WYNN RESORTS, LIMITED The following discussion should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q and the consolidated financial statements appearing in our annual report on Form 10-K for the year endedDecember 31, 2019 . Unless the context otherwise requires, all references herein to the "Company," "we," "us," or "our," or similar terms, refer toWynn Resorts, Limited , aNevada corporation, and its consolidated subsidiaries. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled "Special Note Regarding Forward-Looking Statements."
Overview
We are a designer, developer, and operator of integrated resorts featuring luxury hotel rooms, high-end retail space, an array of dining and entertainment options, meeting and convention facilities, and gaming, all supported by an unparalleled focus on our guests, our people, and our community. Through our approximately 72% ownership of WML, we operate two integrated resorts in theMacau Special Administrative Region ofthe People's Republic of China ("Macau"),Wynn Palace and Wynn Macau (collectively, our "Macau Operations"). InLas Vegas, Nevada , we operate and, with the exception of certain retail space, own 100% ofWynn Las Vegas , which we also refer to as our Las Vegas Operations. OnJune 23, 2019 , we openedEncore Boston Harbor , an integrated resort inEverett, Massachusetts .
Recent Developments Related to COVID-19
As previously disclosed, inJanuary 2020 , an outbreak of a new strain of coronavirus, COVID-19 ("COVID-19"), was identified. Since then, COVID-19 has spread around the world, and steps have been taken by various countries, including those in which we operate, to advise citizens to avoid non-essential travel, to restrict inbound international travel, to implement closures of non-essential operations, and to implement quarantines and lockdowns to contain the spread of the virus. Currently, no fully effective treatments or vaccines have been developed, and there can be no assurance as to if or when an effective treatment or vaccine will be discovered.
Macau Operations
In response to the COVID-19 pandemic, theMacau government announced onFebruary 4, 2020 the closure of all casino operations inMacau , including those atWynn Palace and Wynn Macau, for a period of 15 days. OnFebruary 20, 2020 , our casino operations atWynn Palace and Wynn Macau reopened on a reduced basis and have since been fully restored; however, certain health safeguards, such as traveler quarantines, limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, and health declarations remain in effect at the present time. We are currently unable to determine when these measures will be lifted. Visitation toMacau has fallen meaningfully since the outbreak of COVID-19. Total visitation from mainlandChina toMacau decreased by 97.2% and 96.3% in February andMarch 2020 , respectively, compared to the same periods in 2019. The decrease in visitation is driven by the numerous measures put in place by the governments ofChina andMacau , including the Chinese government's suspension of its visa and group tour schemes that allow mainland Chinese residents to travel toMacau , traveler quarantine measures, travel and entry restrictions inMacau ,Hong Kong , and certain cities and regions in mainlandChina , the suspension of ferry services and other modes of transportation withMacau and regionally, and the ban on entry or enhanced quarantine requirements for any residents ofGreater China attempting to enterMacau . Persons who are not residents ofGreater China are barred from entry toMacau at this time. The Company is currently unable to determine when these restrictions will be modified or lifted.
Las Vegas Operations and
OnMarch 14, 2020 , theMassachusetts Gaming Commission temporarily suspended operations at all casinos inMassachusetts , includingEncore Boston Harbor . OnMarch 17, 2020 , theNevada government suspended all casino and non-essential operations, including all operations atWynn Las Vegas . Accordingly,Encore Boston Harbor andWynn Las Vegas ceased all operations and closed to the public onMarch 15, 2020 andMarch 17, 2020 , respectively. Both resorts will remain closed until authorized to re-open underU.S. and state government directives. During the first quarter of 2020, the Company committed to pay salary, tips and benefits continuation for allU.S. employees, inclusive of part-time employees, throughMay 15, 2020 . The Company has accrued$75.7 million of expense related to this commitment for the period fromApril 1 through 23
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The disruptions arising from the COVID-19 outbreak have had, during the three months endedMarch 31, 2020 , and will continue to have an adverse effect on the Company's results of operations.Wynn Las Vegas andEncore Boston Harbor are effectively generating no revenue during the periods of their respective closures, and our Macau Operations are generating extremely limited revenue. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, the impact on the Company's consolidated results of operations, cash flows and financial condition in 2020 and potentially thereafter will be material, but cannot be reasonably estimated at this time as it is unknown when the COVID-19 pandemic will end, when or if our properties will return to pre-pandemic demand and pricing, when or how quickly the current travel restrictions will be modified or cease to be necessary and the resulting impact on the Company's business.
