WYNN RESORTS, LIMITED The following discussion should be read in conjunction with, and is qualified in its entirety by, the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q and the audited consolidated financial statements appearing in our annual report on Form 10-K for the year endedDecember 31, 2021 . Unless the context otherwise requires, all references herein to the "Company," "we," "us," or "our," or similar terms, refer toWynn Resorts, Limited , aNevada corporation, and its consolidated subsidiaries. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled "Forward-Looking Statements."
Forward-Looking Statements
We make forward-looking statements in this Quarterly Report on Form 10-Q based upon the beliefs and assumptions of our management and on information currently available to us. Forward-looking statements include, but are not limited to, information about our business strategy, development activities, competition and possible or assumed future results of operations, throughout this report and are often preceded by, followed by or include the words "may," "will," "should," "would," "could," "believe," "expect," "anticipate," "estimate," "intend," "plan," "continue" or the negative of these terms or similar expressions. 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 the risks and uncertainties in Item 1A - "Risk Factors" of our Annual Report on Form 10-K for the year endedDecember 31, 2021 and other factors we describe from time to time in our periodic filings with theSecurities and Exchange Commission ("SEC"), such as: •extensive regulation of our business and the cost of compliance or failure to comply with applicable laws and regulations; •pending or future claims and legal proceedings, regulatory or enforcement actions or probity investigations; •our ability to maintain our gaming licenses and concessions, including the renewal or extension of the concession inMacau that expires onDecember 31, 2022 and the amendments to theMacau gaming law; •our dependence on key employees; •general global political and economic conditions, in theU.S. andChina (including the Chinese government's ongoing anti-corruption campaign), which may impact levels of travel, leisure, and consumer spending; •restrictions or conditions on visitation by citizens of PRC and other regions toMacau ; •the impact on the travel and leisure industry from factors such as an outbreak of an infectious disease, including the COVID-19 pandemic, public incidents of violence, riots, demonstrations, extreme weather patterns or natural disasters, military conflicts, civil unrest, and any future security alerts and/or terrorist attacks; •doing business in foreign locations such asMacau ; •our ability to maintain our customer relationships and collect and enforce gaming receivables; •our dependence on a limited number of resorts and locations for all of our cash flow and our subsidiaries' ability to pay us dividends and distributions; •competition in the casino/hotel and resort industries and actions taken by our competitors, including new development and construction activities of competitors; •factors affecting the development and success of new gaming and resort properties (such as limited labor resources, government labor and gaming policies, transportation infrastructure, supply chain disruptions, cost increases, environmental regulation, and our ability to secure necessary permits and approvals); •construction risks (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems; shortages of materials or skilled labor; environment, health and safety issues; and unanticipated cost increases); •legalization and growth of gaming in other jurisdictions; •any violations by us of the anti-money laundering laws or Foreign Corrupt Practices Act; •adverse incidents or adverse publicity concerning our resorts or our corporate responsibilities; •changes in gaming laws or regulations; •changes in federal, foreign, or state tax laws or the administration of such laws; •continued compliance with all provisions in our debt agreements; •conditions precedent to funding under our credit facilities; •leverage and debt service (including sensitivity to fluctuations in interest rates); 25
--------------------------------------------------------------------------------
Table of Contents
•cybersecurity risk, including cyber and physical security breaches, system failure, computer viruses, and negligent or intentional misuse by customers, company employees, or employees of third-party vendors; •our ability to protect our intellectual property rights; and •our current and future insurance coverage levels. Further information on potential factors that could affect our financial condition, results of operations and business are included in this report and our other filings with theSEC . You should not place undue reliance on any forward-looking statements, which are based only on information available to us at the time this statement is made. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Overview
We are a designer, developer, and operator of integrated resorts featuring
luxury hotel rooms, high-end retail space, an array of dining and entertainment
options, meeting and convention facilities, and gaming, all supported by an
unparalleled focus on our guests, our people, and our community. Through our
approximately 72% ownership of Wynn Macau, Limited ("WML"), we operate two
integrated resorts in the Macau Special Administrative Region ("Macau") of the
People's Republic of China ("PRC"), Wynn Palace and Wynn Macau (collectively,
our "Macau Operations"). In Las Vegas, Nevada , we operate and, with the
exception of certain retail space, own 100% of Wynn Las Vegas . Additionally, we
are a 50.1% owner and managing member of a joint venture that owns and leases
certain retail space at Wynn Las Vegas (the "Retail Joint Venture"). We refer to
Wynn Las Vegas , Encore, an expansion at Wynn Las Vegas , and the Retail Joint
Venture as our Las Vegas Operations. In Everett, Massachusetts , we own 100% of
and operate Encore Boston Harbor , an integrated resort. We also hold an
approximately 85% interest in, and consolidate, Wynn Interactive Ltd. ("Wynn
Interactive"), through which we operate online sports betting, gaming, and
social casino businesses.
Recent Developments Related to COVID-19
Macau Operations
Visitation toMacau has fallen significantly since the outbreak of COVID-19, driven by the strong deterrent effect of the COVID-19 pandemic on travel and social activities, quarantine measures put in place inMacau and elsewhere, travel and entry restrictions and conditions inMacau , the PRC,Hong Kong andTaiwan involving COVID-19 testing, and mandatory quarantine, among other things, and the suspension or reduced accessibility of transportation to and fromMacau . Although there have been periods during which certain restrictions and conditions were eased by theMacau government to allow for greater visitation and quarantine-free travel toMacau , adverse conditions and evolving conditions created by and in response to the COVID-19 pandemic may cause these restrictions and conditions to be reintroduced. For example, in response to an outbreak inMacau which initially commenced inmid-June 2022 , theMacau government extended its COVID-19 containment measures, including the closures of casino operations in full as well as all non-essential business as ofJuly 11, 2022 , and the closure and the limiting of the opening hours and/or operational capacity of various areas and facilities inMacau . OnJuly 23, 2022 , casino operations atWynn Palace and Wynn Macau resumed on a limited basis, and remain limited at the present time due to severely reduced visitation toMacau as a result of enhanced border controls. OnAugust 2, 2022 , theMacau government lifted most of the remaining enhanced COVID-19 restrictions which went into effect in June and July and limited non-gaming operations atWynn Palace and Wynn Macau began to resume. Certain enhanced COVID-19 protective measures remain in effect at the present time with respect to gaming and non-gaming operations. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of containment measures, management cannot predict whether future closures, in full or in part, will occur in our properties, and cannot reasonably estimate the impact to our future results of operations, cash flows, or financial condition.
