View printer-friendly versionLAS VEGAS--(BUSINESS WIRE)--Nov. 7, 2006--Wynn Resorts, Limited (Nasdaq: WYNN) today reported financial results for the quarter ended September 30, 2006.
Net Revenues for the quarter were $318.1 million, 26.5% higher than in the third quarter of 2005. Results for this quarter include 25 days of operations of Wynn Macau, which opened on September 6, 2006. On a US GAAP (Generally Accepted Accounting Principles) basis, net income for the quarter was $715.7 million, or $6.43 per diluted share, compared to a loss of $9.2 million, or $0.09 per diluted share, in the third quarter of 2005. The significant increase in net income was due to the completion of the sale of the subconcession right in Macau in the third quarter of 2006. Adjusted net loss was $1.3 million, or ($0.01) per diluted share (adjusted EPS)(1) compared to an adjusted net loss of $2.2 million, or ($0.02) per diluted share in the third quarter of 2005.
Consolidated adjusted EBITDA(2) in the quarter was $79.6 million, an increase of 8.7% from $73.2 million in third quarter of 2005.
Wynn Las Vegas Results
For the quarter ended September 30, 2006, Wynn Las Vegas generated adjusted EBITDA of $77.3 million, an increase of 5.6% from the third quarter of 2005, with a 28.3% EBITDA margin on net revenue.
Net casino revenues in the third quarter of 2006 were $131.9 million compared to $123.0 million for the third quarter of 2005. Table games drop was $458.2 million, with win per table per day (before discounts) of $7,779 for the quarter compared to drop of $414.6 million and win per table per day of $7,339 last year. Table games win percentage of 22.3% was slightly above the property's expected range of 19% to 22% and the 21.9% generated last year. Slot machine win per unit per day was $248 on handle (volume) of $1,017.2 million in the quarter compared to a win per unit per day of $243 on handle of $897.1 million during the comparable period of 2005. Slot handle increased during the three months of 2006 as compared to 2005, however, during the three months of 2006, the slot win percentage was slightly less than the expected range of 5% to 6%.
Gross non-casino revenues for the quarter were $178.4 million, an 8.5% increase from the third quarter of 2005. Hotel revenues were up 4.8% to $64.3 million during the quarter, versus $61.4 million in the third quarter of 2005. Wynn Las Vegas achieved an Average Daily Rate (ADR) of $271 for the quarter, compared to $264 in the third quarter of 2005. The property's occupancy was 94.9% compared to 93.0% during the prior year period, generating revenue per available room (REVPAR) of $257 in the 2006 period (4.5% higher than in 2005).
Food and beverage revenues increased 13.2% to $69.3 million in the quarter compared to $61.2 million in the third quarter of 2005. Retail revenues were $19.2 million in the quarter compared to $17.0 million in the third quarter of 2005, an increase of 12.7%. Entertainment revenues were approximately $14.1 million, matching the $14.0 million generated in the third quarter of 2005. Food and beverage revenue increases in 2006 compared to 2005 were primarily from increased revenues from the nightclub located in Wynn Las Vegas.
Wynn Macau Results
The first phase of Wynn Macau opened on September 6, 2006 featuring 600 hotel rooms and suites, approximately 212 table games and 375 slot machines in approximately 100,000 square feet of casino gaming space, seven restaurants, approximately 26,000 square feet of retail space, a spa, a salon, entertainment lounges, and meeting facilities.
Wynn Macau generated net revenues (after discounts and commissions) of $45.0 million and EBITDA of $2.3 million in the property's first 25 days of operations. Approximately 81.2% of revenues were derived from table games play at Wynn Macau.
Table games results are segregated into two distinct reporting segments, the mass market segment and the VIP segment.
Table games drop in the mass market segment was approximately $134 million during the 25 day period. Mass market table games win percentage (calculated before discounts and incentives) was 15.7%, below the expected range of 17% to 19%.
Table games turnover in the VIP segment was $1.5 billion for the 25 day period. VIP table games win percentage (calculated before discounts and commissions) was 1.9%, which is significantly less than the expected range of 2.5% to 2.8%.
Slot machine win per unit per day was $387 on handle (volume) of $60.6 million for the 25 day period.
Since our opening on September 6, 2006, Wynn Macau has generated an average daily room rate (ADR) of $201, with occupancy averaging 75.9%. Net non-casino revenues for the 25 days were $4.9 million.
As of September 30, 2006, the Company has expended approximately $816 million of a total project budget for Wynn Macau of approximately $1.2 billion (including the expansion).
Wynn Macau Expansion
Construction of the second phase of Wynn Macau on the remaining five acres continues. This expansion will be fully integrated with the first phase of Wynn Macau and will open in stages in 2007, commencing with approximately 119 table games and 300 slot machines in February. The second phase will include an additional approximately 135,000 square feet of casino space, two restaurants, retail space, a theater, and a dramatic front feature attraction.
