WYNN Q4 2014 CONFERENCE CALL NOTES

Takeaway: Vegas and Macau miss reduced EBITDA estimates. Still no signs of a recovery in Macau despite a better January for Wynn Macau

WYNN Q4 2014 CONFERENCE CALL NOTES - wynn

 

prepared commentary

 

Macau

  • January 2014: low hold. January 2015: high hold %
  • Q4 was tough; Golden Week in October was difficult (effects of changes in China have had a negative effect on top-end business)
  • January 2015:  no change in VIP business (volumes down hard).  Occupancy was high. Rolex/Louis Vuitton suffered. Made $80m in Jan 2015 (made $70m in Jan 2014).
  • Mass business in Jan 2015 was up 26%
  • Opening in a week or so a new area dedicated to VIP business
  • February should see an improvement of some sort
  • Thousands of Wynn Macau employees expecting promotions and better lifestyle
  • Wage Palace on budget and on time BUT builder last night said that because of a problem in timing of labor construction permits, it will not open before CNY 2016. So, Palace will open in the latter days of 1H 2016.
  • China remains a big question mark
  • Requested 1,000 additional laborers, got 700 laborers instead

Las Vegas

  • $515m in EBITDA in LV in 2014 encouraging   

Q & A 

  • Smoking ban will be extended to VIP. Will have unintended consequences. However, WYNN has some open terraces that will mitigate some of that no smoking impact.
  • Oct/Nov:  low hold in premium mass area ($15m/$20m EBITDA impact)
  • VIP hold was normal
  • Tables will increase by 40 tables (combination of junket tables/mass tables) and will be ready before CNY 2015.  Will be up to 485 tables in a couple of weeks.
  • LV promos:  nothing unusual
  • Mass improvement in January 2015:   Mainly mid to high end mass. Had been targeting 7,000 mid-mass players and the campaign has been very successful
  • Boston budget:  $1.7-$1.75bn
    • $50m/month in revenues for the state of MA
    • Another $50m/month for surrounding communities
    • Financed at LIBOR + 175bps non-recourse
  • Downturn is HK and Mainland China
  • Capital Allocation:  Always thought dividend would increase.  Lots of cash protecting the dividend and big property opening in 2016
  • No mass table reclassification 
  • Chinese people are cautious. There is uncertainty. Campaign against corruption has been a big wake up call.
  • Have eliminated weaker junkets. Only will deal with strongest junkets (SunCity and Guangdong new to the property).  Now do only with 9 junkets (12-13 junkets in the past).
  • Mass promotional spending as higher % of revenues:  not seeing in any major increase in promotional activity 
  • Wynn palace table count: 'common sense and integrity at end of day will be last word on subject'
  • 2 projects facing Wynn LV: Old Frontier hotel (purchased by James Packer). Old Stardust hotel (purchased by Genting).
    • Wynn sees these projects bringing more business to Vegas 
  • Raised Vegas pricing by 18% starting Labor Day
  • Mass margins have been very consistent.  Poor retail performance hurting mass margins since it has least income and highest margins.  
  • Overall EBITDA margins of low 30% target
  • They need 1,500 more laborers to build the Wynn Palace. They have put the request in. 

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