Macau Gaming Concession
OnJune 23, 2022 ,Wynn Resorts (Macau) S.A. ("WRM") and theMacau government entered into a concession extension agreement (the "Concession Extension Agreement"), pursuant to which the expiration date of WRM's gaming concession was extended fromJune 26, 2022 toDecember 31, 2022 . Under the Concession Extension Agreement, WRM paid theMacau government MOP47.0 million (approximately$6.0 million ) as a contract premium for the extension, and by no later thanSeptember 23, 2022 will provide a first demand bank guarantee of not less than MOP1,210.0 million (approximately$150.0 million ) in favor of theMacau government for securing the fulfillment of its labor liabilities upon the expiration of the Concession Extension Agreement. 26
--------------------------------------------------------------------------------
Table of Contents
In order to enable WRM to fulfill the relevant requirements to become eligible to obtain a concession extension, each ofWRM and Palo Real Estate Company Limited ("Palo") (the land concessionaires of Wynn Macau andWynn Palace , respectively) entered into a letter of undertaking, pursuant to which each of WRM and Palo has undertaken, pursuant to Article 40 of theMacau gaming law and Clause 43 of the concession agreement, to revert to theMacau government relevant gaming equipment and gaming areas at Wynn Macau andWynn Palace , without compensation and free of encumbrance upon the expiration of the concession agreement term, as amended by the Concession Extension Agreement. Under the indentures governing our$4.7 billion aggregate principal amount of WML Senior Notes and the facility agreement governing the WM Cayman II Revolver, upon the occurrence of any event after which we do not own or manage casino or gaming areas or operate casino games of fortune and chance inMacau in substantially the same manner and scope as of the issue date of the respective senior notes or the date of the facility agreement, for a period of 10 consecutive days or more in the case of the WML Senior Notes or a period of 30 consecutive days or more in the case of the WM Cayman II Revolver, and such event has a material adverse effect on the financial condition, business, properties or results of operations of WML and its subsidiaries, taken as a whole, holders of the WML Senior Notes can require us to repurchase all or any part of the WML Senior Notes at par, plus any accrued and unpaid interest (the "Special Put Option"), and any amounts owed under the WM Cayman II Revolver may become immediately due and payable (the "Property Mandatory Prepayment Event"). InJune 2022 , theMacau government published the amendments to theMacau gaming law approved by theMacau Legislative Assembly . These amendments include, for example, the awarding of up to six gaming concessions with a term up to ten years with a maximum three-year extension possible, and an increase in the minimum capital requirement applicable to concession holders to MOP5.0 billion (approximately$625.0 million ), an increase in the percentage of the share capital of the concessionaire that must be held by the local managing director to 15% from 10% and a prohibition on revenue sharing arrangements between gaming promoters and concession holders. TheMacau government also published the administrative regulations and related documents in relation to a public tender for the awarding of new gaming concessions inJuly 2022 . Upon the publication and entry into force of the revised gaming law onJune 23, 2022 , we are monitoring developments with respect to theMacau government's public tender process, including the adoption of additional administrative regulations, instructions, dispatches, and further adaptations to the current legal and regulatory system, and at this time believe that our concession agreement will be further extended, renewed or replaced by a new gaming concession agreement beyondDecember 31, 2022 . However, it is possible theMacau government could further change or interpret the associated gaming laws in a manner that could negatively impact the Company. If we are unable to further extend or renew our concession agreement or obtain a new gaming concession agreement, an election by the WML Senior Notes holders to exercise the Special Put Option and the triggering of the Property Mandatory Prepayment Event would have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Key Operating Measures
Certain key operating measures specific to the gaming industry are included in our discussion of our operational performance for the periods for which the Condensed Consolidated Statements of Operations are presented. These key operating measures are presented as supplemental disclosures because management and/or certain investors use these measures to better understand period-over-period fluctuations in our casino and hotel operating revenues. These key operating measures are defined below: •Table drop in mass market for our Macau Operations is the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage. •Table drop for our Las Vegas Operations is the amount of cash and net markers issued that are deposited in a gaming table's drop box. •Table drop forEncore Boston Harbor is the amount of cash and gross markers issued that are deposited in a gaming table's drop box. •Rolling chips are non-negotiable identifiable chips that are used to track turnover for purposes of calculating incentives within our Macau Operations' VIP program. •Turnover is the sum of all losing rolling chip wagers within ourMacau Operations' VIP program. •Table games win is the amount of table drop or turnover that is retained and recorded as casino revenues. Table games win is before discounts, commissions and the allocation of casino revenues to rooms, food and 27
--------------------------------------------------------------------------------
Table of Contents
beverage and other revenues for services provided to casino customers on a
complimentary basis. Table games win does not include poker rake.
•Slot machine win is the amount of handle (representing the total amount
wagered) that is retained by us and is recorded as casino revenues. Slot machine
win is after adjustment for progressive accruals and free play, but before
discounts and the allocation of casino revenues to rooms, food and beverage and
other revenues for services provided to casino customers on a complimentary
basis.
•Poker rake is the portion of cash wagered by patrons in our poker rooms that is
retained by the casino as a service fee, after adjustment for progressive
accruals, but before the allocation of casino revenues to rooms, food and
beverage and other revenues for services provided to casino customers on a
complimentary basis. Poker tables are not included in our measure of average
number of table games.
