WYNN 3Q09 CONF CALL TRANSCRIPT

3Q09 CONF CALL

Steve's commentary

  • "It hasn't been too bad this quarter"
  • 1Q09 confirmed their worst fears for LV, 2Q09 wasn't much better, and in the summer things began to pick up
  • If things continue as they are they will beat the 08' results in Vegas this year and in Macau
  • If rate at Encore was $350 then annual EBITDA would have been $150MM higher
  • Room rates are still down because midweek rates are weak given lower business/convention travel
  • People that come to Vegas are spending less on everything 
  • Get the benefit of some Asian spill over
  • Capital structure (ie low debt) protects their franchise until the economy improves
  • You can always buy revenues, its the bottom line that matters - D&A is real (meaning capex) and so is interest expense
  • "Bigger is not better - better is better"... love the Sheldon shot
  • It's not about market share it's about the free cash flow and ROI - basically he's saying that his equipment is most productive and he runs his casinos most efficiently in terms of maximizing ROI per gaming position
  • Encore in Macau is completely budgeted and under control.  Opened some parts already will be 100% open by April
  • Prettiest and most beautiful thing they've ever built
  • Building was built to meet the needs of the VIP business in Macau... "in a hundred cunning ways it will ingratiate itself with the customers"

Q&A

  • Domestic high end business - is that improving? 
    • International has held up well, but the high end domestic business has just not returned yet
  • How does the group convention calendar look for 2010/2011?
    • Booking window is still very compressed.  Hearing that people will start spending their budgets, but that won't happen until 2Q2010 ...as they wait for things to stabilize
    • Had two large cancellations last week... I love how honest Steve is... he thinks that there is still political stigma coming to Las Vegas
  • Response to City Center?
    • Focusing on the fundamentals, employee morale and good service
    • They know that a lot of people will go and check it out... nothing they can do about that.  The experience they have at CC will determine whether they come back to Wynn....
    • If CityCenter cuts prices it will hurt them
  • Increases in expenses can be attributed to utilities/etc rest was seasonal and revenue driving (ie variable as a result of higher revenue)
  • What they expect in additional costs when Encore Macau opens?
    • They are very room constrained, more rooms will allow them to capture more mass market shares
  • What will they do with the IPO proceeds?
    • Protect himself from a dollar that is getting creamed... he's very worried about the depreciating dollar ... will hedge the weakening dollar.
      He sounds like Keith McCullough and the Burning Buck
  • Klatzin asks the question again... in a different way ... Hey Steve will you buy anything with all that cash?
    • Asia seems to be a better bet now.  Uncertainty in the US economy is devastating, and that impacts all of their decisions
  • Visa restrictions in Macau?
    • All the talk of about visa restrictions is becoming quite irritating, all media hype and noise
    • 50% of their visitors are from mainland china
    • Oct holiday was very strong and the period post holiday was seasonally slower as usual. Oct was good
    • "We don't feel uncertainty in Macau"
  • What about Singapore?
    • If the central government thought that Singapore was a threat to their gaming enclave, they change visa restrictions (and taxes)
    • Doesn't think that they lower tax rate in Singapore, and hence the ability of junkets to give higher incentives, will not be a threat to Macau
      • We are worried about Singapore... I wish someone asked the question on what % of Wynn's visitors come from SE Asia 
  • Cotai?
    • They are working on the project but won't discuss it until they are ready to
    • When I was there at the end of Sept there was nothing going on at the site
  • No comment on Acqueduct
  • Any changes to the government policy in Macau?
    • Use the visa program to balance quality of life for people living and working in Macau and the business well being in Macau
  • Corporate expense - little lower than where its been running? Comment
    • Yeah and SG&A was higher - which more than offset that decrease... can you say re-allocation?
    • Payroll cuts and cost control efforts - don't assume that that is a good run rate either
  • Dollar commentary and desire to get less exposure to that... what is he implying?
    • In the past they have converted all their foreign profits into USD ... re-evaluating that
  • Lots of projects/ land available in Las Vegas - any interest?
    • Until there is more certainty in the US they will not be expanding in the US
  • How much of the cost reductions we saw earlier this year will be sustainable
    • Garth Brooks in the 4Q09 - big deal
    • Bought him a jet so that he can come and go
    • First 20 shows are sold out, attracting a lot of people to Las Vegas that haven't come in a long time
    • Entertainment has been the trickiest thing to get right in this business... so bottom line they spent a lot of money on that
    • Other than that things should trend flat from here 
  • Accounting question about WYNN Macau 
    • NI attributable to non-controlling holders right below the NI line
    • Don't you wish that sell-side analysts understood basic accounting?
  • What will become of Fontainebleau?
    • Disconcerting to have half complete projects all around them
    • Another shot at Sheldon - sites 5 & 6
  • "Cosmopolitan is another pending disaster"