WYNN 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.

 

 

OVERALL

  • Worse:  Below the Street quarter but in-line with our projection.  However, EBITDA got a $17m boost from an allowance for doubtful account reserve adjustment.

 MACAU MARKET OUTLOOK

  • WORSE:  Growth has slowed; the outlook is more uncertain but China is relatively stable.  More cautious on direct VIP credit collection. 
  • PREVIOUSLY:  "All the way up until today, is volumes are up over last year in Macau on the VIP side. The market's still very robust.I also think that the customers are coming back to momma. They tried all the other properties and they are going to play where they feel the most comfortable. That's... what I'm seeing now."

WYNN COTAI TIMELINE

  • SAME:  Still waiting for construction permit.  Groundbreaking will happen in Fall 2012.  46 month schedule remains unchanged.
  • PREVIOUSLY:  "I think everybody knows that we were finally given the green light in the land concession, which will lead to imminent ground breaking in the next few weeks."

MACAU BAD DEBT EXPENSE

  • BETTER:  WYNN benefited from a large reversal of doubtful accounts ($17MM).  2/3 was related to Macau, with 1/3 hitting the Las Vegas P&L.
  • PREVIOUSLY:  "Bad debt expense was up $8 million and that was all in Macau....We had a few large accounts that went past 150 days. We have a very conservative accounting policy. If it's 150 days we're fully reserved. And so we had a few large accounts go over 150 days. Our bad debt provision went up. We're 55% reserved in Macau right now and our collections in the second quarter have continued to be very stable and normal."

COTAI FINANCING

  • SAME:  Plan to close financing for a $2.3 billion revolver with interest rates under 2% in ten days
  • PREVIOUSLY:  "We're always conservative so it'll be between 25% to 40% in equity and the rest will be financing that we'll start working on this year. We're only two times levered right now on a net basis."

WYNN MACAU RETAIL EXPANSION

  • SAME:  Will expand retail space to 58,000 sq ft by the end of 2012 at Wynn Macau.  
  • PREVIOUSLY:  "We have 52,000 square feet of retail. It's going to 60,000 – it's in the process of going to 60,000, but we had 52,000 at year-end."

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