•Average daily rate ("ADR") is calculated by dividing total room revenues,
including complimentaries (less service charges, if any), by total rooms
occupied.
•Revenue per available room ("REVPAR") is calculated by dividing total room
revenues, including complimentaries (less service charges, if any), by total
rooms available.
•Occupancy is calculated by dividing total occupied rooms, including
complimentary rooms, by the total rooms available.
Below is a discussion of the methodologies used to calculate win percentages at our resorts.
In our VIP operations inMacau , customers primarily purchase rolling chips from the casino cage and can only use them to make wagers. Winning wagers are paid in cash chips. The loss of the rolling chips in the VIP operations is recorded as turnover and provides a base for calculating VIP win percentage. It is customary inMacau to measure VIP play using this rolling chip method. We typically expect our win as a percentage of turnover from these operations to be within the range of 3.1% to 3.4%; however, reduced gaming volumes as a result of COVID-19 containment measures implemented inMacau may cause volatility in ourMacau Operations' VIP win percentages. In our mass market operations inMacau , customers may purchase cash chips at either the gaming tables or at the casino cage. The measurements from our VIP and mass market operations are not comparable as the measurement method used in our mass market operations tracks the initial purchase of chips at the table and at the casino cage, while the measurement method from our VIP operations tracks the sum of all losing wagers. Accordingly, the base measurement from the VIP operations is much larger than the base measurement from the mass market operations. As a result, the expected win percentage with the same amount of gaming win is lower in the VIP operations when compared to the mass market operations. InLas Vegas , customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers at the gaming tables or at the casino cage. The cash and markers, net of redemptions, used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 22% to 26%. AtEncore Boston Harbor , customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers only at the casino cage. The cash and gross markers used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 18% to 22%. 28
--------------------------------------------------------------------------------
Table of Contents Results of Operations
Summary of second quarter 2022 results
The following table summarizes our financial results for the periods presented (dollars in thousands, except per share data):
Three Months Ended June 30, Six Months Ended June 30,
Increase/ Increase/
2022 2021 (Decrease) Percent Change 2022 2021 (Decrease) Percent Change
Operating revenues
(8.2) $ 1,862,166 $ 1,726,795 $ 135,371 7.8
Net loss attributable to
Wynn Resorts, Limited (130,051) (131,369) 1,318 1.0 (313,375) (412,347) 98,972 24.0
Diluted net loss per share (1.14) (1.15) 0.01 0.9 (2.73) (3.66) 0.93 25.4
Adjusted Property EBITDA
(1) 179,159 206,880 (27,721) (13.4) 356,740 265,780 90,960 34.2
(1) See Item 1-"Financial Statements," Note 18, "Segment Information," for a
reconciliation of Adjusted Property EBITDA to net loss attributable to
The decrease in operating revenues for the three months endedJune 30, 2022 was primarily driven by decreases of$211.7 million and$125.4 million fromWynn Palace and and Wynn Macau, respectively, resulting from a decrease in gaming volumes due to certain travel-related restrictions and conditions, including COVID-19 testing and other procedures related to the COVID-19 pandemic. The decrease in operating revenues was partially offset by an increase in operating revenues of$206.0 million and$44.9 million at our Las Vegas Operations andEncore Boston Harbor , respectively, resulting from increased gaming volumes as well as increases in hotel occupancy and covers at restaurants. The results of our Las Vegas Operations andEncore Boston Harbor for the three months endedJune 30, 2021 were impacted by certain COVID-19 pandemic related protective measures and operating schedule modifications, which were no longer in effect during the three months endedJune 30, 2022 . The decrease in net loss attributable toWynn Resorts, Limited for the three months endedJune 30, 2022 was primarily related to increased operating revenues at our Las Vegas Operations andEncore Boston Harbor , respectively, partially offset by increased operating expenses associated with higher business volumes at our Las Vegas Operations andEncore Boston Harbor . The decrease in Adjusted Property EBITDA for the three months endedJune 30, 2022 was primarily driven by decreased gaming volumes atWynn Palace and Wynn Macau, primarily due to certain travel-related restrictions and conditions, including COVID-19 testing and other procedures related to the COVID-19 pandemic, partially offset by increased operating revenues and operating expenses at our Las Vegas Operations andEncore Boston Harbor , respectively. Adjusted Property EBITDA decreased$103.5 million and$54.5 million atWynn Palace and Wynn Macau, respectively, and increased$93.5 million ,$16.8 million , and$19.9 million at our Las Vegas Operations,Encore Boston Harbor , and Wynn Interactive, respectively. 29
--------------------------------------------------------------------------------
Table of Contents
Financial results for the three months ended
Operating revenues
The following table presents our operating revenues (dollars in thousands):
Three Months Ended June 30,
Increase/ Percent
2022 2021 (Decrease) Change
Operating revenues
Macau Operations:
Wynn Palace $ 58,651 $ 270,371 $ (211,720) (78.3)
Wynn Macau 58,583 184,028 (125,445) (68.2)
Total Macau Operations 117,234 454,399 (337,165) (74.2)
Las Vegas Operations 561,069 355,066 206,003 58.0
Encore Boston Harbor 210,154 165,241 44,913 27.2
Wynn Interactive 20,375 15,407 4,968 32.2
$ 908,832 $ 990,113 $ (81,281) (8.2)
The following table presents our casino and non-casino operating revenues
(dollars in thousands):
Three Months Ended June 30,
Increase/ Percent
2022 2021 (Decrease) Change
Operating revenues
Casino revenues $ 359,585 $ 602,746 $ (243,161) (40.3)
Non-casino revenues:
Rooms 201,298 137,765 63,533 46.1
Food and beverage 229,816 149,142 80,674 54.1
Entertainment, retail and other 118,133 100,460 17,673 17.6
Total non-casino revenues 549,247 387,367 161,880 41.8
$ 908,832 $ 990,113 $ (81,281) (8.2)
Casino revenues for the three months ended June 30, 2022 were 39.6% of operating
revenues, compared to 60.9% for the same period of 2021. Non-casino revenues for
the three months ended June 30, 2022 were 60.4% of operating revenues, compared
to 39.1% for the same period of 2021.
