Las Vegas couldn’t get much better for Wynn Resorts (WYNN 3.40%). The company generated a whopping $226.7 million in adjusted EBITDA (a proxy for casino/resort cash flow) in the second quarter of 2022, nearly double what it generated there. a year ago.
Across the Pacific Ocean, Macau has been a huge drag on Wynn and the entire casino industry. Adjusted EBITDA was negative $90.4 million due to more lockdowns and an uncertain future. Today’s casino industry is truly a tale of two cities.
Image source: Wynn Resorts.
Las Vegas is a booming city
It’s hard to argue with the results of the Las Vegas Strip right now. At Wynn Las Vegas, second-quarter revenue increased 58% year-over-year to $561.1 million, and the property’s adjusted EBITDA was $226.7 million. dollars. There was strength across the board, with revenue per available room up 38% year over year to $368, slots volume up 11% and table games up 20%.
The EBITDA result was a record for a single quarter on the Las Vegas Strip, and it would put the company on track for an incredible $900 million EBITDA year.
Boston operations weren’t too bad either, with revenue up 27% year over year to $210.2 million and adjusted EBITDA of $63.7 million. It’s a fraction of Las Vegas, but the property is smaller and doesn’t have as much non-gaming revenue from hotel rooms, restaurants, and stores.
The terrible neighborhood of Macau
It should come as no surprise to anyone watching the casino industry to see Wynn’s two Macau properties doing terribly in the quarter. The entire region was locked down for part of the quarter and revenue fell to virtually zero.
Wynn Palace’s revenue was only $58.7 million and Wynn Macao had $58.6 million in revenue. They lost a combined adjusted EBITDA of $90.4 million.
The operating measurements show how much the poor conditions have deteriorated. VIP table game volume fell 80% year-over-year, mass-market table volume fell 68%, and revenue per available room fell 65% to $47. And those were already depressed pandemic numbers in 2021.
Wynn’s advantage is still impressive
What do we think of Wynn’s results right now? In the United States, business is booming, and the company just released a quarter that would put it on pace with $1.16 billion in adjusted EBITDA in the United States alone. But that’s barely enough to pay off $11.9 billion in debt, let alone return the money to shareholders.
Wynn Resorts still needs a recovery in Macau for the title to perform well. But if Macau returns, the current title could provide an extremely cheap entry point. In 2019, before the pandemic hit, Macau generated $1.8 billion in EBITDA. If it returned to that level, it would generate around $3 billion in EBITDA per year.
Currently, the company’s enterprise value (market cap plus total debt) is $17.5 billion. This is an enterprise value/implied EBITDA ratio of less than six.
Betting on Macau recovering is risky, but if it does it’s a stock that could easily double or more, which makes me bullish on the stock over the long term.
Travis Hoium holds positions at Wynn Resorts. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.
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