WYNN Wynn Resorts Ltd

Wynn Resorts, Limited (Nasdaq: WYNN) today reported financial results for the fourth quarter and year ended December 31, 2014.

Net revenues for the fourth quarter of 2014 were $1,138.0 million, compared to $1,519.9 million in the fourth quarter of 2013. The decline was the result of a 32.0% net revenue decrease from our Macau Operations and a 5.8% decrease in net revenues from our Las Vegas Operations. Adjusted property EBITDA (1) was $352.5 million for the fourth quarter of 2014, a 29.3% decrease from $498.4 million in the fourth quarter of 2013.

For the full year, net revenues were $5,433.7 million in 2014, down 3.3% from $5,620.9 million in 2013. Adjusted property EBITDA declined 2.1% to $1,773.3 million in 2014, with record annual performance at Wynn Las Vegas offset by lower adjusted property EBITDA at Wynn Macau. For 2014, adjusted property EBITDA increased 5.9% to $515.2 million at Wynn Las Vegas and fell 5.0% to $1,258.1 million at Wynn Macau.

On a US GAAP basis, net income attributable to Wynn Resorts for the fourth quarter of 2014 was $109.3 million, or $1.07 per diluted share, compared to net income attributable to Wynn Resorts of $213.9 million, or $2.10 per diluted share, in the fourth quarter of 2013.

Adjusted net income attributable to Wynn Resorts, Limited (2) in the fourth quarter of 2014 was $122.4 million, or $1.20 per diluted share (adjusted EPS), compared to an adjusted net income attributable to Wynn Resorts of $231.2 million, or $2.27 per diluted share, in the fourth quarter of 2013.

Wynn Resorts also announced today that the Company has approved a cash dividend for the quarter of $1.50 per common share. This dividend will be payable on February 23, 2015, to stockholders of record on February 13, 2015.

Macau Operations

In the fourth quarter of 2014, net revenues were $761.2 million, a 32.0% decrease from the $1,119.9 million generated in the fourth quarter of 2013. Adjusted property EBITDA in the fourth quarter of 2014 was $241.2 million, down 35.5% from $374.2 million in the fourth 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 $20.7 billion for the fourth quarter of 2014, a 39.9% decrease from $34.4 billion in the fourth quarter of 2013. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.80%, within the expected range of 2.7% to 3.0% and below the 2.92% experienced in the fourth quarter of 2013. The average number of VIP tables decreased to 244 units in the fourth quarter of 2014 from 273 units in the prior year's fourth quarter due in large part to a renovation on a portion of the casino floor. Completion of this renovation is expected before Chinese New Year.

Table games win in the mass market segment decreased by 15.0% to $249.0 million in the fourth quarter of 2014. Mass market table games win per unit per day decreased by 7.7% to $13,434 from $14,552 in the fourth quarter of 2013. Drop in the mass market segment was $634.4 million in the fourth quarter of 2014, down 8.3% from the 2013 fourth quarter, while the segment’s win percentage of 39.3% compares to 42.3% in last year’s fourth quarter. The win percentage in the fourth quarter of 2014 was the lowest hold rate since the third quarter of 2013. 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. Because of the large number of chip purchases occurring at the casino cage, we believe the relevant indicator of volumes in the mass market segment should be actual table games win rather than win percentage.

Slot machine handle for the fourth quarter of 2014 declined 19.5% from the 2013 period to $1.1 billion, and slot win decreased by 20.9%. Win per unit per day was 3.8% higher at $912, compared to $879 in the fourth quarter of 2013, due to a reduction in the number of units on the casino floor.

For the fourth quarter of 2014, we achieved an average daily rate (ADR) of $332, 5.4% above the $315 reported in the 2013 fourth quarter. Occupancy at Wynn Macau of 98.6% compares to 96.7% in the prior-year period, and revenue per available room (REVPAR) rose 7.9% to $328 in the 2014 quarter from $304 in last year’s fourth quarter. Non-casino revenues, before promotional allowances, decreased 11.6% during the quarter to $95.9 million.

Las Vegas Operations

For the quarter ended December 31, 2014, net revenues were $376.8 million, a 5.8% decrease from $400.0 million in the fourth quarter of 2013. Adjusted property EBITDA declined 10.4% to $111.2 million, due in part to table games hold above the property's expected range in the fourth quarter of 2013.

