After a turbulent quarter in which co-founder and CEO Steve Wynn exited amid a hail of sexual harassment accusations and his ex-wife Elaine Wynn pushed for more control of the board of directors, Wynn Resorts Ltd. reported a first-quarter earnings loss, reversing year-earlier income.
In a statement, the company said it lost $204.3 million, or $1.99 per diluted share, for the three months ended March 31, compared with net income of $100.8 million, or 99 cents per diluted share, a year earlier.
Wynn said a $463.6 million litigation settlement expense hurt results.
Wynn Resorts’ new CEO, Matt Maddox, said on a call with analysts the company was “no longer mired in litigation,” adding the legal settlements were “great deals” for the company and shareholders.
“As the CEO, I’m not interested in looking in the rear-view mirror,” Maddox said.
Excluding this and other nonrecurring expenses, Wynn Resorts said its adjusted net income was $237 million, or $2.30 per diluted share, for the quarter. The result topped the $1.95-per-share forecast of analysts polled by Yahoo Finance.
Revenue rose 21.1 percent to $1.72 billion from $1.42 billion. Analysts had forecast earnings of $1.75 billion.
Wynn said its adjusted property earnings before interest, taxes, depreciation and amortization, was $564.3 million for the first quarter of 2018, up from $427.5 million a year earlier, fueled by gains at the company’s hotel-casinos in Las Vegas — Wynn Las Vegas and Encore —and its Macau properties.
Wynn Resorts also said it boosted its dividend 50 percent, 75 cents a share, payable May 29 to shareholders of record May 17.
On the call, Maddux said the company would focus on investments that would have a strong return on capital. He said the company would build new convention space and the Lagoon at Wynn Las Vegas, but not the entire $3 billion Paradise project that would replace the now-closed Wynn Country Club. The conference center is scheduled to open in 2020.
Maddux said Wynn would buid amenities around the Lagoon but take time to study its “next multi-billion dollar project” and whether at the Lagoon or at the former New Frontier site across the Strip from Wynn and Encore.
In the fallout over Steve Wynn’s departure, Maddox cast doubt on the future of a $2.5 billion casino under construction in Massachusetts. Gambling regulators in the state are conducting a review to determine if Wynn Resorts should continue to hold the state’s only greater Boston casino license.
Maddox said the company remains excited about the Massachusetts market but would to take “hard look” at the $2.5 billion project if there were indications that “contagion” from the controversy was affecting the rest of its business.
The company says it expects the Wynn Boston Harbor resort to open in mid-2019.
Steve Wynn ceded his executive role in February and sold off his stake in March. Steve Wynn received $2.5 million in salary, a $30 million bonus in cash and shares, and other compensation totaling about $2 million last year, a Securities and Exchange Commission filing shows. If d he’d departed under different circumstances, Bloomberg News reported, Wynn stood to receive up to $582 million in severance and benefits.
This month, seemingly in an effort to turn the page, Wynn Resorts expanded its board to 11 seats and named three women to as directors — Dee Dee Myers, Wendy Webb and Betsy Atkins. Bloomberg News reported that with 40 percent of its board composed of women, Wynn Resorts stands ahead of the 23 percent women-on-the-board average of Fortune 500 companies, as tracked by Equilar Inc., a corporate research company.
“These appointments signify a turning point for us and I look forward to working with each of our new directors as we usher in a new era at Wynn,” Maddox said in a statement announcing the board changes.
Nevertheless, Elaine Wynn, who owns the largest stake in the company at 9.25 percent. sought to reopen period for nominating new directors. In a letter to the Securities and Exchange Commission, she said she seeks company outsiders as directors.
“Because all of the candidates I nominate would, by definition, be new to the board, they would not be in a position to have their independence questioned due to excessively long tenure — unlike some of the incumbent directors who have served for over 15 years.”
Elaine Wynn has lately said she will withhold her votes for John Hagenbuch, a Wynn Resorts director since 2012 who serves on the company’s compensation committee and the board’s special committee investigating the allegations against Steve Wynn. Bloomberg News notes that Hagenbuch’s board term is up at this year’s annual meeting, which is scheduled for May 16 in Las Vegas.
As Bloomberg News reports, Hagenbuch, a real estate investor from Ketchum, Idaho, would serve until 2021 as part of Wynn’s staggered board under current rules. Elaine Wynn said she wanted those rules changed.
Wynn Resorts, in a letter to shareholders, wrote:
“The company is continuing the positive momentum that has accompanied its recent initiatives and is focused on the future. The Board is working in an orderly fashion to refresh its composition, with three new experienced and distinguished directors being named last week.”
Some pundits, notably CNBC’s Jim Cramer, have speculated that another company, possibly from the casino industry, would buy Wynn Resorts. But Maddox told the network last month that the company is not for sale.
Wynn shares fell $3.24, or 1.68 percent, Tuesday to close at $190 in the Nasdaq. The shares have risen 15.6 percent in 2018.
Associated Press contributed to this story.