Key Operating Measures
Certain key operating measures specific to the gaming industry are included in our discussion of our operational performance for the periods for which the Condensed Consolidated Statements of Operations are presented. These key operating measures are presented as supplemental disclosures because management and/or certain investors use these measures to better understand period-over-period fluctuations in our casino and hotel operating revenues. These key operating measures are defined below: •Table drop in mass market for our Macau Operations is the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage. •Table drop for our Las Vegas Operations is the amount of cash and net markers issued that are deposited in a gaming table's drop box. •Table drop forEncore Boston Harbor is the amount of cash and gross markers issued that are deposited in a gaming table's drop box. •Rolling chips are non-negotiable identifiable chips that are used to track turnover for purposes of calculating incentives within our Macau Operations' VIP program. •Turnover is the sum of all losing rolling chip wagers within ourMacau Operations' VIP program. •Table games win is the amount of table drop or turnover that is retained and recorded as casino revenues. Table games win is before discounts, commissions and the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis. Table games win does not include poker rake. •Slot machine win is the amount of handle (representing the total amount wagered) that is retained by us and is recorded as casino revenues. Slot machine win is after adjustment for progressive accruals and free play, but before discounts and the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis. •Poker rake is the portion of cash wagered by patrons in our poker rooms that is retained by the casino as a service fee, after adjustment for progressive accruals, but before the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis. Poker tables are not included in our measure of average number of table games. •Average daily rate ("ADR") is calculated by dividing total room revenues, including complimentaries (less service charges, if any), by total rooms occupied. •Revenue per available room ("REVPAR") is calculated by dividing total room revenues, including complimentaries (less service charges, if any), by total rooms available. •Occupancy is calculated by dividing total occupied rooms, including complimentary rooms, by the total rooms available.
Below is a discussion of the methodologies used to calculate win percentages at our resorts.
In our VIP operations inMacau , customers primarily purchase rolling chips from the casino cage and can only use them to make wagers. Winning wagers are paid in cash chips. The loss of the rolling chips in the VIP operations is recorded as turnover and provides a base for calculating VIP win percentage. It is customary inMacau to measure VIP play using this rolling chip method. We expect our win as a percentage of turnover from these operations to be within the range of 2.7% to 3.0%. 24
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In our mass market operations inMacau , customers may purchase cash chips at either the gaming tables or at the casino cage. The measurements from our VIP and mass market operations are not comparable as the measurement method used in our mass market operations tracks the initial purchase of chips at the table and at the casino cage, while the measurement method from our VIP operations tracks the sum of all losing wagers. Accordingly, the base measurement from the VIP operations is much larger than the base measurement from the mass market operations. As a result, the expected win percentage with the same amount of gaming win is lower in the VIP operations when compared to the mass market operations. InLas Vegas , customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers at the gaming tables or at the casino cage. The cash and markers, net of redemptions, used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 22% to 26%. AtEncore Boston Harbor , customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers only at the casino cage. The cash and gross markers used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 16% to 20%.