Casino revenues
Casino revenues decreased primarily due to decreased VIP turnover and table
games win and mass market table drop and table games win at our Macau
Operations, partially offset by increased table drop, table games win and slot
machine win at our Las Vegas Operations and
The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day):
30--------------------------------------------------------------------------------
Table of Contents
Three Months Ended June 30,
Increase/ Percent
2022 2021 (Decrease) Change
Macau Operations:
Wynn Palace:
Total casino revenues $ 27,194 $ 212,067 $ (184,873) (87.2)
VIP:
Average number of table games 46 94 (48) (51.1) VIP turnover$ 344,462 $ 1,811,381 $ (1,466,919) (81.0) VIP table games (loss) win$ (6,671) $ 71,570 $ (78,241) NM VIP (loss) win as a % of turnover (1.94) % 3.95 % (5.89) Table games (loss) win per unit per day$ (1,600) $ 8,346 $ (9,946) NM Mass market: Average number of table games 231 228 3 1.3 Table drop$ 210,549 $ 707,494 $ (496,945) (70.2) Table games win$ 41,581 $ 163,547 $ (121,966) (74.6) Table games win % 19.7 % 23.1 % (3.4) Table games win per unit per day$ 1,977 $ 7,877 $ (5,900) (74.9) Average number of slot machines 634 726 (92) (12.7) Slot machine handle$ 130,404 $ 421,269 $ (290,865) (69.0) Slot machine win$ 4,922 $ 18,772 $ (13,850) (73.8) Slot machine win per unit per day $ 85$ 284 $ (199) (70.1) Wynn Macau: Total casino revenues$ 39,959 $ 142,419 $ (102,460) (71.9)
VIP:
Average number of table games 40 85 (45) (52.9) VIP turnover$ 301,645 $ 1,489,912 $ (1,188,267) (79.8) VIP table games win$ 14,446 $ 39,388 $ (24,942) (63.3) VIP win as a % of turnover 4.79 % 2.64 % 2.15 Table games win per unit per day$ 4,006 $ 5,111 $ (1,105) (21.6) Mass market: Average number of table games 246 240 6 2.5 Table drop$ 216,154 $ 670,400 $ (454,246) (67.8) Table games win$ 30,582 $ 128,921 $ (98,339) (76.3) Table games win % 14.1 % 19.2 % (5.1) Table games win per unit per day$ 1,365 $ 5,903 $ (4,538) (76.9) Average number of slot machines 665 607 58 9.6 Slot machine handle$ 199,312 $ 300,523 $ (101,211) (33.7) Slot machine win$ 6,329 $ 9,223 $ (2,894) (31.4) Slot machine win per unit per day$ 105 $ 167 $ (62) (37.1) 31
--------------------------------------------------------------------------------
Table of Contents
Three Months Ended June 30,
Increase/ Percent
2022 2021 (Decrease) Change
Las Vegas Operations (1):
Total casino revenues $ 135,345 $ 112,775 $ 22,570 20.0
Average number of table games 237 218 19 8.7
Table drop $ 564,982 $ 427,014 $ 137,968 32.3
Table games win $ 138,879 $ 99,021 $ 39,858 40.3
Table games win % 24.6 % 23.2 % 1.4
Table games win per unit per day
1,712 1,715 (3) (0.2)
Slot machine handle $ 1,326,178 $ 1,115,149 $ 211,029 18.9
Slot machine win $ 89,844 $ 78,890 $ 10,954 13.9
Slot machine win per unit per day $ 577 $ 506 $ 71 14.0
Poker rake $ 5,021 $ 3,927 $ 1,094 27.9
Encore Boston Harbor (2):
Total casino revenues $ 157,087 $ 135,485 $ 21,602 15.9
Average number of table games 184 195 (11) (5.6)
Table drop $ 366,222 $ 306,070 $ 60,152 19.7
Table games win $ 80,263 $ 64,874 $ 15,389 23.7
Table games win % 21.9 % 21.2 % 0.7
Table games win per unit per day
2,781 2,171 610 28.1
Slot machine handle $ 1,232,427 $ 1,094,178 $ 138,249 12.6
Slot machine win $ 99,424 $ 89,560 $ 9,864 11.0
Slot machine win per unit per day $ 393 $ 453 $ (60) (13.2)
Poker rake $ 1,241 $ - $ 1,241 NM
NM - Not meaningful.
(1) On October 19, 2020 , Encore at Wynn Las Vegas adjusted its operating
schedule to five days/four nights each week due to reduced customer demand
levels. On April 8, 2021 , Encore at Wynn Las Vegas resumed full operations.
(2) On January 25, 2021 , Encore Boston Harbor restored 24-hour casino operations
and reopened its hotel tower on a Thursday through Sunday weekly schedule. The
property reopened its hotel tower to seven days per week as of September 1,
2021 .
