Market Overview

Wynn Resorts, Limited Reports Second Quarter 2019 Results

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Wynn Resorts, Limited (NASDAQ:WYNN) (the "Company") today reported financial results for the quarter ended June 30, 2019.

"We were pleased to deliver year-over-year revenue growth at all of our properties in the second quarter, with particular strength in our core mass business in Macau and REVPAR in Las Vegas," said Matt Maddox, CEO of Wynn Resorts, Limited. "On the development front, we have made meaningful progress designing and planning the Crystal Pavilion in Macau, which we believe will be a 'must-see' tourism destination on Cotai. We also achieved a significant milestone during the quarter with the successful opening of Encore Boston Harbor, the East Coast's first premium integrated resort, on June 23. Importantly, the opening of Encore Boston Harbor drives a reduction in our near-term capital expenditures and improvement in our discretionary free cash flow profile. We are also pleased to announce a $1.00 per share dividend for the quarter, consistent with our strategy of capital return to shareholders. We remain excited about the outlook for the Company and we will continue to focus on leveraging our premium-focused business model to drive long-term returns for shareholders."

Operating revenues were $1.66 billion for the second quarter of 2019, an increase of 3.3%, or $52.9 million, from $1.61 billion for the second quarter of 2018. Operating revenues increased $8.3 million, $3.2 million, and $22.6 million at Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively, from the second quarter of 2018.

On a U.S. generally accepted accounting principles ("GAAP") basis, net income attributable to Wynn Resorts, Limited was $94.6 million, or $0.88 per diluted share, for the second quarter of 2019, compared to $155.8 million, or $1.44 per diluted share, in the second quarter of 2018. The change was primarily due to an increase in pre-opening expenses related to the development of Encore Boston Harbor. Adjusted net income attributable to Wynn Resorts, Limited (1) was $153.9 million, or $1.44 per diluted share, for the second quarter of 2019, compared to $166.2 million, or $1.53 per diluted share, for the second quarter of 2018.

Adjusted Property EBITDA (2) was $480.6 million for the second quarter of 2019, an increase of 0.9%, or $4.2 million, from $476.4 million for the second quarter of 2018. Adjusted Property EBITDA increased $2.9 million and $13.2 million at Wynn Macau and our Las Vegas Operations, respectively, and decreased $12.1 million at Wynn Palace.

Wynn Resorts, Limited also announced today that the Company has approved a cash dividend of $1.00 per share, payable on August 27, 2019 to stockholders of record as of August 16, 2019.

Macau Operations

Wynn Palace

Operating revenues from Wynn Palace were $628.9 million for the second quarter of 2019, a 1.3% increase from $620.6 million for the second quarter of 2018. Adjusted Property EBITDA from Wynn Palace was $167.2 million for the second quarter of 2019, a 6.8% decrease from $179.3 million for the second quarter of 2018.

Casino revenues from Wynn Palace were $528.5 million for the second quarter of 2019, a 0.7% increase from $525.0 million for the second quarter of 2018. Table games turnover in VIP operations was $13.39 billion, a 4.6% decrease from $14.03 billion for the second quarter of 2018. VIP table games win as a percentage of turnover was 3.02%, above the expected range of 2.7% to 3.0% and above the 3.00% experienced in the second quarter of 2018. Table drop in mass market operations was $1.27 billion, a 4.0% increase from $1.22 billion in the second quarter of 2018. Table games win in mass market operations was $296.9 million, a 5.8% increase from $280.6 million for the second quarter of 2018. Table games win percentage in mass market operations was 23.4%, above the 23.0% experienced in the second quarter of 2018. Slot machine handle was $937.8 million, a 0.3% decrease from $941.0 million for the second quarter of 2018. Slot machine win decreased 1.4% to $43.6 million for the second quarter of 2019, compared to $44.2 million for the second quarter of 2018.

Non-casino revenues from Wynn Palace were $100.4 million for the second quarter of 2019, a 5.0% increase from $95.6 million for the second quarter of 2018. Room revenues were $43.2 million for the second quarter of 2019, a 6.0% increase from $40.7 million for the second quarter of 2018. Average daily rate ("ADR") was $265, a 4.1% increase from $254 for the second quarter of 2018. Occupancy increased to 97.4% for the second quarter of 2019, from 96.2% for the second quarter of 2018. Revenue per available room ("REVPAR") was $258, a 5.3% increase from $245 for the second quarter of 2018.

Wynn Macau

Operating revenues from Wynn Macau were $546.5 million for the second quarter of 2019, a 0.6% increase from $543.3 million for the second quarter of 2018. Adjusted Property EBITDA was $175.9 million for the second quarter of 2019, a 1.7% increase from $172.9 million for the second quarter of 2018.

Casino revenues from Wynn Macau were $481.2 million for the second quarter of 2019, a 1.7% increase from $473.3 million for the second quarter of 2018. Table games turnover in VIP operations was $9.28 billion, a 33.4% decrease from $13.93 billion for the second quarter of 2018. VIP table games win as a percentage of turnover was 3.30%, above the expected range of 2.7% to 3.0% and above the 2.56% experienced in the second quarter of 2018. Table drop in mass market operations was $1.35 billion, a 4.2% increase from $1.29 billion for the second quarter of 2018. Table games win in mass market operations was $279.1 million, a 10.7% increase from $252.0 million for the second quarter of 2018. Table games win percentage in mass market operations was 20.7%, above the 19.5% experienced in the second quarter of 2018. Slot machine handle was $925.8 million, a 3.9% decrease from $963.6 million for the second quarter of 2018. Slot machine win increased 5.9% to $42.8 million for the second quarter of 2019, compared to $40.4 million for the second quarter of 2018.

