Wynn Macau Scraps 2019 Dividend Citing Need to ‘Safeguard’ Operations During COVID-19 Pandemic

Posted on: March 31, 2020, 09:10h. 

Last updated on: March 31, 2020, 10:16h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Wynn Macau Ltd. is the latest gaming company to alter its dividend policy citing the coronavirus outbreak, saying earlier today that it won’t deliver a 2019 payout.

Citing the need for prudence during the coronavirus, Wynn Macau won’t pay a 2019 dividend. (Image: Bloomberg)

That after the operator of the Wynn Macau and Wynn Palace integrated resorts paid a final 2018 dividend of less than six cents a share, its lowest payout in five years. Most domestic dividend-payers deliver those payouts on a quarterly basis, but international companies frequently pay dividends on a semi-annual basis. Wynn Macau usually pays its shareholders in June and September.

The Board has deliberated over the payment of a dividend, and at this point-in-time no dividend is recommended. During this unprecedented COVID-19 crisis, the Board’s primary focus is on safeguarding its Macau operations, and most importantly, the well-being of its over 13,000 employees,” according to a corporate filing obtained by Casino.org.

Earlier this month, the operator said that because of the coronavius, it can’t accurately project what 2020 earnings and cash flow will look like. Wynn Macau is a holding company for the two aforementioned gaming properties, and relies on those venues to generate cash, which the parent entity often distributes to shareholders. In the filing released earlier this month, potential dividend vulnerability at the hands of COVID-19 was mentioned.

Not The First Company to Do This

With the coronavirus outbreak stifling the industry, previously forcing a 15-day closure of casinos in Macau and, currently, temporary suspensions of all gaming venues in the US, operators are looking for ways to cut costs and conserve capital.

Reducing or suspending shareholder reward programs are easy avenues for doing that. Last week, Boyd Gaming (NYSE:BYD) said it’s suspending its dividend, news revealed after MGM Resorts International (NYSE:MGM) pulled the plug on a $1.25 billion share repurchase program.

Wynn Macau said its board “will be continuously monitoring the situation and market conditions in Macau and Greater China, and may consider a special dividend in the future when such conditions have stabilized.”

Since 2010, the operator has paid six special dividends and nine regularly scheduled payouts.

Decent Cash Position

At a time when analysts and investors are concerned about operators’ cash hoards and access to capital, Wynn Macau appears steady on that front. The company finished 2019 with $1.81 billion in cash on hand and can access a $401 million credit facility for additional liquidity, if needed, according to the filing.

In the US, Wynn Resorts (NASDAQ:WYNN) is taking its own steps to reduce expenses. CEO Matt Maddox recently shifted the remainder of his 2020 compensation to 100 percent equity, with other executives and board members also saying they will move to stock payments of 33 percent to 100 percent of their cash salaries for the year.

Las Vegas-based Wynn pays a quarterly dividend of $1 per share and the company hasn’t commented on the fate of that payout. However, any firm borrowing money from the federal government under the $2 trillion stimulus program must halt buybacks and dividends. The company hasn’t yet confirmed if it will participate in that program.