Market Overview

Wynn Resorts, Limited Reports Third Quarter 2018 Results

Share:

Wynn Resorts, Limited (NASDAQ:WYNN) today reported financial results
for the third quarter ended September 30, 2018. The results reflect the
Company's adoption of the new revenue recognition standard ("ASC 606"),
effective January 1, 2018. Certain prior period amounts have been
adjusted to reflect the full retrospective adoption of ASC 606, with no
impact to operating income, net income or Adjusted Property EBITDA (1).

Operating revenues were $1.71 billion for the third quarter of 2018, an
increase of 10.2%, or $157.7 million, from $1.55 billion for the same
period of 2017. Operating revenues from Wynn Palace and our Wynn Macau
Operations increased $205.5 million and $17.6 million, respectively,
compared to the same period of 2017. Operating revenue growth at Wynn
Palace and Wynn Macau was partially offset by a decrease of $65.4
million from our Las Vegas Operations.

On a U.S. generally accepted accounting principles ("GAAP") basis, net
income attributable to Wynn Resorts, Limited was $156.1 million, or
$1.44 per diluted share, for the third quarter of 2018, compared to
$79.8 million, or $0.78 per diluted share, for the same period of 2017.
The increase in net income attributable to Wynn Resorts, Limited was
primarily due to an increase in operating income from Wynn Palace and
Wynn Macau, offset by a decrease in our Las Vegas Operations. Adjusted
net income attributable to Wynn Resorts, Limited (2) was $182.3 million,
or $1.68 per diluted share, for the third quarter of 2018, compared to
$155.8 million, or $1.52 per diluted share, for the same period of 2017.

Adjusted Property EBITDA was $504.4 million for the third quarter of
2018, an increase of 6.6%, or $31.4 million, from $473.0 million for the
same period of 2017. Adjusted Property EBITDA increased $87.9 million at
Wynn Palace and was relatively flat at Wynn Macau compared to the same
period of 2017. The increase at Wynn Palace was partially offset by a
decrease of $56.2 million at our Las Vegas Operations.

Wynn Resorts, Limited also announced today that the Company has approved
a cash dividend of $0.75 per share, payable on November 30, 2018 to
stockholders of record as of November 21, 2018.

Macau Operations

Wynn Palace

Operating revenues from Wynn Palace were $730.6 million for the third
quarter of 2018, a 39.1% increase from $525.0 million for the same
period of 2017. Adjusted Property EBITDA from Wynn Palace was $226.1
million for the third quarter of 2018, a 63.6% increase from $138.2
million for the same period of 2017. Entertainment, retail and other
revenues and Adjusted Property EBITDA for the third quarter of 2018
include $5.4 million of business interruption insurance proceeds related
to the full settlement of claims from Typhoon Hato in 2017.

Casino revenues from Wynn Palace were $625.6 million for the third
quarter of 2018, a 39.9% increase from $447.1 million for the same
period of 2017. Table games turnover in VIP operations was $15.53
billion, a 13.4% increase from $13.69 billion for the third quarter of
2017. VIP table games win as a percentage of turnover was 3.40%, above
the expected range of 2.7% to 3.0% and an increase from the 2.99%
experienced in the third quarter of 2017. Table drop in mass market
operations was $1.19 billion, a 37.3% increase from $866.6 million for
the third quarter of 2017. Table games win in mass market operations was
$308.1 million, a 58.6% increase from $194.3 million for the third
quarter of 2017. Table games win percentage in mass market operations
was 25.9%, above the 22.4% table games win percentage in the third
quarter of 2017. Slot machine handle was $922.5 million, a 12.8%
increase from $817.5 million for the third quarter of 2017. Slot machine
win increased 9.7% to $46.0 million for the third quarter of 2018,
compared to $42.0 million for the third quarter of 2017.

Non-casino revenues from Wynn Palace were $105.0 million for the third
quarter of 2018, a 34.7% increase from $78.0 million for the same period
of 2017. Room revenues were $44.3 million for the third quarter of 2018,
a 50.1% increase from $29.5 million for the same period of 2017. Average
daily rate ("ADR") was $275, a 38.2% increase from $199 for the third
quarter of 2017. Occupancy was relatively flat at 96.0% for the third
quarter of 2018 when compared to the same period of 2017. Revenue per
available room ("REVPAR") was $264, a 37.5% increase from $192 for the
third quarter of 2017.

Wynn Macau

Operating revenues from Wynn Macau were $579.6 million for the third
quarter of 2018, a 3.1% increase from $562.0 million for the same period
of 2017. Adjusted Property EBITDA from Wynn Macau was relatively flat at
$182.9 million for the third quarter of 2018 when compared to the same
period of 2017. Entertainment, retail and other revenues and Adjusted
Property EBITDA for the third quarter of 2018 include $5.3 million of
business interruption insurance proceeds related to the full settlement
of claims from Typhoon Hato in 2017.

