WYNN RESORTS

WYNN
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Wynn Resorts : Reports First Quarter 2020 Results

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05/07/2020 | 09:42 am

LAS VEGAS- Wynn Resorts, Limited (NASDAQ: WYNN) (the 'Company') today reported financial results for the quarter ended March 31, 2020.

Operating revenues were $953.7 million for the first quarter of 2020, a decrease of 42.3%, or $697.8 million, from $1.65 billion for the first quarter of 2019. Net loss attributable to Wynn Resorts, Limited was $402.0 million, or $3.77 per diluted share, for the first quarter of 2020, compared to net income attributable to Wynn Resorts, Limited of $104.9 million, or $0.98 per diluted share, in the first quarter of 2019. Adjusted Property EBITDA (1) was $(5.3) million for the first quarter of 2020, which 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. Adjusted Property EBITDA was $494.8 million for the first quarter of 2019.

'Our leadership team has been working side-by-side with our host communities, fellow industry leaders and world-class medical experts to identify and implement strategies to mitigate the impact of the virus on our team members, our guests and our broader communities,' said Matt Maddox, CEO of Wynn Resorts, Limited. 'In mid-March we led the industry by identifying the need for short-term closure in Las Vegas and Boston, thereby doing our part to 'flatten the curve.' Concurrently, we decided to invest in the health and safety of our approximately 30,000 team members globally by committing to pay their full wages and benefits through May. We continue to play a leadership role in the industry's re-emergence, most recently producing a detailed reopening plan on April 19, developed in consultation with medical experts from Georgetown and Johns Hopkins Universities, which we believe will be the gold standard for sanitization and customer safety.'

'At the same time, we have also been focused on our long-term business prospects, taking steps to bolster our already strong liquidity position by opportunistically issuing $600 million of unsecured notes and increasing our financial flexibility. While the current environment is clearly challenging, we are confident that travel and tourism will recover in both the U.S. and China, and our industry leading assets, fortress balance sheet and talented team members position the Company to thrive in the years ahead.'

Consolidated Results

Operating revenues were $953.7 million for the first quarter of 2020, a decrease of 42.3%, or $697.8 million, from $1.65 billion for the first quarter of 2019. Operating revenues decreased $467.1 million, $294.4 million, and $77.2 million at Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively, from the first quarter of 2019. The decrease in operating revenues at Wynn Palace, Wynn Macau, and our Las Vegas Operations was partially offset by operating revenues from Encore Boston Harbor of $140.9 million.

On a U.S. generally accepted accounting principles ('GAAP') basis, net loss attributable to Wynn Resorts, Limited was $402.0 million, or $3.77 per diluted share, for the first quarter of 2020, compared to net income attributable to Wynn Resorts, Limited of $104.9 million, or $0.98 per diluted share, in the first quarter of 2019. Adjusted net loss attributable to Wynn Resorts, Limited (2) was $377.9 million, or $3.54 per diluted share, for the first quarter of 2020, compared to adjusted net income attributable to Wynn Resorts, Limited of $172.6 million, or $1.61 per diluted share, for the first quarter of 2019.

Adjusted Property EBITDA was $(5.3) million for the first quarter of 2020, which 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. Adjusted Property EBITDA was $494.8 million for the first quarter of 2019. Adjusted Property EBITDA decreased $212.4 million, $144.7 million, and $130.4 million at Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively. Adjusted Property EBITDA from Encore Boston Harbor was $(12.6) million.

The Company also announced today that it has suspended its quarterly dividend program due to the financial impact of the coronavirus pandemic.

Property Results

Macau Operations

Our casino operations at Wynn Palace and Wynn Macau were closed for a 15-day period in February 2020 and resumed operations on a reduced basis on February 20, 2020. Our casinos' operations have since been fully restored; however, certain public 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.

Wynn Palace

Operating revenues from Wynn Palace were $259.5 million for the first quarter of 2020, a 64.3% decrease from $726.6 million for the first quarter of 2019. Adjusted Property EBITDA from Wynn Palace was $10.2 million for the first quarter of 2020, a 95.4% decrease from $222.6 million for the first quarter of 2019. VIP table games win as a percentage of turnover was 2.91%, within the property's expected range of 2.7% to 3.0% and below the 3.91% experienced in the first quarter of 2019. Table games win percentage in mass market operations was 27.5%, above the 24.2% experienced in the first quarter of 2019.

Wynn Macau

Operating revenues from Wynn Macau were $229.5 million for the first quarter of 2020, a 56.2% decrease from $523.9 million for the first quarter of 2019. Adjusted Property EBITDA was $19.2 million for the first quarter of 2020, a 88.3% decrease from $163.9 million for the first quarter of 2019. VIP Table games win as a percentage of turnover was 4.14%, above the 2.90% experienced in the first quarter of 2019. Table games win percentage in mass market operations was 20.4%, slightly above the 19.6% experienced in the first quarter of 2019.

