Wynn Resorts Results

Wynn Resorts, Limited Reports Second Quarter 2016 Results

Net revenues were $1.06 billion for the second quarter of 2016, compared to $1.04 billion in the same period of 2015. The increase was the result of a 3.6% increase from our Macau Operations, partially offset by a 1.1% decrease from our Las Vegas Operations.

Wynn Resorts

Wynn Resorts, Limited (Nasdaq: WYNN) yesterday reported financial results for the second quarter ended June 30, 2016.

Net revenues were $1.06 billion for the second quarter of 2016, compared to $1.04 billion in the same period of 2015. The increase was the result of a 3.6% increase from our Macau Operations, partially offset by a 1.1% decrease from our Las Vegas Operations.

On a U.S. GAAP basis, net income attributable to Wynn Resorts, Limited was $70.4 million, or $0.69 per diluted share, for the second quarter of 2016, compared to $56.5 million, or $0.56 per diluted share, in the same period of 2015. Adjusted net income attributable to Wynn Resorts, Limited (1) was $108.7 million, or $1.07 per diluted share, for the second quarter of 2016, compared to $75.0 million, or $0.74 per diluted share, in the same period of 2015.

Adjusted Property EBITDA (2) was $312.7 million for the second quarter of 2016, a 5.8% increase from $295.4 million in the same period of 2015. The increase was the result of a 9.8% increase from our Macau Operations and a 0.2% increase from our Las Vegas Operations.

Wynn Resorts, Limited also announced today that the Company has approved a cash dividend of $0.50 per share, payable on August 23, 2016 to stockholders of record as of August 11, 2016.

Macau Operations

Net revenues from our Macau Operations were $639.3 million for the second quarter of 2016, a 3.6% increase from $617.0 million in the same period of 2015. Adjusted Property EBITDA from our Macau Operations was $190.4 million for the second quarter of 2016, a 9.8% increase from $173.4 million in the same period of 2015.

Casino revenues from our Macau Operations were $609.8 million for the second quarter of 2016, a 5.2% increase from $579.5 million in the same period of 2015. Table games turnover in the VIP segment was $11.84 billion, a 23.8% decrease from $15.54 billion in the second quarter of 2015. VIP table games win as a percentage of turnover (calculated before commissions) was 3.98%, above the expected range of 2.7% to 3.0% and the 2.92% we experienced in the second quarter of 2015. The average number of VIP tables decreased to 183 for the second quarter of 2016, compared to 247 in the same period of 2015. Table drop in the mass market segment was $1.17 billion, a 1.7% decrease from $1.19 billion in the second quarter of 2015. Table games win in the mass market segment was $235.2 million, a 12.7% increase from $208.6 million in the second quarter of 2015. Table games win percentage in the mass market segment was 20.0%, above the 17.5% experienced in the second quarter of 2015. Slot machine handle was $806.5 million, a 21.5% decrease from $1.03 billion in the second quarter of 2015, which drove a decline in slot win of 34.8% to $33.3 million.

Non-casino revenues before promotional allowances from our Macau Operations were $68.1 million for the second quarter of 2016, a 12.7% decrease from the $78.1 million in the same period of 2015. Room revenues decreased 5.8%, to $29.3 million for the second quarter of 2016, compared to $31.1 million in the same period of 2015. Our average daily rate ("ADR") remained flat at $321, compared to the same period of 2015. Occupancy decreased to 91.5% for the second quarter of 2016, compared to 96.4% in the same period of 2015. Revenue per available room ("REVPAR") was $294, a 5.2% decrease from $310 in the second quarter of 2015.

Las Vegas Operations

Net revenues from our Las Vegas Operations were $419.0 million for the second quarter of 2016, a 1.1% decrease from $423.5 million in the same period of 2015. Adjusted Property EBITDA from our Las Vegas Operations was $122.3 million, a 0.2% increase from $122.0 million in the second quarter of 2015.