Results of Operations
Summary of first quarter 2020 results
The following table summarizes our financial results for the periods presented (in thousands, except per share data):
Three Months Ended March 31,
Increase/
2020 2019 (Decrease) Percent Change
Operating revenues $ 953,716 $ 1,651,546 $ (697,830) (42.3)
Net income (loss) attributable to Wynn
Resorts, Limited (402,037) 104,872 (506,909) (483.4)
Diluted net income (loss) per share (3.77) 0.98 (4.75) (484.7)
Adjusted Property EBITDA (1) (5,329) 494,777 (500,106) (101.1)
(1) See Item 1-"Financial Statements," Note 16, "Segment Information," for a
reconciliation of Adjusted Property EBITDA to net income (loss) attributable to
Wynn Resorts, Limited .
The decrease in operating revenues for the three months ended March 31, 2020 was
primarily driven by decreases of $467.1 million , $294.4 million , and $77.2
million from Wynn Palace , Wynn Macau, and our Las Vegas Operations,
respectively. These declines were precipitated by the adverse effects of the
COVID-19 outbreak during the three months ended March 31, 2020 , which include
the closure of our casino operations in Macau for a 15-day period and their
subsequent reopening on a reduced basis, and the closure of our Las Vegas
Operations on March 17, 2020 for the remainder of the first quarter of 2020.
Operating revenues from Encore Boston Harbor were $140.9 million . Encore Boston
Harbor closed to the public on March 15, 2020 for the remainder of the first
quarter of 2020.
The decrease in net income (loss) attributable to Wynn Resorts, Limited for the
three months ended March 31, 2020 was primarily related to the adverse effects
of the COVID-19 outbreak on the results of our operations for the three months
ended March 31, 2020 , and includes the impact of $75.7 million of expense
accrued during the quarter related to our commitment to pay salary, tips, and
benefits continuation for all of our U.S. employees for the period from April 1
through May 15, 2020 .
The decrease in Adjusted Property EBITDA for the three months ended March 31,
2020 was driven by decreases of $212.4 million , $144.7 million , and $130.4
million from Wynn Palace , Wynn Macau, and our Las Vegas Operations,
respectively. Adjusted Property EBITDA from Encore Boston Harbor was $(12.6)
million . Adjusted Property EBITDA for the first quarter of 2020 includes the
impact of $75.7 million of expense related to our commitment to pay salary,
tips, and benefits continuation for all of our U.S. employees for the period
from April 1 through May 15, 2020 .
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Financial results for the three months ended
Operating revenues
The following table presents our operating revenues (in thousands):
Three Months Ended March 31,
Increase/ Percent
2020 2019 (Decrease) Change
Operating revenues
Macau Operations:
Wynn Palace $ 259,513 $ 726,622 $ (467,109) (64.3)
Wynn Macau 229,489 523,891 (294,402) (56.2)
Total Macau Operations 489,002 1,250,513 (761,511) (60.9)
Las Vegas Operations 323,824 401,033 (77,209) (19.3)
Encore Boston Harbor (1) 140,890 - 140,890 -
$ 953,716 $ 1,651,546 $ (697,830) (42.3)
(1)
The following table presents our casino and non-casino operating revenues (in
thousands):
Three Months Ended March 31,
Increase/ Percent
2020 2019 (Decrease) Change
Operating revenues
Casino revenues $ 570,789 $ 1,185,101 $ (614,312) (51.8)
Non-casino revenues:
Rooms 152,681 191,270 (38,589) (20.2)
