Wynn Resorts(US:WYNN)2023-05-08 16:00Part I. Financial Information Financial Statements The company's Q1 2023 financial statements show a shift from net loss to $12.3 million net income, with total assets at $13.72 billion and positive operating cash flow of $169.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total current assets | $4,253,280 | $4,029,587 | | Total assets | $13,724,021 | $13,415,100 | | Total current liabilities | $1,370,915 | $1,811,423 | | Long-term debt | $12,106,970 | $11,569,316 | | Total liabilities | $15,340,391 | $15,055,465 | | Total stockholders' deficit | $(1,616,370) | $(1,640,365) | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Total operating revenues | $1,423,679 | $953,334 | | Operating income (loss) | $169,515 | $(94,865) | | Net income (loss) attributable to Wynn Resorts, Limited | $12,332 | $(183,324) | | Diluted net income (loss) per common share | $(0.02) | $(1.59) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $169,491 | $(117,385) | | Net cash used in investing activities | $(131,950) | $(97,215) | | Net cash provided by financing activities | $121,003 | $10,872 | Management's Discussion and Analysis of Financial Condition and Results of Operations Strong recovery in Macau and robust performance in Las Vegas and Encore Boston Harbor drove a 49.3% revenue increase and a shift from net loss to $12.3 million net income, supported by strategic financing activities - Operating revenues for Q1 2023 increased by $470.3 million (49.3%) to $1.42 billion, primarily driven by the recovery of Macau operations after the relaxation of COVID-19 related protective measures113114 - Net income attributable to Wynn Resorts, Limited for Q1 2023 was $12.3 million, a significant improvement from a net loss of $183.3 million in Q1 2022113115 - The company resumed its quarterly dividend program, declaring a cash dividend of $0.25 per share on May 9, 2023173 - Significant financing activities in Q1 2023 included issuing $600 million of WRF Senior Notes due 2031 and $600 million of WML Convertible Bonds due 2029, while repurchasing over $1 billion in existing debt157 Results of Operations Total operating revenues surged 49.3% to $1.42 billion in Q1 2023, primarily due to a 101.1% increase in Macau Operations revenue, leading to a positive operating income Operating Revenues by Segment (in thousands) | Segment | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Macau Operations | $600,089 | $298,425 | 101.1% | | Wynn Palace | $369,363 | $163,325 | 126.2% | | Wynn Macau | $230,726 | $135,100 | 70.8% | | Las Vegas Operations | $586,764 | $441,186 | 33.0% | | Encore Boston Harbor | $216,306 | $190,796 | 13.4% | | Wynn Interactive | $20,520 | $22,927 | (10.5%) | | Total | $1,423,679 | $953,334 | 49.3% | Wynn Palace Key Operating Metrics | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Total casino revenues (in thousands) | $270,687K | $114,413K | 136.6% | | VIP turnover (in thousands) | $2,293,358K | $965,555K | 137.5% | | Mass market table drop (in thousands) | $1,181,998K | $531,859K | 122.2% | | Occupancy | 88.1% | 47.2% | +40.9 pts | | ADR | $321 | $180 | 78.3% | Las Vegas Operations Key Operating Metrics | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Total casino revenues (in thousands) | $154,530K | $124,271K | 24.3% | | Table drop (in thousands) | $600,746K | $547,916K | 9.6% | | Occupancy | 88.8% | 76.9% | +11.9 pts | | ADR | $493 | $432 | 14.1% | Segment Information Adjusted Property EBITDAR showed dramatic recovery in Macau, with Wynn Palace and Wynn Macau swinging to positive results, while Las Vegas and Encore Boston Harbor maintained strong growth Adjusted Property EBITDAR by Segment (in thousands) | Segment | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Wynn Palace | $111,058 | $(864) | NM | | Wynn Macau | $44,745 | $(4,682) | NM | | Las Vegas Operations | $231,597 | $159,378 | 45.3% | | Encore Boston Harbor | $63,414 | $55,250 | 14.8% | | Wynn Interactive | $(21,068) | $(31,501) | 33.1% | - The significant increase in Adjusted Property EBITDAR for Macau Operations was driven by increased business volumes following the relaxation of COVID-19 protective measures in late 2022 and early 2023146 Liquidity and Capital Resources The company's liquidity strengthened with $169.5 million in positive operating cash flow and $3.84 billion in total cash, supported by new debt issuances and dividend resumption Cash and Revolver Capacity by Entity (as of March 31, 2023, in thousands) | Entity | Total Cash and Cash Equivalents | Revolver Borrowing Capacity | | :--- | :--- | :--- | | Wynn Macau, Limited and subsidiaries | $1,613,207 | $— | | Wynn Resorts Finance, LLC | $1,851,777 | $836,985 | | Wynn Resorts, Limited and other | $378,544 | $— | | Total | $3,843,528 | $836,985 | - In March 2023, WML issued $600 million in 4.50% convertible bonds due 2029, with net proceeds of $585.9 million for general corporate purposes164 - In February 2023, WRF issued $600 million in 7 1/8% Senior Notes due 2031 and used proceeds to tender for $506.4 million of its 7 3/4% Senior Notes due 2025170 - In March 2023, the company repurchased all $500 million of its outstanding Wynn Las Vegas 4.25% Senior Notes due 2023171 Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate and foreign currency risks, with 24% of long-term debt variable-rate and a 1% USD/HKD change impacting results by $44.8 million - As of March 31, 2023, approximately 24% of the company's long-term debt was based on variable rates185 - A hypothetical 100 basis point increase in variable interest rates would increase annual interest expense by $23.2 million185 - A 1% change in the U.S. dollar/Hong Kong dollar exchange rate would cause a foreign currency transaction gain/loss of $44.8 million due to USD-denominated debt held by Macau entities188 Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report189 - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal controls190 Part II. Other Information Legal Proceedings The company is involved in various legal proceedings, including litigation related to the Dore gaming promoter, a securities class action, and a federal anti-money laundering investigation - The company is defending lawsuits in Macau related to the Dore Entertainment Company Limited incident, where plaintiffs allege Wynn Macau SA is responsible for Dore's conduct8183 - A putative securities class action lawsuit is proceeding with discovery after the court granted class certification on March 2, 202385 - The company is cooperating with an ongoing investigation by the U.S. Attorney's Office for the Southern District of California regarding anti-money laundering policies and procedures at Wynn Las Vegas87 Risk Factors No material changes to the company's risk factors were reported during the first quarter of 2023, as detailed in the Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022, occurred during the first quarter of 2023193 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase shares under its public program but repurchased 107,181 shares for $10.8 million to cover employee tax withholding obligations - As of March 31, 2023, the company had $628.8 million in repurchase authority remaining under its equity repurchase program194 - No shares were repurchased under the publicly announced program during Q1 2023194 - The company repurchased 107,181 shares for a total of $10.8 million during the quarter to satisfy employee tax withholding obligations on vested restricted stock195