Net casino revenues in the fourth quarter of 2014 were $171.0 million, a 15.5% decrease from the fourth quarter of 2013. Table games drop of $639.0 million was down 11.8% from $724.4 million in the 2013 quarter. Table games win percentage was 24.0%, within the property’s expected range of 21% to 24% and below the 28.8% reported in the 2013 quarter. Slot machine handle of $769.8 million was 5.2% above the $731.9 million in the comparable period of 2013, and net slot win was up 6.2%.

Room revenues were up 6.3% to $95.5 million during the quarter, versus $89.8 million in the fourth quarter of 2013. ADR increased 5.9% to $271 from $256, and occupancy improved to 82.1% from 80.8% in the fourth quarter of 2013. REVPAR was $222 in the 2014 fourth quarter, 7.2% above the $207 reported in the prior-year quarter.

Food and beverage revenues in the fourth quarter of 2014 were $103.3 million, up 5.3% from the 2013 fourth quarter. Entertainment, retail and other revenues improved 0.5% from last year’s quarter to $57.4 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 in the Cotai area of 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 approximately $4.1 billion. We expect to open our resort on Cotai in the first half of 2016.

During the fourth quarter of 2014, we invested approximately $428.7 million in our Cotai project, taking the total investment to date to $1.8 billion.

Wynn Project in Massachusetts

On January 2, 2015, we purchased 33 acres of land in Everett, Massachusetts, along the Mystic River. On this land, we intend to develop and construct an integrated resort containing a hotel, casino, spa, meeting and convention space and waterfront boardwalk featuring premium retail offerings and restaurants.

Balance Sheet and Other

Our total cash and investment securities balance at December 31, 2014 was $2.4 billion. Total debt outstanding at the end of the quarter was $7.3 billion, including $3.0 billion of Wynn Las Vegas debt, $2.4 billion of Wynn Macau debt and $1.9 billion at the parent company.

Conference Call Information

The Company will hold a conference call to discuss its results on February 3, 2015 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.

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, our dependence on existing management, results of regulatory or enforcement actions and probity investigations, pending or future legal proceedings, uncertainties over the development and success of new gaming and resort properties, adverse tourism trends, general global macroeconomic conditions, changes in gaming laws or regulations, volatility and weakness in world-wide credit and financial markets, and our substantial indebtedness and leverage. 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, 2013 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 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, net of taxes in respective jurisdictions. Adjusted net income attributable to Wynn Resorts, Limited and adjusted net income attributable to Wynn Resorts, Limited per diluted share (“adjusted EPS”) are presented as supplemental disclosures 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 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 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 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

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

(unaudited)

  Three Months Ended December 31, Twelve Months Ended December 31, 2014       2013 2014       2013 Operating revenues: Casino $ 884,664 $ 1,262,391 $ 4,274,221 $ 4,490,637 Rooms 129,197 119,299 542,762 492,230 Food and beverage 128,025 125,198 604,701 586,672 Entertainment, retail and other 94,770   108,967   401,181   418,705   Gross revenues 1,236,656 1,615,855 5,822,865 5,988,244 Less: promotional allowances (98,681 ) (95,958 ) (389,204 ) (367,308 ) Net revenues 1,137,975   1,519,897   5,433,661   5,620,936   Operating costs and expenses: Casino 554,583 783,982 2,667,013 2,846,489 Rooms 36,099 32,483 148,338 133,503 Food and beverage 70,353 70,115 337,206 323,573 Entertainment, retail and other 38,729 46,497 163,754 175,257 General and administrative 125,833 116,472 492,464 448,788 Provision for doubtful accounts 4,649 4,773 3,906 11,877 Pre-opening costs 15,354 1,577 30,146 3,169 Depreciation and amortization 80,082 91,990 314,119 371,051 Property charges and other (3,237 ) 3,567   10,437   17,138   Total operating costs and expenses 922,445   1,151,456   4,167,383   4,330,845   Operating income 215,530   368,441   1,266,278   1,290,091   Other income (expense): Interest income 4,369 4,118 20,441 15,713 Interest expense, net of capitalized interest (78,993 ) (76,332 ) (315,062 ) (299,022 ) (Decrease) increase in swap fair value (2,942 ) 1,104 (4,393 ) 14,235 Loss on extinguishment of debt (2,213 ) (13,857 ) (9,569 ) (40,435 ) Equity in income from unconsolidated affiliates 176 206 1,349 1,085 Other 223   471   (182 ) 4,856   Other income (expense), net (79,380 ) (84,290 ) (307,416 ) (303,568 ) Income before income taxes 136,150 284,151 958,862 986,523 Benefit for income taxes 12,043   6,335   3,782   17,634   Net income 148,193 290,486 962,644 1,004,157 Less: net income attributable to noncontrolling interests (38,847 ) (76,602 ) (231,090 ) (275,505 ) Net income attributable to Wynn Resorts, Limited $ 109,346   $ 213,884   $ 731,554   $ 728,652   Basic and diluted income per common share: Net income attributable to Wynn Resorts, Limited: Basic $ 1.08 $ 2.12 $ 7.25 $ 7.25 Diluted $ 1.07 $ 2.10 $ 7.18 $ 7.17 Weighted average common shares outstanding: Basic 101,010 100,748 100,927 100,540 Diluted 101,935 101,807 101,931 101,641 Dividends declared per common share $ 2.50 $ 4.00 $ 6.25 $ 7.00                