Casino revenues from Wynn Macau were $503.6 million for the third
quarter of 2018, a 0.9% increase from $498.8 million for the same period
of 2017. Table games turnover in VIP operations was $13.97 billion, a
4.4% increase from $13.37 billion for the same period of 2017. VIP table
games win as a percentage of turnover was 3.01%, slightly above the
expected range of 2.7% to 3.0% and below the 3.37% experienced in the
third quarter of 2017. Table drop in mass market operations was $1.18
billion, a 10.6% increase from $1.07 billion for the third quarter of
2017. Table games win in mass market operations was $250.2 million, a
15.6% increase from $216.4 million for the third quarter of 2017. Table
games win percentage in mass market operations increased to 21.1%,
compared with the table games win percentage of 20.2% experienced in the
third quarter of 2017. Slot machine handle was $895.2 million, a 3.6%
increase from $864.6 million for the third quarter of 2017, while slot
machine win decreased 2.1% to $34.8 million.

Non-casino revenues from Wynn Macau were $76.1 million for the third
quarter of 2018, a 20.3% increase from $63.2 million for the same period
of 2017. Room revenues were $28.1 million for the third quarter of 2018,
a 20.7% increase from $23.3 million for the same period of 2017. ADR was
$276, a 16.0% increase from $238 for the third quarter of 2017.
Occupancy increased to 99.0% for the third quarter of 2018, from 97.3%
for the same period of 2017. REVPAR was $273, an 18.2% increase from
$231 for the third quarter of 2017.

Las Vegas Operations

Operating revenues from our Las Vegas Operations were $398.9 million for
the third quarter of 2018, a 14.1% decrease from $464.3 million for the
same period of 2017. Adjusted Property EBITDA from our Las Vegas
Operations was $95.3 million, a 37.1% decrease from $151.5 million for
the third quarter of 2017.

Casino revenues from our Las Vegas Operations were $92.9 million for the
third quarter of 2018, a 28.4% decrease from $129.7 million for the same
period of 2017. Table drop was $404.0 million, an 18.6% decrease from
$496.2 million for the third quarter of 2017. Table games win decreased
34.4% to $86.7 million for the third quarter of 2018, compared to $132.2
million the same period of 2017. Table games win percentage was 21.5%,
below the expected range of 22% to 26% and a decrease from the table
games win percentage of 26.6% experienced in the third quarter of 2017.
Slot machine handle was $810.1 million, a 1.1% decrease from $819.5
million for the third quarter of 2017. Slot machine win decreased 6.2%
to $55.9 million.

Non-casino revenues from our Las Vegas Operations were $306.0 million
for the third quarter of 2018, an 8.5% decrease from $334.6 million for
the same period of 2017. Room revenues were $110.7 million for the third
quarter of 2018, a 5.9% decrease from $117.6 million for the same period
of 2017. ADR was $289, a 3.0% decrease from $298 for the third quarter
of 2017. Occupancy decreased to 89.6% for the third quarter of 2018,
from 91.4% for the same period of 2017. REVPAR was $259, a 4.8% decrease
from $272 for the third quarter of 2017. Food and beverage revenues
decreased 7.3%, to $148.6 million for the third quarter of 2018,
compared to the same period of 2017. Entertainment, retail and other
revenues decreased 17.6%, to $46.8 million for the third quarter of
2018, compared to $56.8 million in the same period of 2017.

Encore Boston Harbor Project in Massachusetts

The Company is currently constructing Encore Boston Harbor, an
integrated resort in Everett, Massachusetts, located adjacent to Boston
along the Mystic River. The resort will contain a hotel, a waterfront
boardwalk, meeting and convention space, casino space, a spa, retail
offerings and food and beverage outlets. The total project budget,
including gaming license fees, construction costs, capitalized interest,
pre-opening expenses and land costs, is estimated to be approximately
$2.6 billion. As of September 30, 2018, we have incurred $1.83 billion
in total project costs. We expect to open Encore Boston Harbor in
mid-2019.

Balance Sheet

Our cash, cash equivalents and restricted cash as of September 30, 2018
were $1.95 billion.

Total current and long-term debt outstanding at the end of the quarter
was $8.93 billion, including $4.24 billion of Macau related debt, $3.10
billion of Wynn Las Vegas debt, $985 million of Wynn America debt, and
$611 million of debt held by the retail joint venture which we
consolidate.

As previously disclosed, on September 19, 2018, the Company entered into
a commitment letter (as subsequently amended and restated to add
additional lenders, the "Commitment Letter") to provide for a 364-day
term loan facility to the Company in an aggregate principal amount of up
to $750 million, which remained fully available as of September 30, 2018.

On October 30, 2018, the Company and certain subsidiaries of the Company
entered into a credit agreement to provide for a $500 million six-year
term loan (the "Credit Agreement"). The Credit Agreement matures on
October 30, 2024 and bears interest at a rate of LIBOR plus 2.25% per
year. On October 24, 2018, the Company agreed to terminate $500 million
of the lenders' commitments under the Commitment Letter.

Conference Call and Other Information

The Company will hold a conference call to discuss its results,
including the results of Wynn Las Vegas, LLC, on November 7, 2018 at
1:30 p.m. PT (4:30 p.m. ET). Interested parties are invited to join the
call by accessing a live audio webcast at http://www.wynnresorts.com.