Food and beverage 149,414 173,219 (23,805) (13.7)
Entertainment, retail and other 80,832 101,956 (21,124) (20.7)
Total non-casino revenues 382,927 466,445 (83,518) (17.9)
$ 953,716 $ 1,651,546 $ (697,830) (42.3)
Casino revenues for the three months ended
Casino revenues
Casino revenues decreased primarily due to the adverse effects of the COVID-19 outbreak, including the closure of our casino operations inMacau for a 15-day period and their subsequent reopening on a reduced basis, and the closure ofEncore Boston Harbor onMarch 15, 2020 and our Las Vegas Operations onMarch 17, 2020 for the remainder of the first quarter of 2020. Casino revenues fromEncore Boston Harbor totaled$101.8 million . The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day): 26
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Three Months Ended March 31,
Increase/ Percent
2020 2019 (Decrease) Change
Macau Operations:
Wynn Palace:
Total casino revenues $ 207,576 $ 623,175 $ (415,599) (66.7)
VIP:
Average number of table games 89 111 (22) (19.8) VIP turnover$ 4,792,454 $ 12,627,262 $ (7,834,808) (62.0) VIP table games win$ 139,569 $ 493,184 $ (353,615) (71.7) VIP win as a % of turnover 2.91 % 3.91 % (1.0) Table games win per unit per day$ 20,257 $ 49,156 $ (28,899) (58.8) Mass market: Average number of table games 179 211 (32) (15.2) Table drop$ 475,223 $ 1,303,924 $ (828,701) (63.6) Table games win$ 130,714 $ 315,469 $ (184,755) (58.6) Table games win % 27.5 % 24.2 % 3.3 Table games win per unit per day$ 9,507 $ 16,646 $ (7,139) (42.9) Average number of slot machines 733 1,091 (358) (32.8) Slot machine handle$ 424,714 $ 975,048 $ (550,334) (56.4) Slot machine win$ 18,405 $ 51,401 $ (32,996) (64.2) Slot machine win per unit per day $ 326$ 524 $ (198) (37.8) Wynn Macau: Total casino revenues$ 190,128 $ 450,242 $ (260,114) (57.8)
VIP:
Average number of table games 81 113 (32) (28.3) VIP turnover$ 2,964,146 $ 10,194,031 $ (7,229,885) (70.9) VIP table games win$ 122,625 $ 295,298 $ (172,673) (58.5) VIP win as a % of turnover 4.14 % 2.90 % 1.24 Table games win per unit per day$ 19,702 $ 29,099 $ (9,397) (32.3) Mass market: Average number of table games 183 206 (23) (11.2) Table drop$ 578,235 $ 1,351,693 $ (773,458) (57.2) Table games win$ 117,941 $ 264,542 $ (146,601) (55.4) Table games win % 20.4 % 19.6 % 0.8 Table games win per unit per day$ 8,372 $ 14,283 $ (5,911) (41.4) Average number of slot machines 634 826 (192) (23.2) Slot machine handle$ 366,537 $ 794,367 $ (427,830) (53.9) Slot machine win$ 13,295 $ 37,894 $ (24,599) (64.9) Slot machine win per unit per day $ 272$ 510 $ (238) (46.6) Poker rake$ 2,083 $ 5,752 $ (3,669) (63.8) 27
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Three Months Ended March 31,
Increase/ Percent
2020 2019 (Decrease) Change
Las Vegas Operations:
Total casino revenues $ 71,295 $ 111,684 $ (40,389) (36.2)
Average number of table games 237 238 (1) (0.4)
Table drop $ 414,933 $ 404,073 $ 10,860 2.7
Table games win $ 82,666 $ 111,370 $ (28,704) (25.8)
Table games win % 19.9 % 27.6 % (7.7)
Table games win per unit per day $ 4,530 $ 5,198 $ (668) (12.9)
Average number of slot machines 1,766 1,807 (41) (2.3)
Slot machine handle $ 664,834 $ 789,310 $ (124,476) (15.8)
Slot machine win $ 46,674 $ 54,544 $ (7,870) (14.4)
Slot machine win per unit per day $ 343 $ 335 $ 8 2.3
Poker rake $ 2,175 $ 2,460 $ (285) (11.6)
Encore Boston Harbor (1):
Total casino revenues $ 101,790 $ - $ 101,790 -
Average number of table games 160 - 160 -