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 December 31, Twelve Months Ended December 31, 2014       2013 2014       2013 Net income attributable to Wynn Resorts, Limited $ 109,346 $ 213,884 $ 731,554 $ 728,652 Pre-opening costs, net 13,921 1,577 28,713 3,169 Loss on extinguishment of debt, net 1,826 13,857 7,894 40,435 Decrease (increase) in swap fair value, net 2,942 (1,104 ) 4,393 (14,235 ) Property charges and other, net (2,488 ) 3,567 11,297 17,138 Adjustment for noncontrolling interest (3,102 ) (547 ) (11,576 ) 1,680  

Adjusted net income attributable to Wynn Resorts, Limited(2)

$ 122,445   $ 231,234   $ 772,275   $ 776,839   Adjusted net income attributable to Wynn Resorts, Limited per diluted share $ 1.20   $ 2.27   $ 7.58   $ 7.64            

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 December 31, 2014 Macau

Operations

      Las Vegas

Operations

      Corporate

and Other

      Total Operating income $ 157,608 $ 51,619 $ 6,303 $ 215,530 Pre-opening costs 7,164 4,250 3,940 15,354 Depreciation and amortization 32,814 45,530 1,738 80,082 Property charges and other 1,042 (4,279 ) — (3,237 ) Management and royalty fees 29,576 5,660 (35,236 ) — Corporate expenses and other 6,936 6,862 14,315 28,113 Stock-based compensation 6,084 1,569 8,787 16,440 Equity in income from unconsolidated affiliates —   23   153   176   Adjusted Property EBITDA(1) $ 241,224   $ 111,234   $ —   $ 352,458       Three Months Ended December 31, 2013 Macau

Operations

Las Vegas

Operations

Corporate

and Other

Total Operating income $ 285,555 $ 47,981 $ 34,905 $ 368,441 Pre-opening costs 1,577 — — 1,577 Depreciation and amortization 30,762 59,694 1,534 91,990 Property charges and other 1,500 2,067 — 3,567 Management and royalty fees 44,445 6,001 (50,446 ) — Corporate expenses and other 9,259 8,653 10,208 28,120 Stock-based compensation 1,116 (232 ) 3,582 4,466 Equity in (loss) income from unconsolidated affiliates —   (11 ) 217   206   Adjusted Property EBITDA(1) $ 374,214   $ 124,153   $ —   $ 498,367       Three Months Ended December 31, 2014 2013 Adjusted Property EBITDA(1) $ 352,458 $ 498,367 Pre-opening costs (15,354 ) (1,577 ) Depreciation and amortization (80,082 ) (91,990 ) Property charges and other 3,237 (3,567 ) Corporate expenses and other (28,113 ) (28,120 ) Stock-based compensation (16,440 ) (4,466 ) Interest income 4,369 4,118 Interest expense, net of capitalized interest (78,993 ) (76,332 ) (Decrease) increase in swap fair value (2,942 ) 1,104 Loss on extinguishment of debt (2,213 ) (13,857 ) Other 223 471 Benefit for income taxes 12,043   6,335   Net income 148,193 290,486 Less: net income attributable to noncontrolling interests (38,847 ) (76,602 ) Net income attributable to Wynn Resorts, Limited $ 109,346   $ 213,884            