On November 7, 2018, the Company will make Wynn Las Vegas, LLC financial
information for the quarter ended September 30, 2018 available to
noteholders, prospective investors, broker-dealers and securities
analysts. Please contact our investor relations office at 702-770-7555
or at investorrelations@wynnresorts.com,
to obtain access to such financial information.

Forward-looking Statements

This release contains forward-looking statements regarding operating
trends and future results of operations. Such forward-looking statements
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from those we express in these
forward-looking statements, including, but not limited to, controversy,
regulatory action, litigation and investigations related to Stephen A.
Wynn and his separation from the Company, extensive regulation of our
business, pending or future claims and legal proceedings, ability to
maintain gaming licenses and concessions, dependence on key employees,
general global political and economic conditions, adverse tourism
trends, dependence on a limited number of resorts, competition in the
casino/hotel and resort industries, uncertainties over the development
and success of new gaming and resort properties, construction risks,
cybersecurity risk and our leverage and debt service. Additional
information concerning potential factors that could affect the Company's
financial results is included in the Company's Annual Report on Form
10-K for the year ended December 31, 2017 and the Company's other
periodic reports filed with the Securities and Exchange Commission. The
Company is under no obligation to (and expressly disclaims any such
obligation to) update or revise its forward-looking statements as a
result of new information, future events or otherwise.

Non-GAAP Financial Measures

(1) "Adjusted Property EBITDA" is net income before interest, income
taxes, depreciation and amortization, litigation settlement expense,
pre-opening expenses, property charges and other, management and license
fees, corporate expenses and other (including intercompany golf course
and water rights leases), stock-based compensation, (loss) gain on
extinguishment of debt, change in derivatives fair value, change in
Redemption Note fair value and other non-operating income and expenses.
Adjusted Property EBITDA is presented exclusively as a supplemental
disclosure because management believes that it is widely used to measure
the performance, and as a basis for valuation, of gaming companies.
Management uses Adjusted Property EBITDA as a measure of the operating
performance of its segments and to compare the operating performance of
its properties with those of its competitors, as well as a basis for
determining certain incentive compensation. The Company also presents
Adjusted Property EBITDA because it is used by some investors as a way
to measure a company's ability to incur and service debt, make capital
expenditures and meet working capital requirements. Gaming companies
have historically reported EBITDA as a supplement to GAAP. In order to
view the operations of their casinos on a more stand-alone basis, gaming
companies, including Wynn Resorts, Limited, have historically excluded
from their EBITDA calculations pre-opening expenses, property charges,
corporate expenses and stock-based compensation, that do not relate to
the management of specific casino properties. However, Adjusted Property
EBITDA should not be considered as an alternative to operating income as
an indicator of the Company's performance, as an alternative to cash
flows from operating activities as a measure of liquidity, or as an
alternative to any other measure determined in accordance with GAAP.
Unlike net income, Adjusted Property EBITDA does not include
depreciation or interest expense and therefore does not reflect current
or future capital expenditures or the cost of capital. The Company has
significant uses of cash flows, including capital expenditures, interest
payments, debt principal repayments, income taxes and other
non-recurring charges, which are not reflected in Adjusted Property
EBITDA. Also, Wynn Resorts' calculation of Adjusted Property EBITDA may
be different from the calculation methods used by other companies and,
therefore, comparability may be limited.

(2) "Adjusted net income attributable to Wynn Resorts, Limited" is net
income attributable to Wynn Resorts, Limited before litigation
settlement expense, pre-opening expenses, property charges and other,
change in derivatives fair value, change in Redemption Note fair value,
(loss) gain on extinguishment of debt, foreign currency remeasurement
gain (loss), net of noncontrolling interests and income taxes calculated
using the specific tax treatment applicable to the adjustments based on
their respective jurisdictions. Adjusted net income attributable to Wynn
Resorts, Limited and adjusted net income attributable to Wynn Resorts,
Limited per diluted share are presented as supplemental disclosures to
financial measures in accordance with GAAP because management believes
that these non-GAAP financial measures are widely used to measure the
performance, and as a principal basis for valuation, of gaming
companies. These measures are used by management and/or evaluated by
some investors, in addition to net income and earnings per share
computed in accordance with GAAP, as an additional basis for assessing
period-to-period results of our business. Adjusted net income
attributable to Wynn Resorts, Limited and adjusted net income
attributable to Wynn Resorts, Limited per diluted share may be different
from the calculation methods used by other companies and, therefore,
comparability may be limited.

The Company has included schedules in the tables that accompany this
release that reconcile (i) net income attributable to Wynn Resorts,
Limited to adjusted net income attributable to Wynn Resorts, Limited,
(ii) operating income to Adjusted Property EBITDA, and (iii) net income
attributable to Wynn Resorts, Limited to Adjusted Property EBITDA.

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
 
 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

  2018       2017     2018       2017  
(as adjusted) (as adjusted)
Operating revenues:
Casino $ 1,222,029 $ 1,075,577 $ 3,564,195 $ 3,067,145
Rooms 183,044 170,371 559,405 504,135
Food and beverage 193,874 200,051 580,963 568,878
Entertainment, retail and other   110,125  
View Comments and Join the Discussion!