Las Vegas Operations

Wynn Las Vegas ceased all operations and closed to the public on March 17, 2020, and will remain closed until authorized to re-open under U.S. and state government directives. Operating revenues from our Las Vegas Operations were $323.8 million for the first quarter of 2020, a 19.3% decrease from $401.0 million for the first quarter of 2019. Adjusted Property EBITDA from our Las Vegas Operations for the first quarter of 2020 was $(22.1) million, which includes the impact of $56.4 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. Adjusted Property EBITDA from our Las Vegas Operations was $108.3 million for the first quarter of 2019. Table games win percentage was 19.9%, below the property's expected range of 22% to 26% and below the 27.6% experienced in the first quarter of 2019.

Encore Boston Harbor

On June 23, 2019, the Company opened Encore Boston Harbor, an integrated resort in Everett, Massachusetts. Encore Boston Harbor ceased all operations and closed to the public on March 15, 2020, and will remain closed until authorized to re-open under U.S. and state government directives. Encore Boston Harbor's operating revenues were $140.9 million for the first quarter of 2020. Adjusted Property EBITDA from Encore Boston Harbor for the first quarter of 2020 was $(12.6) million, which includes the impact of $19.3 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. Table games win percentage was 20.8%, slightly above the property's expected range of 16% to 20%.

Balance Sheet

Our cash and cash equivalents and restricted cash as of March 31, 2020 totaled $2.89 billion.

Total current and long-term debt outstanding at March 31, 2020 was $11.37 billion, comprised of $5.15 billion of Macau related debt, $3.11 billion of Wynn Las Vegas debt, $2.50 billion of Wynn Resorts Finance debt, and $611.9 million of debt held by the retail joint venture which we consolidate.

As of March 31, 2020, the available borrowing capacity under the Wynn Macau Revolver was $74.2 million, and the available borrowing capacity under the Wynn Resorts Finance Revolver was $40.9 million, net of $18.1 million in outstanding letters of credit.

As previously disclosed, on April 14, 2020, Wynn Resorts Finance ('WRF') issued $600.0 million aggregate principal amount of 7.75% Senior Notes due 2025 (the '2025 Notes'). The 2025 Notes will mature on April 15, 2025 and bear interest at the rate of 7.75%. WRF plans to use the net proceeds from the offering for general corporate purposes and to pay related fees and expenses.

Conference Call and Other Information

The Company will hold a conference call to discuss its results, including the results of Wynn Resorts Finance, LLC and Wynn Las Vegas, LLC, on May 6, 2020 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 or before May 14, 2020, the Company will make Wynn Resorts Finance, LLC and Wynn Las Vegas, LLC financial information for the quarter ended March 31, 2020 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, the recent global pandemic of COVID-19, caused by a novel strain of the coronavirus, and the continued impact of its consequences, extensive regulation of our business, pending or future 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, 2019 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 (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.

(2) 'Adjusted net income (loss) attributable to Wynn Resorts, Limited' is net income (loss) attributable to Wynn Resorts, Limited before nonrecurring regulatory expense, pre-opening expenses, property charges and other, change in derivatives fair value, loss on extinguishment of debt, foreign currency remeasurement gain (loss), and the impact from the enactment of U.S. tax reform, 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.

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 (loss) 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.

WYNN RESORTS, LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS: See detailed results at:

https://wynnresortslimited.gcs-web.com/news-releases/news-release-details/wynn-resorts-limited-reports-first-quarter-2020-results?field_nir_news_date_value[min]=

(in thousands, except per share data)

Note: Encore Boston Harbor ceased all operations and closed to the public on March 15, 2020, and will remain closed until authorized to re-open under U.S. and state government directives.

(1)

Table games win is shown 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.

(2)

In Macau, table drop is the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage. In Las Vegas, table drop is the amount of cash and net markers issued that are deposited in a gaming table's drop box. At Encore Boston Harbor, table drop is the amount of cash and gross markers that are deposited in a gaming table's drop box.

(3)

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

(4)

ADR is average daily rate and is calculated by dividing total room revenues including complimentaries (less service charges, if any) by total rooms occupied.

(5)

REVPAR is revenue per available room and is calculated by dividing total room revenues including complimentaries (less service charges, if any) by total rooms available.

(6)

Refer to accompanying reconciliations of Operating Income (Loss) to Adjusted Property EBITDA and Net Income (Loss) Attributable to Wynn Resorts, Limited to Adjusted Property EBITDA.

(7)

Encore Boston Harbor opened on June 23, 2019.

Vincent Zahn

702-770-7555

investorrelations@wynnresorts.com

Source: Wynn Resorts, Limited

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