Wynn beats estimates; earnings call focused on UAE project

Wynn Resorts Surpasses Fourth-Quarter Revenue Expectations While Focusing on Strategic Growth in UAE

In its recent fourth-quarter earnings call on February 13, Wynn Resorts reported revenue figures that exceeded expectations yet demonstrated a flat overall growth trajectory. The company has set its sights on the ambitious Wynn Al Marjan project in the United Arab Emirates (UAE), a strategic initiative poised to reshape its future.

During the call, CEO Craig Billings highlighted positive year-on-year revenue growth at both Wynn Palace and Las Vegas properties, although he acknowledged declines at Encore Boston Harbor and Wynn Macau. These mixed results underscore the complex dynamics of today’s gambling landscape and the importance of calculated strategic investments.

Wynn Al Marjan Project: A Major Focus

CEO Billings expressed unwavering confidence in the Wynn Al Marjan project, a landmark undertaking projected to cost between $3 billion and $5 billion, and scheduled for a March 2027 opening. He noted that construction has made significant strides, with the hotel tower reaching the 35th floor and a total of 4.6 million square feet of concrete and steel already in place.

Wynn’s ongoing share buyback will continue as the company seeks to ensure the market reflects the true value of the Al Marjan project. Billings emphasized that the return profile from these purchases is expected to be significant, adding to investor confidence.

Insights on the Competitive Landscape in the UAE

As Wynn approaches the halfway mark of its Al Marjan development, discussions about future competition in the UAE have surfaced. Billings remains optimistic, suggesting that the company’s first-to-market advantage will provide resilience against future entrants. Notably, MGM Resorts has sought a license in Abu Dhabi, yet Billings believes other emirates may not issue additional licenses, as he perceives a lack of significant competition materializing at this time.

“We have good intelligence suggesting that there are currently no deals for a second license,” Billings stated. He further explained that designing and constructing an integrated resort typically takes at least four years, reinforcing Wynn’s strategic positioning.

Strategic Expansion into Luxury Markets

Wynn Resorts is not just focused on construction; it is actively making moves to enhance its luxury brand profile. CFO Julie Camandot announced a groundbreaking $2.4 billion financing package—dubbed the largest hospitality financing in UAE history—to support the Al Marjan project. Additionally, Wynn has recently acquired British luxury brand Aspinal, located in London’s affluent Mayfair district. This strategic asset acquisition aims to engage potential Al Marjan customers, who are likely to frequent high-end establishments in key international markets.

Billings elaborated: “Aspinal will ultimately integrate into our Al Marjan strategy, as it represents a crucial touchpoint for attracting our target clientele—40% of the world’s millionaires reside within our targeted demographic.” This move illustrates a broader trend in the gambling industry toward a personalized and high-touch customer experience.

Potential Developments in Las Vegas

Wynn also owns a significant parcel of undeveloped land in Las Vegas, the site of the former New Frontier Casino and Resort. When questioned about potential development plans, Billings remarked that the timing must align with Wynn’s global strategy. He stated, “Our new developments must complement the existing portfolio without cannibalizing our market presence.”

Extensive planning is underway, but any future developments will be carefully curated to ensure they enhance the Wynn brand rather than dilute it. “Stay tuned,” Billings urged investors, reiterating the substantial opportunity presented by the Al Marjan project as the primary focus.

Analyzing the Financial Performance

In the fourth quarter, Wynn demonstrated solid financial management, repurchasing 2.14 million shares for $200.3 million, a move reflecting confidence in the company’s long-term growth. The company reported revenue of $1.84 billion, surpassing analyst predictions of $1.77 billion. Adjusted earnings per share (EPS) stood at $2.42, significantly above the anticipated $1.22.

As of the end of the fourth quarter, Wynn reported $2.43 billion in cash against $10.54 billion in debt, signaling a robust liquidity position. The company announced a cash dividend of 25 cents per share, payable to shareholders by March 5, affirming its commitment to delivering shareholder value.

Wynn’s stock closed at $80.47 on February 13, experiencing fluctuations leading up to and following the earnings call, showcasing market responsiveness to company performance and strategic direction.