32--------------------------------------------------------------------------------
Table of Contents
Non-casino revenues
The table below sets forth our room revenues and associated key operating
measures:
Three Months Ended June 30,
Increase/
2022 2021 (Decrease) Percent ChangeMacau Operations:
Wynn Palace : Total room revenues (dollars in thousands)$ 7,008 $ 20,883 $ (13,875) (66.4) Occupancy 28.5 % 70.6 % (42.1) ADR $ 145$ 180 $ (35) (19.4) REVPAR $ 41$ 127 $ (86) (67.7) Wynn Macau: Total room revenues (dollars in thousands)$ 4,762 $ 13,427 $ (8,665) (64.5) Occupancy 31.3 % 68.0 % (36.7) ADR $ 150$ 198 $ (48) (24.2) REVPAR $ 47$ 135 $ (88) (65.2) Las Vegas Operations: Total room revenues (dollars in thousands)$ 167,115 $ 93,785 $ 73,330 78.2 Occupancy 90.5 % 67.2 % 23.3 ADR $ 460$ 333 $ 127 38.1 REVPAR $ 417$ 224 $ 193 86.2Encore Boston Harbor (1): Total room revenues (dollars in thousands)$ 22,413 $ 9,670 $ 12,743 131.8 Occupancy 94.1 % 87.8 % 6.3 ADR $ 391$ 304 $ 87 28.6 REVPAR $ 368$ 267 $ 101 37.8 (1)Encore Boston Harbor room statistics have been computed based on 53 days of operation in three months endedJune 30, 2021 , representing the number of nights hotel rooms were offered for sale to the public. Room revenues increased$63.5 million , primarily due to higher occupancy and ADR at our Las Vegas Operations andEncore Boston Harbor , respectively. The hotel tower atEncore Boston Harbor was closed pursuant to a COVID-19 related state directive fromNovember 6, 2020 throughJanuary 25, 2021 , when it reopened its hotel tower on a Thursday through Sunday weekly schedule.Encore Boston Harbor reopened its hotel tower to seven days per week as ofSeptember 1, 2021 .
Food and beverage revenues increased
Entertainment, retail and other revenues increased
33--------------------------------------------------------------------------------
Table of Contents
Operating expenses
The table below presents operating expenses (dollars in thousands):
Three Months Ended June 30,
Increase/
2022 2021 (Decrease) Percent Change
Operating expenses:
Casino $ 244,064 $ 381,615 $ (137,551) (36.0)
Rooms 65,070 50,552 14,518 28.7
Food and beverage 185,471 117,106 68,365 58.4
Entertainment, retail and other 74,985 80,922 (5,937) (7.3)
General and administrative 200,378 197,545 2,833 1.4
Provision for credit losses (3,487) 441 (3,928) NM
Pre-opening 4,502 2,495 2,007 80.4
Depreciation and amortization 162,968 183,307 (20,339) (11.1)
Property charges and other 26,909 5,651 21,258 376.2
Total operating expenses $ 960,860 $ 1,019,634 $ (58,774) (5.8)
NM - Not meaningful.
Total operating expenses decreased $58.8 million compared to the three months
ended June 30, 2021 , primarily due to decreased casino, entertainment, retail
and other, provision for credit losses, and depreciation and amortization
expenses, partially offset by increased room, food and beverage, and property
charges and other expenses.
Casino expenses decreased $99.0 million and $61.4 million at Wynn Palace and
Wynn Macau, respectively. These decreases were primarily due to reductions in
gaming tax expense driven by the declines in casino revenues at each of Wynn
Palace and Wynn Macau, resulting from the effects of the COVID-19 pandemic,
partially offset by increased casino expenses of $10.7 million and $12.2 million
at our Las Vegas Operations and Encore Boston Harbor , respectively, primarily
due to increased operating costs including gaming tax expense driven by the
increase in casino revenues.
Room expenses increased
Food and beverage expenses increased$67.7 million and$6.7 million at our Las Vegas Operations andEncore Boston Harbor , respectively. These increases were primarily a result of higher operating costs related to the increase in food and beverage revenues as well as higher nightlife entertainment costs associated with increased business volumes at our Las Vegas Operations' nightlife venues. Entertainment, retail and other expenses decreased$18.9 million at Wynn Interactive, primarily due to decreased marketing costs, partially offset by an increase of$11.2 million at ourLas Vegas operations, primarily due to higher operating associated with increased levels of business. Provision for credit losses decreased$3.7 million and$3.0 million at our Las Vegas Operations and Wynn Macau, respectively and increased$2.1 million atWynn Palace . These changes were primarily due to the impact of historical collection patterns and expectations of current and future collection trends, as well as the specific review of customer accounts, on our estimated credit loss for the respective periods. Depreciation and amortization decreased$14.5 million atWynn Palace , primarily due to certain furniture, fixture and equipment assets reaching the end of their useful lives in the first quarter of 2022. Our property charges and other expenses for the quarter endedJune 30, 2022 consisted primarily of impairment of goodwill and other finite-lived intangible assets of$7.5 million and$10.3 million , respectively, and$7.6 million of other restructuring costs related to management's decision to cease the operations ofBetBull, Limited ("BetBull"), a subsidiary of Wynn Interactive. Our property charges and other expenses for the quarter endedJune 30, 2021 consisted primarily of asset disposals, abandonments and retirements of$1.4 million ,$1.2 million , and$1.0 million at our Las Vegas Operations, Wynn Macau, andWynn Palace , respectively. 34
--------------------------------------------------------------------------------
Table of Contents
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars
in thousands):
Three Months Ended
June 30,
Increase/ Percent
2022 2021 (Decrease) Change
Interest expense
Interest cost, including amortization of debt
issuance costs and original issue discount and
premium $ 154,830 $ 150,424 $ 4,406 2.9
Weighted average total debt balance $ 12,038,961 $ 12,105,755
Weighted average interest rate 5.14 % 4.97 %
Interest costs increased primarily due to an increase in the weighted average interest rate.
Other non-operating income and expenses
We incurred a foreign currency remeasurement loss of$10.1 million and a gain of$5.6 million for the three months endedJune 30, 2022 and 2021, respectively. The impact of the exchange rate fluctuation of the MOP, in relation to theU.S. dollar, on the remeasurements ofU.S. dollar denominated debt and other obligations from ourMacau -related entities primarily drove the variability between periods.
