Hedgeye - WYNN Q4 2014 CONFERENCE CALL NOTES

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

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

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).

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.