Cotai
The Company has submitted an application to the Macau government for a land concession for an additional 54 acres of land on the Cotai Strip in Macau for future development.
Encore at Wynn Las Vegas
On March 31, 2006, Wynn Las Vegas, LLC's lenders approved a $1.74 billion project budget and the related plans and specifications for Encore (the "Encore Budget, Plans and Specs"). The Company continues to refine the design of Encore and is evaluating certain enhancements, which may increase the project budget. In addition, we are negotiating the final guaranteed maximum price contract for Encore with our general contractor. Any increase to the Encore budget would be funded by contributions of debt and/or equity from Wynn Resorts. Encore's current design includes a 2,042-room hotel tower fully integrated with Wynn Las Vegas, consisting of 132 suites and 1,910 guest rooms, as well as an approximately 54,000 square foot casino, additional convention and meeting space, as well as restaurants, a nightclub, swimming pools, a spa and salon and retail outlets. The Encore Budget, Plans and Specs include approximately $70.0 million to be incurred for an additional employee parking garage located on the Company's Koval property across Sands Avenue from Wynn Las Vegas, a related pedestrian bridge, and costs to be incurred in connection with preparing the Broadway Theater to host "Monty Python's Spamalot." The Company commenced construction of Encore on April 28, 2006 and expects to open Encore to the public by early 2009.
Through September 30, 2006, the Company incurred approximately $200.7 million of the Encore project costs. These costs, net of approximately $6.4 million of retention, have been funded from the Wynn Las Vegas Credit Facilities, the First Mortgage Notes and cash flow from the operations of Wynn Las Vegas. Prior to signing a guaranteed maximum price construction contract, the Company is permitted to spend up to $300.0 million of the proceeds of the First Mortgage Notes and the Wynn Las Vegas Credit Facilities on Encore project costs. As of September 30, 2006, the Company has spent approximately $155.9 million using the debt proceeds. The remaining $38.4 million has been funded from cash flows from operations. The Company expects that the remaining proceeds from the First Mortgage Notes, together with availability under the Wynn Las Vegas Credit Facilities, cash flow from operations and the equity commitment from Wynn Resorts will be sufficient to fund Encore's $1.74 billion budget.
Other Factors Affecting Earnings
Wynn Macau completed the sale of a subconcession right to Publishing & Broadcasting, Limited for $900 million in cash, received on September 11, 2006. The one time gain on the sale substantially increased net income for the quarter ended September 30, 2006.
Depreciation and amortization expenses were $42.5 million during the third quarter of 2006. Interest expense, net of $8.7 million in capitalized interest, was $37.0 million for the quarter. Pre-opening expenses, primarily related to Wynn Macau, totaled $36.8 million during the quarter. Corporate expenses and other were $13.3 million, including $4.8 million of stock based compensation expense.
Balance Sheet and Capital Expenditures
Our total cash balances at the end of the quarter were $1.7 billion, including unrestricted cash balances of $1.4 billion and cash balances restricted for our construction and development projects of $324 million. Total debt outstanding at the end of the quarter was $2.4 billion, including $224 million of Convertible Debentures and $478 million of Wynn Macau-related debt. Capital expenditures during the third quarter of 2006, net of changes in construction payables and retention, totaled approximately $231 million, of which approximately $134 million was related to Wynn Macau and the remainder was mostly attributable to Encore.
Conference Call Information
The Company will hold a conference call to discuss its results on Tuesday, November 7th, 2006, at 6:00 p.m. ET (3:00 p.m. PT). Interested parties are invited to join the call by accessing a live audio webcast via the Investor Relations page 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 information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us. The risks and uncertainties include, but are not limited to, competition in the casino/hotel and resorts industries, the Company's brief operating history, the Company's dependence on existing management, levels of travel, leisure and casino spending, general domestic or international economic conditions, and changes in gaming laws or regulations. 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, 2005 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 its forward-looking statements as a result of new information, future events or otherwise.
Non-GAAP financial measures
(1) Adjusted net income (loss) and adjusted earnings (loss) per share ("EPS") are presented exclusively as supplemental disclosures because management believes that these financial measures are widely used to measure the performance, and as a principal basis for valuation, of gaming companies. These measures are considered by many to be a better indicator on which to base expectations of future results than income or EPS computed in accordance with GAAP.
