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Wynn Resorts, Limited Reports Fourth Quarter and Year End 2017 Results

January 25, 2018 Financial No Comments Email Email

Wynn Resorts, Limited (NASDAQ: WYNN) today reported financial results for the fourth quarter and year ended December 31, 2017.http://www.itcmchina.com/

Net revenues were $1.69 billion for the fourth quarter of 2017, an increase of 29.9%, or $388.7 million, from $1.30 billion for the same period of 2016. The increase in net revenues was the result of increases of $274.7 million from Wynn Palace and $120.2 million from Wynn Macau, partially offset by a decrease of $6.2 million from our Las Vegas Operations.

On a U.S. generally accepted accounting principles (“GAAP”) basis, net income attributable to Wynn Resorts, Limited was $491.7 million, or $4.77 per diluted share, for the fourth quarter of 2017, compared to $113.8 million, or $1.12 per diluted share, for the same period of 2016. The increase in net income attributable to Wynn Resorts, Limited was primarily the result of the income tax benefit from U.S. tax reform and increases in operating income from Wynn Palace and Wynn Macau, partially offset by a smaller decrease in the Redemption Note fair value. Adjusted net income attributable to Wynn Resorts, Limited (1) was $144.3 million, or $1.40 per diluted share, for the fourth quarter of 2017, compared to $50.8 million, or $0.50 per diluted share, for the same period of 2016.

During the fourth quarter of 2017, legislation commonly known as the U.S. Tax Cuts and Jobs Act (“U.S. tax reform”) was enacted. As a result, fourth quarter 2017 results reflect an estimated net tax benefit of $339.9 million in accordance with GAAP as a result of revaluing the Company’s U.S. deferred tax assets and liabilities. This estimated net benefit is based on the Company’s initial analysis of the U.S. tax reform and may be adjusted in future periods as the Company collects additional information and evaluates any regulatory guidance.

Adjusted Property EBITDA (2) was $480.2 million for the fourth quarter of 2017, an increase of 40.9%, or $139.3 million, from $340.9 million for the same period of 2016, primarily the result of increases of $112.6 million from Wynn Palace and $37.2 million from Wynn Macau, partially offset by a decrease of $10.5 million from our Las Vegas Operations.

For the full year, net revenues were $6.31 billion in 2017, an increase of 41.2%, or $1.84 billion, from $4.47 billion for the same period of 2016. The increase in net revenues was the result of increases of $1.56 billion, $221.7 million and $62.5 million from Wynn Palace, which opened in August 2016, Wynn Macau and our Las Vegas Operations, respectively.

On a GAAP basis, net income attributable to Wynn Resorts, Limited was $747.2 million, or $7.28 per diluted share, in 2017, compared to $242.0 million, or $2.38 per diluted share, for the same period of 2016. The increase in net income attributable to Wynn Resorts, Limited was primarily the result of the income tax benefit from U.S. tax reform and increases in operating income from Wynn Palace, Wynn Macau and our Las Vegas Operations, partially offset by increases in the Redemption Note fair value and interest expense as the Company is no longer capitalizing interest on Wynn Palace. Adjusted net income attributable to Wynn Resorts, Limited (1) was $560.5 million, or $5.46 per diluted share, in 2017, compared to $345.9 million, or $3.40 per diluted share, for the same period of 2016.

Adjusted Property EBITDA (2) was $1.81 billion in 2017, an increase of 43.8%, or $551.4 million, from $1.26 billion for the same period of 2016. The increase in Adjusted Property EBITDA was the result of increases of $424.5 million, $79.2 million, $47.7 million from Wynn Palace, Wynn Macau and our Las Vegas Operations, respectively.

Wynn Resorts, Limited also announced today that the Company has approved a cash dividend of $0.50 per share, payable on February 27, 2018 to stockholders of record as of February 15, 2018.

Macau Operations

Wynn Macau

Net revenues from Wynn Macau were $618.6 million for the fourth quarter of 2017, a 24.1% increase from $498.4 million for the same period of 2016. Adjusted Property EBITDA from Wynn Macau was $186.0 million for the fourth quarter of 2017, a 25.0% increase from $148.9 million for the same period of 2016.

