Shut down Macau operations costing Wynn 2.5M per day

Forced to temporarily shutter due to the coronavirus crisis,
Wynn Resorts’ Macau business is currently burning through $2.4 to $2.6 million
in operating expenses each day, according to Wynn Resorts CEO Matt Maddox.

Maddox gave analysts color on the situation in Macau during
Wynn Resorts’ 2019 year-end earnings call last week, commending Macau officials
for their decision to mandate a two-week shutdown of the city’s casinos earlier
this month. Macau’s casino operators ceased operations at midnight on Feb. 5. 

“We’re in daily conversations with the government, they’ve
been extremely transparent, and they’ve been terrific partners with us as we
focus on the safety of everyone in Macau,” said Maddox. Wynn Resorts’ Macau
holdings comprise the Wynn Macau, the adjacent Wynn Encore tower and the Wynn
Palace. 

Maddox added that the majority of the group’s Macau costs
are currently tied to roughly $1.8 to $1.9 million a day in payroll, and he
asserted that the company has no plans to curb that spending. 

“We are not looking at cutting that at all,” he explained. “Now
is the time you invest in your people, and you don’t do something short-term
that will hurt the culture. We know this will be temporary, and we think it is
the right long-term investment.”

Wynn Resorts president and CFO Craig Billings was confident
that Wynn Resorts would be able to weather a potential extension of the casino
shutdown.

“Business interruption insurance must relate to a physical
event that caused the business interruption — a storm or some other kind of
damage — and that obviously isn’t the case here, so we don’t expect material
business-interruption coverage proceeds,” said Billings. “But we have a ton of
liquidity. We have a couple billion dollars of availability … that’s more
than sufficient to last for really any period of closure.”

Operating revenue at the Wynn Macau were down 5.1% to $525.4
million for the three months through Dec. 31, while operating revenues at the
Wynn Palace fell 20.3% to $590.0 million during the same period. 

Companywide, Wynn Resorts recorded a $72.9 million net loss
for the fourth quarter, versus a net income of $464.8 million during the same
quarter in 2018. For the full year, net income was down more than 78% to $122.9
million.

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