Casino revenues from our Las Vegas Operations were $132.9 million for the second quarter of 2016, a 1.3% decrease from $134.7 million in the same period of 2015. Table games drop was $427.4 million, a 16.1% decrease from $509.3 million in the second quarter of 2015. Table games win was $96.1 million, a 3.2% decrease from $99.3 million in the second quarter of 2015. Table games win percentage was 22.5%, within the property’s expected range of 21% to 25% and above the 19.5% experienced in the second quarter of 2015. Slot machine handle was $750.4 million, a 5.4% increase from $712.1 million in the second quarter of 2015, and slot win decreased 4.4% to $48.7 million.

Non-casino revenues before promotional allowances from our Las Vegas Operations were $327.4 million for the second quarter of 2016, a 0.9% decrease from $330.3 million in the same period of 2015. Room revenues increased 4.4%, to $113.6 million for the second quarter of 2016, compared to $108.8 million in the same period of 2015. ADR was $308, a 6.6% increase from $289 in the second quarter of 2015. Occupancy decreased to 85.3% for the second quarter of 2016, compared to 88.4% in the same period of 2015. REVPAR was $263, a 3.1% increase from $255 in the second quarter of 2015. Food and beverage revenues decreased 5.0%, to $153.9 million for the second quarter of 2016, compared to the same period of 2015. Entertainment, retail and other revenues increased 0.9%, to $59.9 million for the second quarter of 2016, compared to the same period of 2015.

Wynn Palace Project in Macau

The Company is currently constructing Wynn Palace, an integrated resort containing a 1,700-room hotel, a performance lake, and a wide range of amenities, including meeting, retail, food and beverage, and casino spaces, in the Cotai area of Macau. We have a $2.7 billion guaranteed maximum price ("GMP") contract for the project’s construction costs. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is approximately $4.2 billion. Wynn Palace is scheduled to open on August 22, 2016.

During the second quarter of 2016, we invested approximately $151.2 million in Wynn Palace, taking the total investment to $3.87 billion through June 30, 2016.

We believe that we will receive an allocation of approximately 100 table games for Wynn Palace, with additional table games allocated to us post-opening.  While we have not yet received formal notification of our table games allocation, if we receive an allocation of 100 new table games, we expect to move approximately 250 table games from Wynn Macau to Wynn Palace resulting in approximately 350 table games at Wynn Palace and 270 table games at Wynn Macau.

Wynn Boston Harbor Project in Massachusetts

In November 2014, the Company was awarded a gaming license to develop and construct Wynn Boston Harbor, an integrated resort in Everett, Massachusetts, adjacent to Boston. Wynn Boston Harbor will be located on a 33-acre site along the Mystic River and will contain a hotel, a waterfront boardwalk, meeting space, casino space, a spa, retail offerings and food and beverage outlets. The total project budget, including construction costs, capitalized interest, pre-opening costs and land costs, is estimated to be between $1.9 billion and $2.1 billion. We remain engaged in site remediation, site preparation and pre-construction activities.

Balance Sheet

Our cash and cash equivalents and investment securities at June 30, 2016 were $2.21 billion.

Total debt outstanding at the end of the quarter was $9.46 billion, including $4.20 billion of Macau debt, $3.17 billion of Wynn Las Vegas debt and $2.09 billion at the parent company and other.

Non-GAAP Financial Measures

(1) “Adjusted net income attributable to Wynn Resorts, Limited” is net income before pre-opening costs, property charges and other, change in interest rate swap fair value, change in Redemption Note fair value, loss on extinguishment of debt, net of noncontrolling interest and 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 U.S. generally accepted principles ("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 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.

(2) “Adjusted Property EBITDA” is net income before interest, taxes, depreciation and amortization, pre-opening costs, property charges and other, management and license fees, corporate expenses and other (including intercompany golf course and water rights leases), stock-based compensation, loss on extinguishment of debt, change in interest rate swap fair value, change in Redemption Note fair value and other non-operating income and expenses, and includes equity in income (loss) from unconsolidated affiliates. 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. 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, 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 attributable to Wynn Resorts, Limited to adjusted net income attributable to Wynn Resorts, Limited, (ii) operating income to Adjusted Property EBITDA, and (iii) Adjusted Property EBITDA to net income attributable to Wynn Resorts, Limited.

