Wynn Q1 Loss Wider Than Estimates, Revenue Tops Forecasts, Dividend ‘Temporarily’ Suspended

Posted on: May 6, 2020, 02:16h. 

Last updated on: May 6, 2020, 04:48h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Hamstrung by closures stemming from the global coronavirus pandemic, Wynn Resorts (NASDAQ:WYNN) reported a first-quarter loss of $3.77 a share, as revenue plunged 42.3 percent to $953.7 million.

Wynn Q1 Loss
Wynn posted a Q1 loss due to the coronavirus and suspended its dividend. (Image: Associated Press)

Analysts expected the Encore operator to lose $1.65 per share, but the top line figure beat Wall Street’s forecast by almost $54 million. Adjusted property earnings before interest, taxes, depreciation and amortization (EBITDA) was -$5.3 million, far below the consensus estimate of $206 million and well off the year earlier figure of $495 million.

After dealing with a 15-day February closure of gaming properties in Macau – Wynn’s most important market – the company temporarily shuttered its two Las Vegas Strip venues and Encore Boston Harbor in mid-March. Wynn Macau and Wynn Palace have since reopened. But the operator’s trio of US integrated resorts remain shuttered, meaning it lost more than 30 days worth of revenue in either the Macau or the US in the first three months of 2020.

Our leadership team has been working side-by-side with our host communities, fellow industry leaders, and world-class medical experts to identify and implement strategies to mitigate the impact of the virus on our team members, our guests, and our broader communities,” said CEO Matt Maddox in a statement.

The company said the EBITDA loss includes “the impact of $75.7 million of expense accrued during the quarter related to our commitment to pay salary, tips, and benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020.”

Maddox said he’s not sure how long the employee pay practice will last beyond May 15 if Wynn’s domestic integrated resorts remain closed.

Macau Commentary

In the first quarter, Wynn Macau and Wynn Palace combined for $489 million of the company’s revenue, well below the 2019 levels. But Maddox sees “extraordinary progress” in the world’s largest gaming hub.

On a conference call with analysts and investors, the Wynn chief executive said Macau hasn’t had a new coronavirus case in weeks, and that officials there are working with their counterparts in Guangdong to make sure health checks are in order prior to relaxing restrictions impacting travel between the largest mainland province and the gaming center.

During the February Macau closure, Wynn was burning roughly $2.5 million daily, but Maddox noted that when the shutdown there ended late that month, the burn rate was trimmed to $800,000 per day.

While Wynn believes its balance sheet is strong, CFO Craig Billings said on the call the company is temporarily suspending its dividend, joining a slew of rivals in doing so, a move that will save $100 million per quarter.

Familiar Refrain

Echoing a refrain heard from competing operators, Wynn said January and February were strong. Maddox said prior to the COVID-19 closures, Las Vegas revenue per available room (revpar) was up eight percent, and Encore Boston Harbor was on pace for record EBITDA.

The chief executive said it’s unclear at the moment if a Sin City reopening will include both Wynn Las Vegas and Encore, or if it will be limited to just one of the properties.

Gaming venues in Massachusetts are expected to remain closed until at least May 18. On the call, Wynn executives didn’t offer up a time frame for when its property there will reopen.