Table drop $ 275,631 $ - $ 275,631 -
Table games win $ 57,286 $ - $ 57,286 -
Table games win % 20.8 % - % 20.8
Table games win per unit per day $ 4,826 $ - $ 4,826 -
Average number of slot machines 2,837 - 2,837 -
Slot machine handle $ 767,739 $ - $ 767,739 -
Slot machine win $ 59,448 $ - $ 59,448 -
Slot machine win per unit per day $ 283 $ - $ 283 -
Poker rake $ 5,105 $ - $ 5,105 -
(1)
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Non-casino revenues
The table below sets forth our room revenues and associated key operating
measures:
Three Months Ended March 31,
Increase/
2020 2019 (Decrease) Percent ChangeMacau Operations:
Wynn Palace : Total room revenues (dollars in thousands)$ 19,710 $ 43,314 $ (23,604) (54.5) Occupancy 41.6 % 97.2 % (55.6) ADR $ 294$ 271 $ 23 8.4 REVPAR $ 122$ 264 $ (142) (53.8) Wynn Macau: Total room revenues (dollars in thousands)$ 15,911 $ 28,867 $ (12,956) (44.9) Occupancy 49.2 % 99.3 % (50.1) ADR $ 321$ 290 $ 31 10.9 REVPAR $ 158$ 288 $ (130) (45.1) Las Vegas Operations: Total room revenues (dollars in thousands)$ 106,105 $ 119,089 $ (12,984) (10.9) Occupancy 80.1 % 82.6 % (2.5) ADR $ 374$ 338 $ 36 10.7 REVPAR $ 299$ 279 $ 20 7.2Encore Boston Harbor (1): Total room revenues (dollars in thousands)$ 10,955 $ -$ 10,955 - Occupancy 75.8 % - % 75.8 ADR $ 292 $ -$ 292 - REVPAR $ 222 $ -$ 222 -
(1)
Room revenues decreased$38.6 million , primarily due to lower occupancy atWynn Palace and Wynn Macau and the closure of our Las Vegas Operations resulting from the adverse effects of the COVID-19 outbreak. Room revenues fromEncore Boston Harbor were$11.0 million . Food and beverage revenues decreased$23.8 million , primarily due to decreased covers at our restaurants at our Macau Operations and closure of ourLas Vegas Operations resulting from the adverse effects of the COVID-19 outbreak. Food and beverage revenues fromEncore Boston Harbor were$20.6 million . Entertainment, retail and other revenues decreased$21.1 million , primarily due to a decrease in visitation to our Macau Operations and closure of ourLas Vegas Operations resulting from the adverse effects of the COVID-19 outbreak. Entertainment, retail and other revenues fromEncore Boston Harbor were$7.5 million . 29
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Operating expenses
The table below presents operating expenses (in thousands):
Three Months Ended March 31,
Increase/
2020 2019 (Decrease) Percent Change
Operating expenses:
Casino $ 442,690 $ 750,071 $ (307,381) (41.0)
Rooms 73,480 63,706 9,774 15.3
Food and beverage 175,910 148,761 27,149 18.3
Entertainment, retail and other 45,580 44,044 1,536 3.5
General and administrative 234,328 217,322 17,006 7.8
Provision for credit losses 20,613 5,422 15,191 280.2
Pre-opening 2,551 27,713 (25,162) (90.8)
Depreciation and amortization 178,746 136,557 42,189 30.9
Property charges and other 27,229 2,774 24,455 881.6
Total operating expenses $ 1,201,127 $ 1,396,370 $ (195,243) (14.0)
Total operating expenses decreased $195.2 million compared to the first quarter
of 2019, primarily due to decreased casino and pre-opening expenses, partially
offset by $75.7 million of expense accrued during the quarter related to our
commitment to pay salary, tips, and benefits continuation for all of our U.S.
employees for the period from April 1 through May 15, 2020 , and increased
depreciation and amortization expense of $36.9 million following the opening of
Encore Boston Harbor in June 2019 .
