Wynn Macau sees 44% drop in Q1 revenue as cash burn continues

Wynn Macau said it expects a drop of as much as 44 percent in Q1 operating revenue due to the impact of the Covid-19 pandemic and expects to continue experiencing cash burn.

The company said in a filing with the Hong Kong Stock Exchange that revenue is likely to be in a range of $912 million to $969 million in Q1. That’s down from $1.64 billion the prior year.

In terms of adjusted property EBITDA, it expects to report a range of about $58 million to $65 million, a fraction of the $484 million the prior year. 

Wynn said adjusted property EBITDA has been adjusted to add back provisional expenses totaling between $70 million and $80 million in connection with its commitment to provide wages and benefits from April 1 to May 15. 

Macau ordered the closure of all casinos in February for 15 days. Although they are now open, they are operating under stringent safety requirements, which have reduced seating at tables and slot capacity. However, the biggest hurdle currently facing Macau operators is the border restrictions, with no one from outside the Greater China area permitted to enter and quarantine restrictions on those from Hong Kong and Taiwan. 

During the closure period, Wynn incurred approximately $2.5 million per day of cash operating expenses, excluding a cash interest expense of approximately $0.5 million per day. 

“Until such measures are lifted, we expect to continue to incur such cash costs in excess of the amounts we are earning at our properties,” the company said. 

Outlining its current credit position, the operator said its Wynn Macau and Wynn Palace properties had about $0.8 billion in cash and cash equivalents. They drew down $50 million under a revolving credit facility in April, meaning they have an additional $24 million available.  

Parent company Wynn Macau, also had an additional approximately $1.0 billion of cash and cash equivalents at March 31, 2020.

The operator said it was still unable to predict the ultimate impact of the pandemic with any clarity.

“The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including to and from our properties), is expected to continue to impact our results, operations, outlooks, plans, goals, growth, reputation, cash flows and liquidity.”

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