Wynn CEO: Macao closures costing up to $2.6M a day

The closure of its Macao properties because of the spread of coronavirus is costing Wynn Resorts Ltd. between $2.4 million and $2.6 million a day, CEO Matt Maddox said Thursday, adding that it’s too early to determine when the properties will reopen.

Business interruption insurance won’t cover the additional expenses resulting from the government-ordered shutdown, Wynn President and Chief Financial Officer Craig Billings said on a conference call to discuss quarterly earnings. But Billings assured investors the company is financially prepared to handle costs surrounding the shutdown, even if it extends beyond 15 days.

“(We have) a ton of liquidity, we have a couple billion dollars of availability between cash and revolver (a revolving credit account) in Macao and that’s more than sufficient to last for really any period of closure.”

Macao’s actions applauded

Wynn derives more than 60 percent of its revenue from its two properties — Wynn Macau and its attached Encore Macau on the city’s main peninsula and Wynn Palace just off the Cotai Strip.

On Tuesday, Macao Chief Executive Ho Iat-seng announced the 41 casinos of the special administrative region would be closed for at least 15 days, but some industry leaders fear closures could go longer.

Maddox applauded Macao’s efforts to control the virus.

“I’d like to commend the government of Macao and China, in fact, for the quick and decisive action that they took and continue to take to contain the coronavirus,” Maddox said. “We’re in daily conversations with the government. It’s been extremely transparent and they’ve been terrific partners with us as we focus on the safety of everyone in Macao.

“It was a controlled and organized closure of the casino,” he said. “We still have our hotels and restaurants open for our few remaining guests in Macao, but during this time while the casino is closed, our operating expense burn rate is roughly $2.4 million to $2.6 million a day, and that’s largely comprised of payroll to our 12,200 employees.”

Short of expectations

The company’s fourth-quarter revenue fell short of analysts’ expectations of $1.71 billion in revenue.

The company reported a net loss of $72.9 million, 68 cents a share, on revenue of $1.653 billion for the quarter that ended Dec. 31. That compares with net income of $464.9 million, $4.31 per share, on revenue of $1.688 billion for the same quarter in 2018.

Maddox said the company’s Las Vegas results declined.

Operating revenue from Las Vegas operations were $368.8 million for the fourth quarter, a 6.3 percent decrease from $393.6 million for the fourth quarter of 2018. Adjusted property cash flow in Las Vegas was at $80.1 million, a 23.8 percent decrease from $105.2 million for the fourth quarter of 2018.

Table-games win percentage was 17.4 percent, below the property’s expected range of 22 percent to 26 percent and below the 22.4 percent experienced in the fourth quarter of 2018.

“In 2019, our baccarat volumes were down roughly 30 percent in 2019 compared to all of 2018, and that contributed to more than a $50 million decline in cash flow year over year,” Maddox said.

Las Vegas plans

Still, Maddox is optimistic about Wynn’s Las Vegas future.

“We’re excited about 2020 in Las Vegas,” he said. “We have a 430,000-square-foot convention center that’s opening in weeks to great fanfare. We have three new restaurants that’ll be more social dining focused and high energy that will be opening throughout 2020 and we’ll begin the remodel of Wynn Las Vegas, the 2,700 rooms here, in the summer of this year and completing before the end of 2020.”

Wynn Resorts shares were up 1.4 percent, $1.91, in average volume trading Thursday. After hours, the stock fell 1.3 percent, $1.69, to end at $132.50 a share for the day.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.