We recorded a gain of
Income taxes
We recorded an income tax expense of$0.7 million in each of the three months endedJune 30, 2022 and 2021. Income tax expense in both periods primarily related to theMacau dividend tax agreement that provides for an annual payment as complementary tax otherwise due by stockholders of WRM.
Net loss attributable to noncontrolling interests
Net loss attributable to noncontrolling interests was$83.4 million and$42.0 million for the three months endedJune 30, 2022 and 2021, respectively. These amounts are primarily related to the noncontrolling interests' share of net loss attributable to WML. 35
--------------------------------------------------------------------------------
Table of Contents
Financial results for the six months ended
Operating revenues
The following table presents our operating revenues (dollars in thousands):
Six Months Ended June 30,
Increase/
2022 2021 (Decrease) Percent Change
Operating revenues
Macau Operations:
Wynn Palace $ 221,976 $ 507,697 $ (285,721) (56.3)
Wynn Macau 193,683 363,679 (169,996) (46.7)
Total Macau Operations 415,659 871,376 (455,717) (52.3)
Las Vegas Operations 1,002,255 533,782 468,473 87.8
Encore Boston Harbor 400,950 295,331 105,619 35.8
Wynn Interactive 43,302 26,306 16,996 64.6
$ 1,862,166 $ 1,726,795 $ 135,371 7.8
The following table presents casino and non-casino operating revenues (dollars
in thousands):
Six Months Ended June 30,
Increase/
2022 2021 (Decrease) Percent Change
Operating revenues
Casino revenues $ 849,447 $ 1,118,964 $ (269,517) (24.1)
Non-casino revenues:
Rooms 371,674 213,955 157,719 73.7
Food and beverage 403,836 217,651 186,185 85.5
Entertainment, retail and other 237,209 176,225 60,984 34.6
Total non-casino revenues 1,012,719 607,831 404,888 66.6
$ 1,862,166 $ 1,726,795 $ 135,371 7.8
Casino revenues for the six months ended June 30, 2022 were 45.6% of operating
revenues, compared to 64.8% for the same period of 2021. Non-casino revenues for
the six months ended June 30, 2022 were 54.4% of operating revenues, compared to
35.2% for the same period of 2021.
36--------------------------------------------------------------------------------
Table of Contents
Casino revenues
Casino revenues decreased primarily due to decreased VIP turnover and table games win and mass market table drop and table games win at ourMacau Operations, partially offset by increased table drop, table games win and slot machine win at our Las Vegas Operations andEncore Boston Harbor , respectively. The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day): Six Months Ended June 30, Percent 2022 2021 Increase/(Decrease) Change
Macau Operations:Wynn Palace : Total casino revenues$ 141,607 $ 397,976 $ (256,369) (64.4) VIP: Average number of table games 56 99 (43) (43.4) VIP turnover$ 1,310,017 $ 4,011,563 $ (2,701,546) (67.3) VIP table games win$ 13,082 $ 168,026 $ (154,944) (92.2) VIP win as a % of turnover 1.00 % 4.19 % (3.19) Table games win per unit per day$ 1,284 $ 9,402 $ (8,118) (86.3) Mass market: Average number of table games 232 225 7 3.1 Table drop$ 742,408 $ 1,315,012 $ (572,604) (43.5) Table games win$ 152,755 $ 295,196 $ (142,441) (48.3) Table games win % 20.6 % 22.4 % (1.8) Table games win per unit per day$ 3,630 $ 7,249 $ (3,619) (49.9) Average number of slot machines 652 707 (55) (7.8) Slot machine handle$ 381,333 $ 780,041 $ (398,708) (51.1) Slot machine win$ 17,571 $ 33,015 $ (15,444) (46.8) Slot machine win per unit per day$ 149 $ 258 $ (109) (42.2) Wynn Macau: Total casino revenues$ 142,389 $ 281,346 $ (138,957) (49.4) VIP: Average number of table games 37 87 (50) (57.5) VIP turnover$ 1,188,695 $ 3,294,294 $ (2,105,599) (63.9) VIP table games win$ 48,475 $ 98,022 $ (49,547) (50.5) VIP win as a % of turnover 4.08 % 2.98 % 1.10 Table games win per unit per day$ 7,181 $ 6,201 $ 980 15.8 Mass market: Average number of table games 247 240 7 2.9 Table drop$ 685,292 $ 1,261,290 $ (575,998) (45.7) Table games win$ 112,842 $ 234,104 $ (121,262) (51.8) Table games win % 16.5 % 18.6 % (2.1) Table games win per unit per day$ 2,521 $ 5,390 $ (2,869) (53.2) Average number of slot machines 625 588 37 6.3 Slot machine handle$ 482,851 $ 601,794 $ (118,943) (19.8) Slot machine win$ 16,941 $ 19,431 $ (2,490) (12.8) Slot machine win per unit per day$ 150 $ 183 $ (33) (18.0) 37
--------------------------------------------------------------------------------
Table of Contents
Six Months Ended June 30,
Percent
