Wynn Declines After New CEO Scales Back Predecessor's ProjectsBy
Matt Maddox says company’s spending was ‘not sustainable’
Vegas lake resort is downsized; another is under review
Wynn Resorts Ltd. suffered the worst stock decline in almost three months after its new chief executive officer said he’s pulling back on some of the projects begun by founder and predecessor Steve Wynn, including a lake resort under development in Las Vegas.
Speaking on his first earnings call since replacing Wynn in February, Matt Maddox said a new resort with a nightly, floating parade on a lake will be scaled back in favor of beaches and bars focused squarely on high-end customers. He called the proposed $3 billion budget for Paradise Park “not sustainable.” Maddox is also reviewing plans for another project on recently purchased land across the street from the company’s original Wynn Las Vegas.
Maddox is taking the steps two months after Wynn left under a cloud of sexual-harassment allegations dating back decades. The company also has begun to shake up its director ranks. The new CEO said Wynn Resorts considered more than 50 candidates before selecting three women to join the board this month. The company has added paid parental leave benefits as well, he said.
Maddox said his goal is “reducing the noise surrounding our business.”
Still, the outlook didn’t sit well with investors. Revenue also came in shy of projections last quarter, despite growing 20 percent.
Shares declined as much as 5.7 percent to $179.22 on Wednesday. That was the biggest drop since Jan. 29, when the scandal surrounding Steve Wynn was deepening.
Despite the pessimism, earnings were stronger than expected in the latest quarter. Buoyed by its newest Macau property, Wynn’s first-quarter profit rose to $2.30 a share, excluding some items, the Las Vegas-based casino company said Tuesday. That topped the $1.96-a-share average of analysts’ estimates.
Wynn Resorts is under investigation by casino regulators in Nevada, Macau and Massachusetts over the actions of its former CEO -- and the board’s handling of the allegations against him. So far, that hasn’t hurt results at the company, which owns casinos in Las Vegas and Macau.
Macau, the only part of China where casino gambling is legal, is rebounding from a multiyear slump. New resorts, including one that Wynn opened in August of 2016, have stimulated demand.
Wynn reported $421.7 million in earnings before interest, taxes, depreciation and amortization from its two Macau casinos, ahead of the $414.5 million estimate provided by Consensus Metrix. Total revenue for the quarter rose to $1.72 billion, compared with analysts’ estimates of $1.75 billion.
Gaming revenue fell short of expectations at Wynn’s original resort on the Macau peninsula, according to Deutsche Bank analyst Carlo Santarelli.