Wynn Resorts Limited (WYNN) reported first quarter earnings of 26 cents, well ahead of the Zacks Consensus Estimate of 14 cents. The company had incurred a loss of 27 cents per share in the year-ago quarter.

The results were driven by higher-than-expected growth in revenues. Net revenues were $908.9 million, up 22.8% year-over-year. The increase was driven by a solid performance of its Macau operations.

Macau Operations

Net revenues at Wynn Macau were $590.6 million, up 31.6% year-over-year, primarily driven by a significant increase in table games turnover in the VIP segment, which was $20.2 billion for the period, compared with $10.7 billion in the prior-year period.

However, the VIP table games win as a percentage of turnover for the quarter was 2.7%, at the low end of the expected range of 2.7% to 3.0% and significantly below the 3.55% experienced in the prior-year quarter.

Average daily rate (ADR) at Wynn Macau was $282, up from $268 in the year-ago period. Occupancy level also improved to 90.7% from 83.3% in the prior-year period, driving revenue per available room (RevPAR) to $256, up 14.8% from the 2009 levels of $223.

Non-gaming revenues at Wynn Macau increased 45.7% during the quarter to $62.7 million, primarily driven by the increase in retail revenues.

Wynn Macau’s contribution to the company’s earnings has increased significantly in the last few years. Macau, the only Chinese city where gambling is legal, has survived the economic downturn relatively well.

Encore at Wynn Macau

In order to expand its operations in Macau, the company opened Encore at Wynn Macau on April 21, 2010. This is an extension of Wynn Macau and adds a fully-integrated resort hotel with 410 luxury suites and 4 villas along with restaurants, additional retail space and gaming space including approximately 37 VIP tables, 24 mass market tables and 69 slot machines. We expect the expansion to significantly add to the company’s top line going forward.

Including Encore, currently the company has 467 tables (246 VIP tables, 210 mass market tables and 11 poker tables) and 1,224 slot machines at Wynn Macau. The company has budgeted around $575 million for the construction of Encore at Wynn Macau. As of Mar 31, 2010, the company incurred $500 million associated with the construction of this resort.

Las Vegas Operations

Wynn’s Las Vegas operations posted a 9.3% increase in revenue. Net casino revenues were $139.5 million, up 18.8% from the prior-year period. Gross non-casino revenues decreased 1.4% year over year to $225.2 million, primarily due to lower hotel revenues, which were partially offset by higher entertainment revenues.

Reflecting the continuation of the challenging conditions in Las Vegas, the company reported a drop in hotel revenues which were down 8.8% year over year to $77.6 million. This was driven by an 8.6% decrease in ADR to $203, while occupancy level remained flat at 89.4%. As a result, RevPAR decreased to $181 in the quarter compared with $199 in the year-ago period.

Balance Sheet

Total cash balances as of Mar 31, 2010 were $1.8 billion. Total debt outstanding at the end of the quarter was $3.3 billion, including approximately $2.5 billion of Wynn Las Vegas debt and $768 million of Wynn Macau debt. During the quarter the company reduced its long-term borrowings by approximately $286.9 million, primarily associated with the Wynn Macau facilities.
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