saw in China, the win percentage rate at Encore Boston Harbor was above management’s expected range and up slightly versus a year ago. On the call, management said the property “generated record GGR in the casino led by strong growth in slot handle and the addition of retail sports betting earlier this year.” Non-gaming revenue was up nearly 4% versus the year-ago period with strength seen in hotel as well as food and beverage sales. Wynn Interactive Wynn continues to take a disciplined cost approach to its digital gaming platform. As was the case last quarter, the EBITDAR burn rate (the amount of money it lost) decreased sequentially and year over year. (Jim Cramer’s Charitable Trust is long WYNN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The new Wynn casino and hotel, Macau, China.
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Wynn Resorts (WYNN) delivered impressive second-quarter results on Wednesday, including higher profit margins out of a resurgent China — the linchpin of our investment thesis.