2022 2021 Increase/(Decrease) ChangeLas Vegas Operations (1): Total casino revenues$ 259,616 $ 192,678 $ 66,938 34.7 Average number of table games 232 195 37 19.0 Table drop$ 1,112,898 $ 751,545 $ 361,353 48.1 Table games win$ 268,043 $ 175,674 $ 92,369 52.6 Table games win % 24.1 % 23.4 % 0.7 Table games win per unit per day$ 6,372 $ 4,979 $ 1,393 28.0 Average number of slot machines 1,720 1,631 89 5.5 Slot machine handle$ 2,504,162 $ 1,906,409 $ 597,753 31.4 Slot machine win$ 170,675 $ 129,379 $ 41,296 31.9 Slot machine win per unit per day$ 548 $ 438 $ 110 25.1 Poker rake$ 8,882 $ 5,794 $ 3,088 53.3Encore Boston Harbor (2): Total casino revenues$ 305,835 $ 246,964 $ 58,871 23.8 Average number of table games 184 197 (13) (6.6) Table drop$ 712,417 $ 540,632 $ 171,785 31.8 Table games win$ 157,054 $ 114,251 $ 42,803 37.5 Table games win % 22.0 % 21.1 % 0.9 Table games win per unit per day$ 4,716 $ 3,201 $ 1,515 47.3 Average number of slot machines 2,778 2,031 747 36.8 Slot machine handle$ 2,415,740 $ 2,007,973 $ 407,767 20.3 Slot machine win$ 194,720 $ 164,380 $ 30,340 18.5 Slot machine win per unit per day$ 387 $ 447 $ (60) (13.4) Poker rake$ 2,026 $ - $ 2,026 NM NM - Not meaningful. (1) OnOctober 19, 2020 , Encore atWynn Las Vegas adjusted its operating schedule to five days/four nights each week due to reduced customer demand levels. OnApril 8, 2021 , Encore atWynn Las Vegas resumed full operations. (2) OnJanuary 25, 2021 ,Encore Boston Harbor restored 24-hour casino operations and reopened its hotel tower on a Thursday through Sunday weekly schedule. The property reopened its hotel tower to seven days per week as ofSeptember 1, 2021 . 38
--------------------------------------------------------------------------------
Table of Contents
Non-casino revenues
The table below sets forth our room revenues and associated key operating
measures:
Six Months Ended June 30,
2022 2021 Increase/(Decrease) Percent Change
Macau Operations:
Wynn Palace:
Total room revenues (dollars in thousands) $ 20,839 $ 37,895 $ (17,056) (45.0)
Occupancy 37.7 % 65.6 % (27.9)
ADR $ 166 $ 179 $ (13) (7.3)
REVPAR $ 63 $ 118 $ (55) (46.6)
Wynn Macau:
Total room revenues (dollars in thousands) $ 14,152 $ 28,129 $ (13,977) (49.7)
Occupancy 40.5 % 64.4 % (23.9)
ADR $ 174 $ 219 $ (45) (20.5)
REVPAR $ 70 $ 141 $ (71) (50.4)
Las Vegas Operations:
Total room revenues (dollars in thousands) $ 298,582 $ 133,546 $ 165,036 123.6
Occupancy 83.8 % 52.9 % 30.9
ADR $ 448 $ 332 $ 116 34.9
REVPAR $ 375 $ 176 $ 199 113.1
Encore Boston Harbor (1):
Total room revenues (dollars in thousands) $ 38,101 $ 14,385 $ 23,716 164.9
Occupancy 87.4 % 81.1 % 6.3
ADR $ 360 $ 294 $ 66 22.4
REVPAR $ 315 $ 238 $ 77 32.4
(1) Encore Boston Harbor room statistics have been computed based on 89 days of
operation in six months ended June 30, 2021 , representing the number of nights
hotel rooms were offered for sale to the public.
Room revenues increased $157.7 million , primarily due to higher occupancy and
ADR at our Las Vegas Operations and Encore Boston Harbor , respectively. The
hotel tower at Encore Boston Harbor was closed pursuant to a COVID-19 related
state directive from November 6, 2020 through January 25, 2021 , when it reopened
its hotel tower on a Thursday through Sunday weekly schedule. Encore Boston
Harbor reopened its hotel tower to seven days per week as of September 1, 2021 .
Food and beverage revenues increased
Entertainment, retail and other revenues increased
39--------------------------------------------------------------------------------
Table of Contents
Operating expenses
The table below presents operating expenses (dollars in thousands):
Six Months Ended June 30,
Increase/
2022 2021 (Decrease) Percent Change
Operating expenses:
Casino $ 568,143 $ 733,581 $ (165,438) (22.6)
Rooms 123,785 84,087 39,698 47.2
Food and beverage 332,127 191,054 141,073 73.8
Entertainment, retail and other 163,889 154,381 9,508 6.2
General and administrative 397,158 377,319 19,839 5.3
Provision for credit losses (3,145) 7,808 (10,953) NM
Pre-opening 6,949 4,122 2,827 68.6
Depreciation and amortization 347,524 368,428 (20,904) (5.7)
Property charges and other 72,629 11,268 61,361 544.6
Total operating expenses $ 2,009,059 $ 1,932,048 $ 77,011 4.0
NM - Not meaningful.
Total operating expenses increased
Casino expenses decreased$141.3 million and$84.3 million atWynn Palace and Wynn Macau, respectively. These decreases were primarily due to reductions in gaming tax expense driven by the declines in casino revenues at each ofWynn Palace and Wynn Macau, resulting from the effects of the COVID-19 pandemic, partially offset by increased casino expenses of$30.5 million and$29.7 million at our Las Vegas Operations andEncore Boston Harbor , respectively primarily due to increased operating costs including gaming tax expense driven by the increase in casino revenues.
Room expenses increased
Food and beverage expenses increased$132.4 million and$13.2 million at our Las Vegas Operations andEncore Boston Harbor , respectively. These increases were primarily a result of higher operating costs related to the increase in food and beverage revenues as well as higher nightlife entertainment costs associated with increased business volumes at our Las Vegas Operations' nightlife venues.