Casino expenses decreased primarily due to decreases of $235.6 million and
$147.4 million at Wynn Palace and Wynn Macau, respectively, commensurate with
the decreases in casino revenues at each property. These decreases were
partially offset by $67.1 million from Encore Boston Harbor and an increase of
$8.6 million from our Las Vegas Operations, inclusive of $7.9 million and
$12.8 million , respectively, of expense accrued during the quarter related to
our commitment to pay salary, tips, and benefits continuation for all of our
U.S. employees for the period from April 1 through May 15, 2020 .
Room expenses increased primarily due to $9.6 million from Encore Boston Harbor
and an increase of $3.4 million at our Las Vegas Operations, inclusive of
$1.5 million and $8.3 million , respectively, of expense accrued during the
quarter related to our commitment to pay salary, tips, and benefits continuation
for all of our U.S. employees for the period from April 1 through May 15, 2020 .
The increase was partially offset by a decrease of $2.8 million at Wynn Palace ,
commensurate with the decrease in room revenues.
Food and beverage expenses increased primarily due to $26.2 million from Encore
Boston Harbor and an increase of $12.9 million at our Las Vegas Operations,
inclusive of $4.8 million and $20.8 million , respectively, of expense accrued
during the quarter related to our commitment to pay salary, tips, and benefits
continuation for all of our U.S. employees for the period from April 1 through
May 15, 2020 . The increase was partially offset by decreases of $9.1 million and
$2.9 million at Wynn Palace and Wynn Macau, respectively, primarily due to
decreased costs of sales associated with a decrease in covers.
Entertainment, retail and other expenses increased primarily due to $5.0 million
from Encore Boston Harbor and an increase of $3.2 million at our Las Vegas
Operations, inclusive of $0.7 million and $4.1 million , respectively, of expense
accrued during the quarter related to our commitment to pay salary, tips, and
benefits continuation for all of our U.S. employees for the period from April 1
through May 15, 2020 . The increase was partially offset by decreases of $4.5
million and $2.3 million at Wynn Palace and Wynn Macau, respectively, primarily
due to the closure of certain owned retail outlets at our Macau Operations and
their conversion to leased outlets during 2019.
General and administrative expenses increased primarily due to $45.6 million
from Encore Boston Harbor and an increase of $13.1 million at our Las Vegas
Operations, inclusive of $4.4 million and $10.2 million , respectively, of
expense accrued during the quarter related to our commitment to pay salary,
tips, and benefits continuation for all of our U.S. employees for the period
from April 1 through May 15, 2020 . The increase was partially offset by
decreases of $4.3 million and $0.6 million at Wynn Palace and Wynn Macau,
respectively. In addition, corporate and other general and administrative
expenses decreased $38.5 million , primarily due to a fine of $35 million
assessed by the Massachusetts Gaming Commission incurred during the three months
ended March 31, 2019 .
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Provision for credit losses increased primarily due to increases of$11.7 million ,$1.8 million and$0.9 million at our Las Vegas Operations,Wynn Palace , and Wynn Macau, respectively. The increases were primarily due to the impact of historical collection patterns and current collection trends in light of the COVID-19 outbreak, as well as the specific review of customer accounts, on our estimated credit loss for the respective periods. For the three months endedMarch 31, 2020 , pre-opening expenses totaled$2.6 million , which primarily related to restaurant remodels at ourLas Vegas Operations. For the three months endedMarch 31, 2019 , pre-opening expenses totaled$27.7 million , which primarily related to the development ofEncore Boston Harbor . Depreciation and amortization increased primarily due to additional depreciation expense of$36.9 million associated with the opening ofEncore Boston Harbor inJune 2019 and an increase of$2.7 million at our Las Vegas Operations associated with the opening of the meeting and convention expansion inFebruary 2020 . Our property charges and other expenses for the quarter endedMarch 31, 2020 consisted primarily of asset abandonments and retirements of$22.2 million and$1.4 million atWynn Palace and Wynn Macau, respectively.