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2016   2015 2016   2015
Operating revenues:
Casino $ 742,659 $ 714,208 $ 1,475,389 $ 1,540,307
Rooms 142,847 139,912 278,439 271,967
Food and beverage 170,631 181,016 301,075 317,029
Entertainment, retail and other 82,031   87,459   164,026   177,835  
Gross revenues 1,138,168 1,122,595 2,218,929 2,307,138
Less: promotional allowances (79,804 ) (82,137 ) (162,887 ) (174,442 )
Net revenues 1,058,364   1,040,458   2,056,042     2,132,696  
Operating costs and expenses:
Casino 470,372 466,535 922,912 990,588
Rooms 38,040 37,584 75,749 74,270
Food and beverage 105,727 110,952 185,147 187,358
Entertainment, retail and other 37,674 38,997 75,973 79,291
General and administrative 119,505 113,707 236,950 235,907
Provision for doubtful accounts 2,478 4,302 3,184 10,381
Pre-opening costs 45,949 16,875 79,718 32,966
Depreciation and amortization 79,749 81,913 157,720 164,779
Property charges and other 11,331   472   12,852   2,976  
Total operating costs and expenses 910,825   871,337   1,750,205     1,778,516  
Operating income 147,539   169,121   305,837     354,180  
Other income (expense):
Interest income 2,783 1,498 6,262 3,190
Interest expense, net of amounts capitalized (69,257 ) (75,236 ) (114,029 ) (153,219 )
Change in interest rate swap fair value (1,036 ) (1,114 ) (2,861 ) (5,723 )
Decrease in Redemption Note fair value 7,982 2,979
Loss on extinguishment of debt (3,839 ) (120,033 )
Equity in income (loss) from unconsolidated affiliates (127 ) 16 70
Other (1,462 ) 198   (1,945 ) 1,331  
Other income (expense), net (60,990 ) (78,620 ) (109,578 )   (274,384 )
Income before income taxes 86,549 90,501 196,259 79,796
Benefit (provision) for income taxes 2,893   (13,298 ) (1,025 ) (16,495 )
Net income 89,442 77,203 195,234 63,301
Less: net income attributable to noncontrolling interest (19,051 ) (20,743 ) (49,622 ) (51,442 )
Net income attributable to Wynn Resorts, Limited $ 70,391   $ 56,460   $ 145,612     $ 11,859  
Basic and diluted income per common share:
Net income attributable to Wynn Resorts, Limited:
Basic $ 0.69 $ 0.56 $ 1.44 $ 0.12
Diluted $ 0.69 $ 0.56 $ 1.43 $ 0.12
Weighted average common shares outstanding:
Basic 101,438 101,157 101,415 101,146
Diluted 101,881 101,710 101,792 101,795
Dividends declared per common share: $ 0.50 $ 0.50 $ 1.00 $ 2.00
 
WYNN RESORTS, LIMITED AND SUBSIDIARIES
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED
TO ADJUSTED NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED
(in thousands, except per share data)
(unaudited)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2016   2015 2016   2015
Net income attributable to Wynn Resorts, Limited $ 70,391 $ 56,460 $ 145,612 $ 11,859
Pre-opening costs 45,949 16,875 79,718 32,966
Property charges and other 11,331 472 12,852 2,976
Change in interest rate swap fair value 1,036 1,114 2,861 5,723
Decrease in Redemption Note fair value (7,982 ) (2,979 )
Loss on extinguishment of debt 3,839 120,033
Income tax impact on adjustments (469 ) (83 )
Noncontrolling interest impact on adjustments (11,585 ) (3,788 ) (19,778 ) (7,778 )
Adjusted net income attributable to Wynn Resorts, Limited $ 108,671   $ 74,972   $ 218,203   $ 165,779  
Adjusted net income attributable to Wynn Resorts, Limited per diluted share $ 1.07   $ 0.74   $ 2.14   $ 1.63  
 
