Company Results

Wynn Resorts First Quarter 2014 Las Vegas Revenues Decline

Net revenues for the first quarter of 2014 were $1,513.6 million, compared to $1,378.7 million in the first quarter of 2013. The growth was driven by a 14.2% revenue increase from our Macau operations, modestly offset by a 1.5% decline in net revenues from Las Vegas operations.

Wynn Resorts

Wynn Resorts, Limited (Nasdaq: WYNN) last week reported financial results for the first quarter ended March 31, 2014.

Net revenues for the first quarter of 2014 were $1,513.6 million, compared to $1,378.7 million in the first quarter of 2013. The growth was driven by a 14.2% revenue increase from our Macau operations, modestly offset by a 1.5% decline in net revenues from Las Vegas operations. Adjusted property EBITDA (1) was $494.6 million for the first quarter of 2014, a 9.7% increase from $451.1 million in the first quarter of 2013.

On a US GAAP basis, net income attributable to Wynn Resorts for the first quarter of 2014 was $226.9 million, or $2.22 per diluted share, compared to net income attributable to Wynn Resorts of $203.0 million, or $2.00 per diluted share, in the first quarter of 2013.

Adjusted net income attributable to Wynn Resorts (2) in the first quarter of 2014 was $236.7 million, or $2.32 per diluted share (adjusted EPS), compared to an adjusted net income attributable to Wynn Resorts of $205.6 million, or $2.03 per diluted share, in the first quarter of 2013.

Wynn Resorts also announced today that the Company has approved a cash dividend for the quarter of $1.25 per common share. This dividend will be payable on May 29, 2014, to stockholders of record on May 15, 2014.

Macau Operations

In the first quarter of 2014, net revenues were $1,132.7 million, a 14.2% increase from the $992.1 million generated in the first quarter of 2013. Adjusted property EBITDA in the first quarter of 2014 reached a record $384.3 million, up 16.2% from $330.7 million in the first quarter of 2013.

Table games results in Macau are segregated into two distinct reporting categories, the VIP segment and the mass market segment.

Table games turnover in the VIP segment was $36.0 billion for the first quarter of 2014, a 26.7% increase from $28.4 billion in the first quarter of 2013. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.79%, within the expected range of 2.7% to 3.0% and significantly below the 3.14% experienced in the first quarter of 2013.

Table games win in the mass market segment increased by 23.7% to $300.7 million in the first quarter of 2014. Mass market table games win per unit per day increased by 19.1% to $15,695 from $13,180 in the first quarter of 2013. Drop in the mass market segment was $692.5 million in the first quarter of 2014, up 1.1% from the 2013 first quarter, while the segment’s win percentage of 43.4% compares to 35.5% in last year’s first quarter and sequentially to 42.3% in the fourth quarter of 2013. Note that customers purchase mass market gaming chips at either the gaming tables or the casino cage. Chips purchased at the casino cage are excluded from table games drop and will increase the expected win percentage. With the increased purchases at the casino cage, we believe the relevant indicator of volumes in the mass market segment should be table games win.

Slot machine handle of $1.4 billion for the first quarter of 2014 was 25.3% above the prior-year quarter, and slot win increased 13.1% compared to the prior-year period. Win per unit per day was 13.3% higher at $917, compared to $809 in the first quarter of 2013.

For the first quarter of 2014, we achieved an average daily rate (ADR) of $338, 7.3% above the $315 reported in the 2013 first quarter. Occupancy at Wynn Macau of 98.1% compares to 93.8% in the prior-year period, and revenue per available room (REVPAR) rose 11.8% to $331 in the 2014 quarter from $296 in last year’s first quarter. Gross non-casino revenues increased 7.3% during the quarter to $113.0 million.

Wynn Palace Project in Macau

The Company is currently constructing Wynn Palace, a fully integrated resort containing a 1,700-room hotel, performance lake, meeting space, casino, spa, retail offerings, and food and beverage outlets on Cotai in Macau. In July 2013, we signed a $2.6 billion guaranteed maximum price (GMP) contract for the project’s construction. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is $4.0 billion. We expect to open our resort on Cotai in the first half of 2016.

During the first quarter of 2014, we invested approximately $163.1 million in our Cotai project, taking the total investment to date to $866.7 million.

Las Vegas Operations

For the quarter ended March 31, 2014, net revenues were $380.9 million, a 1.5% decrease from $386.6 million in the first quarter of 2013. Adjusted property EBITDA was $110.3 million, down 8.4% from $120.4 million generated in the comparable period in 2013, mainly the result of a 6.0 percentage point decline in table games win percentage.

