Wynn
The top line
Operating revenues fell 23.9% to $725.8m ($953.7m Q120) and net loss was $281m or $2.53 per diluted share, compared with a loss of $402m or $3.77 per diluted share, in Q120.
Adjusted EBITDA at the group’s resort properties increased $17.2m, $50.2m and $43m at Wynn Palace, Las Vegas, and at the Encore Boston Harbor respectively.
Wynn’s Las Vegas and Boston properties incurred $56.4m and $19.3m of expense respectively due to the group’s commitment to pay salary, tips, and benefits from April 1 to May 15 2020.
Wynn has cash reserves of $2.89bn, $1.8bn of which is held by Wynn Macau. At March end total borrowing capacity for Wynn Resorts was $833.9m and for $293m for Wynn Macau. Total debt was $11.95bn as of March 31.
The full Napoleon: First, the significant detail on the move to spin Wynn Interactive into a full listing via the $3.2bn merger with the Austerlitz SPAC run by Bill Foley. The current shareholders of Wynn Interactive will retain 79% of the new entity. Within that, Wynn Resorts will hold 58% of the shares. Foley’s Austerlitz, fresh from completing the de-SPAC of Paysafe, will inject $640m into the new entity. Cannae Holdings will backstop any share redemptions. Matt Maddox, Wynn Resorts CEO, on the company’s Q121 earnings call said that “as we looked at the future and realised this was going to be as large as the commercial casino opportunity, we knew this was an opportunity we had to capitalize on.”
“As we explored various options, it became clear that creating a pure-play publicly-listed gaming company was the right thing to do to create value. It felt like the exact right thing to do.”
However, the call was light on detail. Giving the call over to “online pioneer” Sadok Kohen, president at WynnBet and CEO and founder at Betbull, much was said about bringing the social and casual gaming expertise of the UK road-tested BetBull app to the WynnBet offering in order to reach a hoped-for 15% market share long-term. Echoing DraftKings last week, Kohen said the company had a “relentless focus on product and user experience” and encouraged margin-heavy parlay bets and social interactivity. However, the projected $75m of UK revenues in 2023 doesn’t scream huge mass-market appeal as yet.
As of April, Wynn Interactive was live in five states including the most recent launch in Indiana. No detail on current revenues was included, although it said it hoped to hit $708m in combined interactive revenues from WynnBet, BetBull and the social casino business by 2023.
Retail therapy: During Wynn Resorts’ Q1 analyst call, Maddox said he was confident in the outlook for Las Vegas and Boston going into the summer, saying volumes picked up around March Madness. He said revpar in April increased 50% on Q1. He also pointed to record slot numbers of $25m last month in Vegas, a property record and “more than any month in history of Wynn Las Vegas”. Maddox added that Q2 EBITDA was already above Q1 with occupancy rates at 90%.
Junket evolution: Momentum continued to accelerate in Macau with Golden Week generating $3m normalised EBITDA per day, which Maddox said was was the biggest total since the start of the pandemic. The group is focusing on attracting mass and premium mass players. Visitor numbers were at 80% of Golden Week numbers from 2019 and in May there had already been acceleration over April results. When asked if the group could expect to ever return to the VIP highs of 2014 , Maddox said it was currently at around 50% of pre-Covid levels, “but we’re repositioning the business toward premium and mass premium customers.”
“Junkets have evolved and so have we. Lots of customers are playing direct with the operators and we have made changes to address that.”
Muted reaction: While applauding the move on interactive, the analysts at Jefferies were less impressed with the the Macau and Las Vegas numbers which they said “disapppointed.” Taking more heart from the results were the team at Deutsche Bank who suggested the management commentary on Macau was encouraging while the “domestic colour” on Las Vegas and the Encore Boston was “very positive from an outlook perspective.”
