In preparation for WYNN's Q1 earnings, we've aggregated some forward looking commentary from the company's Q4 release and conference call.
Q1 should be a strong quarter for WYNN, but given the run in the stock it may not matter. We're above the Street in revenues but in-line for EBITDA this quarter due to a low hold percentage - and the associated margin impact - despite record VIP volumes. While we think that Wynn Encore will have solid performance, we think that perhaps the Street is ahead of themselves in modeling margins for the backhalf of 2010. Below is a "YouTube" from last quarter's call and some our thoughts.
FORWARD LOOKING COMMENTARY & TRENDS
- "Although I don't make forward-looking statements as a rule, we're tracking substantially ahead of that the first two months of the year....and incidentally, we're not holding high, we're holding low..at 2.8"
- The market was indeed on fire in 1Q2010 and Wynn did perform well...although they did suffer from weak hold - we estimate 2.6% on VIP since March hold was a pathetic 2.3%
- Our Macau 1Q2010 estimates are as follows:
- RC of $20.6BN, VIP win % of 2.6%, and VIP win of $536MM
- Mass win of $117MM, Slot win of $50MM
- Net revenue of $555MM and EBITDA of $144MM
- Vegas: "I don't see any major change in the future. I don't see it getting worse per se"
- "We're about to refurbish our rooms in Wynn because they're five years old. It puts more pressure on our competition because our service levels and the targeted attractiveness of our facilities gets more and more effective. Nothing left to do but the basics better."
- "The danger that you described is real. I mean, rates stay down in Las Vegas, how long do rates stay down in Las Vegas before they become the norm? You asked me that question, and I say to you, I don't know. But what should I do? Have empty rooms?"
- "We had a very big Baccarat year last year in Las Vegas in spite of everything else."
- "If you're talking about strictly convention booking, you can say that '10 is better than '09, and you can say you see a trend of increased bookings. It is totally irresponsible and naive for anybody to say based upon this slight trend we project this infinitely into the future and give you some rosy baloney story about what's going to happen in '11."
- "How about for the Southeast Asia customer percentage?" [of total customers to WYNN Macau]
- "It's less than 5%."
OTHER NOTABLE COMMENTS
- "The workforce in Macau is totally delicious."
- "We're more of a Chinese company than American company today as we're having this call. I love it. Thank God for being outside the United States today."
- "I love the idea that they're going to start five and six because it's a Sheraton, they're lower-end products. And that's lots of folks. And then they, Sheldon, built all those ferry boats. I think that's good too. And he was subsidizing everybody else on Cotai by those ferry boats and it's also worked out well for him. That's all great stuff, it all happened and what I'm looking forward to is opening the nicest place in that neighborhood and skimming off the top end of the business just like we did downtown in Las Vegas on the Strip, in Atlantic City and we're doing it now in Macau. That's our stick, we do that. We love overdeveloped markets, it's where we thrive."
- "Would I build Encore if I had to do it today, no, I'd keep my money."