Business context and reporting period
Wynn Resorts, Limited’s Form 10-K covers the fiscal year ended December 31, 2022; quarterly data includes the fourth quarter. The company operates Wynn Palace and Wynn Macau in Macau, Wynn Las Vegas, Encore Boston Harbor, and WynnBet. Results reflect sharply different regional trends: Macau remained impaired by pandemic-related travel restrictions, while the U.S. resorts grew.
Financial and operating performance
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Operating revenue | $3.757 billion | $3.764 billion |
| Operating loss | $100.7 million | $394.5 million |
| Net loss attributable to Wynn Resorts | $423.9 million | $755.8 million |
| Diluted loss per share | $3.73 | $6.64 |
| Net cash used in operating activities | $71.3 million | $222.6 million |
| Capital expenditures | $300.1 million | $290.7 million |
Revenue was nearly unchanged year over year, but mix shifted: casino revenue fell 23.5% to $1.633 billion, while non-casino revenue rose 30.3% to $2.124 billion. Casino revenue represented 43.5% of total revenue versus 56.7% in 2021.
- Regional revenue: Macau Operations fell 52.2% to $721.5 million; Las Vegas Operations rose 41.8% to $2.132 billion; Encore Boston Harbor rose 20.2% to $831.1 million; Wynn Interactive revenue increased 21.3% to $72.1 million.
- Segment Adjusted Property EBITDAR: Las Vegas $801.1 million, up $270.2 million; Encore Boston Harbor $243.4 million, up $33.3 million; Wynn Interactive loss $98.5 million, improved from a $267.4 million loss. Macau Operations recorded a $220.6 million loss, versus $95.9 million of positive EBITDAR in 2021. This non-GAAP measure excludes, among other items, interest, depreciation and the new Encore Boston Harbor lease rent; it is not a substitute for operating cash flow.
- Fourth quarter: Revenue was $1.005 billion, operating income was $99.2 million, and net income attributable to Wynn Resorts was $32.4 million, compared with a $177.2 million attributable net loss in fourth-quarter 2021.
- Interest and unusual items: Net interest expense was $650.9 million, up 7.5%; the weighted-average interest rate increased to 5.36% from 4.96%. The company recorded a $182.0 million net gain on the Encore Boston Harbor sale-leaseback and $48.1 million of Wynn Interactive goodwill and intangible-asset impairment.
Liquidity, debt and capital structure
At year-end, cash and cash equivalents were $3.650 billion, excluding restricted cash; available WRF Revolver capacity was $837.0 million, while the $1.50 billion WM Cayman II Revolver was fully drawn. Gross debt was $12.163 billion ($12.117 billion net of issuance costs and discounts), including $547.5 million classified as current. Total cash, cash equivalents and restricted cash were $3.783 billion. Stockholders’ deficit was $1.640 billion.
Operating cash outflow improved to $71.3 million. The $1.70 billion Encore Boston Harbor sale-leaseback drove investing cash inflow and included a $182.0 million gain; the company retained operation of the resort under a 30-year triple-net lease with initial annual base rent of $100 million, escalations, and additional payments in lieu of property taxes. The transaction also added approximately $1.51 billion of operating lease liability. The company repurchased $171.3 million of shares in 2022. Its dividend remains suspended, with no dividends paid since the first quarter of 2020.
Outlook, risks and contingencies
- Macau relaxed or removed most COVID-related entry measures in December 2022 and January 2023. Management said it could not predict the timing or effect of any renewed restrictions, or how quickly Macau operations would recover.
- The Macau concession runs from January 1, 2023 through December 31, 2032. It entails gaming tax and levies totaling 40% of gross gaming revenue, plus a commitment to invest MOP17.73 billion (approximately $2.21 billion) over the term, mostly in non-gaming projects.
- Management believed available cash, operating cash flows and borrowing capacity would support obligations for the next 12 months and beyond, while noting uncertainty around Macau recovery and future access to capital. No specific financial guidance was provided.
- Subsequent to year-end, WRF issued $600 million of 7⅛% notes due 2031 and tendered for $506.4 million of its 2025 notes; it planned to redeem the remaining 2025 notes and repurchase or redeem $500 million of Wynn Las Vegas 2023 notes.
- Key risks include high leverage, interest-rate exposure, debt maturities and covenant requirements; dependence on a limited number of resorts; Macau regulatory, geopolitical, travel and concession risks; competition; premium-customer and gaming-receivable volatility; and labor, cybersecurity and construction risks.
- Contingencies include Dore-related Macau litigation, a continuing U.S. anti-money-laundering investigation, and a securities class action for which the company could not estimate a possible loss. The company also reported Everett-area contamination and remediation costs above initial estimates, and $136.0 million of unrecognized tax benefits.
Most important facts for investors to verify
- Whether Macau visitation and gaming volumes recover following the lifting of travel restrictions, and the effect on segment profitability and cash generation.
- The ongoing cash cost and long-term economics of the Encore Boston Harbor leaseback, including rent escalations and other lease payments.
- Debt maturities, refinancing progress, variable-rate exposure, covenant headroom and the availability of revolver capacity.
- Funding and execution of the Macau concession’s approximately $2.21 billion investment commitment alongside required debt service.
- Developments in the Dore litigation, AML investigation, securities action, Everett remediation and tax positions.