(2) "Adjusted EBITDA" is earnings before interest, taxes, depreciation, amortization, pre-opening expenses, property charges, corporate expenses, stock-based compensation, and other non-operating income and expenses. Adjusted 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 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 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 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 and corporate expenses, which do not relate to the management of specific casino properties. However, Adjusted 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 EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. We compensate for these limitations by using Adjusted EBITDA as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include operating income (loss), net income (loss), cash flows from operations and cash flow data. 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 EBITDA. Also, Wynn Resorts' calculation of Adjusted 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 and net income (loss) per share to adjusted net income (loss) and adjusted net income (loss) per share, and (ii) reconciliation of operating income (loss) to adjusted EBITDA and adjusted EBITDA to net income (loss).
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2006 2005 2006 2005
--------- ------------- --------- -------------
(as restated) (as restated)
Operating revenues:
Casino $172,019 $123,049 $412,060 $221,764
Rooms 66,837 61,393 204,236 106,026
Food and beverage 72,091 61,211 224,411 109,266
Entertainment,
retail and other 46,300 42,057 144,646 76,716
--------- ------------- --------- -------------
Gross revenues 357,247 287,710 985,353 513,772
Less: promotional
allowances (39,155) (36,269) (116,666) (61,203)
--------- ------------- --------- -------------
Net revenues 318,092 251,441 868,687 452,569
--------- ------------- --------- -------------
Operating costs and
expenses:
Casino 93,480 53,388 214,636 95,668
Rooms 18,259 16,120 53,384 27,900
Food and beverage 47,772 42,477 141,954 76,184
Entertainment,
retail and other 31,678 28,699 98,304 48,966
General and
administrative 56,195 44,814 152,172 75,827
Provision for
doubtful accounts 4,876 2,043 11,452 10,642
Pre-opening costs 36,820 7,147 62,794 88,616
Depreciation and
amortization 42,470 37,886 124,797 67,505
Contract termination
fee - - 5,000 -
Property charges and
other 5,739 6,052 13,064 6,161
--------- ------------- --------- -------------
Total operating
costs and
expenses 337,289 238,626 877,557 497,469
Equity in income from
unconsolidated
affiliates 488 463 1,574 714
--------- ------------- --------- -------------
Operating income
(loss) (18,709) 13,278 (7,296) (44,186)
--------- ------------- --------- -------------
Other income
(expense):
Interest and other
income 11,837 7,467 29,885 20,632
Interest expense (36,969) (36,138) (108,218) (65,430)
Increase (decrease)
in swap fair value (8,757) 6,146 1,835 8,033
Loss on
extinguishment of
debt (10,758) - (10,758) -
Gain on sale of
subconcession
right, net 899,409 - 899,409 -
--------- ------------- --------- -------------
Other income
(expense), net 854,762 (22,525) 812,153 (36,765)
--------- ------------- --------- -------------
Income (loss) before
income taxes 836,053 (9,247) 804,857 (80,951)
Provision for income
taxes 120,397 - 120,706 -
--------- ------------- --------- -------------
Net Income (loss) $715,656 $(9,247) $684,151 $(80,951)
========= ============= ========= =============
Basic and diluted income (loss)
per common share:
Net income (loss):
Basic $7.12 $(0.09) $6.86 $(0.82)
Diluted(a) $6.43 $(0.09) $6.22 $(0.82)
Weighted average common shares
outstanding:
Basic 100,480 98,472 99,688 98,245
Diluted 111,702 98,472 111,083 98,245
Note: (a) Diluted earnings per share for the three and nine months ended September 30, 2006 includes the assumption that the convertible subordinated debentures were converted into shares of common stock. Accordingly, net income used in the computation of diluted earnings per share is increased by approximately $2.3 million and $7.1 million, respectively, of interest attributable to these debentures for the three and nine months ended September 30, 2006.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
RECONCILIATION OF NET INCOME (LOSS) AND NET INCOME (LOSS) PER SHARE TO
ADJUSTED NET INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS) PER SHARE
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
---------- -------- --------- ---------
Net income (loss) $715,656 $(9,247) $684,151 $(80,951)
Gain on sale of
subconcession right, net (899,409) - (899,409) -
Pre-opening costs 36,820 7,147 62,794 88,616
Loss on extinguishment of
debt 10,758 - 10,758 -
(Increase) decrease in
swap fair value 8,757 (6,146) (1,835) (8,033)
Property charges and other 5,739 6,052 13,064 6,161
Avenue Q contract
