Wynn Resorts Posts 3Q '08 Results

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. November 05, 2008

LAS VEGAS, NV, November 3, 2008. Wynn Resorts, Limited (Nasdaq: WYNN) today reported financial results for the quarter ended September 30, 2008.

Net revenues for the third quarter of 2008 were $769.2 million, compared to $653.4 million in the third quarter of 2007. The revenue increase was driven primarily by a 36.6% increase in revenues at Wynn Macau.

Consolidated adjusted property EBITDA(1) decreased 5.2% to $176.4 million for the third quarter of 2008, compared to $186.0 million in the third quarter of 2007.

On a US GAAP (Generally Accepted Accounting Principles) basis, net income for the quarter was $51.1 million, or $0.49 per diluted share, compared to net income of $44.7 million, or $0.41 per diluted share in 2007. Adjusted net income in the third quarter of 2008 was $64.2 million, or $0.62 per diluted share (adjusted EPS)(2), compared to an adjusted net income of $73.4 million, or $0.67 per diluted share in the third quarter of 2007.

Wynn Las Vegas Third Quarter Results

For the quarter ended September 30, 2008, Wynn Las Vegas generated adjusted property EBITDA of $70.1 million, compared to $93.2 million in the third quarter of 2007, with a 23.8% EBITDA margin on net revenue. The EBITDA decline is primarily attributable to a lower hold percentage and an $11.1 million increase in our bad debt reserve based solely on the current global economic uncertainty.

Net casino revenues in the third quarter of 2008 were $143.2 million, compared to $149.9 million for the third quarter of 2007. Table games drop increased 11.6% from the comparable period in 2007 to $531.0 million but table games hold decreased to 24.3%, compared to 26.4% in 2007. Slot machine handle of $853.8 million was 11.9% below the comparable period of 2007 and win per unit per day was $225, compared to a win per unit per day of $234 in the third quarter of 2007.

Gross non-casino revenues for the quarter were $190.9 million, a 1.1% decrease from the third quarter of 2007. Hotel revenues were down 3.9% to $65.3 million during the quarter. Wynn Las Vegas achieved an Average Daily Rate (ADR) of $272 for the quarter, compared to $282 in the third quarter of 2007. The property's occupancy was 96.1%, compared to 96.6% during the prior year period, generating revenue per available room (REVPAR) of $261 in the 2008 period (4.0% below the third quarter of 2007).

Food and beverage revenues increased 2.5% to $74.6 million in the quarter, and retail revenues declined 3.8% to $23.0 million in the quarter. Entertainment revenues were approximately $16.0 million compared to $17.0 million in the third quarter of 2007 as we closed Spamalot on July 13, 2008. We have begun the renovation of the theater which will feature Danny Gans in the Encore Theater commencing in February 2009.

Encore at Wynn Las Vegas

We are constructing Encore on approximately 20 acres on the Las Vegas Strip, immediately adjacent to Wynn Las Vegas. Encore will include a 2,034 all-suite hotel tower, an approximately 72,000 square foot casino, additional convention and meeting space, as well as five restaurants, a nightclub, swimming pools, a spa and salon and retail outlets. Encore is expected to open in December 2008 and our project budget is approximately $2.3 billion for Encore and related capital improvements. Encore at Wynn Las Vegas is fully financed.

As of September 30, 2008, we had incurred approximately $1.8 billion of project costs related to the development and construction of Encore and related capital improvements.

Wynn Macau Third Quarter Results

In the third quarter of 2008, Wynn Macau generated net revenues of $474.8 million compared to $347.7 million for the third quarter of 2007. Adjusted property EBITDA increased 14.5% to $106.3 million (with a 22.4% EBITDA margin on net revenue) compared to $92.8 million in the third quarter of 2007. In December 2007, we completed the Wynn Macau expansion, adding approximately 75,000 square feet of gaming space and 20,000 square feet of retail space including 11 new boutiques. EBITDA at Wynn Macau during this quarter was also reduced by an $11.0 million increase in bad debt reserves based solely on the current global economic uncertainty.

Table games results are segregated into two distinct reporting categories, the VIP segment and the mass market segment.

Table games turnover in the VIP segment increased 35.6% to $13.3 billion for the period, compared to $9.8 billion for the third quarter of 2007. VIP table games win as a percentage of turnover (calculated before discounts and commissions) was 3.10%, just above the top end of the expected range of 2.7% to 3.0% and higher than the 2.96% in the comparable period of 2007.

Table games drop in the mass market category was approximately $568.8 million during the period, a 19.7% increase from $475.4 million in the third quarter of 2007. Mass market table games win percentage (calculated before discounts) of 20.3% was in-line with the win percentage in the third quarter of 2007 and above our expected range of 18% to 20%.

Slot machine win increased 103.2% compared to the third quarter of 2007. Win per unit per day was $366, a 19.7% decline from the third quarter of 2007 due to the increase in the average number of slot machines from 486 to 1,230 slots.

Wynn Macau achieved an Average Daily Rate (ADR) of $272 for the quarter, compared to $245 in the third quarter of 2007. The property's occupancy was 86.2%, compared to 91.9% during the prior year period, generating revenue per available room (REVPAR) of $234 in the 2008 period (4.2% higher than in 2007).

Encore at Wynn Macau

Wynn Macau currently features approximately 600 hotel rooms and suites, 380 table games and 1,230 slot machines in 205,000 square feet of casino gaming space, five restaurants, a spa and salon, lounges, meeting facilities and 46,000 square feet of retail space. Encore at Wynn Macau will add a fully-integrated resort hotel with approximately 400 luxury suites and four villas, along with restaurants and additional retail and gaming space. We expect Encore at Wynn Macau to open in the first quarter of 2010. As of September 30, 2008, we have incurred $150.1 million of an expected $700 million budget associated with the construction of Encore at Wynn Macau. Encore at Wynn Macau is fully financed.

Other Factors Affecting Earnings

Interest expense, net of $24.0 million in capitalized interest, was $40.3 million for the third quarter of 2008. Depreciation and amortization expenses were $65.5 million and Encore at Wynn Las Vegas pre-opening expenses were $13.9 million during the quarter. Corporate expense and other was $17.1 million in the third quarter, including $5.4 million in stock-based compensation.

Balance Sheet and Capital Expenditures

Our total cash balances at the end of the quarter were $1.7 billion, including cash balances restricted for construction of approximately $31 million. Total debt outstanding at the end of the quarter was $4.9 billion, including approximately $2.8 billion of Wynn Las Vegas debt, $1.1 billion of Wynn Macau related debt and $1.0 billion at Wynn Resorts, Limited. During the quarter we drew on the remaining availability under our Wynn Las Vegas Revolver and drew an additional $500 million on our Wynn Macau facilities of which $500 million remain available.

Capital expenditures during the third quarter of 2008, net of changes in construction payables and retention, totaled approximately $345.0 million, primarily attributable to Encore at Wynn Las Vegas.

During the month of July, the Company repurchased 4,256,271 shares of our common stock at an average price of $79.06 per share.