Weighted average common shares outstanding - diluted 101,881 101,710 101,792 101,795
 
WYNN RESORTS, LIMITED AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME TO ADJUSTED PROPERTY EBITDA AND ADJUSTED

PROPERTY EBITDA TO NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED

(in thousands)
(unaudited)
 
  Three Months Ended June 30, 2016
Macau

Operations

  Las Vegas

Operations

  Corporate

and Other

  Total
Operating income $ 84,963 $ 46,361 $ 16,215 $ 147,539
Pre-opening costs 39,338 1,429 5,182 45,949
Depreciation and amortization 31,111 45,752 2,886 79,749
Property charges and other 1,261 10,070 11,331
Management and license fees 24,373 13,197 (37,570 )
Corporate expense and other 5,523 4,852 7,439 17,814
Stock-based compensation 3,820   629   5,848   10,297  
Adjusted Property EBITDA $ 190,389   $ 122,290   $   $ 312,679  
 
Three Months Ended June 30, 2015
Macau

Operations

Las Vegas

Operations

Corporate

and Other

Total
Operating income $ 93,347 $ 58,502 $ 17,272 $ 169,121
Pre-opening costs 11,041 5,834 16,875
Depreciation and amortization 34,357 45,249 2,307 81,913
Property charges and other 1,461 (922 ) (67 ) 472
Management and license fees 23,876 13,323 (37,199 )
Corporate expense and other 5,291 5,135 6,412 16,838
Stock-based compensation 4,018 808 5,510 10,336
Equity in loss from unconsolidated affiliates   (58 ) (69 ) (127 )
Adjusted Property EBITDA $ 173,391   $ 122,037   $   $ 295,428  
 
Three Months Ended June 30,
2016 2015
Adjusted Property EBITDA $ 312,679 $ 295,428
Pre-opening costs (45,949 ) (16,875 )
Depreciation and amortization (79,749 ) (81,913 )
Property charges and other (11,331 ) (472 )
Corporate expense and other (17,814 ) (16,838 )
Stock-based compensation (10,297 ) (10,336 )
Interest income 2,783 1,498
Interest expense, net of amounts capitalized (69,257 ) (75,236 )
Change in interest rate swap fair value (1,036 ) (1,114 )
Decrease in Redemption Note fair value 7,982
Loss on extinguishment of debt (3,839 )
Other (1,462 ) 198
Benefit (provision) for income taxes 2,893   (13,298 )
Net income 89,442 77,203
Less: net income attributable to noncontrolling interest (19,051 ) (20,743 )
Net income attributable to Wynn Resorts, Limited $ 70,391   $ 56,460  
 
WYNN RESORTS, LIMITED AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME TO ADJUSTED PROPERTY EBITDA AND ADJUSTED

PROPERTY EBITDA TO NET INCOME ATTRIBUTABLE TO WYNN RESORTS, LIMITED

(in thousands)
(unaudited)
 
  Six Months Ended June 30, 2016
Macau

Operations

  Las Vegas

Operations

  Corporate

and Other

  Total
Operating income $ 185,516 $ 91,373 $ 28,948 $ 305,837
Pre-opening costs 65,597 2,135 11,986 79,718
Depreciation and amortization 60,922 90,946 5,852 157,720
Property charges and other 2,627 10,225 12,852
Management and license fees 47,136 25,522 (72,658 )
Corporate expense and other 11,923 9,690 14,384 35,997
Stock-based compensation 7,913 1,407 11,488 20,808
Equity in income from unconsolidated affiliates   16     16  
Adjusted Property EBITDA $ 381,634   $ 231,314   $   $ 612,948  
 
