Wynn Resorts: Market Shows Little Enthusiasm for Q3 Results, Macau Operations Face Challenges

The casino operator’s stock dipped 3.9% in after-hours trading, dropping from $69.03 per share (£60.64/$69.27) to $66.35, as Macau’s “zero-COVID” strategy continues to negatively affect profits.

Home > Casinos & Gaming > Market Shows Little Enthusiasm for Wynn’s Q3 Results, Macau Operations Face Challenges

The market responded with little excitement to Wynn’s third-quarter financial results, with Macau operations continuing to encounter difficulties. Revenue for the three months ending September 30 declined 10.5% to $889.7 million from $994.6 million.

The company reported a net loss of $142.9 million, or $1.27 per share, for the period. This represents a 14% year-over-year decrease compared to $166.2 million in the third quarter of 2021. However, on a sequential basis, the loss climbed 9.8% from $130.1 million.

The company’s key metric, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), rose 12.2% to $173.5 million from $154.6 million, indicating the long-term strength of the company’s assets.

Macau Operations Face Challenges
The primary reason for Wynn’s net loss was the ongoing poor performance of the company’s properties in Macau, where Wynn is one of six concessionaires. 2022 has been a challenging year for the global gambling center, with COVID-related restrictions continuing. A lockdown in the summer led to the Special Administrative Region experiencing its worst month ever in July, with revenue falling 95% year-on-year to $49.2 million.

Despite the ongoing impact of COVID-19 travel restrictions on our operations in Macau, we are pleased to observe an uptick in visitor numbers during the recent October holidays,” remarked Wynn’s CEO, Craig Billings. “We are confident that as travel resumes, the market will improve.”

The number of visitors from overseas and mainland China has significantly decreased due to stricter visa regulations and concerns surrounding COVID-19 protocols. Although some provinces relaxed e-visa and group visa requirements earlier this month, the closure of MGM Resorts’ MGM Cotai property underscores the industry’s ongoing uncertainty in the city. The new visa policies include a built-in “circuit breaker” mechanism, allowing for their suspension in the event of another outbreak.

“We are truly impressed with the Macau government’s response to the recent outbreak,” stated Wynn President Ian Coughlan. “During a summer outbreak, we closed the casino, and it took six weeks to return to normalcy.

“This time, the government addressed the situation within just two weeks. As a consequence, we are witnessing increased hotel occupancy this weekend. We are recovering from the recent outbreak, and I anticipate a rise in e-visa approvals in the coming weeks, followed by a substantial increase in visitor arrivals in the subsequent months.”

American Strength

Nevertheless, at least a portion of the Asian business challenges have been counterbalanced by Wynn’s sustained robust performance in the United States.

“Our groups at Wynn Las Vegas and Encore Boston Harbor established new third-quarter benchmarks for adjusted property earnings before interest, taxes, depreciation, and amortization at our North American combined properties,” Billings stated.

“Their dedication to top-notch service, combined with our market-leading facilities, continues to elevate our resorts above the competition, making them the preferred destination for high-end travelers in Las Vegas and Massachusetts.”

The company’s core strength in that market prompted Billings to assert that new investor Tilman Fertitta acquired shares when they were undervalued.

“Well, I believe I can state that it’s been advantageous for him, as he’s prospered, because he appears to have begun purchasing when the stock was underpriced in the second quarter. Actually, around the time we were repurchasing some shares in our second-quarter report,” Billings added.

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