WYNN 2Q 2014 CONFERENCE CALL

CC Commentary: best ever July in LV is good. Best July ever in Macau since 2011 is not that big of a deal - Wynn's market share is up (high hold) YoY with a market that's slightly down.

 

 

CONF CALL

  • Wynn Cotai:  18 months out; on budget, on schedule.  On track to open CNY 2016.
  • Comparisons against Sands China 
    • Sands have 10x rooms as Wynn Macau has, twice the EBITDA as WYNN
    • $17k retail per sq ft.  (Sands: $2,400 retail sales sq ft)
    • Win per slot: $105k (Sands:  $36k)
    • Win per table $2.1m (Sands:  $1.5m)
    • ADR:  $334 (Sands:  $210)
  • LV EBITDA per room: $33k ($9.6k - competitors)
  • Macau EBITDA per room:  $304k ($80k - competitors)
  • Do not want to cannibalize Peninsula.  Occupancy is 98%

Q & A

  • Macau margins:   $21M incremental labor expense ($6m of that is one-time); going forward, $5-7m incremental expense per quarter.
  • Held low on direct play (100bps lower than norm)
  • Saw slowdown in June, particularly among smaller junket operators
  • Business picked back up in junket operators in July (best July ever in LV and Macau)
    • Macau:  Best July since July 2011; stabilizing on VIP, growing on mass/slots
  • LV affecting Macau?  Only anecdotal - Hedgeye research shows no correlation between LV and Macau Baccarat volumes
  • LV:  have an edge on casino marketing on Asian/Latino players
  • Pushing $50m in July in Las Vegas;  would like to target $500m for 2014
  • Macau non-gaming revenue:  weakness in launch boutique areas
  • Construction on whole south end of Wynn Macau:  $60m, renovation scheduled to finish CNY 2015; lower slot counts due to the renovation.  May or may not bring back those slots in the future...focused on profitability per slot
  • Peninsula promotional expenses going higher?  Margins have remained very steady on mass and slots
  • Demand for WYNN product are more elastic, relative to their competitors
  • High-end Chinese consumers looking at gaming as part of their normal entertainment budget.  Seeing more new VIP customers.  Bodes well for the long-term.
  • LV:  domestic gaming have not grown since 2007; other segments have done well
  • Macau table metrics:  VIP per unit/day: 32k, MASS per unit/day: 17k
  • Macau table count:  263 vip, 191 mass (#s down due to construction)
  • Parisian/MGM Cotai construction in Macau:  non-existent or stalled

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