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Takeaway: WYNN missed lowered estimates badly and cut the dividend. Negative implications for LVS and MGM.

WYNN Q1 2015 CONFERENCE CALL NOTES - WYNN

CONF CALL

  • Hope for improvement from CNY turned out to be incorrect 
  • Degradation in VIP volumes have continued even into April
  • Q1 trends have continued into April
  • Las Vegas softness: Asian impact on baccarat
  • Dividend lowered based on soft results.  Board of Directors would not hesitate to change dividend policy again going forward.
  • Wynn Palace on track to open on March 2016
  • Allocation of new tables depend on non-casino/casino % (Wynn Palace has most attractive non-gaming option).
  • Wynn Everett:  Start construction in the fall; almost completely financed with non-recourse debt 
  • "Don't want to div out borrowed money"
  • New junket rooms did well.  Other junket operators 'weren't as powerful'.
  • LV Occupancy/room night fell YoY: because of ConAgg comps in March.  Lot of convention business but not much room inventory in January.  
  • LV:  May convention strong mix; 
  • LV: Summer trends in 2015 not pick up as in previous years due to stronger $ and weak Chinese play
  • LV: EBITDA decline continued in April
  • LV: Non-casino rev was flat in 1Q and will be flat in 2Q
  • Macau Labor allocation: got less than what they wanted and appealed the process
  • Macau:  smaller inventory of rooms than their competitors so less of an occupancy drop
  • Grew mid-segment of their mass segment quite nicely
  • 2014 employee turnover was 11% (less than market average of 20-25%) but will not protect them in the new changes in the marketplace
  • Uncertainty is the word of the day in Macau
  • Social harmony affected by Cotai expansions
  • Beijing policies have been unpredictable
  • Dividend policy:  quarterly reviewed. Want to avoid another deduction. 
  • Reallocated rooms from VIP to mid-tier mass.  Over half of rooms are now allocated to mass.
  • Slow down project in Cotai and/or Boston?  Can't slow it down. 
  • Chinese President Xi Jinping unequivocally supports Macau
  • Japan Diet: study bill appeared today. Good news.
  • Macau:  decline in VIP has opened a window to attract more premium mass customers. 
  • Wynn Palace: primarily a non-casino attraction
  • Wynn has smoking lounges in the terraces, some competitors don't have some advantage
  • Macau LRT bridge:  should be done in 2017 or as late as 2020.  Need to take care of reclaimed land issue from HK.
  • Boston: making forward with permit progress. Have performed drilling on site.  Hopefully get it open at end of 2017. Have spent $200m to date. Still need to spend $100m more on remediation and other fees before groundbreaking this year.