Business context and reporting period
Wynn Resorts, Limited’s Form 10-K covers the fiscal year ended December 31, 2021. The company operates Wynn Palace and Wynn Macau, Wynn Las Vegas and Encore, Encore Boston Harbor, and digital gaming through its approximately 74%-owned Wynn Interactive. The filing also provides unaudited quarterly results, including Q4 2021.
Financial performance and liquidity
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Operating revenue | $3.764 billion | $2.096 billion |
| Operating income (loss) | $(394.5) million | $(1.232) billion |
| Net loss attributable to Wynn Resorts | $(755.8) million | $(2.067) billion |
| Diluted loss per share | $(6.64) | $(19.37) |
| Adjusted Property EBITDA | $569.4 million | $(324.3) million |
| Cash from operating activities | $(222.6) million | $(1.072) billion |
- Revenue increased 79.6%, reflecting recovery from 2020 closures and operating restrictions. It remained well below 2019 revenue of $6.611 billion.
- Q4 2021 revenue was $1.053 billion; operating loss was $105.6 million, net loss was $256.4 million, and net loss attributable to Wynn Resorts was $177.2 million, or $1.54 per diluted share.
- Casino revenue was $2.133 billion, up 72.4%; non-casino revenue was $1.630 billion, up 89.9%. Casino revenue represented 56.7% of total revenue.
- Adjusted Property EBITDA improved at the resort segments: Las Vegas $530.9 million, Encore Boston Harbor $210.1 million, Wynn Palace $91.6 million, and Wynn Macau $4.2 million. Wynn Interactive recorded a $267.4 million loss on this measure.
- Operating margin was approximately negative 10.5% in 2021, versus negative 58.8% in 2020, calculated from reported operating income (loss) and revenue. Interest expense was $605.6 million; the weighted-average interest rate on total debt was 4.96%.
- At year-end, cash and cash equivalents were $2.523 billion, total debt principal was approximately $12.000 billion, and total stockholders’ deficit was $836.2 million. Available revolver capacity was $1.048 billion. The company reported net cash used in investing activities of $342.4 million, including $290.7 million of capital expenditures.
- The company recorded income tax expense of $0.5 million in 2021, versus $564.7 million in 2020. A $2.501 billion valuation allowance was recorded against deferred tax assets at year-end.
Material changes versus the prior comparable period
- Recovery drove revenue growth across all resort segments. Las Vegas revenue rose 101.0%, Encore Boston Harbor 91.2%, Wynn Palace 74.7%, and Wynn Macau 31.9%. Macau remained particularly constrained: visitation was 80.4% below 2019 levels, although it increased from 5.9 million in 2020 to 7.7 million in 2021.
- Operating loss and attributable net loss narrowed substantially, but the company remained loss-making and operating cash flow remained negative.
- Debt principal declined from approximately $13.154 billion at year-end 2020 to $12.000 billion at year-end 2021. The company repaid Wynn Macau credit facilities, partly refinancing them with $1.09 billion borrowed under the new WM Cayman II Revolver.
- A February 2021 stock offering generated $841.9 million net proceeds; $716.0 million was used to repay the WRF Revolver. The quarterly dividend program remained suspended.
- Wynn Interactive’s revenue increased to $59.4 million from $6.2 million, but its Adjusted Property EBITDA loss widened to $267.4 million, primarily due to launch-related marketing and promotional costs. Termination of a proposed merger transaction led to a $10.3 million goodwill impairment.
Outlook, risks, contingencies, and unusual items
- COVID-19 and demand: Las Vegas and Boston progressively restored full operations during 2021. Macau visitation remained restricted and uncertain. Management said it could not reasonably estimate the future impact of pandemic developments or related restrictions.
- Macau concession: The concession was due to expire June 26, 2022. The filing states that without an extension, renewal, or replacement concession, Macau gaming operations and related equipment would transfer to the government without compensation. Holders of $4.7 billion of WML senior notes could have a special put right, and the WM Cayman II facility could become due. Management believed renewal or extension was likely; Macau had published draft gaming-law revisions in January 2022.
- Debt and liquidity: Substantial leverage, debt service, floating-rate exposure, covenant restrictions, and dependence on subsidiary distributions remain risks. Approximately 77% of long-term debt was fixed-rate; a 100-basis-point increase in variable rates was estimated to increase annual interest expense by $22.4 million. Management said the company was in compliance with debt covenants at year-end.
- Boston sale-leaseback: Announced after year-end, the proposed transaction would provide approximately $1.7 billion for certain Encore Boston Harbor real estate, subject to approvals and closing conditions. The contemplated 30-year lease has initial annual minimum rent of $100 million, with escalations. Closing was expected in Q4 2022.
- Development: Remaining Wynn Las Vegas room remodel costs were estimated at $90–$100 million, with completion expected in Q2 2022; theater reconfiguration and production costs were estimated at $70–$80 million, with opening anticipated in Q3 2022. A Ras Al Khaimah integrated resort was announced, targeted to open in 2026, subject to approvals including gaming authorization.
- Contingencies: A Macau court ruling held Wynn Macau SA jointly liable in one Dore gaming-promoter case, requiring approximately $1.2 million payment; other cases remained pending. A U.S. anti-money-laundering investigation remained ongoing, with no charges disclosed and potential loss not estimable. A securities action also remained pending. Encore Boston Harbor site contamination may require further investigation and remediation, with ultimate costs uncertain.
- Other notable items: Casino receivables were $199.0 million gross, with a $107.0 million allowance (53.7% of gross casino receivables). Advertising costs rose to $250.6 million from $28.3 million, primarily associated with Wynn Interactive. Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting.
The filing provides no formal consolidated financial guidance for 2022.
Important facts for investors to verify
- Progress and final terms of Macau concession renewal, gaming-law changes, and any related bondholder or revolver repayment triggers.
- Whether Macau travel restrictions ease and visitation, gaming volumes, and cash generation recover sustainably.
- Debt maturities, covenant headroom, access to revolvers, interest-rate exposure, and the availability of subsidiary distributions to the parent.
- Completion, regulatory approval, net proceeds, and lease obligations for the Encore Boston Harbor sale-leaseback.
- Collection outcomes on casino receivables and developments in the Dore litigation, securities action, and federal investigation.
- Wynn Interactive’s customer acquisition costs, operating losses, market access, and progress toward improved economics.