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars
in thousands):
Three Months Ended March 31,
Increase/ Percent
2020 2019 (Decrease) Change
Interest expense
Interest cost, including amortization of debt
issuance costs and original issue discount and
premium $ 130,079 $ 115,898 $ 14,181 12.2
Capitalized interest (1,252) (22,718) (21,466) (94.5)
$ 128,827 $ 93,180 $ 35,647 38.3
Weighted average total debt balance $ 10,850,355 $ 9,214,600
Weighted average interest rate 4.80 % 5.02 %
Interest costs increased due to an increase in the weighted average debt
balance, partially offset by the decrease in the weighted average interest rate.
Capitalized interest decreased due to the completion of Encore Boston Harbor
construction activities on June 23, 2019 .
Other non-operating income and expenses
We incurred a foreign currency remeasurement gain of$10.3 million and loss of$6.4 million for the three months endedMarch 31, 2020 and 2019, respectively. The impact of the exchange rate fluctuation of theMacau pataca, in relation to theU.S. dollar, on the remeasurements ofU.S. dollar denominated debt and other obligations from ourMacau -related entities drove the variability between periods.
We recorded a loss of
Income taxes
We recorded an income tax expense of
Net income (loss) attributable to noncontrolling interests
Net loss attributable to noncontrolling interests was$48.2 million for the three months endedMarch 31, 2020 , compared to income of$54.9 million for the same period of 2019. These amounts are primarily related to the noncontrolling interests' share of net income (loss) from WML. 31
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Table of Contents Adjusted Property EBITDA We use Adjusted Property EBITDA to manage the operating results of our segments. Adjusted Property EBITDA is net income (loss) before interest, income taxes, depreciation and amortization, 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, change in derivatives fair value, loss on extinguishment of debt, 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. We also present 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 us, have historically excluded from their EBITDA calculations preopening 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 our 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. We have 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, our calculation of Adjusted Property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited. The following table summarizes Adjusted Property EBITDA (in thousands) forWynn Palace , Wynn Macau, Las Vegas Operations, andEncore Boston Harbor as reviewed by management and summarized in Item 1-"Notes to Condensed Consolidated Financial Statements," Note 16, "Segment Information." That footnote also presents a reconciliation of Adjusted Property EBITDA to net income (loss) attributable toWynn Resorts, Limited . Three Months Ended March 31, Increase/ 2020 2019 (Decrease) Percent Change Wynn Palace$ 10,176 $ 222,586 $ (212,410) (95.4) Wynn Macau 19,208 163,889 (144,681) (88.3) Las Vegas Operations (22,077) 108,302 (130,379) (120.4) Encore Boston Harbor (1) (12,636) - (12,636) -
(1)
Adjusted Property EBITDA decreased$212.4 million and$144.7 million atWynn Palace and Wynn Macau, respectively. The decreases were primarily attributable to a decline in operating revenues precipitated by the adverse effects of the COVID-19 outbreak during the three months endedMarch 31, 2020 , which include the closure of our casino operations inMacau for a 15-day period and their subsequent reopening on a reduced basis. Adjusted Property EBITDA decreased$130.4 million at our Las Vegas Operations, primarily due to the adverse effects of the COVID-19 outbreak during the three months endedMarch 31, 2020 , including the closure of our Las Vegas Operations onMarch 17, 2020 for the remainder of the quarter. In addition, Adjusted Property EBITDA for our Las Vegas Operations includes the impact of$56.4 million of expense related to our commitment to pay salary, tips, and benefits continuation for all of ourU.S. employees for the period fromApril 1 through May 15, 2020 . Adjusted Property EBITDA fromEncore Boston Harbor for the three months endedMarch 31, 2020 was$(12.6) million , which includes the impact of$19.3 million of expense related to our commitment to pay salary, tips, and benefits continuation for all of ourU.S. employees for the period fromApril 1 through May 15, 2020 .Encore Boston Harbor closed to the public onMarch 15, 2020 for the remainder of the first quarter of 2020. Refer to the discussions above regarding the specific details of our results of operations. 32
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