Wynn Resorts' Record EBITDA and Expansion Plans for 2024
2024-03-05
Wynn Resorts, a prominent casino and hotel company, recently conducted its fourth-quarter 2023 earnings call with key figures such as Julie Cameron-Doe, Craig Billings, and Brian Gullbrants in attendance. During the meeting, the company unveiled impressive financial results, showcasing a record property EBITDA of $632 million for the fourth quarter. Particularly, Wynn Las Vegas stood out by delivering $271 million of adjusted property EBITDA, setting a new all-time quarterly record.
The success of Wynn Resorts in 2023 was attributed to various factors, including business momentum, achieving record property EBITDA, operational diversification, and maintaining a leadership position in luxury in Las Vegas. Furthermore, the company experienced growth in Macau and identified significant expansion opportunities in the UAE.
Looking ahead to February 2024, Wynn Resorts highlighted key upcoming events such as the Super Bowl, Chinese New Year, and a robust February for group and convention activities. These events are anticipated to set a positive tone for the first quarter, with record hotel revenue expected during the Super Bowl period.
During the earnings call, discussions revolved around the performance of different properties and projects. For instance, Encore in Boston generated $64 million of EBITDAR in the quarter, with steady demand year-over-year. Macau contributed $297 million of EBITDA, maintaining market share levels consistent with the previous quarter and 2019. Notably, a collaboration with the team behind Las Vegas-based Illuminarium was launched in Macau, receiving favorable initial feedback from customers.
Wynn Las Vegas demonstrated strong performance in terms of adjusted property EBITDA and operating revenue. The company's opex per day in Q4 decreased by 14% to approximately $2.56 million compared to the previous year. Additionally, the expected capex range related to concession commitments between 2024 and the end of 2025 is projected to be between $350 million and $500 million. As of December 31, the company boasted a total liquidity position of nearly $4.5 billion, with $2 billion in total cash and available liquidity in Macau and around $2.45 billion in the US. In 2023, the company's properties collectively generated nearly $2.2 billion of property EBITDA.
The board approved a cash dividend of $0.25 per share, payable on February 29, 2024, to stockholders of record as of February 20, 2024. Additionally, the company executed a significant number of share repurchases during the quarter.
Expressing optimism about the company's business and operations in Las Vegas, the CEO remained confident despite the presence of a new competitor in the region. The CEO highlighted the strong performance of Wynn Macau, the early recovery in premium mass land at Wynn Palace, and the positive impact of events on the business at Wynn Resorts.
Looking forward to 2024, the outlook for group room nights appears robust, with the company anticipating a record number of room nights. Group room night rates are contracted on a multiyear basis, with Wynn Macau expected to benefit significantly in terms of visitation numbers. The CEO emphasized the positive influence of events like the Super Bowl and Formula 1 on the company's performance.
The company's capital deployment strategy focuses on capex plans, the timing of capital deployment, and dividends, which are described as a cornerstone of the company's capital return strategy. Despite acknowledging the competitive environment for premium mass players in Macau and Wynn Palace, the CEO stressed the importance of maintaining discipline and concentrating on the company's core strengths.
The recent opening of the sphere had a favorable impact on the property, attracting customers seeking accommodation close to the sphere. Wynn Resorts sees numerous growth opportunities in new projects and locations, including leveraging the land bank in Las Vegas, pursuing ventures in New York and the UAE, and exploring prospects in other states and international jurisdictions. The company aims to balance capital deployment and growth opportunities based on the optimal use of capital.
Decisions regarding dividends from the subsidiary in Macau to the parent company are influenced by factors such as debt maturity, the leverage profile in Macau, capital requirements for projects, and the financial implications of the closure and cash burn experienced in Macau.
Discussing the current economic landscape in Macau, the CEO highlighted factors like pent-up demand, proximity to Macau, modest stimulus efforts, and positive economic indicators. The speaker expressed a positive outlook on the long-term viability of Macau, believing that Macau's trajectory appears to be decoupled from the broader China macroeconomic environment.
The retail market in Macau has exhibited strong performance, surpassing pre-COVID levels and emerging as a substitute for Hong Kong in terms of retail sales, attracting a diverse range of visitors. The company announced its withdrawal from the interactive business in specific jurisdictions and continues to conduct a strategic review of opportunities in New York and Michigan.
In conclusion, the fourth-quarter 2023 earnings call provided valuable insights into Wynn Resorts' robust financial performance, growth prospects, and strategic focus on enhancing shareholder value. The company's success in various locations, such as Las Vegas and Macau, coupled with its ability to attract high-quality customers through events and collaborations, bodes well for its future outlook.