WYNN Q3 CONFERENCE CALL NOTES

Takeaway: Q3 margins were solid but Wynn highlights mass margin pressures beyond Q3. Estimates for most of the Macau operators need to be reduced.

Q3 a beat but conference call downbeat

 

 

WYNN Q3 CONFERENCE CALL NOTES - w2

 

STEVE WYNN COMMENTS

  • Mass gains offset VIP losses
  • Central govt very aggressive on corruption and misconduct
  • Still very bullish on Macau
  • Wynn Palace:  on target, on budget
  • Non-gaming offerings on new Cotai properties will be much better
  • Massachusetts: just finished casino design

Q&A

  • Disappointed with market
  • HK protests disrupting business community
  • October 2014:  had perfect storm; lowest hold ever (had held 0.9% at one point)
  • Mass hold % was really high: have no clue on normalized hold - Hedgeye thinks the high Mass hold contributed to the better Macau margins and drove most of the beat
  • Smoking ban:  do have an impact but not major with respective to revenues
  • Mass increasing because of pressure to VIP? Yes.
  • Margin pressure in Macau? Yes. Competition is very intense resulting in either market share loss or margin loss.
  • Very dramatic capacity coming at Wynn Macau hotel: 2 new VIP areas in January 2015.
  • Mass market margins have been constant over last 3 quarters (+/- 100 bps) Have seen premium mass margins stabilize.
  • October:  more margin pressure going forward. 
  • $56mm incremental spend on Phase II Cotai:  1/2 of it due to pre-opening expense (incremental payroll/HR programs). Have protected contingency on construction budget.
  • VIP:  October is clearly worse than in the past
  • WYNN shares Adelson's thinking (LVS):  if they increase promotional allowances and it can add to the bottom line, he will do it even at the expense of lower margins.
  • Last month, WYNN raised Las Vegas rates by 18% to OTAs
  • Las Vegas:  hoping 2014 EBITDA  will be above >$500; want to have the most profitable hotel in Las Vegas
  • Japan:  not sure what will happen. Thinks the Japanese government wants a domestic operator.
  • Direct VIP Turnover was relatively flat YoY in 3Q; VIP collection has been steady.
  • Junkets are cautious and being conservative. People are not spending lavishly. High-end brands (e.g. Louis Vuitton, Chanel) reporting declines. 

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more