Wynn Resorts, Limited — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited results. Wynn operates resorts in Macau, Las Vegas and Boston, plus Wynn Interactive.
Financial performance
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $889.7 million | $994.6 million | $2,751.9 million | $2,721.4 million |
| Operating loss | $53.0 million | $83.7 million | $199.9 million | $288.9 million |
| Net loss attributable to Wynn | $142.9 million | $166.2 million | $456.3 million | $578.6 million |
| Diluted loss per share | $1.27 | $1.45 | $4.00 | $5.10 |
| Adjusted Property EBITDA | $173.5 million | $154.6 million | $530.3 million | $420.3 million |
| Operating cash flow | Not provided for quarter | Not provided for quarter | $(153.0) million | $(216.8) million |
Q3 revenue fell 10.5%, as Macau revenue declined 62.9% to $115.6 million, more than offsetting growth in Las Vegas (14.4%) and Boston (10.2%). Macau gaming operations were fully closed from July 11 and resumed on a limited basis July 23; ongoing travel restrictions continued to depress visitation. For the first nine months, revenue edged up 1.1%, reflecting growth in Las Vegas and Boston offset by a 55.1% decline in Macau.
Q3 casino revenue decreased 27.5% year over year, while non-casino revenue increased 6.3%. Adjusted Property EBITDA is a non-GAAP measure and should not be treated as operating cash flow or a substitute for GAAP results. Q3 operating margin, calculated from reported figures, was approximately negative 6.0%, versus negative 8.4% a year earlier.
Cash, debt and liquidity
- At September 30, 2022, cash and cash equivalents were $1.94 billion; restricted cash was $159.2 million, including a $149.7 million Macau labor-liability bank guarantee.
- Total debt carrying value was approximately $12.12 billion, including $546.1 million current and $11.57 billion long-term. Interest expense was $165.3 million in Q3 and $472.3 million year to date. Approximately 76% of long-term debt was fixed-rate; management estimated a 100-basis-point move in variable rates would change annual interest expense by $29.6 million.
- Available borrowing capacity under the WRF Revolver was $835.6 million; the WM Cayman II Revolver was fully drawn. The company reported compliance with debt covenants, but certain WM Cayman II financial covenants were waived through specified test dates ending March 31, 2023.
- Nine-month capital expenditures were $273.3 million. Cash, cash equivalents and restricted cash declined $428.4 million during the period. The company repurchased $166.4 million of shares in the first nine months.
Outlook, material developments and risks
- Macau concession: The concession was extended only through December 31, 2022. Wynn submitted a tender for a new concession in September and said it believed the concession would be extended, renewed or replaced. Failure to secure continued rights could trigger a put option on $4.7 billion of WML senior notes and accelerated repayment of the fully drawn revolver, with potentially material effects.
- COVID-19 and liquidity: Management said pandemic-related restrictions continued to reduce Macau visitation and that future closures or effects could not be predicted or reasonably estimated. The company suspended its dividend program for the foreseeable future, while stating its liquidity was sufficient to support continuing operations and respond to disruption.
- Encore Boston Harbor sale-leaseback: The company expected to receive approximately $1.7 billion, subject to regulatory approvals and closing conditions, for real estate assets, then lease them for an initial annual rent of $100 million under a 30-year term with renewal provisions and rent escalations. Proceeds could be used for general purposes, including debt repayment; this was an expected transaction, not a completed one at quarter-end.
- Unusual charges and projects: Year-to-date property charges included $37.8 million of goodwill impairment, $10.3 million of intangible-asset impairment and Wynn Interactive restructuring and contract-related costs. Wynn Las Vegas completed a room remodel costing approximately $215 million and a theater reconfiguration costing approximately $110 million; the production Awakening premiered in November 2022.
- Contingencies: Disclosed matters include Macau litigation related to the Dore gaming promoter incident, a securities class action with an indeterminable loss estimate, and an ongoing U.S. anti-money-laundering investigation. The company said it could not predict the investigation’s outcome or estimate any possible loss.
- No specific financial guidance was provided in the supplied filing text. Management cautioned that interim results are not necessarily indicative of full-year results.
Important facts for investors to verify
- Whether Macau’s gaming concession was renewed or replaced after December 31, 2022, and any resulting financing or operating conditions.
- Whether the Encore Boston Harbor sale-leaseback closed, its final proceeds and lease terms, and how proceeds were applied.
- Macau travel restrictions, visitation and property-level performance, alongside the availability of liquidity and compliance with debt covenants.
- Debt maturities, floating-rate exposure and refinancing capacity, especially given substantial leverage and negative operating cash flow.
- Developments in the Dore claims, securities action and anti-money-laundering investigation.