A $637.6 million net loss by Wynn Resorts in the second quarter wasn’t much of a surprise.
The company’s two Las Vegas resorts were open for just 27 days during the three-month period that ended June 30. Encore Boston Harbor didn’t open until after July 4th and Wynn’s Macau properties continued to be impacted by COVID-19-related travel restrictions in the Chinese gaming market.
It’s far from business as usual.
“We’ve had to make some tough decisions about right-sizing our expense structure,” Wynn CEO Matt Maddox said on a conference call Tuesday. For the time Wynn Las Vegas and Encore were open during June, the resorts had a collective cash flow of $9 million.
“We want to break even or make money,” Maddox said. He noted that while demand was high in Las Vegas shortly after casinos reopened following a 78-day shutdown to slow the coronavirus pandemic, the business has since tapered off.
“We’re probably running weekend occupancy of about 50% and 30% percent during midweek,” Maddox said on the primarily drive-in customer traffic from California and Arizona with not a long booking window.
“We are pleased to be up and running again in each of our markets,” Maddox said in a statement. He said the Las Vegas properties had “an intense focus on cleanliness and safety.” A similar set of protocols were enacted at Encore Boston Harbor “to a positive reception as many of our customers currently prefer to stay close to home.”
In the quarter, Wynn’s total revenues declined 94.8% to $85.7 million, a stunning figure when compared to $1.658 billion in the second quarter a year ago. The company’s Las Vegas properties saw revenues drop off 86% to $64.9 million while the company’s Macau had combined operating revenue of $20.6 million in the quarter, compared to $1.54 billion a year ago.
“There should be little debate that the reopening of Macau is taking longer than expected although the reopening should reflect considerable pent-up demand,” Jefferies gaming analyst David Katz said Tuesday. “The quarterly commentary continues to support Wynn maintaining its brand leadership, while the financial profile suggests outsized leverage to recovery.”
Encore Boston Harbor opened in June 2019.
Cash flow companywide in the quarter was a loss of $335 million compared to a positive cash flow of $435.8 million a year earlier.
Earlier this year, Wynn completed a 430,000-square-foot expansion to the company’s Las Vegas convention and meeting facilities, which are now sitting empty due to conferences and tradeshows canceled due to the ongoing pandemic.
Maddox said Tuesday he’s been learning about point of care testing for COVID-19 where groups can be tested for coronavirus and get a five-minute turnaround for results. He said the effort helps the property’s convention business, although he doesn’t expect booking to come back until late spring of 2021.
Wynn ended the quarter with $3.8 billion in cash and $12.78 billion in long-term debt.
Shares of Wynn closed at $72.75 on the Nasdaq Tuesday, down 30 cents or 0.41%.
“Although we didn’t learn much new today, at current levels, the stock is incrementally more attractive and we think data points for the whole space will begin to accelerate,” CreditSuisse gaming analyst Ben Chaiken told investors.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
