Shares of Wynn Resorts (NASDAQ:WYNN) are retreating in extended trading Tuesday after the gaming company reported second-quarter revenue that missed Wall Street forecasts.
The Encore operator posted a non-GAAP loss of 82 cents a share on revenue of $908.8 million during the April through June period. Analysts expected a loss of 97 cents on sales of $981.4 million. Not surprisingly, the top line miss is solely attributable to Macau where Wynn Macau — the company’s China business — operates two integrated resorts.
The results of operations of our Macau Operations for the second quarter of 2022 continued to be negatively impacted by certain travel-related restrictions and conditions, including COVID-19 testing and other mitigation procedures, related to the COVID-19 pandemic,” according to a statement issued by the Las Vegas-based company.
In a normal Macau operating environment, the special administrative region (SAR) accounts for a massive percentage of Wynn’s top line and only a handful of US-based non-technology companies are more dependent on China as a revenue driver than is Wynn. However, since the dawn of the coronavirus crisis, Macau has been anything but normal, lagging the global casino recovery while vexing analysts and operators alike along the way.
For Wynn, Help in the US
Wynn’s second-quarter results were very much a tale of two geographies. While Wynn Macau and Wynn Palace floundered, the opposite was true of the operator’s US properties.
In the statement, CEO Craig Billings said Wynn and Encore Las Vegas set quarterly records in the April through June time frame while Encore Boston Harbor notched all-time high second-quarter results.
“Operating revenues from our Las Vegas Operations were $561.1 million for the second quarter of 2022, an increase of $206.0 million from $355.1 million for the second quarter of 2021. Adjusted Property earnings before interest, taxes, depreciation and amortization (EBITDA) from our Las Vegas Operations for the second quarter of 2022 was $226.7 million, compared to $133.2 million for the second quarter of 2021,” according to the statement.
Data points like those confirm the benefits of geographic diversity and could be indications as to why Wynn is pursuing projects outside of Macau, including in the United Arab Emirates (UAE) and possibly a New York City casino license.
Balance Sheet Update
At a time when analysts are fretting about the cash positions and survival timelines of Macau operators, the health of balance sheets is critical. For its part, Wynn Resorts loaned Wynn Macau $500 million in June.
As of June 30, Wynn has $2.01 billion in cash and cash equivalents against $11.91 billion in long-term debt. That cash position should markedly improve by the end of the year as the company closes the $1.7 billion sale of Encore Boston Harbor’s real estate. Wynn also has access to $1.04 billion in credit revolvers.
“In the second quarter of 2022, the Company repurchased 2,381,928 shares of its common stock at an average price of $57.70 per share, for an aggregate cost of $137.4 million,” the operator added.
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