Entertainment, retail and other expenses increased
General and administrative expenses increased primarily due to increases of$24.8 million and$8.8 million at our Las Vegas Operations andEncore Boston Harbor , respectively. These increases were primarily attributable to increased payroll, operating costs, and general and administrative expenses required to support higher business volumes, partially offset by decreased general and administrative expenses of$8.4 million and$6.9 million , atWynn Palace and Wynn Macau, respectively, primarily due to decreased payroll and operating costs attributable to lower business volumes. The provision for credit losses decreased$6.2 million and$4.5 million at our Las Vegas Operations and Wynn Macau, respectively. The decreases were primarily due to the impact of historical collection patterns and expectations of current and future collection trends, as well as the specific review of customer accounts, on our estimated credit loss for the respective periods. 40
--------------------------------------------------------------------------------
Table of Contents
For the six months endedJune 30, 2022 , pre-opening expenses totaled$6.9 million , which primarily related to reconfiguring the former Le Reve theater space atWynn Las Vegas . For the six months endedJune 30, 2021 , pre-opening expenses totaled$4.1 million , which primarily related to restaurant remodels at our Las Vegas Operations. Depreciation and amortization decreased$31.0 million atWynn Palace primarily due to certain furniture, fixture and equipment assets reaching the end of their useful lives in the first quarter of 2022. Our property charges and other expenses for the six months endedJune 30, 2022 consisted primarily of impairment of goodwill and other finite-lived intangible assets of$37.8 million and$10.3 million , respectively, and$7.6 million of restructuring costs related to Wynn Interactive's BetBull operations, as well as other contract termination expenses of$10.6 million and asset abandonments of$2.1 million related to Wynn Interactive. Our property charges and other expenses for the six months endedJune 30, 2021 consisted primarily of asset abandonments of$3.5 million and$3.2 million at our Las Vegas Operations andWynn Palace , respectively.
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars
in thousands):
Six Months Ended June 30,
Increase/
2022 2021 (Decrease) Percent Change
Interest expense
Interest cost, including amortization of debt
issuance costs and original issue discount
and premium $ 306,988 $ 303,276 $ 3,712 1.2
Weighted average total debt balance $ 12,048,299 $ 12,365,615
Weighted average interest rate 5.09 %
4.90 %
Interest costs increased primarily due to an increase in the weighted average interest rate.
Other non-operating income and expenses
We incurred a foreign currency remeasurement loss of$25.2 million and$5.5 million for the six months endedJune 30, 2022 and 2021, respectively. The impact of the exchange rate fluctuation of theMacau pataca, in relation to theU.S. dollar, on the remeasurements ofU.S. dollar denominated debt and other obligations from ourMacau -related entities drove the variability between periods.
We recorded a gain of
We recorded a$1.3 million loss on extinguishment of debt for the six months endedJune 30, 2021 related to the partial prepayment of the Wynn Macau Term Loan. Income taxes We recorded an income tax expense of$1.9 million and$1.2 million for the six months endedJune 30, 2022 and 2021, respectively. The income tax expense in both periods primarily related to theMacau dividend tax agreement that provides for an annual payment as complementary tax otherwise due by stockholders of WRM.
Net loss attributable to noncontrolling interests
Net loss attributable to noncontrolling interests was$154.7 million and$97.2 million for the six months endedJune 30, 2022 and 2021, respectively. These amounts are primarily related to the noncontrolling interests' share of net loss from WML. 41
--------------------------------------------------------------------------------
Table of Contents
Adjusted Property EBITDA
We use Adjusted Property EBITDA to manage the operating results of our segments. Adjusted Property EBITDA is net 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, meeting and convention, and water rights leases), stock-based compensation, change in derivatives fair value, loss on extinguishment of debt, and other non-operating income and expenses. We use Adjusted Property EBITDA to manage the operating results of our segments. 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 loss, 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. The following table summarizes Adjusted Property EBITDA (dollars in thousands) forWynn Palace , Wynn Macau, Las Vegas Operations,Encore Boston Harbor , and Wynn Interactive as reviewed by management and summarized in Item 1-"Notes to Condensed Consolidated Financial Statements," Note 18, "Segment Information." That footnote also presents a reconciliation of Adjusted Property EBITDA to net loss attributable toWynn Resorts, Limited . Three Months Ended June 30, Six Months Ended June 30, Increase/ Increase/ 2022 2021 (Decrease) Percent Change 2022 2021 (Decrease) Percent Change Wynn Palace$ (49,950) $ 53,555 $ (103,505) NM$ (50,814) $ 80,924 $ (131,738) NM Wynn Macau (40,390) 14,086 (54,476) NM (45,072) 30,642 (75,714) NM Las Vegas Operations 226,706 133,222 93,484 70.2 386,084 161,303 224,781 139.4 Encore Boston Harbor 63,746 46,916 16,830 35.9 118,996 77,279 41,717 54.0 Wynn Interactive (20,953) (40,899) 19,946 48.8 (52,454) (84,368) 31,914 37.8 NM - Not meaningful. Adjusted Property EBITDA atWynn Palace and Wynn Macau decreased$103.5 million and$54.5 million for the three months endedJune 30, 2022 and$131.7 million and$75.7 million for the six months endedJune 30, 2022 , respectively, primarily due to a decrease in operating revenues, partially offset by a decrease in operating expenses. Our Macau Operations for the three and six months endedJune 30, 2022 continued to be negatively impacted by certain travel-related restrictions and conditions, including COVID-19 testing and other procedures related to the COVID-19 pandemic. Adjusted Property EBITDA at our Las Vegas Operations increased$93.5 million and$224.8 million for the three and six months endedJune 30, 2022 , primarily due to an increase in operating revenues, partially offset by an increase in operating expenses. Our Las Vegas Operations for the three and six months endedJune 30, 2021 were negatively impacted by the limitation or suspension of certain offerings and certain capacity limitations related to the COVID-19 pandemic. Adjusted Property EBITDA atEncore Boston Harbor increased$16.8 million and$41.7 million for the three and six months endedJune 30, 2022 , primarily due to an increase in operating revenues, partially offset by an increase in operating expenses. Operating revenue atEncore Boston Harbor for the three and six months endedJune 30, 2021 was negatively impacted by the limitation or suspension of certain offerings and certain capacity limitations related to the COVID-19 pandemic. 42
--------------------------------------------------------------------------------
Table of Contents
Adjusted Property EBITDA at Wynn Interactive increased
Refer to the discussions above regarding the specific details of our results of operations.
43
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source