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)

  Twelve Months Ended December 31, 2014 Macau

Operations

      Las Vegas

Operations

      Corporate

and Other

      Total Operating income $ 895,176 $ 270,489 $ 100,613 $ 1,266,278 Pre-opening costs 21,956 4,250 3,940 30,146 Depreciation and amortization 128,428 179,394 6,297 314,119 Property charges and other 15,352 (4,915 ) — 10,437 Management and royalty fees 148,039 24,580 (172,619 ) — Corporate expenses and other 36,207 36,621 38,967 111,795 Stock-based compensation 12,924 4,342 21,888 39,154 Equity in income from unconsolidated affiliates —   435   914   1,349   Adjusted Property EBITDA(1) $ 1,258,082   $ 515,196   $ —   $ 1,773,278       Twelve Months Ended December 31, 2013 Macau

Operations

Las Vegas

Operations

Corporate

and Other

Total Operating income $ 1,002,463 $ 167,050 $ 120,578 $ 1,290,091 Pre-opening costs 3,169 — — 3,169 Depreciation and amortization 119,597 245,119 6,335 371,051 Property charges and other 5,003 12,162 (27 ) 17,138 Management and royalty fees 160,923 23,721 (184,644 ) — Corporate expenses and other 28,593 32,026 28,110 88,729 Stock-based compensation 4,371 6,397 28,770 39,538 Equity in income from unconsolidated affiliates —   207   878   1,085   Adjusted Property EBITDA(1) $ 1,324,119   $ 486,682   $ —   $ 1,810,801       Twelve Months Ended December 31, 2014 2013 Adjusted Property EBITDA(1) $ 1,773,278 $ 1,810,801 Pre-opening costs (30,146 ) (3,169 ) Depreciation and amortization (314,119 ) (371,051 ) Property charges and other (10,437 ) (17,138 ) Corporate expenses and other (111,795 ) (88,729 ) Stock-based compensation (39,154 ) (39,538 ) Interest income 20,441 15,713 Interest expense, net of capitalized interest (315,062 ) (299,022 ) (Decrease) increase in swap fair value (4,393 ) 14,235 Loss on extinguishment of debt (9,569 ) (40,435 ) Other (182 ) 4,856 Benefit for income taxes 3,782   17,634   Net income 962,644 1,004,157 Less: net income attributable to noncontrolling interests (231,090 ) (275,505 ) Net income attributable to Wynn Resorts, Limited $ 731,554   $ 728,652                  

WYNN RESORTS, LIMITED AND SUBSIDIARIES

SUPPLEMENTAL DATA SCHEDULE

  Three Months Ended December 31, Twelve Months Ended December 31, 2014       2013 2014       2013 Room statistics for Macau operations: Occupancy 98.6 % 96.7 % 98.4 % 95.5 %

Average daily rate (ADR)(a)

$ 332 $ 315 $ 333 $ 313 Revenue per available room (REVPAR)(b) $ 328 $ 304 $ 327 $ 299 Other information for Macau operations: Table games win per unit per day(c) $ 20,209 $ 28,663 $ 25,213 $ 26,188 Slot machine win per unit per day(d) $ 912 $ 879 $ 1,068 $ 777 Average number of table games 445 492 461 491 Average number of slot machines 666 874 679 866 Room statistics for Las Vegas operations: Occupancy 82.1 % 80.8 % 86.9 % 84.6 % Average daily rate (ADR)(a) $ 271 $ 256 $ 274 $ 258 Revenue per available room (REVPAR)(b) $ 222 $ 207 $ 238 $ 218 Other information for Las Vegas operations: Table games win per unit per day(c) $ 7,226 $ 9,849 $ 7,354 $ 7,729 Table games win % 24.0 % 28.8 % 24.4 % 25.1 % Slot machine win per unit per day(d) $ 276 $ 258 $ 275 $ 239 Average number of table games 231 230 232 233 Average number of slot machines 1,864 1,877 1,858 2,030     (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.  

Wynn Resorts, LimitedMark StrawnInvestor Relations702-770-7555investorrelations@wynnresorts.com