Matt Maddox: ‘We are confident that travel and tourism will recover in the US and China’

Wynn Resorts financials
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Following a challenging Q1 in the US and Macau, Wynn Resort’s chief executive affirmed that the company remains well positioned to ride out the coronavirus crisis, highlighting that it retains $3.4bn in liquid assets.

 

Amid the ongoing coronavirus pandemic, Wynn Resorts reported a net loss of $402m for the first quarter. Nevertheless, speaking during the company’s Q1 earnings call, Wynn’s executives remained confident in the firm’s ability to bounce back and highlighted that it retains $3.4bn on the balance sheet.

The casino operator posted operating revenue of $953.7m for the period ending 31 March, a fall of 42.3 percent compared to the same period in 2019.

The company’s CEO Matt Maddox conceded that “the current environment is clearly challenging”, but said the firm was in a strong position to weather the COVID-19 crisis.

“We are confident that travel and tourism will recover in both the US and China, and our industry leading assets, fortress balance sheet and talented team members position the company to thrive in the years ahead,” he affirmed.

Maddox emphasised that the company is “focused on maintaining our liquidity” and has put short-term capital projects on hold until its “cash flow positive”.

“On the capex front, we have postponed the Wynn Las Vegas room remodel, which was slated to begin in June conserving approximately $170m of cash and liquidity, explained Craig Billings, Wynn’s president, CFO and treasurer, adding the company plans “to revisit the project again” in 2021.

He stated that the company had additionally taken the opportunity to bolster its “already strong liquidity position” by issuing $600m of unsecured notes in April.

Wynn closed its Strip operations on 17 March. In Las Vegas, Q1 operating revenues were $323.8m, a 19.3 percent decrease from $401m for the first quarter of 2019.

Over in Massachusetts, operating revenues at Encore Boston Harbor came in at $140.9m. The property closed to the public on 15 March.

“We led the industry both in Massachusetts and in Nevada in closing our casinos. We suggested to the Massachusetts Gaming Commission in mid-March that it was time for us to close based on the data, the science and the potential community spread that …and we actually closed our resorts in Las Vegas in advance of the state declaration,” Maddox clarified. “It was the right thing to do and we knew that we needed to be early and to make that move.”

In Asia, the company’s subsidiary Wynn Macau reported a nearly $154.2m net loss for the first quarter.

Casinos in the special administrative region were forced to suspend operations for 15 days in February as part of efforts to contain the spread of COVID-19. “We’ve remained open in Macau after the closure in the first two weeks of February. However, …the Macau volumes have really not been there because there is a 14-day quarantine of going in and out of Macau from Hong Kong or Mainland China,” noted Maddox.

Operating revenues from Wynn Palace fell 64.3 percent year on year to $259.5m, while Wynn Macau reported $229.5m, a 56.2 percent decrease.

Despite the business impact of the coronavirus pandemic, in a note at the start of May, JP Morgan Securities (Asia Pacific) Ltd said that the company was well-positioned to ride out the current situation.

“Wynn Macau had $1.8bn of available liquidity as of end-April. As discussed previously, daily operating expenses’ burn is $2.4m to $2.6m per day,” given this “the company’s liquidity is enough to weather through 1.5-plus years of zero revenue,” stated analysts DS Kim, Derek Choi and Jeremy An.


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