Net casino revenues in the first quarter of 2014 were $155.3 million, an 11.9% decrease from the first quarter of 2013. Table games drop of $647.4 million was down 3.2% compared to $668.9 million in the 2013 quarter. Table games win percentage was 20.7%, below both the property’s expected range of 21% to 24% and the 26.7% reported in the 2013 quarter. Slot machine handle of $743.8 million was 6.8% above the $696.6 million in the comparable period of 2013, and net slot win was up 7.6%.

Room revenues were up 12.6% to $103.1 million during the quarter, versus $91.5 million in the first quarter of 2013. Average daily rate (ADR) increased 6.2% to $275 from $259, and occupancy increased to 87.8% from 82.8% in the first quarter of 2013. Revenue per available room (REVPAR) was $241 in the 2014 first quarter, 12.6% above the $214 reported in the prior-year quarter.

Food and beverage revenues in the first quarter of 2014 were $115.0 million, approximately flat from the 2013 first quarter. Retail, entertainment and other revenues improved 9.4% from last year’s quarter to $54.1 million, driven by increases from Wynn Las Vegas retail shops, spa and other event services.

Balance Sheet and Other

Our total cash and investments balance at March 31, 2014 was $3.5 billion. Total debt outstanding at the end of the quarter was $7.3 billion, including $3.1 billion of Wynn Las Vegas debt, $2.3 billion of Wynn Macau debt and $1.9 billion at the parent company. Note that, during the 2014 first quarter, Wynn Macau, Limited issued $750.0 million of new 5.25% senior notes due in 2021.

Non-GAAP Financial Measures

(1) “Adjusted property EBITDA” is earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, corporate expenses, intercompany golf course and water rights leases, stock-based compensation, and other non-operating income and expenses, and includes equity in income 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 financial measures in accordance with U.S. generally accepted accounting principles (“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.

(2) "Adjusted net income attributable to Wynn Resorts, Limited" is net income before pre-opening costs, property charges and other, and certain other non-operating income and expenses. Adjusted net income attributable to Wynn Resorts, Limited and adjusted net income per share attributable to Wynn Resorts, Limited (“EPS”) are presented as supplemental disclosures because management believes that these 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 EPS 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 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, and (ii) operating income to adjusted property EBITDA and 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 March 31,
2014       2013  
Operating revenues:
Casino $ 1,226,133 $ 1,106,503
Rooms 136,476 120,480
Food and beverage 141,837 139,701
Entertainment, retail and other 106,860   101,548  
Gross revenues 1,611,306 1,468,232
Less: promotional allowances (97,693 ) (89,578 )
Net revenues 1,513,613   1,378,654  
Operating costs and expenses:
Casino 783,734 697,188
Rooms 35,345 33,390
Food and beverage 74,953 73,873
Entertainment, retail and other 44,535 40,326
General and administrative 111,277 94,909
(Benefit) provision for doubtful accounts (2,728 ) 7,004
Pre-opening costs 3,073 452
Depreciation and amortization 76,659 92,518
Property charges and other 9,934   5,346  
Total operating costs and expenses 1,136,782   1,045,006  
Operating income 376,831   333,648  
Other income (expense):
Interest income 4,753 4,222
Interest expense, net of capitalized interest (75,256 ) (75,377 )
Increase in swap fair value 842 3,144
Loss on extinguishment of debt (1,529 )
Equity in income from unconsolidated affiliates 308 200
Other (297 ) 1,165  
Other income (expense), net (71,179 ) (66,646 )
Income before income taxes 305,652 267,002
(Provision) benefit for income taxes (2,609 ) 5,142  
Net income 303,043 272,144
Less: net income attributable to noncontrolling interests (76,147 ) (69,181 )
Net income attributable to Wynn Resorts, Limited $ 226,896   $ 202,963  
Basic and diluted income per common share:
Net income attributable to Wynn Resorts, Limited:
Basic $ 2.25 $ 2.02
Diluted $ 2.22 $ 2.00
Weighted average common shares outstanding:
Basic 100,822 100,237
Diluted 102,009 101,373
Dividends declared per common share $ 1.25 $ 1.00
 
 
     