termination fee - - 5,000 -
Provision for income taxes 120,337 - 120,337 -
---------- -------- --------- ---------
Adjusted net income (loss) $(1,342) $(2,194) $(5,140) $5,793
========== ======== ========= =========
Net income (loss) per
diluted share $6.43 $(0.09) $6.22 $(0.82)
========== ======== ========= =========
Adjusted net income (loss)
per diluted share $(0.01) $(0.02) $(0.05) $0.15 (b)
========== ======== ========= =========
Note: (b) Diluted adjusted net income per share for the nine months ended September 30, 2005 includes the assumption that the convertible subordinated debentures were converted into shares of common stock. Accordingly, adjusted net income used in the computation of diluted adjusted net income per share is increased by approximately $11.3 million of interest attributable to these debentures.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED EBITDA
AND ADJUSTED EBITDA TO NET INCOME (LOSS)
(in thousands)
(unaudited)
3 Months Ended September 30, 2006
-----------------------------------------
Wynn Las Wynn Corporate and
Vegas Macau Other Total
-----------------------------------------
Operating income (loss) $22,440 $(43,090) $1,941 $(18,709)
Preopening costs 982 35,717 121 36,820
Depreciation and
amortization 36,225 5,434 811 42,470
Property charges and other 5,739 - - 5,739
Management fees and
royalties 4,091 1,596 (5,687) -
Corporate expenses and
other 5,545 1,853 1,093 8,491
Stock-based compensation 2,260 783 1,721 4,764
-------- --------- ------------ ---------
Adjusted EBITDA (2) $77,282 $2,293 $- $79,575
======== ========= ============ =========
3 Months Ended September 30, 2005
-----------------------------------------
Wynn Las Wynn Corporate and
Vegas Macau Other Total
-----------------------------------------
Operating income (loss) $21,896 $(8,633) $15 $13,278
Preopening costs 1,541 5,607 (1) 7,147
Depreciation and
amortization 35,614 1,526 746 37,886
Property charges and other 5,937 - 115 6,052
Management fees and
royalties 3,783 1,500 (5,283) -
Corporate expenses and
other 4,434 - 3,397 7,831
Stock-based compensation - - 1,011 1,011
-------- --------- ------------ ---------
Adjusted EBITDA (2) $73,205 $- $- $73,205
======== ========= ============ =========
3 Months Ended
September 30,
----------------------
2006 2005
------------ ---------
Adjusted EBITDA (2) $79,575 $73,205
Preopening costs (36,820) (7,147)
Depreciation and
amortization (42,470) (37,886)
Property charges and other (5,739) (6,052)
Corporate expenses and
other (8,491) (7,831)
Stock-based compensation (4,764) (1,011)
Interest and other income 11,837 7,467
Interest expense (36,969) (36,138)
Increase (decrease) in swap fair
value (8,757) 6,146
Loss on extinguishment of
debt (10,758) -
Gain on sale of subconcession
right, net 899,409 -
Provision for income taxes (120,397) -
------------ ---------
Net income (loss) $715,656 $(9,247)
============ =========
WYNN RESORTS, LIMITED AND SUBSIDIARIES
SUPPLEMENTAL DATA SCHEDULE
Three Months Ended Nine Months Ended
--------------------- -----------------------
September September September September
30, 2006 30, 2005(6) 30, 2006(6) 30, 2005(7)
--------- ----------- ----------- -----------
Room Statistics for Wynn
Las Vegas:
Occupancy % 94.9% 93.0% 95.4% NM
Average Daily Room
Rate (ADR)(1) $271 $264 $286 NM
Average Paying Rate
(APR)(2) $255 $252 $270 NM
Revenue per
available room
(REVPAR)(3) $257 $246 $272 NM
Other information for
Wynn Las Vegas:
Table games win per
unit per day(4) $7,779 $7,339 $7,455 NM
Table Hold % 22.3% 21.9% 20.6% NM
Slot Machine win per
unit per day(5) $248 $243 $249 NM
Average number of
table games 143 135 143 NM
Average number of
slot machines 1,970 1,956 1,960 NM
Wynn Macau:
Table games win per
unit per day 9,236 NM NM NM
Slot Machine win per
unit per day 387 NM NM NM
Average number of
table games 212 NM NM NM
Average number of
slot machines 375 NM NM NM
(1) ADR is Average Daily Room Rate and is calculated by dividing total room revenue by total rooms occupied.
(2) APR is Average Paying Rate and is calculated by dividing cash room revenue by cash rooms occupied.
(3) REVPAR is Revenue per Available Room and is calculated by dividing total room revenue by total rooms available.
(4) Table games win per unit per day is shown before discounts and commissions.
(5) Slot machine win per unit per day is net of participation fees and progressive accruals.
(6) Information for the 2005 and 2006 nine-month periods as well as 2005 three-month period is not meaningful as Wynn Macau opened on September 6, 2006.
(7) Comparison to the 2005 nine-month period is not meaningful as Wynn Las Vegas opened on April 28, 2005
CONTACT: Wynn Resorts, Limited, Las Vegas
Samanta Stewart, 702-770-7555
investorrelations@wynnresorts.com
www.wynnresorts.com
www.wynnlasvegas.com
www.wynnmacau.com
SOURCE: Wynn Resorts, Limited