Six Months Ended June 30, 2015
Macau

Operations

Las Vegas

Operations

Corporate

and Other

Total
Operating income $ 224,293 $ 106,102 $ 23,785 $ 354,180
Pre-opening costs 20,540 12,426 32,966
Depreciation and amortization 68,558 91,489 4,732 164,779
Property charges and other 1,695 1,109 172 2,976
Management and license fees 50,933 21,454 (72,387 )
Corporate expense and other 11,279 11,098 20,103 42,480
Stock-based compensation 8,435 1,472 11,089 20,996
Equity in income (loss) from unconsolidated affiliates   (10 ) 80   70  
Adjusted Property EBITDA $ 385,733   $ 232,714   $   $ 618,447  
 
Six Months Ended June 30,
2016 2015
Adjusted Property EBITDA $ 612,948 $ 618,447
Pre-opening costs (79,718 ) (32,966 )
Depreciation and amortization (157,720 ) (164,779 )
Property charges and other (12,852 ) (2,976 )
Corporate expense and other (35,997 ) (42,480 )
Stock-based compensation (20,808 ) (20,996 )
Interest income 6,262 3,190
Interest expense, net of amounts capitalized (114,029 ) (153,219 )
Change in interest rate swap fair value (2,861 ) (5,723 )
Decrease in Redemption Note fair value 2,979
Loss on extinguishment of debt (120,033 )
Other (1,945 ) 1,331
Provision for income taxes (1,025 ) (16,495 )
Net income 195,234 63,301
Less: net income attributable to noncontrolling interest (49,622 ) (51,442 )
Net income attributable to Wynn Resorts, Limited $ 145,612   $ 11,859  
 
WYNN RESORTS, LIMITED AND SUBSIDIARIES
SUPPLEMENTAL DATA SCHEDULE
(dollars in thousands, except for win per unit per day, ADR and REVPAR)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2016   2015 2016   2015
Macau Operations:
VIP
Average number of table games 183 247 186 250
VIP turnover $ 11,841,200 $ 15,537,003 $ 25,311,139 $ 32,664,669
VIP table games win $ 470,976 $ 453,203 $ 849,628 $ 933,568
VIP table games win as a % of turnover 3.98 % 2.92 % 3.36 % 2.86 %
Table games win per unit per day (1) $ 28,239 $ 20,177 $ 25,052 $ 20,665
Mass market
Average number of table games 238 223 242 218
Table drop (2) $ 1,173,234 $ 1,193,916 $ 2,383,334 $ 2,474,260
Table games win $ 235,197 $ 208,620 $ 482,697 $ 488,180
Table games win % 20.0 % 17.5 % 20.3 % 19.7 %
Table games win per unit per day (1) $ 10,853 $ 10,274 $ 10,974 $ 12,339
 
Average number of slot machines 775 707 778 678
Slot machine handle $ 806,453 $ 1,027,557 $ 1,902,790 $ 2,067,172
Slot machine win $ 33,330 $ 51,138 $ 83,771 $ 98,916
Slot machine win per unit per day (3) $ 472 $ 795 $ 591 $ 806
 
Room statistics
Occupancy 91.5 % 96.4 % 93.1 % 96.9 %
ADR (4) $ 321 $ 321 $ 323 $ 326
REVPAR (5) $ 294 $ 310 $ 300 $ 316
 
Las Vegas Operations:
Average number of table games 237 235 237 236
Table drop (2) $ 427,418 $ 509,309 $ 902,580 $ 1,082,921
Table games win $ 96,138 $ 99,313 $ 221,184 $ 234,992
Table games win % 22.5 % 19.5 % 24.5 % 21.7 %
Table games win per unit per day (1) $ 4,450 $ 4,650 $ 5,121 $ 5,501
 
Average number of slot machines 1,885 1,868 1,887 1,861
Slot machine handle $ 750,380 $ 712,147 $ 1,467,840 $ 1,474,331
Slot machine win $ 48,742 $ 51,010 $ 98,327 $ 99,427
Slot machine win per unit per day (3) $ 284 $ 300 $ 286 $ 295
 
Room statistics
Occupancy 85.3 % 88.4 % 83.5 % 85.7 %
ADR (4) $ 308 $ 289 $ 303 $ 286
REVPAR (5) $ 263 $ 255 $ 253 $ 245



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