Wynn Resorts, Limited (NASDAQ: WYNN) (“the Company”) today reported financial results for the fourth quarter and year ended December 31, 2018. 
The results reflect the Company’s adoption of the new revenue recognition standard (“ASC 606”), effective January 1, 2018. Certain prior period amounts have been adjusted to reflect the full retrospective adoption of ASC 606, with no impact to operating income, net income or Adjusted Property EBITDA (1).
Operating revenues were $1.69 billion in the fourth quarter of 2018, an increase of 4.0%, or $65.4 million, from $1.62 billion in the fourth quarter of 2017. Operating revenues from Wynn Palace and our Las Vegas Operations increased $84.0 million and $11.7 million, respectively, offset by a decrease of $30.3 million at Wynn Macau.
On a U.S. generally accepted accounting principles (“GAAP”) basis, net income attributable to Wynn Resorts, Limited was $476.6 million, or $4.41 per diluted share, for the fourth quarter of 2018, compared to $491.7 million, or $4.77 per diluted share, in the fourth quarter of 2017. During the fourth quarter of 2018, we finalized our analysis of the U.S. Tax Cuts and Jobs Act (“U.S. tax reform”), which was enacted in the fourth quarter of 2017 and further clarified by guidance issued by the Internal Revenue Service in the fourth quarter of 2018. As a result, fourth quarter 2018 results reflect a net tax benefit of $390.9 million related to U.S. tax reform, which is incremental to the $339.9 million provisional net tax benefit reflected in the fourth quarter of 2017 results.
Adjusted net income attributable to Wynn Resorts, Limited (2) was $114.0 million, or $1.06 per diluted share, in the fourth quarter of 2018, compared to $144.3 million, or $1.40 per diluted share, in the fourth quarter of 2017.
In the fourth quarter of 2018, Adjusted Property EBITDA increased 4.0%, to $499.4 million, compared to $480.2 million in the fourth quarter of 2017. Adjusted Property EBITDA from Wynn Palace and our Las Vegas Operations increased $36.5 million and $1.1 million, respectively, offset by a decrease of $18.5 million from Wynn Macau.
In the full year of 2018, operating revenues increased 10.7%, or $647.5 million, to $6.72 billion, compared to $6.07 billion in the year ended December 31, 2017. Operating revenues increased $727.3 million at Wynn Palace, partially offset by decreases of $42.4 million and $37.4 million from Wynn Macau and our Las Vegas Operations, respectively.
GAAP net income attributable to Wynn Resorts, Limited was $584.2 million, or $5.46 per diluted share in 2018, compared to $747.2 million, or $7.28 per diluted share in the year ended December 31, 2017. The decrease was primarily driven by a litigation settlement expense of $463.6 million recorded in the first quarter of 2018. Both full year 2018 and 2017 results included the aforementioned net tax benefits of $390.9 million and $339.9 million, respectively, recorded in connection with U.S. tax reform.
Adjusted net income attributable to Wynn Resorts, Limited was $699.5 million, or $6.54 per diluted share, in 2018, compared to $560.5 million, or $5.46 per diluted share, in the year ended December 31, 2017.
Full year Adjusted Property EBITDA increased 12.9%, or $233.7 million, to $2.04 billion, compared to $1.81 billion in the year ended December 31, 2017. Adjusted Property EBITDA increased $316.3 million at Wynn Palace, partially offset by decreases of $27.5 million and $55.1 million, from Wynn Macau and our Las Vegas Operations, respectively.
Wynn Resorts, Limited also announced today that the Company has approved a cash dividend of $0.75 per share, payable on February 26, 2019 to stockholders of record as of February 15, 2019.
In the fourth quarter, the Company repurchased 1,478,552 shares of its common stock for approximately $156.7 million.
