WYNN 1Q 2014 CONFERENCE CALL NOTES

05/01/14 06:03PM EDT

Q1 almost exactly in line with our property level EBITDA estimate and nicely above the Street. Positive forward commentary

WYNN 1Q 2014 CONFERENCE CALL NOTES - wynn

CONF CALL NOTES

  • Construction of Wynn Palace on schedule, will open 6 quarters from now (552 tables).  Still want to open up in 1Q 2016 before CNY.
  • LV hotel occu +12.6%, REVPAR up 12.7%; ADR; most profitable hotel in Nevada
  • Low hold impacted LV by $10MM.  Hotel room pace for 2014 is going well.
  • LV 2Q:  6-7% higher than previous year
  • Steve Wynn thinks LV is growing into additional capacity that was added in the past and feels good about it, finally
  • Wynn Macau:
    • No hold impact in 1Q; junket margins stable
    • Flow through very very strong
    • Moving poor performing mass tables into premium table games (62 premium mass tables games); 492 total tables
    • April mass revenues up 55%; April: VIP up 10% (outpaced the market)
      • This translates into US$122m in mass revenues and US$257m in VIP revenues
      • We think Wynn gained mass share in April and possibly VIP share as well if the VIP market was flat or worse.
    • Slot win outpacing market 
    • EBITDA per position trending 35/40% higher than nearest competitor
  • Wynn Palace:  no trouble finding construction workers.  Have 2,000 workers on site; will have 3,000 people by October.  
  • Other Cotai sites under construction look more disoriented
  • In 60 months, Macau/Henqian Island will be most robust tourist destination in the world, competing with Orlando, Los Angeles, etc.

Q & A

  • Macau:  213 average mass tables in 1Q; converting some of junket space into premium mass business
  • $5MM receivable credit in Macau:  collected receivables that were 100% reserved
  • % of EBITDA coming from Mass:  not buying the business
  • Table win per unit
  • LV:  when customers get lucky, drop goes down.  When win is down, credit is also down.
    • Handle:  credit slips with markers and cash
    • Do not have 'table drop' until the customer loses
  • No construction disruption on mass business
  • Table mix at Wynn Palace will be similar to Wynn Macau
  • In the past few weeks, have migrated some VIP tables to premium mass tables. 
  • Wynn Palace:  Hotel Cash room:  700 sq ft; majority of rooms will be +900 sq ft
  • Do not advance VIP credit for more than 30 days.  WYNN settles at end of every month.  Not worried about VIP credit.
  • Thinks Venetian Macau cannibalized Sands Macau
  • Wynn Macau earnings went up, even with all the new casino openings; has held their market share; believes market share will hold its own at Peninsula when Palace opens.
  • China:  Corporate credit is very different from consumer credit
  • Finished financing recently.  Last tranche: $750MM bond at 5.09% with no covenants, non-recourse.
  • Total Cotai financing at $3.85bn at average cost of 3.3%
  • Capital structure is in 'nirvana' - low interest rates, long maturities, low covenants
  • Highly confidence in getting the 552 tables for Palace
  • Want to do the basics better in Macau
  • Most successful largest grossing casino on Gulf Coast is Beau Rivage.
  • Japan:  Diet will discuss study bill in May.  Tokyo, Osaka, Okinawa - potential sites.
  • More optimistic than ever on Japan
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