Casino revenues from Wynn Macau were $582.9 million for the fourth quarter of 2017, a 25.3% increase from $465.3 million for the same period of 2016. Table games turnover in VIP operations was $15.62 billion, a 44.7% increase from $10.80 billion for the fourth quarter of 2016. VIP table games win as a percentage of turnover (calculated before commissions) was 2.89%, within the expected range of 2.7% to 3.0% and below the 3.08% we experienced in the fourth quarter of 2016. Table drop in mass market operations was $1.25 billion, a 14.1% increase from $1.10 billion for the fourth quarter of 2016. Table games win in mass market operations was $230.1 million, an 18.6% increase from $193.9 million for the fourth quarter of 2016. Table games win percentage in mass market operations was 18.4%, above the 17.7% experienced for the fourth quarter of 2016. Slot machine handle was $937.6 million, a 16.8% increase from $802.6 million for the fourth quarter of 2016, while slot machine win increased 25.3% to $40.8 million.

Non-casino revenues before promotional allowances from Wynn Macau were $73.9 million for the fourth quarter of 2017, a 14.5% increase from the $64.6 million for the same period of 2016. Room revenues were flat at $25.9 million for the fourth quarter of 2017, compared to the same period of 2016. Our average daily rate (“ADR”) was $258, a 1.5% decrease from $262 for the fourth quarter of 2016. Occupancy increased to 99.4% for the fourth quarter of 2017, from 96.3% for the same period of 2016. Revenue per available room (“REVPAR”) was $257, a 2.0% increase from $252 for the fourth quarter of 2016.

Wynn Palace

Net revenues from Wynn Palace were $693.4 million for the fourth quarter of 2017, a 65.6% increase from $418.7 million for the same period of 2016. Adjusted Property EBITDA from Wynn Palace was $190.1 million for the fourth quarter of 2017, a 145.3% increase from $77.5 million for the same period of 2016.

Casino revenues from Wynn Palace were $648.6 million for the fourth quarter of 2017, a 73.8% increase from $373.2 million for the same period of 2016. Table games turnover in VIP operations was $16.23 billion, a 57.1% increase from $10.33 billion for the fourth quarter of 2016. VIP table games win as a percentage of turnover (calculated before commissions) was 3.02%, above the expected range of 2.7% to 3.0% and the 2.68% we experienced in the fourth quarter of 2016. Table drop in mass market operations was $1.12 billion, a 55.1% increase from $725.0 million for the fourth quarter of 2016. Table games win in mass market operations was $264.5 million, a 65.7% increase from $159.6 million for the fourth quarter of 2016. Table games win percentage in mass market operations was 23.5%, above the 22.0% experienced for the fourth quarter of 2016. Slot machine handle was $920.6 million, a 72.3% increase from $534.4 million for the fourth quarter of 2016, while slot machine win increased 96.2% to $55.0 million.

Non-casino revenues before promotional allowances from Wynn Palace were $90.8 million for the fourth quarter of 2017, a 5.5% increase from $86.1 million for the same period of 2016. Room revenues were $38.9 million for the fourth quarter of 2017, a 4.1% decrease from $40.6 million for the same period of 2016. ADR was $236, a 13.2% decrease from $272 for the fourth quarter of 2016. Occupancy increased to 96.8% for the fourth quarter of 2017, from 88.4% for the same period of 2016. REVPAR was $228, a 5.4% decrease from $241 for the fourth quarter of 2016.

Las Vegas Operations

Net revenues from our Las Vegas Operations were $377.0 million for the fourth quarter of 2017, a 1.6% decrease from $383.3 million for the same period of 2016. Adjusted Property EBITDA from our Las Vegas Operations was $104.1 million for the fourth quarter of 2017, a 9.2% decrease from $114.6 million for the same period of 2016.