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 March 31,
2014       2013  
Net income attributable to Wynn Resorts, Limited $ 226,896 $ 202,963
Pre-opening costs 3,073 452
Loss on extinguishment of debt 1,529
Increase in swap fair value (842 ) (3,144 )
Property charges and other 9,934 5,346
Adjustment for noncontrolling interest (3,906 ) 20  
Adjusted net income attributable to Wynn Resorts, Limited (2) $ 236,684   $ 205,637  
Adjusted net income attributable to Wynn Resorts, Limited per diluted share $ 2.32   $ 2.03  
 
 
     

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 March 31, 2014

Macau

Operations

   

Las Vegas

Operations

   

Corporate

and Other

    Total
Operating income $ 284,930 $ 51,514 $ 40,387 $ 376,831
Pre-opening costs 3,073 3,073
Depreciation and amortization 31,159 43,990 1,510 76,659
Property charges and other 10,180 (246 ) 9,934
Management and royalty fees 44,755 5,719 (50,474 )
Corporate expenses and other 8,921 8,191 6,778 23,890
Stock-based compensation 1,310 1,026 1,585 3,921
Equity in income from unconsolidated affiliates   94   214   308  
Adjusted Property EBITDA(1) $ 384,328   $ 110,288   $   $ 494,616  
 
Three Months Ended March 31, 2013

Macau

Operations

Las Vegas

Operations

Corporate

and Other

Total
Operating income $ 251,526 $ 40,419 $ 41,703 $ 333,648
Pre-opening costs 452 452
Depreciation and amortization 29,297 61,610 1,611 92,518
Property charges and other 2,619 2,754 (27 ) 5,346
Management and royalty fees 39,196 5,795 (44,991 )
Corporate expenses and other 6,618 7,603 3,561 17,782
Stock-based compensation 1,003 2,227 (2,108 ) 1,122
Equity in (loss) income from unconsolidated affiliates   (51 ) 251   200  
Adjusted Property EBITDA(1) $ 330,711   $ 120,357   $   $ 451,068  
 
Three Months Ended March 31,
2014   2013  
Adjusted Property EBITDA(1) $ 494,616 $ 451,068
Pre-opening costs (3,073 ) (452 )
Depreciation and amortization (76,659 ) (92,518 )
Property charges and other (9,934 ) (5,346 )
Corporate expenses and other (23,890 ) (17,782 )
Stock-based compensation (3,921 ) (1,122 )
Interest income 4,753 4,222
Interest expense, net of capitalized interest (75,256 ) (75,377 )
Increase in swap fair value 842 3,144
Loss on extinguishment of debt (1,529 )
Other (297 ) 1,165
(Provision) benefit for income taxes (2,609 ) 5,142  
Net income 303,043 272,144
Less: Net income attributable to noncontrolling interests (76,147 ) (69,181 )
Net income attributable to Wynn Resorts, Limited $ 226,896   $ 202,963  
 
 
     

WYNN RESORTS, LIMITED AND SUBSIDIARIES

SUPPLEMENTAL DATA SCHEDULE

 
Three Months Ended March 31,
2014       2013  
Room Statistics for Macau operations:
Occupancy % 98.1 % 93.8 %
Average Daily Rate (ADR)(a) $ 338 $ 315
Revenue per available room (REVPAR)(b) $ 331 $ 296
Other information for Macau operations:
Table games win per unit per day(c) $ 29,457 $ 25,550
Slot machine win per unit per day(d) $ 917 $ 809
Average number of table games 492 494
Average number of slot machines 842 843
Room Statistics for Las Vegas operations:
Occupancy % 87.8 % 82.8 %
Average Daily Rate (ADR)(a) $ 275 $ 259
Revenue per available room (REVPAR)(b) $ 241 $ 214
Other information for Las Vegas operations:
Table games win per unit per day(c) $ 6,419 $ 8,519
Table Win % 20.7 % 26.7 %
Slot machine win per unit per day(d) $ 271 $ 215
Average number of table games 231 233
Average number of slot machines 1,866 2,187
                                     

 

(a)

ADR is Average Daily Rate and is calculated by dividing total room revenue including the retail value of promotional allowances (less service charges, if any) by total rooms occupied including complimentary rooms.

(b)

REVPAR is Revenue per Available Room and is calculated by dividing total room revenue including the retail value of promotional allowances (less service charges, if any) by total rooms available.

(c)

Table games win per unit per day is shown before discounts and commissions, as applicable.

(d)

Slot machine win per unit per day is calculated as gross slot win minus progressive accruals and free play.



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