Non-casino revenues from Wynn Macau were $65.3 million for the second quarter of 2019, a 6.8% decrease from $70.0 million for the second quarter of 2018. Room revenues were $26.5 million for the second quarter of 2019, a 2.2% decrease from $27.1 million for the second quarter of 2018. ADR was $281, a 3.2% increase from $272 for the second quarter of 2018. Occupancy decreased to 98.9% for the second quarter of 2019, from 99.4% for the same period of 2018. REVPAR was $278, a 2.6% increase from the second quarter of 2018.

Las Vegas Operations

Operating revenues from our Las Vegas Operations were $464.1 million for the second quarter of 2019, a 5.1% increase from $441.6 million for the second quarter of 2018. Adjusted Property EBITDA from our Las Vegas Operations was $137.4 million, a 10.7% increase from $124.2 million for the second quarter of 2018.

Casino revenues from our Las Vegas Operations were $119.8 million for the second quarter of 2019, a 17.7% increase from $101.7 million for the second quarter of 2018. Table games drop was $440.8 million, a 9.2% increase from $403.7 million for the second quarter of 2018. Table games win was $126.4 million, a 25.2% increase from $101.0 million for the second quarter of 2018. Table games win percentage was 28.7%, above the property's expected range of 22% to 26% and above the 25.0% experienced in the second quarter of 2018. Slot machine handle was $811.6 million, a 4.3% increase from $778.4 million for the second quarter of 2018. Slot machine win increased 11.6% to $55.1 million, compared to $49.4 million for the second quarter of 2018.

Non-casino revenues from our Las Vegas Operations were $344.4 million for the second quarter of 2019, a 1.3% increase from $339.8 million for the second quarter of 2018. Room revenues were $127.6 million for the second quarter of 2019, a 7.9% increase from $118.3 million for the second quarter of 2018. ADR was $333, a 6.4% increase from $313 in the second quarter of 2018. Occupancy increased to 90.1% for the second quarter of 2019, from 87.7% for the second quarter of 2018. REVPAR was $300, a 9.5% increase from $274 for the second quarter of 2018. Food and beverage revenues decreased 3.3%, to $165.2 million for the second quarter of 2019, compared to $170.9 million for the second quarter of 2018. Entertainment, retail and other revenues increased 1.8%, to $51.6 million for the second quarter of 2019, compared to $50.7 million in the second quarter of 2018.

Encore Boston Harbor

On June 23, 2019, the Company opened Encore Boston Harbor, an integrated resort in Everett, Massachusetts. Encore Boston Harbor features a luxury hotel tower with 671 guest rooms and suites, approximately 210,000 square feet of casino space, 14 food and beverage outlets, one nightclub, approximately 71,000 square feet of meeting and convention space, approximately 7,000 square feet of retail space, and public attractions, including a waterfront park, floral displays, and water shuttle service to downtown Boston. During its eight days of operations in the second quarter of 2019, Encore Boston Harbor's operating revenues were $18.8 million and Adjusted Property EBITDA was $0.1 million. The results of Encore Boston Harbor are presented within Corporate and other for the second quarter of 2019, and will be reported as a separate segment beginning in the third quarter of 2019.

Development Projects

We are constructing an approximately 430,000 square foot meeting and convention facility at Wynn Las Vegas and are reconfiguring the Wynn Las Vegas golf course, which we closed in the fourth quarter of 2017. The facility will feature approximately 217,000 square feet of state-of-the-art meeting and convention space available for group reservations. Based on current designs, we estimate the total project budget to be approximately $425 million. As of June 30, 2019, we have incurred $246.6 million in total project costs. We expect to reopen the golf course in the fourth quarter of 2019 and open the additional meeting and convention space in the first quarter of 2020.

Balance Sheet

Our cash and cash equivalents and restricted cash as of June 30, 2019 totaled $1.51 billion.

Total current and long-term debt outstanding at June 30, 2019 was $9.15 billion, comprised of $3.71 billion of Macau related debt, $3.11 billion of Wynn Las Vegas debt, $983 million of Wynn America debt, $739 million of Wynn Resorts debt, and $611 million of debt held by the retail joint venture which we consolidate.

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 August 6, 2019 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 August 8, 2019, the Company will make Wynn Las Vegas, LLC financial information for the quarter ended June 30, 2019 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, 2018 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 net income attributable to Wynn Resorts, Limited" is net income (loss) attributable to Wynn Resorts, Limited before litigation settlement expense, nonrecurring regulatory expense, pre-opening expenses, property charges and other, change in derivatives fair value, change in Redemption Note fair value, gain on extinguishment of debt, foreign currency remeasurement 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 (loss) attributable to Wynn Resorts, Limited and adjusted net income (loss) 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 (loss) 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 (loss) attributable to Wynn Resorts, Limited and adjusted net income (loss) 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.

(2) "Adjusted Property EBITDA" is net income (loss) 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, stock-based compensation, 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 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.

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

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

2019

 

2018

Operating revenues:

 

 

 

 

 

 

 

Casino

$

1,142,503

 

 

$

1,100,027

 

 

$

2,327,604

 

 

$

2,342,166

 

Rooms

198,807

 

 

186,051

 

 

390,077

 

 

376,361

 

Food and beverage

218,022

 

 

214,867

 

 

391,241

 

 

387,089

 

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