Macau Operations
Wynn Palace
Operating revenues from Wynn Palace were $740.6 million for the fourth quarter of 2018, a 12.8% increase from $656.5 million for the same period of 2017. Adjusted Property EBITDA from Wynn Palace was $226.6 million for the fourth quarter of 2018, a 19.2% increase from $190.1 million for the same period of 2017.
Casino revenues from Wynn Palace were $636.9 million for the fourth quarter of 2018, a 12.3% increase from $567.0 million for the same period of 2017. Table games turnover in VIP operations was relatively flat at $16.16 billion for the fourth quarter of 2018 when compared to the same period of 2017. VIP table games win as a percentage of turnover was 3.25%, above the expected range of 2.7% to 3.0% and an increase from the 3.02% experienced in the fourth quarter of 2017. Table drop in mass market operations was $1.30 billion, a 15.6% increase from $1.12 billion for the fourth quarter of 2017. Table games win in mass market operations was $307.4 million, a 16.2% increase from $264.5 million for the fourth quarter of 2017. Table games win percentage in mass market operations increased slightly to 23.6%, compared with the table games win percentage of 23.5% experienced in the fourth quarter of 2017. Slot machine handle was $1.01 billion, a 9.9% increase from $920.6 million for the fourth quarter of 2017. Slot machine win increased 4.6% to $57.6 million for the fourth quarter of 2018, compared to $55.0 million for the fourth quarter of 2017.
Non-casino revenues from Wynn Palace were $103.6 million for the fourth quarter of 2018, a 15.7% increase from $89.6 million for the same period of 2017. Room revenues were $44.6 million for the fourth quarter of 2018, a 27.4% increase from $35.0 million for the same period of 2017. Average daily rate (“ADR”) was $277, a 28.8% increase from $215 for the fourth quarter of 2017. Occupancy increased to 97.2% for the fourth quarter of 2018, from 96.8% for the same period of 2017. Revenue per available room (“REVPAR”) was $269, a 28.7% increase from $209 for the fourth quarter of 2017.
Wynn Macau
Operating revenues from Wynn Macau were $553.4 million for the fourth quarter of 2018, a 5.2% decrease from $583.7 million for the same period of 2017. Adjusted Property EBITDA from Wynn Macau was $167.6 million, a 9.9% decrease from $186.0 million for the same period of 2017.
Casino revenues from Wynn Macau were $479.0 million for the fourth quarter of 2018, a 5.9% decrease from $508.9 million for the same period of 2017. Table games turnover in VIP operations was $12.78 billion, an 18.2% decrease from $15.62 billion for the same period of 2017. VIP table games win as a percentage of turnover was 2.86%, within the expected range of 2.7% to 3.0% and below the 2.89% experienced in the fourth quarter of 2017. Table drop in mass market operations was relatively flat at $1.26 billion for the fourth quarter of 2018 when compared to the same period of 2017. Table games win in mass market operations was $255.7 million, an 11.2% increase from $230.1 million for the fourth quarter of 2017. Table games win percentage in mass market operations increased to 20.3%, compared with the table games win percentage of 18.4% experienced for the fourth quarter of 2017. Slot machine handle was $878.4 million, a 6.3% decrease from $937.6 million for the fourth quarter of 2017. Slot machine win increased 8.8% to $44.4 million for the fourth quarter of 2018, compared to $40.8 million for the fourth quarter of 2017.
Non-casino revenues from Wynn Macau were relatively flat at $74.4 million for the fourth quarter of 2018 when compared to the same period of 2017. Room revenues were $29.9 million for the fourth quarter of 2018, a 17.8% increase from $25.4 million for the same period of 2017. ADR was $294, a 16.2% increase from $253 for the fourth quarter of 2017. Occupancy was relatively flat at 99.3% for the fourth quarter of 2018 when compared to the same period of 2017. REVPAR was $292, a 16.3% increase from $251 for the fourth quarter of 2017. Entertainment, retail and other revenues decreased 20.5%, to $23.3 million for the fourth quarter of 2018, compared to $29.3 million for the same period of 2017.
