Wynn Resorts Limited (WYNN) today reported third-quarter earnings of 28 cents per share. Adjusted earnings were 33 cents. The results are ahead of the Zacks Consensus Estimate of 14 cents. The company had earned 49 cents (adjusted earnings of 62 cents) in the year-ago quarter.

Net revenues were $773.1 million compared to $769.2 million in the prior-year period. Results were driven by the opening of Encore at Wynn Las Vegas in Dec. 2008. However, due to a challenging economic environment, consumers continued to curb their gambling.

Casino revenues in Las Vegas were flat year-over-year, while non-casino revenues increased 18% from the prior-year period, driven primarily by higher hotel and food and beverage revenues from Encore.

Though hotel revenues were up as a result of the addition of 2,034 suites at Encore, we note that average daily rate, occupancy levels and revenue per available room (RevPAR) were all down in the quarter.

Average daily room rate decreased to $210 from $272, while occupancy fell to 83.9% from 96.1% during the prior year period. As a result, RevPAR decreased 32.6% year-over-year to $176.

Net revenues at Macau were $448.5 million, down 5.5% year-over-year due to the drop in table games turnover in both the VIP and mass market segments.

Average daily rate at Wynn Macau was $263, down from $272 in the year-ago period. Occupancy improved to 89.2% from 86.2% during the prior-year period. RevPAR was $235, slightly above 2008 levels of $234.

Wynn Macau raised $1.63 billion earlier in October with an initial public offering on the Hong Kong Stock Exchange.

Wynn Encore Macau, the company’s second resort in Macau, is scheduled to open in the first half of 2010. The company has budgeted around $650 million for the construction of this resort. As of Sept. 30, 2009, the company incurred $375.6 million associated with the construction of Encore at Wynn Macau.

Total cash balance on Sept. 30, 2009, was $1.3 billion. Total debt outstanding at the end of the quarter was $4.2 billion, including approximately $2.7 billion of Wynn Las Vegas debt and $1.5 billion of Wynn Macau debt.

While we remain encouraged with Wynn’s strong brand name, balance sheet and its ability to execute in a difficult operating environment, we think the company’s limited diversity remains one of its key short-term risks. Also, the challenged economic factors will compel customers to gamble less.
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