Casino revenues from our Las Vegas Operations were $142.7 million for the fourth quarter of 2017, a 14.1% decrease from $166.0 million for the same period of 2016. Table games drop was $430.8 million, a 4.8% decrease from $452.5 million for the fourth quarter of 2016. Table games win was $101.3 million, an 18.6% decrease from $124.5 million for the fourth quarter of 2016. Table games win percentage was 23.5%, within the expected range of 21% to 25% and below the 27.5% experienced for the fourth quarter of 2016. Slot machine handle was $833.2 million, a 3.3% decrease from $862.1 million for the fourth quarter of 2016, while slot win decreased 1.2% to $56.6 million.

Non-casino revenues before promotional allowances from our Las Vegas Operations were $275.2 million for the fourth quarter of 2017, a 5.8% increase from $260.2 million for the same period of 2016. Room revenues were $107.8 million for the fourth quarter of 2017, a 1.9% increase from $105.7 million for the same period of 2016. ADR was $305, a 4.8% increase from $291 for the fourth quarter of 2016. Occupancy decreased to 82.1% for the fourth quarter of 2017, from 84.1% for the same period of 2016. REVPAR was $250, a 2.0% increase from $245 for the fourth quarter of 2016. Food and beverage revenues increased 9.9%, to $108.0 million for the fourth quarter of 2017, compared to the same period of 2016. Entertainment, retail and other revenues increased 5.8%, to $59.5 million for the fourth quarter of 2017, compared to the same period of 2016.

Retail Joint Venture

In December 2016, the Company entered into a joint venture arrangement (the “Retail Joint Venture”), of which the Company owns 50.1%, with Crown Acquisitions Inc. (“Crown”) to own and operate approximately 88,000 square feet of existing retail space at Wynn Las Vegas. In November 2017, the Company contributed approximately 74,000 square feet of additional retail space to the Retail Joint Venture, the majority of which is currently under construction at Wynn Las Vegas, and received cash of $180.0 million from Crown. The Company expects to open the additional retail space in the third quarter of 2018. Based on the applicable accounting guidance, the Company will continue to consolidate the Retail Joint Venture in its consolidated financial statements.

Wynn Boston Harbor Project in Massachusetts

The Company is currently constructing Wynn Boston Harbor, an integrated resort in Everett, Massachusetts, located adjacent to Boston along the Mystic River. The resort will contain a hotel, a waterfront boardwalk, meeting and convention space, casino space, a spa, retail offerings and food and beverage outlets. The total project budget, including gaming license fees, construction costs, capitalized interest, pre-opening expenses and land costs, is estimated to be approximately $2.4 billion. As of December 31, 2017, we have incurred $1.13 billion in total project costs. We expect to open Wynn Boston Harbor in mid-2019.

Balance Sheet

Our cash and cash equivalents, restricted cash and investment securities as of December 31, 2017 totaled $3.13 billion.

Total debt outstanding at the end of the quarter was $9.63 billion, including $3.60 billion of Macau related debt, $3.16 billion of Wynn Las Vegas debt and $2.87 billion at the parent company and other.

During the fourth quarter of 2017, Wynn Macau, Limited redeemed the remaining $403.6 million of untendered 5 1/4 % Senior Notes, due 2021 and recorded a $12.3 million loss on extinguishment of debt.

In December 2017, we reached agreements to acquire approximately 38 acres of land on the Las Vegas Strip directly across from Wynn Las Vegas for $336.2 million, approximately 16 acres of which are subject to a ground lease that expires in 2097. We currently expect to complete these transactions in the first quarter of 2018.

Conference Call Information

The Company will hold a conference call to discuss its results on January 22, 2018 at 9:00 a.m. PT (12:00 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 Stephen A. Wynn, 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, extensive regulation of our business, pending or future legal proceedings, cybersecurity risk, the impact of the U.S. tax reform, 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, 2017 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 net income attributable to Wynn Resorts, Limited” is net income attributable to Wynn Resorts, Limited before pre-opening expenses, property charges and other, change in interest rate swap fair value, change in Redemption Note fair value, loss on extinguishment of debt, foreign currency remeasurement gain (loss), the impact from 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 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 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, 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, 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 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, as well as a basis for determining certain incentive compensation. 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, income 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) net income attributable to Wynn Resorts, Limited to Adjusted Property EBITDA.

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