Las Vegas Operations
Operating revenues from our Las Vegas Operations were $393.6 million for the fourth quarter of 2018, a 3.1% increase from $382.0 million for the same period of 2017. Adjusted Property EBITDA from our Las Vegas Operations was $105.2 million, a 1.1% increase from $104.1 million for the same period of 2017.
Casino revenues from our Las Vegas Operations were $104.8 million for the fourth quarter of 2018, a 3.5% increase from $101.2 million for the same period of 2017. Table drop was $508.5 million, an 18.0% increase from $430.8 million for the fourth quarter of 2017. Table games win increased 12.4% to $113.9 million for the fourth quarter of 2018, compared to $101.3 million for the same period of 2017. Table games win percentage was 22.4%, within the expected range of 22% to 26% and a decrease from the tables games win percentage of 23.5% experienced in the fourth quarter of 2017. Slot machine handle was $904.4 million, an 8.5% increase from $833.2 million for the fourth quarter of 2017. Slot machine win increased 3.3% to $58.4 million for the fourth quarter of 2018, compared to $56.6 million for the fourth quarter of 2017.
Non-casino revenues from our Las Vegas Operations were $288.8 million for the fourth quarter of 2018, a 2.9% increase from $280.7 million for the same period of 2017. Room revenues were $117.9 million for the fourth quarter of 2018, a 10.8% increase from $106.4 million for the same period of 2017. ADR was $315, a 4.7% increase from $301 for the fourth quarter of 2017. Occupancy increased to 88.6% for the fourth quarter of 2018, from 82.1% for the same period of 2017. REVPAR was $279, a 13.0% increase from $247 for the fourth quarter of 2017. Food and beverage revenues increased 5.8%, to $121.9 million for the fourth quarter of 2018, compared to $115.2 million for the same period of 2017. Entertainment, retail and other revenues decreased 16.9%, to $49.1 million for the fourth quarter of 2018, compared to $59.1 million for the same period of 2017.
Encore Boston Harbor Project in Massachusetts
The Company is currently constructing Encore 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 $2.6 billion. As of December 31, 2018, we have incurred $2.03 billion in total project costs. We expect to open Encore Boston Harbor in mid-2019.
Balance Sheet
Our cash and cash equivalents and restricted cash as of December 31, 2018 totaled $2.22 billion.
Total current and long-term debt outstanding at December 31, 2018 was $9.42 billion, comprised of $4.23 billion of Macau related debt, $3.10 billion of Wynn Las Vegas debt, $984 million of Wynn America debt, $495 million of Wynn Resorts debt, and $611 million of debt held by the retail joint venture which we consolidate.
As previously disclosed, in December 2018 we amended the Wynn Resorts (Macau) S.A. senior secured credit facilities, which consist of an approximately $2.3 billion equivalent senior secured term loan facility and an approximately $750 million equivalent senior secured revolving credit facility. The amendment extended the final maturity dates of the term loan and the revolving facility to June 2022.
Conference Call and Other Information
The Company will hold a conference call to discuss its results, including the results of Wynn Las Vegas, LLC, on January 30, 2019 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 February 28, 2019, the Company will make Wynn Las Vegas, LLC financial information for the year ended December 31, 2018 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, controversy, regulatory action, litigation and investigations related to Stephen A. Wynn and his separation from the Company, extensive regulation of our business, pending or future claims and 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 will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 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 before interest, income taxes, depreciation and amortization, litigation settlement expense, 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) gain on extinguishment of debt, change in derivatives fair value, change in Redemption Note fair value 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. 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.
(2) “Adjusted net income attributable to Wynn Resorts, Limited” is net income attributable to Wynn Resorts, Limited before litigation settlement expense, pre-opening expenses, property charges and other, change in derivatives fair value, change in Redemption Note fair value, (loss) gain on extinguishment of debt, foreign currency remeasurement loss, 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 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 net 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.
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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